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The Bioeconomy: Delivering Sustainable Green Growth

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The 'bioeconomy' is the idea of an economy based on the sustainable exploitation of biological resources. Within this concept, there is increasing emphasis on issues such as climate change, depletion of natural resources and growing world food needs. The bioeconomy builds on the recognition of advances in technology, particularly in the life sciences, but at the same time covers issues such as innovation management, ecosystem services, development and governance. This book explores the development of the bioeconomy across the world from an economic and policy perspective, as well as identifying potential future pathways and issues. It uses a broad definition, covering all sectors using biological resources except health, and rather than focusing on individual sectors, it explores the breadth of interconnections that make the bioeconomy a new and challenging subject.ÊDivided into two parts, the book initially outlines the current definitions, strategies, policy and economic information related to the world's bioeconomy. The second part describes current economic analysis and research efforts in qualifying and understanding the economics of the bioeconomy. This includes the contributions of technology, research and innovation; driving forces and demand-side economics; supply-side economics, and the role of markets and public policy in matching demand and supply. The political economy, regulation and transitions are considered, as well as the contribution of the bioeconomy to society, including growth, development and sustainability.

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12 Chapters

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1 Introduction and Overview



Introduction and Overview

1.1  Introducing the Bioeconomy

This chapter introduces the concept of ‘bioeconomy’ and provides the motivation for this book.

The scope and the rationale of the book are also presented, together with an overview.

The general concept of the bioeconomy is that of an economy based on the sustainable exploitation of biological resources. There are, however, differing views on this general definition. For example, the European Union (EU) defines it as a bundle of sectors including agriculture and food.

The Organisation for Economic Cooperation and

Development (OECD) and United States definitions, for their part, are more focused on biotechnology. Following different country definitions and strategies, there is a latent divergence between two notions of bioeconomy: one that basically uses the term as the non-food component of the economy, linked to biological resources, and another that also includes agriculture and food.


2 What is the Bioeconomy



What is the Bioeconomy

2.1  Introduction and Overview

This chapter describes the bioeconomy as it is defined today in research and policy documents.

As mentioned, there are differing views on these definitions depending on the point of view and needs of individual countries or actors defining the bioeconomy.

To a large extent this is based on the identification of economic sectors to be included in (or excluded from) the bioeconomy. Economic sectors are usually described based on the kind of goods and services they use and produce. Part of the effort here is to distinguish the bioeconomy from non-bio sectors or from non-bio sub-sectors in hybrid sectors such as energy, construction, and so on. In this attempt, the basis in biological raw materials and products is the distinguishing feature of the sectors of the bioeconomy.

Moreover, the bioeconomy is characterized by the interconnections among these sectors.

Both sectors and their connections can be qualified based on different aspects, such as their economic value, underlying biomass flows, waste and by-products management and the degree of circularity. These aspects are increasingly important in understanding the functioning of the bioeconomy, its economic potential and its limitations.


3 Technology and innovation in the Bioeconomy



Technology and Innovation in the Bioeconomy

3.1  Introduction and Overview

Innovation, and hence technology, is one of the main focuses of the bioeconomy. From the perspective of technology, the bioeconomy can be viewed as a continuing evolutionary process of transition from systems of mining non-renewable resources to farming and processing renewable bio-based ones (Zilberman et  al., 2013). However, in addition to this, a number of features are unique to the bioeconomy or at least highly relevant to it. Some of these include: biotechnologies that affect genomes, biomass breaking down to building blocks, biorefinery concepts and the high use of information technologies, technologies for closing cycles in the economy (waste recovery) and technologies that affect the provision of ecosystem services by affecting the environment. Knowledge and information are also key issues throughout the bioeconomy.

