State of the World 2008, published by the US-based Worldwatch Institute, said a number of entrepreneurs, organisations and states are field-testing eco-friendly economic innovations that offer “surprising” new opportunities for long-term prosperity.

Such projects attracted investments of an estimated $52bn in renewable energy in 2006, according to the report, and is expected to reach $66bn in 2007. Carbon trading also nearly tripled in 2006 compared to 2005.

“Once regarded as irrelevant to economic activity, environmental problems are drastically rewriting the rules for business, investors and consumers, affecting more than $100bn in annual capital flows,” said project co-director Gary Gardner.

The report named organisations such as Citigroup, Goldman Sachs and Wal-Mart which have announced “breakthrough” environmental initiatives in the past two years, and praised major corporations such as General Motors and Xerox for actively urging the US Congress to pass legislation regulating greenhouse gas emissions.

The State of the World authors called for major reforms of government policy to support this economic growth by steering investment away from destructive activities, such as the extraction of fossil fuels, and towards environmentally sustainable industries.

“We have the tools today to steer the global economy onto a sustainable path,” said project co-director Thomas Prugh.

“The task now is to bring them together and scale them up so that they become the norm across today’s economies.”

The report said there is growing evidence that the global economy is now destroying its own ecological base through climate change.

Worldwatch president Christopher Flavin said: “Continued human progress now depends on an economic transformation that is more profound than any seen in the last century.

“We should be practising a sustainable approach to economics that takes advantage of the ability of markets to allocate scarce resources while explicitly recognising that our economy is dependent on the broader ecosystem that contains it.”

Kate Martin

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