Iris Lewandowski Editor Shaping the Transition to a Sustainable

Iris Lewandowski Editor Bioeconomy Shaping the Transition to a Sustainable, Biobased Economy Bioeconomy Iris Lewandowski Editor

Bioeconomy Shaping the Transition to a Sustainable, Biobased Economy

In collaboration with Nicole Gaudet Á Jan Lask Á Jan Maier Á Boris Tchouga Á Ricardo Vargas-Carpintero Editor Iris Lewandowski Institute of Crop Science; Biobased Products and Energy Crops University of Hohenheim Stuttgart, Germany

In collaboration with Nicole Gaudet Jan Lask Institute of Crop Science; Biobased MSc Bioeconomy Program Products and Energy Crops Faculty of Natural Sciences University of Hohenheim University of Hohenheim Stuttgart, Germany Stuttgart, Germany

Jan Maier Boris Tchouga MSc Bioeconomy Program MSc Bioeconomy Program Faculty of Agricultural Sciences Faculty of Business, Economics University of Hohenheim and Social Sciences Stuttgart, Germany University of Hohenheim Stuttgart, Germany

Ricardo Vargas-Carpintero MSc Bioeconomy Program Faculty of Business, Economics and Social Sciences University of Hohenheim Stuttgart, Germany

ISBN 978-3-319-68151-1 ISBN 978-3-319-68152-8 (eBook) https://doi.org/10.1007/978-3-319-68152-8

Library of Congress Control Number: 2017959636

# The Editor(s) (if applicable) and The Author(s) 2018, corrected publication February 2018. This book is an open access publication. Open Access This book is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this book are included in the book’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the book’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a speciﬁc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional afﬁliations.

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This Springer imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Contents

1 Introduction ...... 1 Iris Lewandowski, Nicole Gaudet, Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero Part I Bioeconomy Concepts and Research Methods 2 Context ...... 5 Iris Lewandowski, Nicole Gaudet, Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero 3 Bioeconomy Concepts ...... 17 Regina Birner 4 Inter- and Transdisciplinarity in Bioeconomy ...... 39 Andrea Knierim, Lutz Laschewski, and Olga Boyarintseva Part II Knowledge Base for Biobased Value Chains 5 Biobased Resources and Value Chains ...... 75 Christian Zorb,€ Iris Lewandowski, Ralf Kindervater, Ursula Gottert,€ and Dominik Patzelt 6 Primary Production ...... 97 Iris Lewandowski, Melvin Lippe, Joaquin Castro Montoya, Uta Dickhofer,€ Gerhard Langenberger, Johannes Pucher, Ursula Schließmann, Felix Derwenskus, Ulrike Schmid-Staiger, and Christian Lippert 7 Processing of Biobased Resources ...... 179 Myriam Loefﬂer, Jorg€ Hinrichs, Karin Moß, Marius Henkel, Rudolf Hausmann, Andrea Kruse, Nicolaus Dahmen, Jorg€ Sauer, and Simon Wodarz 8 Markets, Sustainability Management and Entrepreneurship ...... 231 Kirsten Urban, Ole Boysen, Carolina Schiesari, Ru¨diger Hahn, Moritz Wagner, Iris Lewandowski, Andreas Kuckertz, Elisabeth S.C. Berger, and C. Arturo Morales Reyes

v vi Contents

Part III Transition to a Sustainable Bioeconomy 9 Modelling and Tools Supporting the Transition to a Bioeconomy ...... 289 Elisabeth Angenendt, Witold-Roger Poganietz, Ulrike Bos, Susanne Wagner, and Jens Schippl 10 Environmental Economics, the Bioeconomy and the Role of Government ...... 317 Michael Ahlheim 11 Economic Growth, Development, and Innovation: The Transformation Towards a Knowledge-Based Bioeconomy ...331 Andreas Pyka and Klaus Prettner 12 The Bioeconomist ...... 343 Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero

Erratum to: Bioeconomy: Shaping the Transition to a Sustainable, Biobased Economy ...... E1

The original version of this book was revised. An erratum to this book can be found at https://doi.org/10.1007/978-3-319-68152-8_13 Introduction 1

Iris Lewandowski, Nicole Gaudet, Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero

Baroque Castle of the University of Hohenheim # Ulrich Schmidt

J. Maier I. Lewandowski (*) • N. Gaudet MSc Bioeconomy Program, Faculty of Agricultural Institute of Crop Science; Biobased Products and Energy Sciences, University of Hohenheim, Stuttgart, Germany Crops, University of Hohenheim, Stuttgart, Germany e-mail: [email protected] e-mail: [email protected]; B. Tchouga • R. Vargas-Carpintero [email protected] MSc Bioeconomy Program, Faculty of Business, J. Lask Economics and Social Sciences, University of MSc Bioeconomy Program, Faculty of Natural Sciences, Hohenheim, Stuttgart, Germany University of Hohenheim, Stuttgart, Germany e-mail: [email protected]; e-mail: [email protected] [email protected]

# The Author(s) 2018 1 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_1 2 I. Lewandowski et al.

Feeding a growing population is one of the major different scientific disciplines and stakeholders. challenges of the twenty-first century. However, Thus, the field of the bioeconomy is fertile 200 years ago, it was this very same challenge ground for inter- and transdisciplinary research. that initiated the foundation of the University Interdisciplinary research into the bioeconomy is of Hohenheim in 1818. Three years earlier, in based on the collaboration of different disciplines 1815, the volcano Tambora erupted in Indonesia. across the biobased value chain including agri- This local geological event had tremendous cultural science, natural science, economics and impact on the global climate. The eruption social science. This systemic approach enables ejected huge quantities of ash into the atmo- the assessment of complex challenges from an sphere, causing two ‘summers without sun’. environmental, social and economic perspective. In Europe, lower temperatures led to poor crop In addition, transdisciplinary approaches support growth, resulting in famine and riots. On the ambition of the bioeconomy to contribute to 20 November 1818, King Wilhelm I of overcoming some of the most relevant societal Württemberg founded an agricultural education challenges and the underlying paradigm of and research station at Hohenheim, with the aim switching from an economy based on fossil raw of contributing to regional food security by materials to a new, innovative and sustainable educating farmers and developing better agricul- economy based on biogenic resources. tural production methods. Due to the importance of inter- and transdis- Since then, the University of Hohenheim has ciplinary competences in the bioeconomy and grown continuously and today consists of three the need for an appropriate knowledge base, the faculties, namely, the Faculty of Agricultural demand for professionals specifically educated in Sciences, the Faculty of Natural Sciences and this field is growing. For this reason, in 2014, the the Faculty of Business, Economics and Social University of Hohenheim established the first Sciences. Research and education is still focused international Bioeconomy Master program, on societal and environmental challenges, such designed to train the experts required for a suc- as food security and climate change. Building on cessful transition. this basis, the ‘bioeconomy’ has recently This textbook is a joint venture aiming to emerged as a leading theme for the University explore important aspects of the bioeconomy of Hohenheim. from the perspective of Hohenheim’s educators The bioeconomy, often referred to as and students and offers an orientation guideline ‘biobased economy’, encompasses the produc- for the future. It provides specialised knowledge tion of biobased resources and their conversion in relevant disciplines as well as the systematic into food, feed, bioenergy and biobased approaches required to shape bioeconomic materials. A biobased value chain includes the projects and activities. Issued on the occasion of primary production of biobased resources, their the 200th anniversary of the University of conversion to higher-value goods via processing Hohenheim, it will be made available globally and commercialisation on the market. This to all students and professionals aiming to drive involves a variety of sectors and brings together the bioeconomy for a more sustainable future.

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Part I Bioeconomy Concepts and Research Methods Context 2 Iris Lewandowski, Nicole Gaudet, Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero

# http://visibleearth.nasa.gov J. Maier I. Lewandowski (*) • N. Gaudet MSc Bioeconomy Program, Faculty of Agricultural Institute of Crop Science; Biobased Products and Energy Sciences, University of Hohenheim, Stuttgart, Germany Crops, University of Hohenheim, Stuttgart, Germany e-mail: [email protected] e-mail: [email protected] B. Tchouga • R. Vargas-Carpintero [email protected] MSc Bioeconomy Program, Faculty of Business, J. Lask Economics and Social Sciences, University of MSc Bioeconomy Program, Faculty of Natural Sciences, Hohenheim, Stuttgart, Germany University of Hohenheim, Stuttgart, Germany e-mail: [email protected]; e-mail: [email protected] [email protected]

# The Author(s) 2018 5 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_2 6 I. Lewandowski et al.

Abstract The future bioeconomy is expected to drive the transition towards a more sustainable economy by addressing some of the major global challenges, including food security, climate change and resource scarcity. The globally increasing demand for food in particular, but also materials and renewable energy, necessitates innovative developments in the primary sectors. Innovations will need to generate more resource-use-efﬁcient technologies and methods for increasing productivity in agriculture, forestry and aquaculture without jeopardizing the Earth’s carrying capacity and biodiversity. The bioeconomy exploits new resources by building on renewable biomass. Through this, the introduction of innovative and resource-use-efﬁcient production technologies and the transition to a sustainable society, it helps to substitute or reduce the use of limited fossil resources, thereby contributing to climate change mitigation.

Keywords Climate change • Natural resources • Planetary boundaries • Population growth • Food security • Global challenges

use, biomass covered all human needs for food, Learning Objectives energy and materials. In this chapter you will:

• Get an overview of the main challenges of the 2.1 Fossil Resources and Climate twenty-ﬁrst century. Change • Identify the interrelations between the causes of these challenges. The use of fossil resources fuelled industrializa- • Understand how the bioeconomy can contrib- tion, which was driven by technical and eco- ute to meeting these challenges. nomic processes causing a shift from mainly agrarian towards industrial production. However, In the course of 1 year, the Earth travels the availability of fossil resources is limited 940 million km around the sun, from which it and its use resulted in negative environmental receives 1366 W/m2 of solar radiation (2,500,000 effects. EJ per year). Of this, 0.25% is transformed into There are an estimated 37,934 EJ of fossil usable biomass through the process of photosyn- energy reserves and 551,813 EJ of fossil energy thesis. The Earth’s vegetation sequesters about resources globally (Fig. 2.1,BGR2015). 175 petagrams (175,000,000,000,000 kg) of car- Reserves are the amounts of energy sources bon a year, equivalent to about 300,000 billion that have been determined with high accuracy tons of biomass (Welp et al. 2011). and are economically exploitable. Resources are Before humankind discovered fossil oil, coal, the amounts of an energy resource for which gas and uranium and learnt how to put them into there is geological evidence, but which are 2 Context 7

0.7% 2.2% 2.1% 1.2% 0.6% 1.2% 3.7%

19.1%

9.4%

Reserves 5.3% 45.8% Resources 37,934 EJ 551,813 EJ

18.8% 79.9%

8.6%

1.6%

Hard coal Uranium Conventional crude oil Conventional natural gas Lignite Thorium Non-Conventional crude oil Non-Conventional natural gas

Fig. 2.1 Fossil reserves and resources, determined for 2014 (BGR 2015) either economically or geologically not Fossil resources were formed from biomass exploitable. Currently, fossil energy reserves through geological processes that occurred sev- exceed the global primary energy consumption eral million to billion years ago. For this reason, of 540 EJ 70 times. However, crude oil, which is they have a high carbon content (see Table 2.1). also required for material uses, makes up only With every ton of fossil oil or coal burnt and 24% of fossil reserves (BGR 2015) and is there- transformed to energy, about 0.8 tons of carbon fore expected to be the ﬁrst fossil resource to are oxidized, and 3 tons of carbon dioxide (CO2) deplete. are released into the atmosphere (Table 2.1). The atmospheric concentrations of the major greenhouse gases (GHG) carbon dioxide (CO ), Fossil Resources 2 methane (CH ) and nitrous oxide (N O) have Fossil resources include coal, petroleum, 4 2 shown increases of 40%, 150% and 20%, respec- natural gas, oil shales, bitumens, tar sands tively, since the year 1750 (IPCC 2014). These and heavy oils. All contain carbon and increases are mainly driven by the combustion were formed as a result of geological proof fossil fuels, deforestation and soilborne cesses acting on the remains of organic greenhouse gas emissions. Between 1970 and matter produced by photosynthesis (see 2010, CO emissions from fossil fuel combus- Sect. 5.1.1), a process that began in the 2 tion and industrial processes accounted for the Archean Eon more than 3 billion years largest share (78%) of the increase in GHG ago. Most carbonaceous material occurring emissions (IPCC 2014). Today, electricity and before the Devonian Period (approxi- heat production, industry and land-use-related mately 415 million years ago) was derived activities (agriculture, forestry, land use change) from algae and bacteria (https://www. are the sectors that contribute most to the britannica.com/science/fossil-fuel). so-called global warming potential (GWP),

which is expressed in CO2 equivalents 8 I. Lewandowski et al.

Table 2.1 Carbon contents of fossil resources and amounts of carbon dioxide (CO2) and other greenhouse gases (GHG) emitted when fossil fuels are used energetically Greenhouse gas emission (t/t)b a Fossil resource % carbon (C) CO2 N2OCH4 Hard coal 71.6 2.6 0.000027 0.000040 Lignite 32.8 1.2 0.000012 0.000018 Petroleum 84.8 3.1 0.000127 0.000025 Natural gas 73.4 2.7 0.000048 0.000005 aIPCC (2006) bAuthors’ own calculation based on IPCC (2006)

Fig. 2.2 Total anthropogenic greenhouse gas (GHG) emissions (gigatons of CO2 equivalent per year, GtCO2-eq/year) from economic sectors in 2010 (based on IPCC 2014)

(Fig. 2.2). CO2 equivalents include the weighted effect of CO2 (GWP100 year ¼ 1), CH4 (GWP100 radiation. This infrared radiation escapes year ¼ 28) and N2O (GWP100 year ¼ 265) on back to space, but, on the way, some of it global temperature. The higher the GWP100 is absorbed by GHG in the atmosphere, year, the more a molecule of a GHG contributes thus leading to a net warming of the Earth’s to global warming and climate change (see Box surface and lower atmosphere (Fig. 2.3). 2.1) over 100 years. The direct and indirect effects of the increas- Box 2.1 Climate Change ing atmospheric concentration of GHG and con- Greenhouse gases (GHG) in the atmo- comitant increasing global temperatures are sphere lead to the so-called greenhouse manifold and include (IPCC 2014): effect. The Earth’s surface absorbs some of the energy from sunlight and heats • Ocean warming and acidiﬁcation (through

up. It cools down again by giving off this uptake of CO2) energy in a different form, called infrared • Melting of the Greenland and Arctic ice sheets 2 Context 9

Sunlight passes through the atmosphere and warms the Earth’s surface. This heat is radiated back towards space. Most of the outgoing heat is absorbed by greenhouse gas molecules and re-emitted in all directions, warming the surface of the Earth and the lower atmosphere.

Fig. 2.3 How greenhouse gases lead to global warming (adapted from: http://climate.nasa.gov/causes/)

• Sea level rise (1.5–1.9 mm/year), threatening GtCO2 (1000 GtC); over half this amount had coastal communities and ecosystems already been emitted by 2011 (IPCC 2014). One • Glacial retreat high potential GHG mitigation option is the use • Decreased snow cover and increased perma- of biobased instead of fossil resources. frost temperatures • Reduction in precipitation and increased occurrence of drought, especially in areas 2.2 Biobased Resources already critically affected by water limitation • Extreme and unpredictable weather events The resources produced and used in a biobased such as storms and ﬂooding economy all contain carbon (C). Therefore, they • Anticipated negative temperature, drought can replace those fossil resources that contain and other (e.g. diseases) impacts on agricul- carbon, i.e. coal, oil and natural gas. ture, potentially leading to yield losses In the following sections, biobased resources • Negative impact on human health through are deﬁned as all resources containing non-fossil, deteriorating air and water quality, increasing organic carbon, recently (<100 years) derived the spread of certain diseases and altering the from living plants, animals, algae, micro- frequency or intensity of extreme weather organisms or organic waste streams (see Sect. events 5.1 for a more detailed description of biobased resources). The Intergovernmental Panel on Climate Change (IPCC) formulated a “climate goal” of 2 C—the increase in global temperature that Biobased Resources should not be exceeded in order to avoid disas- Biobased resources are of biological origin trous global effects. To ensure CO2-induced and stem from biomass. This biomass can warming remains below 2 C would require be untreated or may have undergone phys- cumulative CO2 emissions from all anthropo- ical, chemical or biological treatment. genic sources to remain below about 3650 10 I. Lewandowski et al.

are at even higher risk. These are biosphere Biomass integrity (in particular genetic diversity) and bio- Biomass stems from living or once-living geochemical flows (specifically nitrogen and organisms including plants, trees, algae, phosphorus flows to the biosphere and oceans marine organisms, microorganisms and as a result of various industrial and agricultural animals. processes) (see Box 2.2). Excluded are materials embedded in geological formations and/or fossilized. Box 2.2 Planetary Boundaries “The planetary boundaries concept Both biobased and fossil resources are derived presents a set of nine planetary boundaries from biomass that has been built through the within which humanity can continue to process of photosynthesis (see Sect. 5.1). During develop and thrive for generations to that process, CO2 is taken up by plants or algae come” (http://www.stockholmresilience. with the help of light energy. Plants and algae org/research/planetary-boundaries.html): convert light to chemical energy by integrating carbon (C) into their organisms. The carbon 1. Stratospheric ozone depletion bound in fossil fuels was thus taken up from 2. Loss of biosphere integrity (biodiversity atmospheric CO2 several million or billion loss and extinctions) years ago. By contrast, biobased resources are 3. Chemical pollution and the release of composed of recently grown biomass where novel entities there is a short time span of 1 to <100 years 4. Climate change between the withdrawal of CO2 from the atmo- 5. Ocean acidification sphere and its release back into the atmosphere. 6. Freshwater consumption and the global Therefore, biomass is often considered “CO2 hydrological cycle neutral” because the same amount of CO2 is 7. Land system change bound and then released again within a short 8. Nitrogen and phosphorus flows to the period of time. biosphere and oceans With an annual increment of 300,000 billion 9. Atmospheric aerosol loading tons of biomass, biobased resources form a very large and, because they grow back, theoretically (http://www.stockholmresilience.org/ unlimited resource. However, their production research/planetary-boundaries/planetary- necessitates the use of natural resources, mainly boundaries/about-the-research/the-nine- land, soil, water and plant nutrients. planetary-boundaries.html)

Integrity here refers to “the capability of 2.3 Planetary Boundaries supporting and maintaining a balanced, and Limitation of Natural integrated, adaptive community of organisms Resources having a species composition, diversity, and functional organization comparable to that of Climate change is one of the nine planetary natural habitat of the region” (Karr and Dudley boundaries (Fig. 2.4) that the UN (Steffen et al. 1981, p. 56). It therefore has a functional as well 2015) has characterized as demarcating the car- as a quantitative (number of species and rying capacity of the Earth and the vulnerability individuals) component (Angermeier and Karr of global natural resources. According to these, 1994). climate change and land system change pro- Agriculture—the primary source of food cesses are already beyond the safe operating and feed and an important sector in the space. However, there are two categories that bioeconomy—has been responsible for 2 Context 11

Fig. 2.4 The nine planetary boundaries. The green-shaded area represents the safe operating space

significant biodiversity losses. Key drivers of the Other natural resources necessary for agri- decline in biodiversity and in conservation and cultural production are also under threat. ecosystem services are increased pesticide, her- While the production of agricultural goods bicide and fertilizer use, increased landscape increased 2.5–3 times over the last 50 years, homogeneity associated with regional and farm- the agricultural land area has only expanded level specialization, drainage of waterlogged by 12% (FAO 2011). Because more than 40% fields, loss of marginal and uncropped habitat of the increase in food production stems from patches and reduced fallow periods (Hilger irrigated areas, water use has also increased. et al. 2015; Lambin et al. 2001). The current Today, 70% of all water withdrawn from high rates of ecosystem damage and extinction aquifers, streams and lakes is used for agricul- can be slowed by efforts to protect the integrity tural production, leading to water scarcity in of living systems (the biosphere), enhancing hab- many areas of Asia, northern and southern itat and improving connectivity between Africa and western North America (FAO ecosystems while maintaining the high agricul- 2011). Intensive agricultural use and deforesta- tural productivity that humanity requires (Steffen tion has also led to soil degradation processes, et al. 2015). such as erosion. Very degraded soils are found 12 I. Lewandowski et al. especially in semiarid areas (sub-Saharan producing biomass, such as forestry and aquacul- Africa, Chile), areas with high population pres- ture, need to apply sustainable production sure (China, Mexico, India) and regions methods. undergoing deforestation (Indonesia) (UNEP A sustainable bioeconomy cannot be achieved 1997). Finally, the plant nutrient phosphorus merely through replacing fossil resources by (P) is also expected to become a limited natural biobased resources to the maximal possible resource for crop production. Phosphate fertil- extent. It also requires that the replacement of izer used in agriculture is mainly produced from fossil fuels by biobased resources results in an rock phosphate (RP). However, RP is a finite overall more sustainable economy. resource, as with all mined resources. For this reason, in 2014, the EC added it to the list of critical raw materials (EC 2014). 2.4 Population Growth and Food Security Natural Resources It is projected that the world’s population will Natural resources occur naturally on the increase from the current seven billion people to Earth. They include (a) biotic resources, nine billion by 2050 (FAO 2011, Fig. 2.5). Today stemming from living organisms (mainly (2017), almost one billion people are undernour- plants and animals) and organic material ished, particularly in sub-Saharan Africa (also fossil), and (b) abiotic resources (239 million) and Asia (578 million) (FAO from nonliving and inorganic material, 2011). In addition to the demands of the growing such as air, soil, water, sunlight and population, economic development, especially in minerals. the emerging economies, leads to increasing consumption of meat. That means the trend towards Because the bioeconomy makes direct use of increasing meat consumption in the emerging natural resources—especially soil, land, water economies of Africa and Asia, and the concomi- and nutrients—and therefore depends on their tant increase in global meat production (Fig. 2.6) availability, it is at the focus of the sustainability will continue. It is estimated that by 2050 an debate. Only a bioeconomy that makes responsi- extra billion tons of cereals and 200 million ble use of natural resources, including their effi- tons of livestock products will need to be pro- cient use, conservation, restoration and duced annually (Bruinsma 2009). However, meat recycling, can contribute to the transformation production requires more land than crop produc- to a more sustainable economy. For this process, tion. To produce 1 kg of meat, 3–100 kg of the bioeconomy will have to drive innovations biomass is required, depending on which animals further towards sustainable agricultural intensifi- and production systems are used (Smeets et al. cation. This is defined as “producing more output 2007). Therefore, future projections anticipate from the same area of land while reducing the the need to increase food production by 70% negative environmental impacts and at the same globally and by 100% in the developing time increasing contributions to natural capital economies (FAO 2011). and the flow of environmental services” (Pretty In food production, quantity is not the only et al. 2011). Sustainable agricultural intensifica- criterion; quality is also important. One of the tion necessitates the use of innovative methods to first quality management steps in the biobased produce modern varieties, fertilizers and crop value chain is the protection of crop and animal protection measures. This aspiration is in line health. This is aimed not only at delivering good with recent trends, which show that about 70% quality foodstuffs but also at increasing produc- of total factor productivity in agriculture is tivity and reducing losses in the production, stor- derived from innovations and only about 12% age, transport and processing of biomass. Even from land area extension. Also, other sectors before food discarded at consumer level is 2 Context 13

10 9

8 7 6 5 4 Population (billion) 3 2 1 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Rural population Urban population Total population

Fig. 2.5 World population trends for 1950–2050 (UNEP 2014)

Fig. 2.6 Global meat, milk and fish (including crustaceans, molluscs and echinoderms) production for 1961–2011 (UNEP 2014; FAO 2015) considered, food losses along the supply chain apply these technologies, infrastructure for stor- are estimated to be as high as 35% for cereals and age and transportation, and efficient processing more than 50% for perishable products such as and conversion methods. roots, tubers, fruits and vegetables (Aulakh and The transition to a knowledge-based bio- Regmi 2013). Avoiding such losses requires economy also depends on consumers being disease-resistant varieties, effective crop protec- aware of the nature and characteristics of biobased tion measures and better training of farmers to products. Otherwise, they will neither be able to 14 I. Lewandowski et al. identify more sustainably produced products nor should be satisfied. Second, the remaining will they be willing to pay a higher price for biobased resources should ideally be allocated higher-value goods. The process of raising aware- with regard to the maximal ecological, social ness will also result in a more conscious choice of and economic benefit. This holistic approach in higher-quality, healthier products with a lower resource allocation is a major pillar of a sustain- environmental impact and possibly in a reduction able bioeconomy and can serve as a blueprint in meat consumption. for sustainable and general resource allocation The availability of sufficient high-quality food strategies. for a growing population is thus not only a matter • Because land use presently contributes 24% of of sufficient production but also of appropriate anthropogenic GHG emissions and a large part use and food consumption patterns. The question of biodiversity losses, agricultural and forestry of fair food distribution and adequate access of land use management needs to be improved in a all people to food determines food security. In sustainable way. Climate-smart production addition, today’s hunger is not caused by insuffi- methods need to be applied that make use of cient global food production but by politically soil carbon sequestration and innovative driven distribution problems. technologies that reduce emissions and ecological impacts. These result in GHG mitigation and are often associated with improved efficiencies, 2.5 The Role of the Bioeconomy lower costs and environmental co-benefits in Dealing with Global (Smith et al. 2007). In the bioeconomy, resource Challenges supply has to be sustainable, and therefore the use of biobased resources should only be Bioeconomy is the sustainable and innovative use implemented where these perform more sustain- of biomass and biological knowledge to provide ably than the fossil alternative. food, feed, industrial products, bioenergy, and eco- • The global demand for more and higher- logical and other services. As such, it has the func- quality food and the limited availability of tion of providing sufficient food of adequate quality land and natural resources necessitate a and renewable resources to a growing population thrust on innovation in agricultural, for- and at the same time making sustainable use of estry, aquaculture and other forms of bio- natural resources. The bioeconomy can help meet mass production as well as biomass global challenges in the following ways: processing and use. This has to result in more efficient and less resource-consuming • As non-renewable fossil resources are finite production methods along biobased value and have a high climate change impact, we chains. Through a knowledge-based need to meet our demands for food, products approach, more efficient and sustainable and energy through renewable resources. production methods must be applied in Foodstuffs and renewable materials can only order to manage natural resources sustain- be supplied by biomass from agricultural and ably and increase productivity. forestry production as well as from aquacul- • The ubiquitous nature of biomass offers the ture. Renewable energy on the other hand, to possibility of creating modern jobs in rural which bioenergy presently contributes 73% areas, thus counteracting both the limited geo- [biomass accounts for about 14% of global graphical distribution of accessible fossil final energy consumption, REN21 (2016)], can resources and the current concentration of job also be supplied through solar, wind, geother- and income opportunities in urban areas. The mal, hydro or tidal energy. bioeconomy will enable areas poor in fossil • In a sustainable bioeconomy, the use of but rich in biobased resources to improve biobased resources should be optimized with income and development opportunities. The regard to two main criteria. First, the demand development of innovative technologies will for high-quality food for the world’s population 2 Context 15

also generate new jobs with a modern profile • How can the use of biobased resources over- (e.g. digitalization). come the shortcomings of fossil resources? • The limited, and in part already overstretched, • How can the production of biobased resources planetary boundaries render a shift to a more help to keep the carrying capacity of the Earth sustainable economy imperative, which makes within the planetary boundaries or, where they better and responsible use of the Earth’s have already been exceeded, to fall back to resources. The change to a sustainable within the boundaries? economy requires environmentally aware • What are the potential contributions of the consumers, who steer economic activities bioeconomy to meeting major global through their targeted preferences and choices, challenges? and an overall sustainability-conscious • What conditions would be necessary for a behaviour of all stakeholders. Bioeconomy sustainable bioeconomy? has become the guiding concept for large areas of economic development and societal transition so urgently needed to achieve this goal. References • The bioeconomy goes far beyond the idea of creating a biobased economy. It also builds on Angermeier PL, Karr JR (1994) Biological integrity ver- sustainable development through the applica- sus biological diversity as policy directives. BioSci- tion of biological and systems knowledge and ence. https://doi.org/10.2307/1312512 the generation of innovations to develop a sus- Aulakh J, Regmi A (2013) Post-harvest food losses estimation-development of consistent methodology. tainable economy. This is not a sectoral First meeting of the scientific review committee of approach in which only economic activities are the food and agricultural organization of the considered that use biobased resources. Instead, UN. Accessed 22 Dec 2014 the concepts of life cycle thinking and value BGR (2015) Energy study 2015. Reserves, resources and availability of energy resources (19). The Federal chain approaches, resource use efficiency and Institute for Geoscience and Natural Resources recycling are applied to all production activities. (BGR), Hannover, 172 p Therefore, the bioeconomy is an integrated and Bruinsma (2009) The resource outlook to 2050: by how forward-looking approach striving for an overall much do land, water and crop yields need to increase by 2050? In: FAO expert meeting. https://doi.org/10. economic system optimization. 1016/B978-0-323-10199-8.00006-2 European Commission (2014) Report on critical raw The bioeconomy can contribute to meeting materials for the EU – critical raw materials profiles. In cooperation with Claudia Wulz (ENTR). European global challenges through its nature as an econ- Commission, Brussels omy building on renewable resources, biological FAO (2011) The state of the world’s land and water knowledge, innovation and knowledge genera- resources for food and agriculture (SOLAW) – man- tion and through holistic approaches that think aging systems at risk. Food and Agriculture Organiza- tion of the United Nations, London along value chains and in value nets. This means FAO (2015) Fisheries and Aquaculture Department, Sta- that the bioeconomy does more than just follow tistics and Information Service FishStatJ: Universal traditional pathways of biomass production, con- software for fishery statistical time series version and use. First, it must lead the way Hilger T, Lewandowski I, Winkler B et al (2015) Seeds of change: plant genetic resources and people’s towards an innovative and sustainable use of livelihoods. In: Agroecology, INTECH open science the Earth’s limited resources. Second, it has to open minds, Rijeka, Croatia, pp 123–146 provide guidelines for the societal transition IPCC (2006) Guidelines for national greenhouse gas towards sustainable development. inventories. In: Eggleston HS, Buendia L, Miwa K, Ngara T, Tanabe K (eds) Prepared by the national greenhouse gas inventories programme. IGES, Review Questions Miura IPCC (2014) Climate change 2014: synthesis report. In: Core Writing Team, Pachauri RK , Meyer LA (eds) • What are the consequences, advantages and Contribution of working groups I, II and III to the fifth disadvantages of the use of fossil resources? assessment report of the intergovernmental panel on 16 I. Lewandowski et al.

climate change. IPCC, Geneva, 151 pp. https://www. working group III to the fourth assessment report of ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_ the intergovernmental panel on climate change. FINAL_All_Topics.pdf. Accessed 31 Dec 2016 Cambridge University Press, Cambridge Karr JR, Dudley DR (1981) Ecological perspective on Steffen W, Richardson K, Rockstrom J et al (2015) Plan- water quality goals. Environ Manag 5(1):55–68. etary boundaries: guiding human development on a https://doi.org/10.1007/BF01866609 changing planet. Science. https://doi.org/10.1126/sci Lambin EF, Turner BL, Geist HJ et al (2001) The causes ence.1259855 of land use and land cover change: moving beyond the UNEP (1997) In: Middleton N, Thomas D (co-ordinating myths. Glob Environ Change 11(4):261–269 eds) World Atlas of desertification. Copublished in the Pretty J, Toulmin C, Williams S (2011) Sustainable inten- US, Central and South America by John Wiley, sification in African agriculture. Int J Agric Sustain. London, New York, c1997 https://doi.org/10.3763/ijas.2010.0583 UNEP, Bringezu S, Schütz H, Pengue W, O’Brien M, REN21 (2016) Renewables 2016 global status report. Garcia F, Sims R, Howarth R, Kauppi L, Swilling M, REN21 Secretariat, Paris. ISBN: 978-3-9818107-0-7 Herrick J (2014) Assessing global land use: balancing Smeets EMW, Faaij APC, Lewandowski IM et al (2007) consumption with sustainable supply. In: A report of A bottom-up assessment and review of global the working group on land and soils of the Interna- bio-energy potentials to 2050. Prog Energy Combust tional Resource Panel. UNEP Sci. https://doi.org/10.1016/j.pecs.2006.08.001 Welp LR, Keeling RF, Meijer HAJ et al (2011) Interan- Smith P, Martino D, Cai Z et al (2007) Agriculture. In: nual variability in the oxygen isotopes of atmospheric Metz B, Davidson OR, Bosch PR, Dave R, Meyer LA CO2 driven by El Ninõ. Nature. https://doi.org/10. (eds) Climate change 2007: mitigation, contribution of 1038/nature10421

Urban gardening on a parking deck in Stuttgart. # Ulrich Schmidt

R. Birner (*) Hans-Ruthenberg-Institute, Social and Institutional Change in Agricultural Development, University of Hohenheim, Stuttgart, Germany e-mail: [email protected]

# The Author(s) 2018 17 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_3 18 R. Birner

Abstract This chapter consists of three sections. The first section deals with the origin and evolution of the concept of the bioeconomy. It starts by tracing the first uses of the terms bioeconomics and bioeconomy and goes on to review the development of the concept of the “knowledge-based bioeconomy” in the European Union before discussing the rise of the bioeconomy as a global concept. A shift from a “resource substitution perspective” of the bioeconomy to a “biotechnology innovation perspective” is identified. Critical views of the bioeconomy are discussed, distinguishing a “fundamental critique” and a “greenwashing critique” of the bioeconomy. The first section of this chapter also reviews the relations between the concept of the bioeconomy and the concepts of “sustainable development”, “green economy”, “circular economy” and “societal transformation”. The second section of the chapter discusses the bioeconomy strategies that an increasing number of countries around the world have adopted in recent years. This section uses a competitiveness framework to classify different elements of the bioeconomy strategies. The third section of the chapter is concerned with bioeconomy governance, focusing on the different actors in the bioeconomy, the ways in which they interact and the governance challenges that they are confronted with.

Keywords Bioeconomy concepts • Knowledge-based bioeconomy • Bioeconomy strategies • Bioeconomy governance

Learning Objectives 3.1 The Concept This chapter should enable the reader to: of the Bioeconomy: Origin and Evolution • Define the term bioeconomy. • Understand the origin and evolution of the 3.1.1 The First Use of the Terms concept of the bioeconomy. “Bioeconomics” • Be familiar with diverse perspectives on the and “Bioeconomy” bioeconomy. • Understand the relation between the concept of The use of the term “bioeconomics” can, the bioeconomy and the concepts of sustain- according to Bonaiuti (2014, p. 54), be traced able development, green economy, circular back to Zeman, who used the term in the late economy and the great societal transformation. 1960s to designate an economic order that appro- • Classify the components of bioeconomy priately acknowledges the biological bases of strategies and policies. almost all economic activities. As Bonaiuti • Identify the key stakeholders of the (2014, p. 54) further explained, Georgescu- bioeconomy and understand their relations. Roegen “liked the term and from the early • Understand key challenges of bioeconomy 1970s made it the banner summing up the most governance. 3 Bioeconomy Concepts 19 important conclusions he had come to in a industrial consequences of advancements in biol- lifetime of research”. An essential element in ogy, the major reason why bioeconomy became Georgescu-Roegen’s use of the term an important policy concept in Europe was a bioeconomics was his concern that unlimited deliberate decision by staff members of the growth would not be compatible with the basic European Commission to promote this concept. laws of nature (Bonaiuti 2014, p. 54). One of the key actors in this effort was Christian This use of the term “bioeconomics” is rather Patermann, the former Program Director of “Bio- different from the early use of the term technology, Agriculture and Nutrition” in the “bioeconomy”, which referred to the use of Directorate General for Research, Science and biological knowledge for commercial and indus- Education of the European Commission. trial purposes. As pointed out in Chap. 4, one can According to his own account, the term consider this rather contrasting use of the two “bioeconomy” was used by a conference of terms as an “irony of fate”. According to von Ministers of Environment.1 The term had not Braun (2014, p. 7), the term was first defined by been further specified by the members of that the two geneticists Juan Enriquez Cabot and conference, but Patermann and his colleagues Rodrigo Martinez. A paper published by realized that the concept had a unique potential Enriquez in the Science magazine in 1998 as a policy concept that would allow the EU to (Enriquez 1998) is also quoted as a source for respond to new opportunities. One opportunity this use of the term (Gottwald 2016, p. 11). In was making economic use of the emerging new this paper, which is entitled “Genomics and the potential of using biotechnologies, as indicated World’s Economy”, Enriquez discusses that the above. Another opportunity inherent in the con- application of the discoveries of genomics will cept of the bioeconomy is the replacement of lead to a restructuring in the role of companies fossil-based resources by bio-based resources, and industries “in a way that will change the both for energy and for material use. In the world’s economy”. He outlined “the creation of early 2000s, decision-makers in the EU felt a a new economic sector, the life sciences” in this strong incentive to find new concepts, because paper (Enriquez 1998, p. 925). Though this paper the need for increasing agricultural productivity does not use the term “bioeconomy”, the source to meet future needs for food and biomass was represents one of the roots of the concept of not very well recognized at the time. Funding for bioeconomy: advancements in the biological agricultural research, which is key to increasing sciences and in biotechnology, which have the agricultural productivity, had declined through- potential to transform many industrial production out the 1990s in spite of the emerging need to processes. The view that the “biological revolu- produce biomass for other uses than food tion” would eventually transform the industry (Geoghegan-Quinn 2013). was, however, not new at that time. The “indus- In developing the concept of the bioeconomy trial impact of the biological revolution” was in the EU, the label “knowledge-based” was already formulated in the early 1980s (Glick added so that it became the “knowledge-based 1982). bioeconomy”. The label “knowledge-based” was in line with the EU innovation policy that prevailed at the time. At a meeting in Lisbon in 3.1.2 The Development 2000, the European Council had made a commit- of the Concept ment to establish “the most competitive and of the “Knowledge-Based dynamic, knowledge-based economy in the Bioeconomy” in the European world” (EU 2000). As pointed out in Sect. 3.1.4 in Union

Even though the term bioeconomy was first 1 Personal communication with Dr. Christian Patermann, introduced by scientists concerned with the 29.04.2013, Berlin. 20 R. Birner more detail, the concept of the knowledge-based of transport fuels”. One can label this dimen- economy reflects the vision of achieving sion of the bioeconomy “the resource substi- economic growth through high-technology tution perspective”. industries, which requires investments in innovation and highly skilled labour. The changing emphasis of these two The efforts of the EU to promote the concept perspectives over time is further discussed in the knowledge-based bioeconomy proved Sect. 3.1.4. The development of the concept of remarkably successful. In 2005, the European the bioeconomy was accompanied by increased Commission held a conference entitled funding, especially in the EU’s Framework “New Perspectives on the Knowledge-Based Programs for Research and Technological Bio-Economy” (EC 2005). At this conference, Development, most notably in the current 8th Janez Potocˇnik, the European Commissioner for Framework Program, which is entitled “Horizon Science and Research, gave a speech entitled 2020” (EC 2013). “Transforming life sciences knowledge into The development of the bioeconomy concept new, sustainable, eco-efficient and competitive by the institutions of the EU was mirrored by products” (Potocˇnik 2005). In the so-called efforts to establish this concept in the EU mem- Cologne Paper of 2007, this title has been quoted ber states. Germany, for example, established a as a definition of the knowledge-based Bioeconomy Council at the federal level in 2010 bioeconomy. The Cologne Paper was based on under the leadership of the Federal Ministry of a workshop held under the German Presidency of Education and Science (BMBF). In 2010, a the Council of the European Union in 2007 in the “National Research Strategy BioEconomy city Cologne. The workshop was attended by 2030” was published (BMBF 2010), and the fed- experts from research organizations and eral government pledged to spend 2.4 billion companies covering different fields, including euros for bioeconomy research until 2016 crop production, biotechnology, bioenergy and (BMBF 2014, p. 9). In 2013, Germany published biomedicine (EU 2007). The Cologne Paper a “National Policy Strategy on Bioeconomy”. emphasized the two dimensions of the The policy had the subtitle “Renewable resources bioeconomy mentioned above: and biotechnological processes as basis for food, industry and energy”, which reflects both the • On the one hand, the paper identified the role biotechnology innovation perspective and the of biotechnology as “an important pillar of resource substitution perspective mentioned Europe’s economy by 2030, indispensable to above (BMEL 2013). sustainable economic growth, employment, Other European countries also developed energy supply and to maintaining the standard policies and strategies related to the bioeconomy. of living” (EU 2007, p. 4). One can label this However, there was considerable variation dimension of the bioeconomy “the biotech- regarding the extent to which these policies and nology innovation perspective”. strategies were specifically focused on the • On the other hand, the Cologne Paper stressed bioeconomy or rather on related aspects, such the use of crops as “renewable industrial feed- as biotechnology or renewable energy. For stock to produce biofuels, biopolymers and example, by 2015 neither France nor Great chemicals” (EU 2007, p. 4). The paper also Britain nor Italy had a strategy that specifically envisaged that “by 2020, in addition to the focused on the bioeconomy (BO¨ R 2015a). then mature gasification technologies, the Finland, in contrast, had already published a conversion of lignocellulosic biomass by bioeconomy strategy in 2014. Austria and enzymatic hydrolysis will be standard tech- Norway, to mention two other examples, were nology opening up access to large feedstock in the process of preparing a dedicated supplies for bioprocesses and the production bioeconomy strategy in 2015 (BO¨ R 2015b). 3 Bioeconomy Concepts 21

3.1.3 The Rise of the Bioeconomy This definition also reflects the two as a Global Concept perspectives of the bioeconomy discussed above, the biotechnology innovation perspective The EU is not the only region of the world where and the resource substitution perspective. Other the concept of the bioeconomy has been pro- countries, including both industrialized and moted since the early 2000s. As already men- developing ones, also published bioeconomy- tioned in Sect. 3.1.1, the term bioeconomy was related policies and strategies in the first two probably first used at a meeting of the American decades of the twenty-first century. For example, Association for the Advancement of Science Malaysia published a “Bioeconomy Transforma- in 1997. In 2012, the Obama administration tion Program” in 2012, and South Africa released released an official strategy on the bioeconomy a bioeconomy strategy in 2013 (BO¨ R 2015b). entitled the “National Bioeconomy Blueprint” While the number of countries that have dedi- (White House 2012). This strategy defines the cated bioeconomy policies is still limited, there bioeconomy as follows: are a large number of countries that have A bioeconomy is one based on the use of research strategies related to biotechnology and/or to and innovation in the biological sciences to create renewable resources (BO¨ R 2015b). Figure 3.1 economic activity and public benefit. The gives a global overview of the state of U.S. bioeconomy is all around us: new drugs and bioeconomy strategy development achieved in diagnostics for improved human health, higher- yielding food crops, emerging biofuels to reduce 2017. dependency on oil, and biobased chemical In December 2015, the first Global intermediates, to name just a few. (White House Bioeconomy Summit was held in Berlin. The 2012,p.7) event was organized by the German Bioeconomy

Fig. 3.1 Bioeconomy policies and strategies established by 2017 (BO¨ R 2017) 22 R. Birner

300

250

200

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100

Number of Citations in Scopus 50

1990 1991 19921993 19941995 19961997 19981999 2000 20012002 2003 2004 2005 20062007 2008 2009 201020112012 2013 20142015 2016 Year

Fig. 3.2 Number of publications listed in Scopus that economy”, “biobased economy”, “bioeconomy” or “bio- refer to the bioeconomy. Note: The diagram captures the economy”. Source: Compiled by the authors based on number of entries that have one of the following Scopus expressions in titles, abstracts or keywords: “bio-based

Council in collaboration with an international perspective. Table 3.1 indicates how the empha- advisory committee. It brought together more sis on these two perspectives changed over time. than 700 bioeconomy experts from more than Even though biotechnology innovation was 80 countries (BO¨ R 2015c, p. 4). recognized from the very beginning as an oppor- The rise of the bioeconomy as a global con- tunity for the bioeconomy, the resource substitu- cept is not only reflected in the increasing num- tion perspective was more prominent in the first ber of countries that have bioeconomy-related decade of the twenty-first century. strategies and policies but also in the scientific One driving force behind the resource substi- literature. As shown in Fig. 3.2, the number of tution perspective was the concept of “peak oil”, publications listed in Scopus that refer to the which implies that oil extraction rates had bioeconomy has increased rapidly from 2005 reached its peak and that extraction rates would onwards. fall after the peak, while oil prices would continuously increase (Bardi 2009). A rising price of oil increases the comparative advantage of using 3.1.4 Changing Perspectives biomass for energy and material use. This line of on the Bioeconomy reasoning promoted the resource substitution perspective of the bioeconomy. As shown above, the development of the concept Figure 3.3 illustrates the resource substitution of the bioeconomy was characterized by two perspective of the bioeconomy. This diagram perspectives: (1) the resource substitution per- was developed by the German Bioeconomy spective and (2) the biotechnology innovation Council in 2010 (BO¨ R 2010). Essential 3 Bioeconomy Concepts 23

Table 3.1 Changing perspectives of the bioeconomy Resource substitution perspective (first Biotechnology innovation perspective (second Perspectives decade of the twenty-first century) decade of the twenty-first century) Relation to “Peak oil”, scarcity of fossil energy resources New exploration technologies for oil; low, fossil resources volatile prices Major driving Expectation that prices will continue to Paris climate agreement Advances in the forces increase biological sciences Overall Resource substitution Innovation for sustainable development rationale Source: Prepared by the author based on BO¨ R(2014)

Fig. 3.3 The resource substitution perspective of the bio-economy. Source: BO¨ R(2010, p. 15) components of the bioeconomy are, as seen in mandates to add biofuel to commercial petrol, Fig. 3.3, the production of biomass in various became subject to increasing criticism, as forms, its conditioning and conversion using dif- research established the impact that they can ferent procedures and the production and market- have on food prices (de Gorter et al. 2013). ing of food, feed, fibre fuel and “fun”. The term These developments had two important “fun” refers to products such as flowers. implications for the bioeconomy: First, the The oil price crisis of 2007/2008 reaffirmed potential tension between ensuring food avail- the “peak oil” perception. The increasing use of ability and using biomass for energy purposes food crops for biofuel contributed to the spike in became an important topic in the public policy food prices that was observed following the oil debate surrounding the bioeconomy, as further price crisis. This development was primarily pro- discussed below. Second, increasing attention moted by high oil prices (Headey and Fan 2008). was paid to the need to increase the productivity Biofuel policies, such as biofuel subsidies and of biomass production and to develop options for 24 R. Birner producing and using biomass that are not in con- 3.1.5 Arising Criticism of the Concept flict with food availability. Such options include second-generation technologies and the use of The global rise of the concept of the bioeconomy by-products and waste products for bioenergy has not been without its critics. One can distin- production. guish two major types of criticism, which one Both energy and food prices fell considerably can label the “fundamental critique” and the after 2010, and they also became more volatile as “greenwashing critique”. An example of the fun- compared to the 1990s (Kalkuhl et al. 2016). The damental critique is the writings by Birch and development of the oil price remains difficult to co-authors (Birch 2006; Birch et al. 2010). They project (Baumeister and Kilian 2016), but in criticize the bioeconomy as the “neolibera- view of the prevailing low oil prices, scarcity of lization of nature”. The authors analyse the oil was no longer a prominent argument for the emerging discourse of the knowledge-based resource substitution perspective (Table 3.1). bioeconomy in the EU and criticize that the Climate protection became the major argument development of the concept has been dominated for substituting fossil-based resources. While this by what they refer to as a “neoliberal ideology”. argument was not new (e.g. WBGU 2011), the Accordingly, the criticism of the bioeconomy Paris Agreement under the United Nations concept is linked to a more general critique of Framework Convention on Climate Change “a neoliberal regime in which market values are became a major rationale for resource substitu- installed as the over-riding ethic in society and tion (see Table 3.1). the market rule is imposed on all aspects of life” While resource substitution, thus, remains (Birch 2006, p. 4). Related to this type of important, the emphasis has shifted to the bio- criticism is the claim that the concept has been technology innovation perspective of the promoted to pursue the interest of big companies, bioeconomy. Accordingly, the opportunity to which are interested in commercializing make economic use of innovations in biotechnol- innovations in the life sciences and in applying ogy and, more generally, in the life sciences has technologies that are contested in society, such as become a major rationale for the bioeconomy in genetic engineering and synthetic biology. An recent years. An example for this shift in per- example of this criticism is a paper by Gottwald spective is a Strategy Paper published by the and Budde that was published in 2015 on the German Federal Bioeconomy Council in May occasion of the Global Bioeconomy Summit of 2014, which includes the following section: 2015. These authors also argue that the Originally, the concept of a biobased economy was bioeconomy would promote “land grabbing” promoted in the light of expected rapidly depleting and threaten world food security (Gottwald and petrol, gas and coal reserves. However, the move Budde 2015). into bioeconomy is no longer driven predomi- The second type of criticism is not fundamen- nantly by expectations of rising prices of fossil fuels. In view of the exploitation of new fossil tally opposed to the concept of the bioeconomy reserves and due to energy efficiency but rather warns against the use of this concept improvements, this argument has become less for “greenwashing”. An example of this type of pressing but it nevertheless remains strategically criticism is a report by the World Wide Fund for essential. Without major adjustments, the continued emission of greenhouse gases and the Nature published in 2009 (WWF 2009), which is related changes in climate conditions will irrevers- entitled “Industrial biotechnology—More than ibly damage the global ecosystem and will involve green fuel in a dirty economy?” This report ¨ incalculable economic risks. (BOR 2014,p.1) acknowledges the potential of the bioeconomy The role of the bioeconomy as an important to make modern economic systems more element in moving towards a more sustainable environmentally sustainable, but points out that economic system is an issue further discussed in the approaches that have been promoted under more detail in Sect. 3.1.6. the label bioeconomy do not necessarily realize 3 Bioeconomy Concepts 25 this potential. The thrust of this criticism is to the definition of the bioeconomy. The ensure that the label “bio” is not misused to Communique´ of the Global Bioeconomy Summit portray an essentially non-sustainable economic of 2015, which was entitled “Making system as environmentally friendly, but to ensure Bioeconomy Work for Sustainable Develop- that innovations in the life sciences are indeed ment”, includes the following statement: used to ensure a transition towards a sustainable Bioeconomy is defined in different ways around economic system. the world. We have not aimed for a unified defini- The rising criticism against the bioeconomy tion but note that an understanding of ‘bioeconomy may have contributed to two trends in the devel- as the knowledge-based production and utilization of biological resources, innovative biological pro- opment of the bioeconomy concept, which have cesses and principles to sustainably provide become prominent in recent years. One is to goods and services across all economic sectors’ is embed the concept of the bioeconomy more shared by many. (Bioeconomy Summit 2015,p.4, explicitly into the broader concepts of sustain- emphasis added) able development and the green economy. The The reference to sustainability can be placed second trend is a shift in focus from the supply within the context of the wider societal goal of side of the bioeconomy to the demand side, i.e. a “sustainable development”. This concept had shift from technological innovations and entered the international policy agenda already companies that commercialize them to the in the 1980s. The UN Commission on Environ- consumers and to society at large. Both trends ment and Development defined “sustainable are described below in more detail. development” in its report “Our Common Future” as follows: development that meets the needs of the present 3.1.6 “Greening” the Bioeconomy without compromising the ability of future generations to meet their own needs. (WCED The early definitions of the bioeconomy quoted 1987, p. 41) above did not include explicit references to envi- The Commission on Environment and Devel- ronmental goals, even though environmental opment is also known as the Brundtland Com- sustainability was implicitly assumed both in mission, named after its chair, Gro Harlem the biotechnological innovation perspective and Brundtland, who was then prime minister of in the resource substitution perspective. As the Norway and first political leader who came to bioeconomy concept was further developed the this position after having been a minister of envi- second decade of the twenty-first century, it was ronment before. As Brundtland points out, the increasingly recognized that environmental goals commission aimed at bringing two major concerns need to be explicitly included into the concept as together, which had been emerged in the interna- the use of biotechnological innovations and the tional agenda in previous decades but were hitherto use of bio-based resources are not “automati- treated rather independently: the concern about cally” more environmentally friendly than alter- environmental problems in industrialized countries native options. The increasing criticism of the on the one hand and the concern about poverty and use of bioenergy, which was associated with the population pressure in developing countries on the food price crisis of 2008/2009 (see above), is a other hand (WCED 1987). The definition of sus- particularly pronounced example of this shift in tainable development reflects the goal to address emphasis. these two concerns jointly. The concept of sustainable development was 3.1.6.1 Bioeconomy and Sustainability reaffirmed at the “International Conference on The increasing concern about ensuring Environment and Development” in Rio de sustainability is reflected in an adjustment of Janeiro in 1992, also referred to as the Earth 26 R. Birner

Summit. At this conference, the representatives of more than 170 nations passed a major global action program called “Agenda 21”, which had four program areas: social and economic dimensions; conservation and management of resources; strengthening major groups, including civil society organizations; and means of implementation (UN 1992). The Agenda 21 promoted the notion that “sustainable development” has three dimensions: an economic, a social and an environmental dimension. Accordingly, the principle that the bioeconomy has to be sustainable covers not only the environmental dimension but also the economic and social dimension. The concept of sustainability and its relevance is further discussed in Sect. 8.2.

Fig. 3.4 The bioeconomy as a component of the green 3.1.6.2 The Bioeconomy economy. Source: Authors as a Component of the Green Economy At the Rioþ20 Conference in Rio de Janeiro in not as part of the bioeconomy. Figure 3.4 2002, the participants adopted a resolution enti- illustrates this conceptualization. tled “The future we want” (UN 2012). This In the UN resolution “The world we want” resolution reaffirms the principle sustainable mentioned above, the international community development, and it highlights the concept of also agreed on a process to establish sustainable the “green economy” as “one of the important development goals as a follow-up to the Millen- tools available for achieving sustainable devel- nium Development Goals that were agreed upon opment” (UN 2012, p. 10). The United Nations in 2000 and covered the time period until 2015 Environment Program (UNEP) defined a green (UN 2012, p. 46ff). A set of 17 “Sustainable economy: Development Goals” (SDGs) were adopted by as one that results in improved human well-being the UN in 2015. Section 8.2 further discusses and social equity, while significantly reducing the role of the SDGs for the bioeconomy. environmental risks and ecological scarcities [...] In its simplest expression, a green economy can be thought of as one which is low carbon, resource 3.1.6.3 Bioeconomy and the Principles efficient and socially inclusive. (UNEP 2011, of the Circular Economy p. 16) Next to the concept of the green economy, In the academic literature, the concept of the another concept has gained prominence in recent green economy has a long history (see review by years, which is related to the bioeconomy: the Loiseau et al. 2016). The question arises as to concept of a “circular economy”. The how the concept of bioeconomy is linked to the Communique´ of the Global Bioeconomy Summit concept of the green economy. Ultimately, this is mentioned above emphasizes the need to align a matter of definition. One option is to consider the principles of a sustainable bioeconomy with the bioeconomy as an integral component of the the principles of a circular economy, which green economy. According to this view, one may “would involve systemic approaches across consider renewable energy sources that do not sectors (i.e. nexus thinking), particularly rely on biological resources, such as wind and innovation policy measures that aim at solar energy, as part of the green economy but optimizing Bioeconomy value networks and 3 Bioeconomy Concepts 27 minimizing waste and losses” (Bioeconomy ensuring that the bioeconomy is, indeed, sustain- Summit 2015, p. 5). able. Moreover, the focus on renewable This concept of the circular economy was resources and on biotechnological innovations, popularized in a classical textbook on environ- which are central elements of the bioeconomy, mental economics by David Pearce and Kerry can play an important role in implementing the Turner in 1989 (Pearce and Turner 1989). principles of the circular economy. These authors trace it back to a landmark essay The goal to link the bioeconomy with the by Kenneth Boulding published in 1966, in principles of a circular economy has also led to which Boulding emphasized the need to manage the development of the concept of a “biomass- the economy not as an open system but as a based value web” (Virchow et al. 2016). This “spaceship”, where “man must find his place in concept takes into account that the cascading a cyclical ecological system which is capable of use of biomass and the use of by-products from continuous reproduction of material form” the processing of biomass lead to an interlinkage (Boulding 1966, p. 11). Boulding’s concepts are of different value chains. These can be analysed further discussed in Sect. 10.2. As a recent as a “value web”. Scheiterle et al. (2017) present review shows, the concept of the circular econ- a case study of Brazil’s sugarcane sector. omy has mostly been associated with the adop- Figure 3.5 illustrates the concept of a value tion of closing-the-loop production patterns web based on the sugarcane biomass. As can be within an economic system, and with aims to seen from the diagram, the by-products from the increase the efficiency of resource use, placing processing of sugarcane, such as filter cake, a specific focus on urban and industrial waste vinasse and bagasse, are used for the generation (Ghisellini et al. 2016, p. 11). As such, the con- of biogas or bioelectricity instead of being cept of the circular economy is narrower in scope disposed as waste. These by-products can than the concepts of the green economy and the also be used for new types of bioeconomy bioeconomy. The demand to link the products, such as flavours or pharmaceuticals, bioeconomy with the principles of the circular thus opening new branches in the biomass- economy can, however, play an important role in based value web.

Rum & Cachaça

Pellets & Briquettes Biofuel Sugar (Potential) Bioeconomy Products

Bioelectricity Ethanol Bioplastics

Colorants

Organic Acids Bagasse Filter cake & Juice Vinasse Amino Acids

Lubricants

Pharmaceuticals Biogas Enzymes & Living cells Residues Flavors & Caption: Fragrances Final products Sugarcane crop Soil Cosmetics Intermediate products Potential products Detergents & Solvents Existing links Potential links

Fig. 3.5 Biomass ﬂows in a value web based on biomass from sugarcane. Source: Scheiterle et al. (2017,p.6) 28 R. Birner

3.1.7 Bioeconomy as an Element of a As shown in the diagram, preferences and “Great Societal values of people, which translate into needs and Transformation” demands for (new) bio-based products, are as essential for the bioeconomy as is the production As can be seen from the above deﬁnitions, the of those products. This holistic view of the development of the bioeconomy concept was bioeconomy requires a transdisciplinary systems initially characterized by a focus on the “supply analysis. The issue of transdisciplinarity is dealt side” of the bioeconomy, that is, by a focus on with in Chap. 4. the supply of goods and services that are based Taking the societal embeddedness of the on biological resources and biotechnological bioeconomy a step further, one can also consider processes. In recent years, more emphasis has the bioeconomy as an element in a process of been placed on the demand side of the societal transformation, which is ultimately bioeconomy and, more generally, on the role of required to transform the current economic sys- the bioeconomy in society. tem into one that is economically, environmen- Figure 3.6 represents a more holistic view of tally and socially sustainable. The recognition of the bioeconomy, which takes people—as the challenges involved in this transformation consumers and citizens—explicitly into account. has led to the hypothesis that it will not be sufﬁ- This diagram was developed by a team from the cient to create economic incentives and imple- University of Hohenheim as basis for the Master’s ment conducive environmental policies. What is program “Bioeconomy”, which started in 2014. ultimately required is “a great societal transfor-

Fig. 3.6 Holistic concept of the bioeconomy. Source: University of Hohenheim (2013) 3 Bioeconomy Concepts 29 mation”, which “encompasses profound changes In line with this thinking, Fig. 3.7 places the to infrastructures, production processes, regula- bioeconomy in a larger historical context. In this tion systems and lifestyles, and extends to a new perspective, the bioeconomy is conceptualized as kind of interaction between politics, society, sci- an essential element in a new era that will ulti- ence and the economy” (WBGU 2011, p. 1). mately replace the industrial society. As shown

1 2 3 4 Post-industrial society Hunters & gatherers Agricultural society Industrial society Bioeconomy Energy input [GJ/capita and year] Great societal 4 transformation

10–20 ca. 65 250 Biomass Biomass Different energy carriers (food, wood, ...) 3 vegetarian food 1 Neolithic 50 feed production 170 fossil energy Revolution 12 wood 5 hydropower Agricultural 14 nuclear power 2 61 biomass Revolution Material input [t/capita and year] 3 Industrial Revolution

ca. 1 ca. 4 19,5 Biomass Biomass Various materials (food, wood, ...) 0.5 vegetarian food 2.7 feed production (DS) 4.7 biomass (DS) 0.8 wood 5.1 oil, coal, gas 9.7 minerals, metals, ...

1010 Hunters and Agricultural Industrial gatherers society society 1990 1970 1950 9 10 1900

1700 A.D.

108 World population

107

5000 B.C.

106 106 105 104 103 102 101 100 Years before present

Fig. 3.7 The bioeconomy as an element in societal transformation. Source: Adjusted from WBGU (2011, p. 86) 30 R. Birner in Fig. 3.7, the industrial society followed the “bioeconomy strategies” is used in the following agricultural society, which in turn had followed to refer policy documents or strategy documents the society of hunters and gatherers. The indus- that have officially been released by national trial society was made possible by the industrial governments or parliaments. The rationale for revolution and agricultural revolution that pre- government intervention in support of the ceded it. The agricultural society, in turn, was bioeconomy is further discussed in Sect. 10.2. made possible by the Neolithic Revolution. As To better understand the bioeconomy strategies shown in Fig. 3.7, the agricultural society and the that governments have developed, it is useful industrial society were associated with a substan- to take the comparative advantage into account tial increase in energy and material use. The that a country has for developing different lower part of Fig. 3.7 indicates that the components of the bioeconomy. The “diamond transitions to the agricultural and to the industrial model” developed by Porter (1990) provides a society were associated with a steep increase in conceptual framework, which can be used world population, which has slowed down only for determining the competitive advantage of in the later phases of the industrial society. Since a country’s bioeconomy (Birner et al. 2014). the transitions to the agricultural and the indus- Figure 3.8 displays an adapted version of Porter’s trial society were caused by so-called diamond model. revolutions, it appears justified to assume that the shift to the bioeconomy requires a similar large-scale change. This line of thinking is 3.2.1 Basic Elements of a reflected in the idea of a “great societal transfor- Bioeconomy Strategy mation” mentioned above (WBGU 2011). The four basic elements of the “diamond” model, which determine the competitive advantage of a 3.2 Bioeconomy Strategies country for developing its bioeconomy, are (1) factor conditions; (2) demand conditions; As pointed out in Sect. 3.1.3, an increasing num- (3) firm structure, strategy and rivalry; and ber of countries have adopted bioeconomy (4) related and supporting industries. strategies or bioeconomy policies. Since the two Bioeconomy strategies typically aim to promote terms are often used interchangeably, the term the bioeconomy by targeting several or all of these

Fig. 3.8 The diamond Chance / Society / model of comparative Firm structure, advantage. Source: shocks culture Adapted from Porter (1990, strategy and rivalry p. 127), published in Birner et al. (2014,p.5)

Factor Demand conditions conditions

Business Related and associations supporting Government / NGOs industries 3 Bioeconomy Concepts 31 four groups of factors. The Global Competitive- labour force for the bioeconomy, especially ness Report of the World Economic Forum (2016) by investing in education and professional provides a wide range of indicators related to training. The development of the bioeconomy these groups of factors for 138 countries. Though requires specific skill sets, and education the indicators are not specific for the bioeconomy, programs need to be adjusted and developed they are still a useful source of information for to enable the labour force to gain those skills. countries to assess the general conditions for the As an example, the University of Hohenheim development of their bioeconomy. in Stuttgart, Germany, introduced as an interdisciplinary Master’s program called “Bioeconomy” in 2014. In Porter’s frame- 3.2.2 Upgrading Factor Conditions work, such investments in education are for the Bioeconomy referred to as “factor upgrading”—which is an important strategy that countries can use Based on Porter (1990), one can distinguish five to improve their competitive advantage for the types of factor conditions, which are relevant for development of their bioeconomy. the development of the bioeconomy: 3. Knowledge resources: One of the most important instruments that governments can use to 1. Natural conditions: A country’s endowment develop their bioeconomy is investment in with land and its agroclimatic conditions have public research on bioeconomy to foster a large influence on a country’s competitive innovations. The concept of the “knowledge- advantage for the production of biomass. based bioeconomy” discussed above Countries with large land endowments, emphasizes this aspect. Accordingly, favourable agroclimatic conditions and low investments in research and innovation are population density typically have a compara- an important element of most bioeconomy- tive advantage for emphasizing the resource related strategies (BO¨ R 2015a, b). Since substitution perspective of the bioeconomy as research by the private sector also plays a they can have the potential to produce bio- key role for developing the bioeconomy, cre- mass for bioenergy and bio-based materials ating a conducive environment for research in (e.g. bioplastic) on a large scale and at com- the private sector is important as well. paratively low cost. Brazil, which has a com- 4. Capital resources: The development of the petitive advantage for producing sugarcane, is bioeconomy relies on investments along the an example for this type of countries. entire value chains for bioeconomy products, Countries that have access to marine including research, product development and resources may emphasize these resources in marketing. The availability of capital, espe- their bioeconomy-related strategies. Norway cially venture capital for risky investments, is is an example (BO¨ R 2015b, p. 108). Countries therefore an essential condition for the devel- with less favourable natural resource opment of the bioeconomy. conditions and/or limited land resources will 5. Infrastructure: Governments can also support have to focus more on biotechnology the development of the bioeconomy by innovation than on resource substitution to providing a supportive infrastructure, espe- develop their bioeconomy. cially in terms of transport as well as informa- 2. Labour resources: While the basic natural tion and communication technologies (ICTs). conditions cannot be influenced by govern- An important task is the identification of infra- ment interventions, governments can have a structure needs that are particularly relevant large influence on the qualification of their for the bioeconomy strategy selected. 32 R. Birner

3.2.3 Strengthening the Demand Bioeconomy Council indicates, however, that for Bioeconomy Products this aspect has attracted relatively limited attention, so far (BO¨ R 2015a, b). An important incentive for the development of the bioeconomy is a strong demand of consumers for bio-based products. Governments can foster 3.2.5 Strengthening Bioeconomy this demand by promoting labels for bio-based Clusters products that facilitate consumer choice and by conducting information campaigns and fostering A striking feature of the bioeconomy strategies social dialogue. Governments can also imple- around the world is the emphasis that they place ment rules for public procurement that strengthen on the development of clusters (BO¨ R 2015a, b). the pubic demand for bio-based products. The The concept of industry clusters or innovation analysis of national economy strategies around clusters is based on the insight that the develop- the world conducted by the German Bioeconomy ment of the bioeconomy requires a strong and ¨ Council (BOR 2015a) showed that such demand- regionally integrated network of industries that side instruments play an important role in many are related and supporting each other along the bioeconomy strategies. An interesting example ® value chain, e.g. by providing specialized inputs of this approach is the BioPreferred Program and services. Clusters also beneﬁt from a close of the United States Department of Agriculture interaction of research organizations, start-up (USDA). This program combines a voluntary companies that are often spin-offs of research labelling initiative for bio-based products with organizations and companies that have the mandatory purchasing requirements for federal capacity to engage in product development and agencies and their contractors, which access large markets. Historical experience encompasses 97 product categories (https:// indicates that governments have limited capacity www.biopreferred.gov/BioPreferred/). to create clusters from scratch. A more promising strategy is to identify emerging clusters and supporting them (Porter 1990). Bioeconomy 3.2.4 Fostering Competition Among clusters may also form regional networks. An Bioeconomy Firms example is the “3BI intercluster”, a partnership of bioeconomy clusters located in France, It is an important insight from Porter’s (1990) Germany, the Netherlands and the United King- analysis that a strong competition of companies dom (http://www.3bi-intercluster.org/home/). in their home countries fosters their international competitive advantage because such competition forces them to be innovative and strategic. At 3.2.6 Using Chances and Shocks times, governments chose to select and subsidize as Opportunities “champions” and protect them from competition. for Bioeconomy Development However, as Porter’s comparative historical studies show, this strategy has hardly ever been The comparative historical studies of Porter successful in enabling companies to gain interna- (1990) have shown that factors that are beyond tional competitive advantage. This insight can be the control of economic and political actors can applied to the bioeconomy, as well. Fostering play an important role in determining the com- competition among ﬁrms engaged in the petitive advantage of an industry. These factors bioeconomy and restricting market dominance may be positive (“chances”), such as discoveries among them can be seen as an important element that offer unexpected opportunities for the of a bioeconomy strategy. The review of bioeconomy, or negative (“shocks”), such as sud- bioeconomy strategies by the German den price changes or natural disasters (see 3 Bioeconomy Concepts 33

Fig. 3.8). These insights from general economic the bioeconomy can be promoted. This final sec- studies can also be applied to the bioeconomy. tion deals with the question of bioeconomy gov- Ultimately, it depends on the actions of ernance. The term governance is used here to governments and/or private businesses whether refer to the institutions, processes and actors opportunities that arise from chances or shocks that are relevant for the development of the are effectively used. For example, the oil price bioeconomy. crisis of 1973 induced the government of Brazil to establish a National Alcohol Program in 1975, which subsequently played an important role in 3.3.1 Overview the development of Brazil’s sugar-based bioeconomy (cf. Scheiterle et al. 2017). Likewise, Figure 3.9 displays a conceptual framework that the nuclear disaster of Fukushima in 2011 was a can be used to analyse the bioeconomy gover- major factor behind the political decision of the nance. The framework distinguishes between German government to get out of nuclear energy three different types of organizations: and focus on renewable energy, a decision organizations of the private sector, organizations referred to as “Energy Turn” (Energiewende). of the public sector and civil society organizations, which are referred to as the “third sector”. Research organizations are mostly public 3.2.7 Considering Sociocultural sector organizations. They are depicted separately Factors in view of their important role for the knowledge- based bioeconomy. The media are also depicted As indicated in Fig. 3.8, sociocultural factors play separately in view of their role in political pro- an important role for the development of the cesses. Typically, they are organizations of the bioeconomy, as well. Just as chances and shocks private sector. Citizens are placed in the centre (see above), these factors are also beyond the of the diagram. They are closely interlinked with immediate control of political or economic actors. all sectors, as further discussed below. Yet, they can influence the development of the The development of the bioeconomy depends bioeconomy in various ways. A case in point is on the various interactions among the different genetically modified organisms (GMOs). actors depicted in Fig. 3.9. The different actors Proponents of GMOs argue that they can play an may have converging or conflicting interests, important role in the bioeconomy, e.g. by improv- which will result in political and economic pro- ing the efficiency of producing or converting bio- cesses that may be more or less conducive to the mass. However, in most countries of Europe, the bioeconomy. The governance of the bioeconomy use of GMOs in agriculture is not accepted by is an interesting new area of research. Existing consumers, and, therefore, GMOs are not used in studies have focused on selected aspects, e.g. the agriculture. This exclusion of a technology for governance of biofuel policies (see, e.g. Bailis sociocultural reasons may, however, foster the and Baka 2011). However, comprehensive stud- efforts to develop alternative technologies, such ies on the governance of the bioeconomy are still as crop breeding methods based on statistical scarce. Therefore, the following sections provide methods. Countries may then gain a competitive conceptual considerations, which may be advantage in such alternative technologies. explored in more detail by empirical studies in the years to come.

3.3 Governance of the Bioeconomy 3.3.2 Private Enterprises and Business Associations The previous sections of this chapter have dealt with the questions of how the bioeconomy can be In a market economy—which is after the fall of deﬁned, how the concept has evolved and how the Soviet Union the dominant economic system 34 R. Birner

Private sector Research Orga- Funding Private enterprises nizations Competition and profit orientation - corporate social Innovations responsibility

Regulations Bioeconomy products Incentives Critique Funding Cooperation Advice Lobbying Media Citizens Consumers Voters Public sector Third sector Parliaments; public agen- Non-governmental /civil so- cies Participatory processes ciety organizations Common good - Public interests – interests of political interests Lobbying the members

Fig. 3.9 Governance of the bioeconomy. Source: Author in most countries of the world—private types of business associations and start to play a companies are, next to the consumers, the main role in lobbying for the bioeconomy. actors in the bioeconomy. Bioeconomy products As indicated in Fig. 3.9, bioeconomy and services are, as indicated in Fig. 3.9, mostly companies can benefit from government policies, produced by private companies. They are subject such as support programs. The various strategies to competition and they need to make profit to that governments can use to support the survive, but they can also exercise corporate bioeconomy fall under the linkages between social responsibility. An interesting potential of private and public sector depicted in Fig. 3.9. the bioeconomy lies in the fact that the Bioeconomy companies may also benefit from bioeconomy creates new opportunities for a research on bioeconomy that is funded by the wide range of different types of private sector public sector, and they may co-fund research companies—ranging from the small start-up that together with the government. Bioeconomy explores new biotechnology innovations to the companies and their associations may lobby the well-established large-scale manufacturers of government with the aim to induce the govern- consumer goods that may decide to introduce ment to support the development of the bio-based materials. bioeconomy. However, companies that rely on One of the challenges of bio-based companies fossil resources may lobby the government, as is the fact that they are distributed across many well, which may slow down the development of different industry branches and that they are, the bioeconomy. therefore, not represented by traditional industry associations. Companies that engage in the production of bio-based products may even face stiff 3.3.3 Consumers/Citizens/Voters competition, both economically and politically, from companies that rely on fossil-based In a market economy, consumers are, next to resources. However, over time, companies that companies, the main economic actors in the are engaged in the bioeconomy may form new bioeconomy. Therefore, policy instruments, 3 Bioeconomy Concepts 35 such as labels for bio-based products, can play an can involve a wide variety of stakeholders important role in promoting the bioeconomy, as beyond industry partners by applying transdisci- mentioned above. In the political system, plinary research approaches. Members of consumers also play a central role as citizens research organizations may also influence and voters. If they are interested in the government policies and public opinion by bioeconomy, they may consider the extent to participating in Scientific Advisory Councils which political parties foster the development related to the bioeconomy. of the bioeconomy and this may influence their voting decision. Citizens may also be critical of the bioeconomy, as discussed in Sect. 3.1.5. 3.3.6 Third Sector Organizations Citizens become more effective political actors, however, if they organize themselves in the form Civil society organizations, also referred to as of civil society organizations, as discussed in the non-governmental organizations (NGOs), play next section. Figure 3.9 also indicates that they an important role in democratic systems. Since are influenced by the media, which may report they differ from both public and private positively or negatively about the bioeconomy. organizations in terms of organizational structure and the nature of their interests, they are often referred to as “third sector”. NGOs typically 3.3.4 Public Sector Organizations pursue public interests, such as environmental protection or social justice, which correspond to As has been discussed in Sect. 3.2, public sector the interests of their constituents. They are based organizations can play an important role in fos- on principles of collective action and are often tering the development of the bioeconomy. organized in networks rather than hierarchical Governments can use various policy instruments structures. They interact with government, to promote the bioeconomy, as discussed above. e.g. by lobbying or by participating in other Governments may use the existing public admin- ways in policy processes, e.g. by being members istration to implement bioeconomy strategies, or of round tables. Since the bioeconomy is still they may create special agencies. So far, special emerging, NGOs that specifically pursue public agencies have mostly been established for spe- interests related to the bioeconomy have hardly cific components of the bioeconomy, such as emerged yet. However, well-established environ- renewable resources or biofuels. As further mental organizations have started to deal with the discussed below, the coordination between dif- bioeconomy. As has been pointed out in Sect. ferent ministries and agencies constitutes one of 3.1.5, some of them view the bioeconomy rather the governance challenges of the bioeconomy. critically. This is, however, not necessarily an obstacle. To the contrary, by taking a critical perspective, NGOs can play an important func- 3.3.5 Research Organizations tion in creating pressure to ensure that the bioeconomy is indeed environmentally sustain- Research organizations that carry out research able (see Sect. 3.1.6). related to the bioeconomy are typically public sector organizations, as mentioned above. How- ever, they often enjoy a degree of independence that sets them apart from other government 3.3.7 Governance Challenges agencies. They play an important role for the bioeconomy, especially by conducting research As can be derived from Fig. 3.9, the bioeconomy using public funding. They may, however, also is governed by a network of actors from different receive funding from the private sector and sectors that have partly aligned and partly engage in joint research activities. As discussed conflicting interests. They interact through a in Chap. 4 in more detail, research organizations variety of processes, which leads to various 36 R. Birner governance challenges. Three types of gover- Global Bioeconomy Governance Global governance challenges are discussed here in more nance mechanisms for the bioeconomy will be detail. essential to address global concerns, such as reconciling food security with an increasing pro- Political Economy Challenges Governments duction of biomass and agreeing on joint interna- can play a far-reaching role by creating condu- tional standards for ensuring sustainability in the cive frame conditions for the development of the bioeconomy. Even though there is increasing bioeconomy, as has been pointed out above. global interest, as documented by the Global However, governments are themselves subject Bioeconomy Summit of 2015, global governance to a variety of forces, such as lobbying by indus- mechanisms still need to be developed. This may try groups and civil society organizations, which require a better integration of the concept of may not necessarily be in favour of the bioeconomy into the global processes related to bioeconomy. Bioeconomy policies are, thus, the sustainable development, which are coordinated outcome of conflicting political processes. by the United Nations (see Sect. 3.1.6). Examples of such controversial policy fields include biofuel policies (Deppermann et al. Review Questions 2016) or biotechnology regulations (see, e.g. Richardson 2012). • How is the bioeconomy defined and how did Participatory and deliberative policy pro- this concept evolve over time? cesses have a considerable potential in improving • What characterizes the resource substitution the policy processes related to the bioeconomy. perspective of the bioeconomy on the one An example is the EU BIOSTEP project, which hand and the biotechnology innovation per- aims at “Promoting Stakeholder Engagement and spective on the other hand? Public Awareness for a Participative Governance • Which types of criticism have been of the European Bioeconomy” (www.bio-step. formulated against the concept of the eu). The project is supported by the European bioeconomy? Union. Mustalahti (2017) presents an interesting • What are the relations between the concept of recent example from Finland of including the bioeconomy and the concepts of sustain- citizens in the forest-based bioeconomy with able development, green economy, circular the aim to ensure responsive governance. economy and the great societal transformation? Coordination Challenges Another challenge of • What are the policy instruments that bioeconomy governance is coordination. Foster- governments can use to promote the developing the bioeconomy requires collaboration ment of the bioeconomy? among different ministries, such as the ministries • Who are the main actors in the bioeconomy, in charge of the economy, agriculture, the envi- and through which types of processes do they ronment as well as research and education. interact with each other? Setting up inter-ministerial working groups may • What are some challenges regarding the gov- help to address this challenge, as the example of ernance of the bioeconomy? such a group in the German federal government shows. There is, however, also a need to establish coordination mechanisms across the public, the private and the third sectors and across different References levels of government, especially in federal systems. At present, such coordination Bailis R, Baka J (2011) Constructing sustainable biofuels: mechanisms are still emerging. governance of the emerging biofuel economy. Ann Assoc Am Geogr 101(4):827–838. https://doi.org/10. 1080/00045608.2011.568867 3 Bioeconomy Concepts 37

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Andrea Knierim, Lutz Laschewski, and Olga Boyarintseva

# Iris Lewandowski

Abstract In this chapter, characteristics and deﬁnitions of inter- and transdisciplinary research are presented and discussed with speciﬁc attention to bioeconomy- related policy discourses, concepts and production examples. Inter- and transdisciplinary research approaches have the potential to positively contribute to solving complex societal problems and to advance the generation

L. Laschewski A. Knierim (*) • O. Boyarintseva Institute for Rural Studies, Johann Heinrich von Thünen Institute of Social Sciences in Agriculture, Rural Institute, Braunschweig, Germany Sociology, University of Hohenheim, Stuttgart, Germany e-mail: [email protected] e-mail: [email protected]; [email protected]

# The Author(s) 2018 39 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_4 40 A. Knierim et al.

of knowledge relevant for innovative solutions. As a key concept for integrating different disciplines across social and natural sciences within a common research project, we present principles, models and examples of system research and highlight systems practice with the help of the farming systems and the socioecological systems approaches. Next, we concretise inter- and transdisciplinary research practice as a three-phase process and operationalise cooperation of scientists and stakeholders in bioeconomy contexts. Speciﬁc attention is given to a differentiated understanding of knowledge. The chapter is closed with a reﬂection on the role researchers play in inter- and transdisciplinary research and the impacts created by norms and values emanating from science.