A key issue for the scope of this book is the way a meaningful representation of bioeconomy technologies can be developed for the purposes of economic studies (Viaggi, 2016). Another key topic is the uptake mechanisms of specific bioeconomy technologies that may, in fact, be connected to an increasingly intricate network of intersectoral relationships. It should be emphasized that the combination of technologies is of particular importance. The same applies from a disciplinary perspective, as interdisciplinarity, multidisciplinarity and transdisciplinarity are


4 Approaches to (the Economics of) the Bioeconomy



Approaches to (the Economics of) the Bioeconomy

4.1  Introduction and Overview

Defining the bioeconomy and its boundaries in economics is a particularly difficult task given the number of interconnections that it embodies, both as a concept and as a sector. The definition of the bioeconomy in itself is largely driven by policy action and the contents of bioeconomy strategies worldwide. The term bioeconomy, on the other hand, is used to identify different ‘types of objects’, notably ranging from a list of sectors to, more ambitiously, a new development model.

In addition, the bioeconomy’s features are largely driven by the connection b

­ etween the bioeconomy and surrounding ­ concepts: sustainability, the circular economy, climate change, ecosystem services, the green economy and agroecology. In this respect, the bioeconomy as a political vision is increasingly referred to as a ‘sustainable and circular bioeconomy’. From a purely conceptual (but also cultural, political and economic) point of view, one stimulating as well as confusing aspect is that the concept itself is developing in a context characterized by the emergence of a number of other ‘bio-concepts’ that, in a way, makes it even more difficult to identify a common understanding of the bioeconomy


5 Driving Forces and Demand-side Economics



Driving Forces and Demand-side


5.1  Introduction and Overview

This chapter illustrates the demand-side issues in the bioeconomy. The central focus of this topic is individual consumer behaviour. Consumers have been mentioned at several points in the previous chapters, as their individual choices are key to understanding trends and the development of markets and sectors. Yet, consumers are not acting in isolation. On the contrary, they take decisions in a context in which they are called to interact continuously with other consumers and society as a whole. Individual and collective choices may well be promoted by major needs laying in the background but acting as driving forces and enacted through policies, network’s actions and information by various opinion groups.

This section seeks to address the entirety of the demand-side issues related to the bioeconomy.

It starts with the macro drivers guiding the need for bioeconomy technologies and investigates how they affect the market through individual consumers’ and citizens’ behaviour. It then focuses on individual behaviour, initially based on rather standard consumer theory, focused mostly on utility as linked to a good’s attributes.


6 Supply-side economics



Supply-side Economics

6.1  Introduction and Overview

Supply-side economics covers the issue of how production systems supply goods by reacting to incentives coming from markets or policy. It includes understanding the relationships between the input and output of a production process, how production reacts to market signals (prices), the way this is organized into production units

(companies) and the manner in which companies take decisions about production.

This chapter is primarily based on technology and its representation as developed in C

­ hapter 3, and explains how this translates into the production of goods and services. To a large extent, the supply-side economics of the bioeconomy can be addressed using standard concepts, such as the decision making by firms based on production function. As discussed in Chapter 3, traditional production functions in agriculture, for example, take a form that depends to a significant extent on the behaviour of living organisms.


7 Matching Demand and Supply: Markets, Policies and Beyond



Matching Demand and Supply: Markets,

Policies and Beyond

7.1  Introduction and Overview

This chapter investigates how demand and ­supply can meet each other or, in more general terms, what mechanisms can be put in place to ensure that supply satisfies societal needs. This matching, in the current economic system, is largely driven by markets. However, markets do not always work properly and policies or other governance instruments need to be devised to meet societal needs. There are several reasons for this to happen in the bioeconomy. First, the bioeconomy is rooted on new technology developments, based on the role of research, in which public funding and research institutions have a major role. Second, the bioeconomy includes a number of cases in which public goods and externalities may emerge and this is a typical case in which private interests do not necessarily meet societal needs. Several markets for bio-based products are characterized by high production costs compared with alternative (e.g. fossil based) products; however, their potential superiority is advocated based on environmental considerations. An example is that of biodegradable polymers (Dietrich et al.,


8 The Political Economy of the Bioeconomy, Regulation, Public Policy and Transition



The Political Economy of the Bioeconomy,

Regulation, Public Policy and Transition

8.1  Introduction and Overview

As discussed in the previous chapters, different actors can have very different views of bioeconomy technology and strategies. Some bioeconomy technologies have shown totally different levels of acceptance in different areas of the world, whereas others have encountered strong opposition or are spreading steadily. As a result, the actual level of development of the bioeconomy is largely dependent on public acceptance and regulation, which is a result of how different interest groups interact in the political arena

