Fancy living in one of the 15 eco-towns proposed by the Government this month? You need not wait until 2016 for the emergence of the first of these controversial new settlements - an organic version of the eco-town has already been born.

St David's, in Pembrokeshire, is on course to transform itself into the world's first carbon-neutral city. It has had an advantage in chasing this lofty ambition: with a population of only 1,800, it is the UK's smallest city. But through force of will, locals believe they can show the rest of the UK how to achieve an eco-conscious way of life.

Andy Middleton, a leader of the green movement in St David's, declares: “I've just about completed building our family eco-home. The electricity needed to run our home and the conference centre next door is biomass and solar-generated. With 50 per cent more insulation than required by building regulations and features like triple glazing, the home can be run for a cost of about 12p a day - less if I get planning consent for a wind turbine.”

In and around St David's, green features have been incorporated into public and private buildings. Rainwater is harvested to service the public toilets and the new Landscape Art Gallery, funded by Pembrokeshire Coast National Park, has ground-source heat pumps.

“People don't necessarily want to live here because it's greener than other places,” says John Nicholas, a partner in a local estate agent, J J Morris, “but obviously they are aware of the issues. Recently I sold a parcel of woodland to a doctor who told me he had covered a lot of air miles over the years and he wanted to put something back. St David's is one of the most sought-after places in Wales. If a property has a view of the cathedral, then it can command a premium of 10per cent. The housing market is quieter than 12 months ago, but St David's is bucking the trend. Yet that has always been the case.”

Local farmers have formed a co-operative company called PBEsco, an offshoot of Pembrokeshire Bioenergy (PBE). For years, the company has been growing energy crops such as miscanthus, a fast-growing and carbon-neutral variety of grass. Bluestone, a new-build holiday village consisting of 186 lodges and a water park, which is due to open this summer, will be heated by an on-site biomass energy centre fuelled by woodchips and miscanthus. Bluestone is within the national park, just east of Haverfordwest, and incorporates principles of sustainability in its design and operations.

Richard Harris, the project's communication manager, says: “Pembrokeshire is a beautiful place to live, but geographical peripherality has also meant the county's economy has suffered in recent years. Local government reorganisation and downsizing, the rationalisation of public and private utilities and the closure of oil refining activities all led to high levels of unemployment.”

Cardiff Business School estimates that, between 1984 and 1994, Pembrokeshire's GDP fell by about 17 per cent. For many years, the county's chief export has been its young people. Harris hopes that Bluestone will provide a range of career opportunities that have not previously existed here. “I'm not saying that, because of Bluestone, everyone who would have left will now stay,” he explains. “But at least they have more of a choice. That is the socio-economic side of sustainability.”

Rosannagh Duffin, of West Wales Properties, says: “Prices have really levelled out. Some properties in Pembrokeshire have taken a drop in order to sell. The reality of the market is that we would encourage sellers to give serious consideration to offers up to 10 per cent off of the asking price. But St David's remains a popular place and people want to have a home here. Even if you don't come and live here, we want many of the 500,000 annual visitors to the city to be motivated by our green outlook.”

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