Transition to a circular bioeconomy requires correct prices, study finds

Conventional food and agricultural production systems use a linear “take, make, waste” approach: taking natural resources from the Earth to make food and fuel, generating waste that contaminates soil and water and emits emissions. harmful pollutants.

More recently, a new production model is gaining traction in the scientific and business community: a “circular bioeconomy” that reduces and recycles waste, abandons fossil fuels in favor of bio-based renewable alternatives, and regenerates natural systems. This approach is essential to feeding and refueling the world’s growing population in an environmentally sustainable way.

But it is a complex concept, and important questions remain: How to implement waste reduction? How far should we go in the “circular”, considering its costs and benefits? And how can a circular bioeconomy system gain buy-in from farmers, industry and consumers in a market economy?

A new paper by leading agricultural economists and scientists argues that the concept of the circular bioeconomy must expand beyond its technical focus on waste reduction and incorporate a values-based economic perspective. The authors highlight the need for appropriate policies, incentives and market signals to persuade consumers and producers to make environmentally friendly decisions and to help ensure that the system is fair.

“Zero waste is an attractive goal, but we also need to consider the economic consequences of achieving it: the cost, who bears it and how to get people to implement it. This requires us to not just focus on the environmental benefits of reducing waste and the use of fossil fuels, but to think about what level of waste is acceptable taking into account economic and equity goals as well as how we carry out transition by incentivizing consumers and producers to make the right choices,” said lead author Madhu Khanna, ACES Distinguished Professor of Environmental Economics and Alvin H. Baum Family Chair and Director of the Institute for Sustainability, Energy and the Environment (iSEE) at the University of Illinois at Urbana-Champaign.

Charting a path toward a circular bioeconomy will require creative ideas from researchers across multiple disciplines, including social scientists, to understand human behavior and design the right types of incentives, Khanna said.

The document, published in Earth and Environment Communicationswas co-authored with David Zilberman, University of California, Berkeley; Gal Hochman, University of Illinois Urbana-Champaign; and Bruno Basso of Michigan State University.

A circular bioeconomy provides a framework for reducing waste and improving sustainability across the economy, Khanna said. It aims not only to reduce environmental contamination associated with agricultural production, but also to transform the energy sector, plastics manufacturing and other industries by using agricultural waste as a resource that can help reduce reliance on fossil fuels and decarbonize the economy.

The authors integrated these concepts into an economic framework to help determine the optimal level of circularity in a market economy. They recommend five critical pathways to enable the transition:

• Technological advancements through investments in research and development, to reduce the cost of clean, climate-smart energy innovations.
• Regulatory incentives that put a price on waste and environmental damage, such as a carbon tax, and institutional changes like crop insurance programs that reduce the risk of farmers adopting sustainable practices.
• Strong markets for circular products.
• Education and public awareness of the ecosystem benefits of a circular bioeconomy.
• Equity considerations for displaced workers and consumers vulnerable to high prices.

Researchers have made great strides in developing individual technologies that contribute to a circular bioeconomy in food and agriculture, such as precision agriculture and digital agricultural technologies that can increase the efficiency with which chemicals are used for agricultural production, and advances in synthetic biology to convert plants and transform waste into biofuels and biochemicals, replacing carbon dioxide-emitting petroleum-based energy sources.

But many of these technologies are expensive. Further investment is needed to develop them and make them commercially competitive and affordable for farmers and consumers, the authors say.

One of the underlying questions in designing environmentally friendly policies is how to create the right incentives for people to adopt sustainable technologies and how to promote the most effective approaches. The problem with agricultural pollution, for example, is that it is difficult to measure and identify the source of runoff or other contaminants.

New tools like a “digital twin” – a computer replica of a field – can help calculate the environmental impact of agricultural management practices, such as adding nitrogen to the soil. This type of progress can lead to targeted policies rewarding farmers for their results, rather than providing uniform and costly payments for their participation in conservation programs,

The overall solution will require action from both the public and private sectors, according to the authors. Many companies are already adopting sustainable practices, and many consumers are willing to pay a premium price for organic food and sustainably sourced products. Yet these efforts are far from enough to curb climate change or reduce pollutants that cause hypoxia in the Gulf of Mexico. New government incentives and changes to how pollution is regulated are needed, Khanna said.

Educating consumers can change their preferences and willingness to pay for climate-smart products, creating market demand and policy support. “If consumers don’t demand enough and aren’t willing to pay, the producer won’t produce it,” Khanna said.

The shift to a circular bioeconomy must be accompanied by social programs that protect vulnerable low-income consumers from short-term price increases and provide new training for workers who risk losing their jobs as the fuel industry fossils are declining, the authors say.

The next step will be to develop more interdisciplinary research programs in which economists work with engineers and scientists to apply this framework to specific industries or supply chains, to determine what a transition to a circular bioeconomy would look like for this sector. “We are excited to create a new center in iSEE to catalyze this type of research,” Khanna said, referring to the new Levenick Center for a Climate-Smart Circular Bioeconomy in Illinois.

The transition to a circular bioeconomy will require long-term political commitment, consistent policies and investments that could take a decade or more to pay off, Khanna said.

“We are far from meeting our US and global goals for reducing carbon emissions. In addition, other environmental problems such as degraded water quality and loss of biodiversity are worsening. “It’s crucial to recognize that these environmental issues are interconnected, ranging from air and water pollution caused by plastic waste,” Khanna said.

“These problems all come from the same source: our current methods of production and consumption. Instead of solving these problems individually, the transition to a circular bioeconomy offers a holistic solution.”