Keywords Inter- and transdisciplinarity • Wicked problems • Types of knowledge • Systems thinking • Socioecological systems • Bioeconomy research

4.1.1 Bioeconomy as a Political Strategy for Sustainable Learning Objectives Growth In this chapter, you will: Following the early interpretations of • Learn how inter- and transdisciplinary ‘bioeconomics’ of Zeman and Georgescu- approaches contribute to knowledge genera- Roegen in the 1970s of the last century, the tion in bioeconomy-related research. term was meant to designate ‘a new economic • Understand system concepts’ potential to inte- order’ which appropriately acknowledges the grate distinct disciplinary views in joint biological bases of (almost) any economic research. activities (Bonaiuti 2015). Apparently, the inten- • Reflect upon researchers’ roles and tasks tion was not to encourage economic development when interacting with others societal actor and growth but to warn of the ecological and the groups in common projects. sociocultural damages induced and to replace the prevailing economic model. Since then, the term ‘bioeconomy’ has become prominent in politics, science and economy (cf. Chap. 3), and it is a 4.1 Introduction: Why Inter- certain ‘irony of fate’ that Western nations make and Transdisciplinarity use of the ‘bioeconomy concept’ to promote and in Bioeconomy? foster research and innovation processes with the aim to establish a better ‘biobased’ economic development and growth (e.g. BMBF In the first section of this chapter, we present our 2010; OECD 2009; Staffas et al. 2013). understanding of ‘bioeconomy’ as a political and As a prominent example, the European Com- societal discourse, as a concept constructed in mission portrays the bioeconomy as a key com- complex interactions of public and private actors ponent for smart and green growth. Utilising the from both economy and civil society spheres results of the public consultation, the EC within regions, nations and in international contexts. It is with this understanding in mind published a combined strategy and action plan document in 2012 entitled ‘Innovating for Sus- that we then argue for inter- and transdisciplinary tainable Growth: A Bioeconomy for Europe’. In research approaches. 4 Inter- and Transdisciplinarity in Bioeconomy 41 this paper, bioeconomy is described as relying waste recycling as a major strategic field (BMEL on ‘the production of renewable biological 2014). More generally, the strategy highlights the resources and their conversion into food, feed, objectives both to meet societal challenges such bio-based products and bioenergy’, and compris- as world population growth, climate change and ing a broad array of economic sectors and the loss of soil fertility and biodiversity as well as branches, such as ‘agriculture, forestry, fisheries, transforming the economy from a dependence on food and pulp and paper production, and parts of fossil resources towards a ‘circular’ or chemical, biotechnological and energy industries’ ‘recycling’ economy. Cross-cutting and thematic (European Commission 2012, p. 5). The report policy areas are thus interwoven (Table 4.1). states further the economic importance of the Political bioeconomy strategies have thus a bioeconomy in terms of annual turnover and strong focus on scientific development and employment creation and also emphasises the equally underline the necessity of stakeholder strategical importance of the sector for the future integration and engagement. However, underly- of the European Union. More concretely, the strat- ing innovation models seems to frequently be egy aims to improve the knowledge base for the rather traditional models of exogenous bioeconomy, encourage innovation to increase innovation development with a strong focus on natural resource productivity in a sustainable man- diffusion of innovation. Explicitly, this is visible ner and assist the development of production in a chapter title ‘Advancing from Lab to the systems that mitigate and adapt to the impacts of Market’ of the White House Bioeconomy Blue- climate change. Importantly, the policy document print (2012). The innovation concept is presented calls for a strategic, comprehensive and coherent with more details in Chap. 11. approach to deal with the complex and interde- Within a social sciences’ perspective, pendent challenges related to the bioeconomy in bioeconomy can be understood as a policy dis- Europe,suchascompetitionbetweendifferent course (see excursus box) that selects and defines biomass uses and potential impact on food prices. societal problems (problem framing) and creates ‘The Bioeconomy Strategy focuses on three large a ‘performative narrative’, i.e. a convincing story areas: that offers solutions in this respect. The bioeconomy discourse combines various (envi- • The investment in research, innovation, and ronmental, economic and social) problem skills streams. With regard to environmental issues, it • The reinforcement of policy interaction and particularly addresses climate change and the stakeholder engagement limited availability of non-renewable (fossil) • The enhancement of markets and competi- resources. These issues are connected with the tiveness in bioeconomy sectors’ (European socioeconomic challenge of growing demand for Commission 2012, p. 12). resources due to the global population growth and increasing incomes. In combination, these In a similar way, the German national processes require a change of the economy bioeconomy strategy emphasises the use of bio- (towards a bio-based economy) and growing pro- mass for multiple purposes and also stresses the ductivity at the same time.

Table 4.1 Cross-cutting and thematic policy areas Cross-cutting policy area Thematic policy area Coherent policy Sustainable production of renewable resources Information and public dialog Processes and value chains Primary and vocational education Growing markets and innovation Competition of land uses International context 42 A. Knierim et al.

economy is used as an implicit concept to Box 4.1 Discourses bioeconomy, which is a reference to ideas of ‘Discourse’ has originally been used as a the knowledge society (see Chap. 3). Most obvi- concept for sequential analysis of the flow ously, this concept is interpreted in a way that of conversations. Then, the concept has ‘knowledge’ is identical to ‘scientific knowl- become a much broader interpretation by edge’, which reflects the strong roles that the work of Michel Foucault (a French phi- scientists are supposed to occupy in the losopher, 1926–1984), who defined dis- bioeconomy. However, as stated in the first chap- course as ‘systems of thoughts composed ter, developing solutions for an innovative and of ideas, attitudes, courses of action, sustainable use of the Earth’s limited resources is beliefs and practices that systematically only one part, the other is to understand and construct the subjects and the worlds of guide targeted societal changes and which they speak’. Foucault traced the transformations. role of discourses in wider social processes of legitimisation and power, emphasising the construction of current truths, how they 4.1.2 Addressing Wicked Problems are maintained and what power relations Related to the Bioeconomy they carry with them. Foucault argued Transition that discourse is a medium through which power relations produce speaking subjects Bioeconomy discourses claim to address com- and a practice through which power plex societal problems and challenges in which structures are reproduced. Thus, power environmental, economic and social dimensions and knowledge are interrelated, and there- are dynamically interwoven in both, conflictive fore every human relationship is a struggle or mutually enhancing manners. In the literature, and negotiation of power. this type of challenges is also qualified as Foucault’s analysis has inspired dis- ‘wicked problems’ (Batie 2008). Thus, proposed course analysis in many fields, and it has technological solutions, e.g. the use of renewable become an integral part of political analy- instead of fossil material, have to be understood sis in particular through the work of as embedded in new institutional structures Maarten Hajer (a Dutch political scientist). (regimes), e.g. consumption patterns, and He defined a policy discourse as ensemble supported and conditioned by evolving mental of ideas, concepts and categories through frames and knowledge structures, which meaning is given to social and phys- e.g. individually and socially held values and ical phenomena. It is produced and norms, before effectively contributing to the reproduced through an identifiable set of expected social outcomes (efficiency and distri- practices. In a policy arena, different, com- bution of costs and benefits). To develop a peting policy discourses may be identified. bioeconomy can be understood as a transition A policy discourse is produced and process or a process of social change within maintained by a discourse coalition, a societies (Geels 2002) that starts from wicked group of actors that, in the context of an problems. Such a transition process targets to identifiable set of practices, shares the voluntarily change individual and collective usage of a particular set of story lines behaviours respective practices of individual over a particular period of time (Foucault and collective actors through the enhancement 1981; Hajer 1995). of problem solving and innovation adoption and diffusion processes (cf. also Sect. 11.1). To develop a conceptual scheme for such In EU and in German political discourses, change processes, first, a generic understanding sometimes the idea of a knowledge-based is necessary of what ‘a problem’ is. Then, we 4 Inter- and Transdisciplinarity in Bioeconomy 43

Fig. 4.1 Problem solving— basic structure (adapted from Hoffmann et al. 2009, p. 63)

show factors and give examples of what production of bioenergy? Actors may face great determines a complex or wicked problem in difficulties to address such a challenging quest order to demonstrate the multiple aspects to be only on the basis of what is considered ‘facts’ taken into account. From human psychology and might want to consider values and norms, concepts, a problem is defined as a perceived e.g. with regard to the protection of natural discrepancy, a cognitive gap between a desired resources. Actors may be tied in familiar social and an actual state, for which no routinised solu- contexts in multiple ways. They may ignore rele- tion (operation) exists (Hoffmann et al. 2009). vant information (‘group think’) or are unable to So, a first important insight is that problems change behaviour due to normative expectations are not objectively present but perceived by by reference groups. Also, actors may identify individuals (¼actors) and determined by their themselves strongly with a certain status quo, so subjective understandings and interests. As that they are reluctant to change behaviour, which shown in Fig. 4.1, the basic structure of a prob- would challenge their status (e.g. diversification lem situation consists of four components: the of farm activities in order to increase income may actual and the desired, targeted state and the be connected with changing gender roles). operation(s) that may change the actual to a Finally, problem solving is also a personal cogni- desired state; the fourth component is the feed- tive capability. Actors often are overconfident back loop from the desired future state to the with regard to their own capabilities (skills) and actual state which reflects the assumption how their capacities (e.g. time, money) to solve the desired state will influence of the current problems (e.g. car drivers are in general overcon- situation. In other words, it is the expectation fident about their own driving skills). Overconfi- about the impact of the desired state. Thus, this dence is particularly problematic in risky choice step is highlighting that a problem-solving pro- situations (overconfident actors often take higher cess might not always come to an end when the risks). However, under-confidence in particular desired state is achieved (and has become the with regard to low-status groups (poor, actual state) (Hoffmann et al. 2009). A problem marginalised) may also be possible and lead to a is given, if one or—what is also possible—sev- situation where actors do not solve perceived eral of these components are unknown to the problems despite the fact that they have both the actor(s). capacities and the capability to act. These various Analysing the nature of a problem more in aspects may all contribute to the perception and detail, its origin may then be caused by either description of a problem and cause that frequently lack of knowledge or by conflicting or incompat- ‘there is no consensus on what exactly the prob- ible values. As the figure shows, both options may lem is’ (Batie 2008, p. 1176)—a typical feature of occur in every step, e.g. lack of knowledge may wicked problems. exist with regard to desired state (what should be Summarising, addressing wicked problems in the share of bio-based materials in the construc- the context of bioeconomy, requires both an ana- tion sector?) or the valuation of possible desired lytical understanding of what the core states and operations (is it ethically acceptable to components of the respective problem are and a make use of animals for the production of synthetic view of how the various mutual hormones?). Another challenge may be to coher- understandings of the people engaged with the ently understand and address the actual state, problem can be related and integrated. An exam- e.g. how to judge and assess the current national ple of an interdisciplinary problem view is 44 A. Knierim et al. presented in the excursus box. A conceptual not only involves researchers but requires active approach of how to develop an integrated under- engagement of many other actors. ‘A close com- standing is presented in Sect. 4.3 on systems munication between politics, business, science thinking and systems practice. and civil society, as well as the preparation of policy decisions’ is necessary (BMEL 2014, p. 45). Furthermore, ‘a knowledge-based dia- Box 4.2 Interdisciplinary Problem-Solving logue on controversial issues’ has to consider Approach (Example) general public’s interests and demands (BMEL For students, it can be especially interest- 2014, p. 47). Spreading awareness about changes ing how the problem-solving approach is and innovations in the society, keeping people explored by other students. Zhang and informed, ‘strengthening open-mindedness’ is Shen (2015) introduce an example of also important (BMEL 2014, p. 10). 16 interviews conducted with the graduates Inter- and transdisciplinary research of 3 disciplinary backgrounds (physics, approaches are considered to have the poten- chemistry and biology) who explain their tial to positively contribute to addressing and experience in dealing with 2 interdisciplin- working on complex societal problems and to ary problems on the topic of osmosis. Even considerably advance the generation of effec- though the majority of the students hon- tively implementable knowledge (Agyris 2005) estly express their sceptical opinion about relevant for innovative solutions. In the one or both disciplines in which they are following section, these approaches are not specialised in, in the end, they admit presented. the value of the interdisciplinary approach in dealing with complex issues: Further Reading Staffas L, Gustavsson M, McCormick K (2013) • Firstly, all scientific fields are Strategies and policies for the bioeconomy and interconnected to some extent and bio-based economy: an analysis of official ‘boundaries between subjects are artifi- national approaches. Sustainability 5:2751–2769 cial’ (epistemological perspective). • Secondly, to conceive almost any world Useful Links problem, a comprehensive view based BMEL (Federal Ministry of Food and Agricul- on many disciplines must be considered ture of Germany) (2014) National policy strategy (practical perspective). on bioeconomy. Renewable resources and bio- • Thirdly, interdisciplinarity can serve as a technological processes as a basis for food, tool which supports the learning process industry and energy. http://www.bmel.de/ as it gives students an opportunity to see SharedDocs/Downloads/EN/Publications/NatPo ‘a broader picture’ regarding a particular licyStrategyBioeconomy.pdf?__blob¼publication problem (educational perspective). File. Accessed 25 Dec 2016 European Commission (2012) Directorate- The authors provide the graphs and General for research and innovation. Innovating detailed descriptions of the interviews for sustainable growth: a bioeconomy for Europe. with quotes (read more—https://doi.org/ http://bookshop.europa.eu/en/innovating-for-sus 10.1080/09500693.2015.1085658). tainable-growth-pbKI3212262/. Accessed 12 Jan 2016 As has been argued in the previous sections, OECD (Organisation for Economic Co- the challenge of transition to bioeconomy, of operation and Development) (1996) The knowl- addressing the respective problems appropriately edge-based economy. http://www.oecd.org/ and of responding to questions arising from sti/sci-tech/theknowledge-basedeconomy. changing production and consumption patterns htm. Accessed 17 Sep 2017 4 Inter- and Transdisciplinarity in Bioeconomy 45

4.2 Terms and Backgrounds understandings, practices and conventions that of Inter- and Transdisciplinary have been accumulated and compiled over time. Research Interdisciplinarity As argued above, a societal transition to a more Scientific research that relates a number of sustainable way of production and resource use in disciplines and transgresses the broader the frame of the bioeconomy paradigm requires a fields of humanities and natural sciences. successful cooperation of a broad range of actors (Knierim et al. 2010; Tress et al. 2007) from various societal subsystems and a meaningful integration of scientific and practical knowledge. Hence, science’s contribution to the Doing joint research as a group of researchers solution of the problems consists necessarily of with different disciplinary backgrounds is usually multifaceted and integrated approaches, or in denoted as ‘multidisciplinary’. Multidisciplinarity short, of inter- and transdisciplinary research refers to a research that addresses a question or an (Brand 2000; Hirsch Hadorn et al. 2008). In the issue from a variety of disciplinary perspectives, following, we briefly present definitions and then without purposefully integrating the various elaborate on principles and key characteristics of findings. Results of this type of research consist inter- and transdisciplinary knowledge genera- usually of added disciplinary pieces without tion in the context of bioeconomy. synergies rather than a connected composition (Pohl and Hirsch-Hadorn 2008a, b). As an example, we see that in the policy strategy ‘Innovating for Sustainable Growth: A Bioeconomy for 4.2.1 What Is Meant by Europe’ (2012), the EU develops 12 crucial Interdisciplinarity, What by actions among which one is ‘increasing cross- Transdisciplinarity? sectoral and multi-disciplinary research and innovation’ (European Commission 2012). At first sight, scientific disciplines seem to be Interdisciplinarity involves different disci- easily separable entities of subject matters, such plinary approaches to research in a conceptually as biology, chemistry, economics, history, etc., coordinated way where the disciplinarily guiding that are shaped by common rules and internally assumptions and research concepts passed down procedures of knowledge genera- (‘worldviews’) are made explicit and mutually tion. However, we also can observe a continuous connected. Thus, interdisciplinarity implies disciplinary differentiation and itemisation that is overcoming classical boundaries and reorganising expressed, for example, in extended titles of aca- scientific questions and knowledge (Mittelstraß demic chairs. From a social science perspective, 1987). With an interdisciplinary approach, ‘facts scientific disciplines can be considered as and findings’ from each discipline are critically institutions that shape the way in which people evaluated in light of the ‘facts’ from the other do research in a certain thematic field and on a disciplines, and the attempt is made to integrate range of topics (following Castań Broto et al. discipline-specific knowledge into a larger whole. 2009). Here, the term institution is defined as a The broader the range of disciplines involved, and set of conventions, norms and formal rules that especially if both natural and social sciences’ 2005, as quoted in Castań Broto et al. (2009). researchers participate, the more challenging is Hence, a discipline is a result of shared this step of knowledge integration. 46 A. Knierim et al.

Box 4.3 Examples of Interdisciplinary oceanography, physics, statistics, agron- Studies omy, geography, anthropology, sociology, A number of applied studies are carried agricultural economics, psychology, epis- out within the interdisciplinary project temology and software engineering) ‘Spatial Humanities’ (funded by the together with social stakeholders plays the European Research Council) whose main main role in achieving the outcomes. These goal is stated as ‘developing tools and are ‘implementation of new climate diag- methods for historians and literary nostic products, multiple talks and articles scholars’ who use the geographic informa- for non-scientific audiences, and various tion systems (GIS). In their research work, tailor-made instructional efforts (e.g., the interdisciplinary team combined workshops on the fundamentals of deci- computational linguistics, cultural geogra- sion-making)’. The participants of the phy and spatial analysis. Thus, the project projects agree that the intense interdisci- implemented methodologies in an inter- plinary collaboration, especially with the disciplinary way that allowed to investi- involvement of stakeholders (transdisci- gate unstructured material from historical plinary approach, to be described below), literature and official documents. Visit the can be very demanding and energy- project’s webpage via http://www. consuming, starting with the common lancaster.ac.uk/fass/projects/spatialhum. formulation of a problem, choosing cross- wordpress/. disciplinary methods to be used in Another example for collaboration of an research, formation of a team and others. interdisciplinary team (ecologists, The obstacles stem from differences in anthropologists and economists) is given ‘styles of thought, research traditions, by Lockaby et al. (2005). The project techniques and language’ of involved WestGa consists of several studies devoted actors. However, despite the difficulties, to the ‘urban development of forested the interdisciplinary approach facilitates landscapes’ in the Southeastern United in keeping a systemic view and looking at States taking into account land use, problems from a range of perspectives. ecosystems, biodiversity as well as social Read more—https://doi.org/10.1016/j. and policy aspects related to the process. envsci.2012.07.008. The WestGa projects help to analyse roots and consequences of many-sided issues Finally, transdisciplinarity broadens a associated with the ‘relationships between research’s scope into another study dimension urban development and natural resources’ as beside the orientation towards real-life and design solutions for them. Read more— problems; this approach also seeks to integrate https://www.auburn.edu/~zhangd1/Refereed lay or non-academic knowledge with scientific Pub/Urbanecosystems2005.pdf. one. This understanding is expressed in the defi- Podesta´ et al. (2013) describe two inter- nition of Lang et al. (2012, p. 27) where disciplinary multinational research ‘transdisciplinarity is a reflexive, integrative, projects which investigate relations method-driven scientific principle aiming at the ‘between climate variability on interannual solution or transition of societal problems and to decadal scales, human decisions, and concurrently of related scientific problems by agricultural ecosystems in the Argentine differentiating and integrating knowledge from Pampas’. In both cases, the problem-driven various scientific and societal bodies of cooperative work of the scientists from knowledge’. diverse fields (climate science, 4 Inter- and Transdisciplinarity in Bioeconomy 47

Box 4.4 Example of Transdisciplinary fields as well as non-scientific sources are Research integrated (Bergmann et al. 2010). On the challenge of adapting agricultural systems to the effects of climate change, Thus, the interface between society and sci- Bloch et al. (2016) show how farm-specific ence is a key constituent which implies not only innovations and adaptive measures are the necessity to create mutual understandings but developed in a transdisciplinary research to go far beyond towards interaction and collab- approach. In a cyclical process of analysis, oration among the various actors. planning, action and reflection, the network of researchers and organic farmers Rosenfield (1992, p. 1351) revealed a repeatedly used participatory analyses narrower understanding when she defined tools to structure the transdisciplinary transdisciplinarity as ‘jointly work of researchers innovation and adaption process. First, a using shared conceptual framework drawing group of organic farmers identified as together disciplinary-specific theories, concepts, main weaknesses the water and nitrogen and approaches to address common problems’. supply likely to be worsened by climate Clearly, this definition is almost similar to the change; then, farm-specific adaption above developed description of ‘interdisciplinar- measures were identified and tested by ity’ and points at the difficulty that, in some conducting on-farm 27 experiments at scientific communities, the terms are blurred 6 organic farms in teams of researcher and no clear distinction is made in this regard. and practitioners. By evaluating and thus However, nearly 25 years later, a certain stock of adjusting and retesting the measures in transdisciplinary publications can be acknowl- consecutive trials, new farming methods edged which also allows to summarise ‘three were developed to increase diversification core features of transdisciplinary research: and decrease risk in organic farming (1) complex real-world problems, practices. Along with the iterative process, (2) collaborations, and (3) evolving the network was expanding towards actors methodologies’ (Zscheischler and Rogga 2015, from advisory services and farmers’ p. 32). associations, and the collective learning Finally, we conclude the range of definitions process led to changes in attitudes and with a more pragmatic one given by Jahn et al. behaviour. The participating organic (2012, p. 4): ‘A reflexive research approach that farmers proved to be active partners; addresses societal problems by means of inter- their openness to innovation and their disciplinary collaboration as well as the collabo- approach to problem solving make them ration between researchers and extra-scientific well suited to transdisciplinary research. actors; its aim is to enable mutual learning pro- In adapting regions to climate change, cesses between science and society; integration is these kinds of stakeholders will play a the main cognitive challenge of the research pro- decisive role. https://doi.org/10.1007/ cess’. Definitions have the important function in s13165-015-0123-5 academia to standardise understandings and by this provide a solid common ground for cooperation. Nevertheless, there may be contested or conflicting perspectives within a group of Transdisciplinarity scientists. Hence, the search for a common defi- A specific form of interdisciplinarity in nition is important in order to determine which boundaries between and beyond agreements, but also differences in looking at disciplines are transcended and knowledge the world and explaining phenomena. Conse- and perspectives from differrent scientific quently, for an inter- or transdisciplinary team, it is important not to impose common definitions 48 A. Knierim et al. but to deal with definitions in a flexible way and innovation has been criticised on various to explore and identify the ‘common epistemo- occasions (e.g. Hoffmann 2007). In a ground- logical ground’, i.e. the common conceptual breaking ethnographic study (The Manufacture understanding of cause–effect relations. The of Knowledge), Knorr-Cetina (1981) demystified multifaceted systems theory is well suited to science. She demonstrated that science is not a structure this working step (see Sect. 4.3). purely rational, cognitive process, but scientific knowledge is a social process and practice which is embedded in a trans-scientific field. 4.2.2 Backgrounds of Inter- Researchers have to make series of choices and Transdisciplinary Research (about research objectives, methods, sampling, publishing strategies etc.) that are bound to social There is an increasing concern about the usability factors (e.g. external evaluators, local research of research outputs and a quality divide between traditions, funding opportunities). Thus, science lay and scientific knowledge is contested. can be studied like any other social field, and in Instead, there is a growing conviction that solv- particular, the assumption of science providing ing real-world problems requires the integration objective, transferable and decontextualised, of multiple forms of knowledge. This includes all-round applicable knowledge has to be taken the acknowledgment of practical, local, tacit with caution. Further examples for pioneer knowledge as a valuable resource but in particu- research on knowledge generation outside lar also the integration of social and natural science were provided by Karl Polanyi sciences perspectives. (1886–1964) and Clifford Geertz (1926–2006) Previously, the emergence of modern science who worked on tacit and on local knowledge. was closely connected with the development of Tacit knowledge is defined as knowledge that is modern societies. The paradigm of scientific dis- difficult to transfer to another person by means of covery had become the dominant mode of writing it down or verbalising it (‘we can know innovation in the modern world. It was built on more than we can tell’), so it is opposed to the hegemony of theoretical and experimental explicit knowledge. Examples are all handicrafts, science, and sometimes science has been seen where actors may develop incredible skills, as the only location of innovation and discovery. which can only be learnt through practice. This model of science is built on a set of Local knowledge can be understood as a shared principles, such as the autonomy of scientists, way of interpreting the world and, thus, relates to which is also considered being the basis for basic ideas of social constructivism (Geertz internally driven taxonomy of disciplines, the 1973). Here, the meaning of ‘local’ is not defined ability of purely scientific problem definitions precisely but relates knowledge to people, places and the assumption that scientific knowledge is and contexts. Since knowledge is always cultur- objective and can be used irrespective of the ally bounded and thus socially constructed, there context. Although this model has been funda- is no universal knowledge; hence, the universal- mentally contested already (e.g. Kuhn 2012), it ity claim of scientific knowledge is questioned; is still widely prevailing in both academic and science is considered as a social practice, communities and the interested public. among others (Knorr-Cetina 1981). As a conse- The paradigm of scientific discovery is quence, there may be different worldviews, and closely connected to transfer of knowledge or thus, ‘knowledge’ and projects that support transfer of technology (TOT) model that assumes social or societal change may become a one-directional diffusion of new knowledge ‘battlefields of knowledge’ (Long and Long and innovation from science to other parts of 1992), in which competing interpretations of society (Hoffmann et al. 2009). This paradigm reality struggle to become the orthodox or and the corresponding model of diffusion of dominant view. 4 Inter- and Transdisciplinarity in Bioeconomy 49

Table 4.2 Expert versus lay knowledge (compilation of the authors) Expert (scientific, explicit) Lay (local, personal, tacit, practical, traditional) Context Decontextualised Contextualised/situated Epistemology Objective Socially constructed Generation Systematic research/science Practical experience Codification Highly codified Uncodified/tacit Valuation Academic discourse Communities of practice Roles Experts Practitioner Policy approach Top-down, exogenous development Bottom-up, endogenous development

The different types of knowledge are often increased since then and international journals condensed in a dualistic typology of expert ver- publishing such research have become more sus lay knowledge (Table 4.2). widespread, such as ‘sustainability’ or ‘ecology and society’. However, most frequently, papers report on experiences from single projects and 4.2.3 Acknowledging Preconditions describe case studies while comparative or even and Bases of Inter- quantifying research is still at its beginning and Transdisciplinary Research (Schmid et al. 2016; Zscheischler and Rogga 2015). Transdisciplinary research has a relatively young From the presented definitions and their con- history: In Germany, it was especially the ceptual foundations, we can conclude that mutual increasing (political) request for sustainability understanding and joint conceptual bases appro- research which encouraged and strengthened priate to cross-disciplinary boundaries are neces- inter- and transdisciplinary research approaches. sary constituents for successful inter- and Starting from the late 1990s, a series of corre- transdisciplinary approaches. In the following spondingly targeted calls and programs from the section, systems thinking and systems practice German Ministry of Education and Research are introduced as theoretical concepts and (BMBF) can be noted, and the first prominent practices with the aim to support inter- and trans- projects were related to agricultural landscape disciplinary teams in joining and relating research (Müller et al. 2002; Hoffmann et al. interests, objectives and understandings for suc- 2009). Also, in Austria and Switzerland, large- cessful cooperation. scale transdisciplinary research programs were funded, and, step by step, a certain body of com- Further Reading mon understanding, principles and core Hirsch Hadorn G, Hoffman-Riem H, Biber- approaches was discussed in books and papers Klemm S, Grossenbacher-Mansuy W, Joye D, (Brand 2000; Hirsch Hadorn et al. 2008;TA Pohl C, Wiesmann U, Zemp E (2008) Handbook 2005; GAIA 2007). At that time, several authors of transdisciplinary research. Springer, noted general deficits in the philosophy of sci- Dordrecht ence and epistemological basis related to inter- Lang JD, Wiek A, Bergmann M, and transdisciplinarity; Grunwald and Schmidt Stauffacher M, Martens P, Moll P, Swilling M, (2005, p. 5) lamented that ‘a lot had been said Thomas CJ (2012) Transdisciplinary research in about inter- and transdisciplinarity, some has sustainability science: practice, principles, and been practiced, little is reflected and understood’; challenges. Sustain Sci 7(1):25–43 they called for methodological canonisation and Zscheischler J, Rogga S (2015) Transdisci- routines. plinarity in land use science—a review of The number of sustainability-related inter- concepts, empirical findings and current and transdisciplinary studies has drastically practices. Futures 65:28–44 50 A. Knierim et al.

4.3 Systems Thinking, Systems others are ignored. An example for a living sys- Practice tem is given in the excursus box below.

4.3.1 Systems Theory Box 4.5 The Fox–Mouse Predator–Prey Relation Perceived with a System Concept Systems theory is a disciplinary transgressing In the fox–mouse relation, the only rele- idea for the study of the abstract organisation of vant information for a fox is the availabil- phenomena, independent of their substance, type ity of mice (yes/no coded as 0,1). Further or spatial or temporal scale of existence. It properties of mice are irrelevant investigates both the principles common to all (e.g. gender, personal character, family sta- complex entities and the (usually mathematical) tus, age). The availability of mice is not a models which can be used to describe them. We signal that mice intend to send. The infor- propose to use systems analysis as an abstract mation about the availability of mice will way to conceptualise how various world views influence the reproduction behaviour of and understandings can be connected in trans- foxes. This will again have an effect on and interdisciplinarity research projects. Systems the presence of foxes, which will have an thinking thus provides the necessary bases for impact on the availability of mice. The linking multiple sources of knowledge and fox–mouse relationship may be understood some general concepts that help to reflect and as a subsystem in a wider ecosystem. structure transdisciplinary research. In the following, we give an eclectic overview based on economic, sociological and natural sciences’ Thus, information can be described as per- conceptualisations of systems (Huber 2011; ceived data, to which meaning is ascribed by Schiere et al. 2004). the element (Schiere et al. 2004). Information Generically, systems consist of basic processing has an effect in the way that certain elements, which may be of a similar type states or behaviours will trigger sequential (e.g. humans in human societies) or different operations. However, a system only emerges, types (e.g. animal and plants in an ecosystem). when the response of receiver will be observed The elements of a system are connected to each by the original sender and or other elements of other by specific relations or forms of the system, and this reciprocal communication interactions (e.g. communication, predator–prey will be reproduced over time. Only then, systems relations, information, energy and material form identifiable entities that can be clearly flows). Any relationship can be interpreted as a separated from their context, the system’s envi- form of communication and exchange of infor- ronment. The separation of systems and their mation. Any communication requires a signal environment requires the existence of and a receiver. The receiver will respond to the boundaries. signal in one way or another. Communication Systems thinking has proven its usefulness as does not necessarily imply awareness or con- a general meta-theoretical approach that seeks to sciousness. In technical systems, the components depart from linear thinking in order to model communicate among each user even though they complexity. Initially, it extends the model of are not aware what ‘they are doing’. Instead, a simple causation (cause–effect) by introducing sensor perceives a signal. In the case of living feedback loops (reciprocity) and linkages to systems, this may require the ability of elements other entities. Feedback loops and linkages to identify and select among different behaviours between several elements are necessary but not and/or states of other elements (information sufficient to characterise a group of elements as processing). Relations therefore are selective in systems. In systems, the elements interact in the way that certain states are recognised and ways that new collective patterns and regularities 4 Inter- and Transdisciplinarity in Bioeconomy 51 emerge such that larger entities hold properties of monitoring and steering living organism) to the individual elements do not exhibit (‘the sys- interpretation and sense-making of human tem is more than the sum of its part’). This activities (here: institutions and ethics of phenomenon is usually referred to as emergence. bio-engineering) and by this to relate technologi- Thus, systems thinking provides a huge poten- cal change to pathways of societal tial for transdisciplinary research as it offers transformation. options to connect phenomena of different In sum, we can describe systems as emergent kinds. Usually, this connection implies a hierar- entities with identifiable boundaries, in which the chy in the sense that systems are constituted by elements are linked in reciprocal ways, which are elements, which are of a different kind. The structurally coupled to its elements, and that can connection is referred to as ‘structural coupling’. be nested in larger systems and/or consist of Emergent systems are structurally coupled with subsystems. the entities, on which they are built. Structural coupling describes a nondeterministic relationship, in which the emergent system does not 4.3.2 Differentiating Systems recognise the existence of the lower-order entities. For example, the human consciousness As it has been mentioned in the beginning of this and cognitive abilities are based on neurobiolog- section, system analysis is a way to address com- ical processes. However, what we think is inde- plexity. Systems can be distinguished regarding pendent from the neurobiological processes their own complexity. The complexity of systems (nondeterminism) and, at the same time, our is associated with the attributes of its elements, consciousness is unable to observe that the relations as well as the system-context relations. neurons of our brain are working (Fig. 4.2). For Due to the disciplinary multitude of systems the study of wicked problems in bioeconomy, theories, there are many ways of how to differen- such a system understanding is relevant as it tiate the system notion. In the following, we pres- enables people to connect the material phenom- ent a few attributes that commonly serve for ena related to bio-based technologies differentiating systems and which are of use in (e.g. bioinformatics resulting in the possibility the context of inter- and transdisciplinary research.

Openness One way to categorise systems is about their openness or the closure of a system’s boundaries. In engineering, closed systems are such, for which required inputs and/or outputs are controlled. Examples of closed systems:

• A computer network is closed in the sense that digital data transfer is only possible between a deﬁned set of computers, while energy and user input is required. • A greenhouse can be organised in a way that no water and nutrients can escape (matter); thus, it is an independent, self-sufﬁcient entity; however, at the same time, heat (energy) is constantly exchanged with the environment (Fig. 4.3). Fig. 4.2 Example for emergent phenomena 52 A. Knierim et al.

Fig. 4.3 Greenhouse, a closed system (the University of Hohenheim, photographer Sacha Dauphin)

Fig. 4.4 Shift from closed system to open system (Messerli and Messerli 2008)

An open system is a system that has external information, goods and services in many differ- interactions with its environment also for its core ent forms’, linkages in the land use system relationships. Hirsch Hadorn et al. (2008) pro- behave in a more complicated way, and even vide an example of a change from rather closed areas considered as conventionally ‘unproduc- rural system (1860) to an open one (twentieth tive’ are used more and more often, e.g. for tour- century) during the society’s development and ist and conservation purposes (Fig. 4.4). modernisation over time. Because of the flows Leakages in both directions, emissions and ‘of people, capital, energy, technology, absorption of matter or information, may have a 4 Inter- and Transdisciplinarity in Bioeconomy 53 significant effect on system performance. Thus, This shift is connected to a specific characteristic boundary maintenance is commonly both a core of living and ecological systems that is called issue of evaluation and assessment, and an inter- autopoiesis. Autopoiesis refers to a system capa- vention strategy. Technological approaches in ble of reproducing and maintaining itself (self- the bioeconomy that seek to improve productiv- organisation). The components (elements/ ity and sustainability usually try to reduce open- subsystems) of such system are produced by ness of production systems by creating closed internal components or through the transforma- systems to gain direct control over emissions tion of external elements by internal components. and absorptions. However, such direct For example, a bee colony is an autopoietic sys- interventions are in many situations not possible tem that internally reproduces its elements or cause other adversities. Then, only indirect (queen, drones, worker bees (house bees, guards, approaches of system steering are possible. field bees), bee hive) and actively transforms Transdisciplinary research is closely related to external components (nectar, pollen, etc.) to situations, in which the openness of system components (feeding, building material). boundaries must be maintained since the nega- Autopoietic systems are operatively closed in tive externalities of closure may exceed its the sense that certain internal operations are benefits. required to maintain the system. Systems structures are built and modified by internal Goals and Functions operations. More importantly, autopoiesis is Another way of looking at systems is focussing connected with the ability to adapt to environ- on systems’ goals or functions. Goals are states mental changes (adaptive systems). This requires that systems try to achieve and maintain, despite sensory feedback mechanisms and the develop- obstacles or perturbations. There are mainly two ment of an adaptation that is a change of contexts when goals are commonly labelled behaviour patterns and/or structural changes. In functions. Firstly, in diversified systems like the example, a bee colony is storing honey and organisms, subsystems may provide a specialised reduces its size during winter as a response to function to the maintenance of the whole. Here, seasonal food availability. The opposite of function is connected to division of labour. Sec- autopoiesis is called allopoesis. A car factory is ondly, functions of systems may be ascribed an allopoetic system that uses raw materials goals. For instance, ecosystem services or the (components) to generate a car (an organised function of a machine are no entities of the sys- structure), which is something other than itself tem itself but ascribed to the systems by humans. (the factory). Autopoietic and allopoetic systems In such cases, assessments of system rely on a distinction that goes back to biologists performances may tell us as much about humans and systems thinker Hugo Maturana (born in who assess as about the system performance 1928) and Francisco Varela (1946–2001). itself. The term ‘goal’ is more commonly applied, when some degree of intentionality is System Assessment assumed. Particularly, human social systems This focus on survival, self-organisation and (e.g. organisations) are often treated as goal- adaptivity in the study of living and ecosystems oriented entities. In contrast, physical systems has triggered the debate on a different types of (e.g. planet system or atoms) are usually consid- assessment criteria such as equilibrium, stability ered as unintentional, in the way that they are and resilience that also have been influencing solely determined by physical laws. Describing other sciences, particularly, economics (think of things in terms of their apparent purpose or goal the idea of market equilibriums in general econ- is called teleology. Regarding system assess- omy) and sociology (Table 4.3). The concept of ment, we find that in biology, the evaluation system equilibrium is perhaps the oldest focus is shifting away from outputs and inputs approach applied. An equilibrium is a state in towards persistence and maintenance over time. which all forward reactions (flows, potentials) 54 A. Knierim et al.

Table 4.3 Characteristics of equilibrium, stability and resilience (compilation of the authors based on Schiere et al. 2004) Equilibrium All forward reactions (flows, potentials) equal all reverse reactions, so that the state of a system remains stable May only be achieved in closed systems Stability An absence of excessive fluctuations of outcomes Outcomes of systems remain in a defined range of parameters Resilience Capacity of an (eco)system to respond to a perturbation or disturbance by resisting damage and recovering quickly

Table 4.4 Simple and complex systems (based on Schiere et al. 2004) Simple Complex Elements Small number of elements Large number of elements Attributes of the elements are predefined Element attributes are variable Interactions/relations Few interactions Many interactions Linear interactions Non-linear interactions Elements are loosely coupled Elements are strongly coupled No feedback loops Feedback loops Simple relations Multiplicity of relations Subsystems Few, simple subsystems Nested, complex subsystems Boundaries Closed Open Time Static Dynamic, pattern stability equal all reverse reactions, so that the state of a interactions would need quantification. The system remains stable. However, such a state more complex systems, the more direct may only be achieved in closed systems. A interventions will induce side effects, and the more moderate concept, stability, thus has been less they are likely to succeed. applied to highlight the absence of excessive Finally, one debate connected with systems fluctuations of outcomes. In this sense, outcomes approaches is that about the ontological status of systems remain in a defined range of of a system. There is a position that systems are parameters. However, these concepts are more ‘real’. Thus, a system is understood as existing in important for engineering and the physical the real world; it has ontological status, i.e. exists world. Ecosystem resource has shown that independent from an observer. The alternative outcomes may vary considerably, and, if they viewpoint is that systems are analytical vary, radical shifts may occur not only due to constructions by the observer. The elements, external shocks but as a normal condition (con- relations and boundaries of the system are sider summer and winter aspects of ecosystems defined by the observer, who has a certain inter- in the North or the dry season/rainy seasons in est in the analysis. Thus, systems can be consid- the South). For the analysis of such systems, the ered as systems of interests. Science or any other concept of resilience has been widely adopted. It societal community define system perspectives is defined as the capacity of an (eco)system to to analyse certain types of problems. In this respond to a perturbation or disturbance by sense, systems are socially constructed entities resisting damage and recovering quickly (by a group rather than by an individual). (Schiere et al. 2004). For example, from a biological perspective, it Table 4.4 presents selected opposing seems at a glance self-evident that the human is characteristics in a simplified way. To make defined by the boundaries of the body. However, this distinction operational, qualities such as the body is settled by microbes that may be both ‘small’ or ‘large’ number or ‘few’ or ‘many’ dangerous (e.g. viruses) and helpful (e.g. millions 4 Inter- and Transdisciplinarity in Bioeconomy 55 of bacteria that support our digestion) but are related to some subjective meaning or intention. inside of our body. Such a definition also excludes Even further, a social action refers to an ‘act’ the fact that we rarely meet naked humans. So, which considers the actions and reactions of does the clothing that definitely is functional other individuals. Thus, according to Parsons, under certain climatic conditions belong to a the basic elements of a system are ‘acts’. An act ‘real definition’ of being human? From a psycho- requires an actor, an end/outcome, a future state logical viewpoint, a definition of being human of affairs towards which the process of action is includes the concept of personality that comprises oriented and an action situation, which is defined its cognitive abilities, the character and patterns by ‘conditions’ of action, and actors’ ‘means’, of behaviour. According to systems thinking, and that allows alternatives or choices. The latter human culture can be understood as an emergent implies that actors’ individual orientations are phenomenon that is structurally coupled to the relevant. Actions are usually not isolated events biophysical world (Fischer-Kowalski and Weisz but must be seen in relation to the actions of other 1999). In the field of socio-environmental studies, individuals. Thus, a ‘social system is a system of the interfaces of human–nature relations have processes of interaction between actors, it is the become particularly important. Frameworks to structure of the relations between the actors as analyse socioecological systems include entities involved in the interactive process which is such as nature objects, materials, etc. as well as essentially the structure of the social system. humans and social systems (cf. Sect. 4.3.4). The system is a network of such relationships’ (Parsons 1991[1952], p. 15). One important point is that social systems 4.3.3 Systems in Social Sciences develop stable patterns that are rather independent from the individual actors. Through stable So far, most research for the bioeconomy is in patterns emerging from repeated interactions, natural and engineering sciences. However, as a rules or norms evolve. In more complex social research approach that fundamentally aims at systems, such norms become generalised, appear changing societal phenomena and conditions as collectively shared knowledge and form com- (transformation), transdisciplinary research plex normative structures rather independent projects are undertaken to change perceptions, from individuals. Thus, social systems are emer- knowledge and behaviour of human beings, gent phenomena, which are constituted by thus targeting social systems. Moreover, trans- norms, roles and institutions. From the perspec- disciplinary research projects themselves are tive of an individual, the social systems appear as social systems, in which groups of individuals given structures. Actors will orient their actions communicate in order create new knowledges not only towards action outcomes, as utilitarian and to solve complex socioecological and (economic) theories suggest, but actions will also sociotechnical problems (cf. excursus box in follow a normative orientation taking third-party this section). Therefore, we introduce two actions and expectations into account. Parsons approaches in social sciences, which have thus distinguishes motivational orientations that applied systems thinking to the analysis of socie- refer to needs and benefits of individuals and tal problems. normative orientations. Since there are many possible action Social Systems as Action Situations situations, actors face the problem to interpret The American Sociologist Talcott Parsons situations, to know, which rules to apply. There- (1902–1979) has introduced systems thinking to fore, actors must share knowledge and under- sociological analysis (Parsons 1991[1952]). His stand signs and symbols, which help to identify concern was the analysis of social action. An the nature and the meaning of situations. These action is a special type of behaviour that is shared knowledge and beliefs and the expressive 56 A. Knierim et al. symbols together form the cultural system. Thus, Communication does not necessarily imply values, beliefs and symbols must be considered that observers have to respond to the initial in the analysis of social action situations. Refer- ‘actor’ directly. For instance, if a player of your ring to our former discussion, one could say that favourite football team scores, thousands of the cultural system is the basis for information spectators will shout; some might hug their flows and communication process in social neighbour, the goal will be discussed at homes, systems. in the media and your work place; betters will Like the social system, the cultural system lose or win; and football fans might engage in provides comparatively abstract structures that violent disputes. Thus, an initial act may initiate from the perspective of the individual may further, rather diverse activities and outcomes. appear as given. While social structures provide But how are these activities connected? The institutions, Parsons calls cultural structures of answer is shared meaning. All the diverse symbolic signification generalised media of reactions and following communications and interaction. The prototype and most highly activities require that actors understand the developed example of generalised media of meaning of the goal (even it might be difficult social interaction is language. Parsons argues to explain it). Thus, social systems are ‘systems that social action situations can be seen as of meaning’. (action) systems, in which the personal, the Luhmann’s concept of social system deviates social and the cultural systems are tied together from Parsons’ model in another important and interpenetrate each other. At a later stage, he regard. It focusses on the separation of system added the biological organism as a fourth system. and environment and emphasises the concept of All systems shape action situations by providing autopoiesis. Communication is the operation that orientations (motivations, normative reproduces specific social systems. Social expectations, values, instincts) as well as systems are a continuous flow of related, mean- structures (abilities/resources, rules, media, ingful communication. Communication creates physical conditions). connected communication, or communication ‘produces’ new communication. In this sense, Social Systems as Communication Situations social systems are autopoietic, since system While Parsons developed his systems theory elements reproduce its elements. The boundaries starting from the analysis of social action of a social system are not physical but are pro- situations, the German sociologist and systems duced and reproduced in a communication situa- thinker Niklas Luhmann (1927–1998) has shifted tion itself. The evaluation criteria are thus the perspective to the analysis of the reproduc- moving away from outcomes and stability tion of social systems (Luhmann 2013). One towards boundary maintenance and resilience. could say, while Parsons is focussing on the Meaning can be understood as mechanism to single acts and social organisations at a given select communication and to define criteria to point in time, Luhmann is interested in the per- further maintain, continue and reproduce petuation and continuation of social processes in it. Alternatively, one could say that systems the flow of time. Central to his analysis is the refer to a specific rationale or internal logic connectivity of events. Rather than to ask how where communication requires knowledge systems shape actions, he asks how systems about the meaning of a communication as well emerge out of individual acts. Thus, his concern as communication rules. The reproduction of is less about the person that acts but more about meaning through communication also requires the other actors that observe, interpret the act and that meaning must be recognisable. For instance, may react or do not react. Accordingly, the cen- academic disciplines are subsystems of the aca- tral element of systems is not action but demic system, since they share a common ratio- communication. nality of science (the difference between true/not 4 Inter- and Transdisciplinarity in Bioeconomy 57 true), but have established different research focusses, methodologies, specialist languages The circulation media used are oral and forms of communication. communication in meetings, written For Luhmann, communication media are par- documents, maps, images or calculations ticularly important, and he distinguishes between produced by the participants. The use of circulation media and symbolically generalised these media can be very demanding for communication media. Circulation media (oral some, who ‘in their worlds’ apply different speech, writing, modern telecommunication, media or media in a different way. Due to etc.) define the form of communication. The the diversity of viewpoints and ways to use most important aspects of circulation media are media, there is a considerable chance that the boundedness or separation of communication communication might fail. Project from time and space and therewith the actors, participants may not understand each which can be included in a communication sys- other and get frustrated or conflicts may tem. Symbolically generalised communication evolve. media (SGCM) or success media are important This interpretation of a transdisciplinary to motivate actors to engage in communications, project gives some hints, what kind of particularly when these are connected with partly issues should be addressed and how results negative consequences. SGCM are binary coded should look like. Firstly, the group has to which allows a binary distinction between acknowledge and accept the differences. systems. The main social systems are the political The process is about understanding the system (binary code power/no-power), economic diversity of viewpoints, knowledges, system (money/no money), science (truth/false) languages and motivations. After the proj- and law (legal/illegal). ect, everybody will return to his or her own world and must live with the outcomes. Thus, solutions must be designed in ways Box 4.6 Transdisciplinary Research that they create connectivity between for- as a Communicative Interaction System merly separated worlds, without changing The following example will help to explain (too much) the worlds (business people Luhmann’s understanding of social sys- will continue to seek for profit, academics tem: A transdisciplinary research project for higher reputation and policymakers for on a bioeconomy-related issue brings peo- voters) (cf. Sect. 4.4). ple together from different ‘backgrounds’ (academy, businesses, policy, etc.). Such backgrounds may be understood as differ- Summarising, it can be concluded that ent social systems, which follow different systems theory is a powerful and extremely pro- rationales. Academics seek for truth ductive conceptual approach in the sense that it (according to their disciplinary standards), set manifold impulses for the creation of linkages business people will look at issues and the integration of knowledge among various assessing implications for profits and disciplines and groups of professional actors. policymakers judge the process from the Hence, systems theory is considered as a key perspective of maintaining/gaining politi- ingredient. Systems-theory-based conceptual cal power. The transdisciplinary research is frameworks can provide a solid basis to inter- not a social system itself but rather an and transdisciplinary research. In the next sec- interaction system, in which different tion, we demonstrate how system concepts are systems overlap and constitute a temporary applied in interdisciplinary research practice, social structure. making use of two prominent examples. 58 A. Knierim et al.

Fig. 4.5 Farming systems approach (Darnhofer et al. 2012,p.4)

4.3.4 Systems Practice and a region, with its specific agro-ecological setting, economic opportunities and cultural How system concepts are put into research praxis values (see Fig. 4.5). and provide a conceptual framework for inter- The farming systems approach has three core and transdisciplinary research is demonstrated characteristics: with the help of examples from two scientific communities, the farming system research com- • It uses systems thinking. Situations deemed munity and the Ostrom Workshop at the Indiana ‘problematic’ are understood as emergent University of Bloomington. phenomena of systems, which cannot be comprehensively addressed by using only a reduc- The Farming Systems Approach tionist, analytical approach. It requires The farming systems approach proposes an thinking about the interconnections between analytical framework combined with a methodo- a system’s elements, its dynamics and its rela- logical approach in the field of agricultural tion with the environment. It studies sciences in order to understand the interactions boundaries, linkages, synergies and emergent between components of farms or larger agricul- properties. The aim is to understand and take tural systems. The components may include into account interdependencies and dynamics. material objects (e.g. soils, plants, animals, It means keeping the ‘bigger picture’ in mind, buildings, financial means, etc.) as well as sub- even when a study focusses on a specific jective perceptions, values and preferences, aspect or subsystem. i.e. how farmers ‘make sense’ of their practices. • It relies on interdisciplinarity. Agronomic The focus on interactions also emphasises that a sciences (crop production, animal husbandry) farm cannot be studied in isolation, and to under- are working closely with social sciences at stand the farming practices, the farm needs to be micro- and mesoscale levels (sociology, eco- understood as embedded in a territory, a locale nomics, political sciences, human geography, 4 Inter- and Transdisciplinarity in Bioeconomy 59

landscape planning, etc.). Farming systems research is thus distinct from multidisciplinary research, which can provide complementary insights (e.g. informing the development of new production methods). • It builds on a participatory approach. Integrating societal actors (farmers, extension agents, civil society organisations, associations, etc.) in research is critical to understand ‘real-world’ situations, to include the goals of various actors and to appreciate Fig. 4.6 SES (Ostrom 2007, p. 15182) their perception of constraints and opportunities. The participatory approach are complex and unpredictable and where causes, also allows integrating local and farmers’ while at times simple (when finally understood), knowledge with scientific knowledge, thus are always multiple. They are non-linear in fuelling reciprocal learning processes nature, cross-scale in time and space, and have (Darnhofer et al. 2012; Janssen 2009). an evolutionary character. This is true for both natural and social systems. In fact, they are one Farming systems research explicitly strives to system, with critical feedbacks across temporal join the material–technical dimension and the and spatial scales’ (Ostrom 2007, p. 15181). human dimension of farming. The aim is to SES frameworks are built around the analysis take into account both the ‘things’ and their of action situations similar to those defined by meaning. This requires understanding the Parsons (Sect. 4.3.3). They have been developed structures and the function of systems simulta- in order ‘to clarify the structure of an SES so we neously as ‘objective’ (things, and their understand the niche involved and how a particular interactions, existing in a context) and as ‘sub- solution may help to improve outcomes or make jective’ (i.e. relating to the different socially them worse. Also, solutions may not work the contingent framings). same way over time. As structural variables change, participants need to have ways of learning The Socioecological Systems Approach and adapting to these changes’ (Ostrom 2007, A comprehensive understanding of complex p. 15181). Figure 4.6 summarises the influencing human–natural resources’ interaction especially factors at a very high level of aggregation into an at a regional scale and involving collective analytical framework that seeks to define common decision-making and governance issues was the characteristics of SES and to draw on both social core interest of Elinor and Vincent Ostrom and sciences as well as natural sciences. continues through the ‘workshop in political the- Similar to the farming systems research frame- ory and policy analysis’ in Indiana University work, the generic SES framework (1) relies on Bloomington which they initiated. This commu- systems thinking appropriate to address complex nity of researchers uses socioecological systems governance problems and (2) makes use of a (SES) approaches as analytical frameworks that range of disciplinary expertise that is interdisci- support the understanding of environmental deg- plinary combined. While there is no explicit men- radation problems such as an irrigation-related, tion on whether and how participatory methods regional drop of the water level, the depletion of and stakeholder involvement processes are to be coastal fish sources or soil erosion related to included, it gives very detailed instructions for a harmful agricultural practices as complex issues. multilevel governance understanding and analy- ‘Characteristically, these problems tend to be sis of nested action systems and institutional system problems, where aspects of behaviour 60 A. Knierim et al.

Fig. 4.7 Systems practice in interdisciplinary research (Ison 2010, Fig. 4.3.4; adapted from Checkland 1999 and Checkland and Poulter 2006, Fig 4.1.9)

arrangements. By this, the framework is appro- Building on these conceptual premises, it priate to substantiate conceptual reflections in becomes obvious that when a researcher transdisciplinary teams addressing societal tran- develops a system concept appropriate to guide sition towards sustainable development. a research, compiling (1) boundary judgements, (2) hierarchies of systems and subsystems, (3) different elements and their relationships, 4.3.5 Making Systems Practice (4) purposes and (5) performance criteria, this is Effective a system composition, which represents ‘the person and their system of interest’ (Ison 2012, Although uncontestably, developing a systems p. 151). Essentially, such systems practice concept is a key constituent for a comprehensive requires an open and curious attitude of the appraisal and analysis of a perceived challenge, it researcher towards the implications and is only one ingredient to systems practice despite consequences of one’s own study interests, epis- others. As shown in Chap. 11, a broad range of temological awareness and flexibility in using key competences is related to professionals in concepts (Fig. 4.7). bioeconomy. Here, we concentrate on those important in the context of research and follow Ison (2012), who emphasises the important role 4.4 Inter- and Transdisciplinary (s) and agency of the researchers engaged as Research Practice system practitioners. Especially, it is the researcher who makes conceptual and definition When outlining the principal characteristics of choices and determines by these possible inter- and transdisciplinary research practice in outcomes. Ison (2012, p. 145) stresses that bioeconomy, we emphasise commonalities more (1) reflection about such steps in the making of than differences of the two approaches. These research and (2) reflexivity about ‘why we do common components thus comprise the integra- what we do’ are essential to link the researcher’s tive design of the research, the team collabora- perspective with the ‘situation outside of our tion of the involved actors, the joint conception selves’ (Ison 2012, p. 147). Thus, reflexivity is of the research problem and the necessity of necessary in order to understand one’s role in integrating and synthetising knowledge from contributing to or inducing systemic change. various disciplines and sources (Jahn et al. 4 Inter- and Transdisciplinarity in Bioeconomy 61

2012; Zscheischler and Rogga 2015). The dis- • The (re)integration and application of created tinction mainly consists in the professional ori- knowledge phase entation of the involved actors: in the case of interdisciplinarity, all actors have a professional background in academia, and scientific interests 4.4.1 The Problem Framing dominate, whereas in the case of transdisci- and Team Building Phase plinarity, stakeholders and actor groups also par- take, and a range of diverse outcomes are By its very definition, inter- and transdisciplinary expected, including those of practical value for research starts with the perception of a (some- real-life questions (cf. Sect. 4.1). Differences in how) complex real-life problem (Sect. 4.1.2). We interests and impacts resulting for the propose as example the bioeconomy-related researchers in particular are addressed in Sect. question whether and under what conditions agri- 4.5. Here, we present essential principals and culture provides raw materials for the construc- steps of transdisciplinary research practice as tion sector. The framing of such a problem and structured by Lang et al. (2012) in three main the composition of a team that engages in inter- phases (Fig. 4.8): or transdisciplinary research on this behalf is mutually interwoven: so, a perceived problem • The problem framing and team building phase may constitute the starting point for the compo- • The co-creation of solution-oriented transfer- sition of a team which then will together specify able knowledge phase and define this problem with more details. For

Fig. 4.8 Conceptual model of an ideal–typical transdisciplinary research process (Lang et al. 2012, p. 28) 62 A. Knierim et al. example, if the perceived challenge is located in separately and evaluated in mixed teams’ the agricultural production sphere predomi- settings. This is the case of the UHOH nantly, then agronomists and farm economists bioeconomy master. Another option for a might be the first ones to be involved but also learning context is to introduce the problem- farmers. If in contrast, the perceived challenge is and project-based learning approach (Barrett located in the technological procedure of 2005; Savery 2006) as a key feature. integrating new materials into known construc- Specific to transdisciplinary research is the tion processes, construction engineers and mate- integration of actors other than scientists. A rial processing experts might be involved at first widely used term for these actors is hand. Next question then could be how the mar- ‘stakeholders’. Stakeholders are persons, groups ket would react, so that marketing experts and or collective actors with interests in and/or influ- potential consumers would be required. From ence on the addressed issue (see also Sect. 4.2.3). these short considerations, it becomes evident According to this definition, a fundamental that a range of actors has to be included in stakeholder classification proposes groups order to obtain a more complete understanding according to (1) problem ownership, (2) actors of a problem situation. And consequently, an who have interest in outcomes and (3) the actors’ interdependency is revealed between the actors ability to act and to influence and shape project describing the research problem and the way it is outcomes. Thus, stakeholder identification in perceived and embedded into cause–effect transdisciplinary research necessitates both an relations and the expected results and outcomes understanding of the research question, so that of the study. Summarising, the very first chal- boundaries of the social and ecological system lenge of inter- and transdisciplinary research is to can be established, and an overview of required frame a problem appropriately and to unite a resources, rights and capabilities that are neces- group of scientists (and other actors) whose com- sary to successfully complete the project. It is an position is sufficiently broad and deep in its iterative process, where stakeholders might be expertise to generate meaningful answers. In added as the analysis continues. In practice, it is transdisciplinary studies, such a straight problem often not possible to identify all concerned orientation has proven an effective instrument for stakeholders, and it is necessary to draw a line successful identification and mobilisation of at some point, based on predetermined and well- stakeholders (Knierim 2014). defined decision criteria, to stop the selection and So, once the problem is—at least initially— recruitment process (Gerster-Bentaya 2015; encircled and a number of concerned actors Grimble and Wellard 1997). identified, the second and consecutive challenge In order to appropriately address practitioners of the first research phase is to set up the team’s and to understand and assess roles, agencies and collaboration and to concretely implement the power constellations of actors involved, a stake- cooperation. In other words, how to practise a holder analysis is an essential step (Gerster- working procedure that allows both individual Bentaya 2015). With regard to the categorisation and group performances, so that the expertise of of stakeholders, the first question to be addressed all actors involved can unfold? What exactly will is: Who classifies them? In the case of top-down be studied and how? What will be the responsi- ‘analytical categorisations’, stakeholders are bilities and tasks of the various actors? How will classified by researchers or experts, while the results be determined? Clearly, these skills bottom-up ‘reconstructive methods’ allow the cannot be learned through books or taught in categorisations and parameters in a stakeholder lectures but require a reflexive learning-by- analysis to be defined by the stakeholders them- doing approach. One basis for such skills can be selves. General stakeholder classification criteria a targeted team work training where steps of an may be based on interest and influence, legiti- action-oriented research process are practised macy and resources and networks or types of 4 Inter- and Transdisciplinarity in Bioeconomy 63 activities. The influence–interest (II) matrix is (e.g. social recognition). Also, interest does not commonly used to categorise stakeholders necessarily imply active involvement. Some- according to their interest and influence (Fig. 4.9). times, actors are not aware of possible costs and Although this II matrix is very intuitive, many benefits or incapable of acting and thus appear to analyses fail to identify important stakeholders be ‘passive’ (Nagel 2001). Actors may be able to due to an insufficient clarification of ‘interests’ influence the outcome of a project even if they do and sources of ‘influence’. The level of interests not have an interest in project outcomes. is mainly about achieving benefits, but it is also Influence can be based on multiple sources of about avoiding burdens. In the constructed case power. Legitimacy (of defining rules) is an of agricultural raw materials for the construction important source of power. It is often linked to sector, competing producers, e.g. from forestry an institutional position with ascribed or acquired would be considered as stakeholders too. Benefit rights, e.g. which are formalised by law such as and burden sharing is central to any type of public sector organisations or landowners. Some- projects. However, benefits and burdens may be times legitimacy may derive from the task being direct and immediate or indirect and long term. undertaken or through public consent or from Also, not all impacts are material. Cultural bodies which are considered to be legitimate impacts are usually symbolic and immaterial (e.g. scientific organisations, ‘moral’ institutions). Resources are knowledge, expertise and capabilities, as well as material resources that allow the key stakeholder to exert a forma- tive influence on the issue and the research objective or to manage and monitor access to these resources (e.g. experts, funding institutions, media). Finally, influence may derive from social connections and the number and quality of relationships to other actors who are under obli- gation to or dependent on the stakeholder. In Table 4.5, a selection of stakeholders is presented Fig. 4.9 System for classifying stakeholders according to exemplify the categories ‘context setters’, to interest and influence (Grimble and Wellard 1997, ‘subjects’ and ‘key players’. p. 176)

Table 4.5 Examples of stakeholder types (compilation of the authors) Context Funding organisations setters Relevant public administration that is not directly involved in the project Political parties/organisations Representative organisations from relevant sectors (national/international) Research community Governmental agencies Subjects Public/target groups Private sector organisations and individuals who have a current or potential future vested interest in an area Neighbourhood Contractors Key players Local municipalities/regional administrations Landowner/local businesses that may implement solutions NGOs representing target groups Project team/employees 64 A. Knierim et al.

4.4.2 The Co-creation of Solution- actors or groups of actors. Stakeholder roles may Oriented Transferable be classified according to the ways their knowl- Knowledge edge is included into the research process or, in other words, along the degree of participation Thomas Jahn (2008) has highlighted four inte- realised (Knierim et al. 2010; Pretty 1995). In gration dimensions of the transdisciplinary the most basic forms of interaction between research process. The cognitive-epistemic researchers and other actors, stakeholders may (or knowledge) dimension is the connection and be treated as learners and as (rather passive) amalgamation of discipline-specific as well as recipients of information or knowledge adaptors. scientific and non-scientific knowledge. The Even though transdisciplinary research does not social and organisational dimension means iden- simply intend to transfer knowledge, the group tification and acknowledgement of interests and of stakeholders, which are not actively included activities of project partners. Stakeholder analy- in the research process, can be quite large. sis is the core tool of this dimension (cf. Sect. Stakeholders may also be a source of informa- 4.4.1). The communicative dimension refers to tion. Most commonly through interviews and the heterogeneous communication practices and surveys, but also via focus groups or internet community-specific terminologies. Participatory forums the viewpoints and experiences of measures are central to this dimension. Finally, stakeholders, who are otherwise not directly factual and technical dimension means the inte- involved, may be collected, and made accessible gration of partial solutions into a common to the research project. Similarly, stakeholders socially and normatively embedded joint may be understood as experts of their own lives, framework. livelihoods and experiences and thus have a In the following, we will primarily focus on consulting role. However, more in line with an the communicative dimension, while aspects of equal-partner understanding of actors is the the cognitive–epistemic and the factual and tech- involvement of stakeholders as research nical dimension will be dealt with in the final collaborators in transdisciplinary studies. For section. instance, they may be included as practice Integration through communication requires partners, which provide access to their own life a stakeholder management strategy and plan world, experiences and knowledge about how to with a focus on communicative interactions, deal with addressed challenges. Even further, participation and involvement procedures that stakeholders may be part of the research process also includes an ongoing ‘stakeholder monitor- contributing to the research by collecting data ing’. Such a strategy may be built on specifically for the purpose of the research. differentiated forms of involvement of different While research collaboration in its basic forms

Table 4.6 A typology of participation levels in research projects (modified following Pretty 1995, p. 1252) Type of participation Characteristics of type Manipulative participation Actors inclusion is a pretext, they have no functional role Passive participation Actors are considered as ‘learners’, they receive information Participation by Actors contribute with information by answering to questions of knowledge, consultation perceptions, opinions, etc. They have no part in decision making on the project’s issues Participation for material Actors contribute to research with information and/or labour etc. and receive in turn incentives material advantages and resources Functional participation Actors are involved as their competences, resources and/or societal positions are relevant to the aim of the project. They may have an influence in the research design and decision-making processes related to the project’s implementation Interactive participation Actors participate as equal partners throughout the research phases, participate in decision-making and share responsibilities and resources 4 Inter- and Transdisciplinarity in Bioeconomy 65 only treats stakeholders as helpers, they may third means of integration, Pohl and Hirsch also be involved as creative actors who actively Hadorn (2008a) propose models—ranging on a contribute to the development of the research continuum from purely quantitative (mathemati- design and interpretations. Irrespective of other cal) to purely qualitative (descriptive) and they types of involvements, a main role of emphasise that ‘(semi-)qualitative system stakeholders in transdisciplinary research dynamics models are often developed in a col- projects is that of validators of research findings laborative learning process among researchers (cf. Table 4.6). and other stakeholders, aiming at a shared Most obviously, the practical ways how understanding of the system, its elements and actors are involved in the joint research and their interactions’. In this regard, we refer to development process of a transdisciplinary the use of a conceptual frame as presented in study are determinative for the participation the Sect. 4.3.4. Finally, as a fourth means, realised. Here, Pohl and Hirsch Hadorn (2008a) products are designated, which can be of any differentiate between ‘forms of transdisciplinary kind such as marketable products, knowledge- collaboration’ and ‘means of integration’ based sharing devices or even institutions, etc. on their experiences as transdisciplinary researchers. The three ways to implement transdisciplinary cooperation are common group 4.4.3 (Re)integration and Application learning, deliberation among experts, and inte- of Created Knowledge gration by a subgroup or individual. While in the first case cooperation happens as a whole group Interdisciplinary integration raises the issues of learning process, in the second case, team the compatibility and connectivity of discipline- members with relevant expertise on the specific knowledge. Integration in this sense has components of the problem join their views in to be seen in both directions. On the one hand, a form of a deliberative process. In the third case, joint definition of ‘study objects’ and scientific the act of integration happens through the work models is required, which goes beyond disciplin- of a specific subgroup or an individual who ary perspectives. On the other hand, the new work(s) on the behalf of all (Pohl and Hirsch knowledge has also to be transferred back into Hadorn 2008a, p. 115). As ‘means of integra- disciplinary discourses. Similarly, the integration tion’, the authors propose four ‘classes of tools’: of research results comprises, in one respect, mutual understanding, theoretical concepts, summarising and validation of case specific models and products (ibid). Obviously, the ques- knowledge with regard to problem under investi- tion of mutual understanding is one of having a gation. The evaluative focus from such a perspec- common language, of seeking to avoid too spe- tive is on usability. In another vein, scientists cific, disciplinary terms and of spending time for have to, at least partly, retransfer the new knowl- explanation and listening. Secondly, ‘challenges edge in discipline-specific context. This requires in integration are about creating or restructuring the identification of generalisable, nomothetic the meaning of theoretical and conceptual terms parts of knowledge (Lang et al. 2012). to capture what is regarded as relevant in prob- Research outcomes of transdisciplinary lem identification and framing. Therefore, a sec- research (concepts, methods and products) are ond group of integration “tools” comprises evaluated from two different perspectives. theoretical notions [theoretical concepts], Firstly, outcomes are assessed with regard to which can be developed by (1) transferring their usability, their practical relevance. Local concepts between fields, (2) mutually adapting actors care for their case and not for any general disciplinary concepts and their operationa- knowledge. To solve the problem ‘in principle’ lisation to relate them to each other, or (3) creat- would not be acceptable to the audience and the ing new joint bridge concepts that merge local actors who push the case. Thus, each case disciplinary perspectives’ (ibid, p. 116). As has its individual value, because the involved 66 A. Knierim et al. actors are engaged in solving their specific issue, natural and climatic restrictions. Target knowledge not a general problem! Secondly, scientists is defined as an understanding of actors, their search for the more general features of a case interests, concerns and capacities, and it is devel- and the advancement of scientific knowledge in oped on the basis of values and norms that guide general. The evaluative question here is ‘are the decision-making. Social research may be used to cases telling us that some nomothetic lessons can describe the social sphere, but, again, the actors be learned despite their situational conditions, or themselves share a detailed knowledge about its that lessons can be learned because they are nature. So, the question whether and to what share embedded in real world contexts?’ fossil energy or renewable material-based As it has been outlined in the earlier sections, resources shall be used in construction is one that the origins of the concept of transdisciplinarity is solved based on target knowledge. Finally, lie in a perceived mismatch between types of transformative knowledge provides answers knowledge produced in the field of sciences and about changing practices and institutions. While the demand for problem-solving solutions of the first two types of knowledge are describing the society. This mismatch can partly be traced status quo, and may help to define a desired future back to the type of (generalised) knowledge state, the transformative knowledge is crucial in generated through sciences and the neglect of order to describe a path, the operational steps from actors’ practical, often tacit and context-specific, the current to a desired state (cf. Fig. 4.1). While knowledge. Also, science has increasingly the systems and target knowledge form a necessary specialised in an escalating number of prerequisite and—at least in principal—can be disciplines. While this specialisation has allowed undertaken in purely disciplinary scientific to catalyse scientific knowledge growth, it has research manner, transformative knowledge can increasingly become a hindrance for the solution be understood as the essence of transdisciplinary of ‘real’-world problems, which usually combine research, in which multiple forms of scientific/ multiple dimensions in a complex manner. practical and multidisciplinary perspectives are Therefore, solutions require the integration of combined and transformed. different perspectives. In practice, it is argued that for solving ‘real’- world problems, three different types of knowl- 4.5 Researchers’ Norms, Values edge are needed. They go across scientific and Agency in Inter- disciplines as well as beyond purely scientific and Transdisciplinary knowledge: system, target and transformation Bioeconomy Research knowledge. Systems knowledge can be seen as an understanding of the nature of a problem, the In Sect. 4.1, the important role of inter- and causalities and conditioning context. In the transdisciplinary research for Western societies’ example of bio-based construction materials, bioeconomy strategies was outlined. In other knowledge about the production and the words, interactive knowledge creation and processing of these materials would fall in the innovation development are core concepts ‘systems knowledge’ category. Scientific knowl- related to bioeconomy politics and programs. edge is particular important for the analysis of Thus, scientists’ roles and tasks for the advance- problems, while the definition of the problem ment and implementation of bioeconomy may may derive from science but also from the socie- not be underestimated but, on the contrary, need tal context (lifeworld) itself. However, local to be explicitly addressed and taken seriously in actors may also hold and contribute substantial all consequences. As was argued in Sects. 4.3 practical knowledge about many aspects of the and 4.4, the conceptual backgrounds of inter- functioning of the investigated system, e.g. do and transdisciplinary research and its design farmers have practical knowledge about how to and implementation are predominantly authored produce best on their land and under the given by members of the academic communities. So, 4 Inter- and Transdisciplinarity in Bioeconomy 67 what are the norms and values and how do Besides, the same authors argue it is the (social scientists’ roles and tasks impact and influence science) researchers’ capacity and responsibility the process and the results of inter- and transdis- to behave in a way that a maximum of participa- ciplinary research? tion can be reached in such collaboration pro- In the following, these questions will be cesses. This requires a high degree of trust in discussed referring to two key characteristics of one’s own and others capacity to bear and to inter- and transdisciplinary research: (1) the way deal with uncertainty. A second necessary skill how participation is put into practice and (2) the is reflexivity expressed as a continuous attention design and agreement of the conceptual for the procedural part of the research. Here, the framework. will to learn not only about contents from other disciplines but also about methods and procedures for adequate and effective communi- 4.5.1 Researchers Norms, Values cation and collaboration among various actors is and Practices with Regard a prerequisite. to Participation Reflexivity and Engagement There is empirical evidence that besides classical A key quality of researchers with responsi- scientific procedures, researchers in inter- and bility in a transdisciplinary research pro- even more in transdisciplinary research settings cess is mental openness for perceiving a frequently adopt multiple roles, such as ‘facilita- situation repeatedly anew and to act within tion of the working process’, ‘mediating among this systemic context, on the basis of heterogeneous interests’, ‘consulting reflexivity (see Sect. 4.3.3). Engaging for practitioners about possible solutions’, ‘commu- an appropriate degree of participation of all nicating results to decision makers’, etc. Whether other actors involved constitutes a second or not these roles and functions are consciously necessary ingredient for successful cooper- adopted or ascribed by the environment, they ation (see Table 4.6). Both practices imply that researchers give up their classical require a positive attitude towards commu- distant observatory and reflective attitude and nication and interaction in social systems. become active in communication and interaction (Knierim et al. 2013). Hereby, values and norms about how effective communication and Given the fact that scientists are frequently the decision-making take place become relevant drivers of transdisciplinary research settings and and impact on the individual behaviour in com- processes, it is not surprising that they come— munication and interaction settings. For exam- intended or unintendedly—in charge of design- ple, Schmid et al. (2016) have shown that ing and managing the collaboration process. scientists with a positive attitude towards trans- Manifold questions have to be tackled in a transdisciplinary research conducted more interactive parent way, such as: Who defines the research events with practitioners than their colleagues agenda? Which interests are reflected in the who were more sceptical towards transdisciplin- research agenda and which interests are perhaps ary research. One key determinant in this regard ignored? A further issue is the accountability of is the question whether or not researchers affirm science. If science autonomously defines the the necessity of and practice an ‘open process’ research process and its quality criteria, is there attitude in cooperation with other actors. Consid- any chance for the society to influence the ering participation as an ‘open’ or ‘emerging research process and the nature of the outcomes? process’ (Greenwood et al. 1993, p. 179) means Summarising, the expectations on researchers that when a research process starts, it is not involved in inter- and transdisciplinary studies predetermined to which degree the interactive are uncontestably higher than those on classical cooperation among the actors will be realised researchers: they are more divers with regard to but that it evolves in the course of the work. methodological skills and practices at hand, and 68 A. Knierim et al. they imply a certain readiness to reveal and So, in general, certain social functions are reflect upon one’s sociopolitical norms and assigned to institutions such as creating stability values that guide actions with societal relevance and reliability among people. The process of (Knierim et al. 2013). creating institutions (institutionalisation) in modern societies is often interpreted as a process of establishing and assigning new rationality 4.5.2 Researchers’ Roles criteria to specialised action arenas. In a socio- in the Design logical perspective, the transition to a bio-based and Implementation economy requires the institutionalisation of, of Conceptual Ideas e.g. recycling or of a preference of biomass and Frameworks usage over fossil resources, etc.

