diff --git a/src/aterm-helper.pl b/src/aterm-helper.pl
index 5b7b33691d..9b2bde7000 100755
--- a/src/aterm-helper.pl
+++ b/src/aterm-helper.pl
@@ -47,6 +47,7 @@ print HEADER "#endif\n\n\n";
 print IMPL "namespace nix {\n";
 
 while (<STDIN>) {
+    s/\#.*//;
     next if (/^\s*$/);
     
     if (/^\s*(\w*)\s*\|([^\|]*)\|\s*(\w+)\s*\|\s*(\w+)?/) {
diff --git a/src/libexpr/eval.cc b/src/libexpr/eval.cc
index 4f97c761ed..2bb29f871c 100644
--- a/src/libexpr/eval.cc
+++ b/src/libexpr/eval.cc
@@ -3,6 +3,7 @@
 #include "hash.hh"
 #include "util.hh"
 #include "store.hh"
+#include "derivations.hh"
 #include "nixexpr-ast.hh"
 
 
@@ -157,23 +158,24 @@ static Expr updateAttrs(Expr e1, Expr e2)
 }
 
 
-string evalString(EvalState & state, Expr e)
+string evalString(EvalState & state, Expr e, PathSet & context)
 {
     e = evalExpr(state, e);
-    ATerm s;
-    if (!matchStr(e, s))
+    string s;
+    if (!matchStr(e, s, context))
         throw TypeError(format("value is %1% while a string was expected") % showType(e));
-    return aterm2String(s);
+    return s;
 }
 
 
-Path evalPath(EvalState & state, Expr e)
+string evalStringNoCtx(EvalState & state, Expr e)
 {
-    e = evalExpr(state, e);
-    ATerm s;
-    if (!matchPath(e, s))
-        throw TypeError(format("value is %1% while a path was expected") % showType(e));
-    return aterm2String(s);
+    PathSet context;
+    string s = evalString(state, e, context);
+    if (!context.empty())
+        throw EvalError(format("the string `%1%' is not allowed to refer to a store path (such as `%2%')")
+            % s % *(context.begin()));
+    return s;
 }
 
 
@@ -206,76 +208,84 @@ ATermList evalList(EvalState & state, Expr e)
 }
 
 
-/* String concatenation and context nodes: in order to allow users to
-   write things like
-
-     "--with-freetype2-library=" + freetype + "/lib"
-
-   where `freetype' is a derivation, we automatically coerce
-   derivations into their output path (e.g.,
-   /nix/store/hashcode-freetype) in concatenations.  However, if we do
-   this naively, we could introduce an undeclared dependency: when the
-   string is used in another derivation, that derivation would not
-   have an explicitly dependency on `freetype' in its inputDrvs
-   field.  Thus `freetype' would not necessarily be built.
-
-   To prevent this, we wrap the string resulting from the
-   concatenation in a *context node*, like this:
-
-     Context([freetype],
-       Str("--with-freetype2-library=/nix/store/hashcode-freetype/lib"))
-
-   Thus the context is the list of all derivations used in the
-   computation of a value.  These contexts are propagated through
-   further concatenations.  In processBinding() in primops.cc, context
-   nodes are unwrapped and added to inputDrvs.
-
-   !!! Should the ordering of the context list have a canonical form?
-
-   !!! Contexts are not currently recognised in most places in the
-   evaluator. */
-
-
-/* Coerce a value to a string, keeping track of contexts. */
-string coerceToStringWithContext(EvalState & state,
-    ATermList & context, Expr e, bool & isPath)
+static void flattenList(EvalState & state, Expr e, ATermList & result)
+{
+    ATermList es;
+    e = evalExpr(state, e);
+    if (matchList(e, es))
+        for (ATermIterator i(es); i; ++i)
+            flattenList(state, *i, result);
+    else
+        result = ATinsert(result, e);
+}
+
+
+ATermList flattenList(EvalState & state, Expr e)
+{
+    ATermList result = ATempty;
+    flattenList(state, e, result);
+    return ATreverse(result);
+}
+
+
+string coerceToString(EvalState & state, Expr e, PathSet & context,
+    bool coerceMore, bool copyToStore)
 {
-    isPath = false;
-    
     e = evalExpr(state, e);
 
-    bool isWrapped = false;
-    ATermList es;
-    ATerm e2;
-    if (matchContext(e, es, e2)) {
-        isWrapped = true;
-        e = e2;
-        context = ATconcat(es, context);
-    }
-    
-    ATerm s;
-    if (matchStr(e, s)) return aterm2String(s);
-    
-    if (matchPath(e, s)) {
-        isPath = true;
-        Path path = aterm2String(s);
-        if (isInStore(path) && !isWrapped) {
-            context = ATinsert(context, makePath(toATerm(toStorePath(path))));
+    string s;
+
+    if (matchStr(e, s, context)) return s;
+
+    ATerm s2;
+    if (matchPath(e, s2)) {
+        Path path(canonPath(aterm2String(s2)));
+
+        if (!copyToStore) return path;
+        
+        if (isDerivation(path))
+            throw EvalError(format("file names are not allowed to end in `%1%'")
+                % drvExtension);
+
+        Path dstPath;
+        if (state.srcToStore[path] != "")
+            dstPath = state.srcToStore[path];
+        else {
+            dstPath = addToStore(path);
+            state.srcToStore[path] = dstPath;
+            printMsg(lvlChatty, format("copied source `%1%' -> `%2%'")
+                % path % dstPath);
         }
-        return path;
+
+        context.insert(dstPath);
+        return dstPath;
     }
+        
+    ATermList es;
+    if (matchAttrs(e, es))
+        return coerceToString(state, makeSelect(e, toATerm("outPath")),
+            context, coerceMore, copyToStore);
 
-    if (matchAttrs(e, es)) {
-        ATermMap attrs(128); /* !!! */
-        queryAllAttrs(e, attrs, false);
+    if (coerceMore) {
 
