Jeff Edwards, the owner and funeral director at Edwards Funeral Service in Columbus, Ohio, wants to make one thing perfectly clear. He isn’t flushing your grandmother down the toilet.

That, he says, is the biggest misconception about alkaline hydrolysis, a green alternative to cremation that involves liquefying human remains with potassium hydroxide and 300-degree heat. The environmental benefits of hydrolysis are hard to argue with: the process results in only a fraction of the carbon emissions of a traditional cremation. But when Edward began offering the service last January — he claims to be the first funeral home in the United States to do so — the “mainstream media distorted the facts,” he says, claiming that the liquid created by hydrolysis (only the bone residue is saved for an urn) is flushed down the toilet. “I mean, for all intents and purposes, the liquid remains are released back into the water treatment facility,” Edwards admits. “So yeah, that does mean they go down the drain. But it doesn’t mean somebody is standing behind a machine with a great big flusher, like you would do with a commode, and you’re flushing grandma down the drain.”

After Edwards used hydrolysis on just nineteen bodies, the Ohio Department of Health intervened, announcing in March of 2011 that they would no longer accept death certificates or issue burial transit permits to any funeral home using hydrolysis, essentially making it illegal in Ohio. Edwards filed a lawsuit against the state, and he’ll have his day in court this October, which he’s confident he’ll win. Alkaline hydrolysis is already legal in seven states, he says, and the numbers are expected to rise. “The funeral business is changing,” Edwards says. “Green is the future. It’s better for the world and families are demanding it.”

Green funerals are nothing new. Cemeteries and funeral homes across the country have been offering eco-friendly death care, from biodegradable caskets to formaldehyde-free body preparation, for much of the past decade. But in recent years, it’s gotten bigger — there are nearly three hundred funeral homes in forty states offering green services in 2011, as opposed to roughly a dozen in 2008 — and noticeably more eccentric. Just a few years ago, a green funeral might’ve meant getting buried in a pine or wicker coffin made without toxic materials. Today, it could mean being buried in an urn made of recycled paper and shaped like an acorn (available for $149 from ARKA Ecopod Limited in Brighton, U.K.), or having a tombstone with a solar-powered Serenity Panel that plays the deceased’s favorite songs and videos ($2000 from Denver-based Vidstone), or being cast out to sea in a reef ball filled with cremations (priced between $2495 and $6495 from Eternal Reefs in Decatur, Georgia.)

“The funeral industry hasn’t had a new idea since the 1870s,” says Joe Sehee, the executive director of the New Mexico-based Green Burial Council. “We’re still burying people like they buried Abraham Lincoln. It’s flabbergasting that things have been so slow to move.” While he admits that green burials are still a small part of the $11.95 billion funeral industry — although the exact numbers have yet to be documented — he believes it’s poised to become a dominate force in the death field. “Don’t mistake fringe markets for emerging markets,” he says. “This is not a fringe market. There is an end-of-life revolution at hand.” But for that to happen, the eco-friendly funeral movement has to not only convince the public that green burials are best; they also have to convince the funeral industry.

Thus far, the public has been the most receptive. In a 2008 survey conducted by funeral industry publishers Kates-Boylston Publications, 43% of respondents said they would consider a green burial. That’s a big increase from a similar survey done in 2007 by Washington D.C.-based AARP, in which 21% of those polled were curious about green burials. A likely explanation is the cost. According to the National Funeral Directors Association, the average cost of a funeral is around $6,560 (up from $5190 in 2000) — and that doesn’t include a cemetery plot, tombstone, and miscellaneous items like flowers and hearses. The cost of a green funeral is typically a fraction of that, usually no more than a few thousand dollars. And there are numerous ways to cut corners and save money. At most cemeteries, the open/close fee — the cost of digging a grave and then refilling it — is in the range of $1000. But at the Honey Creek Woodland Cemetery, a green grave site in Conyers, Georgia, customers can save $500 if they’re willing to dig their own graves or the bereaved are willing to do it for them.