As argued in Sect. 4.4, the success of collabora- Box 4.7 Institutions tion among various actors and actor groups A more general definition sees institutions throughout a transdisciplinary research process as a set of stabilised social practices/ strongly depends on a common understanding interactions. This may be an individual of the nature of the problem studied and the morning ritual (breakfast with coffee, appropriate concepts that guide the structuring cleaning the teeth), an institutionalised of the problem and related solutions (cf. - social group activity or interaction Chap. 11). Hence, there is a process of (e.g. having a joint family breakfast at conceptualisation which is (at least) guided 7 a.m.), collective structure (the family as (if not determined) by the involved scientists: a social institution) or even a wider (1) it starts with the development of a general organised social structure (e.g. the educa- understanding of what ‘bioeconomy’ is (cf. Sect. tional system). 4.1.1) and how the studied problem relates to it, it In a narrow sense, institutions are often continues with the judgement for which defined as the ‘rules of the game’, thus bioeconomy questions and challenges research referring to the normative order of individ- resources should be allocated and it concretises ual practices and social interactions. From even more in the conceptual framework concept this perspective, institutions reduce the that orients an inter- or transdisciplinary social complexity and ease individual research. Throughout these steps, the researcher choices (routine) but also social (s) strongly and more or less explicitly shapes the interactions, since actors do not have to way bioeconomy research is understood and negotiate all aspects of action situations. realised. Thus, researchers are important drivers The establishment of a normative order in the process of the ‘institutionalisation of requires a process of socialisation, in bioeconomy’ because they themselves contribute which actors learn (internalisation) an to the creation and stabilisation of institutions as: established normative order. Thus, institutions are related to knowledge in • Developers of aims and objectives in the way that they require actors’ knowl- bioeconomy-related research edge to function, but also offer values, • Knowledge and innovation creators related to meaning and knowledge to actors about bioeconomy ‘why’ and ‘how to act’. Institutions also • Facilitators of stakeholders’ participation in require external control and sanctioning such research. (rewards as well as punishment) mechanism (governance). Institutions can be defined in various ways. In abstract words, they are ‘prescriptions that humans use to organize all forms of repetitive Through their engagement when developing and structured interactions’ (Ostrom 2005, p. 3). conceptual frameworks for research in 4 Inter- and Transdisciplinarity in Bioeconomy 69 bioeconomy, scientists contribute to this recognised, openly addressed and—where neces- institutionalisation process. For example, when sary negotiated—in inter- and transdisciplinary conceiving the invention of ‘new’ products or research projects. production processes, scientists do implicitly or Summarising, this section showed that explicitly also cause the emergence of ‘property researchers’ impact on processes, outputs and rights’ on the result. Three fundamental steps in outcomes of inter- and transdisciplinary research this process are captured with the terms ‘reifica- should not be underestimated. On the contrary, it tion’ and ‘commodification’. is important to take the various roles, functions Reification is the process of making some- and tasks, which arise in the process of participa- thing ‘real’. Bioeconomy is based on the crea- tory cooperation, as serious as possible and to tion of new ‘objects’ of interest for society accept and perform or reject (and if necessary (e.g. new bio-based materials out of existing delegate) them openly (Knierim et al. 2013)in ‘waste’, enzymes, DNA, etc.). A prominent order to come to meaningful and reliable results example in this regard is DNA: The DNA was that are relevant and appropriate to solving prac- always there, but only its recognition and the tical problems within the society. development of technical tools for its manipulation have transformed DNAs into objects of Review Questions interest for society. The processes of reification primarily triggered ethical debates: in how far are • What is ‘a problem’? Why is it important to we morally authorised to transform nature understand the nature of ‘wicked problems’ in objects, parts of bodies, etc. into parts/materials the context of bioeconomy? for human usage? Commodification means trans- • What is meant by multi-, inter- and transdisci- formation of formerly non-traded objects into plinary research? What are differences and tradable commodities (e.g. blood, organs, similarities among these research approaches? waste). Commodification requires the assign- • How do you explain ‘a system’? How is this ment of property rights to new (property) objects. concept used in social and in natural sciences? The concept of bioeconomy is based on an exten- Why is a system concept a good basis for sive process of commodification of objects inter- and transdisciplinary research? (e.g. patenting of DNA code), which were for- • What are characteristics of inter- or transdis- merly regarded as gifts (organs/blood) or waste ciplinary research processes, which character- (a non-property/’res nullius’) and which are now istic phases can be detected, which transformed into valuables. responsibilities result for scientists? In most cases, the role of individual researchers with respect to the institutionalisation of bioeconomy is by far not that influen- tial as the one s/he has on the degree of References interactive participation in the cooperation process. Here, it is the multitude of choices and Agyris C (2005) Actionable knowledge. In: Knudsen C, decisions taken by a certain number of Haridimos T (eds) The Oxford handbook of organisation theory. 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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Part II Knowledge Base for Biobased Value Chains Biobased Resources and Value Chains 5 Christian Zorb,€ Iris Lewandowski, Ralf Kindervater, Ursula Gottert,€ and Dominik Patzelt

# Ulrich Schmidt

The original online version of this chapter was revised. An erratum to this chapter can be found at https://doi.org/ 10.1007/978-3-319-68152-8_13. Individual section’s authors are indicated on the corresponding sections. C. Zorb€ (*) Institute of Crop Science; Quality of Plant Products, R. Kindervater • U. Gottert€ • D. Patzelt University of Hohenheim, Stuttgart, Germany BIOPRO Baden-Württemberg GmbH, Stuttgart, e-mail: [email protected] Germany e-mail: [email protected]; [email protected]; I. Lewandowski [email protected] Institute of Crop Science; Biobased Products and Energy Crops, University of Hohenheim, Stuttgart, Germany e-mail: [email protected]

# The Author(s) 2018 75 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_5 76 C. Zorb€ and I. Lewandowski

The bioeconomy uses the resources biomass— logies for the designing of these characteristics and originating directly or indirectly from plants, the use of data and biological knowledge. microorganisms or animals—and biological know- In the second part of the chapter, the concept ledge. A bioeconomist requires knowledge of these of biobased value chains and their integration resources to be able to plan the resource supply into value nets is addressed. Examples of value strategy for a bioeconomic activity, to decide chains from food, bioenergy, biomaterial and which biomass resource is best suited for a speciﬁc biochemical applications are used to demonstrate biobased product chain and how these product how biomass is integrated into different biobased chains can be optimized. This chapter describes product chains. the characteristics of biomass, important techno- 5 Biobased Resources and Value Chains 77

5.1 Biobased Resources

Christian Zorb€ and Iris Lewandowski

# Ulrich Schmidt

Abstract Biobased resources are all resources data and its interpretation, often by means of containing non-fossil, organic carbon, recently bioinformatics, and the understanding of natu- (<100 years) derived from living plants, animals, rally occurring mechanisms (bionics). algae, microorganisms or organic waste streams. These are summarized in the term “biomass”. Keywords Biomass; Biomass production; This section describes the formation of biomass Biobased resources; Biomass use; Plant through the process of photosynthesis. Biobased modification resources can be classified and characterized according to their origin (e.g. plant, animal) and Learning Objectives the sector (agriculture, forestry or waste) in After studying this chapter, you should: which they are produced. However, for the integration into specific biobased product chains, the • Understand the process of biomass formation. most relevant classification of biomass is • Be able to characterize the resource base of according to its major component, i.e. starch, the bioeconomy. sugar, lignocellulose, oil or protein. • Have gained an overview of techniques to There are various options for tailoring bio- design biomass characteristics. mass properties to user demands. This section • Understand the concept of biological considers breeding, green biotechnology and knowledge. genetic engineering. Synthetic biology uses the tools of genetic engineering and biotechnology to Biomass Concepts: Different Perspectives construct completely new functional units or The concept of biomass was introduced in the year systems with desired properties. The bioeco- 1927 by a publication of the German zoologist nomy also makes use of biological knowledge, Reinhard Demoll (1882–1960): “By biomass we described here as the combination of biological term the quantity of substance in living organisms 78 C. Zorb€ and I. Lewandowski per unit of surface or volume” (Demoll 1927). with an amount of binding energy. However, Currently, there is no consensus on the general unfortunately, there is no chemical formula for definition of “biomass”. A simple and widely used the general definition of biomass. Physicists or biological definition is “organic matter derived agronomists may calculate the energy value of a from living, or recently living organisms”. This certain biomass fraction, from a maize field, for definition may be too broad to be of use as an example, using an equation for the heating value exact definition for this bioeconomy textbook. Let of biomass based on its components, but this is us focus on different perspectives of what also only part of the “what is biomass” story. constitutes biomass. Even in ecology, there is no standard definition of biomass. One reason is that A Technologist’s Perspective biomass changes as organisms interact with each Technologists see biomass as a source of energy. other and with their abiotic environment. Instead, Therefore, they mostly think of plant-based a colourful variety of ecological biomass concepts materials not used for food or feed applications, exists side by side. specifically lignocellulosic biomass. Although technical biomass definitions include only biotic A Biologist’s Perspective substances that can be used as energy sources, a When considering the term “biomass”, a biolo- number of different energy-related biomass gist would first think of carbohydrates terms and definitions still exist. Biomass can be (e.g. starch, sugar), proteins (e.g. storage proteins used for energy either directly via combustion to from grains), fats and oils (e.g. from oil seeds) produce heat or indirectly after conversion to and other secondary plant compounds. These various forms of biofuel. There are several substances are secondary metabolites of (plant) methods of converting biomass into biofuels, tissue, many examples of which can be found in and these are broadly classified into thermal, biochemistry textbooks. Primary plant chemical and biochemical methods (see Chap. 7 metabolites are compounds produced from the for description of conversion technologies). sugars formed by photosynthesis and used for metabolism. By contrast, secondary metabolites Our Definition of Biomass are not involved in primary metabolism but are In Sect. 2.2, biobased resources were defined as responsible, for example, for the structure and all resources containing non-fossil, organic car- functioning of a cell or organism. Higher plants bon, recently (<100 years) derived from living probably build around 100,000–150,000 differ- plants, animals, algae, microorganisms or ent secondary compounds including a diverse organic waste streams. These are summarized in range of proteins, sugars, sugar alcohols, the term “biomass”. Biomass can be further vitamins, fats, oils, amino acids, organic acids, defined as plant or animal tissue or tissue-based nucleic acids, phenolic compounds, odours, material, microorganisms and the substances pigments, etc. There are many interesting produced from them as well as organic molecules substances within these classes that may be (re) (primarily) formed by (photosynthetic) discovered in the bioeconomy as valuable organisms such as carbohydrates (e.g. sugars), compounds for polymer chemistry or possibly proteins, fats, fibre, vitamins and other secondary even pharmacy. plant metabolites. This includes edible biomass, such as starch-, sugar- and oil-rich biomass and A Chemist’s Perspective nonedible lignocellulosic biomass from dedi- A chemist would like to see a molecular formula cated crop production, residues and organic to describe carbohydrates, proteins, fats and wastes. Today, the term “biomass” is most fre- other secondary substances showing the chemi- quently used to refer to organic material utilized cal elements incorporated by autotrophs (see for energy production and other nonfood Fig. 5.1 and section “Photosynthesis”) together applications such as the production of biogenic 5 Biobased Resources and Value Chains 79 materials and chemicals. In the following text, Biotechnological methods may make it possible we use a more general definition of biomass, to increase the production and concentration of which includes edible as well as nonedible target molecules by plants and microorganisms. organic material. The first step in biomass formation is the absorption of light by the chlorophyll molecule. Photosynthetic electrons are used for the assimi- 5.1.1 Biomass: Its Origin lation of CO2 and the formation of carbohydrates and Characterization such as sugars in plant cells. However, not all absorbed energy electrons can be converted to chemical energy in the form of sugars. There are Photosynthesis energy losses in the process of photosynthesis, Primary production is the process that directly or for example, the heat produced by metabolism, indirectly supports virtually all life on Earth. and energy consumption through photorespira- Primary biomass is formed by the conversion of tion and other processes such as the Mehler reac- carbon dioxide (CO2) and water through the tion (for further information, see Taiz et al. autotrophic processes of photosynthesis (perfor- 2015). Therefore, the maximal efficiency of pho- med by plants and green algae) and chemosyn- tosynthesis is estimated to be about 12%. How- thesis (performed by some microorganisms). Of ever, this is a theoretical maximum (Radmer and these two processes, photosynthesis is the more Kok 1977) that can never be achieved by a grow- important. In this process, autotrophic organisms ing crop, even if all adverse factors such as take up CO2 and water and convert them into disease, predation, inadequate inorganic nutrient carbohydrates with the help of light energy supply and suboptimal water supply are (photons). Thus, light energy is converted into mitigated. Wilhelm and Selmar (2011) calcu- chemical energy through the integration of lated a conversion efficiency of photosynthetic carbon (C) into the organism’s substance (assim- energy into biomass of only about 8% (Fig. 5.2). ilation). The final products of photosynthesis are Given the above-mentioned energy losses in C6 sugars (hexoses) and oxygen. Figure 5.1 biomass formation, it is of vital importance that shows the chemical equation summarizing the available biomass is used as efficiently as possi- complete process. ble. Here, three approaches for efficient biomass Glucose is used as a resource in internal plant production and use are suggested: biochemical processes to form various other molecules through subsequent biochemical • Focusing on the production of valuable reactions, which also incorporate macro- and (biochemical) substances by plants and algae. micronutrient elements into the plant substance. An effective strategy would be the production of It is estimated that plants can build up around valuable organic substances (such as glycolate, 100,000–150,000 different chemical substances, omega-3 fatty acids, lutein) by algae. many of which have not yet been identified but Microalgae in particular have a higher photo- could be interesting in a future bioeconomy. How- synthetic efficiency because the light absorption ever, not all of these substances are available in of small algal cells (unicellular algae) is gener- sufficiently high quantities or concentrations. ally better than that of larger algae. • Supporting the efficiency of crop production Light through optimal crop management, improved 6 6 6 CO2 H 2O C6H12 O6 O2 harvest technologies and the avoidance of Chlorophyll biomass losses in the supply chain (see CO2: carbon dioxide; H2O: water; C6H12O6: glucose Sect. 6.1). • Applying breeding and biotechnological Fig. 5.1 Photosynthesis methods to supply varieties that make optimal 80 C. Zorb€ and I. Lewandowski

Fig. 5.2 Energy balance of biomass production. Bars represent photosynthetic energy absorbed and the various energy losses by transformation into biomass. Hundred percent is the maximum photosynthetic active energy (based on Wilhelm and Selmar 2011)

use of factors necessary for growth and that are nitrogen (N), phosphorus (P), potassium (K), are tailored to the production of specific calcium (Ca), magnesium (Mg) and sulfur (S). products (e.g. metabolites, proteins) at high These elements are also the major components of concentrations in the biomass. plant fertilizers, mostly in the form of ammonium, nitrate, urea, phosphate and potassium All biological material (or biomass) is essen- salts. Further important elements are the tially derived from inorganic molecules or ions so-called plant micronutrients, which are essen- that are assimilated into the biological tissue of tial but only in very small quantities—mostly at autotrophic (primary) organisms (plants and concentrations three orders lower than that of microorganisms) through photosynthetic or che- macronutrients. They include iron (Fe), manga- mosynthetic processes. Organisms that perform nese (Mn), zinc (Zn), copper (Cu), boron (B), primary production are called “autotrophs” molybdenum (Mo), chlorine (Cl) and nickel because they are self-feeding and use light as an (Ni). Other elements that can be beneficial for energy source. In the process of photosynthesis, plant growth in niche environments are silicon they take up CO2 and convert it into chemical (Si), cobalt (Co), selenium (Se) and sodium energy with the help of sunlight. These organisms (Na) (Fig. 5.3). provide the basis for secondary biological organisms, i.e. heterotrophs. Heterotrophs Biomass Characterization (animals, humans, fungi, most bacteria) rely on Biomass resources can be classified according the consumption of either the products of to their origin, i.e. whether they come from autotrophs or whole autotrophic organisms. plants, animals or microorganisms. Not only Biomass is formed primarily from carbon (C), the requirements for their production (see oxygen (O) and hydrogen (H) (Fig. 5.1). These Sects. 6.1.9, 6.1.10 and 6.4) are different but are assimilated from air and water. In addition, also the characteristics of their products. This mineral macronutrients are essential for plant is not only relevant from a processing point of growth and development and thus biomass for- view but also from an ethical point of view, for mation. The main macronutrients necessary for example, meat is not an “acceptable” biomass the production of biomass by primary organisms for vegetarians. 5 Biobased Resources and Value Chains 81

Fig. 5.3 Factors affecting plant growth and elemental composition of plant biomass (adapted from Lewandowski and Wilhelm 2016)

Fig. 5.4 Biobased resources. Plant, animal and microor- processed to food, feed, energy or raw materials. ganism biomass is produced in different primary sectors Examples of products used in the bioeconomy are seen of the bioeconomy. These biomass resources are in the outer circle 82 C. Zorb€ and I. Lewandowski

Table 5.1 Classification criteria for biomass resources Organisms which Sector of biomass produce biomass production Major biomass components (molecular formula)

Plants Agriculture Sugars (e.g. glucose, C6H12O6) Animals Forestry Starch (C6H10O5)n Microorganisms Fishery and Cellulose (C6H10O5)n aquaculture Hemicelluloses (e.g. xylose, C5H10O5) Algae and Lignin (coumaryl alcohol, C9H10O2; coniferyl alcohol, C10H12O3; microorganisms sinapyl alcohol, C11H14O4) Waste Oils (triglycerides, e.g. oleic acid, C18H34O2) Proteins (amino acids, e.g. alanine, C3H7NO2)

Fig. 5.5 Main components of different biomasses (in % of dry matter)

Biomass resources can also be classified criticism. For this reason, biomass is also classi- according to the sector in which they are pro- fied into “edible” and “nonedible” in terms of duced, e.g. as agricultural, forestry or waste bio- suitability for human consumption. mass (Fig. 5.4). The biomass supply chains in The most relevant classification of biomass for each sector vary from a practical point of view. its integration into specific biobased product chains But also from an ethical point of view, it makes a is according to its major component, i.e. starch, difference whether biomass has been classified as sugar, lignocellulose (lignin þ cellulose þ hemicel- waste or whether it comes from the agricultural lulose), oil or protein (Table 5.1). All of these sector. The use of waste biomass is generally contain mainly C, H and O. Only proteins, being considered beneficial, whereas agricultural bio- a combination of different amino acids, also con- mass has the primary task of producing food. In tain N and some contain S (Table 5.1). the latter case, a careful decision needs to be Figure 5.5 shows the major components of made on the best use of the biomass to avoid different biomasses. These vary considerably competition with food supply. The energetic use between lignocellulosic biomasses (such as wood of edible biomass, such as vegetable oil, for the and straw), starch-rich biomasses (e.g. wheat production of biofuels has received particular grain), oil-rich biomasses (e.g. rape seed), sugar- 5 Biobased Resources and Value Chains 83 rich biomasses (e.g. sugar beet) and protein-rich tonnes, 23%), protein (1.23 billion tonnes, 12%) biomasses (e.g. pig meat and fish). and fat (0.51 billion tonnes, 4%) (FAOSTAT 2014; Finally, biomass can also be characterized nova Institut 2015). About three quarters of the according to its physical conditions into “wet” total biomass produced by agriculture is used as and “dry” or “solid” and “liquid” biomass. The feed to produce 115, 90 and 60 million tonnes of physical properties of biomass determine the pig, chicken and cattle meat, respectively, and requirements for its harvest, transport, storage and 640 million litres of milk (Fig. 5.6). processing (see Sect. 7.3). Generally, wet biomass is more perishable than dry biomass. It requires a higher transport effort (because more water is transported) and additional processing before stor- 5.1.2 Techniques for Improving age, such as drying or ensiling (e.g. maize is or Designing Biomass ensiled for feed and biogas applications). Characteristics

Global Biomass Use Currently, it is estimated that about 11.4 billion Breeding tonnes of biomass are produced annually on agri- Humans started to cultivate plants as they began cultural land and from forests. Of this, 18% stems to settle about 10,000 years ago. It was beneﬁcial from wood, 40% from agricultural production, for them to have food stored throughout the 30% from pasture and 12% are by-products whole year, to consume when less or no freshly (FAOSTAT 2014; Raschke and Carus 2012). The produced food was available. This enabled them largest part of this biomass is comprised of cellu- to survive in unfavourable climates where natu- lose (5.62 billion tonnes, 49%). Other important rally grown plant-based food was only available biomass feedstocks are sugar/starch (2.63 billion in a particular season. Early farmers already

Fig. 5.6 Worldwide use of harvested forestry and agricultural biomass in 2008 (based on Raschke and Carus 2012) 84 C. Zorb€ and I. Lewandowski started breeding wild plants and selecting the into its genome. These can originate from the genotypes with the best performance in terms of same or another, non-related species. The latter high yield, non-shedding seeds and resistance to results in a transgenic organism, i.e. one that biotic and abiotic stress (e.g. drought). They contains genes from a different species. Breeding developed many of our most important plants, progress is usually faster and more specific when such as wheat, maize (corn), rape and rice. biotechnological methods are used. Today, breeding is still the most important GM techniques can be applied to crops to prerequisite for sufficient and sustainable food modify the chemical structure of polymers such production. as starch, lignin or other fibres. The modification Breeding is the improvement of crop varieties of proteins or metabolites for use in the chemical and animal breeds—in terms of yield, resistance to industry, building industry or in pharmacy is also pests and diseases, fertility, product quality or adap- possible. The use of plant-based antibodies to tation to different production conditions—through human or animal diseases has been applied in breeding methods. These are classified as either practice for two decades. The advantage of “conventional” or “genetic engineering” methods. using GM crops for pharmaceutical purposes is Conventional breeding seeks to provide improved that the agents can be produced in greenhouses or varieties or breeds by selection and directed cross- fermenters, and official regimentation is much ing. Genetic engineering (or genetic modification) lower than for field trials. Most varieties of a uses biotechnological techniques to alter the number of major crops, including soybean, genome (genetic material) of the organism. maize and cotton, commonly grown in the USA, Brazil, China, India or elsewhere, have Green Biotechnology been genetically modified. However, GM crops Biotechnology is “any technological application are usually not well accepted by the general that uses biological systems, living organisms, or public, and, in Europe, their production in the derivatives thereof, to make or modify products field is highly restricted. In addition, GMO pro- or processes for specific use” (UN Convention on duction is not permitted in organic agriculture. Biological Diversity, Art. 2). Green biotechnol- The recently developed gene-editing method ogy is the application of such techniques in agri- CRISPR/Cas9 used in plant breeding is a bio- cultural processes. An example is the use of technical method for cutting out (knocking out) genetic engineering methods to design transgenic genes without leaving a trace or for specifically plants able to grow in particular environments altering or adding genes or gene pieces in order characterized by the presence (or absence) of to introduce the desired properties. The status of specific (bio)chemicals. crop varieties produced by this method is the subject of current discussion. The question arises Genetic Engineering whether these organisms should still be consid- Genetically modified organisms (GMOs) are ered genetically modified if only parts of the organisms that have had their genomes altered, genes have been cut out or altered without either in a way that does not occur naturally or in introducing genetic material from other a natural but accelerated way. To produce a organisms or if genetic material from other spe- GMO, specific characteristics can be changed cies was only temporarily introduced for inter- using laboratory-based techniques to delete mediate breeding steps (e.g. early flowering in or alter particular sections of DNA trees) and then removed again. (deoxyribonucleic acid, contains the genetic Breeding and genetic modification can be information, e.g. genes, regulatory elements). categorized according to the nature of the An organism’s characteristics can also be conferred traits. Input traits are those that affect changed by introducing new pieces of DNA crop performance without changing the nature of 5 Biobased Resources and Value Chains 85 the harvested product. Examples include resis- -omics. The term “big data” is also used for tance to pests, viruses, bacteria, fungi or insects, large quantities of biological data but can also tolerance to abiotic stresses (e.g. soil-borne be applied to other areas than genetic informa- metals, salinity, drought, heat) and a higher nutrition, such as data for analysing human health ent use efficiency resulting in higher yields of and interactions with various factors including biomass or target products. nutrition and the environment. Omics data are Output traits change the quality of the crop often used for breeding purposes, e.g. for the product itself, e.g. by altering the starch, protein, identification of genes that code for important vitamin or oil composition to improve the traits such as crop resistance to pathogens, and nutritional value. This may be, for example, animal health or quality parameters. Big data through an increase in vitamins, omega-3 fatty sets can be used, for example, to describe the acids or antioxidants, a decrease in saturated fats pharmacological relevance of particular or an improved amino acid balance. Other substances, e.g. those produced by plant output-trait-related targets include an enhanced cultures,eitherGMorconventional.Thisisof level of essential minerals (Fe, Zn), the elimina- great value for a knowledge-driven, biobased tion of allergenic proteins, improved taste, longer economy because it can help to provide practi- shelf life and the introduction of novel food cal information for developments in medicinal products. Output traits may also focus on the or food crop production. An example is the use (small-scale) production of biomass for of biobased genomic data for the design of a biopharming, sold at premium price. plant-tissue-based antibody (immune globulin) for the treatment of cancer. For this purpose, the binding specificity of the antibody to its target 5.1.3 Biological Knowledge was calculated from a bioinformatic-based data set (genomic and proteomic data). The designed The discipline of biology was established gene sequence for the antibody was then around 1800 as the “science of life”. Biological introduced into tobacco cell culture in research produces large sets of data on different fermenters, where the protein (i.e. the antibody) scales, ranging from genetic information to bio- was expressed (for further details, see Ma et al. diversity and the interactions between species, 2005). landscapes and climates. Biological knowledge Biological knowledge also includes the under- is the combination of biological data and the standing of naturally occurring mechanisms interpretation of its meaning. Traditionally, (bionics). A prominent example is the so-called such data were interpreted by a person; how- lotus effect. This describes the self-cleaning ever, today the interpretation of large-scale data properties of the lotus plant (Nelumbo nucifera) sets is only possible with the help of computers that results from the ultrahydrophobicity of its due to the sheer volume of data. This is mostly leaves. Technical application of this mechanism done by bioinformatics—the use of computa- is used for paints, coatings, roof tiles, fabrics and tional and mathematical techniques to store, other surfaces that can stay dry and clean them- manage and analyse biological data (Kaminski selves. Biologization is the integration of such 2000). A major area of bioinformatic applica- natural concepts into economic development, the tion is the analysis of DNA and protein application of biological and life science sequences and structures in order to characterize innovations and the development of products and the linked functions. The term “omics data” is solutions by means of life sciences. Biologization also used to refer to this type of bioinformation. and digitalization (seen in the example of bioin- There are data available for genomics, proteo- formatics above) are often considered as conver- mics, metabolomics, ionomics and several other gent and potentially synergetic processes. 86 C. Zorb€ and I. Lewandowski

Synthetic Biology opportunities in the bioeconomy, e.g. for the Synthetic biology goes beyond the application supply of products that cannot be produced of existing biological mechanisms and knowl- economically by chemical processes or for edge. It uses the tools genetic engineering and which there are no natural synthesis methods biotechnology to construct completely new, (Kircher et al. 2017). not naturally occurring biological functional units or systems with desired properties or Review Questions remodel existing biological systems for new tasks (Kircher et al. 2017). For example, recent • What are the major resources used in the technological advances have enabled scientists bioeconomy? to produce new sequences of DNA from • How can biological knowledge be applied? scratch. Through the application of modern • Describe the energy balance of biomass pro- engineering principles and the use of duction through the process of photosynthesis. computers and chemicals, organisms can be • Which plant nutrients are important for bio- designed that are suitable for technical mass formation? purposes, for example, the direct production • Which input and output traits are relevant for of biofuels or precursor chemicals for pharma- plant modiﬁcation? ceutical drugs. Synthetic biology offers new 5 Biobased Resources and Value Chains 87

5.2 Biobased Value Chains and Networks

Ralf Kindervater, Ursula Gottert,€ and Dominik Patzelt

# Canned Mufﬁn

Abstract In order to describe bioeconomic 5.2.1 Introduction to Value Chain activities, the term biobased value chain is often used by policymakers (European Commission, A There are manifold concepts and notions to bioeconomy strategy for Europe. Working with describe the relationship and interdependencies nature for a more sustainable way of living. among players within an industry sector. For European Commission, 2012; BMBF 2011), instance, supply chain, (global) value chain, mar- organizations (GBS, Communique´ of the global ket chain, value web or global commodity chain. bioeconomy Summit, 2015) and researchers. In While most of these concepts have considerable the bioeconomy, value chains are built on overlapping meanings and/or can be used inter- biological resources and therefore called changeably, in bioeconomy most commonly the “biobased”. This chapter addresses the funda- term “biobased value chain” is used (Nang’ole mental concept of value chains and investigates et al. 2011; Kaplinsky and Morris 2002). unique characteristics of biobased value chains. The ﬁrst standardized approach to investigate the link between players in agricultural produc- Keywords Value chain; Biobased value chain; tion systems and to visualize their relationship Value network; Cascading use; Bioreﬁnery through a metaphorical chain was made by the 88 R. Kindervater et al.

French Institut National de la Recherche and the logistics to transport it to the first point of Agronomique (INRA) and the Centre de Coope´r- processing. Then the chain continues step by step ation Internationale en Recherche Agronomique with each following intermediate product until the pour le De´veloppement (CIRAD) with their con- final product is reached, marketed, sold to the cept of filie´re (French for thread) in the 1970s. customer and serviced over its lifetime. The visu- The concept was developed as an analytical tool alization usually follows a left-to-right orientation to study the organization of farmers and with each step depicted in an arrow-shaped box. processors (Nang’ole et al. 2011). Raw materials such as crude oil have to In the 1980s Michael E. Porter established the undergo a large number of transformation steps term value chain. He conceptualized the organi- before they result in the final (e.g. plastic) prod- zation of a firm as a system made up of uct. As such, “complete” value chains would be subsystems, each with inputs, transformation very long and incomprehensible. To avoid this, processes and outputs (Porter 1985). Each (sub) value chains are often simplified by grouping system involves the acquisition and consumption activities. This makes it easier to read the value of resources, i.e. money, labour, materials, equip- chain but also leads to a loss of detail. In Fig. 5.8 ment, buildings, land, administration and man- a simplified biobased value chain is shown, agement (Fig. 5.7). including primary production, conversion and While Porter’s value chain definition puts an market. Features of biobased value chains are emphasis on only one actor (the firm), newer discussed in Sect. 5.2.2. conceptions expand the scope of the term to Value chains are often also called “value- achieve a more holistic picture. This broader added chains”. This reflects the fact that, from conception of the term includes the range of an economic point of view, there is typically an activities and complex interactions of various increase in value with each step applied. The actors (M4P 2008) and is rather related to the value chain approach allows stakeholders to concept of filie´re. In a context of worldwide understand the cost structure and the socioeco- integration, the term global value chains arose nomic value of a product in a comprehensive and (Kaplinsky und Morris 2002). transparent way. With respect to these newer conceptions, For additional information about the value- Kaplinsky and Morris (2002) define value chains adding process, a value chain may be as following: complemented by a product chain, a process The value chain describes the full range of chain and an information flow. Product chains activities which are required to bring a product or aim to visualize the transformation from the service from conception, through the different raw material(s) over intermediates to the final ... phases of production ( ), delivery to final product(s). Process chains display the processes consumers, and final disposal after use. which are applied to receive all needed Following this, a value chain generally starts intermediates. Simultaneously, the value-adding with the extraction or production of a raw material activities entail information about economic

Fig. 5.7 The original value chain model of Michael E. Porter (based on Porter 1985) 5 Biobased Resources and Value Chains 89

Fig. 5.8 Simpliﬁed biobased value chain

figures, social indicators and the environmental networks is also essential to gain the necessary impact. An example for biobased plastics pro- information for successful innovation processes, duction is shown in Fig. 5.9. e.g. in the replacement of fossil by renewable As mentioned above, for reasons of simplic- resources. Whenever a raw or intermediate mate- ity, the value chain has a linear form. For more rial is replaced, the transition to the next value complex products, such as cars, machines, step has to be evaluated and properly planned. buildings and packaging solutions, a simple Any misfits may cause a break in a value chain, value chain is not optimal for the depiction of inhibiting the smooth integration of new raw the manufacturing procedure, as many different materials into an existing production process. materials derived from different processes are The value chain approach is related to the used. Here, it is better to introduce the concept competence of system thinking (see Sect. 4.3) of “components” and define the manufacture of a and the central idea of life-cycle assessments complex product as the assembly of several (see Sect. 8.3). It attempts to portray the impact components, with the production of each compo- of a product on its environment and the nent being shown in a linear value chain. The interdependencies of production systems. complete production process can then be illustrated in a so-called value network (or - value-added network), which integrates multiple 5.2.2 Characteristics of Biobased value chains. Figure 5.10 shows the example of a Value Chains value-added network for the manufacture of biobased car parts and biomethane as fuel. Bioeconomic concepts focus on the sustainable In the bioeconomy, due to the vast applicabil- and efficient use of renewable, biological ity of biobased raw materials, value networks can resources. Cascading use is considered to be a also be used to illustrate and thus gain a better central concept of the bioeconomy, and efforts understanding of the production paths in the are taken to apply it to biobased value chains manufacture of complex goods from a particular (Odegard et al. 2012). Generally, cascading is renewable raw material, e.g. wood. Forestry about optimizing the functional and consecutive wood consists of several base materials, such as use of biomass with respect to present conditions cellulose, lignin, hemicellulose and other chemi- and future alternative applications. By means of cal substances depending on the type of tree. A efficiency, cascading aims at the maximization of value network makes it possible to describe the socioeconomic value given the constraint of manufacturing of complex products derived from resource limitation (Haberl and Geissler 2000). multicomponent raw materials. It also allows However, the term is interpreted in various ways. side streams of residual components (e.g. lignin Firstly, it could be understood as an efficient in paper production) to be displayed, which may use of biomass for different purposes in time. For occur at any stage in the production process. instance, the use and recycling of paper including Thus, value networks provide a holistic view of different applications is an already established the production process of complex goods and can case. be used to develop production scenarios (see Secondly, cascading may be considered as the Sect. 9.2) for a sustainable bioeconomy, follow- prioritization of high (socioeconomic)-value bio- ing a zero-waste strategy and cradle-to-cradle mass applications. This means that plant biomass concepts. A detailed understanding of value is first used in the food sector to ensure food 90

Fig. 5.9 Simpliﬁed value chain of the production of biobased plastics, showing the product and process chain, and information ﬂow .Knevtre al. et Kindervater R. 5 Biobased Resources and Value Chains 91

Methane operated car consisting of biobased plastic parts

Compressed Fibre reinforced Fibre reinforced Plastic parts 3-D printed methane laminated thermoplastic foils parts for refueling parts parts

Biomethane Reactive Carbon fibre Biobased Extrusion of filament, (CH4) resin &-fabric Polymers powder

PLA, Resin Biogas Lignin fibre Lignin Cellulose Dilactide components Lactic acid

Fermentable Fermentable Biogenic raw or raw or waste raw or waste waste material Beech wood material material

VAC 1 VAC 2 VAC 3 VAC 4 VAC 5

Fig. 5.10 Value network consisting of five value-added chains (VAC) for the manufacture of car parts from biobased plastic and biomethane as fuel (BIOPRO, shown at ACHEMA 2015) security or for production of pharmaceuticals in feedstock biorefinery, whole crop biorefinery and the healthcare industry. Sequentially, residual green biorefineries (which use nature-wet bio- matter is used for feed and/or material, before mass), among others (Kamm et al. 2012). In by-products are finally exploited for energy gen- grass refineries, wet grass is converted in a eration (see Fig. 5.11). range of products such as plastics, insulation In addition, also biorefining is seen as an appli- materials, fertilizers and energy (see Box 5.1). cation of the cascading approach. In biorefineries biomass serves as a source for several valuable Box 5.1 Grass Refinery products or functional components through dif- A grass refinery is an example of green ferent conversion processes and is thereby used as biorefining. In this concept, ideally region- efficiently as possible. Although it is not a new ally produced meadow grasses are refined to concept, it has gained attention in recent years. a range of products including composites, Biorefinery systems differ according to the insulation materials, fertilizers and electric- (1) flexibility to process various types of feed- ity. Following a cradle-to-cradle approach, stock, (2) characteristics of the conversion pro- products can be fully recycled without cesses and (3) product diversification (Sadhukhan et al. 2014). Some examples are lignocellulosic (continued) 92 R. Kindervater et al.

Fig. 5.11 Cascading use of primary biomass

Fig. 5.12 Grass reﬁnery

Furthermore, the concept of cascading is often Box 5.1 (continued) seen to be complemented by the principle of generation of waste. Within the production circularity (Kovacs 2015). In biobased value process, materials are used as efficiently as chains, it addresses the closing of material and possible and in closed loops. For instance, energy flows, transforming linear production process biogas and heat are used for heating processes into circular or closed ones, accord- or drying within the refinery (Fig. 5.12). ingly reducing the generation of waste. To establish cascading of biological resources on an economy-wide scale, entire biobased value Obviously, the introduced interpretations of chains have to be formed and eventually cascading use are not mutually exclusive and integrated in value networks. The development should be perceived complementary in order to of new biobased value chains requires coopera- ensure the most efficient use of biomass. tion between previously unconnected sectors in 5 Biobased Resources and Value Chains 93 order to handle the specific characteristics of and fibre production. These simplified value bioeconomic value chains. chains consist of components aggregating vari- Most of these characteristics are derived from ous process and product steps (see Fig. 5.9). the involvement of primary production of Before milk is distributed to the final cus- biological resources in the value chains. Espe- tomer (Fig. 5.13), multiple processes and product cially in forestry or agriculture, production pro- steps are required. For instance, the value chain cesses are characterized by seasonal patterns, component “feed production” includes all steps, occur decentralized and underlie quality such as feed crop production, harvest and stor- variations due to environmental conditions. In age, needed to supply dairy cows with feed. addition, the transportability of biomass is often Similar to rearing of cows (dairy cattle farming) limited due to its low density and susceptibility and the milk production itself, these processes to decaying. Accordingly, primary biomass can follow a large variety of different methods processing has to take place on a regional scale and techniques. The wide variety of approaches and is characterized by various and divergent in agricultural production systems depends on players. For instance, in future, so far rarely various factors described in Sect. 6.1. interacting industrial sectors such as established The value chain of biogas in Fig. 5.14 chemical companies and small-scale farmers will comprises four components. The feedstock mix have to cooperate intensively, in order to produce depends on the biogas plant and management. biobased chemicals for an emergent bioeconomy Here, energy crops (e.g. corn or miscanthus) (Berg et al. 2017). are cultivated, including all process steps from Considering these features, biobased value soil preparation to harvest. In the biogas plant, chains form a strong contrast with continuous biomass is digested by methane-producing fossil-based production processes, and a substan- anaerobic microorganism. The following com- tial mind shift will be required in conventional ponent contains all upgrading processes business logics and approaches. (e.g. purification), preparing the biogas for the market. The distribution component comprises chains visualising logistic, marketing and 5.2.3 Examples of Value Chains service. in the Bioeconomy The value chain of different paper-based materialsisshowninFig.5.15. This includes forest In the following section, three examples of management to produce wood and the following biobased value chains are given, for food, fuel wood processing steps, such as fibre separation

Fig. 5.13 Dairy products value chain

Fig. 5.14 Biogas value chain

Fig. 5.15 Paper value chain 94 R. Kindervater et al.

(pulping), which is possible by means of different BMBF (2011) National research strategy bioeconomy processes. Finally, the separated fibres (pulp) 2030. Federal Ministry of Education and Research (BMBF), Berlin undergo pressing and drying processes in order to Demoll (1927) Betrachtungen über Produktionsber- remove water from the final paper product. echnungen. Arch Hydrobiol 18:462 European Commission (2012) A bioeconomy strategy for Europe. Working with nature for a more sustainable way of living. European Commission, Brussels 5.2.4 Using Value Chains and Value FAOSTAT (2014) Food and agriculture organization of Networks in Technology the United States – Statistics Division. http://faostat. Transfer and Innovation fao.org/ Support Activities GBS (2015) Communique´ of the global bioeconomy Summit. Making bioeconomy work for sustainable development. http://go.nature.com/293zhq2. Technology transfer activities typically consist Accessed 25 Jun 2017 of efforts to commercialize research results in Haberl H, Geissler S (2000) Cascade utilization of bio- cooperation with individual companies. How- mass: strategies for a more efficient use of a scarce resource. Ecol Eng 16:111–121. https://doi.org/10. ever, the technology transfer officer in charge of 1016/S0925-8574(00)00059-8 the commercialization of a particular product Kaminski N (2000) Bioinformatics: a user’s perspective. may be unaware of the complete value chain Am J Respir Cell Mol Biol. https://doi.org/10.1165/ and the exact position of the company concerned ajrcmb.23.6.4291 Kamm B, Gruber PR, Kamm M (2012) Biorefineries – along the chain. In a biobased economy, technol- industrial processes and products. Ullmann’s encyclo- ogy transfer and innovation support professionals pedia of industrial chemistry. Wiley-VCH, Weinheim, need to interconnect all parties involved in a pp 659–683 particular value network and learn about their Kaplinsky R, Morris M (2002) A handbook for value chain research. Institute of Development Studies, individual needs and motivation to shift from University of Sussex fossil to biobased resources. Interactions Kircher M, Bott M, Marienhagen J (2017) Die Bedeutung between members of a value network are typi- der Biotechnologie für die Biookonomie.€ In: Pietzsch € cally based on a vendor/purchaser relationship. J (ed) Biokonomie für Einsteiger. Springer, Berlin, pp 105–128 This slows down the innovation process and Kovacs B (ed) (2015) Sustainable agriculture, forestry often means that biobased components and and fisheries in the bioeconomy – a challenge for products enter the market only if they are price Europe. Standing Committee on Agricultural competitive. Research – 4th Foresight Exercise. European Com- mission, Brussels If economic developers succeed in addressing Lewandowski I, Wilhelm C (2016) Biomasseentstehung. the needs of all parties in the value chain, highly In: Kaltschmitt M, Hartmann H, Hofbauer H (eds) innovative research and development projects Energie aus Biomasse: Grundlagen, Techniken und become feasible. Following this approach, indi- Verfahren. Springer, Berlin, pp 77–123 M4P (2008) Making value chains work better for the vidual requirements (e.g. material quantities and poor: a toolbook for practitioners of value chain anal- qualities) can be addressed. The authors’ experi- ysis, Version 3. Making Markets Work Better for the ence has shown that the integration of all Poor (M4P) Project, UK Department for International participants of a value chain into R&D projects Development (DFID). Agricultural Development International, Phnom Penh can decrease development cycles of biobased Ma JKC, Chikwamba R, Sparrow P et al (2005) Plant- products by half. derived pharmaceuticals-the road forward. Trends Plant Sci. https://doi.org/10.1016/j.tplants.2005.10. 009 Nang’ole E, Mithofer€ D, Franzel S (2011) Review of References guidelines and manuals for value chain analysis for agricultural and forest products. Occasional Paper 17. World Agroforestry Centre, Nairobi Berg S, Kirchner M, Preschitschek N et al (2017) Die Odegard I, Croeze H, Bergsma G (2012) Cascading of € Biookonomie als Kreislauf- und Verbundsystem. In: biomass: 13 solutions for a sustainable bio-based € ü Pietzsch J (ed) Biookonomie f r Einsteiger. Springer, economy. CE Delft, Delft Berlin 5 Biobased Resources and Value Chains 95

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Primary Production 6 Iris Lewandowski, Melvin Lippe, Joaquin Castro Montoya, Uta Dickho¨fer, Gerhard Langenberger, Johannes Pucher, Ursula Schließmann, Felix Derwenskus, Ulrike Schmid-Staiger, and Christian Lippert

Primary production is the synthesis of organic net primary production of biomass is highest in substances by autotrophic organisms from atmo- regions where high temperatures are combined spheric or aqueous carbon dioxide (CO2)(seeSect. with a good water supply and is totally absent in 5.1). Primary productivity, which is the rate at desert regions without a natural water supply. which energy is converted into organic substances, Apart from light and water, there are other depends on internal (genetic) and external (eco- factors that determine primary productivity, physiological) factors. Figure 6.1 shows that the including the availability of plant nutrients,

I. Lewandowski (*) J. Pucher Institute of Crop Sciences; Biobased Products and Department of Experimental Toxicology and ZEBET, Energy Crops, University of Hohenheim, Stuttgart, German Federal Institute for Risk Assessment, Berlin, Germany Germany e-mail: [email protected] e-mail: [email protected] M. Lippe U. Schließmann • U. Schmid-Staiger Thünen Institute of International Forestry and Forest Department of Environmental Biotechnology and Economics, Hamburg, Germany Bioprocess Engineering, Fraunhofer Institute for e-mail: [email protected] Interfacial Engineering and Biotechnology, Stuttgart, Germany J. Castro Montoya • U. Dickho¨fer e-mail: [email protected]; schmid- Institute of Agricultural Sciences in the Tropics; Animal [email protected] Nutrition and Rangeland Management in the Tropics and Subtropics, University of Hohenheim, Stuttgart, F. Derwenskus Germany Institute of Interfacial Process Engineering and Plasma e-mail: Joaquinmiguel.Castromontoya@uni-hohenheim. Technology, University of Stuttgart, Stuttgart, Germany de; [email protected] e-mail: [email protected] G. Langenberger C. Lippert Institute of Agricultural Sciences in the Tropics (Hans- Institute of Farm Management; Production Theory and Ruthenberg-Institute; Agronomy in the Tropics and Resource Economics, University of Hohenheim, Subtropics, University of Hohenheim, Stuttgart, Germany Stuttgart, Germany e-mail: [email protected] e-mail: [email protected]

# The Author(s) 2018 97 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_6 98 I. Lewandowski et al.

0 200 400 600 800 1000 >1200 g C m-2a-1 NPP

Fig. 6.1 Net primary production (NPP) of biomass, in gram increments of carbon (C) per m2 and year (from Imhoff et al. 2004) mainly nitrogen (N), potassium (K) and phospho- containing four carbon atoms. Sugar cane and rus (P) (Fig. 5.3). The lack of any one of these other subtropical and tropical crops belong to factors can hinder biomass growth. Unfavourable this group. Under favourable environmental site conditions, such as soil contamination or com- conditions, especially high temperatures, C4 paction, can also impair biomass growth. Because crops are more productive than C3 crops because the process of photosynthesis consumes CO2, they possess a more effective biochemical mech- potential biomass productivity increases with anism of fixing CO2. The genetic component of increasing atmospheric CO2 concentrations. How- productivity can be exemplified by the breeding ever, this additional stimulus cannot be progress achieved in recent decades. It is pre- transformed into higher productivity if water sup- sumed that the major proportion of yield ply is limited by drought. That means the highest increases seen in the agricultural crops wheat, biomass growth is achieved when all factors rice and maize are the result of intensive breed- affecting growth are at their relative optimum. ing. Improved crop management, especially fer- Primary productivity also differs depending tilization and crop protection, is the second most on the type of plant or organism and its genetics. important factor driving yield increases. An example of this can be seen in the productiv- Actual biomass production very much ity of ‘C3’ and ‘C4’ plants. Most crops cultivated depends on the kind of land use (see Fig. 6.2). in temperate climates possess the C3 photosyn- The highest productivity is generally achieved on thetic mechanism, so called because the first intensively managed cropland with natural vege- product of carbon fixation contains three carbon tation generally having the lowest. atoms. Wheat, sugar beet and trees are examples It is anticipated that a growing bioeconomy of C3 crops. Carbon fixation in the photosynthe- will require an increasing supply of biomass. sis pathway of C4 crops results in a first product However, not all of the biomass produced can 6 Primary Production 99

Fig. 6.2 Arable land in use and suitable for rainfed agriculture in different regions of the world. Also shown are the percentages of maximal attainable wheat yield in these regions (based on FAO 2002) be made available for use. For example, in the Today, it is generally agreed upon that biomass context of bioenergy development, there is an potential assessment studies should follow the ongoing debate about biomass availability and following rules (see also Dornburg et al. 2010): whether the energetic and material use of biomass is in conflict with food supply. • They should only consider biomass that is not The question of how much biomass can be required now or in future for the purpose of sustainably used for human consumption, espe- food production. A biomass potential should cially for bioenergy, has led to various biomass only be indicated as such if it can be generated potential analyses being performed. Several in addition to products from primary produc- global biomass potential assessments indicate tion needed for food or feed purposes. that an additional biomass potential exists for • Biomass should not be produced in any areas material or energetic application that could be of high conservation value (HCV). The used without jeopardizing food supply (Dornburg Roundtable on Sustainable Palm Oil (RSPO) et al. 2010; Piotrowski et al. 2015; Smeets et al. defines HCVs as ‘... biological, ecological, 2007). The methods applied in these studies are social or cultural values which are considered generally supply-driven, which means they assess outstandingly significant or critically impor- biomass potentials on the basis of resources avail- tant, at the national, regional or global level. able for biomass production. These resources are All natural habitats possess inherent conser- either additional land or land that can be more vation values, including the presence of rare efficiently used to increase biomass productivity. or endemic species, provision of ecosystem Other supply-driven studies assess and quantify services, sacred sites, or resources harvested potential biomass supply from untapped or by local residents. An HCV is a biological, underutilized resources, such as agricultural and ecological, social or cultural value of out- forestry residues, landscape and grassland bio- standing significance or critical importance’ mass and other organic wastes. (RSPO 2016). 100 I. Lewandowski et al.

Biomass should not be produced where it as 30% in African countries (Fig. 6.2). Because would lead to the destruction of high-carbon biomass potentials are generally assessed by land-use systems, such as peat, natural forest multiplying the respective yield by the amount or permanent grasslands. of land available, the yield assumed is also a • Biomass should be generated from the more major determinant of biomass potentials. efficient use of existing agricultural land and • The amount and quality of land considered sustainable extraction from natural forests or available for biomass production. The amount other land-use forms. In addition, more effi- of land that is additionally available for bio- cient use should be made of existing biomass mass production is currently a topic of ongo- resources, for example, through more efficient ing debate. The FAO (2002) estimated an biomass conversion techniques, and of resi- untapped potential of 25 billion ha of agricul- due streams to increase the biomass potential. tural land for rainfed biomass production (see also Fig. 6.2). However, large parts of these Recent studies have resulted in global bio- areas may be characterized as ‘marginal land’. mass potentials ranging from 0 to more than Marginal production conditions can be defined 1100 GJ (Dornburg et al. 2010). The background in economic and biophysical terms (Dauber assumptions applied in the modelling approach et al. 2012). Biophysical constraints to agricul- form the major determinant of the size of the tural production include degradation though biomass potential given. There are many factors erosion, contamination, stoniness, and shallow that determine the sustainably usable biomass soils and soils of low fertility. If marginal land potential (Smeets et al. 2007; Dornburg et al. is defined as land that does not support eco- 2010) including: nomically viable agricultural production, the status of marginality will depend on land-use • The local diet, mainly the kind and amount of and biomass prices. A caveat to the use of meat and dairy products consumed. The bio- economically marginal land is the fact that mass potential decreases with an increase in the production of whatever biomasses, be it the amount of meat consumed because meat for food or energetic and material uses, on production requires 3–100 times more land this land will result in low profit. than crop production (Smeets et al. 2007). • The kind of biomass being considered. Ligno- • The type and efficiency of meat production. cellulosic crops, such as trees and grasses, The efficiency of meat production, expressed deliver the highest biomass and energy yields in terms of kg meat produced per kg feed, per hectare. Many potential studies (Hoogwijk differs between animals, regions, feeding et al. 2005; Smeets et al. 2007) are based on the systems and others (see Sect. 6.1.10,Table6.5). assumption that short rotation coppice is • The efficiency of agricultural land use. The grown on land available for biomass produc- actual exploitation of agricultural land, tion. However, a number of material appli- indicated by the proportion of potential yield cations and liquid biofuel production require that is actually harvested, varies widely vegetable oils, sugar or starch. These can only between countries. It can be close to full be produced at lower yield levels. exploitation in industrial countries but as low 6 Primary Production 101

Fig. 6.3 Major types of global land-use cover in Mha and future trends (from UNEP 2014)

These bio-based resources are produced on a Agriculture and forestry are the largest pri- land area of 14,900 million ha (Mha) globally, of mary production sectors, followed by ﬁshery, which 1500 Mha are arable land, 4100 Mha are aquaculture and production of algae and permanent grassland and pastures and 3900 Mha microorganisms. Each of these primary sectors are forest (Fig. 6.3). forms an important part of the bioeconomy. They are described in the following sections. 102 I. Lewandowski et al.

6.1 Agricultural Production

Iris Lewandowski, Melvin Lippe, Joaquin Castro Montoya, and Uta Dickho¨fer

# Ulrich Schmidt

Abstract Agriculture is the cultivation of crops 13.5% of global greenhouse gas emissions or the husbandry of livestock in pure or (IPCC 2006). integrated crop/animal production systems for In the future bioeconomy, agriculture needs to the main purpose of food production, but also be performed sustainably. ‘Sustainable intensifi- for the provision of biomass for material and cation’ aims at shaping agricultural production in energetic use. Together with forestry, agricul- such a way that sufficient food and biomass can tural production represents the main activity of be produced for a growing population while, at resource production and supply in the the same time, maintaining ecosystem functions bioeconomy and the major activity delivering and biodiversity. Sustainable intensification can food as well as starch, sugar and vegetable oil partly be achieved by the development and resources. Today, 33% (about 4900 Mha) of the implementation of innovative production Earth’s land surface is used for agricultural pro- technologies, which allow a more efficient use duction, providing a living for 2.5 billion people. of natural resources, including land and agricul- Agriculture shapes cultural landscapes but, at the tural inputs. Its implementation requires a knowl- same time, is associated with degradation of land edge-based approach, in which farmers are made and water resources and deterioration of related aware of the requirements of sustainable produc- ecosystem goods and services, is made responsi- tion and trained in the implementation of sustain- ble for biodiversity losses and accounts for able agricultural production systems. 6 Primary Production 103

The planning of bio-based value chains and determined by climatic, physical, environmental sustainable bioeconomic development demands and societal conditions and the interactions an understanding of the mechanisms of biomass (and interconnections) between them (Fig. 6.4). production and supply (as described in this chap- Furthermore, the principles of crop and animal ter) for the entire global agricultural sector. production, their input and management requirements as well as their outputs, mainly in terms of Keywords Farming systems; Agricultural pro- yields, are described. duction systems; Crop production; Livestock production; Sustainable agriculture 6.1.1 Farm Types Learning Objectives After studying this chapter, you will: Farms are the entities that perform agricultural production by either cultivating crops or rearing • Have gained an overview of global agri- livestock, or by a mixture of both. Farms are in cultural production general characterized according to size; available • Be able to explain why different agricultural resources; local options for crop and animal production systems are adopted in different production; organizational model and natural regions limitations of the surrounding agroecosystem, as • Have become acquainted with the techno- a function of climate or soil types; and interaction logical and logistical preconditions for agri- with other floral and faunal species (Ruthenberg cultural production 1980; Sere´ and Steinfeld 1996; Dixon et al. 2001). • Understand the mechanisms of options for On a global scale, conservative approximations sustainable agriculture and intensification estimate that currently about 570 million farms exist, ranging from small-scale family farms to Agriculture is the cultivation of crops and large-scale agro-industrial managed entities rearing of livestock in pure or integrated crop/ (Lowder et al. 2016). Family farms are still the livestock systems for the main purpose of food most common farm type to date, where family production, but also for the provision of biomass members serve as the major work force. About for material and energetic use. Agricultural pro- 84% of all farms worldwide are classified as duction systems are determined by the following small-scale family or smallholder farms, factors: the production activity (crop, animal or cultivating on average about 0.5–2 ha of land, integrated crop/animal production), the organi- with 72% cultivating less than 1 ha and 12% zational form (e.g. small-scale family or large- cultivating about 1–2 ha only. These farms pro- scale industrial farm), the climatic (e.g. tropical, vide about 70–80% of agricultural products in temperate) and other environmental conditions Asia and Sub-Saharan Africa (IFAD 2013). (e.g. soil properties) and socio-economic factors Agro-industrial farming is characterized by (e.g. population density, land availability, agrar- larger-scale farming types based on production ian policy, farm and market structures). Agricul- approaches known from industry, i.e. the use of tural production is performed by farming entities mechanical-technical methods, large capital within an agroecosystem. inputs and high productivity. These farms can be The terms ‘farm’ and ‘agroecosystem’ are organized as family farms as well as by company- defined below. This chapter describes how agri- based organizational structures. cultural production systems are embedded in and 104 I. Lewandowski et al.

Fig. 6.4 Agricultural production systems and their determinants

Farming Systems • Degree of commercialization: subsistence, Farming systems can be classified according to partly commercialized farming (if >50% of the following criteria (Dixon et al. 2001): the value of produce is used for home consumption) and fully commercialized farming • Available natural resource base, including (if >50% of produce is used for sale) water, land, grazing areas and forest • Climate, of which altitude is one important Notably, fruit trees are often defined as peren- determinant nial crops from an agricultural perspective and • Landscape composition and topography are not considered as forestry-based systems. • Farm size, tenure and organizational form However, exceptions are ‘agroforestry’ types • Dominant pattern of farm activities and that combine annual cropping with trees and household livelihoods, including field crops, pasture systems (referred to as ‘agrosilvo- livestock, trees, aquaculture, hunting and pastoral’) or the combination of tree species and gathering, processing and off-farm activities annual crops (referred to as ‘agrosilvicultural’). • Type of technologies used, determining the Figure 6.5 provides an overview of the global intensity of production and integration of distribution of the most important farming crops, livestock and other activities and land-use systems. Given the wide mixture • Type of crop rotation: natural fallow, ley sys- of locally possible farm type systems, only tem, field system, system with perennial crops broadly defined farm and land-use types are • Type of water supply: irrigated or rainfed distinguished. Further information on regional • Level of annual and/or perennial crops used farm-type composition can be found in the online • Cropping pattern: integrated, mixed or databases and map portals listed at the end of this separated cropping and animal husbandry chapter. rmr Production Primary 6 105

Fig. 6.5 Land use systems of the world (based on Nachtergaele and Petri 2008) 106 I. Lewandowski et al.

6.1.2 Agroecosystems their characterization and selected major food and energy crops cultivated. An agroecosystem can be defined as the spatial and functional unit of agricultural activities, including the living (¼biotic) and nonliving components ¼ 6.1.4 Physical Environment ( abiotic) involved in that unit as well as their and Agricultural Production interactions (Martin and Sauerborn 2013). It can also be described as the biological and ecophysio- The physical environment mainly determines logical environment in which agricultural produc- options for agricultural production through the tion takes place. In this case, the environment topography of the landscape and soil properties. consists of all factors affecting the living con- The topography defines if or how well the ditions of organisms. The different physical and land can be accessed and managed mechanically. chemical effects that originate from the nonliving Soil cultivation, such as ploughing, is difficult on environments represent the abiotic factors. In ter- steep slopes, and there is the danger of erosion. restrial habitats, they essentially include the The soil characteristics most relevant for crop properties of the soil (e.g. pH value, texture, car- production are: bon content), specific geographic factors (e.g. topography and altitude) and climatic con- • Organic matter, mainly occurring in the upper ditions (e.g. precipitation, light and thermal A soil horizon (see Fig. 6.6). Organic matter energy, water balance). The effects of the biotic determines the soil’s water-holding capacity factors originate from the organisms and can be and can supply plant nutrients. exerted on other individuals of the same species • Soil texture or grain size distribution (clay: (intraspecific), on individuals of a different species <0.002 mm; silt: 0.002–0.05 mm; sand: (interspecific) or on the abiotic environment 0.05–2 mm), which determines the water- (e.g. on specific soil properties). From a species holding capacity and workability of the soil perspective, the biotic environment essentially as well as its susceptibility to degradation consists of other species, to which it can have processes. different forms of relationship. These include feed- • The pH, which is a numeric scale used to ing relationships, competition and mutualism specify the acidity (pH < 7) or basicity (Gliessman 2015; Martin and Sauerborn 2013). (pH > 7) of the soil. • Soil depth, bulk density and stoniness. These determine the water-holding capacity 6.1.3 Climate and Agricultural of the soil, how well it can be treated mech- Production anically, how well plant roots can penetrate it and how much space is available to plant As described above, the type of crops that can roots for the acquisition of water and grow on a site mainly depends on the availability nutrients. of water, the temperature and the light intensity. Agricultural production can therefore be char- Crop production requires the natural resource acterized according to the climatic zone, classified soil. However, it is directly or indirectly respon- according to temperate, subtropical, or tropical sible for the largest part of soil degradation pro- conditions. Deserts also sustain some extensive cesses, such as erosion and compaction. Soil agricultural use through grazing. Climatic zones degradation occurs when (a) forests are cleared can also be distinguished according to the ori- to make room for agriculture, (b) conversion of ginal vegetation, e.g. forests. Table 6.1 gives an land to intensive soil cultivation subjects the overview of the main climatic/vegetation zones, organic matter and upper horizons of soil to 6 Primary Production 107

Table 6.1 Major agricultural production systems in different climatic regions of the world (based on Davis et al. 2014) Rainfall Temp. Growing Biome and type of agriculture mm aÀ1 Ca daysb Potential cropsc Subtropical/temperate humid forest 1000–2500 10–30 270–365 Cerealsd, fibres, oil crops, pulses, Large commercial and smallholder: roots/tubers, coffee, tea, sugar intensive mixed agriculture, cereals and crops, fruit, vegetables livestock, tree crops Temperate broad-leaved forest 250–1500 À10–30 90–365 Cerealsd, fibres, oil crops, pulses, Large commercial and smallholder: tree roots/tubers, coffee, tea, fruit, crops, forest-based livestock, large-scale vegetables cereal and vegetables, cereal/livestock Temperate coniferous forest 100–1500 À30–5 30–180 Cerealsd, roots, tubers Forestry, large commercial and smallholder: cereals/roots, forest-based livestock Temperate grassland 50–1000 À10–30 0–320 Cerealsd, fibres, oil crops, roots/ Large commercial and smallholder: tubers, sugar crops, fruit, irrigated mixed agriculture, small-scale vegetables cereal/livestock, livestock Tropical dry forest 700–2500 15–30 30–300 Cerealsd, fibres, oil crops, tea, Large commercial and smallholder: tree roots/tubers, coffee, sugar crops, crops, rice, cereals/roots fruit, vegetables Tropical grassland 500–2500 15–30 30–300 Cerealsd, fibres, oil crops, tea, Large commercial and smallholder: roots/tubers, coffee, sugar crops, extensive, commercial ranching or mobile fruit, vegetables pastoralist systems, livestock Tropical humid rainforest 1500–5000 25–30 300–365 Cerealsd, fibres, oil crops, pulses, Large commercial and smallholder: roots/tubers, tea, coffee, sugar subsistence agriculture, livestock, tree crop, crops, fruit, vegetables root crop, partly protected land Temperate and tropical desert 0–350 10–40 0–30 Succulents Pastoralism aAverage annual temperature, based on FAO GeoNetwork (2017a, b) bIn general, growth is limited by rainfall (or water availability) in tropical climates and by temperature in temperate climates; species might have evolved locally in order to survive the extremes of climate, some crops may not, leading to zero growing days. Crop selection and management can potentially extend the growing season in other cases cWithin a biome, the suitability of a site for a particular crop depends on a range of factors, including altitude, aspect, rainfall and soil type. Crops listed here are examples and are not intended to be a comprehensive list dCereals crops are generally of the gramineous family and are cultivated to harvest dry grain only (as food or feed) or the total plants (as feed or bioenergy source), e.g. wheat, rice, barley, maize, rye, oat, millet, sorghum, buckwheat, quinoa, fonio, triticale and canary seed decomposition and runoff and (c) inappropriate tilling of soil is kept to a minimum or avoided soil cultivation methods lead to compaction and altogether, strive to preserve soil fertility. There erosion. are a range of measures through which the farmer Degradation of agricultural soils can be pre- can maintain soil fertility, including (a) maxi- vented or even reversed by appropriate manage- mizing soil coverage by intercropping, crop rota- ment methods, but in some cases it requires time tion optimization and mulching, (b) enhancing spans of decades or centuries for full restoration. soil organic matter supply through intercropping Conservation and low-tillage farming, where the and applying crop residues; (c) reducing soil 108 I. Lewandowski et al.

and viruses, at a specific site. These can all become constraints in crop production and live- Horizons stock husbandry, for example, through animals eating the crops; weeds competing with crops for nutrients and water; crops becoming infected 0 cm with fungal, viral or bacterial diseases; or the competition for and lack of fodder of moderate- to-high quality for animal feeding. A 25 cm At the same time, agricultural production has a strong impact on biodiversity through the use of pesticides, herbicides and fertilizers, increased landscape homogeneity associated with regional B and farm-level specialization and habitat losses when natural vegetation is converted to agricul- 75 cm tural land (Hilger and Lewandowski 2015; Lambin et al. 2001). Mixed cropping systems may lead to higher overall product yields than monocultures. How- C ever, if the target is the maximization of the yield 120cm of one specific crop, the highest area yield is achieved by monoculture, i.e. the cultivation of a single crop or variety in a field at a time. This is because the management system (i.e. crop pro- Fig. 6.6 Typical soil profile with different horizons # Ulrich Schmidt tection, fertilization, harvesting time) can be best optimized for a homogenous plant community. cultivation intensity and growing perennial crops Any other plants in the field compete with the and (d) avoiding erosion by contour farming, crop for growth-promoting factors (water, light i.e. soil cultivation parallel to slopes. and nutrients) and are therefore considered weeds that need to be controlled or eradicated in order to avoid a reduction in crop yield. Soil Erosion Animals that feed on the crops are also in conflict Soil erosion is the physical loss of soil with agricultural production, except for natural caused by water and wind. Rainfall leads predators of pests (e.g. birds of prey that catch to surface runoff, especially when soil has mice) and beneficial insects (e.g. ladybirds than been cultivated, is not covered by vegeta- eat aphids), which help to increase agricultural tion or is on a steep slope. Wind erosion crop productivity. mainly occurs in semiarid and arid regions. There are two concepts which are often In this process, wind picks up solid discussed in the context of agriculture and main- particles and carries them away. Erosion tenance of biodiversity: land sharing and sparing. is a major process in soil degradation. ‘Sharing’ refers to the attempt to integrate as much biodiversity as possible into the agricultural 6.1.5 Biological Environment area, generally at the expense of productivity. and Agricultural Production ‘Sparing’ aims to divide the land into areas used intensively for agriculture and others left natural The biological environment (¼biotic factors) and uncultivated. There is scientific evidence that refers to the natural occurrence of organisms, the principle of sparing may be more successful in such as animals, plants, microorganisms, bacteria supporting biodiversity than that of sharing. 6 Primary Production 109

6.1.6 Infrastructure and Logistics than the markets could take up without detrimen- tal price effects. Therefore, farmers were obliged Mechanization has greatly enhanced land-use to set land aside and and compensated. At that and labour productivity. In modern agricultural time, 15% of land had to be set aside. Today this production, all processes of soil cultivation, crop land is required for the production of energy establishment, fertilization, crop protection and and industrial crops, and no more set aside harvesting are performed mechanically by agri- obligations exist. Currently CAP rules determine cultural machinery specifically optimized for the how agricultural subsidies are coupled to environ- crop at hand. For this reason, modern agriculture mental beneficial management measures under is capital-intensive. In order to secure a reliable the so-called ‘cross-compliance (CC)’, and and efficient supply chain with low losses, infra- farmers are obliged to integrate ‘greening areas’ structure and logistics are required for the agri- to support biodiversity. cultural production system and storage and Societal expectations determine how agricul- transport of the products to the markets. The tural and environmental policy programmes are better the infrastructure and logistic conditions, framed. For example, in Europe there is little the lower the supply chain losses. These can acceptance of genetically modified organisms reach up to 70% in areas where agricultural (GMO; see Sect. 5.1), and the production of infrastructure is poorly developed. The lack of GM crops is strictly forbidden. infrastructure (roads, storage facilities) is seen as As has been described above (Sect. 6.1.1), the a major barrier to increasing biomass supply in evolution of farming systems very much depends developing countries. Huge investments would on social structures, especially how land access is be required to overcome these bottlenecks. granted and who owns how much land. Also, the Digitalization is becoming increasingly rele- educational level of farmers not only determines vant in contemporary agricultural infrastruc- the success or income of farms, but also whether ture. Modern tractors are equipped with farmers have the knowledge and willingness to electronic devices, such as GPS (Global Posi- manage their farm sustainably. Finally, the tioning System). In precision farming (see Box empowerment of farmers is an important condi- 6.4), for example, GPS, electronic sensors and tion for shaping a sustainable agriculture for the computer programs steer the spatially specific future. and resource-use-efficient application of agrochemicals. 6.1.8 Market Conditions

6.1.7 Political and Societal The most important animal-based products glob- Conditions ally are cow milk and cattle, pig and chicken meat (see Table 6.2). Rice, wheat and maize are Agricultural, environmental and market policies the most important crop-based commodities and have a signiﬁcant impact on agricultural produc- are traded globally. Section 8.1 describes how tion in terms of what is produced and how. supply and demand steer the agricultural com- Examples of market policy impacts are described modity markets and determine market prices. in Sect. 8.1. Agricultural policy programmes are There are local, regional and global markets. made by many nations, and so-called common But it is the demand of those markets that are agricultural policies (CAP) determine agricultural accessible to farmers that determines what and policies at EU level. They mainly steer the how much they produce. subsidies provided to farmers and the production Consumer preferences and the consumer’s volumes of certain agricultural commodities. In willingness to buy certain products and to pay a the 1990s, European agriculture produced more certain price are important market determinants. 110 I. Lewandowski et al.

Table 6.2 Top agricultural products in terms of production value and production quantities, world 2012 (FAOSTAT 2014) Commodity Production in $1000 Production in MT Milk, whole fresh cow 187,277,186 625,753,801 Rice, paddy 185,579,591 738,187,642 Meat, indigenous, cattle 169,476,916 62,737,255 Meat, indigenous, pig 166,801,086 108,506,790 Meat, indigenous, chicken 132,085,858 92,730,419 Wheat 79,285,036 671,496,872 Soybeans 60,692,327 241,142,197 Tomatoes 59,108,521 161,793,834 Sugar cane 57,858,551 1,842,266,284 Eggs, hen, in shell 54,987,685 66,372,549 Maize 53,604,464 872,791,597 Potatoes 48,770,419 365,365,367

The willingness of consumers to pay a certain salinity) stresses. In addition, the appropriate price is especially important for sustainably or management measures need to be chosen ‘better’-produced products. One of the challen- according to the crop and site conditions (see ges in a bioeconomy is that ecologically more Fig. 6.8). Whereas site conditions are given nat- sound production is accompanied by higher pro- urally, crop management is the anthropogenic duction costs. Therefore, bio-based or sustain- influence on crop production. ably produced products are often more Crop rotation is the temporal sequence of expensive than conventional ones. Markets for crops on a field. If annual crops (seeding and bio-based products can only develop if harvesting in the course of 1 year) are grown, consumers are well informed and willing to the farmer can choose a new crop every year. make a conscious choice for the ‘better’ product. Perennial crops are grown on the same field for 3–25 years, depending on the optimal production period of the crop. Intercropping is the integra- 6.1.9 Principles of Crop Production tion of a catch crop in between two major crops. Catch crops are often grown to prevent soil run- Every crop performs best in specific climatic off (erosion) or nutrient leaching or to provide conditions and can best be grown in either a organic matter to the soil. Crop rotations are temperate, subtropical or tropical climate (see generally optimized from an economic view- also Table 6.1). The climatic profile of a crop is point, i.e. those crops with the highest market usually determined by the region of its origin value are grown. However, there are biological (see Fig. 6.7 and also: http://blog.ciat.cgiar.org/ and physical limits to crop rotation planning. It origin-of-crops/). Breeding (see Sect. 5.1.2) can has to allow enough time for field preparation produce crop varieties that are adapted to specific between the harvesting of one crop and the sow- climatic conditions. A prominent example is ing of the next. Generally, it is not recommended maize, whose cultivation area in Europe was to cultivate the same crop in a field for two or extended north by breeding for cold tolerance. more consecutive years because pests, diseases The most important prerequisite for success- and weeds often remain in crop residues and soils ful crop production is the choice of an appropri- and can attack the follow-on crop. A change of ate crop and variety for a specific site. This does crop is also necessary due to the depletion of soil not only refer to climatic parameters. Crops also nutrients. For this reason, it is recommended to have specific demands with regard to soil avoid growing the same crop, or crops with simi- conditions and biotic (e.g. pests and diseases) lar demands and susceptibility to pests and and abiotic (e.g. drought, contamination, diseases, in succession. 6 Primary Production 111

Fig. 6.7 Origin of important food crops (based on Khoury et al. 2016)

Site conditions Crop management

Variety Temperature Crop rotation Soil cultivation Water Plant com- Seeding/Planting munity Fertilization Irridiation Crop protection Harvest time and Soil and nutrients technology

Fig. 6.8 Factors determining success of crop production

Soil cultivation is performed to loosen the effective soil treatment in terms of soil loosening soil, to incorporate residues, organic and mineral and weed control. However, to protect soil fertilizer, to control weeds and to prepare the soil organic matter and to avoid erosion, less inten- for sowing or planting. The timing of and tech- sive soil cultivation technologies are to be pre- nology used for soil cultivation have to be ferred. These, however, can lead to increased adapted to the demands of the crop and soil weed pressure and weed control demand. conditions. Treating a wet soil and using heavy Crops are established via sowing or planting. machinery can have negative impacts on the soil Sowing is cheaper and easier to mechanize and is structure (compaction). Ploughing is the most the method used for most major crops, such as 112 I. Lewandowski et al.

Table 6.3 List of selected crops with information on water, fertilizer and pesticide demand, parts harvested and constituents utilized Sugar cane Corn Soy Oil palm Miscanthus Crop type Perennial Annual Annual Perennial Perennial

Photosynthetic C4 C4 C3 C3 C4 pathway Water demand High: Moderate: Moderate: High: Low: >450 (mm aÀ1) 1500–2500 670–800 600 2000–2500 Fertilizer demand N: 45–300 N: 145–200 N: 0–70 N: 114 N: 0–92 (kg haÀ1 aÀ1) P: 15–50 P: 26–110 P: 32–155 P: 14 P: 0–13 K: on demand K: 25–130 K: 30–320 K 159 K: 0–202 Pesticide needed? Yes Yes Yes Yes No Main parts Stems, leaves Grain Grain Grain Stems harvested Constituents Sugar Starch Oil Oil Lignocellulose utilized Uses Food, Food, feed, Feed, Food, Bioenergy, building materials, biochemicals/ biochemicals/ biodiesel biochemicals biocomposites, second- fuels, (feed) fuel a.o.a generation biochemicals aOil derivatives are used in the cosmetic and other industries (from Davis et al. 2014) cereals, maize, sugar, oilseed rape, etc. Some only applied when there is an obvious shortage. crops have to be planted. Examples are sugar This also applies to the so-called micronutrients, cane, which is established via stem cuttings, such as iron (Fe), chloride (Cl), manganese (Mn), and oil palm, established via plantlets. In each zinc (Zn), copper (Cu), boron (B), molybdenum case, the soil has to be prepared for planting by (Mo), cobalt (Co) and nickel (Ni), which are only loosening it and removing weeds that would required in small quantities. Typical fertilizer hamper crop establishment (soil cultivation). requirements of major crops, including biomass Fertilization refers to all measures aimed at crops, of temperate regions are shown in supplying nutrients to the crop (e.g. application Table 6.3. of mineral or organic fertilizer) or improving Crop protection refers to measures for the soil conditions relevant for nutrient uptake suppression or control of weeds, diseases and (e.g. liming or application of organic pests. Weeds compete with crops for all factors substances). The optimal amount of fertilizer is affecting growth and reduce crop yield and/or determined according to the expected nutrient quality. So do pests and diseases, which feed on demand and withdrawal by the crop. Nitrogen plant parts or their products of photosynthesis (N) is the nutrient with the strongest yield effect. and often reduce the photosynthetically active It is supplied to the soil via mineral or organic surface area of plants. Every crop has a range of fertilizer, N-fixing legumes or atmospheric depo- pests and diseases to which it is susceptible. sition. In ecological agriculture, N is only sup- Diseases can be caused by fungi, bacteria or plied via organic fertilizer and biological N viruses. If weeds, pests and diseases are not con- fixation (see Box 6.1). In addition, potassium trolled, they can lead to large or total crop losses. (K), phosphorus (P) and calcium (Ca) are There are a number of crop protection measures required for optimal crop growth and are gener- including mechanical (e.g. weeding) and chemi- ally applied when in shortage. As well as being a cal (herbicides, pesticides (Box 6.2)) methods. In plant nutrient, Ca has an influence on soil struc- organic agriculture (Box 6.4), no chemical/syn- ture and pH. The so-called crop macronutrients thetic crop protection measures are allowed. also include magnesium and sulphur (S). These Instead, biological methods (e.g. natural are often combined with PK fertilizer and are predators, pheromone traps) are used together 6 Primary Production 113 with biological pesticides (e.g. extracts from neem tree) and mechanical weed control. Pesticides can have different chemical Harvest technology and timing are relevant structures (organic, inorganic, synthetic, for the harvest index (proportion of harvested biological) and target organisms. product versus residues) and the quality of the product. Appropriate harvest time and technol- Crop Yields ogy avoid pre- and postharvest losses. Crop yields depend on the climatic and management factors depicted in Fig. 6.9. Thus, yield Box 6.1: Biological Nitrogen Fixation potentials have a climatic/site-specific and a Nitrogen (N) is one of the most abundant management component. They usually increase elements on Earth and occurs predomi- with the educational level of farmers and their

nately in the form of nitrogen gas (N2)in access to means of production, in particular fer- the atmosphere. There is a specialized tilizer and pesticides. The potential yield on a group of prokaryotes that can perform speciﬁc site, which is mainly determined by biological nitrogen ﬁxation (BNF) using crop genetics and growth-promoting factors, is the enzyme nitrogenase to catalyse the generally much higher than the achievable yield

conversion of atmospheric nitrogen (N2) (Fig. 6.9). The achievable yield is limited by the to ammonia (NH3). Plants can readily use availability of nutrients and water and can be NH3 as a source of N. These prokaryotes improved by yield-increasing measures, such as include aquatic organisms (such as fertilization and irrigation. The actually cyanobacteria), free-living soil bacteria harvested yield, however, is normally lower (such as Azotobacter), bacteria that form than the achievable yield, because it is reduced associative relationships with plants by pests and diseases and/or harvest losses. (such as Azospirillum) and, most impor- These can partly be overcome through improved tantly, bacteria (such as Rhizobium and crop management and agricultural technology, Bradyrhizobium) that form symbioses such as efficient harvesting technology. with legumes and other plants (Postgate The ratio of actual to achievable yield is 1982). highest in industrial and lowest in developing In organic agriculture, BNF is the major countries where farmers have less access to N source, and leguminous crops are grown means of agricultural production and are less for this purpose. There have been many educated (see Fig. 6.2). For this reason, and also attempts to associate N-fixing bacteria with due to climatic differences, it is not possible to crops other than legumes, with the objective provide yield figures for the performance of a crop of making them independent of external N on every site and for all circumstances. Table 6.4 supply. It is anticipated that BFN will play a provides typical, average yields for selected major major role in the sustainable intensification crops per hectare (ha ¼ 10,000 m2). of agricultural production.

6.1.10 Principles of Livestock Production

Box 6.2: Pesticides Global Livestock Population Trends Pesticide means any substance, or mixture Global livestock production has a value of at least of substances of chemical or biological US$1.4 trillion and employs about 1.3 billion ingredients, intended for repelling, people (Thornton 2010). Livestock has a great destroying or controlling any pest or regu- signiﬁcance in the livelihoods of people in the lating plant growth (FAO and WHO 2014). developing world, providing support for 600 million poor smallholder farmers (Thornton 2010). 114 I. Lewandowski et al.

