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This report was commissioned by the OECD Environment Directorate and prepared by Dr. David Ockwell, with contributions from Dr. Jim Watson, Alexandra Mallett, Ruediger Haum, Professor Gordon MacKerron, and Anne-Marie Verbeken, all based at the University of Sussex, UK, and affiliated with SPRU (Science and Technology Policy Research). It is based on a brief desk review of existing theory and available empirical evidence and of recent research developed by the author in this area. The report was commissioned in the context of the preparation of the OECD Global Forum on Environment focused on eco-innovation, held on 4-5 November, 2009, at the OECD Conference Centre in Paris (for more information, visit www.oecd.org/environment/innovation/globalforum).