-        Expr a = attrs.get(toATerm("type"));
-        if (a && evalString(state, a) == "derivation") {
-            a = attrs.get(toATerm("outPath"));
-            if (!a) throw TypeError("output path missing from derivation");
-            isPath = true;
-            context = ATinsert(context, e);
-            return evalPath(state, a);
+        /* Note that `false' is represented as an empty string for
+           shell scripting convenience, just like `null'. */
+        if (e == eTrue) return "1";
+        if (e == eFalse) return "";
+        int n;
+        if (matchInt(e, n)) return int2String(n);
+        if (matchNull(e)) return "";
+
+        if (matchList(e, es)) {
+            string result;
+            es = flattenList(state, e);
+            bool first = true;
+            for (ATermIterator i(es); i; ++i) {
+                if (!first) result += " "; else first = false;
+                result += coerceToString(state, *i,
+                    context, coerceMore, copyToStore);
+            }
+            return result;
         }
     }
     
@@ -283,31 +293,41 @@ string coerceToStringWithContext(EvalState & state,
 }
 
 
-/* Wrap an expression in a context if the context is not empty. */
-Expr wrapInContext(ATermList context, Expr e)
+/* Common implementation of `+', ConcatStrings and `~'. */
+static ATerm concatStrings(EvalState & state, const ATermVector & args,
+    string separator = "")
 {
-    return context == ATempty ? e : makeContext(context, e);
+    PathSet context;
+    std::ostringstream s;
+
+    /* If the first element is a path, then the result will also be a
+       path, we don't copy anything (yet - that's done later, since
+       paths are copied when they are used in a derivation), and none
+       of the strings are allowed to have contexts. */
+    ATerm dummy;
+    bool isPath = !args.empty() && matchPath(args.front(), dummy);
+
+    for (ATermVector::const_iterator i = args.begin(); i != args.end(); ++i) {
+        if (i != args.begin()) s << separator;
+        s << coerceToString(state, *i, context, false, !isPath);
+    }
+
+    if (isPath && !context.empty())
+        throw EvalError(format("a string that refers to a store path cannot be appended to a path, in `%1%'")
+            % s.str());
+    
+    return isPath
+        ? makePath(toATerm(s.str()))
+        : makeStr(s.str(), context);
 }
 
 
-static ATerm concatStrings(EvalState & state, const ATermVector & args)
+Path coerceToPath(EvalState & state, Expr e, PathSet & context)
 {
-    ATermList context = ATempty;
-    std::ostringstream s;
-    bool isPath = false;
-
-    /* Note that if the first argument in the concatenation is a path,
-       then the result is also a path. */
-
-    for (ATermVector::const_iterator i = args.begin(); i != args.end(); ++i) {
-        bool isPath2;
-        s << coerceToStringWithContext(state, context, *i, isPath2);
-        if (i == args.begin()) isPath = isPath2;
-    }
-
-    return wrapInContext(context, isPath
-        ? makePath(toATerm(canonPath(s.str())))
-        : makeStr(toATerm(s.str())));
+    string path = coerceToString(state, e, context, false, false);
+    if (path == "" || path[0] != '/')
+        throw EvalError(format("string `%1%' doesn't represent an absolute path") % path);
+    return path;
 }
 
 
@@ -352,8 +372,7 @@ Expr evalExpr2(EvalState & state, Expr e)
         sym == symFunction1 ||
         sym == symAttrs ||
         sym == symList ||
-        sym == symPrimOp ||
-        sym == symContext)
+        sym == symPrimOp)
         return e;
     
     /* The `Closed' constructor is just a way to prevent substitutions
@@ -371,6 +390,7 @@ Expr evalExpr2(EvalState & state, Expr e)
         ATermBlob fun;
         if (!matchPrimOpDef(primOp, arity, fun)) abort();
         if (arity == 0)
+            /* !!! backtrace for primop call */
             return ((PrimOp) ATgetBlobData(fun)) (state, ATermVector());
         else
             return makePrimOp(arity, fun, ATempty);
@@ -397,6 +417,7 @@ Expr evalExpr2(EvalState & state, Expr e)
                 ATermVector args2(arity);
                 for (ATermIterator i(args); i; ++i)
                     args2[--arity] = *i;
+                /* !!! backtrace for primop call */
                 return ((PrimOp) ATgetBlobData((ATermBlob) fun))
                     (state, args2);
             } else
@@ -550,11 +571,10 @@ Expr evalExpr2(EvalState & state, Expr e)
     if (matchSubPath(e, e1, e2)) {
         static bool haveWarned = false;
         warnOnce(haveWarned, "the subpath operator (~) is deprecated, use string concatenation (+) instead");
-        ATermList context = ATempty;
-        bool dummy;
-        string s1 = coerceToStringWithContext(state, context, e1, dummy);
-        string s2 = coerceToStringWithContext(state, context, e2, dummy);
-        return wrapInContext(context, makePath(toATerm(canonPath(s1 + "/" + s2))));
+        ATermVector args;
+        args.push_back(e1);
+        args.push_back(e2);
+        return concatStrings(state, args, "/");
     }
 
     /* List concatenation. */
diff --git a/src/libexpr/eval.hh b/src/libexpr/eval.hh
index a7f4e69437..323a828734 100644
--- a/src/libexpr/eval.hh
+++ b/src/libexpr/eval.hh
@@ -60,17 +60,26 @@ Expr strictEvalExpr(EvalState & state, Expr e,
     bool canonicalise = false);
 
 /* Specific results. */
-string evalString(EvalState & state, Expr e);
-Path evalPath(EvalState & state, Expr e);
+string evalString(EvalState & state, Expr e, PathSet & context);
+string evalStringNoCtx(EvalState & state, Expr e);
 int evalInt(EvalState & state, Expr e);
 bool evalBool(EvalState & state, Expr e);
 ATermList evalList(EvalState & state, Expr e);
-ATerm coerceToString(Expr e);
 
-/* Contexts. */
-string coerceToStringWithContext(EvalState & state,
-    ATermList & context, Expr e, bool & isPath);
-Expr wrapInContext(ATermList context, Expr e);
+/* Flatten nested lists into a single list (or expand a singleton into
+   a list). */
+ATermList flattenList(EvalState & state, Expr e);
+
+/* String coercion.  Converts strings, paths and derivations to a
+   string.  If `coerceMore' is set, also converts nulls, integers,
+   booleans and lists to a string. */
+string coerceToString(EvalState & state, Expr e, PathSet & context,
+    bool coerceMore = false, bool copyToStore = true);
+
+/* Path coercion.  Converts strings, paths and derivations to a path.
+   The result is guaranteed to be an canonicalised, absolute path.
+   Nothing is copied to the store. */
+Path coerceToPath(EvalState & state, Expr e, PathSet & context);
 