Fig. 6.9 Determination of crop yields (adapted from Rabbinge 1993)

Between 1961 and 2014, the number of animals respectively, in the EU than in the LDC. For in the least-developed countries (LDC) increased cattle, the productivity gap between industrialized 2.4-, 7.1- and 6.9-fold for cattle, chicken and pigs, and developing countries has even increased in the respectively, with major increases in the last two last 50 years. In 1961, milk yields were 9.8-fold decades. By contrast, in the European Union higher and meat yields 1.5-fold higher in the EU (EU), livestock populations increased about 1.5- than in the LDC. In 2014, they were 20- and 2.3- fold between 1961 and the beginning of the 1980s fold higher, respectively (author’s own and, since then, have remained more or less stag- calculations; FAOSTAT 2017). nant with slight decreases in cattle and slight increases in chicken populations (author’s own Classiﬁcation of Livestock Production Systems calculations; FAOSTAT 2017). Livestock production systems vary greatly Primary production from livestock has between different regions of the world, and increased in both developing and industrialized their development is determined by a combina- countries. In developing regions, this is a result tion of socio-economic and environmental of increasing livestock populations and perfor- factors. Many of these systems are thus the result mance levels (e.g. kg milk or meat/animal), of a long evolution process and have traditionally whereas in industrialized countries the growth been in sustainable equilibrium with their has almost exclusively been achieved by improv- surrounding environments (Steinfeld et al. ing animal performance. There is still a large yield 2006). Livestock production systems are gener- gap between industrialized and developing ally classiﬁed based on the following criteria countries. In 1961, yields of chicken and pig (Sere´ and Steinfeld 1996; Steinfeld et al. 2006): meat per animal were 52% and 92% higher, respectively, in the EU than in the LDC. In • Integration with crops 2014, these yields were still 40% and 49% higher, • Relation to land 6 Primary Production 115

Table 6.4 Average yields of selected crops (in dry matter DM) (from KTBL 2015; FNR 2008; FAOSTAT 2014) Yields (t DM haÀ1 aÀ1) of harvested products Harvested product Major producing Crop (main ingredient) Low Average High Typical uses country Temperate Wheat Grain (starch) Food, feed, biofuel Europe, Ukraine, USA Summer 3.4 5.4 7.1 Winter 5.4 7.4 9.5 Corn/maize Grain (starch) 6.2 9.5 12 Food, feed, biofuel USA, Europe Whole crop 12 18 25 Feed, biogas Potato Food, feed, biofuel, Europe bioplastics Rape seed Seed (Oil) 2.2 3.7 4.7 Food, feed, biofuel, Europe biochemicals Sun ﬂower Seed (Oil) 1.3 2.5 4.3 Food, feed, biofuel, USA biochemicals Sugar beet Beet (Sugar) 45 67 85 Food, feed, biofuel Europe Hennep Fibre 0.77 Textiles China, Europe Flax Fibre 0.66 Textiles Europe, China Subtropical Rice Grain (starch) Food, feed Thailand, Vietnam, China, India Corn/maize Grain (starch) Food, feed, biofuel USA, Europe Sugar cane Stems (Sugar) 71 (fresh) Bioethanol, food, feed Brazil, India, China Soy bean Grain (protein, oil) 2.9 Food, feed, biodiesel USA, China, Brazil Cotton Fibre 2.0 Textiles Australia, India, USA Tropical Cassava Tuber (starch) Food, feed Oil palm Fruits (oil) 2.9 Food, cosmetics, Indonesia, biochemicals, biodiesel Malaysia, Nigeria Abaca Fibre 1.46 Yarn, ropes Philippines, Abaca

• Agroecological zone transhumant systems have developed in • Intensity of production regions of the world with high inter- or intra- • Type of product annual variability in precipitation and/or ambient temperatures and thus plant biomass In this regard, most livestock production yields of grasslands. Examples include the systems are classiﬁed into three categories: steppes of Central and East Asia, the semiarid to arid savannahs of Africa and the highlands • Grazing-based systems. In these livestock of Europe, the Middle East, Northern Africa systems, more than 90% of feed dry mass and South America. Sedentary, grazing-based stems from grassland. Of all the production ruminant systems are normally found in systems, they cover the largest area: about regions with higher precipitation, lower cli- 26% of the Earth’s ice-free land surface matic variability and higher primary produc- (Steinfeld et al. 2006). This category mainly tion of grasslands. These include, for instance, includes the keeping of ruminants in mobile ranching systems of North and South America or sedentary systems. Nomadic and and Australia characterized by large pasture 116 I. Lewandowski et al.

and herd sizes as well as extensive, grazing- growing public awareness of environmental based cattle, sheep and goat systems in and animal welfare issues. In addition, (peri-) Europe. urban production units are commonly landless • Mixed systems. These are the most important systems. Raising livestock within or in the production system worldwide. They typically vicinity of large human settlements provides refer to mixed crop-animal systems, in which fresh products to the markets, but also imposes livestock by-products such as manure and health risks for humans due to the accumula- draught power and crop residues are used as tion of animal wastes. reciprocal inputs and where farmers commonly grow multipurpose crops (e.g. to pro- The livestock production systems described duce grain for human consumption and stover above are interrelated, and very often for animal feed) (Thornton 2010). Two-thirds modifications in one system will result in con- of the global human population live and comitant modifications in another. For example, within these systems (Thornton 2010). landless milk production in Kenya depends on Mixed systems are particularly relevant in grazing-based systems for the replacement of the developing regions, where they produce milking herd (Bebe et al. 2003). Therefore, the about three-quarters each of ruminant milk size and number of each type of production unit and meat, 50% of pork and 35% of poultry influences the other. Furthermore, human popu- meat (World Bank 2009). lation growth and societal changes put each sys- • Landless systems. These systems represent tem under pressure to adjust to evolving market livestock production units in which less than demands, growing urbanization, diminishing 10% of feed dry mass stems from the unit’s availability of traditionally used resources and own production (Sere´ and Steinfeld 1996). even increasing public scrutiny. Decreasing They are mainly pig and poultry systems. access to land and improving access to markets Globally, 55% of pig meat, 72% of poultry drive the conversion of extensive and mixed meat and 61% of eggs are produced in these systems into more intensive production units, systems (authors’ own calculations; Steinfeld making these systems more efficient in the utili- et al. 2006). A minor proportion of beef cattle zation of inputs to the livestock system. How- stocks that are raised in so-called feedlots also ever, some of the systems will not be able to belong to this category. Such landless systems adapt to the new conditions and will collapse are increasingly under pressure due to (imploding systems) (Fig. 6.10).

Fig. 6.10 Schematic Food safety and quality presentation of Fossil fuel prices development pathways of Intensification main livestock production systems and selected main Imploding Intensive drivers (from World Bank Arable systems systems grazing 2009)

Mixed crop/ Agropastoral livestock Exits systems

Extensive grazing Landless systems intensive

Feed grain demand Land availability 6 Primary Production 117

Feed Resource Use in Livestock Production intake level, a major proportion of the energy Systems (and nutrients) ingested by an animal is used for The feed conversion ratio (FCR) is a measure of maintenance purposes or is lost via urine and the amount of feed (e.g. kg dry mass) needed by faeces and emission of methane, and only a an animal to produce a unit (e.g. 1 kg) of meat, minor proportion is converted into, for instance, milk or eggs. It is the inverse of feed conversion milk or meat. However, with increasing feed efficiency (i.e. the ratio between the product intake, the proportion of feed energy (and yield and the feed input). Hence, the lower the nutrients) converted into meat, milk or eggs FCR, the more efficient the conversion of feed increases (Fig. 6.11; highlighted in green; van energy or nutrients into animal products. The Soest 1994). Hence, improving energy and nutri- FCR is higher if evaluated at herd level than at ent intakes and thus animal performance will the level of an individual producing animal, greatly enhance the efficiency of feed resource because the demand for feed biomass of nonpro- use in livestock systems. ducing animals in the herd is also taken into In line with this, the majority of monogastric account. The FCR varies greatly between differ- livestock worldwide is kept in industrial systems, ent livestock products, production systems and even in the less-developed countries of South and regions of the world (Table 6.5). For instance, the East Asia, Latin America and Sub-Saharan FCRs for sheep and goat meat are more than nine Africa (see above). Concentrated feeds times higher than for pig or poultry meat and (i.e. feeds rich in energy and/or protein and gen- much higher than for milk. Furthermore, the erally low in fibre, such as cereal grains and their FCR is higher in grazing-based than mixed and by-products) as well as soybean and fish meal as industrial ruminant livestock systems (Herrero high-quality protein sources commonly account et al. 2013) and higher in Sub-Saharan Africa, for more than 80% of their diet (on a dry matter the Caribbean, Latin America and South Asia basis; Sere´ and Steinfeld 1996; Herrero et al. than in North America and Europe. 2013). The high digestibility of these feeds This variation in FCR is mainly determined by promotes intake and animal growth rates. Conse- the genetic potential of the animals and the quently, the FCR in pig and poultry systems are intake, digestibility and nutrient concentrations much lower than in ruminant livestock (except of the available feed, with breeding and health dairy production) and are very similar across the management also playing a role. At low-feed various regions of the world.

Table 6.5 Feed conversion ratio for the production of producing animals) (modified from Smeets et al. 2007; milk, meat and eggs by different livestock species based on Bouwman et al. 2005; Bruinsma 2003) (in kg dry feed per kg animal product, evaluated for Region Milk Bovine meat Sheep and goat meat Pig meat Poultry meat and eggs North America 1.0 26 58 6.2 3.1 Oceania 1.2 36 106 6.2 3.1 Japan 1.3 15 221 6.2 3.1 West Europe 1.1 24 71 6.2 3.1 East Europe 1.2 19 86 7.0 3.9 CIS/Baltic States 1.5 21 69 7.4 3.9 Sub-Saharan Africa 3.7 99 108 6.6 4.1 Caribbean and Latin America 2.6 62 148 6.6 4.2 Middle East and North Africa 1.7 28 62 7.5 4.1 East Asia 2.4 62 66 6.9 3.6 South Asia 1.9 72 64 6.6 4.1 CIS Commonwealth of Independent States 118 I. Lewandowski et al.

Fig. 6.11 Changes in the proportion of energy lost in faeces, urine, heat production and methane and in the proportion of energy used for maintenance and weight gain/milk production with increasing feed intake in ruminants (From van Soest 1994; based on Mitchell et al. 1932)

By contrast, ruminant feeding is much more ruminant products between the various production diverse, and their diets comprise (on a dry matter systems and regions of the world. basis) at least 50% roughage (i.e. bulky feeds with generally higher ﬁbre concentrations and lower Box 6.3: Feed Conversion Ratio (FCR) digestibility than concentrate feeds) with a few Common approaches to evaluating the exceptions such as beef cattle ﬁnishing in feedlots. FCR and ecological footprints of livestock Moreover, the slower maturation and longer systems do not differentiate between the reproductive cycles of ruminants, as compared to types of plant biomass used as feed. For pigs and poultry, result in higher proportions of instance, the use of feed resources inedible nonproducing animals within the herds. Conse- for humans, such as roughage and crop quently, the FCR at both the animal and system residues, may reduce competition with level is higher in ruminant than in monogastric plant biomass as food or feed. When livestock. The FCR in milk production is lowest. expressed as the amount of energy and Because milk contains about 85% water, its nutri- protein from human-edible feeds per unit ent and energy density is very low compared to of animal product, differences in FCR other animal-derived food products. While most between livestock products become much ruminant livestock in industrialized countries is smaller, because ruminant diets typically kept in mixed systems (Sere´ and Steinfeld 1996) contain lower proportions of feeds suitable where feeding is based on cultivated forage and for human consumption. In some cases, the concentrate feeds, animals in other regions of the FCR is even lower for the production of world commonly graze on (semi-)natural grass- beef than for pork, poultry meat and eggs lands or are fed crop residues, and use of concen- (Wilkinson 2011). Similarly, these trate feeds is lower. These differences in diet approaches only focus on either milk, composition and hence performance of animals meat or eggs as primary products and do are responsible for the differences in the FCR of (continued) 6 Primary Production 119

6.1.11 Towards Sustainable Box 6.3 (continued) (Intensification of) Agriculture not (adequately) account for other outputs or services provided by livestock. For In the bioeconomy, agriculture needs to be instance, animal manure is an important performed sustainably. This requires a definition source of nutrients for the maintenance of and characterization of sustainable agriculture. soil fertility in crop production, in particu- One approach is to categorize farming systems lar in mixed farming systems of according to their management concepts (see Sub-Saharan Africa, Latin America and Fig. 6.12). Industrial farming aims to maximize South and East Asia. Neglecting this addi- economic benefit through a high level of mecha- tional output overestimates the actual FCR nization and the application of synthetic in mixed systems. Also, calves born in pesticides and fertilizers for crop production dairy cattle systems are also raised to pro- and through the utilization of specialized breeds duce meat. Correcting for the greenhouse and intense feeding, health and reproductive gases emitted during the production of the management for animal production. Integrated same amount of meat in specialized beef farming uses both synthetic and biological cattle systems considerably reduces the means of nutrient supply and pest control, but carbon footprint of cow milk (Flysjo et al. applies input and management measures at levels 2012) and diminishes the differences considered economically justified and that between various production systems. reduce or minimize ecological and health risks. Additionally, integrated farming makes use of naturally occurring strengths in plants and As the vast majority of expenses in livestock animals used for production purposes, like resis- husbandry comes from the provision of animal tance to drought in certain crops or tolerance to feed, the FCR greatly determines the profitability diseases and parasites in certain animal breeds. of livestock farming. Moreover, the FCR is a key The conservation of natural resources, including determinant of the demand for natural resources genetic resources, is at the focus of both organic and the emissions of environmental pollutants in farming and conservation farming. In organic livestock systems. For instance, about 98% of the farming, no synthetic fertilizers, pesticides or water needed to produce animal products feed supplements are allowed. Conservation (i.e. water footprint) is related to the production, farming mainly focuses on agronomical practices processing, transport and storage of feed for live- that enhance soil conservation via, e.g. cover stock, whereas only 1% each is needed as drink- crops or incorporation of crop residues into the ing or service water (Mekonnen and Hoekstra soil; here there might be a conflict with livestock 2010). Accordingly, the water footprints of in mixed production systems because livestock beef, mutton and goat meat are higher than of will compete for crop residues as feed and may pig and poultry meat and are even higher in compromise the objectives of conservation agri- grazing-based than in mixed or industrial rumi- culture. Finally, precision farming strives to min- nant systems, in particular those of Europe and imize agricultural inputs by applying spatially North America characterized by a lower FCR. specific management to crops and accurate and There are similar differences in the carbon foot- timely feeding to animals using modern agricul- print of animal products (Herrero et al. 2013). tural technologies including digitalization (see Hence, any improvements in the FCR will Box 6.4). All these farming concepts apply man- greatly contribute to increasing profitability and agement rules to define and operationalize sus- reducing environmental emissions and (natural) tainable agricultural management. resource use in livestock farming. 120 I. Lewandowski et al.

Management concepts Natural resource conservation Industrial Farming Climate-smart farming (CSA) Good Agricultural Practice Agrocecological farming (GAP) Agroecological intensification Integrated farming Ecological intensification Organic farming

Farming concepts

Technology approaches Conventional intensification Farming in urban areas Conservation farming Precision farming Urban farming Diversified farming Sky farming Agroforestry

Productivity increase and Natural resource conservation Sustainable intensification

Fig. 6.12 Farming concepts

Box 6.4: Farming Concepts with a Clear National codes of GFP constitute minimum Definition (Rather Than a Conceptual standards for farm management and serve Approach) as a precondition for payments to farmers Good Agricultural Practice (GAP) in the context of ‘cross-compliance’. ‘Good Agricultural Practice (GAP), for Cross-compliance is the attachment of instance in the use of pesticides, includes environmental conditions to agricultural the ofﬁcially recommended or nationally support payments (Baldock and Mitchell authorized uses of pesticides under actual 1995) and is an obligatory element of the conditions necessary for effective and reli- Common Agricultural Policy (CAP). In the able pest control. It encompasses a range of EU, cross-compliance as well as GAP rules levels of pesticide applications up to the are generally laid down in laws or legal highest authorized use, applied in a manner guidelines. which leaves a residue which is the Integrated Farming smallest amount practicable’ (FAO and Integrated farming seeks to optimize the WHO 2014). With respect to, for instance, management and inputs of agricultural pro- health management in livestock farming, duction in a responsible way, through the GAP includes the prevention of entry of holistic consideration of economic, ecolog- diseases onto the farm, an effective health ical and social aspects. This approach aims management (e.g. record keeping, animal at minimizing the input of agrochemicals identiﬁcation and monitoring) and the use and medicines to an economical optimum of chemicals and medicines as described and includes ecologically sound manage- (IDF and FAO 2004). ment practices as much as possible. As one In the EU, ‘good farming practice’ example, ‘Integrated Pest Management (GFP) is used synonymously with GAP. (IPM) means the careful consideration of

(continued) 6 Primary Production 121

Box 6.4 (continued) compromised by a serious deficiency. Simi- all available pest control techniques and larly, organic livestock production focuses subsequent integration of appropriate on disease prevention, and it prohibits the measures that discourage the development use of antibiotics, unless any other option is of pest populations and keep pesticides and available to stop the animal from suffering. other interventions to levels that are eco- Precision Farming nomically justified and reduce or minimize Precision farming is a management risks to human and animal health and/or approach based on the spatially specific the environment. IPM emphasizes the and targeted management of agricultural growth of a healthy crop with the least land and fields. It makes use of modern possible disruption to agro-ecosystems agricultural production technology and is and encourages natural pest control often computer-aided. In crop farming, the mechanisms’ (FAO and WHO 2014). objective of precision farming is to take Moreover, the close linkage of crop and account of small-scale differences in man- livestock components in agroecosystems agement demand within fields. Sensors that allows for efficient recycling of agricul- assess the nutritional status and health of tural by-products or wastes, thereby reduc- crops support their spatially differentiated ing the reliance on external inputs such as management. Similarly, precision farming fertilizers or animal feeds. in livestock production aims at (continuous) Organic Farming monitoring of, for instance, the nutrition, ‘Organic Agriculture is a production performance, health and reproductive status system that sustains the health of soils, of (individual or small groups of) animals in ecosystems and people.Itrelies on ecolog- real-time. Such information helps farmers to ical processes, biodiversity and cycles make appropriate decisions in animal, feed adapted to local conditions, rather than or grazing management to optimize produc- the use of inputs with adverse effects. tion, health and welfare of animals but also Organic Agriculture combines tradition, to increase efficiency of natural resource use innovation and science to benefit the in and reduce environmental impact of live- shared environment and promote fair stock farming. relationships and a good quality of life for Conservation Farming all involved’ (IFOAM 2005). There are ‘Conservation Agriculture (CA) is an several variants of organic agriculture, approach to managing agroecosystems for including livestock organic production. improved and sustained productivity, All of them forbid the use of synthetic increased profits and food security while pesticides and fertilizers in crop produc- preserving and enhancing the resource tion. Crop nutrient demands and crop base and the environment. CA is charac- health are managed through biological terized by three linked principles, namely: methods of N fixation, crop rotation and the application of organic fertilizer, espe- Continuous minimum mechanical soil cially animal manure. Regarding livestock, disturbance. organic production fosters the welfare of Permanent organic soil cover. animals, and it restricts the use of synthetic Diversification of crop species grown in feed supplements to those conditions where sequences and/or associations’ (FAO the welfare of the animal might be 2017a). 122 I. Lewandowski et al.

In a future bioeconomy, agriculture will need to make combined use of all available knowledge Even though challenging, larger and technology that can help increase productiv- improvements can be made in those pro- ity while, at the same time, reducing the negative duction systems where the animal is still environmental impacts of agricultural produc- far from reaching its genetic potential for tion. This vision is also described as ‘sustainable production, like those typically found in intensification’ (see Box 6.4). tropical and in developing regions. Other intensification option is the more systematic use of agricultural or industrial Box 6.5: Sustainable Agricultural by-products. However, one main problem Intensification of these materials is the unknown content The Royal Society (2009) defined sustain- of nutrients, therefore, a characterization of able intensification as a form of agricul- the available resources per region and their tural production (both crop and livestock feeding value for each species may help to farming) whereby ‘yields are increased introduce them as ingredients in animals’ without adverse environmental impact diets. In this regard, even at the production and without the cultivation of more land’. units with high levels of intensification, More recently, Pretty et al. (2011) advances towards sustainability can be extended this definition of sustainable agri- made. In recent years the inclusion of citrus cultural intensification to ‘producing more by-product from the juice industry has output from the same area of land while been regularly practised in dairy cattle reducing the negative environmental diets. impacts and at the same time, increasing Moreover, later examples have shown contributions to natural capital and the flow that small proportions of crop residues of environmental services’. like wheat straw and corn stover—as source of physically effective fibre—can be included in diets of high-yielding dairy cows without negative impacts on yields Box 6.6: Sustainable Intensification (Eastridge et al. 2017). Such by-products of Livestock Production have been traditionally assumed not to be Examples of India and Kenya show that suitable for diets of high-yielding animals small changes in feeding practices like bal- and have been rather associated in mixed ancing diet with the same feed ingredients, systems with less productive animals. feeding small additional amounts of con- The use of local forages as source of centrate and introducing cooling systems protein can also aid to the sustainable can greatly increase yields and total animal intensification of production systems. production and the sustainability of the However, for a farmer to adopt any man- production systems (Garg et al. 2013; agement practice, this has to fit into the Upton 2000). farmer’s daily routine or only minimally There is evidence that the nutrient-use alter it; additionally, it should allow the efficiency increases, while the intensity of farmer to afford it. methane emissions (g/kg milk) decreases by feeding nutritionally balanced rations designed from locally available resources In order to define and describe the goals of in smallholders of cattle and buffaloes sustainable agriculture, relevant criteria need to (Garg et al. 2013). be established. Discussions in various international, multi-stakeholder roundtables have led 6 Primary Production 123

Table 6.6 Summary of criteria for sustainable agricul- to a set of internationally accepted criteria being tural production and biomass supply, compiled from the compiled. The general criteria of the sustain- sustainability studies of the Roundtable on Sustainable Palm Oil (RSPO), the Round Table on Responsible Soy ability standards elaborated by these roundtables (RTRS), Bonsucro and the Roundtable on Sustainable are shown in Table 6.6. Biomaterials (RSB) (from Lewandowski 2015) However, even if we manage to set the criteria Social criteria for sustainable agriculture, the aspiration of Respect of human and labour rights ‘absolute’ sustainability appears inoperable. – No child labour This is because the manifold trade-offs between – Consultation/stakeholder involvement sustainability goals and conflicting stakeholder – Payment/fair salary perceptions of sustainability render the simul- – No discrimination (sex, race) taneous fulfilment of all sustainability criteria – Freedom of association shown in Table 6.6 impossible. Therefore, the – Health and safety plans concept of sustainable agricultural intensification – Respect of customary rights and indigenous people will need to strive for the best possible compro- Smallholders’ rights mise between productivity increase and Responsible community relations natural resource conservation. Socio-economic development There are many options for increasing agri- Well-being cultural productivity. Figure 6.13 shows the Ecological criteria Protection of biodiversity/wildlife/HCV areas numerous technical approaches that can contri- Environmental responsibility bute to this goal. These include breeding of effi- – Minimization of waste cient crop varieties and animal breeds; – Reduction of GHG development of efficient, site-specific crop and – Efficient use of energy livestock management and land-use systems; – Responsible use of fire development of specific feeding strategies for Soil degradation an animal type and region (see Box 6.6); log- Water resources/quality istic optimization; and exploration of new bio- Air pollution mass resource options, such as algae and biomass Use of best practice/responsible agricultural practices from permanent grasslands. – Responsible use of agrochemicals The largest potential for maximizing yields – Training of employees through improved cropping and livestock systems Responsible development of infrastructure and is seen in approaches targeted at closing the yield new areas of cultivation/plantations gap between achievable and actually harvested – Impact assessment prior to establishment yields. In many regions of Africa, Latin America – No replacement of HCV areas after year X and Eastern Europe, this gap averages up to 55% – No establishment on fragile soils – Restoration of degraded land (FAO 2002). The problem is often not the bio- – Compensation of local people, informed consent physical suitability of the site, ‘site x crop combi- – Maintenance of sites with high-carbon soil content nation’ or production potential of livestock General and economic criteria animals but insufficient agronomical practices Commitment to continuous improvement and policy support (Yengoh and Ardo 2014). Wise use of biotechnology However, to avoid the intensification of agricul- Climate change and GHG mitigation tural production necessary to exploit the yield gap Food security becoming, or being perceived as, ecologically Use of by-products ‘unsustainable’, concepts for ‘sustainable intensi- Traceability fication’ need to be elaborated. In addition, Transparency advanced agricultural technologies, such as pre- Legality cision farming (Box 6.4), that can improve pro- Responsible business practices ductivity without negative ecological impacts, Respect for land-use rights need to be further developed. 124 I. Lewandowski et al.

Improved crops and varieties • Higher yield and optimized quality Crop and animal • Improved efficiency (use of water, nutrients) breeding • Stress tolerance (biotic and abiotic stress) • Efficient photosynthesis, C4 pathway • Improved plant architecture • Higher yields of by-products and residues • Perennial crops Animal breeds with high feed-use efficiency Development of new biogenic resources, such as algae

Development of site-specific crop management systems with optimal combinations of: crop choice, variety choice, soil cultivation, crop establishment, fertilization, irrigation, and crop protection regimes Development of efficient, low-input, low-emission, soil-conserving cropping Crop management systems (sustainable intensification, precision farming, low-intensity soil tillage or no-till, integrated crop protection and production systems) and farming Soil improvement and reclamation (e.g. phytoremediation, biochar) systems Participation and training of farmers in development and implementation of improved management systems Access for farmers to modern varieties, fertilizer, and crop protection Access for farmers to local and regional markets Strengthening the rights of smallholder farmers Integrated “Food-Feed-Fuel-Fibre” and “animal-crop-bioenergy” production systems and multi-product use of crops Urban farming

Multiple land-use systems Perennial land-use systems Maintenance and use of grassland systems Amelioration and use of marginal and degraded land Land-use systems Bottom-up, participatory approaches to land-use planning

Improved supply chain logistic Availability of transport, pretreatment and storage infrastructure, infrastructural investments Harvest, transport, Reduction of harvest, transport, treatment, and storage losses pre-treatment, storage Exploitation of residue and by-product streams, closing nutrient cycle Efficient biomass use Reduction of food wastes Conversion Allocation of biomass to most sustainable uses Efficient biomass conversion systems Efficient bioenergy technologies Biorefineries, different uses of biomass components Biomass and Cascading: material followed by or combined with energetic use product use

Fig. 6.13 Technical and socio-economic options for mobilizing the sustainable biomass potential, allocated to different production scales in the bio-based value chain (from Lewandowski 2015) 6 Primary Production 125

The provision of technical solutions for the storing of manure and from rice grown in flooded improvement of cropping and livestock systems conditions (Mosier et al. 1998). N2O comes from alone will, however, not be sufficient to mobilize nitrification and denitrification of N in soils and the sustainable biomass supply. Farmers must manures, or from N volatilization, leaching and also be willing to adopt these solutions and see runoff, and its emission is enhanced with an advantage in their application (Nhamo et al. higher levels of N fertilization (for soils) or 2014). Also, farmers must be able to afford the high levels of N feeding (for animals) (IPCC agricultural inputs required and be in a position 2006). to apply them. This calls for support through The global technical potential for GHG miti- credit programmes and access for farmers to gation in agriculture is estimated to be in the markets and training programmes (Nhamo et al. range of 4.5–6.0 Gt CO2equivalents/year if no eco- 2014). nomic or other barriers are considered (Smith et al. 2007). In general, GHG emissions can be Agriculture and Greenhouse Gas (GHG) reduced by increasing plant and animal produc- Emissions tivity (i.e. unit of final product per unit of area or Agriculture also needs to contribute to cli- per animal) and by more efficiently managing mate change mitigation via a reduction of green- inputs into the system (e.g. applying the appro- house gas (GHG) emissions. The main GHGs are priate amount of fertilizer needed for a particular carbon dioxide (CO2), methane (CH4) and crop under the soil/climatic conditions, closed nitrous oxide (N2O). Presently, global agriculture nutrient cycling). Other options include land emits about 5.1–6.1 Gt CO2equivalents of GHG a management that increases soil carbon sequestra- year (Smith et al. 2007). CO2 is mainly released tion (e.g. agroforestry), improving diet quality to from microbial decay or burning of plant litter reduce enteric CH4 formation, soil management and soil organic matter and also comes from the that enhances the oxidation of CH4 in paddy use of fossil resources in agricultural production. fields and manure management that minimizes

CH4 is mainly produced from fermentative N2O formation. Finally, also the use of bioenergy digestion by ruminant livestock, from the is a mitigation option (see Fig. 6.14; for details

Fig. 6.14 Greenhouse gas emissions from global agriculture in Gt CO2equivalents/year together with major emission sources. Boxes indicate major GHG mitigation options in agricultural management (data from Smith et al. 2007) 126 I. Lewandowski et al. on agricultural GHG mitigation options, see Further Reading Smith et al. 2007). For statistics of agricultural production, see FAOSTAT (http://www.fao.org/faostat/en/#home) Review Questions and USDA (https://www.usda.gov/topics/data) FAO (Food and Agricultural Organization of the • What are the main determinants for the kind United Nations) (2011) The state of the world’s of agricultural production performed? land and water resources for food and agricul- • What are the management options for improv- ture. Earthscan, Milton Park, Abingdon, OX14 ing productivity in crop and animal 4RN production? van den Born GJ, van Minnen, JG, Olivier JGJ, • What is sustainable agriculture and sustain- Ros JPM (2014) Integrated analysis of global bio- able intensiﬁcation? mass ﬂows in search of the sustainable potential • How can negative environmental impacts of for bioenergy production, PBLY report 1509, PBL agricultural production be minimized? Netherlands Environmental Assessment Agency 6 Primary Production 127

6.2 Forestry

Gerhard Langenberger and Melvin Lippe

# Gerhard Langenberger

Abstract Forests cover about 30% of the Keywords Forest distribution; Forest types; Earth’s total land area, harbouring most of the Natural forests; Planted forests; Forest products; world’s terrestrial biodiversity and containing Forest management almost as much carbon as the atmosphere. They have many functions, providing livelihoods for Learning Objectives more than a billion people, and are of high rele- After studying this chapter, you should: vance for biodiversity conservation, soil and water protection, supply of wood for energy, • Have gained an understanding of forests as construction and other applications, as well as distinct ecosystems other bio-based resources and materials such as • Be aware of the multiplicity of functions and food and feed. The forestry sector was the ﬁrst to services which forests provide or safeguard adopt a sustainability concept (cf. Carlowitz), • Be able to explain why forests are an important and sustainable use and management of forests multifunctional eco- and production system remains an important issue to this day. Forestry is and how they contribute to the maintenance a multifunctional bioeconomic system and has an of ecosystem services, such as biodiversity important function in securing the sustainable protection and climate change mitigation resource base for the present and future • Have gained an overview of the major forest bioeconomy. types and their distinctive features 128 G. Langenberger and M. Lippe

• Be aware of the characteristics and specifics • Forests are an accumulation of trees, which of forest management are lignified, erect, perennial plants. • Understand the relevance of forests for the • They develop a ‘forest climate’, which differs bioeconomy considerably from the open land and is characterized by much more balanced temperature fluctuations and extremes, reduced wind 6.2.1 Forestry and Forests speeds and a higher relative humidity. • This results in characteristic soil properties Forestry is the practice and science of man- with usually high-soil organic matter contents. aging forests. This comprises the exploitation of • The different forest types with their character- both natural and near-natural forests. Near-natural istic vertical structures provide a multitude of forests are those where the original tree species habitats and ecological niches supporting composition is still apparent and the original eco- diverse plant and animal communities. system dynamics have been maintained, at least to some extent. The artificial establishment of Since forests play an important role in the bio- forests following either recent or historical economy, for carbon storage and thus for climate removal of the original forest cover (‘reforesta- change mitigation measures, a more technical tion’ or ‘afforestation’) is also becoming increas- definition is required, which can be used for ana- ingly important. This can be done with native tree lyses and statistics. For this reason, the FAO species, which were part of the original forest lay down criteria to define forests, which can be cover, or with so-called exotic species—species found in Box 6.7: from other ecosystems and often even continents. Forestry thus comprises the utilization, manage- Box 6.7: Forest Definition According to FAO ment, protection and regeneration of forests. (2000) (Shortened and Simplified) It is common understanding that forests are – Covers natural forests and forest plan- composed of trees. But when can an aggregation tations, including rubber wood plan- of trees be called a forest? Are trees along a tations and cork oak stands. road—an avenue—already a forest? Are Medi- – Land with a tree canopy cover of terranean olive groves or Eucalyptus plantations more than 10% and an area of forests? Can recreational parks with scattered more than 0.5 ha. trees, e.g. ‘Central Park’ in New York and the – Determined both by the presence of ‘English Garden’ in Munich, be defined as trees and the absence of other predomi- forests? At first glance, this might not be of nant land uses (cf. agriculture). relevance since the purpose of such areas is – Trees should be able to reach a mini- obvious—they are not used, e.g. for timber pro- mum height of 5 m. duction. Nevertheless, other areas covered by – Young stands that have not yet but are trees may not be defined as parks, but still fulfil expected to reach a crown density of 10% similar important protection tasks or recrea- and tree height of 5 m are included under tional purposes, such as Frankfurt’s city forest forest, as are temporarily unstocked areas. (Frankfurt a.M. 2017). Therefore, a general definition of a forest could include the following criteria: (continued) 6 Primary Production 129

Fig. 6.15 Global extent of forest areas (based on FAO 2010)

Table 6.7 Global forest area and regional distribution Box 6.7 (continued) (based on FAO 2015a) Excludes: Forest area % total forest – Stands of trees established primarily for Region/subregion 1000 ha area agricultural production, for example, Eastern and Southern 267,517 7 fruit tree plantations, and also agrofor- Africa estry systems or short rotation coppice Northern Africa 78,814 2 plantations. Western and Central 328,088 8 Africa Total Africa 674,419 17 East Asia 254,626 6 6.2.2 Forest Distribution, Floristic South and Southeast Asia 294,373 8 Regions and Forest Types Western and Central Asia 43,513 1 Total Asia 592,512 15 Russian Federation (RUF) 809,090 20 6.2.2.1 Global Forest Distribution Europe excl. RUF 195,911 5 Most regions of the Earth with a suitable climate Total Europe 1005,001 25 (sufficient water availability and minimum Caribbean 6933 0 length of growing season) were originally cov- Central America 19,499 0 ered by forest. Since humans began to colonize North America 678,961 17 the planet, forests have been exploited for Total North and Central 705,393 17 resources and cleared, especially for agricultural America production (cf. Albion 1926). Figure 6.15 Total Oceania 191,384 5 provides an overview of the global distribution Total South America 864,351 21 of forests, and Table 6.7 shows the forest cover World 4033,060 100 by region. In Fig. 6.16, the countries with the largest forest areas are listed. criterion of all approaches is the floristic distinc- tiveness of an area. A major classification of the Earth’s vegetation based on the endemicity and 6.2.2.2 Floristic Kingdoms and Forest the presence or absence of taxa is the formulation Types of floral kingdoms, a concept first suggested There are several approaches to distinguish and by Good (1947) and later elaborated by classify the natural vegetation of the Earth. A key Takhtajan (1986). This concept distinguishes 130 G. Langenberger and M. Lippe

Others India Sudan Indonesia Australia DR Congo China U.S.A. Canada Brazil Russ. Fed.

0 200 400 600 800 1000 1200 1400 Forest cover (million ha)

Fig. 6.16 The most important countries in terms of forest area (based on FAO 2015a, b)

Fig. 6.17 Floristic kingdoms and global extent of important forest types (based on FAO 2010; Giri et al. 2010) six floral kingdoms—the Holarctic, Neotropical, subdivided into floristic regions and provinces. Paleotropical, Australian, Capensis and Antarctic Since the floral kingdoms represent major spe- kingdoms (see Fig. 6.17)—which are further cies groups, they also give an indication of the 6 Primary Production 131 general usability of the associated forests and such as meranti, kapur, balau, etc. (Wagenführ thus reflect the bioeconomical potential. 1996). The Combretaceae are another plant fam- The following overview of the floristic ily with important timber trees including, for kingdoms lists plant groups of major economic example, Terminalia spp. (framire´, limba). The importance together with their common use: Paleotropical kingdom is also the centre of diversity of the figs (Moraceae). Holarctic The Holarctic comprises the vegetation in the Australian Northern Hemisphere beyond the tropics and The Australian kingdom is the origin of impor- subtropics. The forest types included are the tant plantation-tree species, especially Euca- boreal and temperate forests (see below). This lyptus spp. (Myrtaceae family). These are a huge area is characterized by representatives of crucial source of pulpwood. In addition, it is a important timber-tree families, such as the pine centre of diversity of Acacia spp. (Fabaceae fam- family (Pinaceae) with, e.g. firs (Abies spp.), ily), which also play an important role in tropical spruces (Picea spp.), larches (Larix spp.) and tree plantations. pines (Pinus spp.), and several broad-leaved tree families such as the beech family (Fagaceae) Capensis with beech (Fagus spp.), oak (Quercus spp.) and The Capensis is of more importance as source of chestnut (Castanea spp.). Other important timber ornamentals than for forestry. It is a centre of families are the birch family (Betulaceae) with diversity of the heath family (Ericaceae). birch (Betula spp.), alder (Alnus spp.) and horn- beam (Carpinus spp.) and the willow family Antarctic (Salicaceae) with poplar (Populus spp.) and wil- The Antarctic kingdom includes one tree group of low (Salix spp.). The Holarctic is also a centre of mainly regional importance to a forest bioeco- diversity of the rose family (Rosaceae) with its nomy, the southern beeches (Nothofagus spp.). cherries (Prunus spp.), apples (Malus spp.) and peaches (Pyrus spp.). The Prunus spp. in partic- The Major Forest Types ular play an important role in a forest While plant kingdoms refer to taxonomic distinc- bioeconomy as source of valuable hardwood. tiveness and thus reflect evolutionary processes rather than habitat homogeneity, forest types Neotropical reflect environmental conditions and are there- The Neotropical kingdom mainly covers Central fore an important classification for ecology, pro- and South America. It is of crucial importance as ductivity and management options (Table 6.8). source of food plants such as tomato and pineap- ple (cf. Vavilov Centers) (Hummer and Hancock Boreal Forests 2015). Nevertheless, it is also home to a range of Boreal forests cover about 13% of the Earth’s highly valued hardwoods, e.g. true mahogany land surface. They are found in the Northern (Swietenia mahagoni) (cf. Anderson 2012), as Hemisphere, mainly between 50 and 70 north, well as the major provider of natural rubber, the and comprise the huge conifer-dominated forests Para´ rubber tree (Hevea brasiliensis). of northern Europe, northern Russia, Canada and Alaska, also known as taiga. In the south, they Paleotropical merge with the temperate-mixed and broad- The Paleotropical kingdom covers the huge and leaved forests. Climatically, they are cold-humid very diverse, mainly tropical area from Africa to with annual precipitation between 250 and Southeast Asia. It is particularly important as the 500 (750) mm, mainly occurring during summer. origin of the Dipterocarpaceae family, a timber- Despite the regionally very low precipitation, the tree family with several hundred species. This hydrological balance is usually positive due to family is the source of important tropical timbers 132 G. Langenberger and M. Lippe

Table 6.8 Total biomass dry matter stock per hectare and net primary production of different forest types (cited in Richter 2001; Busing and Fujimori 2005a) Dry matter stock per Net primary Forest type hectare/tonnes production/g mÀ2 yearÀ1 Boreal forest 60–400 363–870 (1050?) Temperate forest 150–500 1090–1775 Temperate pine forest, Oregon, USA 850 1890 Temperate redwood rainforest, California, USAa 3300–5800 600–1400 (only aboveground NPP) Tropical rainforest 200–800 (1100) 3500 Mangroves - 1700

Fig. 6.18 Large, homogenous tracts of pine forests interspersed with e.g. aspen are a typical feature of the boreal forest (left); fire plays a considerable role in nutrient cycling and forest regeneration (right) (Photos: G. Langenberger) low evapotranspiration. The area is characterized the accumulated biomass into nutrient-rich ashes by extreme temperature fluctuations, with perma- and thus initiates the natural regeneration of frost soils where the average annual temperature the forests (Fig. 6.18). Due to their homogeneity drops below 0 C. The vegetation period is on and species composition, these forests are an average 3–5 months, with a maximum of important resource for pulp and paper production. 6 months. The resulting forests are more or less single-layered with a maximum tree height of Temperate Forests up to 20 m. It is comparatively poor on species Temperate forests cover about 8% of the Earth’s and dominated by pine trees (Pinus spp., Picea land surface. As with boreal forest, they mainly spp., Larix spp., Abies spp.) and wind-pollinated occur in the Northern Hemisphere. They can be broad-leaved trees (Betula spp., Populus spp.). found between 35 and 55, depending on macro- The undergrowth is dominated by dwarf shrubs climatic conditions. The mountain forests of (e.g. Vaccinium), mosses and lichens. Ecto- Patagonia and New Zealand can be named as mycorrhiza plays a crucial role in this type of examples of temperate forests in the Southern ecosystem. Since these forests usually cover old Hemisphere. Temperate forests are characterized landmasses, such as the Canadian shield, the by more balanced climatic conditions than soils are rather poor (e.g. podzols), and consider- boreal forests. They are humid with precipitation able surface humus layers (cf. the occurrence of between 500 and 1000 mm/year and rainfall mosses and Vaccinium) can be found. Fire plays maximum in summer. They experience frost a considerable role in these forests. It transforms periods, but with much less pronounced 6 Primary Production 133 extremes. The average annual temperature wood, and especially construction timber. ranges between 5 and 15 C, and the vegetation The production of maple syrup in eastern period lasts between 5 and 8 months. They show North America and of honey in fir forests a pronounced seasonality, often with gorgeous (‘Tannenhonig’) can also be mentioned as autumn colours, e.g. during the ‘Indian summer’ specialized uses of temperate forests. in north-eastern USA and Canada. The coastal temperate rainforests of the North Temperate forests display a high diversity of, American West Coast represent a special case of in particular, deciduous broadleaf trees, but also temperate forest. They occur from Alaska down evergreen trees, which can attain considerable to California along the Pacific coast and its dimensions. Tree heights of 50 m have been mountain ranges and are characterized by documented for firs, Douglas firs, oaks and mild winters and moderate summers accom- beeches, even in Germany. Economically impor- panied by high precipitation. They are dominated tant species include oaks, beeches, maples, bass- by conifers, comprising some of the most impres- wood, poplars, cherries, hickories, tulip trees, sive tree species in the world including redwood etc. Conifers such as spruce, fir and pine play (Sequoia sempervirens) (Fig. 6.19), Sitka spruce an important economic role locally as planted (Picea sitchensis), western red cedar (Thuja forests. Ecologically, these forests are not only plicata), western hemlock (Tsuga heterophylla) rich in tree species, but are also often character- and Douglas fir (Pseudotsuga menziesii). These ized by a distinct shrub and herb flora. Geophytes forests are of considerable economic importance are a typical feature of temperate forests. Two for the timber industry and are intensively structural layers can often be distinguished. Tem- exploited. Most of these species have been tested perate forests are not homogenous but display a as exotics in Germany, but only Douglas fir has high diversity of tree types depending on been established as a common component of local site and microclimatic conditions (Arbeits- German forests. Today it plays a considerable gemeinschaft Forsteinrichtung 1985). Another economic role. important difference between boreal and temperate forests is the prevailing soil types. Temperate Mediterranean Forests forests mainly grow on young, post-glacial soils, Mediterranean forests are defined by a set of cli- often brown soils. Economically, temperate matic conditions rather than the locality. As such, forests are still important providers of pulp they not only occur around the Mediterranean

Fig. 6.19 Redwood (Sequoia sempervirens) in a Californian national park (note the relative height of the human) and the common clear-cutting practice of West Coast forests in Oregon (Photos: G. Langenberger) 134 G. Langenberger and M. Lippe

Sea but also in South Africa, California, Asia. The high species diversity is also reflected central Chile and Southern Australia. The respec- in the structural diversity and associated eco- tive climate is characterized by mild, rainy logical niches. A common misunderstanding is winters and very hot, dry summers. The vege- that tropical rainforests are impenetrable jungles. tation is sclerophyllous; the trees are evergreen. The opposite is the case, at least in undisturbed Although the forests around the Mediterranean forests. Due to the shade created by the high and Sea were degraded hundreds of years ago, some dense canopy, only little undergrowth develops, economically important forest products still play and it is easy to walk through the stands. a role to date. The olive tree (Olea europaea) Three major tropical rainforests are usually provides fruits and oil and is also regarded as a distinguished: the American rainforest, mainly popular timber source. The cork oak (Quercus comprising the Amazon and Orinoco basins, the suber) not only produces cork for corking Indo-Malayan and Australian rainforest and the wine bottles but also for use as a very good African rainforest. All of them are considered flooring material. Cork oak stands are formally important timber sources. classified as forests by FAO (2000). The pine Pinus pinea produces the pine nuts (pignoli Mangroves nuts), which are actually pine seeds, used in Mangroves (Fig. 6.20) are forests growing in the modern cuisine, for example, in pestos. The intertidal zone of tropical and subtropical coast- argan tree (Argania spinosa) of Morocco has lines, estuaries and deltas (cf. ‘Sundarbans’ in recently attracted attention through its oil, Bangladesh; see also Fig. 6.17 A–E). Their adap- which is traded as Argan oil and used in cos- tion to regular inundation by saltwater is unique metics but also as a food oil. Historically, the and requires tolerance to salt as well as oxygen Lebanon cedar (Cedrus libani), which was shortage (cf. stilt roots, pneumatophores). They already mentioned in the Old Testament, played are found throughout the tropics and subtropics. an important role as valuable timber source in the Depending on the coastline and tidal dynamics, Middle East. One of the most important planta- there can be a distinct zonation of species. tion trees, the Monterey pine (Pinus radiata), Mangroves have been and, in some regions, still actually originates from California, where it did are a considerable source of timber, firewood and not play a considerable role. But it proved to be a charcoal as well as tannins. They are of impor- high-potential plantation species outside its natu- tance as a food source for fish and shells. With ral habitat. their zonation of different tree species, which often stretch a considerable distance into the Tropical Rainforests sea, mangroves can protect shorelines and play Tropical rainforests are the world’s most diverse an important role in coastal nutrient cycling and forests. While the climatic conditions in these as spawning grounds for fish, which find protec- forests are more or less similar around the world, tion in the shallow water and between the often structure, species composition and usability dis- impenetrable stilt roots of, for example, the play distinct differences. Tropical rainforests are Rhizophora trees. Due to the past heavy exploi- characterized by average temperatures between tation, these functions and services are often 24 and 30 C and a minimum average annual obsolete nowadays. Mangroves continue to be temperature of 18 C. Rainfall exceeds 1800 mm threatened by transformation into fishponds, per year. The vegetation is dominated by a high rice fields, resorts and so on. diversity of woody plants, which can attain considerable heights of 30–50 m, sometimes even 6.2.2.3 Natural and Planted Forests 70 m. Due to the high diversity, the density of Forests regenerate themselves naturally either individual species are usually very low, the excep- through succession (cf. pioneer species) follow- tion being the dipterocarp forests of Southeast ing a major disturbance (fire, storm, etc.) or less 6 Primary Production 135

Fig. 6.20 Mangroves are an impressive feature of many tropical coastlines (Island of Leyte, Philippines) (Photo: G. Langenberger)

obviously by the replacement of single trees or tree groups in gaps (cf. Box 6.8) after natural are shade-tolerant in their youth, but rather mortality or smaller disturbances (lightning, slow growing and much more sensitive to local storm damage, etc.). The same processes climate extremes (drought, frost). They usu- more or less apply to human-caused ally produce far less but larger seeds. They disturbances, such as clear-cutting and selective can regenerate under old pioneer species or logging. But since the time and direction of these in gaps in old forests. Typical examples are processes are difficult to steer and manage, they beech (Fagus spp.) and firs (Abies spp.). are often replaced by human intervention, and trees are replanted immediately after the harvest. Artificial regeneration can be practised either This is called ‘reforestation’. When a forest is with ‘native’ or ‘exotic’ species. Exotic species re-established after a long period of other land are those that are not native to the region or uses, such as crop production or cattle ranching, country. Thus, a native species in one country it is called ‘afforestation’. can become an exotic species in a neighbouring country and vice versa (cf. teak originating from Box 6.8: Pioneer and Climax Tree Species Indo-Burma and nowadays being also planted in Two major strategies of tree regeneration Central America, Eucalyptus from Australia can be distinguished: pioneer species, planted in Spain, Monterey pine from California e.g. birches (Betula spp.), are adapted to planted in New Zealand). The use of exotic spe- establish on open, often disturbed sites. cies in forestry is often controversially and They require full sun and are generally fast highly emotionally discussed, in contrast to agri- growing and thus especially suitable for the culture, where it is not challenged that actually establishment of plantations. They produce all commercial crops are exotics. In Germany, huge quantities of volatile seeds (wind dis- there is the interesting case of the Douglas fir persal) that establish particularly well on (Pseudotsuga menziesii), a tree species of high mineral soils. Climax tree species are economic value, that originates from western adapted to regenerate in the microclimate North America. Douglas fir was native to Central conditions of already existing forests. They Europe before the ice ages, which caused the 136 G. Langenberger and M. Lippe extinction of many tree taxa in Europe which can 6.2.3.1 Products from Forests nowadays still be found in North America. Douglas fir was successfully reintroduced to The Tree as Major Source of Forest Products Germany at the beginning of the nineteenth cen- A tree is defined as an erect, lignified plant com- tury and became an important source of construc- posed of three major functional units, namely, tion timber. It established well in the forest root system, trunk and crown (Fig. 6.21). Thus, community and can now be classified as natural- it comprises a below-ground and an above- ized. It is often used to replace Scots pine ground component, which is of importance (Pinus sylvestris), which was planted to restore when calculating biomass and carbon seques- degraded soils in the past, since it is much more tration potentials. The main tree parts that are productive. Thus, Scots pine is ‘native’ to used for economic purposes are the stem and Germany but never occurred naturally at the major branches. Stump and roots, minor majority of sites it can be found today. Ori- branches and leaves usually remain in the forest ginally, these sites were occupied by broadleaf to maintain organic matter and nutrient cycling, trees (especially oaks). Therefore, neither since the majority of forests are not fertilized, Douglas fir nor Scots pine is autochthonous in contrary to forest plantations. (native) to these sites, and it is debatable The root system anchors and stabilizes the whether, ecologically, Douglas fir is worse than tree in the soil. It ensures the provision of water Scots pine. and nutrients, usually supported by a symbiosis

6.2.3 Forest Services and Functions

Forests have accompanied human development from time immemorial. They provided shelter, wood for fire, tools and construction purposes, as well as fruits, mushrooms and meat. And this has not really changed to the present day. But what has changed is the intensity of usage, the sophistication of products manufacture and the improved understanding and greater importance of forests for human wellbeing. Forests have played a special role in the development of mankind due to a complex set of societal perceptions and expectations (cf. Harrison 1992). Nowadays, in addition to the sustainable production of physical goods, forests are expected to provide a multitude of services. This has resulted in restrictions in management practices that far exceed those of agricultural production, including tree species selection, mode of management, forest protection, application of agrochemicals and even mode of harvesting. This section gives an introduction into the modern usage of forests, distinguishing between their traditional function as physical resource provider and the contempo- Fig. 6.21 The major components of a tree (from Young rary function of non-physical service provider. et al. 1964, simplified) 6 Primary Production 137 between the tree and fungi referred to as ‘mycor- The taproot system is based on a central, rhiza’, which is specific to the tree species. The dominant root supplemented by side roots. This trunk merges via branches into the crown and system provides very stable anchorage and is connects the root system with the leaves, which typical for oaks, firs and pines, but also the Neo- serve as photosynthetic units. It transports the tropical rubber tree Hevea brasiliensis. The water and nutrients absorbed by the root system heart-root system does not have a clear root hier- in its central, woody part, the xylem, via the archy, but rather spreads homogenously in the branches to the leaves. In return, the assimilates soil. It is fairly typical for a wide variety of produced by the leaves are transported down- species, such as birches and beeches. The sinker wards in the phloem, which is located in the root system is characterized by a dominant hori- inner side of the bark. These assimilates are zontal root system near the soil surface from used for tree growth, including root growth and which vertical sinker roots develop that can regeneration, and to provide food for the mycor- reach considerable depths. Since the sinker rhiza. The tree crown usually begins where the roots are sensitive to waterlogged and compacted trunk starts to divide into a hierarchy of branches, soils, they are often not well developed, erro- at the ends of which the leaves are found. This is neously leading to the perception that the root however strongly dependent on the age and posi- system is generally flat. Spruce trees display a tion of the tree in the population. While the typical sinker root system. crown of young trees reaches down to the soil, old trees often have a long straight bole without Wood any branches, especially in dense forests. Soli- The major physical resource provided by a tree is tary trees can retain their low branches through- its wood. The ability to make fire altered the out their entire lifespan. The tree root system course of human evolution and the energy source needs to be flexible in order to adapt to involved was wood. This did not change for different site conditions. Three major types of hundreds of thousands of years, until ‘recently’ root system can be distinguished: the taproot coal and then oil replaced wood. In the wake of system, heart-root system and sinker root system the recent renewable energy boom, wood is cur- (Fig. 6.22). rently experiencing a renaissance as an energy

Fig. 6.22 The major root systems of trees: taproot sys- strongly on site and soil conditions. Soils with a high tem (left), heart-root system (middle), sinker root system water table can lead to a very shallow and flat root system (right). The actual development and structure depend (even in pines) # Ulrich Schmidt 138 G. Langenberger and M. Lippe source, either as raw wood or wood chips or Table 6.9 Density figures of some common tree species pellets. Additionally, wood serves as raw mate- (all data from Knigge and Schulz 1966) rial for tools, furniture, a wide variety of con- Boundary struction purposes and paper production. Average values of dry Bulk Tree dry density density in density in species in g cmÀ3a gcmÀ3a kg mÀ3a Box 6.9: Chemical Composition of Wood Balsa 0.13 0.07–0.23 120.8 Carbon (50%) Spruce 0.43 0.37–0.54 377.1 Oxygen (43%) Poplar 0.37 0.27–0.65 376.8 Hydrogen (6%) Pine 0.49 0.30–0.86 430.7 Nitrogen (1%, incl. minerals) Maple 0.59 0.48–0.75 522.2 Oak 0.64 0.38–0.90 561.1 Beech 0.66 0.54–0.84 554.3 To understand the relevance of wood in a bio- Pockwood 1.23 1.20–1.32 1045.5 economy, it is crucial to be aware of its composi- aThere is a small but relevant difference between the dry tion and features. The major components of wood density, usually measured in g cmÀ3, and bulk density, À3 are cellulose, hemicelluloses and lignin. Wood is measured in kg m . This is due to the fact that wood often compared to a concrete construction, with shrinks during the drying process. The bulk density relates the fresh volume of a wood sample or tree to the respec- the cellulose fibres representing the steel rein- tive wood content. The dry density relates the volume of forcement which give the construction elasticity an oven-dried, shrunken wood sample to its weight. The and the lignin representing the concrete which latter figure is therefore higher, since the reference vol- provides stability. Additionally, wood contains ume is smaller fat, starch and sugars as minor components, as well as resins, tannin agents, colour agents, 60 kg Â 3.7 ¼ 222 kg of carbon dioxide (CO2). etc. From a chemical point of view, wood is com- The same calculation for a beech tree with a posed of carbon (C), oxygen (O), hydrogen (H), bulk density of 554 kg mÀ3 results in a figure of nitrogen (N) and minerals (see Box 6.9). 1025 kg and for a pockwood tree 1935 kg. Since the molecular weight relation of Dry wood has a calorific value of 5–5.2 kWH carbon dioxide to carbon is 3.7 to 1, it is easy to kgÀ1, and, depending on the species and its wood calculate the carbon sequestration potential of density, one m3 of piled hardwood can replace wood from its species-specific dry weight. around 200 l of fuel oil given a wood moisture of It should be mentioned that there is a traditional about 15% (air dry). distinction between so-called hard woods Due to its chemical and physical composition, (broad-leaved trees) and soft woods (conifers). wood has some unique features which distin- Hard woods are usually heavier and have a guish it from other materials, resulting in a shorter fibre length than soft woods. The latter wide spectrum of applications. It is compara- is of importance, e.g. in paper production. tively light, flexible, easy to work and often Table 6.9 shows the average dry weight and even very ornamental. It is thus used for con- bulk density of common timber species. Bulk struction purposes such as houses and boats; for density is the mass of dry matter in relation to flooring, furniture, carvings and tools; as well as the volume of the freshly harvested wood. It is an for the production of paper and semi-natural important parameter for the calculation of, fibres including viscose and modal. Wood also among others, the carbon dioxide equivalents serves food industry applications, e.g. as artificial stored in trees. For example, a balsa tree with a vanillin produced from lignin and as xylose, a volume of 1 m3 has a dry matter wood content of sugar produced from wood. about 120 kg. As the proportion of carbon is 50% Globally traded forest products are recorded (Box 6.9), this gives 60 kg carbon. The molecular in a standardized form. Table 6.10 shows the weight of carbon dioxide is 3.7 times that of major trade categories with associated volumes carbon. Thus 1 m3 of balsa wood stores for the year 2015. 6 Primary Production 139

Table 6.10 Global production of forest products in 2015 Table 6.11 Bushmeat provision of forests and agricul- (FAO 2017a) tural land togethera in Germany, hunting year 2015/2016 (only hoofed game) (DJV 2017) Production Producta Unit in 2015 Amount in tonnesb Value in mio €c Roundwood million m3 3.714 Red deer 4865.51 21.9 Wood fuel million m3 1.866 Fallow deer 2157.33 10.8 Industrial round wood million m3 1.848 Wild boar 23,908.82 95.6 Wood pellets million tonnes 28 Roe deer 12,330.29 61.7 Sawnwood million m3 452 Total 43,261.95 190.0d Wood-based pannels million m3 399 aHunting districts are not delimited along land-use Veneer and plywood million m3 171 boarders but are based on ownership. The overall hunting Particleboard and million m3 228 area in Germany amounts to 32 mio. hectares b fibreboard Animal with skin cPrice for whole animal with skin and bones (‘primary Wood pulp million tonnes 176 value’) Other fibre pulp million tonnes 12 dThe monetary value given in the table does not take into Recovered paper million tonnes 225 account the associated value chain and added values due Paper and paperboard million tonnes 406 to processing aFor definitions see FAO (1982, 2017b) about 380,000 persons currently own a hunting licence. Other physical goods that can be obtained In addition to the monetary value of the meat, from forests (e.g. fruits, mushrooms) are annual hunting fees can also constitute a con- referred to either as ‘non-wood’ or ‘non-timber siderable source of income for forest owners forest products’ (NWFP, NTFP). Depending on and often exceed the annual income from the region of the globe, these may provide wood production. Expenditure on hunting equip- important contributions to the population’s live- ment is another economically relevant factor. lihood or be used for recreational activities. Since Mediterranean cork oak stands are classi- 6.2.3.2 The Protective Role of Forests fied as forests, the cork produced can also be Forests fulfil important protective functions. In classified as a non-wood forest product, as can mountainous regions, they protect settlements, the natural rubber produced in the millions of farms and infrastructure from avalanches and hectares of rubber tree plantations in rockfalls. Due to the specific forest climate, Southeast Asia. which maintains soil humidity and thus enhances A special case with considerable regional water infiltration rates, forests usually reduce importance is the meat provisioning service. surface runoff and erosion. The root network So-called bushmeat is a source of protein in stabilizes the soil and acts as a buffer against many African regions. In some Southeast landslides. Asian countries, e.g. Vietnam, forest species Along streams, forests stabilize river banks are being hunted to extinction to feed the insati- and often serve as water (and sediment) retention able hunger for exotic meat of the region’s areas during periods of flooding. In the tropics, new rich. Bushmeat hunting and trade is usually mangroves have a protective role on shorelines, illegal and uncontrolled and has considerable serving as wave breaks and also as spawning negative impacts on the affected species’ ground for fish, safeguarding the livelihood of populations. However, hunting practices in fishermen. North America and Europe, for example, show Forests are also crucial for the hydrological that it is also possible to use forests as a sustain- cycle and as water protection areas. In urban able source of considerable amounts of meat. centres, forests play a considerable role as air Table 6.11 shows the case of Germany, where filters and oxygen providers. On a global scale, 140 G. Langenberger and M. Lippe forests are crucial for carbon sequestration and Table 6.12 Forest ownership structure in Germany serve as long-term carbon sinks. (from BMEL 2017) Forest ownership Share of forest/% 6.2.3.3 Forests for Recreational Privatea 48 Activities Federal states 29 Forests are important for recreational activities. Corporations 19 In Germany in particular, it is said that people Federal governmentb 4 have a very close affinity to their forests. For this 100 reason, forests are open access, and generally aAbout 50% of private forests are smaller than 20 ha b people are allowed to enter without permission. Especially military training grounds Hiking, jogging, biking and mushroom collec- tion are common recreational activities. But sylvestris), 15% beech (Fagus sylvatica) and hunting, which is practised nationwide, should 10% oaks (Quercus robur/petraea). also be mentioned. In recent years, there has been a trend towards the return to the original site-adapted species 6.2.3.4 The Socio-economic Importance composition, mixed stands and abandonment of of Forests in a Bioeconomy: A clear-cuts. This has been mainly triggered or Case Study—Germany accelerated by devastating storm damage, espe- Germany is a highly industrialized country with a cially—but not only—in spruce monocultures land surface of nearly 360,000 km2, of which (e.g. hurricanes Vivian and Wiebke in 1990 and 32% are classified as forest. Centuries of inten- Lothar in 1999). To date, around 73% of German sive use, degradation, reforestation and affores- forests are classified as mixed forests, composed tation mean that today the forests are mainly of different tree species. production forests and only parts can be defined Forest distribution and ownership within as near-natural. Despite this intensive use and Germany varies greatly between the federal states. exploitation in the past, the forests have largely Rhineland-Palatinate and Hesse have the highest maintained their original level of biodiversity, forest cover at 42% each, while Schleswig- with the exception of large carnivores and Holstein has only 10%. The ownership structure predators, which historically competed with is quite heterogeneous (Table 6.12) and dominated humans and have been hunted to extinction. by private owners. The private sector, that is, These include bear, wolf, lynx and large birds private and corporate forests together, accounts of prey, such as eagles and vultures. for 67% of the total forest area and around two Without human interference, German forests million owners. would be characterized by broadleaf trees, Forests and their associated value chains are mainly beech. Beech-dominated forests would of considerable socio-economic importance. On cover around 74% of the total forest area, average, each hectare of forest has a timber stock followed by oak forests with 18%. Through his- of 336 m3 and an annual timber growth of around torical developments, however, German forests 11 m3, resulting in an annual timber production are nowadays dominated more by conifers, of more than 120 million m3. The forest sector as which cover 60% of forest area, with broadleaf a whole has an annual turnover of 170 billion forests only covering 40%. One main reason for euros, providing nearly 1.3 million jobs (BMEL this development is that conifers are easier to 2017). propagate and establish than broadleaf trees, especially on open lands, and in the past were often the only viable option to ensure the 6.2.4 Forest Management re-establishment of forests. As a result, the currently dominant tree species are as follows: 28% The management of forests has some peculiar- spruce (Picea abies), 23% pine (Pinus ities which need to be understood to properly 6 Primary Production 141 assess their potentials and restrictions in a bio- it is abandoned, and the forest can re-establish economy. One major difference compared to all and regenerate into a secondary forest. other biological production systems is the time The great onslaught on tropical forests in par- horizon. In forestry, we are dealing with decades ticular, but also boreal forests, stems from tech- or even centuries—in contrast to the short rota- nical developments, especially the chain saw and tion time of modern agriculture. This requires related heavy machinery such as bulldozers, much more foresight. In agriculture, a wrong skidders and nowadays harvesters. With these decision might result in the loss of an annual tools, it was and still is possible to extract timber crop. In forestry, a wrong decision with regard at an unprecedented speed. Although usually to tree species may reveal its disastrous conse- only the most valuable trees are harvested, the quences only after some decades. For example, a damage to the remaining forest can be tremen- single exceptional summer or winter season can dous, due to the heavy machinery and the lack of ruin the entire long-term investment in one blow, technical (felling) skills. In addition, lack of which is particularly bitter in times of high inter- regulations and non-implementation of existing est rates. This long-term perspective together rules and corruption have led to the degradation with the necessity of food production is the and disappearance of large tracts of tropical main reason that, in the majority of developed forests. countries, forests have been pushed back into In sustainable forestry, two major approaches less productive or difficult-to-manage sites and can be distinguished: clear felling and selective replaced by agriculture on good soils. logging, i.e. the targeted removal of single trees. As a consequence, forest investments focus on Clear felling is the most simple and straight- short rotation plantations, while the management forward practice. All trees on a given area are of natural or near-natural forests is practised in harvested. This has considerable advantages state-owned or traditionally privately owned from a production point of view. First, harvesting forests. can be conducted very efficiently, and a huge amount of biomass can be made available. 6.2.4.1 The Exploitation and Use Clear felling allows site modifications such as of Forests stump extraction and ploughing which requires The first use of forests was exploitative—the large machinery, but also facilitates artificial desired products (meat, wood, other non-wood regeneration. This type of forest usage and regen- products) were harvested without considering eration is typical in plantation forestry their regeneration. Soon, people discovered that (cf. Eucalyptus, Acacia, Pinus spp.), where the an overuse can result in a shortage of supply. For fast production of a single commodity is the main this reason, the majority of rural tribes around the objective. world have use restrictions, even though these Selective logging targets individual trees of may not be written down or documented as they high value, with the intention of maintaining would in a modern society. forest structure and functions. It is often practised However, forests were often cleared to create in mixed, near-natural forests. One selection cri- open space for crop production. This form of terion is a preset minimum diameter. This man- agriculture can still be found in the tropics, agement practice is highly demanding and where it is called ‘shifting cultivation’ or ‘swid- involves all aspects of management. First of all, den agriculture’. The use of fire is a key element the identification of the right trees requires the in this practice, and, in the course of time, vast forest manager to know his forests very well. areas can be deforested, even with very primitive Harvesting logistics need to be worked out tools. The forest is cut down during the dry before logging begins to reduce the impact on season and the dry matter burned at the begin- the remaining forest stand. This requires the ning of the rainy season. The open land is used establishment of a skidding infrastructure and for crop production for 2–3 years. After that time, related felling schemes (cf. directed felling). 142 G. Langenberger and M. Lippe

Fig. 6.23 Clear-felling system in conifer forests of the western USA (Photo: G. Langenberger)

Good logging skills are necessary to implement • Optimal phase: Adult stage with regeneration. the felling scheme and minimize felling • Stagnation phase: Decreasing vitality. damages. The concept as a whole aims at the • Natural decay: die-off and replacement. production of single but high-value trees. This kind of logging is usually accompanied by natu- The length of each stage is species-specific ral regeneration. and, as a result, different species are used in However, in practice, the situation is much different management schemes. For all produc- more complex and diverse than described tion forests, the stagnation phase and natural above, and the two approaches are often mixed, decay are eliminated by prior harvest. depending on local circumstances. Thus, small Two major tree types can be distinguished clear-cuts can be used to promote light- based on their life strategy: the pioneer species demanding species, and the natural regeneration and the late-successional and climax forest spe- is sometimes assisted by artificial planting either cies (see Box 6.8). Typical pioneer species, to support stagnant regeneration or to change e.g. birch and pine, all share a similar strategy. species composition. Figure 6.23 shows the com- They produce large quantities of wind-dispersed mon clear-felling practice of conifer forests in seeds, prefer mineral soils for regeneration and the western USA. Large tracts of forests are require full sunlight to establish and grow. Plan- clear-cut, but blocks of forest are maintained in tation forestry uses species from this group, as between as a source of seeds. they show tremendous growth in their youth but soon reach a culmination in increment, allowing 6.2.4.2 Management Cycles for short rotations. Their natural lifespan is com- Generally, five natural development phases can paratively low (Table 6.13). be distinguished in the lifetime of a tree: The majority of late-successional and climax forest species are adapted to regeneration inside • Establishment phase: This comprises the esta- the forest, in shady conditions or small light gaps. blishment of a tree seed at a given site. The seeds are usually larger (e.g. beech) than • Youth phase: The time between the establish- those of pioneers, and the seedlings can often ment and maturity (seed production) of a tree. not tolerate full sunlight exposure or temperature 6 Primary Production 143

Table 6.13 Life expectancy of selected tree species and production figuresa Potential max. age in Rotation period in Average annual incrementb in Tree species years years m3/ha Broadleaf trees Alder (Alnus glutinosa) 150 90 4.5–8 Ash (Fraxinus excelsior) 200 120 4.5–6.1 Beech (Fagus sylvatica) 300 150 4.2–8.6 Birch (Betula pendula) 120 80 3.6–4.9 Eucalyptus (E. camaldulensis) 1000 7–15 2–30 (plantation) Oaks (Quercus petraea, robur) 800 200 3.6–6.4 Teak (Tectona grandis) >200 80 0.6–14.8 Conifers Douglas fir (Pseudotsuga menziesii) 1000 100 9.4–17.1 Fir (Abies alba) 500 150 7–12.8 Larch (Larix decidua) 500 140 4.1–7.2 Pine (Pinus sylvestris) 600 140 1.2–7.0 Spruce (Picea abies) 600 120 5.6–11.9 aDifferent sources: Schütt et al. (1992), Schober (1987), Lamprecht (1989), Jacobs (1955) bThe annual increment strongly depends on site quality and thinning concept; the values given for temperate-zone species refer to the highest rotation length given in yield tables. If rotation length is reduced, average annual increments can be higher extremes. The establishment of these species in growth expectations by the removal of open spaces poses considerable problems. There- competitors. This is the first management step fore, such species are more often used in perma- which can lead to positive economic returns nent mixed forests. They usually have slower through the marketing of wood. Depending on growth in their youth than pioneer species, but the management scheme, several thinning rounds maintain a considerable level of increment up to need to take place before final harvest. a high age and can grow quite old (Table 6.13). Once trees have been established, either as a 6.2.4.3 Forest Certification monoculture or within the framework of a natural and Sustainability Initiatives regeneration concept, they need to be tended. Sustainability has recently become a buzzword Fertilization is common practice in forest with as many meanings as it has advocates. The plantations. The risk of fire should be taken into ‘invention’ of the term by Carlowitz in 1713 origi- consideration in plantation schemes, but also nally aimed at the provision of a permanent timber competition from grass, which can make source for industry. Since then, the meaning of the weeding necessary. Lianas are often reported as term has evolved, based on scientific progress and a serious problem hampering natural regenera- ecological understanding, and has now taken on an tion in selectively logged forests (especially in ecosystem-oriented connotation, comprising the the tropics). Here, growth regulation and compe- protection of species diversity and ecosystem tition control is necessary after the establishment functions. While forest management regulations of the young trees, for example, misshapen and in the temperate-zone and industrialized countries damaged trees, and trees of low vitality are are usually well developed and implemented, for- removed. As the trees grow taller and start to est use in the tropics has been and often still is pure differentiate, thinning is required, that is, the exploitation, leading to forest degradation and promotion of trees which fulfil quality and finally transformation, sometimes intentionally to 144 G. Langenberger and M. Lippe expand agricultural land. As a reaction to the tre- each with somewhat different criteria and focus, mendous forest losses in the tropics in the second e.g. that of the organic farming label ‘Naturland’ half of the last century, environmentalists and (http://www.naturland.de/en/). other civil society organizations came together to consider options to change this development using market pressure. As a result, forest certification Review Questions schemes were developed, probably the most prominent being the ‘Forest Stewardship Council’, bet- • What are the specific features of forests? ter known as FSC (https://ic.fsc.org/en). As FSC • Distinguish between the different forest types. was initiated by environmental and human rights • How do they contribute to mankind’s needs organizations (in particular WWF, Greenpeace, and to the bioeconomy? etc.), forest owners and the forest industry reacted • What is the relevance of forests in meeting by creating their own, more user-friendly certifi- global challenges such as the mitigation of cation scheme, the ‘Programme for the Endorse- climate change? ment of Forest Certification’ (PEFC: https://pefc. • What is sustainable forest management? org/). There are other certification schemes, 6 Primary Production 145

6.3 Aquatic Animal Production

Johannes Pucher

# Ulrich Schmidt

Abstract Aquatic animals are fundamental to a ponds or tanks which fully rely on external feed. well-balanced, healthy human diet due to their New integrated aquaculture systems are increas- profile and content of essential amino acids, ingly being developed and applied, which follow polyunsaturated fatty acids, vitamins and a more direct implementation of a circular minerals. Since the 1990s, the growing demand bioeconomy and focus on a more efficient use for aquatic food cannot be satisfied by capture of nutrients and water. The best choice of fisheries alone and has therefore caused a steady production method largely depends on local increase in aquaculture production of on average conditions. 8.8% annually. Today aquaculture is the fastest- growing agricultural sector globally, especially Keywords Aquaculture production; Aquacul- in Asia. There are 18.7 million fish farmers glob- ture systems; Integrated aquaculture ally, and annual aquaculture production is worth around 150 billion euros. It is expected that Learning Objectives aquaculture will increasingly contribute to pro- After studying this chapter, you should: tein supply and healthy nutrition of the growing world population. • Have gained an overview of the global supply Fish production can be performed at different with aquatic animal biomass by fisheries and intensity levels, from production systems based aquaculture on natural feed resources to closed systems in 146 J. Pucher

• Be able to explain why different aquaculture (FAO 2014). The World Bank (2013) expects production systems and intensities are the demand to increase aquatic food production adopted in different regions and environ- up to 152 million tons by 2030. mental surroundings Of the 2012 total annual production, 91.3 mil- • Understand the interdisciplinary dimension of lion tons were harvested by capture fisheries, and aquaculture production 66.6 million tons were produced in aquaculture • Have become acquainted with challenges for (Fig. 6.24). For human food production, capture future development of sustainable aquaculture fisheries mainly supply the markets with production organisms of higher trophic levels, like piscivorous or carnivorous fish, mollusc species and Aquatic animals like fish, crustaceans, mol- crustaceans (Neori and Nobre 2012; Tacon et al. luscs and echinoderms are fundamental to a well- 2010). Species of lower trophic level (esp. balanced, healthy diet due to their profile and pelagic fish species) are also used for non-food content of essential amino acids, polyunsaturated purposes including the production of fishmeal fatty acids (e.g. eicosapentaenoic acid and doco- and fish oil, which are dominantly used as feed sahexaenoic acid), vitamins, and minerals (FAO sources in aquaculture (Shepherd and Jackson 2014). On one hand, aquatic food products are 2013). Capture landings for food and non-food increasingly consumed as healthy and easily purposes are dominantly harvested in seas and digestible food by richer consumers. On the oceans (79.7 million tons in 2012), whereas other hand, aquatic animal-based protein 11.6 million tons were landed from freshwater resources are highly important for the food and systems. nutrition security of the poor in developing Over the past decade, the amount of aquatic countries and emerging economies. animal biomass landed globally by capture fish- In 2012, the global production of aquatic eries has been maintained at a relatively constant animal-based biomass reached 158 million tons, level through the utilization of ever more effec- of which 136.2 million tons were used for human tive fishing gear and landing technologies and by consumption and 21.7 million tons for other uses the overexploitation of several natural stocks like fishmeal and fish oil production (FAO 2014). (Pauly 2009). Since the 1990s, the growing The growth in world population, rising per capita demand for aquatic food cannot be satisfied by consumption, and better access to global and capture fisheries alone and has caused a steady local markets have led to an increasing global increase in aquaculture production of on average demand for aquatic food and feed resources 8.8% annually, making aquaculture the fastest-

Fig. 6.24 World capture ﬁsheries and aquaculture production (data from FAO 2015a, b) 6 Primary Production 147

Table 6.14 Aquaculture production by region in 2012 aquaculture production systems exist to accom- (FAO 2015a, b) modate the specific needs of the species and inte- Production of aquatic animals grate aquaculture into the local/regional (million tons) conditions. Aquaculture production systems dif- Africa 1.49 fer greatly with regard to their intensity of pro- Americas 3.19 duction, which can be classified (Fig. 6.24) Asia (excl. China) 17.79 according to the yield, stocking density, level of China 41.11 external feed/fertilizer inputs, dependency on nat- Europe 2.88 ural food resources, management/technical Oceania 0.18 requirements, capital, labour and risks (Edwards Total 66.63 et al. 1988; Tacon 1988; Prein 2002). In general, aquaculture production systems are classified into growing agricultural sector globally (FAO 2014), three intensities (extensive, semi-intensive and especially in Asia (Table 6.14). According to the intensive aquaculture) and are integrated differ- FAO (2016), there are now 18.7 million fish ently into the spatial bioeconomies and biomass farmers worldwide, and aquaculture production flows. is worth around 139 billion euro (83 billion euro from finfish, 16 billion euro from molluscs, 30 bil- Feed Conversion Ratio (FCR) lion euro from crustaceans, 3 billion euro from The FCR indicates how much feed (dry other aquatic animals and 5 billion euro from matter) is needed to produce one unit of seaweeds). Aquacultural production is growing fresh fish. This unit highly depends on the in developing and emerging economies in partic- feed quality, culture condition, production ular, leading to a strong global imbalance in geo- intensity and trophic level of the species. graphical supply and demand in seafood, as 37% of seafood produced globally is exported (data 2012, FAO 2014). In 2012, 49% of the seafood In extensive aquaculture, aquatic organisms import value of developed countries originated from mainly lower trophic levels are grown from developing countries (FAO 2014). Conse- solely on natural feed resources (e.g. bacteria, quently, seafood products consumed in phytoplankton, zooplankton, zoobenthos, detri- industrialized countries are often produced in tus, prey fish) without substantial inputs of exter- developing or emerging economies. This makes nal feed or fertilizer. The systems are most often harmonized and internationally accepted run as polycultures (combination of several spe- standards and regulations for production, cies with different feeding niches in the same processing and trading of aquatic foods essential pond) for local and regional markets. The stock- to ensure an adequate level of protection for the ing densities per area and the annual yields are consumer. low due to the limited productivity of the natural Aquaculture is defined by the FAO as having feed resources. Extensive aquacultures require ‘...some sort of intervention in the rearing pro- only low levels of technical equipment, manage- cess to enhance production, such as regular stock- ment schemes and financial investment, but large ing, feeding, protection from predators, ...’ (FAO areas of water per yield, as the internal produc- 1997, p. 6). Today, about 520 single species or tion of feed resources is entirely based on natural groups of species (excluding plants and primary (algae) production within the ponds. mammals) are cultured in marine, brackish, or Extensive aquaculture systems are only appli- freshwater aquaculture systems. As there is a cable in areas where suitable surface waters are large variation in the nutritional requirements abundant and are not polluted. These natural and feeding behaviour (planktivorous, herbi- aquaculture systems are often highly important vorous, detritivorous, omnivorous, piscivorous/ for the preservation of biological biodiversity as carnivorous) of cultured species, a wide range of they provide suitable habitats for a wide range of 148 J. Pucher

Fig. 6.25 Semi-intensive carp polyculture in a pond in Vietnam (Photo: J. Pucher)

flora and fauna. As no external feed and fertil- pathogens and undesired substances that are izers are used, extensive aquaculture systems act harmful for human health. as a nutrient sink and counteract eutrophication. In semi-intensive aquaculture, aquatic organ- In developing countries in particular, extensive isms are grown in natural or constructed ponds aquaculture plays an important role for the food (Fig. 6.25) on a combination of external supple- security of poorer communities, as minimal man- mental feed and natural feed resources supported agement and inputs are required to produce by organic or inorganic fertilizer inputs in com- highly nutritious food resources. The future bination with a suitable water management. expansion of extensive freshwater aquaculture Again, these systems are most often run as systems is very limited due to the limited avail- polycultures of several species of lower trophic ability of suitable water resources. It would levels for regional or national markets. To effec- require the more efficient use (intensification) tively utilize the protein-rich natural feed and recycling/multiple use of freshwater in inte- resources, external feeds often contain high grated systems without increasing the risk of levels of carbohydrates/energy to supply the cul- contamination with undesired substances that tured species with the required nutrients in a reduce the safety of food products. A special balanced and effective way (De Silva 1995). form of extensive aquaculture is extractive aqua- In developing countries, by-products of lower culture in which filter-feeding aquatic species are quality (e.g. press cakes, brans and manure) cultured in more eutrophic waters. The most are often used as feed and fertilizer resources. predominant example is the production of bi- Semi-intensive aquaculture is characterized by valves (e.g. mussels, oysters) which are grown medium stocking densities, moderate use of tech- in coastal waters and feed on plankton and detri- nical equipment (e.g. aeration) and medium man- tus. Similarly, seaweeds are grown in coastal agement requirements. As with extensive waters and take up dissolved nutrients. These aquaculture, semi-intensive aquaculture offers a extractive aquacultures have high potential as range of habitats for flora and fauna and stabil- they counteract eutrophication especially in izes biodiversity. On a global scale, semi- coastal zones, but care should be taken regarding intensive aquaculture is extremely important for potential contamination with marine toxins, the supply of highly nutritional food and is most 6 Primary Production 149 often highly integrated into spatial bioeconomies standardization of products, but necessitates a and biomass flows (e.g. water, feed and fertil- high level of monetary investment, management izers). In the developing countries and emerging and skilled staff (Fig. 6.26). Potential risks are economies of Asia and Africa, semi-intensive insufficient quality and safety of feeds and water aquaculture in integrated agriculture aquaculture resources, environmental pollution and eutrophi- (IAA) systems is very important. These systems cation by effluents, genetic mixing of aquaculture integrate agricultural production with livestock escapees and wild stocks, inadequate utilization of husbandry and pond aquaculture. By-products veterinary medicines (e.g. antibiotics) and produc- from each farming activity are used as feed or tion technologies, as well as outbreaks of diseases, fertilizer for another farming activity, leading to technical failure and price competition on a circular bioeconomy at farm or regional level. national/international trading. However, in such IAAs, an intensification of one Intensive aquaculture is conducted either in farming activity (e.g. application of pesticides or net cages (Fig. 6.27) or in land-based flow- inorganic fertilizers) has a direct impact on the through systems or closed recirculation aqua- efficiency of the entire system and may also culture systems (RAS). Net cages are installed affect the safety of their products (Pucher et al. in rivers, lakes or marine waters and enable direct 2014; Schlechtriem et al. 2016). A sustainable contact of the cultured species with the surround- and safe expansion of this type of aquaculture ing environment via the water, which supplies needs to be well integrated into the regional situ- them with oxygen and flushes out faeces and ation. But the largest part of an increased future dissolved metabolites. This type of aquaculture production necessary to supply the rising demand is affected by the surrounding environment can only be achieved by an intensification of through diseases and parasites, which may attack aquaculture (Tacon et al. 2010). the cultured species, and also directly affects the Intensive aquaculture is the production of environment through the effluent water, which aquatic species, mostly piscivorous/carnivorous makes the site selection of such production species, in monocultures for large national/inter- highly important. national markets. It enables the highest control Flow-through systems and closed recircu- over the culture conditions including water qual- lation aquaculture systems (RAS) are constructed ity, feed utilization, hygienic conditions and indoor or outdoor tanks and ponds (Figs. 6.28 and health management. In intensive aquaculture, the 6.29). In so-called land-based systems, the water cultured species are grown solely on external flow can be better controlled, allowing higher feeds, which are specifically formulated and pro- protection of cultured species from external duced to supply them with all required nutrients influences (e.g. parasites, contaminated waters) and energy, thus enabling an efficient and and also higher protection of the environment, maximized utilization of resources such as water as effluents can be filtered and treated before and feeds. These systems are specifically designed release. Flow-through systems direct water to adjust and stabilize the culture conditions to the through the culture raceways, supplying oxygen needs and requirements of the cultured species to the organisms and flushing out metabolites and (e.g. oxygen supply, temperature, currents, salin- faeces. By contrast, RAS recycle the water by ity, pH). The use of technical equipment (aerators, filtering solid wastes out and oxidizing the highly water quality monitoring, filters, nitrification and toxic ammonium (main metabolite of the culture denitrification units, pumps, disinfection units, species’ protein metabolism) to less toxic nitrate. temperature controls, automatic feeders, etc.) The reaction allows multiple recirculation of the permits the highest stocking densities. This water and thus a higher water-use efficiency. high-intensity aquaculture allows the greatest Inclusion of denitrification units can even yields, space efficiency, monetary return and increase this multiple water use, allowing highly 150 J. Pucher

Fig. 6.26 Classiﬁcation of different aquaculture production systems according to their intensities of inputs, returns and hazards/risks (redrawn and expanded from Edwards et al. 1988 in cooperation with U. Focken)

Fig. 6.27 Intensive net cage culture of salmon in Norway (Photo: J. Pucher) 6 Primary Production 151

Fig. 6.29 Intensive outdoor shrimp production in a pond system in Vietnam (Photo: J. Pucher)

Fig. 6.28 Intensive indoor shrimp production in a recirculating aquaculture system in Germany (Photo: J. Pucher)

controlled production with minimal use of water resources (Fig. 6.30). (Kaushik and Troell 2010; Byelashov and Grifﬁn 2014).

