How to support ecological innovation

In response to a declining and consistent supply of cheap environmental goods and services a new term has emerged in the last 10 years or so: Eco-innovation or Ecovation.

Ecovation is the process by which responsible capitalism aligns with ecological innovation to construct products which have a generative nature and are recyclable back into the environment for usage in other industries. (See full article on Thought Leader)

According to the Wikipedia: Eco-innovation is a term used to describe products and processes that contribute to sustainable development.Eco-innovation is the commercial application of knowledge to elicit direct or indirect ecological improvements.  It is often used to describe a range of related ideas, from environmentally friendly technological advances to socially-acceptable innovative paths towards sustainability.

Innovation flourishes in creative space. Rather then being heavy-handed only (e.g. you must sort your waste), the challenge is to come up with creative solutions that ignites the human ingenuity in responding to the ecological crises.  I see interventions are needed on least three levels: First, prices need to reflect the value of natural resources and the damage to the environment.  Second, institutions need to be redirected to explicitly support the process of innovation, and third support systems need to be designed to ease the transition for the needy losers in the process towards a more sustainable development path.