 /* Automatically call a function for which each argument has a default
    value or has a binding in the `args' map.  Note: result is a call,
diff --git a/src/libexpr/expr-to-xml.cc b/src/libexpr/expr-to-xml.cc
index 195cbd7b85..f5b0e74770 100644
--- a/src/libexpr/expr-to-xml.cc
+++ b/src/libexpr/expr-to-xml.cc
@@ -15,26 +15,20 @@ static XMLAttrs singletonAttrs(const string & name, const string & value)
 }
 
 
-static void printTermAsXML(Expr e, XMLWriter & doc, ATermList & context)
+static void printTermAsXML(Expr e, XMLWriter & doc, PathSet & context)
 {
     XMLAttrs attrs;
-    ATerm s;
+    string s;
+    ATerm s2;
     int i;
-    Expr e2;
     ATermList as, es, formals;
     ATerm body, pos;
 
-    while (matchContext(e, es, e2)) {
-        e = e2;
-        for (ATermIterator i(es); i; ++i)
-            context = ATinsert(context, *i);
-    }
+    if (matchStr(e, s, context)) /* !!! show the context? */
+        doc.writeEmptyElement("string", singletonAttrs("value", s));
 
-    if (matchStr(e, s))
-        doc.writeEmptyElement("string", singletonAttrs("value", aterm2String(s)));
-
-    else if (matchPath(e, s))
-        doc.writeEmptyElement("path", singletonAttrs("value", aterm2String(s)));
+    else if (matchPath(e, s2))
+        doc.writeEmptyElement("path", singletonAttrs("value", aterm2String(s2)));
 
     else if (matchNull(e))
         doc.writeEmptyElement("null");
@@ -90,7 +84,7 @@ static void printTermAsXML(Expr e, XMLWriter & doc, ATermList & context)
 }
 
 
-void printTermAsXML(Expr e, std::ostream & out, ATermList & context)
+void printTermAsXML(Expr e, std::ostream & out, PathSet & context)
 {
     XMLWriter doc(true, out);
     XMLOpenElement root(doc, "expr");
diff --git a/src/libexpr/expr-to-xml.hh b/src/libexpr/expr-to-xml.hh
index eb628660d9..36b8e40424 100644
--- a/src/libexpr/expr-to-xml.hh
+++ b/src/libexpr/expr-to-xml.hh
@@ -9,7 +9,7 @@
 
 namespace nix {
 
-void printTermAsXML(Expr e, std::ostream & out, ATermList & context);
+void printTermAsXML(Expr e, std::ostream & out, PathSet & context);
     
 }
 
diff --git a/src/libexpr/get-drvs.cc b/src/libexpr/get-drvs.cc
index 808e12ffd5..acdc0c7b58 100644
--- a/src/libexpr/get-drvs.cc
+++ b/src/libexpr/get-drvs.cc
@@ -10,7 +10,8 @@ string DrvInfo::queryDrvPath(EvalState & state) const
 {
     if (drvPath == "") {
         Expr a = attrs->get(toATerm("drvPath"));
-        (string &) drvPath = a ? evalPath(state, a) : "";
+        PathSet context;
+        (string &) drvPath = a ? coerceToPath(state, a, context) : "";
     }
     return drvPath;
 }
@@ -21,7 +22,8 @@ string DrvInfo::queryOutPath(EvalState & state) const
     if (outPath == "") {
         Expr a = attrs->get(toATerm("outPath"));
         if (!a) throw TypeError("output path missing");
-        (string &) outPath = evalPath(state, a);
+        PathSet context;
+        (string &) outPath = coerceToPath(state, a, context);
     }
     return outPath;
 }
@@ -38,9 +40,11 @@ MetaInfo DrvInfo::queryMetaInfo(EvalState & state) const
     queryAllAttrs(evalExpr(state, a), attrs2);
 
     for (ATermMap::const_iterator i = attrs2.begin(); i != attrs2.end(); ++i) {
-        ATerm s = coerceToString(evalExpr(state, i->value));
-        if (s)
-            meta[aterm2String(i->key)] = aterm2String(s);
+        Expr e = evalExpr(state, i->value);
+        string s;
+        PathSet context;
+        if (matchStr(e, s, context))
+            meta[aterm2String(i->key)] = s;
         /* For future compatibility, ignore attribute values that are
            not strings. */
     }
@@ -74,7 +78,7 @@ static bool getDerivation(EvalState & state, Expr e,
         queryAllAttrs(e, *attrs, false);
     
         Expr a = attrs->get(toATerm("type"));
-        if (!a || evalString(state, a) != "derivation") return true;
+        if (!a || evalStringNoCtx(state, a) != "derivation") return true;
 
         /* Remove spurious duplicates (e.g., an attribute set like
            `rec { x = derivation {...}; y = x;}'. */
@@ -86,13 +90,13 @@ static bool getDerivation(EvalState & state, Expr e,
         a = attrs->get(toATerm("name"));
         /* !!! We really would like to have a decent back trace here. */
         if (!a) throw TypeError("derivation name missing");
-        drv.name = evalString(state, a);
+        drv.name = evalStringNoCtx(state, a);
 
         a = attrs->get(toATerm("system"));
         if (!a)
             drv.system = "unknown";
         else
-            drv.system = evalString(state, a);
+            drv.system = evalStringNoCtx(state, a);
 
         drv.attrs = attrs;
 
diff --git a/src/libexpr/lexer.l b/src/libexpr/lexer.l
index df30a5ed07..9f0f0b335f 100644
--- a/src/libexpr/lexer.l
+++ b/src/libexpr/lexer.l
@@ -64,7 +64,7 @@ static Expr unescapeStr(const char * s)
         }
         else t += c;
     }
-    return makeStr(toATerm(t));
+    return makeStr(toATerm(t), ATempty);
 }
 