Fish-In-Fish-Out (FIFO) Ratio Measure to compare the dependency of Intensive aquaculture offers great potential for different aquaculture species on marine future production due to its high productivity, feed resources (fishmeal and fish oil) from efficiency and controllability. But an increase in wild non-food-producing fish. This con- intensive aquaculture production is creating a cept of indexing is highly discussed higher demand for classical feed resources (e.g. fishmeal and fish oil) and land/water to 152 J. Pucher

Fig. 6.30 Intensive outdoor pangasius production in a pond system with feed supply in Vietnam (Photo: J. Pucher)

produce plant-based feed resources (Tacon and effectively and reduce environmental impacts. Metian 2008). The limited availability and A prominent example is the combination of increasing price of fishmeal and fish oil for the intensively fed carnivorous fish with filtering intensive production of piscivorous species and species such as mussels or seaweed. This might increasing consumer awareness are pushing the be realized in open waters, or shellfish is farmed sector to minimize the use of fishmeal/fish oil in fish farm drainage canals, while the effluents and replace them with alternative, plant-based from the fish are directed over mussel and/or resources. Nowadays, soybean protein in parti- seaweed beds. These filtering species filter out cular is often used in aquafeeds for piscivorous solid particles and algae that take up dissolved species. However, globally other plant-based as nutrients from aquaculture effluents. This con- well as animal-based by-products from other cept allows the partial binding of emitted branches of the bioeconomy are also used nutrients from intensive aquaculture to supply (Hardy 2010; Hernańdez et al. 2010), including additional products (e.g. mussels, seaweed). press cakes and protein extracts from plant oil Another form of modern integrated aquacul- production, protein extracts from single-cell ture is the combination of intensive aquaculture technology, blood and bone meal, insect meal (of fish) and hydroponic production of plants like and unsaturated fatty acids from vegetable and herbs and vegetables. These so-called aquaponic algae oils. systems are designed to utilize the excreted Other novel methods of integrated aquacul- dissolved nutrients from aquaculture production ture systems are increasingly being developed as fertilizer for plants. Some systems even recy- and applied, which follow a more direct imple- cle water from evapotranspiration. This increases mentation of a circular bioeconomy and focus on both nutrient and water-use efficiency. These a more efficient use of nutrients and water. systems are currently being promoted for (peri-) Integrated multi-trophic aquaculture (IMTA) is urban regions to supply urban niche markets with a combination of several aquatic species of dif- locally produced food products. Additionally, ferent trophic levels which are co-produced in waste heat from industrial activities can be util- order to utilize the applied nutrients more ized to increase their competitiveness. However, 6 Primary Production 153 the competitiveness and efficiency of aquaponic of water resources, feed resources, know-how of production systems is presently the subject of workers and public, availability of technology, scientific discussion. acceptance within the society for the production Biofloc systems are increasingly applied and systems and products, permitting regulatory are a mixed form of semi-intensive and intensive framework on environmental performance, pro- aquaculture. Here, fish or shrimps are kept in duction licences, water use, animal welfare, mar- intensively managed aquaculture tanks or ponds ket demand and prizes, production costs, with minimized water exchange. In addition to seasonality, risks of food safety and biosecurity, the feed for the cultured species, low-value, availability and quality of stocking material, cli- carbohydrate-rich by-products (e.g. molasses, mate change and post-harvesting/processing. vinasses) are applied as an energy source for a Risk assessments, value chain analysis and market microbial community of heterotrophic and surveys might be needed to mitigate potential chemotrophic bacteria. These bacteria organi- risks. In general, it is more resource efficient to cally bind the nutrients excreted by the culture culture species of lower trophic level and increase species (e.g. nitrogen and phosphorus) to form the utilization of by-products by establishing pro- so-called bioflocs, which are eaten by the culture duction chains with alternative feed resources. species. High water aeration is necessary to sup- The choice of production method is highly depen- ply the culture species and bacterial community dent on local conditions, and therefore, it might be with sufficient oxygen and keep the bioflocs suitable to establish polycultures/multi-trophic suspended in the water so that dissolved nutrients systems in one location but more suitable to estab- are efficiently captured and serve as an internally lish intensive recirculating aquaculture systems recycled feed resource. Such systems promise a (Fig. 6.28) in another location. Improving animal higher-nutrient efficiency and productivity of welfare and sustainability of aquaculture as well used water sources, but potential risks include as implementing eco/welfare-labelling and quality the accumulation of undesirable substances in assurance/certification is targeted to increase the the system. consumer acceptance. As described above, aquaculture can take a number of different forms and operate at various scales, while it can vary from subsistence-oriented Review Questions small-scale fish farming in the family pond to the industrial-scale production for international • Which of the various aquaculture production markets. Aquaculture is part of complex value systems show a higher productivity and eco- chains and is influenced by a range of environ- nomic performance? mental, societal and governmental factors. For • Which of the various aquaculture production future aquaculture production of healthy and systems are more sustainable in terms of the safe food products, it is important to focus on use of water, feed resources and energy in a environmental, social and economic sustainability site-specific context? and integrate aquaculture into the regional sur- • What risks might arise from circular produc- rounding circumstances. These surrounding cir- tion concepts for the cultured animals and the cumstances include the availability and quality consumers? 154 U. Schließmann et al.

6.4 Microalgae

Ursula Schließmann, Felix Derwenskus, and Ulrike Schmid-Staiger

Light-microscope images of different microalgae species. # Fraunhofer IGB, Stuttgart

Abstract Microalgae are one of the most impor- (e.g. proteins, polar membrane lipids with omega- tant global biomass producers and can be used 3 fatty acids, non-polar triacylglycerides) as well commercially to produce specific food, feed and as high-value components such as carotenoids can biochemical compounds. The cultivation process be obtained sequentially from the microalgae differs completely from that of land-based plants biomass. because they are grown under more or less controlled conditions in different types of bioreactor Keywords Microalgae cultivation; Reactor systems in salt, brackish or fresh water. Special systems; Algal composition; Algae-based processing requirements apply to the extraction products; Microalgae biorefinery of valuable compounds from algae biomass and further use of the residual biomass, especially in cascade utilization. In general, the chemical Learning Objectives characteristics and market specifications, for After reading this chapter, you will: example the required degree of product purity, determine the downstream processing technique. • Have gained an overview of the definition, Additional requirements are the avoidance of an metabolism and capability of microalgae energy-intensive drying step wherever possible • Know about the most important parameters and the ensuring of gentle extraction processes for the cultivation of microalgae in different that both maintain the functionality of biochemi- photobioreactor systems cal compounds and permit the extraction of fur- • Be aware of the huge diversity of valuable ther cell components. constituents in microalgae biomass and know The vast number of microalgae strains differ about their areas of application fundamentally in cell size, cell wall formation and • Understand the main difficulties in down- biomass composition. By applying successive stream processing of microalgae biomass in extraction procedures, both the principal fractions terms of a biorefinery concept 6 Primary Production 155

6.4.1 Microalgae Cultivation, 50% of global oxygen is produced by micro- Composition and Products algae. Like terrestrial plants, microalgae require nitrogen and phosphorus for optimal growth. Microalgae are one of the most important global However, compared to higher plants, their culti- biomass producers. Not only do they provide a vation has a considerable number of advantages large contribution to global oxygen production, (Schmid-Staiger et al. 2009). These include a but they are also able to produce several high- five-to-ten times higher biomass productivity value compounds such as proteins, omega-3 fatty per area unit than terrestrial plants and the possi- acids or antioxidant colourants. Microalgae repre- bility of cultivation in controlled reactor systems sent a diverse group of plant-like, unicellular on land not suitable for conventional agricultural organisms, of which there are an estimated purposes (Meiser et al. 2004). Closed reactor 300,000 different species on earth today. So far, systems lead to a substantial reduction in water about 40,000 species have been described, and a consumption compared to the cultivation of land few have been analysed in detail (Batista et al. plants, as no water is lost through evaporation or 2013;Mataetal.2010). The term ‘microalgae’ infiltration. Since several microalgae species can includes prokaryotic cyanobacteria as well as be cultivated in brackish or coastal seawater, the eukaryotic microalgae species capable of growing consumption of fresh water is reduced as well. in the presence of sea water (e.g. oceans), fresh water (e.g. lakes, rivers) and on several kinds of Reactor Systems ground surfaces (e.g. soil) (Richmond 2004). Cultivation in reactor systems enables the constituents of microalgae biomass to be influenced by regulating various process parameters, in Microalgae particular nutrient supply and light intensity The term microalgae includes prokaryotic (Münkel et al. 2013). One major challenge in cyanobacteria and eukaryotic microalgae the cultivation of phototrophic organisms is the species. According to recent estimations, provision of sufficient light for the culture. For about 300,000 different species exist on this reason, many different open and closed bio- Earth today. reactor systems have been developed for algae cultivation, each with its own advantages and Depending on the species, microalgae are able disadvantages (Singh and Sharma 2012). The to grow under heterotrophic, mixotrophic or system used is determined by the desired product photoautotrophic conditions (Morales-Sańchez and the algae species. The most common systems et al. 2014; Perez-Garcia et al. 2011; Ceroń- are open ponds, tubular reactors and flat-panel Garcıá et al. 2013) (Table 6.15). When cultivated reactors (see Fig. 6.31). in photoautotrophic conditions, they capture light Open ponds are natural or artificial lakes with and use its energy to convert carbon dioxide a culture depth of about 20–30 cm. In general,

(CO2)—a relevant greenhouse gas—via photo- these reactors reflect the natural algae environ- synthesis into chemical energy in the form of ment. The first open ponds were built in the carbon-rich biomass. It is estimated that about 1950s, and research in this field is still continuing

Table 6.15 Potential growth conditions of different microalgae

Heterotrophic Mixotrophic Photoautotrophic Light x x

CO2 xx Organic carbon source x x 156 U. Schließmann et al.

Fig. 6.31 Different bioreactor systems used for (B) tubular reactors (AlgaePARC, Wageningen Univer- microalgae cultivation: (A) race-way ponds in southern sity, Netherlands) and (C) flat-panel-airlift bioreactors California (White 2011, AlgaeIndustryMagazine.com), (Fraunhofer IGB, Stuttgart, Germany) today (Das et al. 2015). Raceway ponds are an process control and low contamination risk. improvement on simple ponds and are usually Examples of microalgae species grown in tubular equipped with a paddle wheel to generate a reactors on a large scale are Chlorella vulgaris higher flow velocity (see Fig. 6.31A). The for food supplements and Haematococcus plu- cultivation of algae in open ponds is an vialis for the production of astaxanthin, a red established technology with low investment colourant (Pulz 2001). costs. Furthermore, ponds are simple to operate. As light is the most important parameter in Disadvantages are low process control (e.g. lack algae cultivation, reactors with a high surface- of cooling, difficult CO2 supply, high water evap- to-volume ratio have been developed. Flat- oration rate), low biomass productivity and low panel reactors are vertical systems with a culture –1 algae concentration (approx. 1 gDW L ) due to depth of only a few centimetres and are mixed by insufficient light supply as a result of inadequate bubbling gas at the bottom. This gas flow prevents mixing conditions. The open system also carries oxygen accumulation and the high light availabil- a high risk of contamination with other algae, ity leads to an increased biomass productivity and bacteria and predators. Open ponds are particu- concentration compared to other bioreactor larly used for the commercial cultivation of systems. The concentration can be more than extremophile algae such as Spirulina, which ten times higher than in open ponds. However, tolerates high pH values, and Dunaliella salina, in conventional flat-panel reactors, there is little which can survive in high salt concentrations. horizontal mixing, as the gas bubbles only move In tubular reactors, the biomass is pumped directly upwards in an unimpeded manner. For through transparent tubes with a diameter of sev- this reason, a modified flat-panel-airlift (FPA) eral centimetres and a length of up to 100 m. CO2 reactor has been developed (see Fig. 6.31C). It is usually supplied in a closed mixing tank. The consists of static mixers that produce a circular

CO2 consumption and oxygen production of the current in each chamber of the reactor (Bergmann microalgae can lead to pH and oxygen gradients et al. 2013). The ﬂow pattern constantly entrains in the culture, as the ﬂow in the tubes is usually the algae cells from the dark to the light side of the nonturbulent. The closed system enables high reactor (see Fig. 6.32). Thus, an optimal light 6 Primary Production 157

Fig. 6.32 (A) Side view of a flat-panel-airlift bioreactor and (B) schematic image of the flow pattern within each compartment. The cyclic flow pattern provides a transport from microalgae cells from the sun-faced to the shaded side of the bioreactor

Fig. 6.33 Flat-panel- airlift bioreactor (FPA) with artiﬁcial illumination, pH- as well as temperature control and automated feeding system #Fraunhofer IGB

distribution is ensured, which results in very high reactors can be used indoors illuminated by –1 –1 productivities (up to 2 gDW L d ) and leads to a LEDs (see Fig. 6.33) or outdoors operating on –1 high biomass concentration of up to 20 gDW L . natural sunlight (see Fig. 6.31C). These reactors can be equipped with automation systems, which provide full control of Algal Composition and Products

CO2, temperature, pH value and nutrient concen- Microalgae can produce a large number of sub- tration in the culture (Münkel et al. 2013). The stances that are of interest to various sectors 158 U. Schließmann et al.

Fig. 6.34 Biochemical components of microalgae biomass. The amount of each component depends on the species as well as the cultivation conditions including, in particular, the food, feed, cosmetics Due to the great diversity of constituents and and pharmaceutical industry. Depending on the different cell wall characteristics of various species used and the cultivation conditions, they microalgae species, it is necessary to carry out are able to produce large quantities of fatty acids selective processing of the biomass in order to in the form of triacylglycerides (up to 70% of dry effectively extract high-quality components. The weight), proteins (up to 50% of dry weight) or composition of microalgae ingredients depends polar membrane lipids with omega-3 fatty acids on the selected strain and the process conditions (up to 7% of dry weight), as well as a broad (Pal et al. 2011; Mulders et al. 2014). Given variety of carotenoids and phytosterols. The aim sufﬁcient nitrogen and phosphorous supply, is to use these compounds in food production microalgae tend to produce large amounts of without changing their techno-functional, nutri- proteins. These can constitute up to 60% of the tional and physiological properties (see total dry cell mass and appear very suitable for Fig. 6.34). food and feed purposes, since the amino acid 6 Primary Production 159

Table 6.16 Microalgae ingredients and their areas of application Microalgae ingredients Area of application Carbohydrates Use as renewable energy source (e.g. bioethanol, biodiesel, palm oil substitute) Triacylglycerides Proteins Supplements for food and feed applications (e.g. animal feed in aquacultures, ﬁsh oil Membrane lipids replacement, nonanimal protein source) Pigments and High-value products for nutrition, chemical and pharma industry phytosterols

profile is in balance with WHO/FAO recommend- sector, since they can be converted to biodiesel ations (Becker 2007). However, the only commer- (from fatty acids) or bioethanol (from carbo- cial products on the market so far are dietary hydrates) or used as platform chemicals for fur- supplements. As chlorella is rich in chlorophyll ther synthesis (Harun 2010). Until now, all and lutein, it is thought to have beneficial health studies and estimations have confirmed that the properties and is used in supplements for the production of biodiesel from microalgae is still reduction of oxidative stress and treatment of too expensive and not yet competitive with several diseases including age-related macular fossil fuels (Rodolfi et al. 2009; Norsker et al. degeneration (ARMD) (Granado et al. 2003). 2011). However, in addition to the main pro- In addition, some microalgae species ducts, microalgae biomass can include several (e.g. Phaeodactylum tricornutum, Pavlova high-value by-products such as carotenoids lutheri, Nannochloropsis oceanica) have (e.g. astaxanthin, β-carotene, fucoxanthin, lutein) phospho- and galactolipids in their chloroplast and phytosterols, which are of interest consider- membranes that contain polyunsaturated omega- ing their antioxidant and anti-inflammatory 3 fatty acids, especially eicosapentaenoic acid properties (Ahmed et al. 2014; Macıás-Sańchez (EPA, C20:5, ω3) and docosahexaenoic acid et al. 2007; Ahmed et al. 2015; Francavilla et al. (DHA, C22:6, ω3) (Chini Zittelli et al. 1999; 2010). Some carotenoids can be used as natural Krienitz and Wirth 2006; Pieber et al. 2012). and healthy food colourants (see Table 6.16). EPA (typically contained in the human diet in fish oils) can act as a precursor of prostaglandin- 3, which can inhibit platelet aggregation. It is also 6.4.2 Microalgae Biorefinery: Adding thought that a specific EPA intake can help to Value by Fractionation reduce inflammation and the symptoms of depression (Martins 2009). In the context of the bioeconomy, algae biomass When microalgae cells are cultivated under needs to be utilized as holistically and efficiently nitrogen or phosphor starvation, some species as possible. Although microalgae can be used as (e.g. Chlorella vulgaris) are able to accumulate whole cells for nutritional purposes, it is often huge amounts of triacylglycerides consisting of worth fractionating the different constituents to glycerol and saturated and mono-unsaturated add value to the biomass and thereby vindicate lipids (mainly C16-C18 fatty acids). Under comparatively high production costs. However, appropriate conditions, these fatty acids consti- developing appropriate downstream processes is tute more than 60% of the total dry mass (Münkel a huge challenge, since microalgae biomass usu- et al. 2013). Other species (e.g. Chlorella soro- ally contains more than one main constituent of kiniana) are able to accumulate large amounts of interest, e.g. saturated fatty acids as biodiesel carbohydrates in the form of starch. Extraction of feedstock, and proteins, omega-3 fatty acids and unsaturated fatty acids and carbohydrates is sim- carotenoids for food and feed applications. Fur- ple. These products are of interest to the energy thermore, the quality and amount of valuable 160 U. Schließmann et al. components can vary greatly according to the Nowadays, one of the most common origin of each species and cultivation conditions, approaches in the extraction of products from e.g. light availability and nutrient supply algae is to separate lipids (e.g. fatty acids and caro- (Münkel et al. 2013; Pal et al. 2011). Hence, tenoids) from proteins. This can be realized by cell disruption and extraction parameters have cascaded extraction using high-pressure extraction to be adjusted carefully depending on the com- methods. These methods have a relatively low position of constituents and also individually for environmental impact compared to conventional each specific microalgae strain. solvent extraction. Unit operations such as subcrit- Well-known downstream processes used, for ical pressurized liquid extraction (PLE) using example, for terrestrial plants or bacteria, cannot organic solvents (e.g. ethanol, ethyl acetate) or be easily transferred to microalgae, since these are supercritical fluid extraction (SFE) using carbon cultivated in aqueous media and the solid matter dioxide can be applied sequentially to separate content is far below the values achieved in classi- products according to their polarity. Both extrac- cal fermentation processes (Posten and Feng Chen tion methods operate at high pressure and moder- 2016). Thus, microalgae biomass requires a solid- ate temperature and can thus preserve the liquid separation (e.g. by flotation, filtration or nutritional value and techno-functionality of the centrifugation) to harvest and concentrate micro- recovered compounds (Liau et al. 2010;Mendes algae cells produced in open ponds or closed bio- et al. 2003; Pieber et al. 2012). Furthermore, there reactors. Subsequently, an additional drying step are several suitable solvents that meet the require- (e.g. spray drying or lyophilization) can be neces- ments and regulations of the food and feed sectors. sary to remove residual water, since water may Other extraction techniques, which have already interfere with solvent extraction or disturb the been described for the extraction of plant biomass, hydrolysis process for biofuel production. including ultrasound-assisted extraction (UAE), In most cases, harvesting is followed by a cell pulsed electric field extraction (PEF) and disruption step. For many microalgae species, microwave-assisted extraction (MAE), are also at this step is mandatory since multilayered micro- the focus of current research in order to adapt them algae cell walls can be very robust and might for microalgae treatment (Parniakov et al. 2015; impede direct contact between the solvent and Pasquetetal.2011; Plaza et al. 2012). compounds to be extracted (Brennan and Owende 2010). Cell disruption can also improve Review Questions the bio-accessibility of antioxidant compounds used in food and feed applications (Gille et al. • What are the differences between hetero- 2016). For this purpose, mechanical cell disrup- trophic, mixotrophic and photoautotrophic tion, e.g. by bead milling, high-pressure homo- growth, and what are main advantages and genization or sonication, tends to be more disadvantages of each growth type? effective than chemical or enzyme-based treat- • What makes microalgae so interesting con- ments (Safi et al. 2014). cerning their composition of ingredients in comparison to terrestrial plants? • Which criteria have to be met for a microalgae Cascaded Extraction reactor system to achieve high biomass pro- Combination of multiple extraction steps in ductivity as well as energy efficiency? order to extract multiple products while • What are the main challenges concerning cas- avoiding the degeneration of molecules and caded utilization of microalgae biomass? organic compounds within each fraction. 6 Primary Production 161

6.5 Economics of Primary Production

Christian Lippert

Tea plantation Seeyok in Darjeeling (India) July 2016 # Christian Lippert

Abstract When developing new bio-based dealing with interest calculation based on the products and assessing their market existence of (economic) capital growth and opportunities, the correct calculation of all biological growth. expected unit costs is indispensable. The provision of natural resources from primary agricul- Keywords Biological growth function; Invest- tural or forest production is an important cost ment appraisal; Capital budgeting; CostingDis- component in this calculation. All renewable counting; Forest economics natural resources require a certain time to grow. For this reason, in order to correctly account for Learning Objectives all external and internal net benefits of natural After studying this chapter, you should be able to: resources, it is important to calculate the related capital costs and model the biological growth • Apply an investment appraisal with special over time. For permanent crops and woodland regard to farm and forestry economics resources, it is particularly important to derive • Model biological growth by means of the optimized single and infinite rotations for differ- Euler method ent kinds of plantations. For this purpose, the • Combine simple biological growth models corresponding biological growth expectations and investment appraisal to optimize single need to be combined with an investment and infinite rotations for different kinds of appraisal. This chapter introduces basic concepts plantations 162 C. Lippert

• Identify optimal replacement times for possible capital growth, because the present value long-lasting assets in agriculture and of the future amount is the money that one would horticulture need right now (as initial principal sum) in order to obtain the given future value as the initial principal In this chapter, Sect. 6.5.1 outlines basic sum plus the accrued compound interest. concepts of compound interest calculation Discounting can be performed either assuming a (i.e. capital growth) and illustrates reasons for discrete process (illustrated in Sect. 6.5.1.1)ora and methods of discounting. Section 6.5.2 deals continuous process (illustrated in Sect. 6.5.1.2)in with simple ways to mathematically describe and time. Section 6.5.1.3 uses the example of electric- simulate biological growth. Combining both ity production to briefly illustrate the correct approaches enables us to plan optimum resource calculation of per unit costs (in this case costs per use over time: in this context, we will identify kilowatt-hour of electricity) when the relevant cost optimum harvest (or rotation) times in forestry components are unevenly distributed over time. (Sect. 6.5.3) and determine the optimum replacement time for permanent crop plantations that continuously yield yearly benefits (Sect. 6.5.4). 6.5.1.1 Basic Concepts of Discrete Our analysis will focus on private wood- and Discounting Assuming a discrete process with time steps of crop-related benefits. However, in Sect. 6.5.3 1 year corresponds to the common approach we will also briefly discuss how the inclusion of taken in banking. Future net benefits or cash forest-related positive externalities (for a defi- flows ( À ) are transformed into present nition of externalities, see Sect. 10.4) from regu- Bt Ct values by multiplying À by a lating or cultural ecosystem services affects Bt Ct discount (1 þ )–t, where is an interest rate that harvest decisions and optimum forest use over factor r r reflects the opportunity cost of capital. Opportu- time. As the important concepts are presented nity costs are the benefits foregone from a hypo- quite concisely here, the reader should refer to thetical alternative use of the capital invested in Perman et al. (2011) for more detailed expla- the project under consideration. If the money had nations. An interesting application of the not been invested in this project, it could have approach presented in Sects. 6.5.3 and 6.5.4 can been alternatively placed at an interest rate . be found in Guo et al. (2006). r Future cash flows can only be compared to pres-

ent cash ﬂows (B0 À C0) by discounting. The 6.5.1 Investment Appraisal (Capital discounted present value B0 of a beneﬁt Bt arising Budgeting) at the end of year t is given by

Bt Àt B0 ¼ ¼ BtðÞ1 þ r : ð6:1Þ In real life, every resource use results in an inter- ðÞ1 þ r t temporal sequence of benefits (Bt) and costs (Ct). In this context, a net benefit of a given amount of Usually the so-called discount rate r to be money is usually considered less valuable the far- chosen by the decision maker is the interest rate ther in the future it is expected to occur. Thus, at which loans could be raised or the rate at future benefits (Bt) and costs (Ct)havetobecom- which his own capital (equity) could be placed pared with present ones (B0 and C0). The standard or a weighted average of these two interest rates approach to making future net benefits equivalent (the weights corresponding to the shares of loans to present net benefits is to discount the former by and equity used when investing). For example, multiplying them with a so-called discount factor. assuming a discount rate of r ¼ 2%, the present Diminishing an expected future amount of money value of an expected benefit of 100 € in t ¼ 5 Àt À5 by means of discounting involves accounting for years is B0 ¼ Bt(1 +r) ¼ 100 € (1 þ 0.02) 6 Primary Production 163

¼ 100 € Â 0.90573 ¼ 90.57 €. In this case, real interest rate r (i.e. an interest rate adjusted for 100 euros available in 5 years have the same inflation) should be used when calculating the value as 90.57 € today. In other words: one NPV. Where future net benefits already account would have to place 90.57 € today at a rate of for price increases due to inflation, the discount return r of 2% in order to obtain a benefit of 100 € rate applied should be a nominal interest rate in 5 years. (i.e. the interest rate actually paid or received). For simplicity, assuming in investment For a given nominal interest rate rn and a given appraisal that all yearly benefits B1, B2, ..., BT inflation rate in, the real interest rate r is and all yearly costs C , C , ..., C related to a 1 2 T rn À in certain project are payments in arrears, which ¼ ð : Þ r þ 6 4 means that in each case, they occur exactly 1 in after t years (t ¼ 1, 2, ..., T), whereas the benefit For instance, a nominal interest rate rn ¼ 4% B0 and the cost C0 are to be obtained or to be paid and an inflation rate in ¼ 2% yields a real interest right now, one obtains the Net Present Value rate r ¼ (0.04 À 0.02)/(1 þ 0.02) ¼ 0.0196 ¼ (NPV) of the project: 1.96 %. Hence, for a relatively low inflation rate

XT in, one can say that the real interest rate Àt NPV ¼ ðÞBt À Ct ðÞ1 þ r ð6:2Þ r approximately corresponds to the nominal t¼0 interest rate rn minus the inflation rate in. If an NPV is greater than zero, in principle, As a general rule, a project is only worthwhile the corresponding project is worthwhile. If there as long as its NPV is positive. If the NPV is are two alternative projects with identical capital negative, this means the project is unprofitable. needs (or in the case of plantations, with identical Of course, the NPV strongly depends on the land requirements), the project yielding the assumptions made regarding the discount rate higher NPV is to be preferred. However, as the À r and when calculating the net benefits Bt Ct. NPV depends on the amount of capital invested, Therefore, careful sensitivity analyses should be in the case of projects that require different performed when calculating NPVs. For instance, amounts of capital, one should also examine the one should always analyse how the NPV is internal rates of return for the different invest- affected by a ceteris paribus change of the dis- ment alternatives. The internal rate of return IRR count rate applied. The NPV declines sharply is the discount rate that—for given net benefits with increasing discount rate, especially for (Bt À Ct)—leads to an NPV of zero: projects like forest plantations that yield main net benefits particularly late in the future. XT ¼ ¼ ðÞÀ ðÞþ Àt: ð : Þ The discounted payback period [year k in NPV 0 Bt Ct 1 IRR 6 5 ¼ Eq. (6.3)] is the first period at which the summed t 0 up discounted net benefits of an investment are When calculating the IRR in this way, the greater than or equal to zero, so that implicit assumption is made that all positive net

Xk benefits (cash flows) obtained at the end of the Àt < NPVk ¼ ðÞBt À Ct ðÞ1 þ r different time periods t T can be reinvested at t¼0 the corresponding IRR. For huge IRRs, however, this assumption is unrealistic. In such cases, a 0 and NPVkÀ1 modified IRR (MIRR) is to be determined: XkÀ1 À vffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi ¼ ðÞB À C ðÞ1 þ r t < 0: ð6:3Þ u t t uPT t¼0 u posðÞþ TÀt u NBt 1 rr u MIRR ¼ u 0 À1: ð6:6Þ As long as future prices and costs contained in t PT T negðÞþ Àt net benefits NBt ¼ Bt À Ct have been calculated at NBt 1 rf today’s prices (i.e. not accounting for inflation), a 0 164 C. Lippert

pos À T where NBt are all cash flows Bt Ct that are 1 rðÞ1 þ r CRF ¼ ¼ : ð6:8Þ positive and can be reinvested at a rate of return PVAF ðÞþ T À neg 1 r 1 rr and NBt are the absolute values of all cash À flows Bt Ct yielding negative amounts of The capital recovery factor may also be used money that need to be financed at an interest to convert the NPV of a project or investment rate rf. into an average yearly profit (or loss) resulting Constant annual cash flows in arrears (i.e. a from the corresponding project. For farmers, the ¼ constant yearly rent or an annuity NBt notion of a yearly profit is easier to comprehend À ¼ ¼ ¼ ... Bt Ct constant NB for all t 1, , T)can than the idea of an NPV that corresponds to the be transformed into one single present value apply- amount of money theoretically obtained when ing the Present Value Annuity Factor (PVAF): converting all project-related cash flows into

XT present values and adding them up. À NPV ¼ NBðÞ 1 þ r t 1 6.5.1.2 Basic Concepts of Continuous XT À Discounting ¼ NB ðÞ1 þ r t Discrete discounting as introduced in the previ- 1 ous section is common business practice. How- ðÞ1 þ r T À 1 ¼ NB ¼ NB Á PVAF: ð6:7Þ ever, continuous discounting by means of an rðÞ1 þ r T interest rate ϱ that is applied continuously (at infinitely small time steps) to a capital stock Thus, the PVAF transforms a constant(!) Kt in order to add compound interest is easier to yearly payment NB (to be obtained for the next handle in mathematics than discrete discounting. T years) into one single present value. Note that Continuous capital growth K is described by ¼ ... t t 1, , T and that formula (6.7) applies for means of Euler’s number e (¼2.71828...): payments in arrears. In the case of a perpetuity (i.e. an ‘eternal’ annuity NB ¼ NB with t ¼ 1, ..., ρ dKt ρ dKt t K ¼ K e t ) ¼ ρK e t ) 1), the PVAF in formula (6.7) can be simplified: t 0 dt 0 dt • 1 dKt X K K Àt ¼ ρ ) t ¼ ¼ ρ: ð : Þ NPV1 ¼ NBðÞ 1 þ r Kt 6 9 dt Kt 1 X1 The unit of the capital growth rate ϱ is % Àt ¼ NB ðÞ1 þ r divided by the time unit for which the capital 1 growth function has been calibrated, e.g. %/year. 1 Applying the formula for continuous compound- ¼ NB ¼ NB Á PVAF1: ð6:7aÞ r ing, one can again ask for the present value B0 of a benefit Bt that will be available in t years: NPV1 is the amount of money that one would ρ t Àρ t have to place today at an interest rate r in order to Bt ¼ B0e ) B0 ¼ Bte : ð6:10Þ obtain a rent NB ¼ r NPV1 every year again and Àϱ Á t again (and for the first time at the end of year 1) Thus, the term e is the discount factor for without ever depleting the calculated necessary continuous discounting. Hence, given a discount ϱ ¼ capital stock NPV1. rate of 2%, the present value of an expected The reciprocal value of the PVAF is the capi- benefit of 100 € in t ¼ 5 years gives a present ¼ € À0.02 Â 5 ¼ € tal recovery factor (CRF), which transforms a value B0 100 e 90.48 . So, single present value or payment into T constant according to this calculation, in 5 years, 100 € yearly payments NB in arrears (to be obtained have the same value as 90.48 € today. This is less after each year t; t ¼ 1, ..., T): than the 90.57 € found in the case of discrete 6 Primary Production 165 discounting above using Eq. (6.1) at a discount single present payment into T yearly payments rate of 2%. The reason for this discrepancy is that (always to be obtained at the end of year t; one needs slightly less money today in order to t ¼ 1,..., T) is given by the reciprocal value of have 100 € in 5 years when compound interest the PVAF: (i.e. the interest on interest) is calculated and 1 ðÞeρ À 1 eρT added continuously. Every discount rate r (for CRF ¼ ¼ : ð6:14Þ ρT À discrete discounting) can be transformed into an PVAF e 1 ϱ equivalent discount rate (for continuous In the special case of a constant flow of money discounting): throughout the whole year NBfl (i.e. a constant À Àρ yearly amount NB is equally distributed over B ¼ B ðÞ1 þ r T ¼ B e T ) fl 0 T T the year t, t ¼ 1, ..., T), the money obtained at ρ ¼ lnðÞ 1 þ r : ð6:11Þ every time span Δt amounts to NBfl Á Δt. Assum- ing infinitely small time steps Δt ¼ dt, So, if r ¼ 2%, the equivalent rate ϱ ¼ ln discounting and summing up these payments (1 þ 0.02) ¼ 0.01980 ¼ 1.98% and, for the yields À0.0198 Â 5 example, B0 ¼ 100 € e ¼ 90.57 €.In ZT ZT the case of continuous discounting, the real inter- ¼ Àρt ¼ Àρt est rate (ϱ) corresponds exactly to the difference NPV NBfle dt NBfl e dt between the nominal interest rate and the infla- 0 0 tion rate (ϱn À in). If all cash flows B À C À ÀρT t t ¼ 1 e ¼ Á : ð : Þ always occur in arrears at the end of year ρ NBfl PVAF NBfl 6 15 t (t ¼ 1, ..., T), we can write where T approaches infinity—analogous to the XT ¼ ðÞÀ Àρt: ð : Þ case of discrete discounting [see Eq. (6.7a)]; the NPV Bt Ct e 6 12 ϱ t¼0 PVAF collapses to 1/ .

For constant net benefits in arrears NBt ¼ À ¼ ¼ ... Bt Ct NB(t 1, , T), we obtain 6.5.1.3 Calculating Average Cost- XT Covering Prices for (Bio-)energy Àρt NPV ¼ NB0 þ NBe When comparing different ways of producing t¼1 energy, the average cost per unit (e.g. of electric- XT ity expressed in Euro per kWh) needs to be ¼ þ Àρt NB0 NB e correctly calculated. In principle, this average ¼ t 1 cost corresponds to a hypothetical cost-covering ρ e T À 1 electricity price (P ¼ P) in Euro per kilowatt- ¼ NB þ NB t 0 ðÞeρ À 1 eρT hour (€/kWh) that is assumed to be constant over the years t. The International Energy Agency ¼ NB0 þ NB Á PVAF ð6:13Þ (IEA) calls this cost-covering electricity price In the case of a perpetuity (i.e. an ‘eternal’ Levelized Costs of Electricity (LCOE). To fully annuity NBt ¼ NB with t ¼ 1, ..., 1), the conti- cover all costs, the present value of all benefits nuous discounting Present Value Annuity Factor needs to be equivalent to the present value of all (PVAF) simplifies to PVAF ¼ 1/(eϱ À 1). Again, costs (general representation): the capital recovery factor (CRF) transforming a 166 C. Lippert

XT XT comparison of LCOE for different renewable Á ðÞþ Àt þ ðÞþ Àt P Et 1 r Ht 1 r energy technologies is given in Kost et al. (2013). t¼0 t¼0 XT Àt ¼ ðÞIt þ Mt þ Ft þ Ct þ Dt ðÞ1 þ r ) 6.5.1.4 Cost-Benefit Analysis t¼0 and Environmental Externalities Externalities related to natural and environmental LCOE ¼ P resources use result mainly from regulating and PT Àt cultural ecosystem services. Social losses from ðÞIt þMt þFt þCt þDt ÀHt ðÞ1þr ¼ t¼0 resource degradation associated with certain pro- PT Àt duction activities need to be accounted for when E0 þ EtðÞ1þr t¼1 carrying out thorough bioeconomic cost-benefit analyses or cost calculations. The monetary valu- ð6:16Þ ation of corresponding externalities is beyond the where It ¼ Investment expenditures in year t; scope of this chapter. Here, in the context of Mt ¼ Operations and maintenance expenditures investment appraisal, we concentrate on how to in year t; Ft ¼ Fuel expenditures (if relevant) in find an adequate discount rate to apply when year t; Ct ¼ Carbon costs in year t (if relevant); dealing with environmental benefits (or possible Dt ¼ Decommissioning costs in year t; Ht ¼ Value benefits foregone) that occur partly far in the of heat produced in year t (if relevant); r ¼ real future. Many resource-use decisions have a discount rate (here: discrete discounting, for con- long-term impact, especially when they lead to tinuous discounting, the discount factors (1 þ r) resource depletion or ecosystem degradation. Àt Àρ Á t are to be replaced by e ); Et ¼ Electricity Hence, when discounting future environmental generation in kWh in year t; and P ¼ LCOE ¼ benefits, two questions arise: (1) Should common Cost-Covering Electricity Price (Levelized Costs economic net benefits be discounted in the same of Electricity) in €/kWh. Assuming that E0 ¼ 0 way as the value of ecosystem services linked to (i.e. no electricity can be produced during the nature preservation? (2) Which discount rate initial year when the power plant is built) and should be chosen when dealing with very long that for t ¼ 1 through T the yearly energy pro- time horizons exceeding our own lifetime? duction Et ¼ E is constant, we can write 1. To answer the first question, the ideas put PT Àt forward by Krutilla and Fisher (1975) may ðÞIt þ Mt þ Ft þ Ct þ Dt À Ht ðÞ1 þ r t¼0 be useful: Let B(D) be the annual benefit P ¼ t PT À (e.g. farm produce) valued at today’s market E ðÞ1 þ r t t¼1 prices arising in year t from the development PT of some pristine land (e.g. forestland or moor) Àt ¼ ðÞIt þ Mt þ Ft þ Ct þ Dt À Ht ðÞ1 þ r that is converted to farmland in year t 0. C ¼ t¼0 : (D) is the corresponding annual cost incurred Á t E PVAF when purchasing all inputs necessary to main- ð : Þ 6 16a tain production. These costs are also valued at present market prices. In contrast, B(P) is the Given that expenditures I occur at the begin- t t social benefit resulting from the ecosystem ning and costs D at the end of corresponding t services provided by the pristine land. These projects, it should be considered how an increas- annual environmental benefits will be forgone ing discount rate r applied by decision makers once the land is converted. They may be affects the average cost calculation according to referred to as benefits of ‘wilderness’ preser- Eq. (6.16) with respect to the cost components vation. Also, these yearly benefits, which are It and Dt. An interesting application and 6 Primary Production 167

benefits foregone once the land is converted, ‘wilderness’ benefits could be enjoyed for an are assessed based on today’s price and infinite number of years (T!1) if pristine land income conditions. ϱ is a real discount rate was preserved, applying Eq. (6.15) yields for continuous discounting. (N.B.: inflation ZT does not matter in this context, as it is simply ÈÉ ¼ ðÞÀ ðÞ Àρt a general price increase.) Then the NPV of the NPV BDt CDt e dt development project is 0 Z1 ZT ÀðÞρÀα t ÈÉ À BP0 e dt NPV ¼ BDðÞÀ CDðÞeÀρtdt t t 0 0 ZT ÈÉ ZT ¼ ðÞÀ ðÞ Àρt BDt CDt e dt À BPðÞeÀρtdt, ð6:17Þ t 0 0 BP À 0 : ð6:19Þ the second integral being the overall environ- ρ À α mental cost of the development project in terms Hence, the larger the assumed growth rate α of ‘wilderness’ benefits foregone. The interesting (i.e. the future relative value increase of ecosys- question now is how the values B(D) , C(D) and t t tem services emanating from pristine land), the B(P) will evolve over time relative to each other. t less likely it is that the project should go ahead. In this context, Krutilla and Fisher (1975) believe When the rate α is close to or even equals the that the relative value of benefits from ‘wilder- discount rate ϱ, the development project should ness’ preservation B(P) is likely to increase over t not be implemented (as then BP /(ϱ À α) !1). time when compared to the prices contained in B 0 One should be aware that in practice, no matter (D) and C(D) . The reasons for this are (1) the t t what the assumed values of B(D) , C(D) and B prospects of ongoing economic growth and tech- t t (P) are, the project decision finally made by nical progress that will reduce the relative value t policy-makers strongly depends on their individ- of the net benefits B(D) À C(D) resulting from t t ual discount rates as well as on their assumptions the development of the pristine land, (2) supposed of how the scarcity of ‘wilderness’-related eco- high-income elasticities of demand for certain system services will increase in the future. ecosystem services from ‘wilderness’ in contrast to stagnating (or even decreasing) supply of such 2. Applying a high discount rate in cost-benefit services and (3) lack of substitution possibilities analysis when future environmental benefits for these ecosystem services. Assuming the value are at stake means that these benefits receive of benefits from ‘wilderness’ preservation is α a particularly low weight (the lower the farther given by B(P) ¼ BP e t with BP being its t 0 0 in the future they occur). When increasing the present value and α the rate at which this value discount rate applied, the NPV of a develop- grows over time, we can write ment project that contains environmental costs ZT ÈÉ as future benefits forgone is then more prone to ¼ ðÞÀ ðÞ Àρt become positive. This is the case at least as NPV BDt CDt e dt long as the initial investment cost is relatively 0 small and especially when the useful life of the ZT project is much shorter than the expected time À αt Àρt ð : Þ BP0e e dt 6 18 span during which the corresponding environ- 0 mental impacts are relevant. One may think about nuclear energy and its very long-lasting Further assuming that the annual benefit BP 0 environmental impact in this context. is equally distributed over the year and that the 168 C. Lippert

Discounting future generations’ benefits fore- for the relatively near future or for time periods gone entailed by today’s resource use means within the decision makers’ own expected life- systematically diminishing the opportunity time. For the remote future, lower discount rates costs inflicted on people living in the future. should be applied. This last point is all the more It is an ethical issue whether this is acceptable relevant as one does not believe in ongoing or not. It is frequently argued that the social future growth of wealth. discount rate, applied by a benevolent government explicitly accounting for the welfare of future generations, should be lower than com- 6.5.2 Biological Growth Functions mon private discount rates, applied by private decision makers who are planning for their When trying to optimize the use of a renewable own business and usually deal with time resource, one needs to describe the development horizons covered by their expected lifetimes. of the corresponding resource stock over time. However, there may also be reasons for using Often it is adequate to describe biological growth relatively high social discount rates in project as a function of current stock volume S . Defining appraisal: firstly, this is not always unfavour- t dS able for the environment, as a high discount • t dSt ¼ 0ðÞ¼ ¼ ðÞ¼dt rate means not only attributing low weight to S t S rate of change, gSt dt St environmental damages in the far future but • also lower weight to project benefits in the S ¼ ¼ growth rate of the stock, medium term (this aspect is more relevant the St higher the initial investment cost). Secondly, ¼ Á applying relatively high discount rates is then G(St) g(St) St is the biological growth justified when believing that through economic function or regeneration function giving the growth, future generations will be wealthier related net biological growth G(St) for every than the current generation and able to substi- stock size St. In the simplest case when the rate tute the lost environmental benefits in question. of change (dSt/dt) is proportionate to the current ¼ Thus, the answer to the question which dis- stock (meaning that g(St) g is a constant), we count rate to use then partly depends on how have exponential growth (see the dotted graph optimistic we are about future technical prog- and the corresponding differential equation in ress and resource substitution possibilities. Fig. 6.35). When no substitute for an essential ecosystem However, an undisturbed evolution of the service is in sight, a low discount rate is to be wood volume of a plantation is more likely to chosen, as suggested by Krutilla and Fisher. correspond to the simple logistic growth Following ideas expressed by Weitzman displayed in Fig. 6.35. For small stock sizes St, (1998), the discount rate applied may also the value of the bracket in the differential equa- depend on the time horizon t itself: tion for logistic growth is close to 1. Thus, at the beginning, there will be exponential growth; then, the growth rate of the stock will conti- ZT ÈÉ Àρ nuously decline until the stock volume asymptot- NPV¼ BDðÞÀCDðÞÀBPðÞ e ttdt with ρ t t t t ically approaches an upper limit. The quadratic 0 growth function or regeneration function G(St) dρ leading to logistic growth is said to be density ¼ρðÞt and 0: dt dependent (the growth depending on plant or

ð6:20Þ population density). G(St) is a differential equation as the derivative of St is a function of St This involves using higher discount rates itself: (derived from common market interest rates) 6 Primary Production 169

Fig. 6.35 Stock size over St = stock size at time t Smax = upper bound of stock size time for exponential (carrying capacity) growth and for logistic growth

Smax exponential growth: d S t = g S t d t logistic growth: S(t) d S t S max – S t = g S t d t ( S max )

0 initial stage exponential asymptotic 0 stage stage time (t)

À Its basic principle is to calculate stock size S(t ) ðÞ¼dSt ¼ Smax St k+1 GSt gSt ¼ Δ dt Smax at point in time tk+1( tk + t) by simply adding 2 the change [derived from the known function G ¼ À gSt : ð : Þ Δ gSt 6 21 (St)] taking place during time period t to the Smax stock size S(tk) at point in time tk:

Solving Eq. (6.21) for St yields the develop- 0 StðÞ¼kþ1 StðÞk þ Δt StðÞþk S ðÞtk Δt: ð6:23Þ ment of the stock volume over time for an initial stock size S0: If this procedure is repeated again and again, one obtains an approximation for the develop- S S ¼ max : ð6:22Þ ment of the stock volume S(t ) at consecutive t À k 1 À S0 Smax eÀgt ¼ ... À S0 points in time tk with k 0, , T 1). The resulting time path S(t) will be the more accurate For convenience, when modelling the growth the smaller the chosen time step Δt. of a plantation for a certain codomain of time, function (6.22) may be approximated relying ¼ þ 2 þ 3 upon a cubic function St a*t b*t c*t 6.5.3 Forest Economics (a and b being positive parameters, c being a and Bioeconomic Modelling negative parameter). of Plantations However, there may be additional (e.g. harvest-related) factors influencing dSt/dt in From an institutional economics point of view every time period that further complicate the and accounting for different possible institutional growth function and the resulting equation settings, natural forests yield different kinds of describing the stock volume over time St.In resources. Forests provide renewable resources such cases and when there is a clear functional as private goods: resource units can be allocated ¼ 0 relationship between dSt/dt S (t) and St,we on the margin (i.e. consumed in small units), may rely on the Euler method (according to and property rights are usually enforceable Leonhard Euler, 1707–1783) to model stock (e.g. timber in German forests). Other forest- development over time. This method is a numer- related renewable resources are common pool ical procedure to approximately solve differen- resources: resource units can be allocated on tial equations for which an initial value is known. the margin; there is rivalry in consumption, but 170 C. Lippert excludability is only obtained at prohibitively 6.5.3.1 Optimum Resource Use high cost (e.g. mushrooms in German forests). in a Single-Rotation Forest Thus, whether a resource is a private good or a Model common pool resource depends on the specific Let kpl be the initial planting costs (at time distribution of property rights along with local t ¼ 0); P today’s price per unit of harvested institutions and transaction costs for the enforce- timber; c the marginal harvest cost—so that ment of property rights. In addition, forests yield p ¼ P À c is the so-called stumpage price several environmental resources as public goods (value of a timber unit free of harvest cost); (or forest use-related positive externalities) R the opportunity cost of the forest land that cannot be allocated on the margin and (e.g. agricultural land rent foregone); ϱ the real whose beneficiaries usually cannot be excluded discount rate (continuous discounting); T the har- and do not affect each other’s utility vest age of the stock (i.e. the time when the

(i.e. non-excludability and non-rivalry in con- plantation is to be clear-cut); and ST the volume sumption) (e.g. many forest-related ecosystem of the stock reached at time T. Thus, the harvest services). Further examples of forest-related pri- age T is to be chosen in a way that maximizes the vate or common pool resources are fuelwood, following NPV: charcoal, pulpwood, timber, fruits, nuts, mush- ZT rooms, medicinal plants, honey, wild game, ðÞ¼À À Àρt drinking and irrigation water. Examples of posi- NPV T kpl Re dt tive externalities are protection against land- t¼0 slides, recreational and aesthetic amenities, þ ÀρT: ð : Þ pSTe 6 24 cultural ecosystem services and regulating ecosystem services including the provision of plant As the land’s opportunity cost is constant over and animal habitats, soil formation and nutrient time and applying Eq. (6.15), we get cycling, water and air quality regulation, waste decomposition, climate regulation and CO stor- 1 À eÀρT 2 NPVðÞ¼ÀT kpl À R age. Hence, forests are multi-attribute assets, and ρ this should be kept in mind when analysing opti- Àρ þ pS e T : ð6:25Þ mum harvesting strategies. In the following T sections, however, we will focus on wood pro- Calculating the first derivative of NPV(T) and duction as in traditional forest management. For- rearranging the first-order condition NPV0 est land or a forest plantation can be seen as a (T) ¼ 0, necessary to achieve an optimum, we capital asset with intrinsic growth and often an find opportunity cost as the land could be used other- dS wise. The objective is to maximize the NPV of a p T ¼ ρpS þ R: ð6:26Þ forest plantation. First, a single rotation will be dt T considered (i.e. trees are planted and logged at Consequently, the optimum harvest time T is age T, then the land is used for a non-forest pur- reached when in the last year of forest use pose, e.g. for agriculture). Second, optimization (in period T), the stumpage value of the last will be performed for an infinite rotation (i.e. the period’s stock increase (pS/dt ¼ additional same tree species are replanted after every clear- T income when waiting one more period) is equal cutting). Third, we will briefly discuss how posi- to the interest to be earned when harvesting the tive forest externalities affect optimum harvest whole stock (ϱ pS ¼ additional income when strategies (for further information, see Perman T converting attained forest capital into cash) plus et al. 2011). 6 Primary Production 171 the opportunity cost of the land (R ¼ additional Hence, the NPV of an infinite rotation is the income when using the land alternatively, e.g. for NPV due to the land use of the first T periods plus crop production). If the value increment from the discounted NPV of the same infinite rotation. forest growth on the left-hand side of Eq. (6.26) This second term accounts for the still infinite is still greater than the opportunity cost of bound sequence of rotations from period T onwards. capital and land displayed on the right-hand Solving Eq. (6.28) for NPV gives side, it is still better to wait with the harvest and pS eÀρT À kpl let the forest grow instead of capitalizing on NPVðÞ¼T T : ð6:29Þ À ÀρT the harvested wood. One could also say that 1 e we are comparing possible biological growth A similar expression could be deduced for the with economic growth possibilities (a truly case of discrete discounting. Again, we can use ‘bioeconomic’ consideration). Rearranging the the first-order condition NPV0(T) ¼ 0 to derive optimum condition slightly (6.27) yields an optimum condition that needs to be fulfilled at • harvest time T (and at times 2T,3T, ..., nT as S R T ¼ ρ þ : ð6:27Þ well). This way, we obtain the so-called ST pST Faustmann rule (in honour of Martin Faustmann, 1822–1876): implying that, at optimum harvest time T, the growth rate of the stock should be equal to the p dST ρ dt ¼ : ð6:30Þ real interest rate plus the relative capital increase À À ÀρT pST kpl 1 e from alternative land use, or the growth rate of the stock should equal the possible rate of return Solving Eq. (6.29) for kpl and entering the of the capital bound (incl. land). The latter is the corresponding term for kpl into (6.30) yields, possible capital growth rate when converting the after rearranging a condition that is quite similar forest (the natural capital) into cash. to condition (6.27) above:

• S ρNPV 6.5.3.2 Optimum Resource Use T ¼ ρ þ : ð6:31Þ in an Infinite-Rotation Forest ST pST Model The rotation length T is to be chosen so that Where there are no alternative land-use possi- when harvesting, the growth rate of the stock just bilities (i.e. R ¼ 0), it does not really make equals the interest rate plus the relative capital sense to assume that the forest land will be left increase due to the average land rent from future fallow after T years. If the forest plantation forest use. Again, the possible growth rate of the turned out to be profitable (NPV(T) > 0), the stock should be equal to the possible rate of plantation should be replaced after clear-cutting return of the capital bound (incl. land). ϱNPV is in year T, which means that at time T, the NPV the perpetuity (the ‘eternal’ annuity) from con- (T) can be obtained again. But then, as long as all tinuous forest use. In this context, the NPV is assumed price and cost parameters do not also referred to as ‘site value’ of the forest land change, reforestation should be done again and (i.e. the maximized NPV from an infinite number again at points in time T,2T,3T, ..., nT with of rotations). n approaching infinity. This is the case for an infinite (sequence of) rotation(s) with T being the rotation length. As the NPV of an infinite 6.5.3.3 Forest Model with Positive rotation is the NPV of the first rotation plus the Externalities discounted (residual) value of the land after Finally, it should be discussed how the forest clear-cutting in year T, we can write externalities mentioned above affect wood- harvesting strategies. For simplicity, let us ¼À þ ÀρT þ ÀρT: ð : Þ NPV kpl pSTe NPVe 6 28 assume that these external benefits FE 172 C. Lippert

(e.g. from habitat support or landscape 6.5.4 Determining the Optimal amenities) occur after a certain time once the Replacement Time forest has been planted and remain constant in Agriculture and Horticulture until clear-cutting at time T. From a social point of view, and according to the same reasoning that The reasoning applied in Sect. 6.5.3 can be easily led to condition (6.27) for the single-rotation extended to assets or projects that also involve forest model, the optimum condition to deter- beneﬁts and costs between time periods 0 and mine harvest time now is T (e.g. hop gardens, rubber plantations,

• greenhouses). In addition to the symbols already À ST ¼ ρ þ R FE : ð : Þ introduced, let ka be the initial investment cost 6 32 ¼ ST pST for the asset considered (at time t 0) and RaT the residual value (salvage value) of the asset that The opportunity cost of the land (R) is dimin- is received at time T. The NPV of such an invest- ished by the welfare gains due to forest external- ment is ities (FE). As the right-hand side of this optimum condition is smaller now than in the case of NPVðÞ¼ÀT ka ¼ FE 0, and considering the growth rate of the XT Àρt stock is declining because of logistic growth, the þ ðÞBt À Ct À R e optimum harvest age T will occur later than when t¼1 ÀρT merely considering wood benefits. Not surpris- þ RaTe : ð6:33Þ ingly, positive forest externalities will delay clear-cutting and forest replacement by an alter- The ex ante optimum useful lifetime T is again native land use. obtained by considering NPV0(T) ¼ 0 leading to The optimum conditions for traditional forest dRaT management derived in this chapter should be BT ¼ CT þ R À þ ρRaT: ð6:34Þ applied when dealing with certain types of dt plantations. However, one should be aware that, This means the optimum lifetime of the given the multiple beneficial ecosystem services investment is reached once the marginal benefit related to the existence of natural forests, clear- when using the asset one more period (BT)is cutting of forests should be avoided. According equal to the marginal cost of using it one more to § 5 (3) of the German Federal Nature Conser- period. This marginal cost consists of additional vation Act, forests should be managed sustain- operating costs (CT) plus the opportunity cost of ably without clear-cutting. Selective forestry to the land needed (R) plus the amount of the loss obtain near-natural forests is to be implemented due to a reduced residual value (dRaT/dt is nega- instead. This allows for continuous wood harvest tive and corresponds to depreciation of the asset) and natural regeneration. The issue of optimum plus the interest forgone because the residual forest use over time then turns out to be a ques- value is cashed one time period later (ϱRaT). tion of realizing maximum sustainable yield.In In the case of identical replacement of the principle, this means the forest manager needs to asset, analogous to Eq. (6.29), the NPV of an find the stock volume at which the forest regen- infinite sequence of the corresponding invest- eration function G(S) [see Eq. (6.21) as an exam- ment is ple] is at its maximum. 6 Primary Production 173

PT dRa Àρt ÀρT À þ T À ρ ¼ : ð : Þ Àka þ ðÞBt À Ct e þ RaTe BT CT RaT ANB 6 37 ¼ dt NPVðÞ¼T t 1 ðÞÀ ÀρT 1 e As long as the marginal net benefit when ðÞ∗ continuing to use the old asset [i.e. the left-hand ¼ NPV T : ðÞ1 À eÀρT side of Eq. (6.37)] is still greater than the ANB of ð6:35Þ the future use, the current use should be continued. ANB is to be calculated for the new NPV(T)* being the NPV of a single invest- replacing investment using Eqs. (6.33)or ment. For discrete discounting, the NPV of an (6.35). Note that in Eq. (6.37), dRaT/dt (i.e. the infinite identical replacement is depreciation in period T) is usually negative. ðÞ NPV T Review Questions PT À þ ðÞÀ ðÞþ Àt þ ðÞþ ÀT ka Bt Ct 1 r RaT 1 r • Explain the basic difference between discrete ¼ ¼ t 1 and continuous discounting. À ðÞþ ÀT 1 1 r • In which cases can one make use of a Present Value Annuity Factor (PVAF) when calculat- ∗ NPVðÞT ing a Net Present Value (NPV), and under ¼ À : ð6:36Þ 1 À ðÞ1 þ r T which conditions does this factor collapse to ‘one divided by the discount rate’? • Explain and illustrate by means of a formula Calculating NPV(T)usingEqs.(6.35)or containing the main cost components how to (6.36) for different possible replacement times calculate cost-covering electricity prices for a T and thus searching for the highest NPV lead to biogas plant. the optimum ex ante replacement time of the • Following the ideas of Krutilla and Fisher, asset. Ex ante decision situation here means what are the reasons the future value of certain that the corresponding asset is not yet purchased ecosystem services (i.e. benefits related to or the plantation not yet implemented, and one ‘wilderness’ preservation) should be dis- wants to determine the optimum useful life counted at relatively low discount rates in a given expected prices and costs before starting cost-benefit analysis? the project. • Explain the basic concept of the Euler method. In contrast, in an ex post decision situation, • Write down and explain the Net Present Value the asset or the plantation is already being used, (NPV)of(a)a single-rotation forest model and and one wants to know when to replace it by an (b) an infinite-rotation forest model—with alternative or identical land use. Very important reference to the growth rate of the stock. For when making ex post decisions on how long to both cases, give an optimum condition that is continue the use of an asset, a plantation or a to be met when maximizing the NPV. forest stand, the initial investment costs of the • Explain how to identify the ex ante optimum present use (kpl or ka) do not matter! Once an useful lifetime of an agricultural asset (e.g. a investment has been implemented, these initial rubber plantation) (a) in the case of an alter- costs are so-called sunk costs already paid for in native land-use opportunity and (b) in the the past. Such sunk costs cannot be recovered. In case of identical replacement. ex post decision situations, marginal net benefits • Give a rule for the optimum replacement time of the current land use have to be compared to in an ex post decision situation, and explain average net benefits (ANB) of the considered why so-called sunk costs do not matter in this possible future land use: context. 174 C. Lippert

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Processing of Biobased Resources 7 Myriam Loeffler, Jo¨rg Hinrichs, Karin Moß, Marius Henkel, Rudolf Hausmann, Andrea Kruse, Nicolaus Dahmen, Jo¨rg Sauer, and Simon Wodarz

The fundamental idea behind the bioeconomy For production of materials, our economic is processing of biobased resources into a system is predominantly based on finite fossil wide range of products in the food, feed, carbon resources, such as natural gas, crude oil, energy, and material sectors. Due to the special and coal. Crude oil is the basis for most fuels characteristics of biobased resources (see Sect. 5. and is refined into more useful products such as 1), appropriate conversion approaches need to be naphtha, gasoline, diesel, asphalt, heating oil, selected with the desired application in mind. kerosene, and gas. These are further processed Food supply is the most traditional and, of to intermediates and final products including course, most essential function of biobased plastics, fibers, vanishes, and adhesives. Petro- resources. Section 7.1 presents fundamental leum (or naphtha) is a liquid raw material knowledge on food quality and food processing consisting of reduced hydrocarbons which are techniques. mostly oxidized to the desired product. In this

M. Loefﬂer (*) e-mail: [email protected]; marius. Institute of Food Science and Biotechnology; Food [email protected]; Rudolf.Hausmann@uni- Physics and Meat Science, University of Hohenheim, hohenheim.de Stuttgart, Germany A. Kruse e-mail: myriam.loefﬂ[email protected] Institute of Agricultural Engineering; Conversion J. Hinrichs Technologies of Biobased Resources, University of Institute of Food Science and Biotechnology; Soft Matter Hohenheim, Stuttgart, Germany Science and Dairy Technology, University of Hohenheim, e-mail: [email protected] Stuttgart, Germany N. Dahmen • J. Sauer • S. Wodarz e-mail: [email protected] Institute of Catalysis Research and Technology, K. Moß • M. Henkel • R. Hausmann Karlsruhe Institute of Technology, Karlsruhe, Germany Institute of Food Science and Biotechnology, Bioprocess e-mail: [email protected]; [email protected]; Engineering, University of Hohenheim, Stuttgart, [email protected] Germany

# The Author(s) 2018 179 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_7 180 M. Loeffler and J. Hinrichs process, inorganic, often metallic, catalysts are sucrose and glucose originating from sugarcane, used and both high temperatures and pressures sugar beet, and hydrolysis of starch (Sect. 7.2). are applied. The conversion starts with pure and Another concept is the thermochemical con- relatively concentrated educts, making product version (Sect. 7.3) of the renewable feedstock, recovery comparatively simple. which is technologically less demanding. This Biorefinery concepts explore possible routes method breaks down the biomass into a complex for the refining of renewable resources to fuels, mixture of partly reduced substances. energy, and materials, analogous to chemical The sugar and lignin fractions are partially refining processes. These generally make use of oxidized and, in many cases, have to be reduced all biomass components, resulting in various to gain valuable products. For this purpose, CO2 educt streams which can be converted to basic has to be removed from the carbon skeleton. This products. In contrast to crude oil, naphtha, and implies that on a mass base product yields gener- other petrochemical fractions, biomass materials ally are lower than in petrochemical production. for biorefineries display lower energy densities, For these reactions, catalysts have to be are solid rather than liquid, and are partially employed which act highly specifically and stop oxidized. at a certain oxidative step. Biocatalysts (whole Lignocellulose is the most abundant biopoly- cells or enzymes) possess these properties but, in mer and is a solid raw material. It consists of three contrast to inorganic catalysts, they require phys- main components, namely the carbohydrates cel- iological conditions. The reactions are performed lulose and hemicellulose (polyoses) and lignin. at moderate temperature (10–60 C), under nor- Cellulose and hemicellulose are polymers mal pressure. But as the educt stream is yet consisting of hexoses and pentoses; lignin is a diluted, also the product stream is diluted, cross-linked phenolic polymer built up from aro- consisting of only 1–10% of the product, and matic alcohols. 90–99% of water. This demands a quite intensive Fractionation and depolymerization are downstream processing. prerequisites for further bioconversion. Lignin is In a biobased economy renewable feedstocks, most often separated from the carbohydrates and thus mainly plants, form the basis for materials. combusted to supply the bioconversion process Biorefineries provide concepts for thermochemi- energy. The carbohydrates can be depolymerized cal and biochemical conversion of biobased by acid or enzymatic hydrolysis, to form aqueous materials towards fuels, materials, and energy. sugar solutions with a sugar content of about However, for mobility and energy solutions 0.2–2%, which is then concentrated. In this solar, wind, or geothermal energy are promising, approach, the structure of the resource is pre- but for materials the use of renewable feedstocks served, to give relatively defined sugar streams. is the most suitable solution so far. Carbon cap- These sugar streams may be used in biotechnolog- ture and utilization technologies potentially may ical processes to supplement the substrates be included in the biorefinery concepts. 7 Processing of Biobased Resources 181

7.1 Food Processing

Myriam Loefﬂer and Jo¨rg Hinrichs

# Jorg€ Hinrichs & Horst Neve

Abstract Food science and technology is the Keywords Food quality; Food safety; Shelf life; science that deals with the physical, biological, Industrial processing; Food functionality; Water and chemical processes relevant for the activity; Product development processing of food and food ingredients. The goal is to research, develop, and optimize technical procedures based on natural and engineer- Learning Objectives ing sciences as well as socioeconomic factors in After studying this chapter, you should order to provide high-quality and safe food for human consumption. Food processing refers to • Be familiar with food components and the conversion/transformation of raw materials ingredients. to a safe food product. This chapter introduces • Know basic processes used in food processing the physical, chemical, and biological unit and drivers of technical food processing. operations typically used in food processing to • Be aware of aspects, important for the devel- ensure food safety and quality. The inﬂuence of opment of new food products. intrinsic as well as extrinsic parameters on microbial growth behavior is highlighted and examples of important factors that need to be 7.1.1 Food and Food Ingredients considered during food processing are introduced (water activity, enzyme activity, The word “food” refers to substances and lipid oxidation). At the end of the chapter, products that are taken in by humans through strategies for new product developments are the mouth for the purpose of nutrition and/or also presented. pleasure. For this reason, the term also includes 182 M. Loeffler and J. Hinrichs products that one normally wouldn’t think of as 7.1.2 Unit Operations of Food foods, such as: Processing

• Alcoholic beverages For the consumer, food does not merely give • Food ingredients such as salt and spices the feeling of satiety (energy) and supply • Food additives such as thickeners micronutrients, but it provides a pleasurable • Food supplements such as minerals and vita- experience through aroma, taste, color, and min preparations texture. Moreover, ritual functions (e.g., the Eucharist) and prohibitions (e.g., Jewish food Major food ingredients (the big five) are: regulations) are linked to food and food consumption. Nowadays, quite a few of these • Water prohibitions can be explained and understood • Proteins (Fig. 7.1) by looking at former climatic and hygienic • Fat (Fig. 7.2) conditions and the related diseases. For instance, • Carbohydrates (e.g., the monosaccharide glu- it is well known that beans should not be con- cose, disaccharide lactose, and polysaccharides sumed without processing. Raw beans contain a cellulose and starch) toxic protein (phasin), which has to be denatured • Minerals (e.g., calcium, iron, magnesium, zinc) prior to consumption by heating or pickling to prevent intestinal colic. Thus, knowledge of the Minor components/micronutrients are: cultivation, storage, preservation, and processing • Vitamins (fat- or water soluble) of food was and still is of great importance. In • Other functional components this context, food processing describes the conversion/transformation of raw material to a safe food product. Today, there is a variety of possibilities (e.g., unit operations) to convert and hence process plant and animal raw materials to semifinished goods (e.g., flour), ready-to-eat end products (e.g., bread), and convenience food including special diets. A distinction has to be made between physical, biological, and chemical methods used for raw material and food processing. Depending on the requirements, these techniques may be applied individually, in a particular order or in combination. Table 7.1 gives an overview of unit operations used in food processing. Most of these techniques were developed a long time ago and then adapted to different food matrices. A few, Fig. 7.1 Protein structure; green: peptide bond-linking such as irradiation, have been introduced much amino acids more recently. 7 Processing of Biobased Resources 183

Fig. 7.2 Structure of Fatty acids glycerol, saturated and Glycerol O unsaturated fatty acids, and triglycerides HO

CH2 – OH –– Saturated

CH – OH O

CH2 – OH HO

Unsaturated

Triglycerides

CH2 – O O –– Saturated CH – O O

CH2 – O Glycerol + 3 fatty acids

CH2 – O O –– Monounsaturated CH – O O

CH2 – O

CH2 – O O ––

CH – O O Polyunsaturated

CH2 – O

With the beginning of industrialization in the large-scale operating companies in Europe and second half of the eighteenth century, major North America. technical advances were made in crop and plant cultivation, food processing, and packaging. For instance, research findings of Justus 7.1.3 Food Quality, Shelf Life, Liebig led to an increase in agricultural produc- and Food Safety: Drivers tion of about 90% between 1873 and 1913. The of Technical Food Processing use of fertilizers, scientifically based animal breeding, and initial mechanization of agricul- An important requirement for the storage and ture allowed more and more people to be sup- trade of food and food ingredients is that they plied with food. At the same time, new methods either retain their specific properties (best case) of preservation and packaging were developed or undergo only minor physicochemical and/or (e.g., 1804, sterilization of milk) to extend stor- microbial changes over a longer period of time, age time and improve food transportation, lead- thus guaranteeing food quality and safety. ing to a marked increase in small-scale and 184 M. Loeffler and J. Hinrichs

Table 7.1 Examples of food processing objectives classified by main principle and listing of unit operations applied Main principle Objective Unit operation Physical Removal of dirt and unwanted Washing, sieving, peeling components Crushing Cutting, grinding, crushing Enrichment of certain components Pressing, separating, filtering, distilling, extracting, evaporation, drying, crystallization Texture alteration Kneading, dispersing, emulsifying, foaming Shelf life Heating, cooling, freezing, drying, microwave heating, irradiation, high pressure Destroying interfering or toxic Blanching, cooking substances Improved digestibility, formation of Heating, frying, cooking, steaming aromas, browning Biological Raw material transformation ! taste, Fermentation, fermentative acidification, enzymatic smell, texture reactions Shelf life Fermentation, acidification Chemical/ Taste and texture Addition of salt or/and sugar biochemical Shelf life Addition of salt, sugar, or acid, smoking, addition of preservatives Destroying/inactivation of interfering Acidification, heating or toxic substances Optical appearance Addition of colorants

“Safe” in this context means that neither Intrinsic Parameters (Examples) pathogens nor toxins are present in the food prod- 1. pH uct prior to consumption. Many of the physical, biological, and chemical methods listed in Microorganisms can be classified according to Table 7.1 are used to prolong shelf life, but they the minimum, optimum (best growth may vary depending on the product. In the past, requirements), and maximum pH values, at food products were often preserved by reducing which they can grow. For certain food water activity (Sect. 7.1.5) or through fermenta- products, knowing the pH is of vital impor- tion. For instance, foods already traded in antiq- tance. For instance, yoghurt (pH 4.3–4.7) and uity included dry products such as salt, sugar, fruit juices (pH 3.5–3.8) have a very low pH cereals, dried meat, and spices, or fermented and are therefore mainly spoiled by yeasts and products such as wine or vinegar, as well as salt- molds, while emulsified sausages have higher conserved products including fish (e.g., salt cod), pH values (~5.9–6.2) and are very prone to meat, and cheese. Therefore, salt became an contamination with food spoilage—(e.g., important commodity a long time ago, since pseudomonads) or food-poisoning bacteria it was essential for food preservation and (e.g., Listeria monocytogenes). seasoning. 2. Moisture content The preservation of foods by drying is achieved by the removal or binding of moisture, without 7.1.3.1 Factors Affecting Microbial which microorganisms are not able to grow. Growth See also water activity in Sect. 7.1.5. As our foods are of animal and/or plant origin, it 3. Oxidation-reduction potential (O/R, Eh) is important to consider the raw material and Aerobic microorganisms such as Bacillus ssp., product characteristics that may influence micro- as well as most molds and yeasts, require posi- bial growth during harvesting, food processing, tive Eh values (oxidized) for growth, whereas and (short/long-term) storage. 7 Processing of Biobased Resources 185

anaerobes such as Clostridium botulinum 7.1.4 Special Features require negative Eh values (reduced). However, of the Industrial Processing it should be noted that a lot of bacteria are of Food facultative anaerobes and are thus able to grow under either aerobic or anaerobic conditions. The general principles and requirements of 4. Nutrient content industrial scale food processing do not differ Nutrient requirements for microbial growth from homemade, small-scale processing—they include water, a source of energy (e.g., usually involve the raw materials, a recipe, and sugars), a source of nitrogen (e.g., proteins), the necessary equipment. In all cases, the end vitamins and related growth factors, as well as product is expected to be safe and to have a minerals (Sect. 7.1.1). The requirements differ high sensory quality with regard to flavor, taste, depending on the strain. Generally, Gram- color, and texture. Some products may have fur- positive bacteria are known to have the ther requirements such as health aspects. In the highest requirements. food industry, all these requirements are the 5. Antimicrobial constituents responsibility of the manufacturer and once Naturally occurring antimicrobials include for products are on the market they are subjected to instance lysozyme (eggs, milk) and the state quality standard monitoring. lactoperoxidase system (bovine milk). In general, industrial scale food production is characterized by a higher degree of automation. Extrinsic Parameters (Examples) In addition, a “higher” safety level is required, Extrinsic parameters also play a crucial role in since the semifinished or final products are often microbial growth. marketed over long distances, which in turn requires a longer shelf life and appropriate pack- 1. Temperature aging. In cases where quality deficiency or dam- This includes processing temperature and age is identified, the recall of industrial scale storage temperature. products is much more difficult than for locally Here it should be noted that microorganisms marketed products. can also be classified according to their growth temperatures: 7.1.4.1 Raw Materials • Psychrotrophs (optimum: 20–30 C; grow The following factors are of particular impor- well at or below 7 C; e.g., Pseudomonas tance for technical food production: ssp.) • Mesophiles (optimum: 30–40 C; grow • The bulk of raw materials used are of natural well above 20 C and below 45 C, e.g., plant or animal origin. They have a great Escherichia coli O157:H7) variability with respect to composition, • Thermophiles (optimum: 55–65 C; grow autochthone microorganism flora, and well at and above 45 C, e.g., Streptococ- processing properties. cus thermophilus) • The availability of many raw materials (e.g., fruits, sugar beet, wine) is limited by 2. Other parameters seasonality. Other extrinsic parameters that should be con- • Plant raw materials (e.g., coffee, soy, hops) sidered are relative humidity of the environ- are often only cultivated in certain regions, leading to long transport distances. ment and the presence of gases (e.g., CO2) and/or other microorganisms that produce, • Raw materials are not always available in e.g., substances that are inhibitory or even unlimited supply and their storage is only lethal to other microorganisms (e.g., possible for a limited period of time. bacteriocins, organic acids). • High price fluctuations are possible. 186 M. Loeffler and J. Hinrichs

• Once processing has been started, it usually or a change in the order of the unit operations can cannot be stopped. influence the structure and thus also the functionality of the end product. This may or may not be Today, other socioeconomic aspects related to advantageous for the application in question. The the selection of raw materials are taken into functionality includes subjectively and objec- account. These are often described by terms such tively measurable properties of the final product. as “resource-conserving,” “organic,” “eco,” Nowadays these properties are generally divided “GMO-free,” “climate-neutral,” and “fair trade.” into techno-functionality (e.g., shelf life, texture, However, as discussed below, these are of minor color, taste, smell, foam formation, emulsion importance with respect to food processing. formation) and bio-functionality (e.g., nutritional value, or health aspects). 7.1.4.2 Processing of Raw Materials In the next step, the raw materials are converted into standardized (quality attributes and/or func- 7.1.5 Toolbox Used in Food tional properties) products through various unit Processing operations. For this reason, the chemical, biological, and physical properties of the raw Food science and technology deals with the materials and also their behavior during physical, biological, and chemical processes rel- processing have to be taken into account. The evant for the processing of food and food technology-structure-function relationship ingredients. The goal is to research, develop, behind the processing of raw materials (e.g., and optimize technical procedures based on nat- sugar beet, milk) into foodstuffs (sugar cubes, ural and engineering sciences as well as on socio- processed cheese) is illustrated in Fig. 7.3.In economic factors in order to provide high-quality the figure, “technology” includes the substances and safe food for human nutrition. As it is not and ingredients used, their concentration and possible to give an in-depth account of all the composition, as well as the basic operation factors that need to be taken into account, a few (s) applied (Table 7.1). The desired functionality selected important examples are presented here. of the product is achieved through the choice of process parameters (e.g., pressure, temperature, Water Activity pH). The structure of the final product (e.g., sugar As shown in Table 7.1, various unit operations cubes: small crystals in the form of a cube of can be used, for which a wide range of machines defined edge length, white, solid) is predomi- and equipment are available. The physical nantly influenced by the technology used. In properties (e.g., liquid/solid), the chemical com- turn, the structure provides the basis for the func- position, and, in particular, the water content of tionality of certain food products (e.g., sugar the raw materials to be processed are of high cubes: dissolve rapidly in hot liquids; desired importance. However, it is freely available sweetness). water rather than the total water content that is For the same raw material, even small crucial for appropriate processing. Figure 7.4 changes in the process parameters of basic shows the intensity of various reactions operations, the use of other machines/equipment, depending on the water activity. The water

Fig. 7.3 Technology- structure-function relationship for the processing of food as well as the development of new food products 7 Processing of Biobased Resources 187

Fig. 7.4 Potential of microorganisms to grow on food depending on water Inhibition of gram- negative bacteria activity (above). Potential Growth of shelf life of food and Inhibition most processed food under of yeasts bacteria certain storage conditions Halophilic (below) organism Xerophilic organism

0.6 0.7 0.8 0.9 1.0 Water activity

diate

Sweets, Interme Meat, milk self stable food, sweets shelf life cooling extends very fast spoilage

Ambient temperature, With cooling, or low pH With cooling without cooling limited shelf life one to a few days shelf life long shelf life

Sterile processing and aseptic packaging or freezing o long shelf live at ambient temperatures resp. at –18 C

Table 7.2 Water activity of various food raw materials and food products Water activity Food raw material, food products 0.98 Fish, meat, milk, egg, vegetables, juices, fruit, yoghurt, fresh cheese, soft cheese 0.95–0.97 Sausages, semihard and hard cheese 0.86–0.92 Raw sausage, raw ham, salami, parmesan 0.80–0.90 Jam, cakes, bread, syrup, sweetened condensed milk, ﬂour, rice, ketchup 0.70–0.80 Soups, marzipan, dry fruit cakes, dried plums, jam of higher concentration 0.60–0.70 Honey, nougat, raisins, muesli, nuts, confectionery, dried fruit 0.5 Pasta, spices 0.4 Egg powder 0.3 Cookies 0.2 Milk powder

activity (aw) value is calculated as the water microbial spoilage, especially if cold storage is vapor pressure of the raw material/foodstuff insufﬁcient. Accordingly, all raw materials of divided by the vapor pressure of pure water at animal origin must be processed quickly, the same temperature. Substances of low molec- unless they have their own protective mechanism ular mass, such as salts or sugars, are surrounded (such as eggs). The unit operations, drying by water molecules and can thus reduce the water and salt addition (Table 7.1), can reduce the aw vapor pressure above the food and therefore also value (Table 7.2, raw sausage). Freezing the aw value. also reduces the mobility of water, preventing If the water activity is very close to microorganisms from growing and reducing the 1 (Table 7.2), the product is very prone to rate of chemical reactions. Consequently, this 188 M. Loeffler and J. Hinrichs

activity (aw > 0.2). Thus, fat-containing egg powder and products with many unsaturated fatty acids can only be protected from lipid oxidation by appropriate packaging materials, a protective modiﬁed atmosphere without oxygen, or antioxidants. Figure 7.5 and Table 7.2 provide relevant information on some of the unit operations mentioned above necessary for the fulﬁlment of requirements regarding shelf life, safety, and preservation of the sensory properties of a food product.

