An unprecedented $14trn (£8.8trn) greening of the global economy is the only way to ensure long-term sustainable growth, according to a stark warning delivered to political and business leaders as they descended on the World Economic Forum in Davos yesterday.

Only a sustained and dramatic shift to infrastructure and industrial practices using low-carbon technology can save the world and its economy from devastating global warming, according to a Davos-commissioned alliance led by the former Mexican President, Felipe Calderon, in the most dramatic call so far to fight climate change on business grounds.

This includes everything from power generation, transport, and buildings to industry, forestry, water and agriculture, according to the Green Growth Action Alliance, created at last year's Davos meeting in Mexico.

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The extra spending amounts to roughly $700bn a year until 2030 and would provide a much-needed economic stimulus as well as reduce the costs associated with global warming further down the line, said Mr Calderon, who leads the alliance.

It is better to try to pre-empt events like Hurricane Sandy, which cost $50bn, by keeping a lid on global warming, concluded the report, researched by the Accenture consultancy.

Mr Calderon, whose six-year term as Mexican President ended in November, said: "It is clear that we are facing a climate crisis with potentially devastating impacts on the global economy.

"Greening global economic growth is the only way to satisfy the needs of today's population and up to 9 billion people by 2050, driving development and wellbeing while reducing greenhouse gas emissions and increasing natural resource productivity."

He added: "Economic growth and sustainability are inter-dependent, you cannot have one without the other, and greening investment is the pre-requisite to realising both goals".

Mr Calderon is calling on the UK Government and other members of the G20 to unleash a wave of private investment in green infrastructure by giving potential backers of low-carbon projects the confidence and incentives to step up their spending.

The alliance, which includes the World Bank, Deutsche Bank and the European Bank for Reconstruction and Development, proposes that governments use public money to give guarantees, insurance and incentives to potential low-carbon investors at the same time as phasing out fossil fuel subsidies.

The investment is needed to stimulate spending on everything from low-emission crop practices with reduced chemical and fertiliser use to renewable power generation and energy-efficient buildings and transport.

In addition to the need for an extra $14trn of extra spending, a substantial part of the $5trn-a-year that has been earmarked worldwide for investment in traditional, fossil-fuel heavy infrastructure by 2020 will need to be diverted to greener alternatives "to avoid locking in less-efficient, emissions-intensive technologies for decades to come".

The report acknowledges that an extra $700bn is a lot of extra cash to find each year, but says that the money could be raised with an increase in global public spending of a relatively small $36bn a year, if it was targeted effectively through the right measures to support private investment.