Complex risks for the development of biobased solutions transforming agricultural waste streams

Abstract

Innovative biobased processes are often designed to be compatible with a circular economy. The reuse and valorisation of agricultural waste streams and co-products is very important in this respect, and initiatives are set up to treat for example manure, corn stover, prunings from orchards, or verge cuttings, and to transform these in fodder, fuels, or bulk chemicals.

While this development is sound in principle, the evolutionary dynamics of such an emergent industry are unpredictable. The main caveat is that the supply of agricultural waste streams does not respond directly to the demand. Growing industries should be aware that an increasing demand for these co-products will not automatically lead to growing supply. The supply is directed by market circumstances of the core products that lead to these waste streams. For instance, farmers invest in corn in reaction to the corn price, and not to the price of corn stover. Manure is a co-production of livestock husbandry. But farmers do not decide to invest in larger pig stocks following an increase in the manure price. Retributions for waste streams are valuable additions to the profit of a farmer, but the investment decisions are taken based on price fluctuations of the core products, such as corn and pigs. This complex connection can lead to insufficient biomass provision, and in difficulties for emerging biobased industries to develop and to reach a critical scale.

We investigate this complex relationship in the emergence of new biobased industries, by simulating future development scenarios of agriculture combined with new biobased industrial initiatives. We use an empirical agent-based model, including different technologies for manure treatment. The results show that constrained market circumstances for agricultural products can be detrimental to the development of circular biobased solutions. We also discuss strategic solutions for biobased industry to remediate these supply chain risks.