Thermal Treatment One of the most important unit operations is the thermal treatment of food (Table 7.1). Thermal treatments can improve food safety through kill- Fig. 7.5 Qualitative description of the intensity of chemical and biochemical reactions, as well as microbial ing pathogenic germs and viruses and prolong growth, depending on water activity shelf life by killing spoilage organisms and inactivating enzymes already present in the prod- process is now widely used to protect raw uct and microbial enzymes. However, it should materials, semifinished products, and finished be noted that (intensive) heat treatments may also products from spoilage and to preserve vitamins, destroy thermolabile vitamins and accelerate color, and texture. Many other reactions that also chemical reactions including the Maillard reac- affect food quality, such as lipid oxidation, are tion mentioned above. directly related to water activity, as demonstrated in Fig. 7.5. Example: Milk Production Raw milk is an easily perishable foodstuff since Enzyme Activity, Lipid Oxidation it has a near-neutral pH and a water activity close As can be seen from Fig. 7.5, enzymatic to 1 (Table 7.2). It was recognized as early as the reactions can be expected until a very low water nineteenth century that raw milk can contain activity of 0.4 is reached. Therefore, raw pathogenic microorganisms and is capable of materials must be treated in such a way that transmitting diseases to humans. existing enzyme activities do not lead to unde- It is therefore a legal requirement that raw sired changes in sensory properties, color, or milk obtained directly from the producer has to texture. One way to prevent enzyme activity be boiled prior to consumption. However, boiling and kill microorganisms at the same time is milk at 100 C is not a very gentle treatment and through heating. However, heating can lead to can have a negative effect on its components. nonenzymatic browning by the Maillard reaction. The reaction takes place between proteins Pasteurization and sugars and may cause desired (caramel, It is well known that Mycobacterium tuberculosis bread, malt beer) or undesired (juices, milk pow- (discovered by Robert Koch in 1882, disease: der) effects depending on the characteristics of tuberculosis) is one of the most thermostable the food product. pathogens in raw milk. For that reason, It is interesting to note that the oxidation of M. tuberculosis was used to define heating lipids (fats) is lowest at a water activity of 0.2 requirements for the pasteurization of milk. Fig- (minimum) and more pronounced in products ure 7.6 gives a summary of heat-based methods for with either a lower (aw < 0.2) or a higher water the inactivation of pathogenic organisms. Short- 7 Processing of Biobased Resources 189

Fig. 7.6 Kinetics of some example reactions associated with milk heating (Stoeckel et al. 2016)

time pasteurization at 72–75 Cfor15–30s However, the treatment is not very gentle. The provides a safe product with a shelf life of max. heating area for sterile milk (Fig. 7.6) is above 10 days when stored at <8 C. Longer is not the line for visible browning (Maillard reaction) possible because bacterial spores (extremely resis- and above the line that marks lysine (an essential tant, help bacteria to survive extreme conditions) amino acid) and vitamin B1 (thiamine) losses. are not sufﬁciently killed during pasteurization. UHT Sterilization It was not until 1952 that the process of ultrahigh- Sterilization is carried out following a traditional temperature heating (uperization) was developed process developed by Apert in 1804. The milk is by Alpura (Switzerland). In this process, the milk ﬁlled into cans or bottles, sealed, and then heated is heated to about 145 Cinjustafewseconds, in an autoclave (Fig. 7.6). An autoclave is a kept hot for a few seconds, and then rapidly cooled pressure vessel in which temperatures of about down again. The heating area used for UHT milk 120 C are reached using overpressure. If this (Fig. 7.6) lies below the line for lysine and vitamin temperature is maintained for about 20–30 min, B1 losses but above the spore inactivation line. mesophilic and thermophilic bacterial spores are UHT milk is thus comparable to sterilized milk inactivated. Sterilized milk has a shelf life of with regard to shelf life, but the method is more 1 year and can be stored at room temperature. favorable with regard to the components. 190 M. Loeffler and J. Hinrichs

7.1.6 Complexity of the Technologies or chopped (cubes) and then canned and Needed to Produce Different sterilized. End Products from the Same Raw Material Box 7.1 Process-Indicated Diagrams Process-indicated diagrams are usually used in which the unit operations are Example: Products from Tomatoes named as process steps and delimited by a All final products mentioned in Fig. 7.7 are semi- framework of substances (raw materials finished products (e.g., ketchup, sauces, soup), and additives, ingredients, intermediate which are used in households as products or as products, and end products). Just as the ingredients for food preparation. process parameters, the chemical, physical, The raw material “tomato” has to be selected and (micro) biological properties of the and controlled in terms of variety, taste, color, substances that are important for the pro- texture, and maturity, with the functionality of duction process are given as “set points.” the end product in mind. During processing, the substances are Immediately after delivery, the tomatoes are regularly analyzed and the process washed, sorted, and then further processed using parameters then automatically logged various operations and machines. For instance, (“actual value”). On the one hand, this is after peeling, the tomatoes are filled directly into part of the quality assurance to meet cans, to which tomato concentrate and, in some requirements requested by law. On the cases, also salt are added for better preservation other hand, this guarantees a final product of the tomatoes’ structure for subsequent sterili- with most widely standardized functional zation in the autoclave at 95 C. Alternatively, properties. peeled tomatoes are passed through sieves (pulp)

Fig. 7.7 Combination of process steps (boxes ¼ unit operations) for the production of various tomato products for a range of applications (techno- functionality) 7 Processing of Biobased Resources 191

As the sterilization of larger containers (300–1500 kg) is not possible (heating and cooling would take hours and affect the quality of color, texture, taste, etc.), the products are continuously heated in heat exchangers, kept hot for a short, deﬁned period of time, and then rapidly cooled. The products are then ﬁlled under aseptic conditions into previously sterilized containers. The production of tomato paste and powder requires further process steps including separation, concentration, and/or drying.

Energy and Water Consumption Finally, a note on the energy and water consumption and the utilization/valorization of waste and side streams: Technical developments not only allow the manufacture of products with a defined functionality and safety, but they also enable economical and responsible exploitation of water and energy Fig. 7.8 From the idea to the new food product resources. For example, the processing of foodstuffs requires an average of only 1–2 kg of Numerous aspects have to be taken into water per kg of processed product, including the account during the product development process. water required for cleaning procedures. In some The first step involves (preliminary) experiments cases, the water present in the product and removed in the laboratory, which consider the following during concentration is recycled. Energy consump- aspects: selection of raw materials, additives, and tion has also been markedly reduced. Food waste is other ingredients, a risk analysis (HACCP), composted and used either as fertilizer or in biogas specifications, appropriate test procedures for plants for heat and electricity generation. both the materials and functional properties, suppliers, shelf life, etc. The test procedures for the functional properties need to be defined and 7.1.7 Strategies/Approaches for New validated. The unit operations required to pro- Product Developments duce a product with certain functionalities as well as their sequence need to be defined. In Innovative companies generally launch a new addition, technical and legal requirements for product idea (Fig. 7.8) following existing trends the facilities have to be considered. or resetting trends by responding to changing A pilot test then validates the technology used consumer habits, social conditions (e.g., full- to produce a product with a certain structure and day child care), or trade demands. This also function and experiments are carried out to involves innovative technologies, such as mem- assess the shelf life. All these steps are repeated brane separation processes. Once the functional several times (Fig. 7.8) before the first produc- characteristics have been specified and the target tion on a scaled-up level starts. At the same time, consumer groups defined, a marketing concept is product declaration and packaging materials required that includes analysis of the market have to be adapted to the requirements of the potential with respect to sales volume and price. product. The functionality of the final product needs to be Once all these steps have been completed and specified as clearly as possible in order to be able the product documentation is available, the offi- to elaborate a detailed product concept. cial production and supply to retailers can begin. 192 M. Loeffler and J. Hinrichs

Once the new product is established on the mar- Review Questions ket, it is important to constantly improve the recipe and to monitor market success. Only • What are the properties of proteins and fats in about 1 idea out of 100 will be successful in the food? (use also other sources) long run. • What is meant by the term aw-value/water activity? • Describe and explain Fig. 7.6—assess pasteurization and sterilization of milk; consider 7.1.8 Concluding Remarks aspects such as shelf life, storage conditions, nutrient value, and convenience. The technical processing of food should be seen as • Assess/discuss traditional homemade and a continuous process of development that usually large-scale processing regarding present follows consumer demands. New technologies demands of growing cities and world popula- enable, for example, the decaffeination of coffee, tion, food safety, and food security. the dealcoholization of beer, lactose reduction in • Demonstrate the main steps to bring a new dairy products, reduction of allergens, and produc- product idea (suggest your own one) to mar- tion of fat-reduced foods that still taste good. ket. Discuss processing requirements needed Additionally, technical food production allows to produce a certain product and also consider supply of a wide variety of high-quality food storage temperature as well as shelf life. products at reasonable prices. Without technically processed products with a long shelf life, the Further Reading supply of megacities could no longer be Kessler HG. Food and bio process engineering: guaranteed, even in developing countries. dairy technology, 5th edn. Publishing House A new focus is the valorization of product A. Kessler, Munich waste and side streams, bioreﬁnery, and use of Fellows PJ. Food processing technology – “new” resources (depending on the country). Cur- principles and practice, 4th edn. Elsevier Sci- rent research studies therefore have a strong focus ence/Woodhead Publishing, Kent on, for example, alternative protein resources Belitz HD, Grosch W, Schieberle P. Food chem- (e.g., from microalgae and insects) but also on istry, 4th edn. Springer, Berlin techniques that help to monitor the temperature Jay JM, Loessner MJ, Golden DA. Modern food history of food products during transportation and microbiology, 7th edn. Springer, New York storage (e.g., time temperature indicators). 7 Processing of Biobased Resources 193

7.2 Biotechnological Conversion

Karin Moß, Marius Henkel, and Rudolf Hausmann

# Bildarchiv Uni Hohenheim, photo by Manfred Zentsch

Abstract This chapter presents key terms and presently the case. The rapid development of concepts in the ﬁeld of industrial biotechnology. genetic, synthetic biology and bioprocessing The inclusion of examples, such as ethanol fer- methods will lead to biotechnology increasingly mentation, and production of polylactic acid complementing chemical industries. (PLA) and propanediol (PDO), allows students to become acquainted with important concepts Keywords Industrial biotechnology; Biological and their application. Industrial biotechnology, system; Bioprocess engineering; Strain develop- also known as “white biotechnology,” is devoted ment; Biocatalysts; Upstream and downstream to the exploitation of living cells, such as yeasts, processing; Biobased products molds, bacteria, and enzymes. In the context of a bioeconomy, it may provide methods to replace and complement petroleum-based synthetics. Learning Objectives Industrial biotechnology has been identiﬁed as a After reading this chapter, you should key enabling technology. Nowadays, industrial biochemicals are mainly produced from carbon • Understand the importance of industrial bio- sources based on sucrose and glucose. In a future technology for a biobased economy. bioeconomy, lignocellulosic plant biomass could • Know the key terms and concepts required to become a key feedstock. However, for this pur- understand basic processes of bioprocess pose, technologies are required that can break engineering. down lignocellulosic biomass more easily, with • Know biotechnologically derived products of less energy input, and creating less waste than is the present and the future. 194 K. Moß et al.

7.2.1 Industrial Biotechnology There are three phases in bioprocess engineering: upstream processing, bioreaction, and Industrial biotechnology uses microorganisms downstream processing (Fig. 7.9). Upstream and enzymes for the production of biobased processing refers to all operations for the materials. These materials are utilized in the planning and preparation of the bioreaction. chemical, food and feed, healthcare, and biofuel This includes the choice of the suitable biological sectors. Currently, biotechnology is a niche system, the appropriate physiological parameters, within the chemical industry, mostly providing as well as the strain development. The practical products with demanding structure or stereo- preparation of the bioreaction—i.e., preparation chemistry requirements. of media, sterilization of bioreactor, and prepara- Historically, biotechnology dealt with uncon- tion of pre-cultures—also belongs to this step. trolled food processing, such as in the production During the bioreaction, a given substrate is of wine, beer, vinegar, bread, cheese, and other converted into the desired product by a biological fermented foods. In 1873, Louis Pasteur received system. Microorganisms (bacteria, yeast, fungi), a patent on isolated yeast, and since then the role mammalian cells, and enzymes may be utilized. of yeast in beer brewing and that of bacteria in As the resulting product typically comprises no vinegar fermentation has been exploited, and more than 10–15% of the fermentation broth, knowledge-based biotechnology began to evolve. downstream processing is needed in order to sep- Contemporary industrial biotechnology, by arate and purify the desired product. contrast, uses controlled and induced production of various microbial products. This is achieved through the choice of and, in some cases, the 7.2.2 Biological System genetic manipulation of the producing organisms and the development of bioprocess engineering. Bioprocess engineering employs biocatalysts, Bioprocess engineering provides both sterile microorganisms, and cell lines, or parts thereof, conditions and control of several physiologically for the generation of value-added products. The important parameters such as temperature (T), pH, huge potential of the multitude of naturally dissolved oxygen (pO2), and input of carbon and occurring organisms that could be used has not nitrogen sources as well as other components. yet been exploited. The phylogenetic tree in Today, such methods enable reproducible pro- Fig. 7.10 shows biotechnologically important cesses to be performed, thus ensuring product groups of organisms found within the quality. prokaryotes (cyanobacteria, proteobacteria,

Fig. 7.9 Schematic overview of upstream, bioreaction, and downstream processing in biotechnology. The choice of the biologic system as well as conditions and culture medium belong to the upstream processing (by Johannes Kügler) 7 Processing of Biobased Resources 195

Fig. 7.10 Phylogenetic tree with important biotechnological used microorganisms

Gram-positives) and the eukaryotes (fungi, able to perform important posttranslational animals, and plants). For the choice of a suitable modifications such as N-glycosylation. The bacte- biological system, it is important that the organ- ria may become infected by phages, possibly ism is able to produce the desired product effi- destroying the bacteria culture and resulting in ciently. The process conditions, such as the loss of production. temperature, pH, and oxygen content, must be Industrially employed yeast and fungi include chosen according to the physiological Saccharomyces (beer and wine yeasts, ethanol), requirements of biological system employed. Penicillium (many antibiotics, e.g., penicillin), and Aspergillus (some antibiotics, many organic Important Groups of Organisms acids, e.g., citric acid). Their advantages are the for Biotechnology following: high productivity of homologous The most important microorganisms for biotech- proteins, high cell densities, very good secretion, nology are bacteria, yeast, algae, and mammalian fast growth rates, good pH tolerance (very impor- cells. Important bacteria used in industrial pro- tant for the production of acids), large cell size cesses are, for example, Escherichia coli (for var- (simplifies downstream processing), and no ious processes, e.g., recombinant proteins), problems with phages. Additionally, yeast and Bacillus sp. (detergent proteases, vitamin B2), fungi can perform posttranslational modification. Clostridium acetobutylicum (acetone, butanol), However, their glycosylation pattern is neither and Corynebacterium glutamicum (amino acids). identical nor similar to that of humans, and this They are easily genetically manipulated; robust limits their use in pharmaceutical products. against shear stress, pressure, and osmosis; show The production of therapeutic glycoproteins high productivity, cell densities, and growth rates; for pharmaceutical use is performed by mamma- and are able to grow in comparatively inexpensive lian cell cultures. Various cell lines are employed media. One disadvantage is that they are often industrially, the most relevant being Chinese deficient in secretion of proteins and are not hamster ovary cells (CHO), but also others to a 196 K. Moß et al. lesser extent. Mammalian cell cultures are very mutagenesis, genetic engineering, metabolic sensitive in comparison to bacteria, yeast, and engineering (directed mutagenesis), and syn- fungi. They grow very slowly, have only low thetic biology. cell densities, are sensitive to shear stress and In classical mutagenesis (example: penicil- osmosis, and require high investment and process lin), the microorganism known to produce the costs. However, one advantage is that they per- desired substance is mutagenized by chemicals form posttranslational modification and glyco- or UV light, which introduces random changes in sylation pattern identical to that of humans. the genome. A screening is then carried out to These properties make them the standard solu- select enhanced producers. Mutagenesis and tion for therapeutic protein production. screening are traditionally repeated iteratively for several generations of microorganisms. This approach is very time consuming. Another draw- Homologous proteins: Proteins derived back is the introduction of several random from the host strain’s DNA. mutations, which individually or collectively Heterologous proteins: Proteins derived reduce the viability of the organism. from the DNA of another organism than If the desired product is a direct gene product the host strain in which it is expressed. (i.e., a protein), genetic engineering is a suitable Posttranslational modification: In pro- choice (example: insulin). Here, the gene tein synthesis, DNA sequences are first encoding for the desired protein is additionally transcribed into RNA by RNA polymerase incorporated via a vector or chromosomal inte- and then translated intro proteins by gration into the production strain, which then ribosomes. The protein’s structure may produces it either intra- or extracellularly. then be modified, for example by the In metabolic engineering, the metabolic removal of biochemical groups or the addi- pathways of a microorganism are improved by tion of (in-)organic groups. enhancement of desired pathways and deletion or Glycosylation/glycosylation pattern: attenuation of those that lead to by-products. This is a specific posttranslational modifi- Bottlenecks are identified through metabolic cation of the protein, in which sugar flux analysis (metabolomics and transcriptomics) residues are attached to the protein. These and reduced by genetically enhancing biosynthe- sugar residues and their varying patterns sis routes. In this way, higher product titers are recognized by the immune system. It (concentrations) with fewer by-products can be is thus mandatory that therapeutical achieved (example: L-lysine and succinic acid). proteins have the correct glycosylation The currently most modern approach is and sugar residue pattern. termed synthetic biology. In this approach, pathways are designed based on formerly gained knowledge (example: propane-1,3-diol, PDO) Strain Development: Genetic Improvement and the biosynthesis is reconstituted in the most of Production Strains suitable microorganism. Modified biosynthesis Wild-type strains do not normally produce prof- genes originating from various donors including itable quantities of the desired chemical sub- plants may be exploited. Existing genome, stance. It may even be that the production strain metabolome, proteome, and transcriptome data does not naturally produce the desired substance can be used in computational modeling for fur- at all. In order to enable the production or ther enhancement. In synthetic biology, these improve the productivity, strains are genetically data are used to design nonnatural, novel modified. This is called strain development. pathways and circuits in production strains. Methods used include classic screening and These strains may than be used for industrial 7 Processing of Biobased Resources 197 application. Databases such as National Center added to an existing one. The rate of growth in for Biotechnology Information (NCBI), the reactor is called the specific growth rate (μ). BRaunschweig ENzyme DAtabase (BRENDA), This may vary in a given bioprocess, depending Kyoto Encyclopedia of Genes and Genomes on nutrient availability, substrate inhibition, (KEGG), and many others are essential for the accumulation of metabolites (acetate, alcohol, design of such microorganisms. lactic acid), and population density. Typically, different growth phases can be distinguished (see Fig. 7.11): Initially microorganisms adapt 7.2.3 Basics of Bioprocess to the new environment, which is apparent in Engineering the so-called lag phase, where the growth rate is zero. This is followed by an acceleration phase Bioprocesses are characterized by the utilization with an increased growth rate. A subsequent of living cells or enzymes as catalysts, which are phase with constant growth rate, the exponential therefore termed biocatalysts. The production of phase, is then observed. Population growth is the biocatalyst is thus the first step in the conver- finally limited by consumption of available sion of a given substrate to a desired product. nutrients and levels off. In bioreactor cultivations, the rates of growth and product for- Biomass Growth mation are controlled by the setting of process Bacteria and yeast multiply by binary fission. conditions and feeding-in of nutrients. Bacteria grow by cell enlargement and subsequent fission in two identical bacteria Media Composition and Culture Conditions cells. Yeasts grow by budding: they divide into In bioprocesses, the medium is the liquid in a mother and a smaller daughter cell, leaving a which the bioreaction is performed. It provides scar on the mother cell. The daughter cell grows the microorganisms with an energy source and to the same size as the mother cell. Fungi are all necessary nutrients. Biomass is composed multicellular organisms and grow either by api- mainly of the elements carbon [C], oxygen [O], cal growth or ramification, where a new cell is nitrogen [N], hydrogen [H], potassium [K],

Fig. 7.11 Formal classiﬁcation of growth phases 198 K. Moß et al.

phosphorus [P], and sulfur [S] and other parameters (temperature, pH, pO2) are in the microelements. In order to produce biomass, all optimal range. Therefore, devices for tempering, these elements have to be present in the medium stirring, aeration, pH control, pO2 control, foam in a suitable concentration. Additionally, other control, and further addition of medium and acid growth factors such as vitamins and essential or base are necessary. In this way, the processes amino acids may be required. If any of these can be controlled and reproduced. There are var- are missing or have been consumed, the cell ious types and shapes of bioreactors, including growth will stop. However, as the cells are still bubble column, fluidized bed reactor, tubular alive, they still consume nutrients for cell main- reactor (mainly for algae), and stirred-tank reac- tenance. For most biotechnological processes, tor. The last is the type most often used the carbon and energy source consists of (Fig. 7.12). carbohydrates such as glucose, sucrose, or starch, Bioprocess kinetics describe the time- or carbohydrate residues such as molasses. They dependent courses of cell growth, product con- may also be provided by triglycerides such as centration, and substrate concentration during a vegetable oils. The nitrogen sources most often bioprocess. Important parameters include the used are ammonia or ammonium salts, urea, corn specific growth rate μ [1/h], the substrate con- steep liquor, yeast extract, soy flour, fish meal, or sumption rate, the product formation rate, the protein hydrolysates. Media can be differentiated productivity Pv (g/L h), and the product yield into complex and defined media. Complex media per substrate [YP/S (g/g) or Y’P/S(mole/mole)]. If contain at least one non-defined component, e.g., investment and production costs are high, pro- yeast extract or corn steep liquor. In a defined ductivity is the most relevant parameter. If sub- medium, the chemical composition of the carbon strate costs are high, yield per substrate is most source, inorganic salts, as well as any other relevant. additions is precisely specified. A defined Reactions can be performed in batch, medium is used when strict control and repro- fed-batch, or continuous mode. The easiest pro- ducibility of the process are essential. Complex cess mode is a batch culture, where the whole media are less expensive and can be used when reaction is performed in the initial volume with- strict control is not necessary. out further nutrient addition over time. The Bioreactions have to be performed under growth rate is not constant, as nutrients are con- physiological conditions, i.e., an environment sumed. Nutrients in excess may lead to metabolic that suits the microorganisms’ preferences in overflow reactions. Fed-batch processes are terms of temperature, pH value, oxygen avail- started with a low volume and subsequent addi- ability, ion concentrations, and water activity. tion of nutrients. A constant or an exponential growth rate can be achieved and metabolic over- Bioreactors, Process Kinetics, and Process flow prevented. Correspondingly, the volume Control increases over time. A continuous culture Bioreactions are performed in a vessel called a enables a steady flow of fresh medium into and bioreactor, which provides a sterile barrier, thus of bioculture out of the reactor. The volume preventing contamination. A bioreactor can be remains constant, but the microorganisms grow understood as any defined space or apparatus, in at the set growth rate. With this kind of which material conversions take place with the bioprocess, a quasi-steady state of biomass and participation of biocatalysts. Functions of nutrient concentrations can be achieved. Batch bioreactors include mixing (homogenization) of and fed-batch cultivations are advantageous content, suspension of solids (microorganisms, where defined charges are required, e.g., in the pellets), emulsification of two non-intersoluble pharmaceutical industry. Most industrially rele- liquids, dispersal of gases (air or O2) in the vant bioproduction processes are carried out in liquid, and ensuring that constant physical fed-batch mode. 7 Processing of Biobased Resources 199

Fig. 7.12 A stirred-tank bioreactor for the controlled growth of microorganisms, with devices for stirring, O2 and pH control, feeding-in of substrate, base, and antifoam

Downstream Processing Downstream processing deals with the recovery of the desired product. This is often an extensive task, as the fermentation broth consists of 90–99% of water and hence the desired product is very diluted. In general, water has to be eliminated during downstream processing. Nor- mally, further by-products are formed, which may be very similar to the target product. If, for example, an intracellularly produced heterologous protein is to be recovered, it has to be separated from numerous other proteins present in the cell, all consisting of chemically similar amino acid chains. For the recovery of the desired product, a generalized purification scheme can be followed, as shown in Fig. 7.13. The first step is nearly always a solid-liquid separation, where the solid biomass is separated from the surrounding liquid. If the target product is an extracellular compound, the biomass is discarded. If the target is an intracellular product, the supernatant is discarded. In the latter case, the cells are then disintegrated, and the solids are Fig. 7.13 General downstream processing scheme for a once again separated off and disposed of. In biotechnological product 200 K. Moß et al. both cases, the remaining liquid is concentrated Not all microorganisms exhibit all kinds of met- and then further purified in the next step. The abolic pathways. There are strictly aerobic, fac- degree of purification depends on the purity ultative anaerobic, microaerophilic, and strictly demands of the target product. For medical anaerobic microorganisms. applications in particular, compliance with legis- Possible products include biomass,asin lative regulations is cost intensive. In the last baker’s yeast and starter cultures; primary step, the product is dried, formulated, and metabolites such as the end product ethanol and packed, giving the final product, which is ready intermediates like organic acids and amino acids; to be sold (Fig. 7.13). secondary metabolites like antibiotics, alkaloids, toxins, and biosurfactants; specialty products Possible Products like storage substances, exopolysaccharides For the biological conversion of renewable (e.g., xanthan), and pigments; enzymes like materials, microorganisms are used as catalysts. amylases, proteases, and glucose isomerases; As a rule, only naturally occurring metabolites and proteins like recombinant proteins or mono- and products can be produced so far. clonal antibodies. These products are formed by metabolization of a given substrate (mostly glucose from starch hydrolysis) to the desired product. In the process, 7.2.4 Application of Industrial the substrate passes through different metabolic Biotechnology pathways, which can be classified as primary or secondary metabolism. In the primary metabolic This section presents bioproducts that have pathways, intermediates and products of low already been established. molecular weight are formed, which are then either used for the generation of macromolecules Antibiotics or broken down to supply the cell with energy. An antibiotic is a substance, which either inhibits Examples of primary metabolic pathways are the growth of or kills a bacterium. There are glycolysis and the citric acid cycle. With the several antibiotics on the market. The best exception of fermentation end products, all pri- known is penicillin, which inhibits cell mem- mary metabolites are normally only synthesized brane formation and thus bacterial growth. in the amount required by the cell. Overproduc- Antibiotics have revolutionized the cure of bac- tion of these products can be achieved by modi- terial infections. However, the spread of multi- fication of the metabolic regulation. For some resistance in pathogenic bacteria poses a global primary metabolites, e.g., citric acid, the appro- health threat, as the infections caused can no priate choice of fermentation conditions, such as longer be treated with widely used antibiotics. low pH and excess substrate supply, leads to Penicillin was discovered by chance in 1927 overproduction. Secondary metabolic pathways by Sir Alexander Fleming. He noticed a fungal generate substances that do not appear to be contamination growing on a bacterial culture. A directly needed for the survival of the organism. halo with no bacterial growth had formed around Secondary metabolites are often complex in the fungal (Penicillium notatum) colony. Flem- structure and can be biologically active. One ing was able to produce an antibacterial extract example of a secondary metabolism pathway is with a titer of about 1.8 mg/L and named it the mevalonate pathway, which leads to the pro- penicillin. At first, penicillin was produced as duction of isoprenoids. surface cultures, making upscaling quite diffi- Some metabolic pathways require oxygen for cult. Nevertheless, as penicillin became impor- the transfer of electrons. In this case, aerobic tant, especially for the cure of wounded soldiers, conditions, i.e., with aeration, need to be these surface cultures were performed industri- provided. Other metabolites are formed in anaer- ally with high labor intensity in up to 100,000 obic conditions, so here no aeration is required. milk bottles in parallel. With the development of 7 Processing of Biobased Resources 201 bioprocess engineering and respective strains, it Acetic acid is used in the food industry as became possible to produce penicillin in acidulants, preservatives (E 260), and vinegar. submerged cultures, where the scaling up of the The main fraction of acetic acid is used for the tank is comparatively easy. New and more potent preparation of polymers, such as polyvinyl ace- penicillin-producing strains were screened for. tate (PVAC) for paints and varnishes and ethyl- With improved strains and bioprocess engineer- ene vinyl acetate and cellulose acetate for ing technology, the penicillin titer was increased cigarette filters, films, and other plastic products. by a factor of 40,000 within the following 80 years. Today, about 10,000 different micro- Succinic Acid bial antibiotics are known. However, only a frac- Succinic acid is one of the new substances which tion of these is exploited for medical purposes. may pave the way to a biobased industry. It can be used as a platform chemical to be transformed Organic Acids into further products. These may then serve as Organic acids are basic chemicals and serve as building blocks, e.g., in polymers. It can also be building blocks for polymers or as acidifiers. used directly as a monomer for alkyd and poly- Most of them are produced chemically (e.g., ester resins; plasticizers; flexibilizers; paint adipic acid), but citric, lactic, gluconic, itaconic, solvents; food additives (E 363); flavor and succinic acid are almost exclusively pro- enhancers; potassium, calcium, and magnesium duced biotechnologically. The four most impor- succinate as a substitute for sodium chloride; and tant organic acids, each with a global production acidifier or acidity regulator. Succinic acid is a of more than one million tons per year, are metabolite within the citric cycle and is gained acetic acid, acrylic acid, adipic acid, and citric under anaerobic conditions. Succinic acid can be acid. Of these, only citric acid is produced produced by E. coli (company BioAmber), biotechnologically. Basfia succiniciproducens (company Succinity, a joint venture between BASF and Corbion Acetic Acid Purac), and S. cerevisiae (joint venture between About 7,000,000 t of acetic acid are produced DSM and Roquette). Whereas E. coli and annually by chemical carbonylation of methanol. S. cerevisiae had to be extensively genetically The conditions applied (150–200 C and modified for high-titer succinic acid production, 3–6 MPa) are relatively mild for a chemical B. succiniciproducens secretes it naturally in rel- process. This reaction has a total carbon yield atively high quantities. In E. coli and (Yc) of about 95%, i.e., 95% of the deployed S. cerevisiae, the by-product formation is deleted carbon is converted to acetic acid. Biotechnolog- and the biosynthetic pathway enhanced. Under ical production by fermentation is modest in anaerobic conditions, the citric acid cycle is comparison: 200,000 t of acetic acid as a compo- passed through in the reductive direction and nent of vinegar. Vinegar is produced by succinic acid is formed and secreted into the employing bacteria of the genus Acetobacter or medium as end product. Technically, this is Gluconobacter in an incomplete oxidation of realized in a two-phased bioprocess. For E. coli ethanol to acetate. This reaction has to be and S. cerevisiae, biomass is built up in the first performed under aerobic conditions, as an oxy- phase under aerobic conditions. The second gen molecule is added to the ethanol. The fer- phase is the anaerobic production, where titers mentation takes place at 26–28 C at normal of about 100 g/L can be achieved. pressure. Even though the yield (Y(P/S))is 85–90%, the final concentration is only Biopolymers

100–150 g/L and the total carbon yield (Yc) Nowadays, most plastics (300 Mt/a) are of petro- starting with glucose is about 57%. chemical origin, and thus rely on a nonrenewable 202 K. Moß et al. resource. The terms “bioplastic” and “biopolymer” (PS) or polyethylene terephthalate (PET). Its incorporate several concepts. One is the biotechno- availability and attractive structure make it the logical manufacture of monomers used to produce front runner in the emerging bioplastics market. biobased synthetic materials such as lactic acid, Its building block is lactic acid, produced by the propane-1,3-diol, succinic acid, isoprene, adipic fermentation of sugars. PLA is biodegradable acid, 1,5-diaminopentane, and others. Biobased and hence can be used for packaging material synthetic materials may or may not be biodegrad- or single-use items, but also for household able. The term “biopolymer” also covers microbial items. Lactide is formed by intermolecular dehy- polymers and in general polymers synthesized by dration of lactic acid. Polylactide (PLA) is living organisms such as polynucleotides (the prepared by catalytic ring opening polymeriza- nucleic acids DNA and RNA), polypeptides tion of lactide. Only the pure enantiomers, gen- (proteins), and polysaccharides (polymeric erally L-lactic acid, can be polymerized. Even carbohydrates). Biopolymers utilized as bioplastics though Lactobacilli are wild-type strains able to are polyhydroxyalkanoates (PHA) such as generate lactic acid, they are no longer used for polyhydroxybutyrate (PHB). However, the term large-scale lactic acid production. This is due “bioplastic” can also refer to a biodegradable plas- to the product inhibition, pH sensitivity, and tic of petrochemical or mixed origin. In this chap- susceptibility to phages. Today, genetically ter, we focus on biobased synthetic materials. From optimized S. saccharomyces strains are used, an economic point of view, polylactic acid (PLA) where an acetate dehydrogenase has been added (global production ~370,000 t/a in 2011) and to the genome. The advantages of this organism xanthan (global production ~110,000 t/a in 2012) are its pH tolerance (>pH 2), no problems with are the most important biopolymers. phages, and the simple downstream processing. Disadvantages are lower productivities and that ethanol is formed as by-product. Bio-Nylon and Diamines, Cadaverine Nylon (PA66) was the first 100% synthetic Propane-1,3-Diol (PDO) fiber to be produced. It is a polyamide that can Propane-1,3-diol is a clear, colorless, odorless, be spun and is produced by the condensation biodegradable liquid with low toxicity. It is used of two chemically produced monomers: in the manufacture of polyesters, for example 1,6-hexanediamine and adipic acid. Similar polytrimethylene terephthalate (PTT) also biobased, or at least partly biobased, products known as 3GT. From these polyesters, clothing, can be made by replacing the 1,6-hexane diamine fibers, automotive parts, carpets, solvents, and by 1,5-diaminopentane and the adipic acid by coatings are produced. Biotechnological produc- either sebacic or succinic acid, to give the tion of PDO was the first industrial application of products PA 5.10 or PA 5.4. These biobased synthetic biology, as there is no organism known, polyamides can, for example, be used in textiles, which produces PDO directly from glucose. But carpets, and sportswear. 1,5-Diaminopentane it is known that S. cerevisiae converts glucose to (cadaverine) can be produced biotechnologi- glycerol and that the bacterium Klebsiella cally. For this, the lysine biosynthetic pathway pneumoniae transforms glycerol to PDO. The of C. glutamicum was extended by one step, the cloning of the appropriate genes of both these lysine decarboxylase. This product has been microorganisms into E. coli gave a recombinant manufactured by BASF at pilot scale and organism able to convert glucose to PDO. This is processed together with sebacic acid derived done in an aerobic process with a final concen- from castor oil. tration of 135 g/L propane-1,3-diol, a volumetric

productivity (Pv) of 3.5 g/(L h), and a yield (YP/S) Polylactic Acid of 51% (m/m). PDO biotechnologically pro- Polylactic acid (PLA) is a thermoplastic material duced from corn glucose was introduced in with a rigidity and clarity similar to polystyrene 2006 and is considered the first basic chemical 7 Processing of Biobased Resources 203 produced by a strain generated by synthetic biol- the plastic recycling system (“Gelber Sack”) ogy methods. introduced here a year later inhibited the advance of this bioplastic. Today, PHA products are insig- Isoprene nificant. Nevertheless, Metabolix has successfully Currently, synthetic rubber (20 million t/a) is commercialized PHA biopolymers for a range of derived entirely from petrochemical sources and applications. PHAs are considered a replacement comprises mainly styrene-butadiene rubbers for petrochemical polymers. Their potential (SBR). Natural rubbers are isoprene rubber (IR), applications include packaging material, hygiene gained from plants like the rubber tree (Hevea products, and medical industry products. brasiliensis). Isoprene is a colorless liquid which is insoluble in water and volatile, as its boiling Biofuels temperature is 34 C. DuPont is working together Biofuels are renewable fuels derived from biomass with Goodyear on the development of a through chemical or biochemical reactions. fermentation-based process for the production of Depending on the feedstock used, three generations bio-isoprene monomer (2-methyl-1,3 butadiene). of biofuel can be differentiated. “First-generation” The largest application area for bio-isoprene is the biofuels are based on food crops, such as sugarcane production of synthetic rubbers for “green” tires and corn, and are thus in direct competition with and elastomers. Two metabolic pathways exist, food. “Second-generation” or “advanced” biofuels which lead to isoprene as secondary metabolite: are based on nonfood crops and lignocellulose with the mevalonate (MVA) pathway and the methyl- reduced or no food competition. “Third-genera- erythritol-4-phosphate (MEP) pathway. For the fer- tion” biofuels are based on algae, which avoids mentative production, an E. coli was chosen as competition with food and lowers land production strain. The MEP pathway is endoge- requirements. The main biofuel used today is etha- nously present in E. coli, and the MVA pathway nol. Other biotechnologically producible biofuels was additionally cloned into it. Later, an adapted are biobutanol, alkanes, biodiesel, and biogasoline. isoprene synthetase was added to the genome. With For biobutanol production, either Clostridium this strain, an isoprene titer of 60 g/L and a volu- acetobutylicum or metabolically engineered metric productivity (PV)of2g/(Lh)were S. cerevisiae can be used. As a proof of principle achieved. The yield (YP/S) was 11% isoprene per for microbial alkane production, the metabolic glucose. This is quite ineffective, given that the pathways of alkane production from cyanobacteria theoretical maximum is 24% for the MVA pathway were functionally expressed in E. coli, which and 29% for the MEP pathway. Isoprene is gaseous secretes the hydrocarbons. The company LS9 was at 37 C and therefore can be continuously heading towards commercialization of these micro- removed from the exhaust gas of the bioreactor. bial fuels, but the production was stopped as it proved uncompetitive with petroleum-based fuels. Polyhydroxyalkanoate Polyhydroxyalkanoates (PHA) are microbial polymers (polyesters) produced by bacterial fer- 7.2.5 Conclusion and Outlook mentation of sugars. Polyhydroxybutyric acid was discovered in 1926 in Bacillus megaterium. Currently, industrial biotechnology only Numerous bacteria (>90) including Cupriavidus accounts for a minor proportion of industrial necator form PHAs as a reserve or storage chemical and material production. In comparison materials. PHAs are therefore fully biologically to petrochemical industries, biotechnology only degradable and have further useful properties holds a representative market share in a few such as thermoplasticity, biocompatibility, and niche areas. Thus, a major turnaround will be nontoxicity. In 1990, the first biodegradable prod- required to convert a major part of the current ® uct (Biopl ) was launched in Germany. However, chemical industry towards a biobased one. 204 K. Moß et al.

However, the potential exists for novel, environ- • Various microorganisms are applied in the mentally friendly, knowledge-based products industrial production of bioproducts. Assess and this potential could generate new, high- advantages and disadvantages of the most level job opportunities for biotechnologists and important organisms. bioeconomists in the future. • In few niche areas, biotechnologically derived products hold a representative market share. Review Questions Compare and contrast an established product with a prospective bioproduct. Consider • Differentiate between “traditional biotechnol- factors hindering or facilitating the ogy” and modern biotechnology by means of introduction. an example. 7 Processing of Biobased Resources 205

7.3 Thermochemical Conversion

Andrea Kruse

# Bildarchiv Uni Hohenheim /FG Konversionstechnologie NaWaRo 440f

Abstract All thermochemical conversions help practice, thus creating the technological base to overcome two main hurdles in the for a large-scale use of biomass. bioeconomy: the high oxygen content of biomass For the substitution of fossil resources by bio- (low heating value if used as fuel) and the large mass, new technologies are needed. In this chap- variability in biomass composition and ter, students learn how biomass is converted by characteristics. In addition, all thermochemical (thermo-)chemical conversion technologies to conversions have in common that they can pro- energy carriers or platform chemicals. One duce platform chemicals, materials, or fuels from example is the conversion of chicory roots to a wide range of biomass types, and that the the platform chemical hydroxymethylfurfural oxygen content is lower in the product than in (HMF). After further chemical conversion, the feedstock. The bioeconomy is not only a HMF can be used to produce a wide range of concept, but also requires technologies that are common objects from daily life, including bottles attractive enough for companies to put into and stockings. Thermal conversion can also be 206 A. Kruse applied to produce special carbon materials, e.g., place to make chemical bonds.” As can be seen, supercapacitors, which will enable a more flexi- cellulose has a functional group at each carbon ble use of e-cars. atom and is therefore considered “over- functionalized.” For plastics, every basic chemi- Keywords Pyrolysis; Gasification; Carboniza- cal needs to have two functional groups, one at tion; Torrefaction; Supercritical water; Hydro- each end. This enables the formation of long thermal processes; Platform chemical chains, which are the basis of all polymers. In fact, this is what the word polymer means: a long chain of repeating units. Learning Objectives In principle, there are three possibilities to After reading this chapter, you should convert biomass into products: (1) biological or biochemical methods applied at low temp- • Have an overview of thermochemical conver- eratures, (2) chemical conversion at medium sion technologies. temperatures, and (3) thermochemical processes • Know the range of products which can be at higher temperatures. This chapter focuses on produced by thermochemical conversion. thermochemical processes, which means chemi- • Be able to choose an appropriate process with cal conversions that use heat as an important tool respect to (a given) feedstock and desired for the conversion. Thermochemical conversions product. are characterized by the desired product and the “agents” added to influence the reaction. The products are solids (char, coke, charcoal), a 7.3.1 Introduction tarry liquid, and gases. Important agents include oxygen and air. The addition of these leads to a When biomass is compared with fossil resources partial combustion of organic material, deliver- such as coal or oil, the main difference is its ing the heat necessary for the conversion. This is higher oxygen content. Cellulose, the main com- then called an “autothermic process.” Another ponent of biomass, contains one oxygen atom per important agent is water, added as a liquid or in carbon atom. This reduces the heating value of the form of steam. Due to the large range of biomass when used as fuel. The high oxygen processes which are performed with or without content is also a disadvantage when biomass is water, the following sections distinguish between used as chemical compounds to produce, for dry, steam-assisted, and hydrothermal biomass example, plastics. Figure 7.14 represents a conversions. All conversion methods have one small part of cellulose, using Lego® bricks to thing in common: the oxygen content is reduced, demonstrate its structure. Every red brick as illustrated in Fig. 7.14 for charcoal formation. (which represents a carbon atom) has an OH The characterization of fuels by the ratio of group attached to it. In chemistry, this is called hydrogen to carbon and the ratio of oxygen to a functional group, which, put simply, means “a carbon can be displayed in so-called van

Fig. 7.14 Charcoal formation from biomass, illustrated using Lego® bricks. Red bricks represent carbon atoms, blue oxygen atoms, and yellow hydrogen atoms 7 Processing of Biobased Resources 207

Fig. 7.15 Van-Krevelen diagram of fossil fuels and biomass

Table 7.3 Overview of dry processes (based on Hornung 2014) Liquid (tar with water) Solid (char) Gas Conditions (%) (%) (%) Fast pyrolysis ~500 C, short hot vapor residence time 60 20 20 < 2s Slow pyrolysis ~500 C, ~1 h 30 50 20 Torrefaction ~300 C, ~10–30 min 77 23 Slow—carbonization ~400 C, ~hours/days 30 35 35 Gasiﬁcation ~800 C 5 10 85

Krevelen diagrams. Figure 7.15 shows different 7.3.2 “Dry” Processes types of fossil coal and fossil oil, as well as wood as an example of biomass. Dry processes are considered the more “tradi- Biomass materials used for thermochemical tional” conversion processes. In dry processes, conversions mainly consist of hemicellulose, cel- the water content of the biomass needs to be lulose, lignin, and ash. Cellulose and lignin have below 10 wt%, which means the processes can also been added to the van Krevelen diagram only be applied to biomass with low water con- (Fig. 7.15). Lignin has a chemical composition tent, such as wood, straw, and crops which pro- similar to brown coal. As can be seen, fossil coal duce similar biomass, such as miscanthus. Other has both a lower oxygen and hydrogen content in biomass feedstocks with higher water content relation to carbon. A line could be drawn from have to be dried before being processed. As this cellulose to coal in Fig. 7.15, corresponding to requires a lot of energy, it is not usually done in the elimination of water, as shown in Fig. 7.14.It practice. The dry processes are summarized in should be pointed out here that the production of Table 7.3 (Fig. 7.16). a liquid product similar to fossil oil can only be Dry biomass conversion generally leads to the achieved by the addition of hydrogen, e.g., by formation of a mixture of solid, liquid, and gas- coal hydrogenation. A conversion that eliminates eous products, the ratio of which changes with oxygen only, instead of water, is not chemically reaction conditions (Table 7.3). At the lowest possible. The only possibility of reducing the temperatures of around 300 C, the so-called oxygen content without reducing the hydrogen torrefaction occurs. For this, continuous reactors content is through the elimination of carbon like rotating tubes are often used. From a chemi- dioxide or carbon monoxide. Here methane or cal point of view, the heating process ﬁrst dries hydrogen is the other end product, not the biomass, and then leads to the formation of hydrocarbons. volatilized compounds from hemicellulose to 208 A. Kruse

Residence time

Carbonisation hours

Slow Pyrolysis minutes

Torrefaction

Fast Pyrolysis seconds

Gasification

0 200 400 600 800 Temperature (˚C)

Legend: Product

Dry Conversion Solid Gas Biomass Method Liquid

Fig. 7.16 Thermochemical conversion: dry processes leave a solid, partially charred material. At higher Slow pyrolysis is applied to obtain a solid temperatures, cellulose also forms volatiles and fluid and to reach complete conversion. Here, starts charring. The condensable gases are temperatures of 500–600 C and longer reaction combusted outside the torrefaction plant to gener- times lead to a complete charring of the biomass. ate the heat required for the process. Torrefaction Again, a rotating tube is often used and the com- is usually regarded as a pretreatment process and bustible gases are used for heat generation. The is followed by another thermal treatment, e.g., classic process to produce charcoal is with kiln. gasification or combustion. The torrefied product In these, first a high amount of air is entered so has a slightly higher heating value than the origi- that part of the volatiles formed by wood pyroly- nal biomass as it has a lower oxygen content [e.g., sis are burned. Once a high temperature has been 19 MJ/kg to 20–22 MJ/kg (Gucho et al. 2015)]. reached, the air supply is reduced. Charring then This reduces the relative transport costs and, in occurs. The process takes several weeks. A large addition, the structural changes that occur during amount of tar compounds and particles leave the torrefaction mean that much less energy is kiln with the gases, as no gas cleaning takes required for milling. place. A more advanced version of the process 7 Processing of Biobased Resources 209 uses a retort. Here, the reaction time is reduced to coke and gases. The formation of char and gases hours and no oxygen/air is added. The volatiles cannot be avoided completely, but the yields of are combusted outside the retort in a burner and pyrolysis oil can be maximized by a short and the off-gas is used for heating. There are virtually defined reaction time. From the point of heat no emissions of tarry or hazardous compounds transfer, fast heating up is only possible by (see also “Biokohle—Herstellung, Eigenschaften solid-solid contact. There, in all types of reactors und Verwendung von Biomassekarbonisaten” in applied, biomass is heated up by direct contact further reading). with a hot surface, which might be metallic or sand particle. Usually burners, burning the gases coming out of the process, generate the heat Pyrolysis necessary. At reaction condition, the pyrolysis Conversion of biomass with heat and no oil is a condensate in one, two, or more steps, or low amounts of oxygen to avoid after separations of the char/coke particles usu- combustion. ally by cyclones. If the water content is low, condensation of the pyrolysis oil is possible with- Many different types of slow pyrolysis out phase separation in one step. Pyrolysis oil reactors have been developed (Demirbas et al. usually has a water content of 20–30% (g/g) 2016; Kan et al. 2016). Charcoal is used for the (Bridgwater et al. 1999; Oasmaa et al. 2003). production of activated carbon, e.g., as a feed This water is partly a product of the reactions additive, in medicine, as a basis for catalysts, and originates from moisture in the biomass and for gas and water cleaning. It also forms the used. This is possible because of a lot of polar basis of black powder in fireworks and is used for compounds like acids, sugars, aldehydes, and metallurgic purposes, e.g., the production of cop- ketones are formed. Various types of phenols per. Today, the production of advanced carbon are also found in pyrolysis oil. If the water con- materials, such as supercapacitors and electrodes tent is increased to above ~45%, phase separation for fuel cells and hydrogen storage as well as occurs with the formation of an aqueous and modern battery parts, is of particular interest organic phase. In addition, a lignin-like solid is (see also “Advanced Carbon Materials and Tech- precipitated. Therefore, in the case of relatively nology” in further reading). high water content it is useful to use a two-step condensation process. Here, an aqueous phase with high contents of acetic acid and an organic Carbonization phase is produced (Dahmen et al. 2010). Pyroly- Reaction of biomass leading to a higher sis products can be upgraded to car fuels, but this carbon content. Charring is a special case requires large amounts of hydrogen (Wildschut of carbonization, usually at around 500 C et al. 2009). Pyrolysis oil, or one fraction of it, is and “dry.” used as “liquid smoke” in the food industry and to attract wild pigs for hunting. In the case of complete conversion of biomass In the process called bioliq® (Dahmen et al. at around 500/600 C, tar can be regarded as 2012), the first step of biomass conversion is fast intermediate. The mixture containing hundreds pyrolysis and the second gasification. This of different compounds reacts further by poly- addresses one of the principal challenges of bio- merization processes to form coke and by further mass conversion process chains: the widespread, splitting to gases. Therefore, if this tar or the decentralized occurrence of biomass by splitting so-called pyrolysis oil is the desired product, the biomass conversion into two steps, fast pyrol- fast heating up to 500–600 C, a short reaction ysis and gasification: The goal of the bioliq® time of a few seconds, and quenching for fast process is to produce a fuel via syngas. To cooling down are applied (Table 7.3). This is achieve economies of scale, the gasification and necessary to avoid the consecutive reactions to synthesis plant needs to have a high throughput, 210 A. Kruse which means the biomass has to be supplied from transfer is improved. The heat transfer from a very large area. However, the amount of energy gases to solids and throughout the solids is a necessary to transport biomass—a material of limiting step for the conversion of biomass in relatively low heating value (16–19 MJ/kg, dry slow pyrolysis and torrefaction. By adding matter)—over long distances to supply a large water in the form of steam, a high carbonization gasification plant is very high. In the bioliq® conversion of biomass is achieved at lower reac- concept, the biomass is first pyrolyzed in smaller, tion temperatures compared to the conversion fast pyrolysis plants. Then the coke and the without steam addition (Pütün et al. 2006). pyrolysis oil are mixed to a slurry. This slurry has an energy density ten times higher than that of straw, the biomass used as feedstock. The 7.3.4 Hydrothermal and Supercritical slurry is then transported to the gasification Water Processes plant. In this case, a gasification temperature above 1000 C is used to avoid tar formation. A special case of water being used as an agent in The products resulting from gasification of biomass conversion is the reaction in liquid or biomass, for example in the bioliq® process, are supercritical water as reaction medium. Biomass very important in the bioeconomy for the substi- conversions in liquid water at increased temp- tution of fossil fuels by biomass. Gasification for eratures are called “hydrothermal.” This expres- the production of syngas and the following use of sion originates from geology where it refers to syngas to produce different products are common reactions in liquid water at increased pressure processes in industry today. Usually, coal or and temperature. Depending on the temperature residues from fossil oil processing are gasified. required, the pressure has to be adapted to avoid Therefore, the resource can be changed to bio- evaporation. An overview of hydrothermal pro- mass to which the available processes for cesses is given in Fig. 7.17. converting syngas can be applied without further In addition to the different conversion pro- need for adaptation. The processes are the processes, Fig. 7.17 includes the vapor pressure duction of ammonia, methanol production, curve of water, ending in the critical point. All Fischer-Tropsch synthesis to produce diesel processes above this vapor curve are conducted fuel, oxosynthesis to produce aldehydes, ketones, in liquid phase. The higher the temperature, the and others. Besides air or oxygen, water or car- higher the pressure needed to have liquid water bon dioxide is also added as a so-called gasifica- as reaction medium. If the critical point is tion agent (Hofbauer 2009): reached, the phase boundary between gaseous and liquid states no longer exists. This is called C H O þ 6H O $ 6CO þ 12H ð7:1Þ 6 12 6 2 2 2 “supercritical” region.

The addition of water increases the yield of hydrogen following Eq. (7.1). Supercritical Water Water at a temperature above 374 C and a pressure above 22 MPa. It has the solvent behavior of a nonpolar solvent like 7.3.3 Steam-Assisted Processes pentane. In conversion processes that use lower temperatures than gasiﬁcation, for example By adapting the pressure, a supercritical pyrolysis, water is added. This alters the gas medium can be changed from liquid-like to composition by increasing the hydrogen yield, gaseous-like density, without the appearance of as shown in Eq. (7.1). In addition, the heat a phase boundary. 7 Processing of Biobased Resources 211

Pressure (MPa) Supercritical Water Gasification 20–30

Catalysed Near-critical Gasification

Hydrothermal Liquefaction 5–20

Aqueous Phase Reforming (Gasification)

0–5 Hydrothermal Carbonisation

0 200 400 600 800 Temperature (˚C)

Legend: Product

Solid Gas Wet Conversion Biomass Method Liquid

Vapour Pressure Curve

Critical Point (374 ˚C, 22 MPa)

Fig. 7.17 Thermochemical conversion: hydrothermal and supercritical water processes

It may seem surprising that in Fig. 7.17 differ- definition, no Brønsted acids (compounds which ent processes with fairly similar reaction produce H+ ions in water) or bases can exist conditions are next to each other. In addition, the anymore. On the other hand, the solvent polarity subcritical processes are all in the liquid region. of water decreases with temperature, although This is due to the special properties of water, water remains as a polar and very reactive mole- which change with temperature. Subcritical cule. The reason for this is the lower interaction of water has a higher ionic product, behaving like a the water molecules with each other and their mixture of a weak acid and a weak base. There- faster thermal movement. As a consequence, the fore, reactions, which usually require the addition solubility of gases and nonpolar compounds of acid or base, occur without these additions. increases and the solubility of salts decreases. At In supercritical water—in contrast—the ionic around 30 MPa, supercritical water behaves like product is very low. This means that, per pentane, with complete miscibility with gases, 212 A. Kruse very good solubility of nonpolar compounds, and developed, e.g., to produce supercapacitors to very low solubility of salts (Kruse and Dahmen store electricity from renewable resources or in 2015). electric cars (Titirici et al. 2015a, b). Hydrothermal and supercritical water processes are of special interest for the use and Box 7.2 Nutrient Recovery conversion of “wet biomass.” A living plant In high temperature, dry process nutrients has a water content of 80–90%. Many biomass like phosphates are part of a glass-like slag. residues from agriculture and the food industry They are not available for plants, directly. also have such high water contents. This kind of In low-temperature dry conversions, biomass can be converted by digestion. In this nutrients like phosphate leave the reactor case, methane is the desired product, but the with the char. They have to be leached by conversion is not complete because lignin and strong acids or used together with the char. some type of fibers cannot be digested. The In hydrothermal conversions, the situation biomass could be dried if other products than is completely different: Hydrothermal car- methanearedesiredandacompleteconversion bonization offers the opportunity to recov- is strived for, but this would cost a lot of energy. ery around 80% as pure fertilizer. In In hydrothermal processes, wet biomass is hydrothermal liquefaction, nutrients stay converted without drying and the water in the solved in water, and can be used, e.g., for biomass becomes the reaction medium. There- algae growth (Lo´pez Barreiro et al. 2015a). fore, from a chemical point of view, hydrother- In supercritical waster salts, also nutrient mal processes are completely different from dry precipitates and solids can be removed processes. In hydrothermal processes, the polar from the reactor. water molecules split the polar bonds of the biomass by hydrolysis. In contrast to dry processes, which are mainly solid–gas reactions, Hydrothermal liquefaction occurs at around hydrothermal conversions usually occur in one 300 C in liquid water, often in the presence of phase, with fast degradation of the solid basic catalysts. Here biomass is completely biomass by reaction with water. The fast converted to smaller molecules like substituted splitting of biomass in water is the reason for phenols and different acids or other carbonyl the lower temperatures needed at hydrothermal compounds. This process was developed under conversions compared to dry processes. On the the trade name “hydrothermal upgrading” by the other hand, the high pressure is often regarded company Shell (Goudriaan and Peferoen 1990). as a disadvantage of hydrothermal conversions There are three differences between hydrother- of biomass (Kruse and Dinjus 2007). mal liquefaction and fast pyrolysis, also producing a liquid or “tarry” mixture from biomass. First, the process temperature of the hydrother- Hydrothermal mal method is very low. During flash pyrolysis, Reaction conditions in liquid water at temperatures of around 500–600 C and very temperatures usually above 100 Cat short reaction times of a few seconds are applied. increased pressure. The short reaction times are necessary to avoid char/coke formation. Such limitations do not Hydrothermal carbonization occurs at temp- exist for hydrothermal liquefaction; this is the eratures typically in the range of 180–230 C. second difference between hydrothermal lique- Most of the carbohydrates, possibly even the faction and fast pyrolysis. A wide range of reac- complete biomass, are hydrolyzed and dissolved. tion times is applied. In dry flash pyrolysis, large The desired product, called HTC-coal or amounts of solid and gaseous products are always hydrochar, is formed via polymerization (Titirici formed. The third difference is that hydrothermal et al. 2015a, b). This process has been further liquefaction leads to a low gas yield, mainly 7 Processing of Biobased Resources 213 carbon dioxide and therefore with no energy In the case of wet biomass, the water coming out content, and very low solid yields. The solids of the process has to be “treated,” maybe by formed are often salts. In the reaction conditions, digestion. Hydrothermal liquefaction with a the tarry compounds are dissolved in water. After throughput of 100 kg/h has been demonstrated cooling down, the tarry liquid phase separates in Apeldoorn, the Netherlands (Goudriaan and from the aqueous phase. Through this separation, Peferoen 1990). the phenols formed from the biomass are A special case of hydrothermal liquefaction is concentrated in the tarry phase. Acid and other the hydrolysis of lignin to obtain phenols. Here, polar (i.e., oxygen-containing) compounds stay temperatures of around 400 C are usually in the aqueous phase. Phase separation may take applied because of the lower reactivity of some time but leads to a tarry product with a high pure lignin than lignocellulose. In addition, heating value. This heating value is higher than hydrogenation, e.g., by hydrogen and catalyst that of the tarry product of fast pyrolysis. In addition, is conducted. Phenols are interesting addition, the water content of hydrothermally platform chemicals for resin production. produced oil is very low (<0.5% (g/g)) compared Another special case of liquefaction is the to fast pyrolysis oil (20–30%). The reason for production of hydroxymethylfurfural (HMF, this is simply that all polar compounds are in Fig. 7.18) from sugars. HMF is one of or perhaps the water, not in the oil. A minor disadvantage of the most interesting platform chemical for the the low water content is the rather high viscosity bioeconomy (Teong et al. 2014), mainly because of hydrothermally produced oil (Lo´pez Barreiro of the two functional groups enabling the forma- et al. 2014;Lo´pezBarreiroetal.2015a). It tion of many different consecutive products. usually flows above 80 C. To decrease the vis- These chemicals can replace fossil-based cosity and to obtain a more diesel-like fuel, this plastics, and potential end products include oil is hydrogenated. The product is called “HTU- bottles for drinks and nylon stockings. HMF Diesel” and in the Netherlands large efforts have can be produced in hydrothermal conditions been made to establish such a process. Due to the (Antal and Mok 1990; Yin et al. 2011) and is relatively low oxygen content, such a process is assumed to be an intermediate product of hydro- energetically and economically more interesting thermal carbonization (Kruse et al. 2013). than for pyrolysis oil. Today, hydrothermal liq- Depending on the temperature and main prod- uefaction is often used for the conversion of uct formed, three different hydrothermal gasifi- algae (Valdez et al. 2014;Lo´pez Barreiro et al. cation processes can be distinguished: 2015a, b, c). The reasons for this are the following: 1. Aqueous phase reforming At relatively low temperatures of around 1. Algae are very wet biomass and should be 200 C and in the presence of a noble metal converted in water. catalyst, hydrogen is formed from compounds 2. Fast-growing algae are usually rich in originating from biomass (Davda et al. 2005; carbohydrates and the lipid content is too Luo et al. 2008). Hydrogen formation as low for the production of biodiesel. 3. The aqueous phase contains various nutrients (minerals) which can be recycled (Lo´pez Barreiro et al. 2015a).

The basic studies on hydrothermal liquefaction were done with wood. Wood is not a typical “wet” biomass. The use of relatively dry wood opens up the opportunity to recycle water, Fig. 7.18 Hydroxymethylfurfural with its two functional because wood has a relatively low water content. groups: an aldehyde and an alcohol 214 A. Kruse

product is thermodynamically possible at this critical catalyzed gasiﬁcation, the stabiliza- low temperature, but the concentration has to tion of the catalyst is a special challenge. In be very low at around 1% (Feng et al. 2004; particular, the support of the catalyst has to Kruse 2008). A hydrogenation catalyst is nec- be stable in the highly aggressive aqueous

essary. This process can only be applied to medium. Pure carbon and Al2O3 have been biomass compounds, not to raw biomass. found to be sufficiently stable as catalyst Therefore, it can be applied to aqueous efflu- support. Elliott et al. (2006)foundmono- ent of other processes. The most important clinic zirconia, rutile titania, and carbon as advantage of this process is that the catalyst the best choice for the support. Catalytically uses the formed hydrogen to hydrogenate the active metals are limited to nickel, ruthe- feedstock. The extent to which this consecu- nium, and rhodium. tive reaction occurs depends on which noble 3. Supercritical water gasification metal is used as catalyst (Davda et al. 2005; Biomass with a dry mater content of at least Huber et al. 2005). In a following step, aro- 10% (g/g) and temperatures above 600 Cis matic compounds which can substitute required to produce hydrogen in reasonable terephthalic acid can be produced that can be concentrations, because of thermodynamic used for PET bottles (Kumula 2011; Serrano- reasons. Challenges are finding suitable reactor Ruiz et al. 2011). materials and a method of handling salt depo- 2. Near-critical catalyzed gasification sition. The reactor material has to be a nickel- Near the critical point, methane is the ther- based alloy to withstand high temperatures and modynamically preferred burnable product. pressures. However, this material has varying Here, the (nearly) complete gasification and corrosion stability and is usually expensive and the hydrogenation of carbon monoxide to difficult to obtain. As mentioned above, the methane occur in the same reactor. In dry solubility of salts is poor in supercritical processes, this is not possible, because higher conditions (Kruse 2008, 2009), but alkali salts temperatures are needed for gasification, are necessary to catalyze the water-gas shift too high for methane formation. The forma- reaction. Water-gas shift reaction: tion of methane from hydrogen requires hydrogenation catalysts (Ni, Ru, Rd, PT, CO þ H2O $ CO2 þ H2 ð7:2Þ Pd) for sufficient yields. Only small amounts of methane can be formed via the decarbox- The equilibrium of the reaction lies to ylation of acetic acid, without a catalyst. In the right of Eq. (7.2), with hydrogen as the principle, two versions of near-critical gasifi- preferred product due to the high concentration cation are conducted: Elliott et al. (2006, of water, but alkali salts are necessary to 2004) prefer subcritical conditions. The reach the equilibrium. Gasification of glucose advantage is that salts are still soluble and without alkali, in particular potassium, salts the risk of plugging is low. In this concept, leads to a syngas with high carbon monoxide the biomass is first liquefied and then gasified content. As biomass naturally contains alkali in a solid-bed reactor filled with the catalyst. salts, its conversion usually does not require A mobile trailer version has also been alkali salts to be added. A catalyst is not neces- constructed and is in use (Elliott 2008). sary,but,e.g.,carbonisoftenusedtoavoidhigh F. Vogel and his group prefer supercritical temperature requirements or to increase the rel- conditions, which have the advantage of ative gas yield if the biomass has a high dry good solubility of organic compounds and matter content. gases. To handle the salt deposition, a special Supercritical water gasification is a suitable gravity separator is used (Brandenberger method to convert agricultural residues, process et al. 2013;Dreheretal.2013). In near- water, sludges, and algae (Kruse 2008, 2009). 7 Processing of Biobased Resources 215

Larger scale gasification plants are operational in • What is the role of water in “wet” conversion Karlsruhe/Germany and Hiroshima/Japan. The processes? German plant converts various types of biomass • Name products and corresponding reaction including corn silage, spent grain, and grass on a conditions of hydrothermal gasification. scale of 100 kg/h slurry (Boukis et al. 2007). In the Japanese plant, the biomass proceeds through Further Reading a liquefaction reactor before gasification. A spe- Dufour A. Thermochemical conversion of bio- cial aspect of this plant is that a coal catalyst is mass for the production of energy and chemicals. fed into the gasification reactor, which can be Wiley, New York. ISBN: 978-1848218239 reused. For details see also Kruse (2008, 2009). Hornung A (ed) Transformation of biomass: the- Such larger plants are important to assess the ory to practice. Wiley, Chichester. ISBN: performance of the process, for example in 978-1119973270 terms of energy efficiency. Quicker P, Weber K (eds) Biokohle – Herstellung, Eigenschaften und Verwendung Review Questions von Biomassekarbonisaten. Springer Vieweg, Wiesbaden. ISBN: 978-3658036881 • What are the differences between “dry” and Tiwari A, Shukla SK (eds) Advanced carbon “wet” conversion technologies (feedstock, materials and technology. Wiley, Hoboken. process conditions, and products)? ISBN: 978-1118686232 216 N. Dahmen et al.

7.4 Process and Product Cost Assessment

Nicolaus Dahmen, Jo¨rg Sauer, and Simon Wodarz

# Ricardo Vargas

Abstract When a new product or process is factors such as profitability and amortization developed and introduced, market analyses and time are important to outline the investment cost estimates are required to examine its mar- opportunity. However, they are not sufficient to ketability and manufacturing or production costs. fully characterize the process and thus correctly Before a company takes the decision to construct assess the investment potential. Soft factors also a production plant and invest in the production need to be considered in order to weight up and marketing of a certain product, it needs to further advantages and disadvantages of an make sure that the planned process is the most investment. These include a number of criteria economical and thus the most profitable alterna- relating to the technical process, the location of tive. In order to make this decision in a sound the production plant, and the market situation. manner, various tools are used to carry out an Production costs are strongly influenced by the economic assessment, weighing up the different technology applied along with its materials and costs and revenues against each other. Profitabil- energy balance. Therefore, process and product ity considerations are also used to develop busi- cost analysis takes place in early stages and dur- ness plans and assess the state and value of a ing process engineering. The resulting economic company. When decisions to invest in chemical data allow an economic analysis and the creation conversion plants are taken, a large number of of a business plan, which help to determine factors have to be taken into account. Hard whether a planned project is profitable or not. 7 Processing of Biobased Resources 217

This chapter provides the fundamental knowl- determination of all relevant process steps, the edge for this process, together with an example type and capacity of equipment, the resources to of a cost estimation. be used (energy, materials, work, time), and the consideration of all products, desired and unde- Keywords Costing; Investment costs; sired. The beginning of the process develop- Manufacturing costs; Variable and fixed costs ment is accompanied by a huge uncertainty— up to Æ100%—while an accuracy of Æ5% is not uncommon close to completion of the proj- Learning Objectives ect. The Association for the Advancement of After studying this chapter, you should Cost Engineering International (AACE) proposes a subdivision of cost estimates into • Understand the principles of cost estimation five classes (AACE International 2016). These in manufacturing. are summarized in Table 7.4 and illustrated • Be aware of the most important cost- graphically in Fig. 7.19.Theasymmetricdistri- determining factors. bution of the uncertainty is particularly • Be able to conduct your own simple estimates apparent. of process investment and manufacturing costs. 7.4.1.1 Investment Costs • Be able to understand cost assessments given Investment costs [capital expenditure, total cap- in the literature. ital cost (TCI)] refer to expenditure that occurs before the plant is commissioned and operated. 7.4.1 Cost Assessment They consist of plant costs,orISBL costs (inside battery limits), and off-site costs, or OSBL costs In order to make sound investment decisions, the (outside battery limits). In this context, “battery anticipated manufacturing costs of the product to limits” means the geographical location on be commercialized need to be known. Since the which the plant is constructed. “Plant costs” exact costs cannot be determined in advance, a refer to expenditure on apparatus, equipment, cost estimate is performed. and other objects and activities directly required The accuracy of a cost estimate increases as for the planning, construction, and operation of a the process development progresses. In this plant, including: period of time, conceptual and design work is carried out prior to building, expanding, or • Main pieces of equipment: reactors, columns, retrofitting a process plant. This includes the heat exchangers, pumps, etc.

Table 7.4 Accuracy of cost estimates during process development (AACE International 2016) Project Accuracy Accuracy maturity lower limit upper limit Class (%) Description (%) (%) 5 0–2 Estimate of order of magnitude, within screening and 20–50 30–100 feasibility studies 4 1–15 Preliminary estimate, comparison of process alternatives 15–30 20–50 based on conceptual designs 3 10–40 Deﬁnitive estimate, for acquisition of funding and investors, 10–20 10–30 based on basic engineering 2 30–75 Detailed estimate, basis for contracting and project ﬁnance 5–15 5–20 control 1 65–100 “Check” estimate, after successful negotiation with 3–10 3–15% contracted companies based on detailed engineering 218 N. Dahmen et al.

Fig. 7.19 Schematic diagram showing the asymmetrical limits of cost estimate accuracy above and below baseline at different stages of process development (AACE International 2016)

• Pipelines and fittings: tubes, valves, insula- these are a good starting point for a first, rough tion, paint, etc. estimate of the investment costs, even though, at • Instrumentation and control: temperature, the end of the day, they do not provide the largest pressure, and level sensors, flow meters, pro- contribution to ISBL costs. cess visualization software, etc. To obtain a first estimate of the key apparatus • Electrical engineering: power supply, wiring, costs, simple methods such as the capacitance transducers, switches, etc. method (Eq. 7.3) are applicable. They can be • Construction work: scaffolding, fundament, carried out without specific technological knowl- buildings, etc. edge, purely on the basis of the desired capacity • Plant assembly: staff and sub-contracting of the new apparatus (or even whole plants) • Miscellaneous: fire protection, interfaces relative to the capacity of comparable, already (connection to power and media supply) existing apparatus (or plant): • Planning and execution: staff and n S2 sub-contracting C2 ¼ C1 ð7:3Þ • Quality assurance S1 • Contingencies C2 denotes the cost of the new apparatus (or plant) with desired capacity S . C denotes “Off-site costs” refer to all costs associated 2 1 the already known cost of an existing reference with the plant, but not located inside the battery apparatus with a given capacity S . Capacities limits, most commonly items such as utilities or 1 may be given in mass and volume flows, electri- ancillaries. cal powers, volumes of reactors, and other vessels or the like. The degression or scale-up Inside Battery Limits (ISBL) Costs factor n indicates how strong the nonlinear rela- The main pieces of equipment account for a tionship between capacity and cost is. Where major share of the ISBL costs. For this reason, 7 Processing of Biobased Resources 219

Table 7.5 Example of literature data for estimation of main equipment costs, FOB (Silla 2003) Capacity FOB cost/303 US$ Degression Equipment Capacity units (Jan 1990) Correlation range coefﬁcient Agitators Propeller 3.0 hp 2.8 1.0–7.0 0.5 Impeller 20.0 hp 12.0 3.0–100 0.3 Air cooler 1.0 ft2 0.137 – 0.8 Blower, centrifugal 4000 ft3/min 60 800–1.8 Â 104 0.6 Compressor, 600 hp 190 200–1.8 Â 104 0.32 centrifugal Electric motors Open drip proof 60 kW 3.0 0.2–5 Â 103 1.1 Explosion proof 100 kW 9.5 0.3–8 Â 103 1.1 Evaporator, vertical 1000 ft2 180 100–8 Â 103 0.53 tube Heat exchanger, shell 1000 ft2 14 100–5 Â 103 0.65 and tube Process furnace 20,000 kW 750 3 Â 103–1.6 Â 105 0.85 Pump, centrifugal High range 20 hp 9.0 2.68–335 0.42 Low range 0.29 hp 2.3 0.1–2 0.29 Reactors, CSTR Jacketed 600 gal 17 30–6 Â 103 0.57 Glass lined 400 gal 33 30–4 Â 103 0.54 Rotary vacuum ﬁlter 30 ft2 60 4–600 0.67 Tanks, cone roof Low range 12 Â 105 gal 170 2 Â 105 – 1.2 Â 106 0.32 High range 12 Â 106 gal 170 1.2 Â 106–1.1 Â 107 0.32

0 n 1, a larger apparatus (plant) is, in correlation range for which the capacity rule is relation, less expensive than a small device. valid, and the degression coefficient. Long-term experience has shown n to be 0.7 for However, in addition to the purchasing costs petrochemical plants, between 0.4 and 0.5 for of an apparatus, further cost contributions are pharmaceutical and specialty chemicals, and generated by its installation and integration into between 0.8 and 0.9 for plants with a high con- the plant. To estimate the total ISBL costs of the sumption of mechanical work by, for example, planned plant, a structural method such as the compressors. Lang method is used to determine these costs of Apparatus costs, as purchased from the equip- connecting pipes, fittings, measuring and control ment suppliers, are called free-on-board (FOB). devices, assembly, and the like. This method, They are generally estimated via the capacity which was developed by Lang in 1940 method (Eq. 7.3). Reference size and price are (Hirschberg 1999), can only be applied once the usually provided by the supplier. The degression required main apparatuses have been determined coefficients for the main apparatuses can vary and dimensioned and their prices are known. significantly (Seifert et al. 2012). Table 7.5 Instead of listing the individual prices of all shows data, as typically found in the literature, other components (i.e., for each valve, tube) compiled from Silla (2003), including the capac- their costs are related to the main pieces of ity of the reference device (always check the equipment based on empirical values; for exam- units given!), the FOB purchase costs, the ple the cost of pipes lies between 30 and 100% of 220 N. Dahmen et al.