  
diff --git a/src/libexpr/nixexpr-ast.def b/src/libexpr/nixexpr-ast.def
index b797fcfc44..fe5fe71b0a 100644
--- a/src/libexpr/nixexpr-ast.def
+++ b/src/libexpr/nixexpr-ast.def
@@ -24,8 +24,37 @@ Call | Expr Expr | Expr |
 Select | Expr string | Expr |
 Var | string | Expr |
 Int | int | Expr |
-Str | string | Expr |
+
+# Strings in the evaluator carry a so-called `context' (the ATermList)
+# which is a list of strings representing store paths.  This is to
+# allow users to write things like
+#
+#   "--with-freetype2-library=" + freetype + "/lib"
+#
+# where `freetype' is a derivation (or a source to be copied to the
+# store).  If we just concatenated the strings without keeping track
+# of the referenced store paths, then if the string is used as a
+# derivation attribute, the derivation will not have the correct
+# dependencies in its inputDrvs and inputSrcs.
+#
+# The semantics of the context is as follows: when a string with
+# context C is used as a derivation attribute, then the derivations in
+# C will be added to the inputDrvs of the derivation, and the other
+# store paths in C will be added to the inputSrcs of the derivations.
+#
+# For canonicity, the store paths should be in sorted order.
+Str | string ATermList | Expr |
+
+# A path is a reference to a file system object that is to be copied
+# to the Nix store when used as a derivation attribute.  When it is
+# concatenated to a string (i.e., `str + path'), it is also copied and
+# the resulting store path is concatenated to the string (with the
+# store path in the context).  If a string or path is concatenated to
+# a path (i.e., `path + str' or `path + path'), the result is a new
+# path (if the right-hand side is a string, the context must be
+# empty).
 Path | string | Expr |
+
 List | ATermList | Expr |
 BlackHole | | Expr |
 Undefined | | Expr |
@@ -36,7 +65,6 @@ Closed | Expr | Expr |
 Rec | ATermList ATermList | Expr |
 Bool | ATerm | Expr |
 Null | | Expr |
-Context | ATermList Expr | Expr |
 
 Bind | string Expr Pos | ATerm |
 Bind | string Expr | ATerm | Bind2
diff --git a/src/libexpr/nixexpr.cc b/src/libexpr/nixexpr.cc
index a36b45bc15..cb006d147e 100644
--- a/src/libexpr/nixexpr.cc
+++ b/src/libexpr/nixexpr.cc
@@ -293,13 +293,35 @@ Expr makeBool(bool b)
 }
 
 
+bool matchStr(Expr e, string & s, PathSet & context)
+{
+    ATermList l;
+    ATerm s_;
+
+    if (!matchStr(e, s_, l)) return false;
+
+    s = aterm2String(s_);
+
+    for (ATermIterator i(l); i; ++i)
+        context.insert(aterm2String(*i));
+
+    return true;
+}
+
+
+Expr makeStr(const string & s, const PathSet & context)
+{
+    return makeStr(toATerm(s), toATermList(context));
+}
+
+
 string showType(Expr e)
 {
     ATerm t1, t2, t3;
     ATermList l1;
     ATermBlob b1;
     int i1;
-    if (matchStr(e, t1)) return "a string";
+    if (matchStr(e, t1, l1)) return "a string";
     if (matchPath(e, t1)) return "a path";
     if (matchNull(e)) return "null";
     if (matchInt(e, i1)) return "an integer";
@@ -309,18 +331,19 @@ string showType(Expr e)
     if (matchAttrs(e, l1)) return "an attribute set";
     if (matchList(e, l1)) return "a list";
     if (matchPrimOp(e, i1, b1, l1)) return "a partially applied built-in function";
-    if (matchContext(e, l1, t1)) return "a context containing " + showType(t1);
     return "an unknown type";
 }
 
 
 string showValue(Expr e)
 {
-    ATerm s;
+    PathSet context;
+    string s;
+    ATerm s2;
     int i;
-    if (matchStr(e, s)) {
-        string t = aterm2String(s), u;
-        for (string::iterator i = t.begin(); i != t.end(); ++i)
+    if (matchStr(e, s, context)) {
+        string u;
+        for (string::iterator i = s.begin(); i != s.end(); ++i)
             if (*i == '\"' || *i == '\\') u += "\\" + *i;
             else if (*i == '\n') u += "\\n";
             else if (*i == '\r') u += "\\r";
@@ -328,7 +351,7 @@ string showValue(Expr e)
             else u += *i;
         return "\"" + u + "\"";
     }
-    if (matchPath(e, s)) return aterm2String(s);
+    if (matchPath(e, s2)) return aterm2String(s2);
     if (matchNull(e)) return "null";
     if (matchInt(e, i)) return (format("%1%") % i).str();
     if (e == eTrue) return "true";
diff --git a/src/libexpr/nixexpr.hh b/src/libexpr/nixexpr.hh
index 674321f924..2fdad73b78 100644
--- a/src/libexpr/nixexpr.hh
+++ b/src/libexpr/nixexpr.hh
@@ -71,6 +71,7 @@ struct TermFun
 };
 ATerm bottomupRewrite(TermFun & f, ATerm e);
 
+
 /* Query all attributes in an attribute set expression.  The
    expression must be in normal form. */
 void queryAllAttrs(Expr e, ATermMap & attrs, bool withPos = false);
@@ -83,16 +84,28 @@ Expr queryAttr(Expr e, const string & name, ATerm & pos);
 /* Create an attribute set expression from an Attrs value. */
 Expr makeAttrs(const ATermMap & attrs);
 
+
 /* Perform a set of substitutions on an expression. */
 Expr substitute(const Substitution & subs, Expr e);
 
+
 /* Check whether all variables are defined in the given expression.
    Throw an exception if this isn't the case. */
 void checkVarDefs(const ATermMap & def, Expr e);
 
+
 /* Create an expression representing a boolean. */
 Expr makeBool(bool b);
 
+
+/* Manipulation of Str() nodes.  Note: matchStr() does not clear
+   context!  */
+bool matchStr(Expr e, string & s, PathSet & context);
+
+Expr makeStr(const string & s, const PathSet & context = PathSet());
+
+
+/* Showing types, values. */
 string showType(Expr e);
 
 string showValue(Expr e);
diff --git a/src/libexpr/parser.y b/src/libexpr/parser.y
index d13a1a1336..cc403d4374 100644
--- a/src/libexpr/parser.y
+++ b/src/libexpr/parser.y
@@ -195,12 +195,12 @@ expr_simple
   | INT { $$ = makeInt(ATgetInt((ATermInt) $1)); }
   | '"' string_parts '"' {
       /* For efficiency, and to simplify parse trees a bit. */
-      if ($2 == ATempty) $$ = makeStr(toATerm(""));
+      if ($2 == ATempty) $$ = makeStr(toATerm(""), ATempty);
       else if (ATgetNext($2) == ATempty) $$ = ATgetFirst($2);
       else $$ = makeConcatStrings(ATreverse($2));
   }
   | PATH { $$ = makePath(toATerm(absPath(aterm2String($1), data->basePath))); }
-  | URI { $$ = makeStr($1); }
+  | URI { $$ = makeStr($1, ATempty); }
   | '(' expr ')' { $$ = $2; }
   /* Let expressions `let {..., body = ...}' are just desugared
      into `(rec {..., body = ...}).body'. */
diff --git a/src/libexpr/primops.cc b/src/libexpr/primops.cc
index f35ba737d9..2fbfa538ff 100644
--- a/src/libexpr/primops.cc
+++ b/src/libexpr/primops.cc
@@ -13,16 +13,6 @@
 namespace nix {
 
