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Real Options Conference 2023

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Eu States Bioeconomies and Sustainable Development

Measuring the sustainability of the bioeconomy is crucial to evaluating its continuous contribution to wellbeing. Previous studies that have addressed sustainability measurement vary in their emphasis on sustainability dimensions and countries’ scores. Studies that have addressed the sustainability of the bioeconomy have focused on indicators that measure specific contributions to sustainability. We devise a framework directly linked to the 1987 Brundtland Report’s definition of sustainable development. Our framework uses the concepts of intergenerational wellbeing and genuine investment, whereby sustainability is defined as non-declining intergenerational wellbeing over time. Sustainability-related investment projects include uncertainty and irreversibility, which we model explicitly in contrast to previous works. We calculate two related indicators—hurdle rate and maximum incremental social tolerable irreversible costs (MISTICs)—which have a forward-looking approach, investigating whether future investment projects in the bioeconomy are sustainable. We use these two indicators to empirically analyze the sustainability of European Union (EU) Member States’ (MSs) bioeconomies and sectors. We found that the hurdle rate in the bioeconomy is lower for the bio-based part than for the non-bio-based part for most countries, indicating a high potential for further sustainable investments in the transition toward an EU bioeconomy. The majority of countries have overall negative MISTICs for their bioeconomy, implying that bioeconomy projects need to provide irreversible benefits. However, all the countries have bioeconomy sectors with positive MISTICs. Our findings are consistent with Ecological Footprint’s report indicating ecological deficits for most EU MSs, as they have a greater footprint than biocapacity.

Maximilian Kardung
Wageningen University

Kutay Cingiz
Wageningen University

Justus Wesseler
Wageningen University


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