The New Nation - Internet Edition

Staff Reporter

Pioneering entrepreneurs, non-governmental organizations, and governments around the globe are inventing the Earth's first sustainable global economy, according to State of the World 2008: Innovations for a Sustainable Economy. The report was released by the Washington, D.C.-based Worldwatch Institute yesterday, according to a message received in Dhaka.

In response to climate change and other environmental problems, these leaders are field-testing a remarkable array of economic innovations that offer surprising and hopeful new opportunities for long-term prosperity, finds the new report from the institute.

"Once regarded as irrelevant to economic activity, environmental problems are drastically rewriting the rules for business, investors, and consumers, affecting over $100 billion in annual capital flows," say project co-directors Gary Gardner and Thomas Prugh.

The report describes a host of new economic opportunities that are attracting capital. An estimated $52 billion was invested in renewable energy in 2006, up 33 percent from 2005. Preliminary estimates indicate

that the figure reached $66 billion in 2007. Carbon trading is growing even more explosively, reaching an estimated $30 billion in 2006, nearly triple the amount traded in 2005.

Some of the most powerful players in today's economy have announced breakthrough environmental initiatives in the past two years, including Citigroup, Goldman Sachs, Kleiner Perkins Caufield & Byers, McKinsey & Company, and Wal-Mart. And many large companies are putting their political muscle where their investment capital is: 27 major corporations, including Alcoa, Dow Chemical, Duke Energy, General Motors, and Xerox, are actively urging the U.S. Congress to pass legislation regulating greenhouse gas emissions-something that would have been unthinkable two years ago.

Innovative companies are also revolutionizing industrial production to meet environmental challenges, while finding that they're saving money: the chemical giant DuPont cut its greenhouse gas emissions 72 percent below 1991 levels by 2007, saving $3 billion in the process. Another sign of dramatic change is the 575 environmental and energy hedge funds now in existence, most of them formed in the last few years.

"Clean tech" has rapidly grown to be the third largest recipient of venture capital, trailing only the Internet and biotechnology. And 54 banks, representing 85 percent of global private project finance capacity, have endorsed the Equator Principles, a new international standard of sustainability investment.

State of the World 2008 cites two major economic modeling studies that find that the damage from global climate change could equal as much as 8 percent of global economic output by the end of this century. Citing World Bank data, the report also notes that some 39 countries experienced a decline of 5 percent or more in wealth when accounting measures also included factors such as unsustainable forest harvesting, depletion of non-renewable resources, and damage from carbon emissions. For 10 countries, the decline ranged from 25 to 60 percent.

To avoid economic collapse at the global level, the State of the World authors call for major reforms of government policy to steer investment away from destructive activities such as the extraction of fossil fuels and toward a new generation of environmentally sustainable industries. Specific recommendations include making prices tell the ecological truth by reducing subsidies and adopting environmental taxes, the message adds.