 
-static Expr unwrapContext(EvalState & state, Expr e, ATermList & context)
-{
-    context = ATempty;
-    e = evalExpr(state, e);
-    if (matchContext(e, context, e))
-        e = evalExpr(state, e);
-    return e;
-}
-
-
 static Expr primBuiltins(EvalState & state, const ATermVector & args)
 {
     /* Return an attribute set containing all primops.  This allows
@@ -51,34 +41,10 @@ static Expr primBuiltins(EvalState & state, const ATermVector & args)
    argument. */ 
 static Expr primImport(EvalState & state, const ATermVector & args)
 {
-    ATermList es;
-    Path path;
-    ATermList context; /* don't care the context */
+    PathSet context;
+    Path path = coerceToPath(state, args[0], context);
     
-    Expr arg = unwrapContext(state, args[0], context), arg2;
-    
-    if (matchPath(arg, arg2))
-        path = aterm2String(arg2);
-
-    else if (matchAttrs(arg, es)) {
-        Expr a = queryAttr(arg, "type");
-
-        /* If it is a derivation, we have to realise it and load the
-           Nix expression created at the derivation's output path. */
-        if (a && evalString(state, a) == "derivation") {
-            a = queryAttr(arg, "drvPath");
-            if (!a) throw EvalError("bad derivation in import");
-            Path drvPath = evalPath(state, a);
-
-            buildDerivations(singleton<PathSet>(drvPath));
- 
-            a = queryAttr(arg, "outPath");
-            if (!a) throw EvalError("bad derivation in import");
-            path = evalPath(state, a);
-        }
-    }
-
-    else throw TypeError(format("argument of `import' is %1% while a path or derivation is required") % showType(arg));
+    /* !!! build the derivations in context */
 
     return evalFile(state, path);
 }
@@ -86,117 +52,11 @@ static Expr primImport(EvalState & state, const ATermVector & args)
 
 static Expr primPathExists(EvalState & state, const ATermVector & args)
 {
-    Expr arg = evalExpr(state, args[0]), arg2;
-    
-    if (!matchPath(arg, arg2))
-        throw TypeError("`pathExists' requires a path as its argument");
-
-    return makeBool(pathExists(aterm2String(arg2)));
-}
-
-
-static void flattenList(EvalState & state, Expr e, ATermList & result)
-{
-    ATermList es;
-    e = evalExpr(state, e);
-    if (matchList(e, es))
-        for (ATermIterator i(es); i; ++i)
-            flattenList(state, *i, result);
-    else
-        result = ATinsert(result, e);
-}
-
-
-ATermList flattenList(EvalState & state, Expr e)
-{
-    ATermList result = ATempty;
-    flattenList(state, e, result);
-    return ATreverse(result);
-}
-
-
-void toString(EvalState & state, Expr e,
-    ATermList & context, string & result)
-{
-    e = evalExpr(state, e);
-
-    ATerm s;
-    ATermList es;
-    int n;
-    Expr e2;
-
-    bool isWrapped = false;
-    while (matchContext(e, es, e2)) {
-        isWrapped = true;
-        e = e2;
-        for (ATermIterator i(es); i; ++i)
-            context = ATinsert(context, *i);
-    }
-
-    /* Note that `false' is represented as an empty string for shell
-       scripting convenience, just like `null'. */
-    
-    if (matchStr(e, s)) result += aterm2String(s);
-    else if (e == eTrue) result += "1";
-    else if (e == eFalse) ; 
-    else if (matchInt(e, n)) result += int2String(n);
-    else if (matchNull(e)) ;
-    
-    else if (matchAttrs(e, es)) {
-        Expr a = queryAttr(e, "type");
-        
-        if (a && evalString(state, a) == "derivation") {
-            Expr a2 = queryAttr(e, "outPath");
-            if (!a2) throw EvalError("output path missing");
-            result += evalPath(state, a2);
-            context = ATinsert(context, e);
-        }
-
-        else throw TypeError("cannot convert an attribute set to a string");
-    }
-
-    else if (matchPath(e, s)) {
-        Path path(canonPath(aterm2String(s)));
-
-        if (isStorePath(path) || (isWrapped && isInStore(path))) {
-            result += path;
-            /* !!! smells hacky.  Check whether this is the Right
-               Thing To Do. */
-            if (!isWrapped)
-                context = ATinsert(context, makePath(toATerm(toStorePath(path))));
-        }
-
-        else {
-            if (isDerivation(path))
-                throw EvalError(format("file names are not allowed to end in `%1%'")
-                    % drvExtension);
-
-            Path dstPath;
-            if (state.srcToStore[path] != "")
-                dstPath = state.srcToStore[path];
-            else {
-                dstPath = addToStore(path);
-                state.srcToStore[path] = dstPath;
-                printMsg(lvlChatty, format("copied source `%1%' -> `%2%'")
-                    % path % dstPath);
-            }
-
-            result += dstPath;
-            context = ATinsert(context, makePath(toATerm(dstPath)));
-        }
-    }
-    
-    else if (matchList(e, es)) {
-        es = flattenList(state, e);
-        bool first = true;
-        for (ATermIterator i(es); i; ++i) {
-            if (!first) result += " "; else first = false;
-            toString(state, *i, context, result);
-        }
-    }
-
-    else throw TypeError(format("cannot convert %1% to a string") % showType(e));
-    
+    PathSet context;
+    Path path = coerceToPath(state, args[0], context);
+    if (!context.empty())
+        throw EvalError(format("string `%1%' cannot refer to other paths") % path);
+    return makeBool(pathExists(path));
 }
 
