The concepts of knowledge-based economy and sustainable development are usually considered independently. Nevertheless, nowadays a new serious challenge has emerged: the need to create a sustainable knowledge-based economy. It involves the in¬troduction of eco-innovation on a global, regional and local scale, with the participation of local government units. Eco-innovation is a direct re-sult of intellectual activity and/or solutions that have evolved in natural ecosystems, which are natural sources of environmental services. The aim of this study is to present environmental services as a type of eco-innova¬tion within the knowledge-based economy created by local government units.