Ok, here's an interesting idea...Flush Puppies, flushable doggie poop bags. These guys make it sound like they invented it, but there are other brands out there. Still, it's the first time it has come to my attention, which is hard to believe since dog poop bags are such vital element of my daily existence.
These, like the others, are made with a plastic film called PVA (poly-vinyl alcohol). I looked it up and everything I find seems to show that it really is water soluble and breaks down with bacteria. Then again, I'm not a scientist, so I'm not sure I totally understand what I'm reading.
Given our experiences with other "making the world better through plastic" issues, they'll probably find something dangerous about it after we've flushed thousands of them down the loo. But I guess the question is, would it be any worse for the environment than tossing your dog's doo in the local creek (a favorite of some of my neighbors, unfortunately) or preserving poop for eternity in a landfill in a normal plastic bag or some-time-less-than-eternity in a "bio-degradable" plastic bag as we do now?
Then there's the back yard dog poo composter...
If you're in a quandry, as I am, the NRDC has published a good overview on the options.