 
@@ -275,11 +135,13 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
         throw EvalError("required attribute `name' missing");
     ATerm posDrvName;
     if (!matchAttrRHS(eDrvName, eDrvName, posDrvName)) abort();
-    string drvName = evalString(state, eDrvName);
+    string drvName = evalStringNoCtx(state, eDrvName);
 
     /* Build the derivation expression by processing the attributes. */
     Derivation drv;
     
+    PathSet context;
+
     string outputHash;
     string outputHashAlgo;
     bool outputHashRecursive = false;
@@ -294,8 +156,6 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
 
         try {
 
-            ATermList context = ATempty;
-
             /* The `args' attribute is special: it supplies the
                command-line arguments to the builder. */
             if (key == "args") {
@@ -307,8 +167,7 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
                     es = flattenList(state, value);
                 }
                 for (ATermIterator i(es); i; ++i) {
-                    string s;
-                    toString(state, *i, context, s);
+                    string s = coerceToString(state, *i, context, true);
                     drv.args.push_back(s);
                 }
             }
@@ -316,8 +175,7 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
             /* All other attributes are passed to the builder through
                the environment. */
             else {
-                string s;
-                toString(state, value, context, s);
+                string s = coerceToString(state, value, context, true);
                 drv.env[key] = s;
                 if (key == "builder") drv.builder = s;
                 else if (key == "system") drv.platform = s;
@@ -331,32 +189,6 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
                 }
             }
 
-            /* Everything in the context of the expression should be
-               added as dependencies of the resulting derivation. */
-
-            for (ATermIterator i(context); i; ++i) {
-
-                ATerm s;
-                ATermList as;
-                
-                if (matchPath(*i, s)) {
-                    assert(isStorePath(aterm2String(s)));
-                    drv.inputSrcs.insert(aterm2String(s));
-                }
-
-                else if (matchAttrs(*i, as)) {
-                    Expr a = queryAttr(*i, "type");
-                    assert(a && evalString(state, a) == "derivation");
-
-                    Expr a2 = queryAttr(*i, "drvPath");
-                    if (!a2) throw EvalError("derivation path missing");
-
-                    drv.inputDrvs[evalPath(state, a2)] = singleton<StringSet>("out");
-                }
-
-                else abort();
-            }
-            
         } catch (Error & e) {
             e.addPrefix(format("while processing the derivation attribute `%1%' at %2%:\n")
                 % key % showPos(pos));
@@ -367,6 +199,18 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
 
     }
     
+    /* Everything in the context of the strings in the derivation
+       attributes should be added as dependencies of the resulting
+       derivation. */
+    for (PathSet::iterator i = context.begin(); i != context.end(); ++i) {
+        debug(format("derivation uses `%1%'") % *i);
+        assert(isStorePath(*i));
+        if (isDerivation(*i))
+            drv.inputDrvs[*i] = singleton<StringSet>("out");
+        else
+            drv.inputSrcs.insert(*i);
+    }
+            
     /* Do we have all required attributes? */
     if (drv.builder == "")
         throw EvalError("required attribute `builder' missing");
@@ -434,9 +278,9 @@ static Expr primDerivationStrict(EvalState & state, const ATermVector & args)
     /* !!! assumes a single output */
     ATermMap outAttrs(2);
     outAttrs.set(toATerm("outPath"),
-        makeAttrRHS(makePath(toATerm(outPath)), makeNoPos()));
+        makeAttrRHS(makeStr(outPath, singleton<PathSet>(drvPath)), makeNoPos()));
     outAttrs.set(toATerm("drvPath"),
-        makeAttrRHS(makePath(toATerm(drvPath)), makeNoPos()));
+        makeAttrRHS(makeStr(drvPath, singleton<PathSet>(drvPath)), makeNoPos()));
 
     return makeAttrs(outAttrs);
 }
@@ -449,7 +293,7 @@ static Expr primDerivationLazy(EvalState & state, const ATermVector & args)
     queryAllAttrs(eAttrs, attrs, true);
 
     attrs.set(toATerm("type"),
-        makeAttrRHS(makeStr(toATerm("derivation")), makeNoPos()));
+        makeAttrRHS(makeStr("derivation"), makeNoPos()));
 
     Expr drvStrict = makeCall(makeVar(toATerm("derivation!")), eAttrs);
 
@@ -466,7 +310,8 @@ static Expr primDerivationLazy(EvalState & state, const ATermVector & args)
    following the last slash. */
 static Expr primBaseNameOf(EvalState & state, const ATermVector & args)
 {
-    return makeStr(toATerm(baseNameOf(evalString(state, args[0]))));
+    PathSet context;
+    return makeStr(baseNameOf(coerceToPath(state, args[0], context)), context);
 }
 
 
@@ -474,39 +319,29 @@ static Expr primBaseNameOf(EvalState & state, const ATermVector & args)
    last slash. */
 static Expr primDirOf(EvalState & state, const ATermVector & args)
 {
-    return makePath(toATerm(dirOf(evalPath(state, args[0]))));
+    PathSet context;
+    return makeStr(dirOf(coerceToPath(state, args[0], context)), context);
 }
 
 
-ATerm coerceToString(Expr e)
-{
-    ATerm s;
-    if (matchStr(e, s) || matchPath(e, s))
-        return s;
-    return 0;
-}
-
-
-/* Convert the argument (which can be a path or a uri) to a string. */
+/* Convert the argument to a string. */
 static Expr primToString(EvalState & state, const ATermVector & args)
 {
-    ATermList context = ATempty;
-    bool dummy;
-    string s = coerceToStringWithContext(state, context, args[0], dummy);
-    return wrapInContext(context, makeStr(toATerm(s)));
+    PathSet context;
+    string s = coerceToString(state, args[0], context);
+    /* !!! do lists etc */
+    return makeStr(s, context);
 }
 
 
-/* Convert the argument to a path. */
+/* Convert the argument to a path.  !!! obsolete? */
 static Expr primToPath(EvalState & state, const ATermVector & args)
 {
-    Expr e = evalExpr(state, args[0]);
-    ATerm t = coerceToString(e);
-    if (!t) throw TypeError(format("cannot coerce %1% to a path in `toPath'") % showType(e));
-    Path path = aterm2String(t);
+    PathSet context;
+    string path = evalString(state, args[0], context);
     if (path == "" || path[0] != '/')
         throw EvalError("string doesn't represent an absolute path in `toPath'");
-    return makePath(toATerm(canonPath(path)));
+    return makeStr(canonPath(path), context);
 }
 