EcoEternity LLC offers green memorials across Virginia, Pennsylvania and North Carolina (with new locations opening in Ohio and Georgia in November), and the cost is competitive, especially if you buy in bulk. “If you want to buy a single family tree for $4500 and put one person under it, that’s pretty dang expensive,” says Jack Lowe, EcoEternity’s president and founder. “It’s close to the cost in northern Virginia of being in the prestigious Episcopal cemetery. But if you share it with fifteen family members and you all get buried under it, at $300 a person, well, I can’t get you in the Baptist cemetery for that.”

But the savings, Lowe insists, isn’t always the selling point. “When I ask (customers) why they’ve come to us, the answer always come back, they don’t like cemeteries,” he says. “Cemeteries remind them of death. These forests are beautiful and they remind them of life. It’s only when we’re writing up all the contracts that they go, ‘Hey, these costs are really great!’” Mark Harris, the author of Grave Matters, agrees that money seems to be a secondary concern in most modern green funerals. “It represents old fashioned American values,” he says. Eco-friendly burials are not just about thrift, he says, but simplicity, a do-it-yourself ethic, and a respect for tradition. Also, green funerals are just more fun.

It’s a wonder that no green burial service has yet come up with the marketing slogan “we’re putting the fun back into in funerals,” as that seems to be exactly what many of them are offering. At Nature’s Caskets in Longmont, Colorado, one of the big draws is cost, as the coffin selections — all made with biodegradable Colorado pine — are between $375 and $450, a steep discount from the industry standard of between $2000 and $10,000. But value isn’t the only selling point of Nature’s Caskets. For the industrious funeral pre-planner in which time isn’t of the essence (i.e. you or your loved one is already dead), a do-it-yourself coffin kit is available, with assembly instructions and optional add-ons like wooden emblems. And for an extra $100, your coffin can come with bookshelves, so you can use it as a decorative living room piece while you wait for the end. “It’s a fun idea,” says Luc Nadeau, who launched Nature’s Caskets in 2009. “It’s like facing your mortality every day. And it looks quite nice.”

For those looking for something more outrageous — say, a casket decorated like a casino slot machine, a DJ turntable, or a bottle of Smirnoff vodka — there’s Creative Coffins, operating from the British island of Guernsey, which has a wide selection of bizarre selections. These coffins aren’t just designed to bring some levity to death, they’re also completely eco-friendly. According to the company’s website, “each coffin is constructed from 60% recycled paper plus wood pulp sourced from sustainable forests.” June Ozanne, the director of sales at Creative Coffins, says that their business has been steadily increasing since the company sold their first coffin in 2008 (she declined to share specifics), despite being in a industry that “won’t be receiving repeat business from our customers.” Although some of their designs are of questionable taste — the casket adorned with the Grand Theft Auto video game logo, for instance, or the customer who requested to be buried in a coffin painted with his favorite vegetable and the pun “Rest In Peas” — Ozanne believes their products are bringing a fresh perspective to a sometimes grim rite of passage. “We’ve had some very nice comments from families about the positive effect our coffins have had,” she says. “It changes a funeral from a situation where you’re mourning to a celebration of life.”

Don’t be too quick to count out the funeral traditions that have been the industry standard for a century. They may seem stodgy and mirthless by comparison, but they do offer something that green burials can’t. “People don’t die pretty,” says Timothy Collison, the Vice President of Sales and Marketing for the Dodge Company, a manufacturer of embalming chemicals and products in Grand Rapids, Michigan. Because most people pass away unexpectedly, he says, or after a long illness, a cosmetic makeover is often necessary for a proper and emotionally healing goodbye. “Embalming enables us to give back to the family for one last time the person looking as they would want to look; as good as possible.”

