A circular bioeconomy that minimizes waste, shifts from fossil fuels to renewable, bio-based options, and revitalizes natural systems is essential for sustainably feeding and fueling the expanding global population. However, this concept is complex and raises important questions about its implementation and how to gain support from farmers, industries, and consumers in a market-driven economy. A recent paper by prominent agricultural economists and researchers suggests that the circular bioeconomy concept must move beyond just the technical aspects of waste reduction to include a values-driven economic perspective. The authors argue that proper policies, incentives, and market signals are crucial to motivate both consumers and producers to adopt more environmentally friendly practices and to ensure fairness within the system.
Traditional food and agricultural production follows a linear model of “take, make, waste”: extracting natural resources to produce food and fuel, resulting in waste that pollutes our soil and waterways, alongside harmful emissions.
Recently, there has been growing interest in a new production model called the “circular bioeconomy.” This approach aims to diminish and recycle waste, move away from fossil fuels, and regenerate natural systems, making it vital for meeting the sustainable resource needs of our planet’s increasing population.
Despite its importance, the circular bioeconomy is a challenging concept with several pressing inquiries: What are the best methods for implementing waste reduction? How extensive should our commitment to a “circular” economy be, balancing costs and benefits? In what ways can we encourage farmers, industries, and consumers to support a circular bioeconomy in a market context?
A new paper from distinguished agricultural economists and scientists contends that this notion must broaden its focus on waste reduction to encompass a values-based economic framework. The paper emphasizes the importance of appropriate policies, incentives, and market signals to persuade both consumers and producers to make environmentally responsible decisions while advocating for equitable outcomes.
“While striving for zero waste is an admirable aim, we must also consider the economic implications of reaching this goal — the associated costs, who will bear them, and how we can incentivize people to adopt these changes. We need to balance environmental advantages against acceptable levels of waste while addressing economic and equity concerns, as well as finding ways to encourage the right choices from consumers and producers,” stated lead author Madhu Khanna, a distinguished professor of environmental economics at the University of Illinois Urbana-Champaign.
Transitioning to a circular bioeconomy will necessitate innovative approaches from researchers across various disciplines, especially social scientists, to better understand human behaviors and develop effective incentives, Khanna noted.
The study, published in Communications Earth and Environment, includes contributions from David Zilberman at the University of California, Berkeley; Gal Hochman at the University of Illinois Urbana-Champaign; and Bruno Basso at Michigan State University.
A circular bioeconomy offers a framework for minimizing waste and enhancing sustainability across different sectors, according to Khanna. Its goals extend beyond mitigating environmental harm in agricultural practices; it also seeks to revolutionize energy production, plastics manufacturing, and other industries by leveraging agricultural waste as a resource, thereby decreasing reliance on fossil fuels and aiding in the reduction of carbon emissions.
The authors integrated these ideas into an economic model to identify the optimal level of circularity attainable within a market framework. They propose five essential pathways to facilitate this transition:
- Investing in research and development to drive technological innovations that make climate-smart and clean energy solutions more affordable.
- Implementing regulatory incentives that assign costs to waste and environmental harm, such as carbon taxes, coupled with institutional changes like crop insurance programs that reduce the risks for farmers adopting sustainable practices.
- Creating strong markets for circular economy products.
- Raising public awareness about the ecosystem advantages of a circular bioeconomy.
- Addressing equity issues for workers displaced and consumers facing higher prices.
Researchers have made significant progress on individual technologies that contribute to a circular bioeconomy in the food and agriculture sectors, including precision farming and digital agricultural technologies that enhance chemical usage efficiency and advancements in synthetic biology for converting plants and waste into biofuels and biochemicals as alternatives to petroleum-based energy sources.
However, many of these innovations can be costly. Increased investment is essential to scale these technologies and make them commercially viable and affordable for farmers and consumers, the authors indicated.
One underlying challenge of creating environmentally friendly policies is how to generate appropriate incentives for adopting sustainable technologies and how to evaluate the most effective strategies. For instance, agricultural pollution presents measurement challenges, complicating the identification of runoff sources or other pollutants. Emerging tools, like a “digital twin” of agricultural fields, can aid in assessing the ecological impact of farming practices, such as nitrogen fertilizer application. These advancements can lead to targeted policy initiatives that reward farmers based on outcomes instead of offering costly flat payments for participation in conservation programs.
Addressing these challenges demands collaboration from both public and private sectors. Many businesses are already implementing sustainable practices, and numerous consumers are eager to pay a premium for organic and sustainably sourced products. Yet, these initiatives still fall short of adequately combating climate change or mitigating pollutants that contribute to hypoxia in regions like the Gulf of Mexico. Khanna asserts that new government incentives and regulatory changes concerning pollution management are crucial.
Consumer education can significantly shift preferences and increase willingness to purchase climate-friendly goods, thus generating market demand and political backing. “If consumers aren’t sufficiently demanding these products and aren’t prepared to pay more, producers won’t have the incentive to create them,” Khanna explained.
Transitioning to a circular bioeconomy should also be coupled with social programs that protect low-income consumers from immediate price increases and offer retraining for workers potentially affected by the decline of the fossil fuel industry, the authors emphasized.
The next phase involves developing interdisciplinary research initiatives where economists collaborate with engineers and scientists to apply this circular bioeconomy framework to specific industries or supply chains, which can help visualize what a transition would entail in various sectors. “We’re excited to establish a new Center at iSEE to promote this type of research,” Khanna added, referencing the Levenick Center for a Climate-Smart Circular Bioeconomy at Illinois.
Shifting to a circular bioeconomy will need consistent long-term policy commitments, stable regulations, and investments which may take a decade or more to yield results, Khanna noted.
“We are seriously lagging in our efforts to meet U.S. and global carbon emissions reduction targets. Moreover, issues like water quality decline and biodiversity loss are worsening. It’s vital to understand that these environmental challenges are interlinked — from air and water pollution to plastic waste. They all arise from our current production and consumption methods. Addressing these issues in isolation is insufficient; transitioning to a circular bioeconomy presents a comprehensive solution,” Khanna concluded.