 
@@ -516,9 +351,9 @@ static Expr primToPath(EvalState & state, const ATermVector & args)
 static Expr primToXML(EvalState & state, const ATermVector & args)
 {
     std::ostringstream out;
-    ATermList context = ATempty;
+    PathSet context;
     printTermAsXML(strictEvalExpr(state, args[0]), out, context);
-    return wrapInContext(context, makeStr(toATerm(out.str())));
+    return makeStr(out.str(), context);
 }
 
 
@@ -526,13 +361,14 @@ static Expr primToXML(EvalState & state, const ATermVector & args)
    as an input by derivations. */
 static Expr primToFile(EvalState & state, const ATermVector & args)
 {
-    ATermList context;
-    string name = evalString(state, args[0]);
-    string contents = evalString(state,
-        unwrapContext(state, args[1], context));
+    PathSet context;
+    string name = evalStringNoCtx(state, args[0]);
+    string contents = evalString(state, args[1], context);
 
     PathSet refs;
 
+#if 0
+    /* !!! */
     for (ATermIterator i(context); i; ++i) {
         ATerm s;
         if (matchPath(*i, s)) {
@@ -541,13 +377,15 @@ static Expr primToFile(EvalState & state, const ATermVector & args)
         }
         else throw EvalError("in `toFile': the file cannot contain references to derivation outputs");
     }
+#endif    
     
     Path storePath = addTextToStore(name, contents, refs);
 
-    /* Note: we don't need to wrap the result in a context, since
-       `storePath' itself has references to the paths used in
-       args[1]. */
-    return makePath(toATerm(storePath));
+    /* Note: we don't need to add `context' to the context of the
+       result, since `storePath' itself has references to the paths
+       used in args[1]. */
+    
+    return makeStr(storePath, singleton<PathSet>(storePath));
 }
 
 
@@ -652,7 +490,8 @@ static Expr primDependencyClosure(EvalState & state, const ATermVector & args)
     Path pivot;
     PathSet workSet;
     for (ATermIterator i(startSet2); i; ++i) {
-        Path p = evalPath(state, *i);
+        PathSet context; /* !!! what to do? */
+        Path p = coerceToPath(state, *i, context);
         workSet.insert(p);
         pivot = dirOf(p);
     }
@@ -663,7 +502,8 @@ static Expr primDependencyClosure(EvalState & state, const ATermVector & args)
     if (e) {
         ATermList list = evalList(state, e);
         for (ATermIterator i(list); i; ++i) {
-            Path p = evalPath(state, *i);
+            PathSet context; /* !!! what to do? */
+            Path p = coerceToPath(state, *i, context);
             searchPath.insert(p);
         }
     }
@@ -686,11 +526,11 @@ static Expr primDependencyClosure(EvalState & state, const ATermVector & args)
             
             /* Call the `scanner' function with `path' as argument. */
             debug(format("finding dependencies in `%1%'") % path);
-            ATermList deps = evalList(state, makeCall(scanner, makePath(toATerm(path))));
+            ATermList deps = evalList(state, makeCall(scanner, makeStr(path)));
 
             /* Try to find the dependencies relative to the `path'. */
             for (ATermIterator i(deps); i; ++i) {
-                string s = evalString(state, *i);
+                string s = evalStringNoCtx(state, *i);
                 
                 Path dep = findDependency(dirOf(path), s);
 
@@ -721,8 +561,8 @@ static Expr primDependencyClosure(EvalState & state, const ATermVector & args)
     /* Return a list of the dependencies we've just found. */
     ATermList deps = ATempty;
     for (PathSet::iterator i = doneSet.begin(); i != doneSet.end(); ++i) {
-        deps = ATinsert(deps, makeStr(toATerm(relativise(pivot, *i))));
-        deps = ATinsert(deps, makePath(toATerm(*i)));
+        deps = ATinsert(deps, makeStr(relativise(pivot, *i)));
+        deps = ATinsert(deps, makeStr(*i));
     }
 
     debug(format("dependency list is `%1%'") % makeList(deps));
@@ -733,8 +573,9 @@ static Expr primDependencyClosure(EvalState & state, const ATermVector & args)
 
 static Expr primAbort(EvalState & state, const ATermVector & args)
 {
+    PathSet context;
     throw Abort(format("evaluation aborted with the following error message: `%1%'") %
-        evalString(state, args[0]));
+        evalString(state, args[0], context));
 }
 
 
@@ -762,8 +603,8 @@ static Expr primTail(EvalState & state, const ATermVector & args)
 /* Return an environment variable.  Use with care. */
 static Expr primGetEnv(EvalState & state, const ATermVector & args)
 {
-    string name = evalString(state, args[0]);
-    return makeStr(toATerm(getEnv(name)));
+    string name = evalStringNoCtx(state, args[0]);
+    return makeStr(getEnv(name));
 }
 
 
@@ -787,7 +628,7 @@ static Expr primMap(EvalState & state, const ATermVector & args)
    platforms. */
 static Expr primCurrentSystem(EvalState & state, const ATermVector & args)
 {
-    return makeStr(toATerm(thisSystem));
+    return makeStr(thisSystem);
 }
 
 
@@ -800,7 +641,7 @@ static Expr primCurrentTime(EvalState & state, const ATermVector & args)
 /* Dynamic version of the `.' operator. */
 static Expr primGetAttr(EvalState & state, const ATermVector & args)
 {
-    string attr = evalString(state, args[0]);
+    string attr = evalStringNoCtx(state, args[0]);
     return evalExpr(state, makeSelect(args[1], toATerm(attr)));
 }
 
@@ -808,7 +649,7 @@ static Expr primGetAttr(EvalState & state, const ATermVector & args)
 /* Dynamic version of the `?' operator. */
 static Expr primHasAttr(EvalState & state, const ATermVector & args)
 {
-    string attr = evalString(state, args[0]);
+    string attr = evalStringNoCtx(state, args[0]);
     return evalExpr(state, makeOpHasAttr(args[1], toATerm(attr)));
 }
 
