A new study says that environmental and social issues are shaping a new sustainable, global economy. The private environmental group, Worldwatch Institute in Washington, conducted the study. Producer Zulima Palacio and Jim Bertel tell us about it.

Row of wind turbines in a rural Iowa

Worldwatch Institute says in its State of the World 2008 report that investors and economic trends are responding to climate change and other environmental problems. And it says the emergence of a new green or sustainable economy could represent a dramatic transformation of the economic system. 

"What we've seen so far is probably no more than 2-3 percent of what ultimately needs to happen.  An example of that is that we have extraordinarily growth rates in the renewable energy technologies, generally in the 30-40 percent per year range,” said Chris Flavin, Worldwatch Institute president. 

Chris Flavin

Flavin says new, sustainable development in energy, agriculture, building construction and automobile manufacturing amounts to billions of dollars in economic change. 

The Worldwatch report estimates that in 2006, investment in renewable energy amounted to nearly $52 billion.  It also highlights that some of the most powerful players in today's economy, including Citigroup, Goldman Sachs and Wal-Mart, have announced new environmental initiatives.

State of the World 2008 cites two major economic studies on the potential damage from global climate change - one produced by the World Economic Forum and the other for the British government.

"Sir Nicholas Stern, former chief economist for the World Bank in his report for the British government last year, estimated that the total economic damage could be as much as eight percent of the total gross world product,” says Flavin.  “And he really described climate change as being arguably the biggest threat facing the global economy in the 21st century," he said.

Gary Gardner

Gary Gardner, co-director of the report at the Worldwatch Institute, says, "Another example is in terms of oceanic fisheries where 11 of the 15 major fishing areas in the world today are fished at or beyond their capacity. They will have to back off to allow environmental recovery."

Worldwatch's annual report notes there are now nearly 600 environmental and energy funds in existence, as well as multimillion venture investments into clean technology, renewable energy and pioneering enterprises.

It also says that 54 banks, representing 85 percent of the global financing capability, have endorsed a set of environmental and socially friendly international standards known as the Equator Principles.

Gary Gardner says today's trends on venture capital and investments are revealing. "Renewable energy is the third largest category after information technology and pharmaceuticals for venture capital to be putting money into."

Worldwatch Institute says that to avoid global economic collapse, governments and investors must continue efforts towards a sustainable economy.