Table 7.6 Lang factors for the calculation of ISBL costs e.g., according to Kolbel/Schulze,€ available Cost type Structural unit Factor from the VCI (Verband der Chemischen Direct Main apparatus (FOB) 1.00 Industrie) at www.chemietechnik.de. ISBL Tubing and ﬁttings 0.40–1.00 costs Instrumentation and control 0.20–1.20 Outside Battery Limits (OSBL) Costs Electronics 0.20–0.50 The off-site costs of a chemical plant depend on Construction (buildings) 0.30–1.00 the infrastructure available at the location of the Plant assembly, installation 0.10–0.25 planned plant. The OSBL stem from the infra- Miscellaneous (insulation, etc.) 0.10–0.25 structure required to provide auxiliary materials

Indirect Engineering 0.35–0.50 (e.g., N2,O2,H2) and energy (in the form of costs Contingencies 0.15–0.30 electricity, steam, or fuels) for the disposal of LF sum factor 2.70–6.00 waste materials as well as for storage and overall on-site logistics. In general, make-or-buy decisions have to be made, meaning that it is the main apparatus costs. These empirical values necessary to consider whether it is more cost are included in the calculation of the ISBL costs efficient to install the infrastructure on-site in the form of so-called Lang factors. These (within the battery limits) or to buy-in a service factors, which may be different for different via an over-the-fence contract with external types of plant, are added up and then multiplied partners (Sinnot et al. 2009). by the sum of the costs of the main apparatus to give an estimate of total ISBL costs (Eq. 7.4): Example: Purchasing Costs of a Furnace A pilot plant is to be constructed for the produc- XN tion of a bioenergy carrier by torrefaction of ISBL ¼ LF ∙ FOB ð7:4Þ k wood pellets. This would usually be fired by hot k¼1 combustion gases, but the pilot plant is too small The sum of the Lang factors (LF) usually for such a design. Instead, the reactor is to be ranges between 2.7 and 6.0. A typical value for constructed as an electrically heated furnace with chemical plants is, for example, 4.57. A list of the a max. capacity of 5 MW. We need to know the individual factors can be found in Table 7.6.In purchasing cost in Euro of a furnace with an most cases, additional cost factors need to be electrical performance of 40,000 kW to be taken into account. The tabulated prices often installed in Germany in 2016. The FOB reference have to be adapted to the following factors: data of a process furnace with a capacity of 20,000 kW, valid from January 1990, can be • Specific technical requirements: corrosion taken from Table 7.5. The purchase price is resistance, high pressure and temperature, given as 750,000 US dollars and the degression material compatibility. These need to be con- coefficient is 0.85. First, the capacity method is sidered by separate material factors for each applied using Eq. (7.5) to obtain the price for an piece of equipment. oven of the desired capacity: • Local factors: local infrastructure, availability 0:85 and costs of trained staff, transportation costs, C ¼ 750; 000 $ 5000 kW USA, $, 1990 20;000 kW ð7:5Þ transport options. ¼ US$230; 840 • International factors: exchange rates, import fees. Now the price has to be adjusted to the year • Annual factors: inflation, leading to price 2016 by Eq. (7.6). It is assumed that the price of development for apparatuses and other equip- the furnace is similar to that of crude steel (since ment. Can be considered by a price index, it is mostly made of steel). Thus the price 7 Processing of Biobased Resources 221 increase is mainly given by the steel price devel- 7.4.1.2 Manufacturing Costs opment factor. Using European steel prices The manufacturing costs of a product can be (IndexMundi) for comparison would also be per- divided into variable and fixed costs. For their missible, since it can be assumed that the prices calculation, it is important that the investment of globally traded steel have developed in nearly costs and the most important process parameters the same way around the world: are already fixed or estimated reasonably accu- rately. Variable costs of production are all costs C C ¼ C Steel,2016 that occur during the operation of the plant and USA, $, 2016 USA, $, 1990 C 0 Steel,19901 are dependent on its utilization. Variable produc- € tion costs comprise the following: 54:85 ð : Þ B tC 7 6 ¼ 230; 840 $ @ € A 14:05 • Material costs: Feedstocks, input and auxil- t iary materials (obtained from the mass bal- ¼ ; US$901 180 ance of the process) • Energy costs: steam, fuels (gas, heating oil), Then Eq. (7.7) is used to factor in the location electrical power, cooling water, etc. (obtained change in the installation of the furnace with a from the energy balance of the process) location factor (taken from Sinnot et al. 2009): • Waste management: waste water disposal, off-gas treatment, solid residues, etc. C • Other costs: analytics, packaging, C ¼ C GER GER, $, 2016 USA, $, 2016 C shipping, etc. USA 1:11 ð7:7Þ ¼ 5:277:607; 23 $ The fixed costs of production are all costs 1:00 incurred during the operation of the plant which ¼ ; ; US$1 000 310 are not dependent on the degree of utilization of Finally, using Eq. (7.8), the exchange rate is the plant. Fixed costs are, for example: taken into account to give the purchase costs in Euro for the furnace with 5000 kW purchased in • Capital-related costs: depreciation of invest- 2016 and installed in Germany: ment costs (fixed capital cost) • Staff costs: wages, salaries, shift premiums, C € ¼ C ∙ Exchange rate GER, , 2016 GER, $, 2016 insurances, company bonuses € ¼ 5; 858; 144:02 $ Â 0:90 • General costs: transport, security, social $ services, plant management ¼ 900; 280 € ð7:8Þ • Repairs and maintenance • Taxes and insurance This results in a purchase price for the electrically heated torrefaction chamber of around The capital fixed costs are calculated from the 900,000 €. The calculation was based on the total investment costs, the depreciation time, and reference capacity and price taken from litera- the production capacity: ture, and updated by the steel price development (as dominant cost factor) for the actual Capital fix costs year of purchase, the change in location of þ ¼ ISBL OSBL the plant construction, and the US$/EUR Depreciation time Â Product capacity exchange rate. ð7:9Þ 222 N. Dahmen et al.

The capital fix costs usually account for the 7.4.2 Cost Estimation Example largest proportion of the manufacturing costs. Therefore, they are the most relevant factor in Synthesis gas, a mixture of hydrogen and carbon the economic assessment of a production pro- monoxide, can be produced from lignocellulosic cess. Additional costs to be considered for the biomass, for example, in the bioliq® process at production and sale of chemical products stem KIT (Dahmen et al. 2016). For this process, bio- from marketing and selling activities (5–25% of mass is pretreated decentrally (close to the place revenues), research (2–5% of revenues, in larger of production) by fast pyrolysis to produce an companies), and for generalia such as financial, energy-dense intermediate, which is collected legal, and patent departments (3–5% of from a number of these decentral plants to be revenues) (Baerns 2013). A number of key per- further processed in industrial scale facilities. formance indicators (KPI) are used to calculate There, it is gasified to produce syngas, which, the economic performance and profitability of an after cleaning, can in turn be used to produce investment. The earnings (profit) are calculated various types of fuels and chemical products. from the revenues minus all costs within a certain Figure 7.20 shows a block flow diagram of the time period. The profit depends on how much downstream production of gasoline in a hypo- product can be sold to the market at the thetical process. The mass and energy balance anticipated price. Thus, the earnings are directly of a process is usually available from process related to the workload of a plant and primarily simulation using software tools like ASPEN determined by the fixed (also incurred when the Plus or CHEMCAD. All the main pieces of plant is not in operation) and variable costs of equipment form blocks of unit operations production. (cooling, heating, pumping, filtration,

Steam generator

Electric CO generator 2 (OSBL) Synthesis gas Turbine

Separation

HE 1 HE 2 DME reactor

Purge gas Separation Water HE 4 HE 3 Gasoline Gasoline reactor

Fig. 7.20 Block flow diagram of gasoline production from synthesis gas 7 Processing of Biobased Resources 223 distillation, reaction, etc.) characterized by spe- use in other parts of the plant. Therefore, cific operating conditions combined with input efficiencies have to be considered: that of heat and output streams of defined composition and exchange is assumed to be 0.8 and that of steam conditions. Here, to reduce the complexity, we generation 0.5. From the simulation, the desired only consider the synthesis of the raw product for capacities of the equipment can be derived for cost estimation. After an initial heat exchange materials (kmol/s), power (MW), and heat (HE1), the high-pressure syngas (in the bioliq® exchangers (m2) as given in Table 7.7. process, a high-pressure gasifier is utilized) In this example, the specific manufacturing passes through a turbine producing electricity. costs are to be estimated for the year 2014 in

Then, the CO2 contained in the syngas (formed EUR. It is assumed that the production plant is by partial oxidation in the previous gasification operated for 7000 h per year and a depreciation process) is separated at ambient temperature. In time of 10 years has been accepted. heat exchanger HE2, the temperature is adjusted The specific production costs (in €/kg) are for the first synthesis reactor. Here, the syngas is calculated below according to the scheme converted at 200 C and 35 MPa into shown in Fig. 7.21. dimethylether (DME) in an exothermic reaction In Table 7.7, the main pieces of equipment are using a mixed catalyst that facilitates methanol compiled together with the reference costs, ref- synthesis, its dehydration, and the water-gas-shift erence and the desired capacity, and degression reaction all at the same time (sum reaction equa- coefficients. These allow cost determination of tion: 3CO + 3H2 CH3OCH3). After reaction, the equipment in the desired size according to the a heat exchanger (HE3) is utilized to adjust the capacity method. For CO2 and product separa- temperature to the optimum for gasoline synthe- tion, additional costs of 18,750,000 € are sis over a zeolite catalyst at around 340 C (sum assumed without further details. reaction equation: CH3OCH3 À (CH2) À + Because reference costs can usually only be H2O, where –(CH2)– stands for a formal hydro- found for past years and are typically given in carbon fuel unit in the resulting fuel mixture). US$, conversion is required to obtain the actual The gas is then cooled down by heat exchanger costs (2014, with price development factor HE4 prior to separation of raw gasoline, water 1.35) in the appropriate currency (EUR, at formed during the reaction and non-reacted gas. 1 € ¼ US$1.25). Since the date of the reference Half of the remaining gas is recycled to the DME and currency are not necessarily the same for all reactor. pieces of equipment, it is recommended that this A process simulation is carried out with procedure is applied for each item. Material some necessary assumptions to give a material factors are also taken into account by using and energy balance: the syngas composition is stainless steel instead of carbon steel for most

ﬁxed (30 vol.% of H2 and CO each, 20 vol.% pieces of equipment. The conversion of refer- CO2, 15 vol.% N2, and 5 vol.% H2O), and the ence costs given in the literature to reference conversion of syngas to DME is 0.85 and that of costs that take price development, exchange DME to gasoline is 1.0. Side products are not rate, and material factors into account is given considered. 20,000 kg of gasoline is produced in Table 7.8. per hour. Process simulation is extremely helpful From these data, FOB costs are calculated when heat shifts are necessary: the heat of both according to Eq. (7.3). Then, Lang factors are exothermic reactions is to be used to preheat applied to the FOB total, to give the ISBL costs. colder input streams and to produce steam for By adding OSBL costs, the total capital 224 N. Dahmen et al.

Table 7.7 Calculation of TCI and capital fixed costs using the example of synthetic raw gasoline production from syngas Total investment cost calculation ISBL calculation FOB calculation Reference Capacity Desired Reference Degression FOB costs/ capacity unit capacity costs/EURa coefficient US$ HE1 609 m2 609 224,536 0.6 224,536 Turbine 5.3 MWe 5.3 1,193,186 0.6 1,193,186 HE2 571 m2 571 212,062 0.6 212,062 DME reactor 1 kmol/s 2.16 4,365,974 0.65 7,195,800 HE3 386 m2 386 177,134 0.6 177,134 Gasoline reactor 1 kmol/s 1.36 4,365,974 0.65 5,340,334 Steam generator 1 MW 24.2 216,943 0.6 1,466,279 HE4 384 m2 384 177,134 0.6 177,134 Separation unit 18,750,000 FOB total/EUR 34,736,464 Application of Lang factors Piping and fitting 0.46 15,978,773 15,978,773 Instrumentation and 0.24 8,336,751 8,336,751 control Electronics 0.2 6,947,293 6,947,293 Construction 0.7 24,315,525 24,315,525 Plant assembly 0.28 9,726,210 9,726,210 Engineering 0.4 13,894,585 13,894,585 Contingencies 0.3 10,420,939 10,420,939 ISBL total/EUR 124,356,540 OSBL calculation Power generators 17,500,000 OSBL total/EUR 17,500,000 TCI calculation Total investment cost/EUR 141,856,540 Fixed capital cost calculation Gasoline production 20,000 kg capacity Annual operation 7000 h time Fixed capital cost/EUR aÀ1 kgÀ1 0.101 aDerived from Table 7.8 investment costs, TCI, are obtained. Power gen- typical for large plant complexes, where the indi- eration is assumed to have an efficiency of 100%; vidual plants are considered as separated busi- losses have already been taken into account in ness units. Since the heat produced in the highly the low steam generation efficiency. exothermic reactions is made use of, excess Manufacturing costs are calculated from vari- energy can be exported. As such, no energy able and fixed cost contributions in Table 7.9. costs are incurred; in contrast, revenues are Syngas is treated as a buy-in product, which is gained from power export. Given the high 7 Processing of Biobased Resources 225

Main equipment reference costs Table 4 and adaption Eq. 1

FOB costs Eq. 2 ISBL costs Table 6

Feedstocks OSBL costs Variable costs Auxiliaries Table 5 Utilities Fixed capital cost Total capital costs, TCI Eq. 7 Fixed costs Personnel/staff Repair/Maintanance

Taxes/Insurances Manufacturing costs EUR/kg Contingencies

Fig. 7.21 Manufacturing cost calculation scheme

Table 7.8 Reference cost adaption for FOB calculation Reference costs US$, Reference costs EUR Reference costs EUR Material Reference costs EUR, 2002 2002 (factor 1/1.25) 2014 (factor 1.35) factor 2014 stainless steela HE1 90,000 72,000 97,624 2.3 224,536 Turbine 550,000 440,000 596,593 2 1,193,186 HE2 85,000 68,000 92,201 2.3 212,062 DME 1,750,000 1,400,000 1,898,250 2.3 4,365,974 reactor HE3 71,000 56,800 77,015 2.3 177,134 Gasoline 1,750,000 1,400,000 1,898,250 2.3 4,365,974 reactor Steam 200,000 160,000 216,943 1 216,943 generator HE4 71,000 56,800 77,015 2.3 177,134 Input data for Table 7.7 variable cost contributions of feedstock, those for usually expressed as a percentage of the total auxiliaries can be neglected here. investment costs. Typical values for chemical To calculate the fixed costs, the fixed capital plants are given in Table 7.9. Such plants usually costs (as given in Table 7.7), and costs for per- require personnel for five shifts as well as a day sonnel, repairs, and maintenance, as well as taxes shift. A typical team would be composed of a and insurances are considered. The last two are plant engineer, some administrative staff, shift 226 N. Dahmen et al.

Table 7.9 Determination of manufacturing costs Manufacturing costs €/kg €/a Variable costs Syngas 0.214 €/kg 1.905 266,704,873 Energy (utilities) Revenues from power generation 0.05 €/kWh À0.060 À8,456,432 Auxiliaries (catalyst/water) negligible negligible Total variable costs 1.845 258,248,441 Fixed costs Fixed capital costs 0.101 14,185,654 Personnel 0.004 590,000 Repairs/maintenance 5% of total capital costs 0.005 709,283 Taxes/insurance 1.5% of total capital costs 0.002 212,785 Total ﬁxed costs 0.112 15,697,722

Total manufacturing costs 1.957 273,946,162

engineers and operators, and technicians for the gasoline product, calculated by repair of mechanical and electrical devices. Here, multiplying the price (which is the equivalent of ten full-time staff is assumed. usually higher than the production costs!) by the amount of product sold in that period of time. 7.4.3 Economic Considerations Costs In this context, costs refer to the amount of money or monetary valuation expended in order to The results of the cost calculation example given produce, market, sell, and deliver above reveal that, in total, 273,946,162 € per year À the product. or 1.957 € kg 1 need to be earned through the sale Profit Profit is obtained when the of the product to cover the investment costs before amount of revenue gained from a any profit can be made from it. There are a number business activity exceeds the of economic indicators that can give information costs, thus: profit ¼ revenues À on the financial state of a company, a process, or costs. It is worth mentioning that project operation These indicators also allow the profit is strongly dependent on comparison of different process alternatives and the amount of marketed product sensitivity analyses, e.g., by changing feedstock, or its selling price. Therefore, energy, selling prices, or other variables with there is always pressure on pro- time. Here are some of the most important cess optimization to reduce fixed measures for accounting and finance with practi- and variable cost contributions. cal, somewhat simplified definitions: EBIT Earnings before interest and taxes Revenue Revenue is the amount of money are a measure of the company’s that a company receives in a cer- profit that includes all expenses tain period of time. In the cost except interest and income tax calculation example above, it is expenses. This indicator is usually money earned by selling the 7 Processing of Biobased Resources 227

applied to whole companies for proﬁtability of a projected invest- the purpose of benchmarking and ment and includes the consider- comparison, but can also be ation of taxes. It is calculated by applied to individual parts of the the following equation: business or processes operated. EBITDA In contrast to EBIT, the earnings Xn c CnðÞ¼ t ð7:10Þ before interests, taxes, deprecia- ðÞþ t t¼0 1 i tion, and amortization do not

include depreciation and amorti- where C(n) is the NPV in year n, ct is the cash zation in the calculation. It is flow, i is the tax, and t is the number of years. closely related to cash flow as Figure 7.22a shows the cash flow for a project one of the most important key to produce synthetic gasoline on the basis of the performance indicators. example given in Sect. 7.4.2. In this example, the Cash flow The net amount of cash moving investment is made to plan, design, and construct into and out of the business in a the production plant within 3 years. In this period specified period of time. It is used of time, the investment costs expended result in to assess the quality of a negative cash flows. After this period and follow- company’s income, that is, how ing commissioning, the plant produces a fixed liquid it is. It is calculated as the amount of product at the same costs and profits difference between revenues and (40,000,000 € per year). Figure 7.22b shows the expenses without considering NPV curve after interest has been paid. It can be interest, taxes, and amortization. seen that the payout time is achieved after Profitability Profitability is a measure of the 9 years. This and several other factors are most efficiency of the employed capital relevant for decision making in companies investment by relating investment and, in particular, profitability of projected costs to achieved profit. It can investments. be used to compare different business models and process Review Questions alternatives. ROCE The return on capital employed • Which simple method can be used for a first, relates revenues without interest rough cost estimate of a plant, when the tech- and taxes (EBIT) to the capital nology is already state of the art? employed. The reciprocal value • What are the main cost contributions in is the time required to recoup the manufacturing costs? investments made (payout time). • Why are capital fixed costs so relevant to NPV The net present value is the differ- manufacturing costs? ence between the present value of • What are the differences between ISBL and cash inflows and present value of OSBL and between variable and fixed costs? cash outflows at a certain time. • What are the most relevant economic key indi- NPV is used to determine the cators? How do they differ from each other? 228 N. Dahmen et al.

a 60

20 €

0 01234 5 6 7 8 9 10 11 12 13 14 –20 Cash-flow / Mio

–40

–60

–80 Time / Years

b 40

€ 0 02468101214 –20

–40

–60

Net present value after / Mio –80

–100

–120 Time / Years

Fig. 7.22 Cash ﬂow and net present value curves for a 3-year investment period

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Markets, Sustainability Management and Entrepreneurship 8

Kirsten Urban, Ole Boysen, Carolina Schiesari, Ru¨diger Hahn, Moritz Wagner, Iris Lewandowski, Andreas Kuckertz, Elisabeth S.C. Berger, and C. Arturo Morales Reyes

In the year 2013, the turnover of the total and paper products, forest-based industries, European (EU 28) bioeconomy, including the pri- textiles, biofuels and bioenergy (see Fig. 8.1). mary sectors agriculture and forestry as well as The relevance of the different bioeconomic the sectors of food, pulp and paper, forestry-based sectors may differ between regions and industries, bioenergy and others, was 2.1 trillion countries. However, it becomes clear that, pres- euros (based on Eurostat data of 2013). Roughly ently, food production is the economically most half of this is accounted for by the food and important sector in the bioeconomy, followed by beverages sector, almost a quarter by the primary agriculture, forest-based industry and pulp and sectors (agriculture and forestry), while the other paper production (Fig. 8.1). The resources for the quarter comes from biobased industries, such as forest-based industry and pulp and paper produc- bio-chemicals, bio-plastics, pharmaceuticals, pulp tion mainly come from forestry. Most other

K. Urban (*) • C. Schiesari Stuttgart, Germany Institute of Agricultural Sciences in the Tropics (Hans- e-mail: [email protected] Ruthenberg-Institute); International Agricultural Trade M. Wagner • I. Lewandowski and Food Security, University of Hohenheim, Stuttgart, Institute of Crop Science; Biobased Products and Energy Germany Crops, University of Hohenheim, Stuttgart, Germany e-mail: [email protected]; carolina. e-mail: [email protected]; [email protected] [email protected] O. Boysen A. Kuckertz • E.S.C. Berger • C.A. Morales Reyes School of Agriculture and Food Science, University Institute of Marketing and Management; Business Start- College Dublin, Dublin, Ireland Ups and Entrepreneurship, University of Hohenheim, e-mail: [email protected] Stuttgart, Germany R. Hahn e-mail: [email protected]; Institute of Marketing and Management; Management, [email protected]; esp. Corporate Sustainability, University of Hohenheim, [email protected]

# The Author(s) 2018 231 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_8 232 K. Urban et al.

19% 2% 2% Agriculture 2% Forestry Food products 8% Beverages Tobacco products 8% Biofuels 3% Bioenergy Textiles and textile products 4% 44% Forest-based industry

6% Paper and paper products 0.6% Chemicals and plastics 1% Pharmaceuticals

Fig. 8.1 Turnover in the European (EU 28) bioeconomy in the year 2013 (Piotrowski et al. 2016) biobased resources used in the bioeconomy, sustainability management from the areas of especially for food production but increasingly sustainability accounting and management control also for chemicals, plastics, pharmaceuticals, as well as of sustainable supply chain management textiles and other products, stem from agricultural are introduced to provide a first glimpse of production and therefore may indirectly, via possibilities for companies to engage with land use, or directly, via use of edible raw mate- sustainability. Life-Cycle Sustainability Assess- rial, interfere or compete with food supply. ment (LCSA) is so far the most comprehensive Markets for biobased resources therefore overlap methodology for sustainability assessment and with food markets to a large extent. To avoid Life-Cycle Assessment (LCA) is a tool broadly negative effects on food security, it is necessary used by companies to assess the ecological and to understand how markets for biobased products energetic performance of biobased value chains. function. Thus, in Sect. 8.1 explains market These tools and their use are described in Sect. 8.3. mechanisms and market influencing factors of Finally, the bioeconomy will only grow if biobased resource and product markets, e.g. an entrepreneurs take the initiative to develop increasing demand for biobased resources for novel and innovative biobased products and biofuel production and policy instruments, such bring them onto the market. The bioeconomy as subsidies. offers great entrepreneurial opportunities. The precondition for a sustainably growing Section 8.4 introduces the business model can- bioeconomy is that sustainably produced biobased vas, a useful tool to break down the idea genera- products are brought onto the market. Section 8.2 tion process and manage the entrepreneurial therefore provides guidance on how companies, as process. This tool makes it possible to clearly central economic players, can engage in describe the value proposition of a new venture sustainability management and contribute their in the bioeconomy. This lean start-up approach share towards sustainability. Actors of can help entrepreneurs in the bioeconomy to sustainability in society are named and the rele- move efficiently through the entrepreneurial pro- vance of sustainability management for companies cess and to quickly develop a value proposition is discussed. Important elements and tools of and a validated business model. 8 Markets, Sustainability Management and Entrepreneurship 233

8.1 Markets of Biobased Resources and Products

Kirsten Urban, Ole Boysen, and Carolina Schiesari

# Uli Maier

Abstract This chapter takes a closer look at the The chapter provides a simple example of a global market for biobased products and perfectly competitive market for biobased resources and its interactions with agricultural products to introduce the market model. It starts and food markets. In particular, it describes the by presenting the supply and demand curves and effect of increasing demand for biobased discussing the differences between price changes products on market prices and thus the quantity and those of other determinants of supply and of agricultural resources demanded and supplied. demand with respect to their effects on the Furthermore, we discuss factors that may drive or respective curve. It then explains how the supply limit demand and supply of biobased products. and demand curves jointly determine the equilib- We analyse the market for biobased resources rium price and quantity on the market and how and products, considering products that are the market price regulates surpluses and already established in the market, such as shortages under the assumption of an autarkic biofuels, as well as products that could acquire country. We apply this market model to demon- a substantial market acceptance in the future, strate the effect of one particular policy for pro- such as bio-plastics. In addition, we brieﬂy intro- moting the production of biobased products on duce selected policy instruments applied to sup- the equilibrium market price and quantity. port biobased products. 234 K. Urban et al.

Learning Objectives competitive at current market prices. Their future After reading this chapter, you should be able to competitiveness requires continued research and development, which—due to market failures— • Understand the challenges on the market for may not occur without some temporary govern- biobased products, and explain driving and ment intervention, such as subsidies, public limiting forces of supply and demand for procurement, blending mandates and the estab- biobased products lishment of labelling or certification programs • Understand the functioning of resource and that distinguish these products from traditional product markets and the price mechanism ones, attesting their higher value and thus • Analyse the effects of supply and demand justifying the charging of viable prices. shocks on the market for biobased products, Figure 8.2 lists the major driving and limiting and understand interlinkages with food and factors in the demand and supply of biobased feed markets products and resources. • Explain policy effects and how they can be The continuous growth in global population, used to influence the markets for biobased together with changes in diets through improved products living standards, has led to sharp increases in the demand for food and feed products. On the other hand, climate change and finite resources are 8.1.1 Introduction driving additional demand for biobased products. Since biobased products are often at least partly based on primary agricultural commodities, this Concerns about the exhaustion of natural creates a conflict with food security objectives resources and climate change have raised interest through the competition for limited resources, in the production of biobased products. This has such as land, water and other inputs to agricul- been driven in particular by the depletion of lim- tural production. For example, additional ited global natural resources such as oil reserves demand for agricultural products as feedstock (Sect. 2.1), the dependency on oil-producing for biofuels production has been identified as countries and the increasing number of one factor that triggered the food price spikes in agreements on environmental protection and cli- 2007/2008 and 2011. These interdependencies mate change mitigation. As a consequence, with food demand and supply and thus food governments are increasingly endeavouring to security hamper the implementation of policy support the production of biobased products instruments to support sustainable production, through policies. The associated political because this requires comprehensive consider- objectives include sustainable production and ation of the entire nexus between development, achievement of sustainable development goals, food security and environmental objectives. reduction of environmental pollution, mitigation of climate change effects, and increased self- sufficiency in energy production thus lowering dependence on oil-producing countries, such as 8.1.2 Developments on the Markets Organization of the Petroleum Exporting for Biobased Products Countries (OPEC) members and other politically (and Resources?) unstable regions. However, the market for biobased resources The OECD (2012) defines biobased products as and products also faces several limiting factors. goods excluding food and feed that are “com- The production costs of biobased products are posed in whole or in significant parts of much higher than those of “unsustainable” biological products, forestry materials, or products already established on the market. As renewable domestic agricultural materials, a result, biobased products are often not including plant, animal or marine materials”. In 8 Markets, Sustainability Management and Entrepreneurship 235

Fig. 8.2 Major driving and limiting forces in demand and supply of biobased resources and products this section, we brieﬂy introduce market European Union (Fig. 8.4b). According to developments for biobased products that can be Gallagher (2008), around 1% of total global crop- divided into three main categories: biofuels, land was used for biofuel production in 2006. biochemicals and biomaterials (see Fig. 8.3 for OECD/FAO (2016) predicts an increase in pro- further explanations). duction of 11.1% for biodiesel and 31.1% for First, we take a closer look at the market for ethanol by 2025. biofuels, the largest of the three biobased product As a result of the 1973 oil embargo initiated groups and one which has existed for more than by OPEC, which led to a dramatic increase in oil three decades. Markets for the other two, prices, Brazil started the production of ethanol biochemicals and biomaterials, are still in devel- from sugar cane with a view to becoming less opment and information on these is scarce. dependent on oil-producing countries. This move Global liquid biofuel production has continu- was facilitated by the low international sugar ously increased over the last three decades. prices at that time and by Brazil’s implementa- Figure 8.4a shows the development of the world tion of several policies promoting the further ethanol and biodiesel production from 2007 to expansion of ethanol production. In 2009, Brazil 2015. In 2015, global biofuel production produced around one third of global ethanol, only amounted to 146 billion litres, almost double exceeded by the USA with a share of more than that of 2007. Ethanol production accounts for 50%, mainly produced from maize (Janda et al. nearly 80% of total biofuel production (OECD/ 2012). The EU is the major producer of biodiesel FAO 2016). In 2015, North America was the (80%). In Germany, 760,000 ha of agricultural major producer of biofuels, followed by Latin land were cultivated with rapeseed in 2016 for America (including the Caribbean) and the the production of biodiesel and vegetable oil 236 K. Urban et al.

Biofuels

•Energy fuels: coke, lignin, bagasse, ethanol, methanol, biodiesel, hydrogen and distillers dried grains, etc.

Biochemicals

•Industrial enzymes, acidulates, amino acids, vitamins, food conditioners, nutraceuticals, pharmaceuticals, cosmeceuticals, agricultural chemicals, etc.

Biomaterials

•Bio-based polymers, oils and lubricants, cleaners, solvents, adhesives, industrial gums, plastic, paints, ink, soaps and detergents, and composite materials, etc.

Fig. 8.3 Categories of biobased products

a) Global biofuel producon 2007–2015 b) Global biofuel producon in 2015 by region

160 Oceania 140 Other Asia 0% 1% 120 19% Billion liters 100 80 North 60 Latin America 40 America 39% 20 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Africa Europe Ethanol Biodiesel 1% 21%

Fig. 8.4 Development of global liquid biofuel production (OECD.Stat 2016)

(FNR 2017). However, the production of 2007/2008 and 2011 and shows increased biodiesel from soybean is increasing in the demand for biofuels due to very high oil prices USA. Figure 8.5 depicts the development in with one year lag. demand for three crops used for biofuel produc- A high crude oil price may be an important tion from 2000 until 2015. It becomes obvious factor for the competitiveness of biofuels. How- from these graphs how much biofuel production ever, energy also contributes to the total produc- has increased the demand for the agricultural tion cost of biofuels. The extent differs between products maize, sugar cane and vegetable oils. countries and crops used for production. Van While the biofuel demand for sugar cane (vege- Lampe (2007) assess biofuel production costs table oils) accounted for around 11% (less than by considering energy, processing and feedstock 1%) in 2000 it increased to 21% (more than 12%) costs and subtracting the value of by-products. A in 2015. The graph for sugar cane demand in simple indicator of the biofuel competitiveness particular highlights the food price spikes in can be derived from the ratio of crude oil to 8 Markets, Sustainability Management and Entrepreneurship 237 a) Maize b) Sugar cane c) Vegetable oils

160 18% 450 25% 30 140 16% 400 25 350 20% 120 14% Million tons Million tons 12% 300 Million tons 20 100 15% 10% 250 80 15 200 8% 10% 60 6% 150 10 40 100 4% 5% 5 20 2% 50 0 0 0% 0 0% 2003 2000 2006 2009 2012 2003 2000 2006 2009 2012 2015 2000 2002 2004 2006 2008 2010 2012 2014 Biofuel use from vegetable Maize for biofuel use Sugar cane for biofuel use oils % of total maize production % of total sugar cane production % of total vegetable oils production

Fig. 8.5 Crop product demand for biofuel production (OECD.Stat 2016). Note: Red line: % of total crop production, blue bars: biofuel use in tons

Price index, 2005 = 100 250 200 150 100 50 0 Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez Dez 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Commodity Agricultural Raw Materials Index Commodity Index Commodity Fuel (energy) Index Crude Oil (petroleum) Index

Fig. 8.6 Price indices for different commodity indices. Commodity Fuel (energy) Index includes crude aggregates (IMF 2016 and World Bank 2016). Note: oil (petroleum), natural gas, and coal indices. Crude Oil Commodity Agricultural Raw Materials Index includes (petroleum) Price index is simply the average of three timber, cotton, wool, rubber and hides price indices. spot prices: Dated Brent, West Texas and the Dubai Fateh Commodity Index includes both fuel and non-fuel price biofuel feedstock prices. The demand for alter- increase biofuel production and feedstock costs. native fuels, such as biofuels, increases with In addition, the contribution of by-products may rising crude oil prices. This, in turn, increases diminish, because outlets become satiated, the demand for agricultural commodities, such increasing biofuel production costs even further. as maize, rapeseed and sugar cane, and raises Figure 8.6 reveals that the price index for com- their prices. Consequently, higher oil prices modity fuels tracks the price index for crude oil, 238 K. Urban et al.

Fig. 8.7 The market for 3,5 biochemicals (adapted 3 from OECD 2011, p 52). 2,5 Note: Biotechnology sales 2 per segment 2007 in EUR 1,5 billions; ROW ¼ rest of the world billion € Sales in 1 0,5 0

EU-27 NAFTA Asia ROW

whereas the index for agricultural raw materials up the remaining 10%. Active pharma follows to a lesser extent. During the crude oil ingredients, organic chemicals and cosmetics price spikes in 2007/2008 and 2011–2014, bio- are of particular importance (Fig. 8.7). fuel feedstock prices, represented by the index The EU is the major player in the for agricultural raw materials, increased less than biochemicals market. In 2013, around 6% of the crude oil price, thus increasing the competi- total chemical products can be considered as tiveness and economic viability of biofuels. biobased. However, at EU member state level The markets for biochemicals and bio- we see large differences. Denmark and Latvia materials are less developed than that for reach shares of biochemicals of over 35%, biofuels. Biochemicals and biomaterials can still while France, Germany and the Netherlands be regarded as infant industries but they could only of around 5%, and many of the newer mem- acquire a substantial market acceptance in the ber states of even less (Piotrowski et al. 2016). future. According to Hatti-Kaul et al. (2007), the EU Both the number of biochemicals produced average is estimated to increase to 20% in from biomass and the range of products made 2020. In the USA, the share of biochemicals in from these biochemicals are very high. Due to total chemicals sales is less than 4%. Asia is this diversity, the OECD (2011) classiﬁes the gradually increasing its market share. biochemical market according to the different The market for bioplastics dominates the cat- chemical industry segments. In 2007, the sale of egory biomaterials and increased substantially in chemicals made from biobased raw materials in recent years. Bioplastics are plastics derived the chemical industry amounted to EUR 48 bil- from renewable biomass sources, such as vegeta- lion, which represents only a minor fraction ble fats and oils, starches, cellulose, biopolymers (3.47%) of the total output produced (Festel and a variety of other materials. In 2013, 300 mil- 2010). lion tons of plastic are produced annually of In 2007, the EU 27, North America including which only 1% can be categorised as bioplastic Canada, the USA and Mexico (NAFTA), and (European Bioplastic 2016). However, due to the Asia dominated the market for biochemicals, high rise in the demand for bioplastics, this mar- accounting for more than 90% of total sales. All ket has the potential to boost its market share. other countries (ROW ¼ rest of the world) made Estimates indicate that the production of 8 Markets, Sustainability Management and Entrepreneurship 239

Fig. 8.8 The market for 5 bioplastics (European 4 Bioplastic 2016). Note: Bioplastic Production in 3 2016 in million tons by Million tons 2 region 1 0

bioplastics could increase from 4.2 million tons to bioenergy and 7% to material use (Raschka in 2016 to approximately 6.1 million tons in 2021 and Carus 2012). (European Bioplastic 2016). In this section, we have brieﬂy introduced the Figure 8.8 presents the market for bioplastics recent developments on the markets for biobased in 2016 which is clearly dominated by Asia (1.81 products and how these developments are million tons) followed by Europe (1.13 million reﬂected in the demand for agricultural tons) and North America (0.97 million tons). The commodities, land use and prices. How does land used to grow the renewable feedstock for the this additional demand for maize, sugar cane production of bioplastics was about 0.68 million and vegetable oils (on top of food and feed hectares in 2014, around 1% of the global agri- demand) affect the market for agricultural cultural land (European Bioplastic 2016). Within commodities? To answer this question, we ana- the bioplastics industry, bio-based Polyethylene lyse supply and demand on the market for maize, Terephthalate (PET) and Polylactic Acid (PLA) exemplary for an input to the production of are the leading biobased plastics products and biobased products. grow faster than others. Baltus et al. 2013 state a production capacity of bio-based PET equal to around 5 million t per year in 2020. PLA is used 8.1.3 The Market for Biobased mainly in packaging but it also has a large num- Resources and Products: ber of other durable applications. The world’s Deriving Demand and Supply PLA production has doubled within the time Curves period 2011–2015 to around 400,000 t per year and has been projected to increase even faster in How supply and demand on a market interact and the near future, by around 800,000 t per year in how they depend on and affect other markets is 2020 (Baltus et al. 2013). The company “Nature explained using a market diagram. Here, we are Works” from Thailand and the USA holds a PLA going to use the maize market as an example market share of almost 80% in 2011 (140,000 t for introducing the market diagram due to its from a total of 180,000 t per year), whereas the omnipresence in all areas of the bioeconomy, other producers have a current capacity varying i.e. food, feed, biofuels, bioplastics as well as between 1500 and 10,000 t per year (bioplastic biochemicals. For a comprehensive introduction Magazine 2012). to theory of markets, the reader is referred to Of the global agricultural land in 2008, 18% standard textbooks of microeconomics, e.g., were allocated to food, 71% to animal feed, 4% Varian (2014). In the market diagram presented 240 K. Urban et al.

a) b) Supply Supply producer 1 producer 2 Price Price (P) (P) Biofuel and bioplastics (out of maize) demand

Food and feed (out of Supply (S): Total maize maize) demand P production P Demand (D): Total maize consumption

QB QF Q = QB + QF Quantity QP1 QP2 Q = QP1 + QP2 Quantity (Q) (Q)

Fig. 8.9 Supply and demand functions in Fig. 8.9a, the horizontal axis represents the of the consumers’ reaction to the price increase is quantity demanded, whereas the vertical axis measured by the price elasticity of demand.1 A represents the price. The demand curve price elasticity of demand equal to one means (D) shown in black depicts the relationship that for example a 20% increase in the price for between the price for maize and the quantity of maize leads to a 20% decrease of the quantity maize consumers are willing and able to buy at demanded. A price elasticity of demand of less each particular price where—according to the than one means the fall in demand is less than law of demand—the quantity demanded depends 20% and the demand curve is steeper and the negatively on the price. This normal, negative demand is said to be less elastic. If the elasticity demand reaction to price increases is the result is greater than one, then the quantity demanded of two separate effects: (1) If the maize price increases by more than 20% and the demand increases, the consumer can afford less quantity curve is ﬂatter and the demand more elastic. of maize at the given income and thus demands Figure 8.9b displays the supply side of the less. This is the income effect. (2) When the price maize market in the same type of diagram. The of maize increases, the consumer will look for supply curve (S) shown in black depicts the rela- alternative products similarly satisfying the need tionship between the price for maize and the and thus substitute some of the consumption of quantity of maize producers in the country are maize, for instance, with wheat. This is the sub- willing and able to supply. Usually, supply is stitution effect. Both effects will cause the con- positively related to the price due to factors caus- sumer to buy less maize if its price increases, so ing production costs to increase with increasing that the total quantity of maize demanded will level of production output, depending on the decrease. Usually, a demand curve in a market particular product market. This is illustrated by reﬂects the aggregate demand of all consumers in two examples. Increasing the production of the market. In Fig. 8.9 we assume that consumer maize could be achieved, for example, by 1 (blue curve) represents the maize demand by allocating additional land or using more food and feed producers, whereas consumer 2 (green curve) represents the maize demand by producers of for example biofuels and 1 More precisely, the price elasticity of demand measures bioplastics. Both curves together add up to the by what percentage the quantity demanded decreases if total maize demand. the price increases by 1%. In general, the price elasticity of demand is a negative number but the minus sign is If the price for maize increases, both often omitted for the sake of simplifying the discussion of consumers want to buy less of it. The strength the value. 8 Markets, Sustainability Management and Entrepreneurship 241

Fig. 8.10 The equilibrium of supply and demand

fertilizer. Both would increase the production Figure 8.10 represents the market by combin- costs of a ton of maize: Commonly, all good ing the supply and demand curves in a single quality, suitable land is already under productive diagram. The market equilibrium (E) is the use and thus the farmer would need to offer a point at which the demand and supply curves higher land rental price than others to obtain intersect. This point defines the market price additional land. Likewise, applying additional (equilibrium price) at which the quantity sup- fertilizer increases the maize yield but the partic- plied on the market equals the quantity ular gain in yield per hectare for the next unit of demanded, thus the price at which the market is fertilizer applied is the lower, the more fertilizer cleared. Usually, the market price automatically is already applied to the field (diminishing mar- settles in the equilibrium due to the interactions ginal productivity). Thus, the quantity of maize between consumers and producers. Let’s con- that can be profitably produced increases with the sider again our maize example. Suppose that in market price of maize and the quantity supplied the initial situation the market price for maize is to the market increases. The supply curve higher than the equilibrium price. At this price, represents the aggregated supplies of all sellers, the quantity supplied is larger than the quantity here supplier 1 and 2, just as the demand curve is demanded (excess supply or surplus). As a result, the sum of the demand of all consumers. not all suppliers are able to sell their maize at the This simple example of a market is general current price and they reduce their prices. At a and equivalently applies to the demand and sup- lower price, consumers demand more maize and ply of any other market, such as those for sugar, producers supply less. This process of lowering fuels or bioplastics. the price of maize and the corresponding reactions of buyers and sellers will continue until the quantity of maize supplied equals the 8.1.4 The Market for Biobased quantity demanded, equivalent to movements Resources and Products: along the demand and supply curves, respec- Determining the Equilibrium tively, towards the equilibrium point. Price and Quantity Besides the market price, there are other factors which determine the quantities supplied In the previous section, we have graphically and demanded, respectively. We can observe analysed the demand and supply curves using movements along the demand curve and shifts the example of maize. Now, we combine demand of the demand curve. Continuing the example, if and supply curves in a market diagram to deter- the price for maize decreases, the result is an mine the equilibrium quantity and price at which increase in the quantity demanded which is a good is traded in the market. equivalent to a movement along the demand 242 K. Urban et al. curve. Similarly, the price decrease declines the How are the equilibrium price and quantity on quantity of maize supplied and is equivalent to a a market affected by a price increase of a related movement along the supply curve. By contrast, product? an increase (decrease) of the quantity demanded Figure 8.11 presents the effects of a rise in the at a given price reflects a shift of the curve to the oil price on the market for biofuels (Fig. 8.11a) right (left) and analogously for the quantity sup- and on the market for the biofuel input maize plied. What are causes for such shifts of the (Fig. 8.11b). Due to the increase in the fossil oil demand and supply curves? price, the market price for fuels also increases so Let us start with the demand side. Usual that biofuels become relatively cheaper and factors that lead to a shift of the demand curve demand for biofuels increases at every price, are: changes in the price of goods related to the indicated by the demand curve shift to the right observed good, income changes, changes of (D1 ! D2). At the old price (P1) demand exceeds tastes and preferences and changes in now supply. This excess demand induces expectations. In our maize example, concerns suppliers of biofuels to raise the price. Conse- about the climate impacts of fossil oil-based quently, the increased oil price raises the equilib- industries increase the demand for biofuels. rium price for biofuels (P1 ! P2) and the This results in a shift of the demand curve for equilibrium quantity of biofuels sold (Q1 ! Q2). biofuels to the right and consequently also in a An increase of the equilibrium biofuel quan- shift to the right of the demand curve for the tity in diagram (a) raises the demand for its inputs biofuel feedstock maize (change in preferences). such as maize. This is shown in diagram (b). At Conversely, a decrease in the fossil oil price every price, the demand for maize is increased as would lead to a decrease in biofuel demand and represented by a shift of the demand curve to the thus also decreases the demand for maize shifting right (D1 ! D2). This results in an increase of the the demand curve to the left (change in the price equilibrium price and quantity for maize, which of a good related to biofuels). in turn affects biofuel producers. From an economic perspective, biofuels are a Shifts of the supply curve are usually caused substitute for fossil oil. Products are called by changes in input prices, technological changes substitutes, if an increase in the price of one or changes in expectations. For the production of commodity (fossil oil) leads to an increase in biofuels several inputs are required, among them the demand for the other commodity (biofuels). maize. If the price of maize increases as However, in other cases an increase in the price described in Fig. 8.11b, this increases the input of one commodity would lead to a decrease in the costs of biofuel production and therefore leads to demand of another commodity, e.g. fossil oil and a reduction of biofuel quantity supplied at every cars. Such products are called complements. price, as represented by a shift of the supply a) b)

Price A rise in oil prices Price (P) leads to an increase (P) An increase in biofuel demand, increases the S in the demand for S biofuels demand for the input P maize 2 Market P2 P1 Market price for P1 price for maize D biofuels 2 increases D2 D increases 1 D1

Q1 Q2 Quantity Q Q Quantity Biofuel quantity supplied 1 2 (Q) Maize quantity supplied (Q) and demanded increases and demanded increases

Fig. 8.11 Supply and demand effects on the resource market 8 Markets, Sustainability Management and Entrepreneurship 243 a) b)

Price Price A drought that leads to (P) (P) a bad maize harvest S2 S2 S S or 1 1 an increase in land Market P A rise in input cost P prices due to increased 2 price for 2 P leads to a decrease P producon of raw 1 maize 1 in supply materials Market increases leads to higher input price for costs and less supply biofuels D D increases Q Q 2 Q1 Quanty 2 Q1 Quanty Biofuel quanty supplied (Q) Maize quanty supplied (Q) and demanded decreases and demanded decreases

Fig. 8.12 Supply and demand effects on the market for biobased products curve to the left (Fig. 8.12a), Whereas technolog- So far, we treated the markets for fossil oil, ical progress decreases the production costs of agricultural raw materials and biobased products biofuels and shifts the supply curve to the right. If in the same way. However, as stated in the intro- biofuel producers expect a further increase in oil duction, most of the biobased products are rela- prices and therefore decide to expand the biofuel tively new so that the corresponding production production, the supply curve shifts to the right. processes often need substantial further research Effects on the supply of inputs that cause and development before the products eventually increased input prices are for example a drought might become competitive with their established that leads to a reduced maize harvest, an increase non-biobased substitutes. Figure 8.13 shows the in the rental price for land, and an increase in average cost curves for fossil fuel and biofuel fertilizer prices (effects shown in Fig. 8.12b). production. Currently, Q1 litres of fossil fuel are The effects of increased input costs are shown sold on the market at price P1. At this price, the in Fig. 8.12a. The reduced supply of biofuels average cost curve for biofuels lies below the leads to an increase in the equilibrium price and average cost curve for fossil fuel implying that a reduction of the equilibrium quantity. biofuels potentially could be sold cheaper. How- When analysing the effects on the market for ever, the fossil fuel industry got established first biobased products and resources, we also need to and is able to sell fuels at price P1, which is below consider the effects on factor markets, e.g. land. the start-up cost of C0 of the biofuel industry. In the real world, we have to cope with limited Due to the current lack of experience and market land supply. The options for gaining additional share to gain from economies of scale, the bio- land area for farming via for example deforesta- fuel industry cannot compete on the market, due tion or polder landscape are limited. In addition, to its higher production costs. This provides a desertification and soil erosion cause loss of land. reason for temporary support of the biofuel Therefore, an increase in the demand and supply industry through the government—often referred of biobased products and consequently an to as the infant industry argument. Through the increase in the amount of crops produced for support (or protection) of the biofuel industry at the biobased market are only possible by a its initial development stages, the industry can reallocating land from the production of food to develop and reduce its production costs through the production of biobased resources. This the development of new technologies and increase in the demand for land leads to an economies of scale so that it might be able to increase in the price of land, which increases compete with the fossil fuel industry in the input costs and thus makes production of future. Another argument for government sup- biobased products less cost efficient. port of the biofuels sector could be made due to 244 K. Urban et al.

Price, cost (per liter fuel) C 0

P 1 ACFuels

ACBiofuels D

Q 1 Quanty of fuel (liter) produced and demanded

Fig. 8.13 Developing markets and the infant industry argument the additional environmental costs fossil fuels increasing occurrences of severe weather events, cause and which are not included in their price. melting ice caps and increasing air pollution. This will be discussed in a later chapter under the These external costs, equal to the value of agri- concept of externalities (see Chap. 10). cultural production losses, health costs, costs of destruction through storms and ﬂooding, and the like, are not covered by the market price of these 8.1.5 Policy Instruments to Support products, leading to an inefﬁcient allocation of Biobased Products resources, i.e. a market failure. In light of the reasons pushing the develop- In the previous sections, we have introduced the ment of biobased products listed in the introduc- drivers of and barriers to the demand and supply tion to this chapter, governments aim to correct of biobased products. Objectives such as sustain- the market failures associated with the use of able development, energy security, independence fossil energy sources and to provide an enabling from fossil fuels, food security, waste reduction environment for renewable alternatives which and climate change mitigation require an should allow these industries to mature and increase in the production and the use of become competitive. To this end, governments biobased products. However, the only recently introduce various policy instruments that aim developed biobased products have a disadvan- to promote the development of biobased tage in the market due to their particularly high products by enabling the development of better production costs compared to products already technologies, to increase the production quantity established in the market (see Fig. 8.13). Con- and thus the market share, and to discourage the ventional products based on fossil energy sources use of fossil fuels (see Chap. 10). Technological (e.g. crude oil, natural gas or coal) have an progress and economies of scale would then lead advantage over renewable fuels/energy, because to a decrease in production costs and conse- they have gained from economies of scale due to quently increase the competitiveness of biobased mass production and learning effects which have products. decreased their production costs over time. How- The comparison of the policy landscape of ever, the use of these products is associated with different biobased products clearly reveals that high carbon dioxide and GHG emissions that the policies implemented to support bioenergy lead to additional cost for society, e.g. through and liquid biofuels are the most advanced. 8 Markets, Sustainability Management and Entrepreneurship 245

Biochemicals and biomaterials are found to be at environment. This will be further explained a relative disadvantage, because many of the instantly. All of these policies are price-driven, policies applied to support biofuel and bioenergy e.g. in the case of a subsidy on biobased products, production reward the use of biomass in these the policy drives a wedge between the market industries. According to the Renewable Energy price and producer price, so that the producers Policy Network for the twenty-first century achieve a price higher than the market price. (REN21), nearly all countries worldwide Feed-in tariffs serve as another example for cre- (146 countries) apply policies to support the pro- ating price-driven incentives that are often vision of renewable energies (REN21 2016). applied in the renewable energy market. Most of them established bioenergy targets. In Producers of renewable energy can feed-in the general, countries use manifold ways and policies full production of green electricity at fixed to support biofuel production, e.g. establishing prices. This policy provides specific support to targets for the share of bioenergy in total energy producers of renewable energies for a defined use (more than 70 countries), applying policy period. Specifically, the producer price for instruments to support the production of biofuels renewable energies equals the market price for (more than 100 countries), and imposing policy energy plus the feed-in tariff rate, so that instruments which improve market access (more producers of renewable energies are paid a cost- than 50 countries) (OECD 2014). based price for their energy supply that exceeds A large number of policy instruments have the fossil energy source-based price. been applied to stimulate bioenergy and biofuel Governments also promote the use of biobased production. In this section, we provide a general products, particularly biofuels, through excise but brief overview of applied instruments to sup- tax reductions or exemptions that decrease the port biobased products, particularly used for price paid by consumers. bioenergy and biofuels, and explain their economic rationale using the example of energy Box 8.1 Energy and Carbon Taxes and carbon taxes. Energy and carbon taxes are imposed to Different instrument types are applied to restrain the production of for example support biobased products. One distinction can energy from fossil fuels and enhance the be made between direct policy instruments, production of biofuels. This simple instru- e.g. tariffs and subsidies on different (biobased) ment provides product group specific taxes products either domestically produced or and aims to correct a market failure by traded, and indirect policy instruments, charging a price for GHG emissions, e.g. environmental taxes (carbon tax) or volun- e.g. fossil fuel production is taxed due to tary agreements. Direct policy instruments can the high GHG emissions of its use. either be provided to support renewable products, e.g. a subsidy on the production of biobased products or a subsidy on agricultural What is the underlying economic rationale products, such as maize, sugar or grains, to behind a policy instrument such as energy and enhance the production of biomass or a tariff on carbon taxes impose additional costs on the use the imports of biobased products to support of fossil energy sources such as oil, natural gas domestic producers. Governments provide and coal in proportion to the amount of carbon subsidies across the entire biomass value chain these resources contain. These additional costs to to facilitate suitable conditions for biobased the use of fossil energy sources is passed through product deployment. By contrast, indirect to the price of the final good such as fuels, policies are mainly applied to fossil-based electricity or any goods that use these sources products by taxing these products to account intensively. The policy instrument corrects the for their negative external effects on the market failure by incorporating these additional 246 K. Urban et al.

Fossil fuel supply Biofuel supply Fuel market

2 Price S FF S1 SBF FF SBF 2 S TF 1 S TF

PT t PM

DTF

Q2 Q1 Q1 2 Q2 Q1 FF FF BF Q BF TF TF Quant ity

Fossil fuels Biofuels Total fuels

Fig. 8.14 Effects of a carbon tax on fossil fuel environmental costs into the market price, price increases. The demand curve is downward- thereby modifying the incentives for producers sloping showing that a price increase leads to a and consumers such that the quantity produced decrease in fuel demand. In the equilibrium 1 and consumed is decreased. (intersection of STF and DTF) at the market price 1 Figure 8.14 presents the effects of energy and PM the quantity QTF is sold on the market of 1 1 carbon taxes and shows how these policy which QFF are fossil fuels and QBF are biofuels. instruments stimulate the production of biofuels. What happens when the government decides to Let us assume that all energy products based on impose an energy and carbon tax? This tax fossil fuels are taxed by an ad valorem tax t that affects the fossil fuel producers, because they drives a wedge between the market price PM and the pay now a tax per unit of output based on fossil producer price PS equivalent to the size of the tax. fuels, therefore, the supply curve of fossil fuels shifts to the left in the panel (a) of Fig. 8.14 PS ¼ PMðÞ1 þ t ð8:1Þ reﬂecting that at every price producers sell less fossil fuel due to the tax. However, the tax does For each quantity of energy from fossil fuels not directly affect biofuel producers. Conse- sold on the market producers have to pay the tax. quently, the biofuel supply curve in panel (b) of Consequently, they receive less per unit of output Fig. 8.14 does not change. In accordance with the and reduce their supply on the market, which in change in panel (a), the total fuel supply curve in 2 turn leads to a market price increase. panel (c) also shifts to the left ( STF ). At any In Fig. 8.14 we analyse the effects of energy market price for fuel less quantity is supplied. carbon taxes on the fuel market considering both The new market equilibrium reveals a decrease 1 the supply of fossil fuel and biofuel. STF in the quantity of fuels supplied and demanded at represents the total supply of fossil fuels and a higher price. However, at this higher price 1 þ ¼ 1 biofuels together ( SFF SBF STF ), whereas biofuel producer sell a higher quantity of biofuels DTF shows the total demand on the fuel market. at the market so that the share of biofuel relative The supply curve is upward-sloping indicating to fossil fuel quantity has increased due to the that the supply of fuel increases as the market implementation of carbon taxes. 8 Markets, Sustainability Management and Entrepreneurship 247

After this excursus on the economic rationale compared to fuel (OECD 2014). This large vari- of a price-driven policy, we now briefly intro- ety with regard to standards, applications and duce other types of policies also often imposed in expectations aggravates the design and imple- the markets for bioenergy and biofuels. mentation of policy instruments to support Examples for quantity-driven policies are, biochemicals and biomaterials. By contrast, the e.g. blending mandates that define a specific development of all three product groups depends share of biofuels in transport fuel sold on the on the same resource (biomass) and related market. This policy is relatively cost neutral for technologies. Crude oil prices determine their the government, however, it increases the competitiveness in the market and there are ben- demand for biofuels at the expenses of the final eficial effects from sharing production facilities. consumer due to higher production costs of biofuels. Also (tradable) green certificates provide quantity-driven incentives to increase the 8.1.6 Conclusions production of biobased products. They are based on a quota-like-mechanism that obliges This chapter provides a brief introduction to the producers to produce a specified fraction of market of biobased products that might become their supply from renewable resources. These increasingly important in the future. The future instruments are successfully applied to support global challenges lead to an increasing demand bioenergy, e.g. low carbon energy. and supply of biobased products. In addition, this In addition to price- or quantity-driven policy market is highly interlinked with the demand and instruments, governments provide other budget- supply of primary agricultural commodities and ary support measures such as investment thus food security. We introduce market diagrams subsidies and new technology support. These representing the demand and supply functions for subsidies are available in a large variety of dif- biobased products to show how the equilibrium ferent designs. Examples are funding for capital price on the market is determined. We apply these investments associated with a new project, or diagrams to show the effects of supply and subsidised loans/interest rates or grants for pro- demand side shocks on the market for biobased duction facilities. The objective is to increase the products, but also on the market for agricultural efficiency of biomass use for the production of commodities and fossil fuels. The particularly biobased products to increase supply and reduce high production costs of the relatively new devel- production costs. Other measures are support oped biobased products compared to conven- provided to research or rural development. tional products already established in the Why is the amount of support provided to market, which are often based on fossil fuels, biofuels much higher than the amount provided create a disadvantage for biobased products. In to biochemicals and biomaterials? According to addition, the prices for conventional products do OECD (2014) the share of crude oil used for not include the additional environmental costs energy production exceeds 90% in most of the they create due to for example high carbon countries. In addition, simpler and a smaller emissions, and thus lead to a market failure number of standards is applied to biofuels com- corresponding to an inefficient allocation of pared to biochemicals. Consequently, controls on resources. Politicians use these two arguments the chemicals market are much higher which as major justifications for implementing policies increases the number of obstacles that need to to support biobased products. We provide a brief be overcome by new products to enter the mar- overview of selected policy instruments and ket. Plastic is a material used for a large variety explained the effects of carbon taxes on prices, of purposes, which in return increases the num- and demand and supply on the market for biofuels ber of expectations on the properties of plastics using a graphical market model. 248 K. Urban et al.

Review Questions producing bioplastics due to technological change. 1. Name and discuss reasons why the production of biobased products has gained importance in a. How would this affect the supply of recent years? bioplastics? Please use a market diagram 2. Explain how high crude oil prices inﬂuence to show and explain the effects. the demand for biofuels? b. Bioplastics are produced from starch. How 3. What are the challenges on the market for would therefore an increase in the produc- biobased products? tion of bioplastics affect the market for wheat, maize and potatoes? Is there empir- a. Explain driving and limiting forces for the ical evidence for the effect? supply of biobased products using 1 exam- c. What would be potential effects on prices ple for each. and supply of food products and thus food b. Explain driving and limiting forces for the security? demand of biobased products using 1 example for each. 6. Governments often use the infant industry argument to justify the introduction of 4. The demand for bioplastics is expected to policy instruments to support relatively new considerably increase in the future. industries such as biofuel producers. Please explain and discuss this argument using a. How would this increase in the demand for biofuels as an example. bioplastics affect the market price and 7. Please use a graph similar to the initial situa- quantity sold of bioplastic material? Please tion in Fig. 8.14 as starting point. Assume that use a market diagram to illustrate and the government starts to pay a speciﬁed explain the results. amount of euros to the producer for each ton b. In addition, the government aims to support of biofuel produced (a subsidy). the production of bioplastics. Please explain and discuss appropriate policy a. How does this output subsidy for biofuels instruments the politicians might introduce. affect the market equilibrium of biofuels (producer price, market price, quantity)? 5. Assume that the bioplastics industry is able b. What are the effects on the total fuel mar- to considerably decrease their costs for ket (equilibrium price and quantity)? 8 Markets, Sustainability Management and Entrepreneurship 249

8.2 Sustainable Development and Sustainability Management

Ru¨diger Hahn

Agrophotovoltaic plant in combination with potato production # Andrea Ehmann

Abstract In the last decade(s), the idea of sus- Following this general introduction, actors of tainable development has become a widely sustainability in society are named and the rele- acknowledged topic which is supported by vance of sustainability management for many actors in modern society. companies is discussed. In the remainder of this Companies, as central economic players, are chapter, three base strategies to achieve increasingly pressured by a wide set of sustainability (i.e. eco-efficiency, eco-effective- stakeholders to engage in sustainability manage- ness and sufficiency) are explained along with ment and to contribute their share towards their opportunities and limitations in achieving sustainability. Against this background, this chap- sustainability. Finally, some exemplary elements ter first introduces the general idea of sustainable and tools of sustainability management from the development with its elements of intrage- areas of sustainability accounting and manage- nerational and intergenerational justice and ment control as well as of sustainable supply illustrates the roots of sustainable development chain management are introduced to provide a as a normative-anthropocentric concept. Since first glimpse of possibilities for companies to sustainability is a contested idea with many dif- engage with sustainability. ferent notions, the different understandings of weak, strong and quasi-sustainability are Keywords Sustainability; SDGs; Stakeholder; introduced and the status quo of sustainability in Eco-efficiency; Eco-effectiveness; Sufficiency society is highlighted. 250 R. Hahn

Learning Objectives cornerstone without which sustainable develop- After studying this chapter, you will be able to: ment cannot be achieved. At the same time, the concept of sustainable development gives future • Characterise sustainable development with its generations a voice through the idea of intergen- various conceptual elements and erational justice, which calls for preserving soci- understandings. etal and ecological systems in a way that future • Discuss the main actors of sustainability man- generations are not inhibited in their own agement and their influence on corporate development. sustainability. This latter perspective, which mainly focuses • Distinguish eco-efficiency, eco-effectiveness on natural sources and sinks, is also included in and sufficiency as base strategies in the historical roots of sustainable development, sustainability management and highlight which trace back to the times of medieval for- their potential and limitations. estry. Already here, central aspects of a sustain- • Exemplarily illustrate elements of able resource utilisation (i.e. permitting only as sustainability management. much logging as could be grown again) were known and practiced. Both elements of justice illustrate that sustainable development is a normative (i.e. relating to an ideal standard or 8.2.1 Sustainable Development: model) and anthropocentric (i.e. relating to the Characterisation and Historical influence of human beings on nature) concept. As Roots such, it is widely acknowledged but still contested and there is no rule of nature that “Sustainable development is development that determines whether or not mankind has to adhere meets the needs of the present without to the principles of sustainable development, but compromising the ability of future generations it is instead an ethical decision (see for example to meet their own needs” (WCED 1987, p. 41). Hahn 2009, 2011). This probably most widely cited characterisation of sustainable development stems from the 1987 report of the United Nations World Commission Box 8.2 Intragenerational on Environment and Development (WCED; also and Intergenerational Justice and the Role called Brundtland report after the chairperson of of the Bioeconomy the commission, then Norwegian Prime Minister Some products and activities from the Gro Harlem Brundtland). bioeconomy sector provide a good per- This broad characterization covers the two spective on why intragenerational and main pillars upon which sustainable develop- intergenerational justice are sometimes dif- ment rests: Intragenerational and intergenera- ficult to align and why achieving tional justice. Meeting the needs of the present sustainability is such a complex task. (i.e. within today’s generation) verbalizes the Take the example of biofuels or bioplastics idea of intragenerational justice and was already made from renewable energy sources such at the centre of thinking in the WCED report as plant material. From an intergenera- despite often being less prevalent in many tional perspective, such products are discussions around sustainable development. In favourable because they potentially allow fact, the report highlights the overriding priority for carbon-neutral products, which have no for needs of the poor and gives a voice to the or at least less impact on climate change large group of unprivileged poor in the world. compared to conventional fuel sources or Fulfilling these needs, for example, in terms of plastics. However, the production of the providing enough food, safe drinking water, san- renewable agricultural raw material for itation, or minimum social security is thus a (continued) 8 Markets, Sustainability Management and Entrepreneurship 251

The counterpart to weak sustainability is Box 8.2 (continued) “strong sustainability” (see Sect. 10.2). The gen- the biobased products might lead to a eral idea of this perception of sustainability is to crowding out of staple crops on limited live only from the “interest” of the natural capi- cultivable surfaces. This could have detri- tal, that is, to use only those natural goods and mental effects on intragenerational justice services that are continuously added. It would if food prices increase or if, in extreme thus not be permitted to use non-renewable cases, food supply is limited (also known resources (because they are not reproduced and as food vs. fuel debate; see, for example, hence generate no “interest”) and renewable Kuchler and Linne´r 2012). resources can only be utilised below their regeneration capacity. If followed through, this would mean renouncing any further growth of con- But when would sustainable development be sumption and production due to the status quo achieved? Despite providing some general of intergenerational justice as further depicted yardsticks for orientation, the above-cited below. To walk this path, society would need to characterisation still allows for different aim at sufficiency (i.e. asking how much is interpretations and some even note that sustain- enough) and efficiency at the individual and able development is a journey that will never be political level. The drawback of this notion of finished. For others, however, sustainable devel- sustainability is that is has a rather metaphorical opment is easier to achieve. This is especially character. A complete abdication of any growth the case when following an interpretation of is unlikely and would also mean that intragen- sustainable development known as “weak erational justice could only be achieved through sustainability” (for overviews of the different a very drastic (and thus unrealistic) redistribution concepts see Sect. 10.2; Ayres 2007; Hediger of worldwide wealth. 1999; Neumayer 2013). In this perception, sustainability is achieved if the total sum of anthropogenic (i.e. man-made) capital and natu- Weak, Strong, and Quasi/Critical/Ecological ral capital are held constant. This bears the main Sustainability assumption that natural capital can generally be These are different understandings of substituted by anthropogenic capital and still sustainability, which lead to fundamentally ensure the continuation of human well-being on different implications for actions and earth. Main strategies to achieve sustainability strategies. under this assumption are a focus on efficiency (i.e. achieving the same output with less input or The middle ground between the two extremes more output with the same input) and consis- is occupied by the idea of “quasi”, “critical”, or tency (i.e. entirely closed systems with no input “ecological” sustainability. It builds upon the of raw materials and no emissions and waste principle of prudence and puts critical levels or production) through technology, growth, and critical boundaries, for example, of the Earth markets. The drawback of this notion of systems into the middle of thinking (for an expla- sustainability is, however, that a full substitut- nation of such critical boundaries see, for exam- ability of natural with man-made capital is likely ple, Steffen et al. 2015). Such thresholds should to be impossible due to technical limitations and not be exceeded and, for example, a substitution laws of nature. Once all non-renewable resources of natural capital by man-made capital has to be as well as the Earth’s biodiversity and bio- well justified. To achieve this, a mixture of the capacity are depleted, it is unlikely by all three strategies might be needed but the techno- known standards that mankind can still survive logical feasibility and the socio-political enforce- at the same level of prosperity as before, if at all. ability of these strategies is uncertain. 252 R. Hahn

8.2.2 Status Quo of Sustainable boundaries which, if crossed, bear a high risk of Development destabilising the Earth system. Of these seven boundaries, two (biosphere integrity and bio- When looking at the current state of the world, it chemical flows) have certainly already been seems to be safe to say that neither intragen- exceeded according to scientific standards and erational nor intergenerational justice have been two others (climate change and land-system achieved despite some scientific debates and change) are marked with an increasing risk so uncertainties on specific issues. Although the that the need to act is urgent if sustainable devel- last 25 years have seen some progress, today opment is a favoured goal. still more than 830 million people live in extreme Eventually, however, the concepts of poverty (earning less than US$1.25 per day), intragenerational and intergenerational justice 6 million children under the age of five die annu- need to be broken down into actionable pathways ally, 2.4 billion people have no access to and concrete fields of action, no matter what improved sanitation and almost 800 million peo- perception of sustainability one follows. There- ple are illiterate (United Nations Human Devel- fore, in 2015 the United Nations proposed a set of opment Programme 2015), while at the same seventeen aspirational “Sustainable Develop- time less than 10% of the world’s population ment Goals (SDGs)” with 169 sub-targets as accumulate almost 85% of total wealth (Stierli depicted in Fig. 8.15. The SDGs are supposed et al. 2015). Looking at rich versus poor to influence and provide guidance not only to countries, people living in high-income countries worldwide politics but also to businesses and use roughly six times more natural resources than individuals in their actions to serve the idea of those living in low-income countries (WWF sustainable development. International 2016). This directly links to the Another often-mentioned reference to reduce perspective of coming generations. Today’s complexity is the so-called “IPAT-Equation” human population uses almost double the amount (e.g. Meadows et al. 2004, pp. 124–126), which of the world’s available biocapacity, thus already illustrates the human impact on ecological at present living at the expense of future ecosystems. The “Impact” refers to the ecologi- generations. In their seminal study, Steffen cal footprint of any population or nation upon the et al. (2015) identified seven planetary planet’s sources and sinks. “Population” counts

Fig. 8.15 The sustainable development goals (Maria Gershuni; CC BY-SA 4.0 via https://commons.wikimedia.org) 8 Markets, Sustainability Management and Entrepreneurship 253 the number of people influencing the ecological adds up and contributes to or hinders footprint. “Affluence” is determined by the sustainability, civil society organizations need impact or throughput generated by the material, to recognise their influence on other players and energy, and emissions associated with consump- advocate different elements of sustainability, and tion. “Technology” illustrates the damage caused of course companies, as central and powerful by the particular technologies chosen to support players in modern society, need to contribute that affluence (i.e. the energy needed to make and their share by means of various elements of deliver material flows, multiplied by the environ- sustainability management either through reduc- mental impact per unit of energy). Changes in ing their environmental and social footprint or any factor of the equation lead to changes in the through actively and positively contributing to ecological footprint we leave on the Earth sustainable development with sustainability- system. oriented business models, goods, and services. To make a company more sustainable (or less unsustainable), the management needs to balance IPAT-Equation a multitude of interests and bring in line various It illustrates the human impact on Earth actors (see Fig. 8.16). Certain types of investors systems through the term: Impact ¼ Popula- or stockholders, for example, might pressure a tion Â Affluence Â Technology. company to actively pursue the idea of sustainability while others fear that measures of 8.2.3 Actors and Understandings sustainability management are costly and could of Sustainability Management thus reduce their earnings. Many potential employees nowadays are increasingly demand- To steer the world society in the direction of ing when it comes to the social responsibility of sustainable development and to promote the their future employer and at the same time many SDGs, multiple actors need to play along (see people still do not see the need to change their Fig. 8.16). Politicians need to recognise the need own behaviour and, for example, do not switch to embed sustainability goals and principles into off the computer monitor when leaving the rules and regulations at different levels, office. Customers often claim to value consumers need to recognise how their behaviour sustainability and the market for organic and

Goal Sustainable Development

Dimensions Intragenerational Justice Intergenerational Justice

Elements of Sustain- Sustainability Sustainability Sustainable … able Development Management Governance Consumption

Management Employees Investors Customers Drivers or Inhibitors of Sustainability Management Public Pressure Supply Chain … Authorities Groups

Fig. 8.16 Elements and actors of sustainable development and sustainability management 254 R. Hahn fair-trade products is constantly growing around win-win paradigms in which sustainable man- the world but the willingness to pay a higher agement is good for the financial bottom line of price for fair and sustainable products is still a company), there are also numerous tensions often limited. Supply chains and networks of and trade-offs companies have to cope with most goods and services are extremely complex (Hahn et al. 2015b). For example, various and easily cover thousands of suppliers, which measures in sustainability management require makes it difficult for companies to monitor the substantial upfront investments, which may put sustainability performance, while at the same pressure on short-term financial objectives and time many pressure groups actively advocate benefits of sustainability management are some- better working conditions and environmental times hard to measure so that a (financial) quan- standards. In sum, the management of tification is not always straightforward. Another sustainability is a complex endeavour. example from the area of the bioeconomy illustrates such dilemmas on a larger scale. Indi- vidual organizations usually strive for efficiency Stakeholder and they are likely to adopt similar solutions “Any group or individual who can affect or when acting under similar external conditions are affected by the achievement of the (e.g. monocultures as efficient means of firm’s objectives” (Freeman 1984, p. 25). cultivating agricultural produce). Such a homog- This encompasses internal (e.g. employees, enization, however, could lead to a lower resil- management and owners/stockholders) and ience of the entire agricultural system due to a external stakeholders (e.g. suppliers, gov- loss of (bio)diversity. Society is called to recog- ernment, customers, creditors and society). nise such trade-offs and tensions and develop solutions to cope with such difficulties (see But why then should a company embrace the again Hahn et al. 2015b, for initial suggestions). idea of sustainable development at all? First, it is As can be seen from these remarks, the pressure of many different stakeholder groups, sustainability management is a task with a myr- for example regulators, governments, or iad of potential fields of action, not all of which sustainability-oriented activists who demand a are relevant for each and every company in the responsible business conduct and who lobby for same way. To make the elusive concepts of sustainability management. Second, a growing intragenerational and intergenerational justice sustainability-consciousness among consumers within sustainable development more compre- and businesses as well as changing regulations hensible and manageable at the company level, produce new market opportunities in this area the concept is often broken down into three dis- and companies with a distinct sustainability pro- tinct pillars of action in which companies present file might also reap reputation benefits. Third, their actions: economic, ecological, and social sustainability management can lead to reduced responsibility (e.g. Elkington 1997), sometimes costs when, for example, more resource- or also termed the 3P of people, planet and profit.In energy-efficient products and processes lead to the corporate domain, the economic pillar material or energy savings. Fourth, some consider (“profit”) is usually understood as the responsi- sustainability management to also be part of an bility of a company to generate profits to be active risk management, because many of the sustainable in an economic sense. Furthermore, most pressing risks companies face are connected aspects such as economic prosperity and devel- to sustainability issues (e.g. reputation risks in opment are also often mentioned. In the ecological (un)sustainable supply chains, raw material pillar (“planet”), topics such as environmental shortages or price volatilities, natural catastrophes protection and resource preservation and respec- and extreme weather events, social instability). tive corporate actions to achieve these goals are However, beyond such examples of a business discussed. The social dimension (“people”) covers case for sustainability management (i.e. beyond topics such as social justice and equal opportunity 8 Markets, Sustainability Management and Entrepreneurship 255 and is often connected to employees and suppliers deteriorating the environment). This strategy with issues such as fair compensation, diversity, mainly aims at technological solutions and labour conditions, work–life balance and so innovations either at the product level (i.e. more on. This also shows that the distinction of previ- energy-efficient electrical household consumer ously often separately covered topics such as devices, fuel-efficient cars etc.) or already in the sustainability and corporate social responsibility production stage (i.e. more resource or energy (CSR) is in fact very blurred. Nowadays, some efficient processes) and there are numerous companies have a CSR department or CSR man- examples of successful eco-efficiency ager while others have a sustainability officer, innovations. Different academics point to the both of which often cover similar tasks and also enormous potential of eco-efficient products in academia the concepts and terms are increas- and processes which could lead to an improved ingly used interchangeably (see, e.g. Hahn 2011). efficiency of resource and energy consumption of up to factor 4 or 10 (Schmidt-Bleek 1998; Weizsa¨cker et al. 1996). The strategy is compa- 8.2.4 Base Strategies rably easy to translate into the corporate domain in Sustainability Management because companies already regularly aim at an efficient use of various (especially financial) As illustrated in the beginning, the road to resources and technological innovations are an sustainability can only be successfully taken if established means of progress in many firms. intragenerational and intergenerational justice However, the success of the eco-efficiency strat- are pursued simultaneously. This implies that we egy (as well as the success of the other strategies need to decouple the human development on the discussed below) is limited by the so-called one hand from the ecological impact caused and rebound effect (for an overview see for example the consumption of resources on the other hand. Figge et al. 2014; Hahn 2008). This effect To achieve such a decoupling, three basic illustrates that an improved eco-efficiency is sustainability strategies are often discussed: often counteracted by increased consumption. eco-efficiency, eco-effectiveness/consistency and The improved efficiency often, for example, sufficiency (for an overview see, e.g. Hahn 2008). leads to cost savings, which in turn lead to a disproportionate growth in overall demand for Eco-efficiency goods and services, if the reduced costs are The general approach of eco-efficiency is to aim associated with lower prices. The same pattern at a more efficient use of natural resources or of might occur in a psychological dimension when, emissions caused in producing goods or services. for example, improved eco-efficiency can induce It thus follows the idea of relative improvements people to buy more products or buy products that through the quantitative reduction of resource they do not need just because they are supposedly usage and emissions of products “from cradle to eco-friendlier than before. Furthermore, the grave” (i.e. from raw material extraction at the introduction of a partly sustainable product or beginning of a product life cycle to the final process might have negative impacts on other disposal at the end of the cycle). With successful aspects of sustainability, which have not been examples of eco-efficiency, less resources or considered before. The automotive industry, for emissions are needed to produce the same example, increasingly substitutes metal with amount of goods and services compared to a lightweight synthetic and composite materials previous status quo (i.e. easing the environmental to help improve fuel efficiency. However, such burden for a constant level of consumption) or materials can cause problems during the produc- more goods and services can be produced with tion and disposal processes (e.g. if their produc- the same amount of resources and emissions tion requires hazardous substances and/or if they (i.e. enabling development without further are difficult to disassemble for recycling). 256 R. Hahn

Eco-effectiveness again above). Furthermore, uncertainties about Other than eco-efficiency, eco-effectiveness the future side effects of innovations are another (or consistency) tries to decouple economic obstacle. Since innovations are, by definition, the development from environmental burden by introduction of something new, their ecological, organising economic processes entirely without economic, and social impacts cannot be entirely waste, emissions, or other environmental impacts assessed ex ante. through closed-loop systems. It thus aims for a qualitative change of material flows by way of Sufficiency fundamental structural change (e.g. Braungart While eco-efficiency and eco-effectiveness are et al. 2007; Huber 2000; McDonough and mainly driven by (technological) innovations, Braungart 2002). The idea of the “cradle-to-cra- sufficiency is a behaviour-based concept which dle” thinking of eco-effectiveness is the abdica- seeks an appropriate level and forms of con- tion of using (finite) natural resources and/or of sumption (e.g. Bocken and Short 2016; generating waste by creating non-polluting pro- Schneidewind et al. 2012). A sustainable lifestyle duction and consumption processes in which following this strategy reduces the absolute each end-product of a consumption or production amount of consumption and/or changes con- process serves as a basis for other processes. sumption in a qualitative way, both leading to Closed-loop systems can come either in form of absolute resource savings. Sufficiency in terms of biological loops or of technological loops (Ellen a quantitative reduction of consumption requires MacArthur Foundation 2013). Biological loops a downgrading of individual aspiration levels and are closely related to processes in the consequently also of the accumulated macro- bioeconomy. Biological materials are farmed, economic intensity of resource utilisation espe- processed to goods, which are then used or con- cially in developed countries with their resource- sumed and finally end up in the biosphere again intensive lifestyle. Sufficiency in terms of a qual- as biological waste products. Examples are itative change of consumption patterns seeks a compostable clothing, houses made from organic flexible adjustment of needs and/or a substitution building materials etc. In technological loops, of non-sustainable by sustainable (or at least less recyclability of materials is ideally already harmful) forms of consumption. Examples included in the design phase of products, which include reuse of products and relying on services then, for example, allow for easy disassembling instead of owning products (e.g. through new or maintenance and refurbishment. Following the business models in the so-called sharing econ- use phase, products are disassembled and either omy), longevity of consumer goods, moderated used as parts again in new products or materials mobility (e.g. regional holidays rather than air are recycled to be used in new production pro- travel abroad), or an increased regional perspec- cesses. If it is feasible to develop and implement tive (e.g. in supply chains or for food products). such kinds of sustainable innovations, they pro- The direct impact of successful sufficiency vide the opportunity to fully decouple growth efforts can relieve environmental pressures in a and development from environmental impact by similar way to the eco-efficiency approach. In aligning nature and technology. However, such contrast to the unpredictable outcomes of closed biological or technological loops usually technology-based innovations, sufficiency require some fundamental changes in terms of measures may achieve reliable and measurable extensive technological innovations and organi- outcomes. Problems with the implementation of zational transformations usually beyond the sufficiency measures, however, arise when boundaries of a single company, which are not unsustainable consumption patterns are deeply easy to find or implement. Furthermore, critiques anchored in the consumer’s mind and also in describe rebound effects also for the businesses’ mind-sets. Finally, there might eco-effectiveness strategy especially in the form again be the issue of rebound effects if the of growth effects and psychological effects (see achieved savings from reduced consumption in 8 Markets, Sustainability Management and Entrepreneurship 257 one area lead to additional consumption in other with the means to make decisions which enable a areas. (more) sustainable business conduct (sustainable management control) and externally provides interested stakeholders with information about a Sharing Economy (also Collaborative company’s conduct and performance with regard Consumption, Peer Economy etc.) to sustainability aspects (sustainability account- Economic and social activities that deviate ing). Internally, a company needs adequate infor- from individual, linear consumption mation about the sustainability performance of patterns. Builds upon an effective manage- its products, processes, and supply chains to be ment of repeated shared use of used, com- able to pursue a purposeful sustainability man- mon, or idle resources as opposed to agement. Internal information systems, for acquiring new resources for private use example, should provide detailed information and final disposal (e.g. Roos and Hahn on material flows, and emissions. Several tools 2017). have been developed to assess the sustainability performance of products and processes. In a life Given the different opportunities and cycle analysis (LCA; Finnveden et al. 2009; see obstacles of the three basic strategies, it seems also Sect. 8.3), for example, inputs, outputs and that an isolated pursuit of these approaches offers sustainability-related impacts of a product sys- only limited chances of success so that a combi- tem are compiled and evaluated throughout the nation of strategies might be needed depending entire life cycle of a product. While ecological on the respective products, production and con- LCAs are widespread and often already sumption patterns, cultural contexts, and so on. standardised, social LCAs are slowly beginning to develop as well (Arcese et al. 2016;Kühnen and Hahn 2017). It is not enough, however, to 8.2.5 Exemplary Elements simply assess performance. Actions need to be of Sustainability Management put in place to improve performance. In this regard, management systems, which coordinate Due to the diverse nature of topics discussed in and systemise corporate activities are widely the broader context of sustainable development, used also in a sustainability context. Such corporate sustainability management is vast and systems follow defined and documented control crosses all functional areas of businesses. and feedback mechanisms. They are usually sub- Aspects of corporate sustainability can nowadays ject to an external audit, which is supposed to be found in areas such as sustainability market- check the implementation of the respective sys- ing, sustainable finance, sustainability account- tem in a firm. Environmental management ing and management control, sustainable human systems such as those defined by standards such resource management, sustainable operations, as ISO 14001 or EMAS III (Neugebauer 2012) sustainable supply chain management, sustain- aim at improving the organization of environ- able innovation management and so on. In the mental management and thus ultimately of a following section, the areas of sustainable company’s environmental performance. Social accounting and control and of sustainable supply management systems such as SA8000 (Sartor chain management will be briefly introduced and et al. 2016) also exist. They are, however, much exemplary management tools and approaches are less widespread than environmental management highlighted to provide a first glimpse of possible systems. Another tool to integrate sustainability courses of action for companies. aspects into management processes is the Sustainability accounting and management Sustainability Balanced Score Card (Hansen control deals with instruments and systems that and Schaltegger 2016), which aims at linking internally provide the management of a company long-term strategic objectives of sustainability 258 R. Hahn with short-term actions and tries to illustrate how sustainable development, i.e. economic, environ- sustainability aspects are linked to financial mental and social, into account which are derived goals. from customer and stakeholder requirements.” When turning to the external perspective, (Seuring and Müller 2008, p. 1700). The main sustainability accounting has become a major question of this area of sustainability manage- issue in sustainability management. Companies ment is how can supply chains be organised and are increasingly pressured (by various managed so that they are economically stable and stakeholders or even through governmental at the same time reduce ecological burdens and regulations) to not only publish information on allow for decent working conditions? Regular their financial situation (as, for example, in media reports, for example, on horrible working annual reports) but also to disclose sustainability conditions and on forms of modern slavery espe- information. In the European Union, for cially in developing countries as well as and on example, most companies with more than the environmental burden of contemporary pro- 500 employees are required to publish informa- duction systems illustrate that the economic suc- tion on their sustainability strategies and perfor- cess of modern supply chains very often builds mance and many other countries have similar on otherwise unsustainable practices. Finding an regulations in place. While publishing certain answer to the mentioned question is an inherently sustainability information is increasingly manda- complex task due to the highly complex and tory, the modalities of disclosure are often intransparent nature of many modern supply not prescribed. Many companies publish chains which regularly include several thousand sustainability reports which broadly cover envi- suppliers and many upstream (raw material ronmental and social aspects, others integrate extraction and processing etc.) and downstream financial and sustainability information into one (manufacturing of finished goods, several distri- single report, or they disclose specific informa- bution channels etc.) stages. The literature tion on issues such as climate change (Hahn and roughly distinguishes between supplier manage- Kühnen 2013; Hahn et al. 2015a). Two trends ment for risks and performance as a rather reac- seem to consolidate, though. First, the voluntary tive approach and supply chain management for standard for sustainability reporting published sustainable products as a rather proactive by the non-governmental Global Reporting approach (Seuring and Müller 2008). Initiative has become a de facto standard in In a supplier management for risks and perfor- sustainability reporting and most companies mance, focal companies (i.e. those companies in implicitly or explicitly refer to these the centre of the supply chain that usually design specifications. Second, especially large companies the product, that are visible for the end consumers increasingly acquire an external assurance for often through a brand name, and that chose their sustainability disclosure, because they want suppliers and distributors and thus orchestrate to receive expert advice on their reporting main parts of the supply chain) try to minimise practices or because they want to increase the risks in their supply chains and ensure a certain perceived reliability of their reports (Gürtürk and minimum performance to avoid social and environ- Hahn 2016; Reimsbach et al. 2017). Such an mental scandals which could, in extreme cases, external assurance is usually mandatory for finan- even bear the risk of chain termination. Prevalent cial reports (e.g. annual reports) but it is voluntary instruments are a supplier management, which for sustainability reporting. includes the selection of suitable suppliers, their Another area of sustainability management is auditing and monitoring, as well as the develop- sustainable supply chain management which can ment of suppliers through trainings, incentives, and be characterised as “the management of material, a close integration into relevant processes. Often, information and capital flows as well as coopera- companies have their own codes of conduct which tion among companies along the supply chain suppliers are supposed to adhere to and some while taking goals from all three dimensions of companies actively ask their suppliers to have 8 Markets, Sustainability Management and Entrepreneurship 259 environmental management systems (such as should be put in place to convince the consumer EMAS III or ISO 14001) or, albeit much less of the product. prevalently, a social management system (such as SA8000). With a supply chain management for sustainable products (e.g. Seuring 2011) companies Review Questions move one step further and try to implement • How do “weak”, “strong” and “quasi products that are (more) sustainable from the sustainability” differ in their understanding of beginning. This includes defining minimum how sustainable development can be achieved? sustainability standards, which might require envi- • What is the status quo of intragenerational and ronmental and/or social LCAs to be conducted to intergenerational justice? determine the impact of the product throughout its • What are the different base strategies for lifespan. To arrive at sustainable products, an decoupling development and environmental extensive cooperation throughout the supply chain burden and what are their opportunities and is necessary to ensure that sustainability aspects are limitations? considered in all phases. Furthermore, chain-wide • Why is sustainability management a complex controlling systems need to be active and endeavour? accompanying sustainability marketing measures 260 M. Wagner and I. Lewandowski

8.3 Life-Cycle Sustainability Assessment

Moritz Wagner and Iris Lewandowski

Rosalie: Lichtwirbel 2016, Schauwerk Sindelﬁngen # Ulrich Schmidt

Abstract The bioeconomy is based on the three comprehensive methodology for sustainability pillars of sustainability and aims to balance the assessment: Life-Cycle Sustainability Assess- environmental, economic and social aspects. ment (LCSA). A hypothetical example of an For this task, tools are required that provide LCSA is elaborated for a biobased product to qualitative and quantitative information on the illustrate the different assessment steps. environmental, economic and social performance of biobased products and on the trade- Keywords Value chain assessment; System offs between the goals of the three dimensions analysis; Life-cycle thinking; Life-cycle assess- of sustainability. In this chapter, a methodologi- ment; Life-cycle costing; Social life-cycle cal approach for a Sustainability Assessment assessment; Life-cycle sustainability assessment based on ‘Life-Cycle Thinking’ is presented. This approach combines the use of three forms Learning Objectives of assessment: Life-Cycle Assessment (LCA) for In this chapter, you will: the environmental aspects, Life-Cycle Costing (LCC) for the economic aspects and Social • Gain an understanding of the requirements of Life-Cycle Assessment (sLCA) for the social system analysis and value chain assessment in aspects. Together these form the most the bioeconomy 8 Markets, Sustainability Management and Entrepreneurship 261

• Learn methods for environmental, social and • Identiﬁes and models potential trade-offs economic sustainability assessments and their between economic, environmental and social combined application goals.