(Zilberman et al., 2015). Given the difficulties that some key bioeconomy technologies, most notably genetically modified organisms (GMOs), face in navigating their way through political legitimation and public acceptance, the political economy of the bioeconomy is emerging as one of the most focused economic research areas applied to the bioeconomy. A special issue of the German


9 The Bioeconomy and Sustainable Development



The Bioeconomy and Sustainable


9.1  Introduction and Overview

Several of the topics discussed in previous

­chapters are already providing insights into the potential role of the bioeconomy in society as a whole and its role in growth, development and sustainability. This chapter addresses the understanding of the net effect towards achieving

­society’s sustainability goals, their measure and interpretation.

One way of framing this chapter is given by the United Nations Sustainable Development Goals

(SDGs), which the bioeconomy may be expected to contribute towards (Schütte, 2017). This contribution is particularly focused on the SDGs r­ elated to food security and nutrition (Goal 2), healthy lives (Goal 3), water and sanitation (Goal 6), affordable and clean energy (Goal 7), sustainable consumption and production (Goal 12), climate change (Goal 13), oceans, seas and marine resources (Goal 14), and terrestrial ecosystems,


10 Impact Evaluation and Management Tools



Impact Evaluation and Management Tools

10.1  Introduction and Overview

The final part of the 20th century has been characterized by the growing role of evaluation tools in policy making and private decisions, in all fields of activity. To some extent, this has been connected to the growing number of concerns in the area of environment and health. In addition, the push for participation in public decision making by a large number of stakeholders, and also the growing need for companies to speak to myriad interested parties, including consumers and environmental organizations, has made these instruments increasingly popular. Some of them have become the basis for legally established administrative procedures (e.g. environmental impact assessment [EIA]); others have become, among other roles, a support to marketing (like the life cycle assessment [LCA]).

Most of them are not specific to the bioeconomy. However, the types of technology development and sustainability approaches of the bioeconomy highlight and encourage the use of some of these instruments and stimulate bioeconomy-specific adaptations of them.


11 At the Boundary of Economics



At the Boundary of Economics

11.1  Introduction and Overview

While this book takes an explicitly economic

­perspective on the bioeconomy, it also highlights relevant topics that could be better examined by resorting to other fields of analysis that touch or overlap with economics. This is evident from the number of potential points of contact between economics and politics, sociology, law, governance and communications (just to mention a few) highlighted in the previous chapters. Several of these fields are complementary in explaining behaviour and supporting economic considerations.

The range of possible relevant fields of science is extremely wide and this chapter only touches upon a selection of the most urgent and evident connections, focusing on the broad area of social science and humanities and providing only a flavour of potential topics. The importance of the technological foundations of the economic analysis of the bioeconomy was treated at the very beginning of the book and informs large part of it, so it will not be addressed here.


12 Final Thoughts and Outlook



Final Thoughts and Outlook

12.1 Introduction

What can we expect for the future of the bioeconomy? The bioeconomy is now growing steadily and in a way that constitutes a silent revolution that is already radically changing our everyday lives. On the other hand, this change is still

­fragile, characterized by uncertainties that are at times emphasized by unjustified fears, and sometimes boosted by unjustified ‘industrial legends’.

Attention to uncertainty and controversies about bioeconomy technologies are motivated by the varied stories of successes and failures, and sometimes mixed results in comparison to the objectives set for their implementation (­Bertrand et al., 2016). For example, Withers et al. (2017) highlight that half of the advanced biofuel projects that started in the US in 2005 had ended by 2015. The internal barriers identified were related to technology itself, while funding and renewable fuel standards were perceived as the main external barriers. The unsatisfactory effects of bioeconomy projects may be partly explained by unfavourable conditions on international markets (Bertrand et al., 2016) but also by the fact that, in many areas of the world, framework conditions such as appropriate legal frameworks and intellectual property rights are still lacking



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