@@ -822,17 +663,18 @@ static Expr primRemoveAttrs(EvalState & state, const ATermVector & args)
 
     for (ATermIterator i(list); i; ++i)
         /* It's not an error for *i not to exist. */
-        attrs.remove(toATerm(evalString(state, *i)));
+        attrs.remove(toATerm(evalStringNoCtx(state, *i)));
 
     return makeAttrs(attrs);
 }
 
 
-static Expr primRelativise(EvalState & state, const ATermVector & args) 
+static Expr primRelativise(EvalState & state, const ATermVector & args)
 {
-    Path pivot = evalPath(state, args[0]);
-    Path path = evalPath(state, args[1]);
-    return makeStr(toATerm(relativise(pivot, path)));
+    PathSet context; /* !!! what to do? */
+    Path pivot = coerceToPath(state, args[0], context);
+    Path path = coerceToPath(state, args[1], context);
+    return makeStr(relativise(pivot, path));
 }
 
 
diff --git a/src/libstore/derivations.cc b/src/libstore/derivations.cc
index 61b3ea89c0..aeab675b23 100644
--- a/src/libstore/derivations.cc
+++ b/src/libstore/derivations.cc
@@ -113,16 +113,6 @@ Derivation parseDerivation(ATerm t)
 }
 
 
-static ATermList unparseStrings(const StringSet & paths)
-{
-    ATermList l = ATempty;
-    for (PathSet::const_reverse_iterator i = paths.rbegin();
-         i != paths.rend(); ++i)
-        l = ATinsert(l, toATerm(*i));
-    return l;
-}
-
-
 ATerm unparseDerivation(const Derivation & drv)
 {
     ATermList outputs = ATempty;
@@ -141,7 +131,7 @@ ATerm unparseDerivation(const Derivation & drv)
         inDrvs = ATinsert(inDrvs,
             makeDerivationInput(
                 toATerm(i->first),
-                unparseStrings(i->second)));
+                toATermList(i->second)));
     
     ATermList args = ATempty;
     for (Strings::const_reverse_iterator i = drv.args.rbegin();
@@ -159,7 +149,7 @@ ATerm unparseDerivation(const Derivation & drv)
     return makeDerive(
         outputs,
         inDrvs,
-        unparseStrings(drv.inputSrcs),
+        toATermList(drv.inputSrcs),
         toATerm(drv.platform),
         toATerm(drv.builder),
         args,
diff --git a/src/libutil/aterm.cc b/src/libutil/aterm.cc
index bb6e33ce92..90a8e212ef 100644
--- a/src/libutil/aterm.cc
+++ b/src/libutil/aterm.cc
@@ -41,3 +41,13 @@ ATerm nix::toATerm(const string & s)
 {
     return toATerm(s.c_str());
 }
+
+
+ATermList nix::toATermList(const StringSet & ss)
+{
+    ATermList l = ATempty;
+    for (StringSet::const_reverse_iterator i = ss.rbegin();
+         i != ss.rend(); ++i)
+        l = ATinsert(l, toATerm(*i));
+    return l;
+}
diff --git a/src/libutil/aterm.hh b/src/libutil/aterm.hh
index 6a2415f0b7..b1cbc3b6d8 100644
--- a/src/libutil/aterm.hh
+++ b/src/libutil/aterm.hh
@@ -43,6 +43,7 @@ Error badTerm(const format & f, ATerm t);
 ATerm toATerm(const char * s);
 ATerm toATerm(const string & s);
 
+ATermList toATermList(const StringSet & ss);
  
 }
 
diff --git a/src/nix-env/main.cc b/src/nix-env/main.cc
index 6a40387150..b55fc2246e 100644
--- a/src/nix-env/main.cc
+++ b/src/nix-env/main.cc
@@ -167,18 +167,18 @@ static void createUserEnv(EvalState & state, const DrvInfos & elems,
         Path drvPath = keepDerivations ? i->queryDrvPath(state) : "";
         ATerm t = makeAttrs(ATmakeList5(
             makeBind(toATerm("type"),
-                makeStr(toATerm("derivation")), makeNoPos()),
+                makeStr("derivation"), makeNoPos()),
             makeBind(toATerm("name"),
-                makeStr(toATerm(i->name)), makeNoPos()),
+                makeStr(i->name), makeNoPos()),
             makeBind(toATerm("system"),
-                makeStr(toATerm(i->system)), makeNoPos()),
+                makeStr(i->system), makeNoPos()),
             makeBind(toATerm("drvPath"),
-                makePath(toATerm(drvPath)), makeNoPos()),
+                makeStr(drvPath), makeNoPos()),
             makeBind(toATerm("outPath"),
-                makePath(toATerm(i->queryOutPath(state))), makeNoPos())
+                makeStr(i->queryOutPath(state)), makeNoPos())
             ));
         manifest = ATinsert(manifest, t);
-        inputs = ATinsert(inputs, makeStr(toATerm(i->queryOutPath(state))));
+        inputs = ATinsert(inputs, makeStr(i->queryOutPath(state)));
 
         /* This is only necessary when installing store paths, e.g.,
            `nix-env -i /nix/store/abcd...-foo'. */
@@ -196,11 +196,11 @@ static void createUserEnv(EvalState & state, const DrvInfos & elems,
 
     Expr topLevel = makeCall(envBuilder, makeAttrs(ATmakeList3(
         makeBind(toATerm("system"),
-            makeStr(toATerm(thisSystem)), makeNoPos()),
+            makeStr(thisSystem), makeNoPos()),
         makeBind(toATerm("derivations"),
             makeList(ATreverse(inputs)), makeNoPos()),
         makeBind(toATerm("manifest"),
-            makePath(toATerm(manifestFile)), makeNoPos())
+            makeStr(manifestFile), makeNoPos())
         )));
 
     /* Instantiate it. */
diff --git a/src/nix-instantiate/main.cc b/src/nix-instantiate/main.cc
index 93b7c03be3..3eb6d30319 100644
--- a/src/nix-instantiate/main.cc
+++ b/src/nix-instantiate/main.cc
@@ -41,7 +41,7 @@ static bool indirectRoot = false;
 static void printResult(EvalState & state, Expr e,
     bool evalOnly, bool xmlOutput, const ATermMap & autoArgs)
 {
-    ATermList context;
+    PathSet context;
     
     if (evalOnly)
         if (xmlOutput)