Some are cautious of eco-friendly funerals not for aesthetic reasons, but because of health concerns. In 2008, a proposed green burial site in eastern Macon, Georgia called Summerland Natural Cemetery was blocked when the county board of commissioners voted on a new ordinance that banned green cemeteries. The ordinance read in part “All human remains shall be buried in a leak-proof casket or vault to protect against contamination of ground water, wells, and aquifers.” Most experts agree that these fears are unfounded, and some suspect that reservations about green burial are about more than just decomposing bodies leaking into the water supply. “I think when some people think of green burials, they imagine a bunch of leftist pagans getting buried in the woods in the middle of the night,” says Mark Harris. Which, he admits, is sometimes true. (Circle Cemetery in Barneveld, Wisconsin, one of the first green burial sites in the United States, was established for Wiccans and pagans.) But he also argues that green burial fits nicely with many religious traditions. “Dust to dust, that comes right out of the bible,” Harris says.

Green burials may still be in the minority, but Joe Sehee thinks that could change in a matter of years. “When Baby Boomers get ready to die, it’s going to be a huge paradigm shift.” Sehee believes that Boomers are the perfect generation for eco-friendly funerals because of their interest in environmentalism and individualism. “We’re just glad to have a head start,” he says. “It gives us the chance to work out wrinkles and get things lined up.” Sehee believes that most funeral homes in the U.S. are completely unprepared for a boom in green funeral demand. “The majority of them don’t even have refrigeration. The mortuary schools are still teaching embalming as the only way to sanitize and preserve a body. There’s no information on natural body prep. They still have sixty year old embalming textbooks. We have our work cut out for us.”

The old guard of the funeral industry is, by many accounts, the biggest hurdle for green burial. Jeff Edwards says his legal battle over alkaline hydrolysis isn’t really with the Ohio government. “The Department of Health buckled to the intimidation or threats of some of my local competitors in the funeral business,” he says. “This isn’t about the value of hydrolysis. This is about the fact that I was the only one doing it, and some of my competitors had an issue with that. Because if their families start wanting this, then they’ll lose that business to me.” (Representatives of the Ohio Department of Health declined to comment as the case is still in litigation.)

Joe Sehee understands why some funeral director may be scared. It wasn’t long ago that cremation “did a lot of damage to the funeral service industry,” he says. According to the National Funeral Directors Association, the U.S. cremation rate in 1985 was just under 15 percent, but rose to 38.15 percent last year, with projections that cremation will account for half of all burials in 2025. “To some people in the funeral industry, green burials seem like an even more disruptive force than cremations because the margins look so much lower,” Sehee says. “Yes, there’s less money in green burial as compared to a $10,000 conventional funeral. But guess what? Those customers were never going to spend $10,000 anyway. They were going to do cremation without a funeral and spend less than a $1000. Compare that to a green burial, where you’re at least going to make $5000. There still has to be body prep, there still has to be a container, there’s still the purchase of a burial plot. It doesn’t look as bad anymore, does it?”

Slowly but surely, many in the industry are coming around. Mark Harris recalls getting a call not long ago from board members at the Fountain Hill Cemetery, a historic burial site in Fountain Hill, Pennsylvania. “I would not characterize them as environmentalists or naturalists,” Harris says. “They were looking to increase the number of burials that take place every year. So they came to me and said, ‘We think this green burial movement is taking off and we want a part of it.’” He helped them come up with a strategy to transform a section of their century’s-old cemetery specifically for the green contingent, and soon urns shaped like acorns or biodegradable coffins painted to resemble bottles of wine might very well be buried a short walk from graves from the 19th century. “Whether you like green burials or not,” Harris says, “a lot of people in the industry are realizing that it’s a way of generating income.”

As for those who don’t, well, Jeff Edwards is happy to take their business. Before he began offering hydrolysis, Edwards says that he interviewed over a hundred families and explained the process. “Exactly zero people were opposed to it,” he says. “One person even asked if we could put his mother’s body on hold until the system could be installed.” And that, Edwards says, really is the lesson of the green funeral revolution. The customer is always right. “I’ve done home funerals, I’ve done funerals in the city park,” he says. “I’m not out there because I want a suntan. I do it because that’s what the family wanted. And that’s what matters. If the public wants it, the funeral industry better be prepared to deliver, or somebody else will. You either innovate or you go extinct.”

(This story originally appeared, in a slightly different form, in the November 3rd, 2011 issue of Bloomberg Businessweek.)