When planning a bioeconomic activity, the combined environmental/social/economic 8.3.1 The Requirements for System assessment, referred to here as “Sustainability Analysis and Value Chain Assessment”, should ideally be performed Assessment in the Bioeconomy ex-ante. This means it should be performed well in time to serve as a source of information for The bioeconomy is expected to contribute the discussion process with stakeholders, the towards meeting global challenges such as cli- negotiation of best compromises and as decision mate change and food security. However, bio- support for the planning of the activity. Based on economic activities are not sustainable per se. the results of this sustainability assessment, The controversial discussions surrounding the potential trade-offs between economic, ecologi- topic of modern bioenergy make this all too cal and social targets can be identified and— apparent (see Lewandowski 2015). Bioenergy where appropriate methods are available—also is one important sector of the bioeconomy. quantified. Although the introduction of advanced bioenergy in Europe has been a success story with regard to Trade-offs the achievement of the GHG emission reduction A trade-off describes a negative correla- goals (about 64 million tonnes of CO -equivalent 2 tion. It is a situation in which the methods emissions were reduced through bioenergy in of achieving two goals are opposed to each Germany, 25% of the German GHG reduction other and a balance has to be struck goal), it requires subsidies to be economically between them. viable. In addition, the reputation of bioenergy An example of an environmental trade- is suffering from the possible competition off can be seen in the production of between food and fuel production. The develop- miscanthus-based bioethanol and its ment of bioenergy has been accompanied by subsequent use in a combustion engine. many unintentional and unanticipated environ- The use of bioethanol in place of fossil mental, social and economic side effects. It has fuels makes a positive contribution to become obvious that there are various trade-offs GHG emission reduction and thus to cli- between the achievement of environmental, mate change mitigation. However, at the economic and social goals. The example of same time, the cultivation of miscanthus, bioenergy makes it clear that the introduction of in particular the application of nitrogen sustainable bioeconomic products requires prior fertilizer, has a negative impact on the assessment which: eutrophication potential. • Takes into account their effect on the bioeconomy system as a whole and not The assessment of the three dimensions of only the isolated optimization of specific sustainability needs to be based on a Life-Cycle bioeconomic sectors or activities (to avoid Thinking approach (see Fig. 8.17). This approach competition leading to food supply problems); ensures: • Gives consideration to and finds a balance between economic, environmental and social • The recognition and modelling of trade-offs aspects, instead of focusing on the optimiza- between the fulfilment of economic, social tion of the performance of just one of these and environmental goals. It does not make sustainability aspects; sense to improve one step of the life cycle if 262 M. Wagner and I. Lewandowski

Fig. 8.17 The concept of life-cycle thinking

that improvement has negative consequences for other parts of the system which may out- use phase, to the End-of-Life (EoL) of the weigh the advantages achieved. product, which can be disposal and/or • The assessment of the “true” costs of a prod- recycling (i.e. from “cradle to grave”). It uct. These include environmental and social includes all stakeholder interactions in costs in addition to production costs. each of the above steps. • The identification of “hot spots” in the envi- This understanding of a life cycle is ronmental, social or economic performance different from the product life cycle in of the life cycle or value chain of a economics, which refers to the life cycle biobased product, and starting points for of products on the market. improvement. The difference between ‘value chain’ • The identification of “future” problems (neg- and ‘life cycle’ is that ‘value chain’ does ative impacts that will become apparent in the not necessarily include the life cycle stages future, for example global warming effects) product use and End-of-Life (EoL); often it and ways of avoiding transferring such just refers to the production of a product. problems into the future. Following a life-cycle approach in bioeconomic sustainability assessment enables an Life Cycle understanding of the system behind the produc- The life cycle of a product comprises all tion and supply of biobased products and steps of a production process, from raw services. A biobased value chain is the sequence material extraction, through supply of of processes from biomass production through to intermediates, manufacture, transport and manufacture of the biobased product, together with its opportunities for value generation, 8 Markets, Sustainability Management and Entrepreneurship 263 including economic, social and environmental 8.3.2.1 Life-Cycle Assessment (LCA) values (see Sect. 5.2). An integrated biobased Life-Cycle Assessment, most commonly referred value chain optimizes the interaction of these to as LCA, is a standardised (ISO 14040 and processes and the material flows involved, with 14044) method of assessing the potential envi- the objective of enhancing the overall perfor- ronmental impacts of products, processes and mance in economic, environmental, social and services in relation to a ‘functional unit’. The thus sustainability terms (Lewandowski 2015). basic approaches underlying LCA are Life- As can be seen for the case of bioenergy, a Cycle Thinking and the aggregation of environ- value chain can only perform sustainably if all mental interventions into impact categories. processes involved are sustainable. A biofuel, for example, cannot be considered sustainable if its Functional Unit and Reference Flow use contributes to the reduction of GHG According to ISO 14040, the Functional emissions (by substituting a fossil reference) Unit (FU) is the “quantified performance but its feedstock supply (biomass production) of a product system for use as a reference does not comply with rules for sustainable agri- unit” (ISO 14040 2006, p. 10). The results cultural production (see Sect. 6.1.11). of all impact categories can be related to A sustainability assessment performed for the this reference unit. In the case of energy- whole value chain—also described as “along the producing systems, such as bioethanol pro- life cycle”—can evaluate the overall perfor- duction, it could be, for example, 1 GJ. This mance of a biobased product or service, and at enables a comparison with other bioenergy the same time identify “hot spots” of low or sources or with a fossil reference. non-performance. This is true for ex-ante The Reference Flow is the output from assessments as well as for the analysis of existing processes in a given product system that is bioeconomic activities. In the latter case, a necessary to fulfil the function expressed sustainability assessment can steer the optimiza- by the FU. So, with a FU of for example tion process. 1 GJ, the reference flow (e.g. in litres) is higher for bioethanol than for fossil gasoline, because the energy content of 8.3.2 Methodology for Sustainability bioethanol is lower. Assessment In LCA, emissions, use of energy and The combination of Life-Cycle Assessment resources, and material streams are assessed for (LCA), Social Life-Cycle Assessment (sLCA) all defined process steps or modules along the and Life-Cycle Cost Assessment (LCC) is seen whole life cycle of a product. In the following as the most advanced and comprehensive sections, the life cycle of bioethanol from approach to sustainability assessment. All of miscanthus (a perennial C4 grass, for more infor- these three methods embrace Life-Cycle Think- mation see Lewandowski et al. 2016) is used as ing and together they cover the three dimensions an example. The process tree for this example is of sustainability. Here, the methods LCA, sLCA shown in Figs. 8.18 and 8.19 and concrete and LCC are first described, and then the case examples of process modules are “soil prepara- study of ethanol production from miscanthus and tion” and “planting and establishment” for the sugar cane is presented to show how these three process of biomass production, and “shredding” methods can be combined to form an overall and “pre-treatment” for the process of biomass Life-Cycle Sustainability Assessment (LCSA). conversion to ethanol. Material streams are In this context, the term “product” is used in the shown as inputs (e.g. “fertilizer”) or outputs broad sense of goods and services. 264 M. Wagner and I. Lewandowski

Fig. 8.18 Life-cycle description and system boundaries for miscanthus biomass cultivation

Fig. 8.19 Life-cycle description and system boundaries for the conversion of miscanthus biomass to ethanol 8 Markets, Sustainability Management and Entrepreneurship 265

Fig. 8.20 Overall framework linking environmental interventions via the midpoint categories to damage categories (adapted from Jolliet et al. 2003)

(e.g. “ethanol”) (see Figs. 8.18 and 8.19). mandatory steps, is explained using the impact Emissions, such as GHGs, are an output from category “climate change” as an example. You process modules. At the beginning of an LCA can find a more in-depth explanation in the ISO study, the so-called “system boundaries” of a life 14044 standard. cycle are defined (see Figs. 8.18 and 8.19). These should include not only the production process Category Indicator and Characterisation modules, but also the treatment and recycling of Model wastes and side streams (see Figs. 8.18 and 8.19). If According to ISO 14040, the category indi- the defined system also includes the use phase and cator is the “quantifiable representative of the End-of-Life (EoL) of the product, we refer to an impact category”. this as a “cradle-to-grave” analysis. It is also possi- The characterization model describes ble to perform a so-called “cradle-to-gate” analysis. the relationship between the Life-Cycle In the example chosen here, this would encompass Inventory (LCI) results (the environmental the biomass cultivation process modules up to intervention) and the category indicator. the farm gate only, including crop production, har- An example of a characterization model is vestandtransportfromfieldtofarm. the GWP . Figure 8.20 shows the aggregation of environ- 100 GWP : Potential contribution of a mental interventions (e.g. emissions, material 100 greenhouse gas to the heating of the atmo- streams) into midpoint categories (also called sphere over a 100-year time horizon. The impact categories) and endpoint categories (also global warming potential (GWP) measures called damage categories). The approach for how much energy the emissions of a gas aggregating environmental interventions is com- absorbs relative to the emissions of the parable for midpoint and endpoint categories. same amount of carbon dioxide (CO ). Here this aggregation, which consists of three 2 266 M. Wagner and I. Lewandowski

In the ﬁrst step, the impact category to be (damage categories) represent the area of protec- analysed (here climate change) is chosen. For tion affected by the environmental intervention. this impact category, the corresponding category One weakness of current LCA approaches is indicator is infrared radiative forcing and that not all relevant environmental impacts can yet the characterisation model is GWP100. In the be described by impact categories. This is espe- second step, relevant environmental impacts cially true for impacts on biodiversity and soil (or environmental interventions) are assigned to quality, both of which are relevant for biomass this impact category. An example of an environ- production. Section 9.3.3 presents approaches on mental impact of miscanthus cultivation (see how land use and biodiversity aspects can be Fig. 8.18), which is assigned to the impact cate- integrated into LCA. gory “climate change” is GHG emissions The choice of impact categories included in

(e.g. CO2,CH4 and N2O). These are mainly an LCA is not standardised. Climate change and caused by the production and application of resource depletion are most commonly chosen. nitrogen fertilizer. All these GHGs impact the However, for biomass production and utilization, climate and lead to global warming. However, relevant potential ecological impacts also include the extent to which they influence the climate land and water use, marine ecotoxicity, human varies significantly. For each GHG, there is a toxicity and freshwater eutrophication (Wagner characterization factor, which expresses its et al. 2017). Therefore, it is recommended that global warming potential in kg CO2- those impact categories should be chosen for equivalents/kg gas based on the characterisation which relevant impacts are anticipated in the model. For example, N2O is a much more potent biobased value chain under analysis (Wagner GHG than CO2. It has a characterization factor of et al. 2017). 265, which means that 1 kg N2O has a global An LCA is performed in the following steps: warming potential of 265 kg CO2-equivalents. This is taken into account in the third step, the 1. Definition of goal and scope calculation of the results for this impact category. Specification of the objective of the study as The impact category “climate change” well as intended application and audience, belongs to the so-called “midpoint categories”. setting of system boundaries, choice of impact These indicate environmental problems that lie categories to be considered. along the environmental mechanism, at an inter- 2. Life-Cycle Inventory (LCI) mediate point between the environmental Data acquisition and derivation of assumptions interventions and the final damage to the area of underlying the study. protection (see Fig. 8.20). An environmental 3. Life-Cycle Impact Assessment (LCIA) mechanism is defined in ISO 14044 (2006)asa: Calculating the potential ecological impact System of physical, chemical and biological pro- according to chosen impact categories. cesses for a given impact category, linking the life 4. Interpretation cycle inventory analysis results to category Description and interpretation of results, devel- indicators and to category endpoints (ISO 14040 opment of conclusions and recommendations. 2006, p. 12). Midpoint categories quantify, for example, The objectives of an LCA (step 1) can be the amount of CO2 equivalents emitted, but manifold and include, among others: they do not give any information on the effect on the damage category. In our example, this • The assessment and quantification of the could be the effect of species extinction caused potential environmental impact of a product by global warming on the damage category “eco- or service for one or more environmental system quality”. Thus the endpoint categories impact categories, 8 Markets, Sustainability Management and Entrepreneurship 267

• The identification of environmental hot spots conventional cost accounting in that “true” in a production process or unit, costs are assessed, including costs of waste • The quantification of environmental trade- removal and recycling, and “hidden” costs, such offs, as for environmental protection and financial • The provision of decision support for the envi- risks. These are then clearly attributed to a par- ronmental improvement of a production pro- ticular product system. This allows the costs of cess or unit, environmental intervention to be assessed (Swarr • The development of a database for customer et al. 2011). information and “green” marketing strategies. Overall, LCC can serve as a tool:

The practical performance of an LCA study • To understand the cost drivers of a product can be supported by calculation programs, such system, as Excel, or professional LCA programs, such • To gain a realistic evaluation of costs beyond as GaBi (www.gabi-software.com), SimaPro production prices, (www.pre.nl/simapro/default.htm) and Umberto • To perform a trade-off evaluation (such as (https://www.ifu.com/umberto/). One example price-versus-disposal costs), of a licence-free, open-access LCA program, • To assess “ignored costs” or externalities, which is very simple to use, is CCalc2 (http:// • To identify options for improvement, www.ccalc.org.uk/ccalc2.php). However, this • To validate pricing strategies, program only covers selected impact categories • For decision support. and is limited in its utilization possibilities. An example of an open-access LCA software with In order to avoid double accounting with features comparable to those of professional LCA, the costs assessed in “environmental” programs is openLCA (http://www.openlca.org/). LCC must relate to real money flows and thus The major benefit of using LCA programs is that do not include monetarised environmental they offer structured data processing and perfor- impacts (Swarr et al. 2011). That means, if for mance of the impact assessment step. Users can example CO2 emissions are quantified in the back these up with their own data banks for the LCA, they should not be priced in the LCC for inventory analysis. LCA data can also be accessed instance in form of costs of CO2 certificates. In from commercial databases, such as ecoinvent LCA, environmental impacts are quantified in

(www.ecoinvent.ch), or open-access databases, physical units (e.g. kg CO2eq.); in LCC, costs such as the ELCD database (http://eplca.jrc.ec. are quantified in monetary units (Euro or other europa.eu/ELCD3/), the NEEDS Life Cycle currencies). Besides internal also external costs Inventory database (http://www.needs-project. are included, if these impacts are not already org/needswebdb/) and ProBas (www.probas. accounted for in the LCA or sLCA. umweltbundesamt.de) from the German Umweltbundesamt. Internal and External Costs Internal costs are costs for the production, use and end-of-life of a product that are 8.3.2.2 Life-Cycle Costing (LCC) paid by an entity or stakeholder directly Life-cycle costing, abbreviated to LCC in the involved in the product system value chain. following sections, is the economic equivalent External costs are costs that are borne of LCA. “Environmental” LCC was actually by third parties outside the product system developed as an economic counterpart to LCA value chain (e.g. waste recovery fees, indi- and sLCA. LCC summarizes all costs of the rect health costs) (Swarr et al. 2011). physical life cycle of a product or service that are borne by one or more of the parties involved in the life cycle (e.g. farmers, producers, LCC adopts the structure given in ISO 14040 consumers/users). This is different from for LCA. It also uses corresponding product 268 M. Wagner and I. Lewandowski system boundaries, a functional unit and defines stakeholders). These social endpoints are compa- indicators that are quantifiable, measurable and rable to damage categories in LCA. The social monitorable. But in LCC, the only unit of mea- aspects assessed are generally related to: (1) the surement is the currency. For this reason, the life- behaviour (e.g. decision taking), (2) socio- cycle impact assessment stage is not included economic processes (downstream effects of and so LCC only consists of the three steps: socio-economic decisions), or (3) impacts on (1) Definition of goal and scope, (2) Inventory human, social or cultural capital (Benoıt̑ and analysis and (3) Interpretation. There is no Mazijn 2009). In sLCA, sub-categories are impact assessment, because the aggregated data defined as socially significant themes or provide a direct measure of impact. attributes. Two complementary sub-category Through LCC, the cost assessment can be classification schemes have been proposed: clas- performed from the different perspectives of sification according to stakeholder and classifica- multiple agents along the life cycle. This means tion according to social impact pathway. These that, for our example of bioethanol production, lead to two methods of categorising social impact the costs can be assessed from the perspective of categories (Benoıt̑ and Mazijn 2009): a manufacturer of bioethanol, a consumer of bioethanol and a municipality intending to sup- 1. Classification of social impact categories port the establishment of miscanthus production according to the stakeholder affected for a bioethanol plant. In practical application, e.g. worker, consumer, local community, soci-

LCC can support the assessment of CO2 mitiga- ety, value chain actors not including consumers tion costs for miscanthus-based ethanol (see Table 8.1). The indicator results of the production. sub-category are aggregated into impact categories. However, there are no characterization models available for this that are generally 8.3.2.3 Social Life-Cycle Assessment accepted by sLCA practitioners. (sLCA) 2. Classification of social impact categories Social life-cycle assessment, abbreviated here to according to the social impact pathway, sLCA, is the social counterpart of LCA. The e.g. human rights, working conditions, health UNEP/SETAC Life Cycle Initiative defines and safety (see Fig. 8.21). sLCA as a Social impact (and potential impact) assessment Results can be aggregated over the life cycle, technique that aims to assess the social and socio- for example 75% of the life cycle of a certain economic aspects of products and their potential positive and negative impacts along their life cycle product are free from child labour. (Benoıt̑ and Mazijn 2009, p. 100). At each geographical location in the value chain, the social and socio-economic inputs It has the same structure as LCA with the steps may be performed by five main stakeholder (1) Definition of goal and scope, (2) Inventory groups: workers, local communities, society analysis, (3) Impact Assessment and (4) Interpre- (national to global), consumers and value chain tation. It also follows the life-cycle approach, but actors (see Table 8.1). with significant differences to LCA as no standards comparable to ISO 14040/44 have A stakeholder category is a cluster of stakeholders been established and the social impact categories that are expected to have shared interests due to their similar relationship to the investigated prod- in sLCA are less well developed than the envi- uct system (Benoıt̑ and Mazijn 2009, p. 101). ronmental impact categories of LCA. Social aspects assessed in sLCA are the Table 8.1 shows sub-categories for the differ- consequences of positive or negative pressures ent stakeholder groups. These sub-categories are on social endpoints (e.g. well-being of assessed through the use of inventory indicators, 8 Markets, Sustainability Management and Entrepreneurship 269

Table 8.1 Classification of social impact categories sub-categories and their inventory indicators in according to the stakeholder affected (Benoıt̑ and Mazijn 2009) the puplication “The methodological sheets for subcategories in social life cycle assessment Stakeholder (s-lca)” (see further reading). categories Sub-categories The identification and selection of Worker Freedom of association and collective bargaining subcategories for a planned sLCA should be Child labour performed in consultation with the stakeholders. Fair salary Working hours 8.3.2.4 Life-Cycle Sustainability Forced labour Assessment (LCSA) Equal opportunities/ The aggregation of LCA, LCC and sLCA into an discrimination LCSA reveals any trade-offs between the three Health and Safety pillars of sustainability. Social benefits/social security The conditions for an LCSA are: Consumer Health and Safety Feedback mechanism Consumer privacy • The use of consistent system boundaries for Transparency all three assessments, End-of-life responsibility • The assessment is based on the physical (not Local community Access to material resources marketing!) life cycle of a product, i.e. a Access to immaterial resources cradle-to-grave approach, Delocalization and migration • The use of compatible inventory approaches Cultural heritage for all three assessments. Safe and healthy living conditions The first step in an LCSA is the choice of Respect of indigenous rights appropriate functional unit. According to Benoıt̑ Community engagement and Mazijn (2009), the following steps are Local employment required to define the functional unit: Secure living conditions Society Public commitments to sustainability issues • Description of the product by its properties, Contribution to economic including its social utility (which encompasses development various social functions for the consumer such Prevention and mitigation of as convenience and prestige); armed conflicts • Determination of the relevant market segment; Technology development • Determination of relevant product alternatives; Corruption • Definition and quantification of the functional Value chain actors Fair competition unit, in terms of the obligatory product not including Promoting social responsibility properties required by the relevant market consumers Supplier relationships segment; Respect of intellectual property rights • Determination of the reference flow for each product system. which can be either quantitative or qualitative. An example of an inventory indicator for the 8.3.2.5 Case Study LCSA stakeholder “worker” in the sub-category “Free- This section describes how an LCSA of ethanol dom of association and collective bargaining” production for the European market, based either could be evidence that this freedom is restricted. on European miscanthus production or Brazilian You can find more detailed information on the sugar cane production, could be approached. 270 M. Wagner and I. Lewandowski

Fig. 8.21 Classiﬁcation of social impact categories according to the social impact pathway (Benoıt̑ and Mazijn 2009)

Definition of Goal and Scope between the production systems of ethanol from The goal of the study is to assess the miscanthus and ethanol from sugar cane are: sustainability of ethanol-based biofuels from var- (a) the location of the biomass production ious production options. The assumption is that, (miscanthus in Europe, sugar cane in Brazil); from an environmental, social and economic (b) the form of transport as well as the transport point of view, ethanol-based biofuel is more sus- distance; and (c) the conversion technology. The tainable than the fossil reference gasoline. largest transport distance in the miscanthus chain Although Brazilian sugar cane ethanol is state is the transport of bales from the farm to the of the art and an economically viable option, ethanol plant (<100 km). By contrast, sugar ethanol produced regionally from lignocellulosic mills with integrated ethanol plants are located biomass derived from perennial non-food crops directly by the sugar cane fields, because sugar is perceived to be a more sustainable alternative cane biomass needs to be processed immediately. for the European market. The largest transport distance for sugar cane eth- The function we are looking for here is the anol is that of the intercontinental shipping from supply of energy in the form of transportation Brazil to Europe (>8000 km), which occurs after fuel. Therefore, the functional unit chosen is 1 GJ the ethanol has been brought from the sugar mill (ethanol or gasoline). to the harbour (<100 km). The conversion of The system boundaries for our analysis polysaccharides into ethanol requires energy. In encompass: cultivation of the biomass including the case of a sugar cane ethanol plant, this can be production of input substrates, transport of the fully supplied from the bagasse, which can even biomass to the conversion plant, conversion into provide excess electricity. The conversion of ethanol, transport of the ethanol to the end user/ lignocellulosic biomass from miscanthus into customer, and final use. The major differences ethanol requires several pre-treatment steps, 8 Markets, Sustainability Management and Entrepreneurship 271 including the use of enzymes, and is thus very categories, such as the “local community”, could energy-intensive (Gilpin and Andrae 2017). be affected and should be considered. The environmental impact categories most For the LCC, all direct costs, including labour, relevant for perennial crop-based value chains material, energy and transport costs, were assessed. are, among others: climate change, fossil fuel depletion, eutrophication and acidification Inventory Analysis (Wagner et al. 2017). These were therefore cho- Figure 8.22 shows the midpoint and endpoint sen for the LCA. categories chosen for our ethanol case study. As working conditions in sugar cane The data inventory can be performed through plantations are often reported to be poor, we a literature search, from online databases choose “workers” as the most relevant stake- (e.g. ILO for labour conditions) or commercially holder group for the current example and available databases (ecoinvent for life-cycle included them in all sub-categories listed in data on material and energy flows), from com- Table 8.1. However, when analysing the impacts pany and/or government online resources, and of biobased value chains, also other stakeholder from measurements and stakeholder interviews.

Fig. 8.22 Midpoint and endpoint categories, sub-categories of stakeholders and cost categories assessed in the case- study LCSA on bioethanol (adapted from Valdivia et al. 2011) 272 M. Wagner and I. Lewandowski

Stakeholder interviews for data acquisition and regulated. Another positive aspect is the fact require the most effort, involving travel and per- that the production of miscanthus ethanol creates formance of the interviews, both of which are new jobs in Europe. By contrast, working time-consuming. The assessment of data for the conditions in sugar cane plantations are poor production of ethanol from miscanthus is chal- (Rocha et al. 2010) and human rights violations lenging, because this value chain has not yet been can occur, such as forced or child labour. Also, implemented and the conversion technology is wages are low and work is only available season- still at the R&D stage. For this reason, many ally. However, this social assessment ignores the assumptions have to be made in the LCI of this question of the need for these jobs and income chain. For the LCA, environmental and impact opportunities in Brazil. assessment data for ethanol produced from The overall environmental performance is miscanthus were based on the authors’ own best for sugar cane. The efficient recycling of calculations (unpublished). The environmental nutrients, the full autonomy of energy supply data for sugar cane-based ethanol production through bagasse, and low fertilizer demands were taken from Munõz et al. (2014) and Seabra lead to the best environmental performance et al. (2011). For the sLCA and the LCC, no data with regard to GWP and FFD, and a better were acquired; instead best guesses were used. performance than miscanthus with regard to The reference values for gasoline were taken EP and AP. Both biobased ethanol production from the ecoinvent database (Weidema et al. pathways perform better environmentally than 2013). the fossil alternative with regard to GWP and FFD. However, they perform worse with regard Impact Assessment to AP and EP, mainly due to fertilizer-induced Figure 8.23 shows a high-level summarised emissions. approach for the qualitative presentation of the Miscanthus-based ethanol production carries (hypothetical) results of the LCSA. The results the highest production costs because wages in were ranked in relation to the alternatives. That Europe are higher and the second generation means, of the three systems (miscanthus-based ethanol production technology is much more ethanol, sugar cane-based ethanol and gasoline) expensive than that for sugar crops. Anticipated the one with the lowest impact is shown in green transport costs for the import of sugar cane etha- and the one with the highest impact in red. As nol to Europe are relatively low because it is mentioned above, the LCA data stem from the transported by ship. literature (Munõz et al. 2014; Seabra et al. 2011), Overall, miscanthus-based ethanol is to be but no real data were available for the LCC and preferred from a social point of view and sugar sLCA, and therefore the cost and social impact cane ethanol from an environmental point of information given in Fig. 8.23 is hypothetical. It view (for those impact categories considered in is included here to show how LCA, LCC and the LCSA). sLCA can be integrated into an LCSA. Here, the results are only demonstrated quali- tatively. When conducting an LCSA, quantita- Interpretation tive data are used for all impact categories to Miscanthus-based ethanol is the most beneficial quantify the relative performance and trade-offs alternative from a social viewpoint, because between the product pathways. working conditions in Europe are well defined 8 Markets, Sustainability Management and Entrepreneurship 273

Fig. 8.23 Comparative results for the LCA, LCC and et al. (2014) and Seabra et al. (2011). Results for the LCC sLCA assessment and its compilation into an LCSA; and sLCA are hypothetical. GWP Global Warming Poten- performed for ethanol production from miscanthus and tial, FFD Fossil Fuel Depletion, AP Acidiﬁcation Poten- sugar cane. Results for the LCA were taken from Mun˜oz tial, EP Eutrophication Potential 274 M. Wagner and I. Lewandowski

Review Questions and References Further Reading Baumann H, Tillman AM (2004) The Hitch • What are the purposes and goals of system Hiker’s guide to LCA: an orientation in life and value-chain/life-cycle assessments in the cycle assessment methodology and applications. bioeconomy Studentlitteratur, Lund • What is Life-Cycle Sustainability Assessment Benoıˆt Norris C, Traverso M et al (2009) The (LCSA)? methodological sheets for subcategories in social • What are the conditions and methodological life cycle assessment (s-lca). Available on: http:// steps for the performance of a consistent www.lifecycleinitiative.org/wp-content/uploads/ LCSA? 2013/11/S-LCA_methodological_sheets_11.11. • What can the results of an LCSA be used for 13.pdf and by whom? 8 Markets, Sustainability Management and Entrepreneurship 275

8.4 Entrepreneurial Ventures and the Bioeconomy

Andreas Kuckertz, Elisabeth S.C. Berger, and C. Arturo Morales Reyes

Starting up and growing # Singkham/Fotolia

Abstract Entrepreneurship is based on entrepre- Keywords Entrepreneurial opportunity; Busi- neurial opportunities and the bioeconomy ness model; Start-up process offers a plethora of such opportunities. As the bioeconomy—at least partially—addresses Learning Objectives humanity’s greatest challenges, it consequently After studying this chapter, you will be able to: offers the greatest entrepreneurial opportunities as well. One useful tool to break down the idea • Understand the challenges the bioeconomy generation process and manage the entrepreneur- faces and to be able to interpret them as ial process is the business model canvas, which entrepreneurial opportunities. makes it possible to clearly describe the value • Know the key tools that entrepreneurs in the proposition of a new venture in the bioeconomy. bioeconomy can use to manage the start-up The lean start-up approach can help entrepreneurs process. in the bioeconomy to move efﬁciently through the • Get an initial idea of the ﬁrst steps necessary entrepreneurial process and to quickly develop a to become an entrepreneur in the bioeconomy. value proposition and a validated business model. 276 A. Kuckertz et al.

8.4.1 Entrepreneurial Opportunities might provide funds and support to reduce this and the Bioeconomy market failure. However, at the same time this market failure with an environmental impact Humans being conscious of their footprint on this provides grounds for many entrepreneurial planet is not a novelty. More than 40 years ago opportunities in the bioeconomy. the Club of Rome (Meadows et al. 1972) introduced the world to different model-based Entrepreneurial Opportunity scenarios that illustrated the limits of economic The opportunity to establish a new firm growth, which directly correlate with the finite which in the bioeconomy often results natural resources of planet earth. Despite signifi- from market failure. Huge market failures cant public awareness, those same issues remain provide huge opportunities for entrepreneurs pressing and relevant. The bioeconomy to establish new ventures that create value addresses these challenges, but the transition to by addressing the challenges facing it will not happen overnight. humanity. Government interventions might be one solution, but private initiative from entrepreneurs has promising potential too (Kuckertz and If the market failure creates a problem, an Wagner 2010). Providing business solutions to individual can engage in entrepreneurial activity accomplish the switch from our current fossil and generate profit by discovering the opportu- fuel based economy is the main task of nity to provide a solution, evaluating the oppor- entrepreneurs in the bioeconomy. Entrepreneurs tunity, and ultimately exploiting it by providing are likely to provide valid answers to questions the solution (Shane and Venkataraman 2000; like how we might produce more with less and Dean and McMullen 2007). When providing how we can secure more high quality food, more such bioeconomic solutions, entrepreneurs con- energy, and more social stability with fewer tribute to the mitigation of the market failure and resources, less space, less water, less energy, hence to the development towards the and less risk. bioeconomy. The Visioverdis case study is a Addressing those challenges with a meaning perfect example of the tremendous creativity in mind and not with a given fixed set of that entrepreneurs can apply to address the huge objectives and resources is an ongoing process, challenges of the bioeconomy. in which entrepreneurs use their existing networks to accomplish targets that will eventu- Box 8.3 Case Study Visioverdis: The ally lead to newly established companies GraviPlant addressing the challenges of the bioeconomy. Alina Schick, a biologist with expertise in This is not just an altruistic mindset but also the botany with focus on plant physiology who starting point for a business opportunity in areas received her PhD in agricultural sciences such as energy, food security and resource from the University of Hohenheim in efficiency. Germany, has been wondering about one There are several barriers hindering the devel- of those big challenges for society. More opment of the bioeconomy. Companies and specifically, Alina has been asking herself: individuals might be aware of the threats to How should the cities of the future be planet earth, but at the same time business designed? If population density concentrates practices today often do not value, for instance, in metropolitan areas, how can air pollution free natural assets. Therefore, natural assets are be minimised? Pollution concentration in especially prone to abuse by society and major cities also brings two major side individuals (Dorfman 1993). Governments (continued) 8 Markets, Sustainability Management and Entrepreneurship 277

Fig. 8.24 The GraviPlant #Ala`biso/Visioverdis

Box 8.3 (continued) The tree rests in a sealed container with effects: Green areas tend to disappear and a high-tech plant care system. The con- land prices increase exponentially making it tainer is just docked to a water pipe and almost impossible to have parks in the city the tree grows fully independently, requir- or to maintain existing green areas. ing no maintenance for a four-year period. Alina’s start-up called Visioverdis Currently available solutions (like vertical (Visioverdis 2017) solves this problem planting systems or creeper plants) in con- with the GraviPlant, a tree that can be trast require constant maintenance to installed on building facades and grows prevent damage to the building’s infra- perpendicular to the wall (see Fig. 8.24). structure. Visioverdis’ goal is not only to The idea is based on Alina’s doctoral stud- conquer the European market, but also to ies during which she managed to grow unleash the potential of the GraviPlant in trees horizontally by rotating them in their countries that currently suffer from severe own axis and giving them precise doses of air pollution and drought such as China and water and nutrients (Clinostat). After test- Saudi Arabia. ing different types of trees and building the first prototype she proved the existence of a What exactly constitutes an entrepreneurial business opportunity for her research by opportunity has been debated in the academic participating in and winning several start- literature for quite some time (Kuckertz et al. up idea competitions. In 2017, Visioverdis 2017). There seems to be consensus that the pro- managed to acquire a contract to integrate cess of recognising entrepreneurial opportunities trees into the facade of the building involves being alert, actively searching for them, designed for the world show that celebrates and gathering information about new ideas on the 500th anniversary of the protestant ref- products or services. Economic theory ormation in Wittenberg, which offers an (Schumpeter 1934;Kirzner1973;Drucker1984) opportunity to present the idea to a global suggests that entrepreneurs should particularly audience. look for four different types of trends and 278 A. Kuckertz et al. developments, as these are likely to trigger • Where they can be active in a large and grow- entrepreneurial opportunities. These are: ing market • Where there is a balance of risk and potential • Information asymmetries and incongruences The potential to become entrepreneurially • Exogenous shocks active in the bioeconomy is therefore enormous, • Changes in demand as an equilibrium of natural sources and an ideal • Changes in supply bioeconomy is unfortunately not yet in sight. The potential is also reflected by the current estimated For instance, it appears obviously incongruent value of the bioeconomy exceeding two trillion that each year eight million people die of hunger euros and employing 22 million people in Europe caused by scarcity of water and agricultural land (agriculture, forestry, fisheries, food, and (Conforti 2011), whereas at the same time in the chemicals) (European Commission 2012). Each developed world “redundant” food is being euro invested in the bioeconomy is estimated to destroyed. Resolving such incongruity constitutes generate 10 € of added value by 2025. This is an opportunity for bioeconomy entrepreneurs. fertile ground for entrepreneurial activity. Similarly, climate change [or other earth system processes that are in danger (Rockstrom€ et al. 2009)] could be interpreted as exogenous shocks 8.4.2 Managing the Start-Up Process that are likely to be addressed with new in the Bioeconomy technologies brought to the market by innovative entrepreneurs. In a similar vein, such exogenous In general, entrepreneurship deals with the ques- shocks can prompt changes on the demand side: tion of how individuals effectively organise any Endconsumersnowtendtowantethical,green, growth-oriented creation process on the basis of and sustainable products and services, and opportunity (Kuckertz and Mandl 2016). Having entrepreneurs can cater for such desires with new an idea of what product or service in the offerings. bioeconomy customers could benefit from is Given the sometimes enormous failure rates thus often the first step towards exploiting such of entrepreneurial ventures, entrepreneurs need an entrepreneurial opportunity and founding a to assess whether a particular opportunity has the start-up (Kuckertz et al. 2017). However, tradi- potential to be turned into a profitable business. tional market research instruments often fail to There is obviously no way to do so in an objec- assess the potential of a product or service, which tive and completely reliable manner, however, to does not yet even exist. The only way to find out assess whether an entrepreneurial opportunity is is to develop and test the product early. interesting, it may help to think about these opportunities as a professional investor would. Business Model That investor might be a venture capital firm Explains the key components of a business (Kollmann and Kuckertz 2010) or a unit and how they relate to each other in order investing in promising start-ups on behalf of a to create value. larger corporation (Roehm et al. 2017). Such investors would look for opportunities: A popular approach to become entrepreneur- • Where entrepreneurs can create significant ially active is the lean start-up method, which value for customers or users describes founding a business in a very lean and • Where the opportunity matches the experi- resource-conscious manner. It stands in opposi- ence and competence of the entrepreneur or tion to more traditional approaches of managing the venture team the start-up process that usually include writing a • Where an important problem is addressed or detailed business plan and approaching the mar- needs will be met for which customers are ket only when a close-to-perfect offering has willing to pay a significant premium been developed. The lean start-up method is 8 Markets, Sustainability Management and Entrepreneurship 279 related to the Japanese car manufacturer minimum viable products in different industry Toyota’s lean manufacturing, an approach seek- segments such as bicycles and door handles. ing to eliminate as much waste as possible from production processes (Womack and Jones 1996). Minimum Viable Product Similarly, the lean start-up method seeks to elim- Constitutes a reduced offer that is inate as much unnecessary effort as possible subjected to customer feedback as quickly from start-up processes. and often as possible in order to test a start- Eric Ries (2011) is credited with applying up’s hypotheses about actual market needs. lean principles to founding start-ups. The lean start-up method is an iterative and agile method to develop a start-up based on listening to the The minimum viable product represents a pro- needs of potential customers and testing their totype that might be far from perfect, but which willingness to pay for the service or product works. Once there is a minimum viable product, offered by the start-up. During the process, the the build-measure-learn cycle can be initiated focal question is whether the product or service (Blank 2013b). The cycle aims to enable solves a real problem from real customers and validated learning by continuously improving whether a valid business model can be devel- the minimum viable product based on customer oped. Instead of planning far into the future, the feedback. The development of the minimum via- aim is to learn by doing, and by introducing the ble product towards a functioning business product or service to the market as early as pos- model might include numerous incremental sible. This naturally involves a risk of failure, but changes, but might also require a pivot, that is, as failure never can be completely avoided, it is a more radical correction from the original idea reasonable to embrace it as early as possible. towards a new value creation if some underlying Failure creates opportunities to learn and to try assumptions prove invalid. again to succeed (Blank 2013a) and thus many Especially in the bioeconomy with potentially entrepreneurs go through many failed projects highly innovative products, customers and before they eventually find a valid business entrepreneurs might need to discover the model (Mandl et al. 2016). product’s added value together in order to arrive The first step of the lean start-up method at a functioning business model. The minimum involves making basic assumptions concerning viable product illustrated in Fig. 8.25 exemplifies possible customer requirements and the potential the incremental change in farming tools market. Assumptions should initially be according to the needs of the farming sector. validated by talking to and listening to potential Even the first approach to a farming tool is fully customers. The potential failure and learning functional, but it takes several iterations to arrive then needs to be enabled quickly by developing at the final, smart solution. While a minimum a so-called minimum viable product. For viable product helps to test the market, it is not instance, the German start-up betula manus is sufficient to build a company around it. Instead currently trying to establish whether there is entrepreneurs need to think in terms of business money making potential in tree bark, which is a models, which answer the question of what key waste product from the paper industry (Betula components of the company interact to generate Manus 2017). To do so, betula manus is testing value for the customer and therefore provide a the market potential of tree bark with different competitive advantage for the company. 280 A. Kuckertz et al.

Fig. 8.25 Minimum viable product of basic farming tools developing into software-based precision agriculture

Fig. 8.26 UrbanFarmers business model (Osterwalder and Pigneur 2010, applied to UrbanFarmers 2013)

The business model canvas is a powerful, iter- delivers, and captures value (Osterwalder and ative tool (see Fig. 8.26) to think beyond a specific Pigneur 2010). The business model canvas is use- idea or product and develop the business model. ful to understand and visualise the interplay of the The canvas consists of nine distinct components different components creating value. While it that describe how an organization creates, might be helpful to understand existing business 8 Markets, Sustainability Management and Entrepreneurship 281 models, the business model canvas is also suitable value proposition of UrbanFarmers is a func- to design business model innovations, which tional aquaponics branded urban farm (this describe novel approaches towards the design of includes design, development, operations, and single components and the interplay of such sales). It offers its customers a system that is components. 20 times more productive than a conventional The canvas can be compared to a theatre. The soil-based greenhouse. The value proposition left side of the canvas represents the backstage, might be different for each customer segment, the creative arena of the organization, which is the term to describe who the company creates usually not visible to customers. The right side of value for. UrbanFarmers is a business to business the canvas represents the stage, the value part of company and its customer segments include the organization, which needs to be clear to supermarkets and commercial growers. The customers. The nine components of a business channels are used to reach customers and point model are described below on the basis of the out the value proposition to them. UrbanFarmers bioeconomy start-up UrbanFarmers. This com- approaches potential customers through pany has spent the last six years delivering a business meetings, and makes presentations to commercial scale aquaponic solution. investors and potential farm buyers. Moreover, Aquaponics is the integration of two separate UrbanFarmers uses the UrbanFarmers-BOX established farming technologies: recirculating (a container-sized demonstrator) and its pilot water fish farming (aquaculture) and soil-less farms in Basel and The Hague to create interest plant farming (hydroponics). in the firm’s products. Media coverage of their The combination of food production systems current reference projects showing the interest of creates a symbiotic relationship that requires a end consumers in UrbanFarmers’ salad and minimum input as all the water and its nutrients UrbanFarmers’ fish production is an important are recirculated in a closed loop system where proof of concept of a profitable business for both fish and plant production can take place future investors and farm buyers. The customer (Carlsson 2013).The combination results in pro- relationships describe how the relationship with duction yields higher than are available from the relevant customer segment is created and soil-based cultures (Savidov et al. 2007), a sus- maintained. Revenue streams are generated tainable use of natural resources like the elimina- through selling the value proposition. In other tion of 90% of the fresh water requirement words, it answers the question of where the (Blidariu and Grozea 2011), and an organic pro- money is made. UrbanFarmers generates one duction method free from pesticides and time revenues from the development and con- antibiotics. The aquaculture (fish farming) waste- struction of a farm and recurring revenues from water (effluent) is used as organic fertilizer for the technical service, audits, key account man- plants, with significant water savings. The use of agement, and communication services of the the aquaculture wastewater as an organic fertil- farm. Recurring revenues also include royalty izer negates the need for fossil-based fertilizers. fees for licensing the UrbanFarmers proprietary software and using the UrbanFarmers brand. Whether the revenue streams are sufficient to Business Model Canvas make the business model work depends on the Combines nine components associated components on the left side of the model. The with a firm to illustrate how value is cre- key activities are required to create the value ated and can be utilised to understand proposition. In the case of UrbanFarmers, its key existing business models, but also to create activities are the farm design, commissioning, innovative business models. operations and maintenance services and brand management. The key resources are needed to Central to the business model is the value realise the key activities. To achieve a functional proposition, which addresses the added value farm, the key resources of UrbanFarmers are the the company provides to its customers. The team, software platform, the brand, and the 282 A. Kuckertz et al. expertise in delivering a functional aquaponic farm to its customers acquired over the past six ok, answering them all is a learning process years. The activities and resources might be inter- you will have to go through. Remember? nal or come from a key partner outside the Build, measure, learn! organisation. UrbanFarmers cooperates with several key partners such as greenhouse constructors 1. What is the business idea? that can deliver commercial greenhouses modified 2. What makes your idea special? for aquaponic production purposes, and suppliers 3. Who are the customers and how big is of consumables such as the fish food and the target group? seedlings. Another important key partner for 4. What is the business model? UrbanFarmers is the media helping to popularise 5. Who are the competitors? (includes and sustain the brand UrbanFarmers. Investors products/solutions similar to yours) and commercial producers who do not want to 6. Who is part of the founder team? Who is get involved in the operations and maintenance missing? of the farm can also be key partners. As a whole Once you can answer all these the left side of the business plan creates costs, questions, you should take four steps that which form the cost structure of the business can help to develop your idea further and model. In other words, the left side of the plan move towards a sustainable business model answers the question of how much it costs to in the bioeconomy: create the value. UrbanFarmers is becoming an international company with a franchise model, 1. Join a start-up event in your city and get and its cost structure is currently a combination to know the start-up scene in town. of salaries, farm construction, payment to These events are the perfect place to suppliers, and maintenance of the platform. network and exchange your ideas with The goal of any entrepreneur is thus to create others. a business model that not only creates value, but 2. Pitch your idea and discuss it with peo- that also creates a favourable balance of cost ple you do not know. In this way, you structure and revenue streams. Only when this can obtain valuable input about the first goal has been achieved can a firm say it has a problems your idea may encounter. viable business model. 3. Find a team that can help you to make your idea a reality. Only when the entire team shares the same vision, can Box 8.4 Hands on: Let’s Get Started! objectives be accomplished. If you have an idea, that is great! We just 4. Work with the business model canvas managed to motivate you to change the intensively. And look for a mentor who world. Here, you will find a simplified set can provide valuable feedback. of steps that can help you to get started. First, check your idea. To create a better world is always a great starting point for Review Questions any start-up. However, at some point you will need money to progress your idea. • What is an entrepreneurial opportunity and Therefore, the basis for a financially sus- why is the bioeconomy likely to offer many tainable company is an idea with market entrepreneurial opportunities? potential. Use the following “W” questions • What is a business model and how can it be to test the market viability of your idea. If described? Try to identify start-ups in the you cannot answer all the questions that is bioeconomy and describe their business model. 8 Markets, Sustainability Management and Entrepreneurship 283

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Part III Transition to a Sustainable Bioeconomy Modelling and Tools Supporting the Transition to a Bioeconomy 9

Elisabeth Angenendt, Witold-Roger Poganietz, Ulrike Bos, Susanne Wagner, and Jens Schippl

# Ulrich Schmidt

E. Angenendt (*) S. Wagner Institute of Farm Management; Farm Management, Institute of Agricultural Policy and Markets; Agricultural University of Hohenheim, Stuttgart, Germany and Food Policy, University of Hohenheim, Stuttgart, e-mail: [email protected] Germany W.-R. Poganietz Center for Environmental Systems Research (CESR), Research Area Energy – Resources, Technologies, University Kassel, Kassel, Germany Systems, Institute for Technology Assessment and e-mail: [email protected] Systems Analysis (ITAS), Karlsruhe Institute of J. Schippl Technology, Karlsruhe, Germany Research Area Innovation Processes and e-mail: [email protected] Impacts of Technology, Institute for Technology U. Bos Assessment and Systems Analysis (ITAS), Department Life Cycle Engineering (GaBi), Institute for Karlsruhe Institute of Technology, Karlsruhe, Acoustics and Building Physics, University of Stuttgart, Germany Stuttgart, Germany e-mail: [email protected] Thinkstep AG, Leinfelden-Echterdingen, Germany e-mail: [email protected]

# The Author(s) 2018 289 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_9 290 E. Angenendt et al.

Abstract The strategy of using biogenic resources in a bioeconomy could be seen as one answer to the geopolitical challenges the world is facing in the twenty-ﬁrst century. One of those challenges is the closing of the prosperity gap between rich and poor countries. However, considering the current global population growth and anthropogenically induced climate change, it is expected that efforts to achieve this goal will be accompanied by an increasing demand for food, feed, products, and energy, which cannot be satisﬁed by the expected supply of non-biogenic raw materials and resources. Transforming an economy is extremely complex: domestic and international obligations, traditional practices, and divergent interests and wishes need to be taken into consideration. This requires the development of an appropriate strategy and adequate instruments and tools to support it. This chapter discusses a range of possible knowledge-based instruments and tools that take a systemic view of the challenges in such transformation processes.

Keywords Scenarios • Scenario building • Economic models • Ecological and biophysical models • Life cycle assessment • Integrated assessment models

Learning Objectives Since rich countries are unlikely to renounce After studying this chapter, you should: their wealth, closing the prosperity gap will be accompanied by an increasing demand for food, • Understand how transformation theory can feed, products, and energy. It is expected, how- support transition processes. ever, that in the longer run, increasing demand • Have an overview of main instruments and will not be satisfied by the available supply of tools to quantify and assess transition metals, minerals, and fossil fuels. Recycling developments. strategies can reduce the pressure on primary • Be acquainted with the main challenges, resources, but even with technological progress, strategies and drivers to facilitate the transi- excess demand for non-renewable materials will tion to a bioeconomy. not be sufficiently lowered. Climate change and increasing pressure on the natural environment demand a change in strat- 9.1 Introduction egy. For this reason, the European Commission, among others, proposes a radical change in “its One core geopolitical challenge in the twenty- approach to production, consumption, first century is closing the prosperity gap processing, storage, recycling and disposal of between rich and poorer countries. However, biological resources” (European Commission this needs to be achieved in a world with a 2012). This bioeconomic strategy needs to: growing population, unevenly distributed growth and anthropogenically induced climate change • Ensure food security. with significant regional variation in its impact. • Manage natural resources. 9 Modelling and Tools Supporting the Transition to a Bioeconomy 291

• Reduce dependence on non-renewable 9.2 Scenarios: Revealing the Trails resources. into the Future • Mitigate and adapt climate change. • Create jobs and maintain competitiveness This section presents the scenario approach. especially—but not exclusively—in rural First, the necessity of scenarios is explained areas. (Sect. 9.2.1), followed by a discussion of their function in science and the public (Sect. 9.2.2). Whereas the challenges to be addressed are Because scenarios are used in different contexts, widely known and accepted, the question of how a typology of scenario approaches is shown in these goals can be achieved, i.e. how an economy Sect. 9.2.3. Section 9.2.4 aims to assist the devel- can be transformed into a bioeconomy, is still at opment of scenarios. The section ends with some the centre of scientific, political, and societal concluding remarks (Sect. 9.2.5). debate. Historical evidence from recent decades demonstrates society’s essential role in any suc- Scenarios cessful transformation of systems. Norms, Scenarios describe complex pictures of the values, and thus behavioural patterns, along future that are seen as plausible. The with the degree of acceptance and the willingness described future can be modelled to support changes, are as important as techno- according to current knowledge of the sys- logical and economic factors (Verbong and tem. However, scenarios do not give infor- Loorbach 2012). These norms and values shape mation on which future is likely or desired. the preferences of what a future bioeconomy should look like. Any thinking about the future 9.2.1 Why Do We Need Scenarios? is accompanied by uncertainties and relevant but as yet unknown processes within and outside the The transformation of a system requires future- control of stakeholders. oriented system knowledge. Not only are current The development of potentially successful elements of a system and their interdependencies strategies for dealing with uncertainties on the of relevance but also possible future changes. way to a bioeconomy requires instruments and New elements could enter the system, and tools to depict possible transition paths. This established ones could lose their significance. chapter provides the reader with a number of Also the interrelationship between the elements instruments and tools, without claiming to be could change, or new ones may be established. comprehensive. To control a system transformation, i.e. to iden- To identify future possibilities, scenarios have tify and implement suitable pathways, strategic increasingly been used in the past decades. They thinking is highly recommended, in particular in address complexities and uncertainties by explic- the case of complex systems. Strategic thinking itly acknowledging that different futures are pos- requires particular tools and instruments for sible and that reliable, long-term predictions in predicting and assessing alternative futures and the field of sociotechnical transition are not pos- pathways to achieve the desired future. sible (Grunwald 2011). Scenarios aim to explore Prediction and controllability of the future and develop potential or desirable future states were the main pillars of economic policy in the and development pathways. One established first half of the twentieth century, not only in approach is to combine scenarios with models socialist countries. For example, Japanese eco- (Poganietz et al. 2000). Models can reveal nomic development after World War II was interdependencies between resources, produc- based on a “plan-oriented market economy sys- tion, consumption, markets and sectors, and the tem” (Johnson 1982). The Japanese Ministry of environment. International Trade and Industry (MITI) acted 292 E. Angenendt et al.

Fig. 9.1 Scenario ﬁlter funnel

like a central planner, yet was not always suc- thinking is of utmost importance. Scenarios are cessful (Johnson 1982; Jansen 2002). Prediction a useful tool to support such thinking. has to be understood as a statement about an Scenarios describe complex pictures of the uncertain future based on experience or knowl- future that are seen as plausible. Plausible edge. In that context, prediction is achieved means that the described future may happen through rigorous mathematical or statistical given today’s knowledge of the system under methods (Rescher 1998). Controllability investigation. But plausibility does not mean describes the requirement that a system must be the described future is likely or even desirable. controllable so that the system status can be Scenarios can include extreme situations, which changed to a desired status. The target status of are seemingly not likely yet plausible. Common a system is achievable by manipulating the rele- to all scenarios is the use of consistent vant control variables (Kalman 1963). The assumptions about possible future developments, “planning optimism” collapsed in the aftermath leading to divergent futures (Grunwald 2002; of the first oil crisis in 1974 (Wack 1985). Kosow and Gaßner 2008). Despite this “planning optimism” after the Second World War, future-oriented activities started in the RAND Corporation in the 1960s 9.2.2 Functions of Scenarios (Wack 1985; Schwartz 1996), evolving from a prognostic approach to the future to a scenario- Scenarios fulfil several functions, which can also based one (Grunwald 2002). In contrast, a sce- overlap: nario approach denies the possibility of predicting and controlling the future due to the • Knowledge function complexity of systems and the impossibility of • Communication function capturing all relevant elements and their • Goal-setting function interdependencies. Therefore, scenarios aim to • Strategy-forming function describe a “space of possibilities” of future developments, meaning that different futures From a scientific point of view, the knowledge are possible, at least from today’s perspective function is considered the most important. It has (Fig. 9.1; Kosow and Gaßner 2008). If the future two aspects. The first aspect is a consequence of is not predictable and controllable, strategic using scenarios for analysing systems. Scenarios 9 Modelling and Tools Supporting the Transition to a Bioeconomy 293 can help improve knowledge about the cause- From a more strategic perspective, scenarios and-effect relationship within systems and the can also assist in the development or specifica- kind and degree of possible consequences of tion of goals (goal-setting function). They can developments, decisions, or policy measures. help stakeholders to reflect on their perspectives Scenarios can also help detect unwanted or positioning (Minx and Bohlke€ 2006). In addi- consequences of actions, “blind spots”, or even tion, they can provide orientation in planning contradictions in decisions or policy measures as processes (strategy-forming function), such as well as dilemmas. The latter means different testing the robustness of strategies and compar- aims cannot be achieved simultaneously. As ing different alternatives (Kosow and Gaßner such, trade-offs between targets may exist. To 2008). give an example, intensification of farming that targets the enhancement of yields may contradict the aim of environment-friendly agriculture. 9.2.3 Scenario Approaches The second aspect stems from the process of scenario building. Scenarios can capture only part As there are different ways of thinking about the of a complex system. The analysed system must future and possible paths towards it, there are be “simplified” by dispensing with irrelevant many approaches to structuring scenarios. Most elements or reducing the complexity of interrela- commonly, they are subdivided into three types, tionships between elements to focus on those that and this subdivision points to central differences provide knowledge for the intended aim. For in their development and application. According example, in agricultural economics, model-based to Borjeson€ et al. (2006), these can be scenarios often exclude nonagricultural activities designated: such as forestry (Balkhausen et al. 2008). How- ever, a sine qua non for reducing the complexity is • Predictive the awareness of what is considered relevant for a • Explorative particular question and what is not. In this way, • Normative scenarios scenarios reduce complexity in a systematic and transparent manner to a cognitively measurable Predictive Scenarios level. Specifically, the scenario-building process Predictive scenarios are typically used to forecast enables the systematic and targeted integration of the most likely future. Here, scenario analysts different information types, i.e. findings and the- aim to answer questions like “what will happen ses from different disciplines, as well as qualita- in the future?” or “what can be expected?”. tive and quantitative data. In principle, scenarios Answers are typically provided by “just” also offer the possibility to integrate social updating or extrapolating past trends into the objectives, norms or values in a transparent way future. For example, to predict the production (Kosow and Gaßner 2008). of biofuels in Germany in a specific year, say In cases where scenarios are developed in 2025, it can be assumed that the future growth collaboration with stakeholders, they can serve rate will follow the same trend as, for example, in as an integrative platform for players from dif- the last 10 years. Implicitly, this type of scenario ferent fields and thereby help structure topics and disregards any change in market conditions or arguments. This can assist the parties involved in other relevant decision-making parameters. better understanding their respective positions or It is arguable whether predictive scenarios interests and working out priorities. It can also should be counted as scenarios at all. Strictly encourage them to discuss the subject matter in a speaking, they strongly resemble predictions, long-term perspective (Havas 2014). Thus, which by definition are not scenarios. Instead, scenarios have a communication function that although relatively cumbersome, they should be should not be underestimated. called “scenario-like forecasts”. Scenarios 294 E. Angenendt et al. assume that different futures are possible, agriculture: lower yields and higher food prices whereas forecasts tend to look for the right could intensify the competition for arable land. future. The early developers of scenarios such Wild cards or black swans, as they are often as Kahn and Wiener (1967) would certainly called, need not be so drastic. A breakdown of have refused to use the term scenario here. the EU Common Agriculture Policy or the suc- We include predictive scenarios here for prag- cessful market penetration of a new product type, matic reasons. First of all, it makes the distinc- e.g. in vitro meat, is also a possible wild card. tion between the other two types, i.e. explorative Whereas predictive scenarios have their and normative scenarios, clearer. Additionally, starting point in the present, this is not obligatory the concept of scenarios is often extended to for explorative scenarios. For example, scenarios predictive approaches by practitioners. A refer- considering the impacts of future political inter- ence scenario is often constructed on the basis of vention have a year in the future as starting point trend extrapolation, representing how the world (Borjeson€ et al. 2006). would look if everything continued as before. Explorative scenarios are particularly suitable This is often referred to as a “business-as- for long-term horizons of 20–40 years. usual” or BAU scenario. Predictive approaches Statements on these timescales are exceptionally can also inform investors or managers of difficult when they concern complex systems expected developments (Borjeson€ et al. 2006). with a high degree of uncertainty, such as the A BAU or reference scenario can then be com- bioeconomy. pared with other, explorative or even normative However, the surroundings in which these scenarios. A reference or BAU scenario is not aims are to be achieved are not static over time. assigned a probability: a future where everything Examples of dynamically changing factors are, continues as before is no more likely than one on the demand side, population, dietary habits, characterized by dramatic changes. In this case, preferences for biogenic and non-biogenic the “predictive scenario” is just one scenario products, and income and on the supply side among others. technological progress within the food, agricultural industry and forestry-based industry, energy Explorative Scenarios conversion technologies, and both traditional and Explorative scenarios attempt to show possible innovative material processing industries. futures. It does not matter whether these futures To capture the uncertainties and identify a are desired or likely. Analysts use explorative “space” of possible futures, it is recommended scenarios to answer questions like “what would to build several, distinctly differing scenarios. An happen, if ...?” or “what is possible?”. Here, example is presented in Table 9.1 (see also Box exploring past trends plays a minor role. The 9.1). most important step in building explorative The focus of each scenario is on the potential scenarios is identifying the main drivers of devel- cause-and-effect relationships. The addressees opment of the elements of the system and their can then develop strategies for action or rethink interdependencies. Another step is to identify existing strategies. Political or business strategies plausible assumptions regarding the develop- can be tested for their robustness. For example, ment of such drivers (cf. Sect. 9.3.4). one could be concerned with the question of how Since these assumptions are based on today’s biomass would develop as an energy carrier if knowledge, it is also possible to consider events strong societal demands (“saving the cultural that are unlikely or unpredictable but can greatly landscape”) hinder cultivation of energy plants. influence developments. For example, the impact Depending on the purpose of a scenario, it of a comet in 2032 would darken the atmosphere may also be important to vary both external and for several years through scattered dust. This internal factors (Borjeson€ et al. 2006). External could lead to a slowdown in climate change, factors are those that cannot be influenced by but it might also have a long-lasting impact on actions of the principal, e.g. the government or 9 Modelling and Tools Supporting the Transition to a Bioeconomy 295

Table 9.1 Example for distinct scenarios Demand for biomass for material Scenario and energy Biomass supply Remark Scenario A: Low growth rate Medium growth – bio-modesty rate Scenario B: High growth rate High growth rate Supply of biomass matches bio-boom demand Scenario C: High growth rate Medium growth Supply of biomass cannot match bio-scarcity rate demand Based on Kovacs (2015) Note: The study discusses possible future developments of a European bioeconomy up to 2050 company. Internal factor are those that can be influenced by the principal. Varying these factors Four scenarios were elaborated, each makes it possible to test the robustness of action assuming a different development of the strategies in the context of alternative influencing factors: developments, which consequently allows flexible and adaptive strategies to be identified. Like- Scenario 1—“Government as a driver”: wise, an organization can be sensitive to signals The government is sustainability ori- (“weak signals”) that indicate important future ented and drives the transformation changes (Borjeson€ et al. 2006). By varying inter- towards a bioeconomy. Companies nal factors, strategic scenarios can be developed remain cost oriented, consumers reluc- (ibid.). The starting point is formed by various tant to bio-based products, and voters action strategies, which are tested for their possi- not convinced. ble effects and subsequently compared. Scenario 2—“Trend towards sustainability”: Similar to Scenario 1, the government is sustainability ori- Box 9.1: Possible Futures Towards a Wood- ented, yet in contrast to the first sce- Based Bioeconomy: A Scenario Analysis nario, consumers and producers for Germany (Hagemann et al. 2016)—An perceive the long-term trend towards Example greater sustainability as an opportunity. In this analysis, six key influencing factors Scenario 3—“Keep going”: Due to the relevant for the future development of a government’s and society’s affinity wood-based bioeconomy in Germany with traditional values and established were identified through literature research structures, no risks are taken to imple- and expert survey, including: ment changes. Scenario 4—“State as obstacle”: Whereas – Biomass Availability and Forest companies are confident in new Structure technologies and society shows some – Globalisation and Global Economic commitment, the government is reluctant Development to implement supporting conditions. – Impulses from Energy and Climate Policy For further scenario analyses, see: – Supply and Demand for Wood – Willingness to Pay for Bio-based • Kovacs B (ed) (2015) Sustainable agri- Products culture, forestry, and fisheries in the – Innovation Along the Wood Value Chain bioeconomy. A challenge for Europe.

(continued) 296 E. Angenendt et al.

future (see Fig. 9.2, No. 1). This could be, for Box 9.1 (continued) example, increasing the share of renewable 4th SCAR Foresight Exercise. energies in Germany to 80% by 2050. In a second doi:10.2777/179843 step, the chances of achieving the target under • Kalt G, Baumann M et al. (2016) Trans- the current conditions or trends are analysed formation scenarios towards a using forecasts (No. 2 in Fig. 9.2) or a business- low-carbon bioeconomy in Austria. as-usual scenario. If these trends are not suffi- Energy Strategy Reviews 13:125-135. cient to achieve the target, a third step is carried doi:10.1016/j.esr.2016.09.004 out: “images” of the future that would achieve the goal are sketched from today’s point of view as consistently as possible (No. 3 in Fig. 9.2). The definition of normative scenarios makes the Then, in a last step, paths that can lead to these difference to explorative scenarios clear. Norms future images are identified (No. 4 in Fig. 9.2), and values are deliberately and clearly identified and precise options for action to attain the goal along with their target, i.e. a specific future. They are formulated. This is a very comprehensive and try to answer questions such as “How can a specific inclusive approach, which can result in the elab- target be reached?” (Kosow and Gaßner 2008; oration of far-reaching policy measures. Schippl and Leisner 2009). Although the target is Some authors also follow the approach of typically desirable, this is not a sine qua non for a Alcamo (2008), who speaks of anticipatory normative scenario. Normative scenarios are often scenarios (sometimes called “prescriptive used for major social transformations, such as the scenarios”), which have their starting point in transformation towards a bioeconomy, but can also the future. Table 9.2 summarizes the presented be used for less complex questions. The target types of scenario approaches. situation may not necessarily be different from The classification outlined here is often help- the current one. In the case of environmental issues ful in structuring scenarios. Of course, they are in particular, maintaining the present state may be rarely found in a pure form when put into prac- desirable, e.g. preventing climate change or con- tice. For instance, explorative scenarios are usu- serving biodiversity. ally not entirely without normative assumptions. A typical form of normative scenarios is Deciding which parameters are important and called “backcasting”. Here, targets are selected thus to be included or varied necessarily involves that are to be achieved at a certain point in the a certain evaluation.

Fig. 9.2 Backcasting in four steps (based on Hojer€ and Mattsson 2000) 9 Modelling and Tools Supporting the Transition to a Bioeconomy 297

Table 9.2 Scenario approaches Predictive scenarios Explorative scenarios Normative scenarios Characteristic What will happen? What could happen, if...? How can a speciﬁc target be questions What can be expected? What is possible? reached? Aim To predict the most likely To analyse possible Analysis of paths to reach the future futures target Method Extrapolation of trends Identiﬁcation of main Backcasting drivers

Table 9.3 Advantages and disadvantages of qualitative and quantitative scenarios (Alcamo 2008) Qualitative scenarios Quantitative scenarios Advantages Can integrate the views of different experts or Deliver figures that are needed for certain stakeholders questions Can describe very complex systems Assumptions can be transparent and accessible Well-written “storylines” can provide an (i.e. underlying numbers, equations, understandable and appealing communication coefficients) about the future Many scenarios use models that have already been published and have thus been scientifically evaluated Can be used to test the consistency of qualitative scenarios Disadvantages The scenarios are often based on “mental The figures suggest a high precision of the models” which may be difficult to understand results which can obscure the fact that they are Their underlying assumptions are difficult to estimates identify, analyse, and test Model-based scenarios are often based on a When it comes to the achievement of concrete very large number of assumptions that are target values, qualitative approaches by difficult to verify (especially for definition cannot offer figures non-specialists) For practical (e.g. no available data) and methodological reasons, models cannot depict systems completely. The process of reducing the complexity is driven by an available model and not necessarily by the challenge Data availability, as well as methodological reasons, tends to model only well-documented system interrelations

In the literature, scenarios are also distinguished For example, the discussion on energy transfor- by the way they are described and identiﬁed: in mation is dominated by model-based (quantita- so-called qualitative scenarios, characterized by tive) scenarios (see, e.g. Appelrath et al. 2016). A the use of narratives (“storylines”), and so-called good example of bioeconomy-related qualitative quantitative scenarios, typically associated with scenarios is OECD (2009) (Kovacs 2015; algebraic models presenting futures or transforma- Hagemann et al. 2016). tion paths as numerical data (see Sect. 9.3). This In practice, however, quantitative and qualita- classiﬁcation can also be applied to the types of tive approaches are often mixed. Narratives are scenarios described above. underlined by numbers or serve as a starting Both types of scenarios have advantages and point for more complex modelling. A highly disadvantages. These are summarized in systematic combination of qualitative and quan- Table 9.3. titative approaches can be found in Alcamo The choice between qualitative or quantitative (2008), who describes his approach as a story- scenarios depends on various factors, like the and-simulation (SAS) approach (Weimer-Jehle availability of data or the user/client demands. et al. 2016). 298 E. Angenendt et al.

Although future-oriented scenarios can be a • Selectivity: Alternative scenarios should rep- strong tool to structure discussions or to support resent different future designs. The different decision-makers, they have a substantial disad- designs should not just be the result of a vantage. Scenarios do not offer truth claims in “mere” variation in a certain parameter; rather the sense of scientific knowledge. For the latter it they should present different complete must be possible to verify (to confirm) or falsify blueprints of a future. (reject) a statement (Popper 2008). This is, of • Transparency: Relevant assumptions and course, not possible for developments that do decisions (and the criteria used) should be not yet exist because they occur in the future. disclosed. A high degree of intersubjective On one hand, scenarios reflect today’s perception comprehensibility can be achieved through of future problems and today’s knowledge on reflection on the procedure. how challenges can be overcome. On the other hand, scenario builders are exposed to stake- These criteria are valid for all scenario types, holder representatives or lobbyists, who try to irrespective of whether they are qualitative or influence the future of political decision-making quantitative. As mentioned before, they can processes through specific future images. This only help to reduce the arbitrariness of scenarios; could involve deliberately constructing futures they cannot be used to reject assumptions—in that are opposed to other futures and suggesting marked contrast to other methods, for example, decisions that benefit particular interests. In this those used in science. That means the findings of context, Brown et al. (2000) refer to contested, scenarios do not deliver “accurate” scientific i.e. controversial, futures. knowledge. This peculiarity is often not This disadvantage can backfire on scenario- emphasized enough when scenarios and their based decisions if the underlying scenarios are results are referred to. Scenarios are applied perceived as worthless, resulting in them being when uncertainty is involved. dismissed as arbitrary speculation. However, it is essential to have a meaningful perspective at the political or business level—and this is one of the central objectives of scenarios—that scenarios 9.2.4 Scenario Building are not completely arbitrary but based on com- prehensible validity criteria. Decisions require There are various ways of building scenarios; more reasoned and thus not purely speculative this section lists the most important steps future images. But this is not a trivial challenge. (Heinecke and Schwager 1995). The following As mentioned before, validity criteria or sci- references reflect only a small part of the avail- entific methods are not available. In the litera- able literature: von Reibnitz (1988), Godet and ture, a few central criteria have been proposed for Roubelat (1996), Schwartz (1996), Schwab et al. the assessment of scenarios (Grunwald 2002; (2003), Borjeson€ et al. (2006), and Bishop et al. Kosow and Gaßner 2008): (2007). Note that the approaches presented in the literature may differ in detail, e.g. by focusing on • Plausibility: Described developments must be particular steps or aggregating others. plausible, but not necessarily likely or The approach presented here is comprised of desirable. eight stages: • Consistency: Images of the future as well as paths to the future should not contradict one 1. Problem analysis: The central objective of another. this stage is to provide a sufficiently precise • Comprehensibility/traceability: The level of identification and description of the problem granularity/aggregation of the scenarios to be investigated, explained for all persons should be determined by the aim of the involved in the scenario analysis, and to scenarios, i.e. they should not be too complex facilitate common understanding among the or too detailed. stakeholders. This serves as starting point 9 Modelling and Tools Supporting the Transition to a Bioeconomy 299

for the definition of individual steps in 4. Scenario building (in the narrow sense of the subsequent stages. word): Scenarios are developed based on the The problem analysis should include: results of stages 1 and 2. Scenario develop- • A statement on the purpose of the scenarios ment can be divided into five steps: to be developed, differentiating between (i) Identification of critical and noncritical normative and explorative objectives. descriptors: Noncritical descriptors are This influences the definition of relevant parameters whose changes in the target variable(s). planned timeline are considered to be • A statement on the timeline over which the relatively precise in their foreseeability. scenarios are to be developed. It is assumed that there will be no breaks • A statement on the operational (e.g. the in chronological trends or that any company) or sectoral (e.g. bioeconomy) changes are relatively foreseeable framework in which the analysis is to take (Heinecke and Schwager 1995). Noncrit- place. ical descriptors can also include • A statement on the spatial framework, parameters considered unimportant for i.e. whether the investigation applies to a the overall system but which should be city, a region, or the world. considered in the analysis for other reasons such as consistency. For exam- The four aspects mentioned are, of course, ple, in many scenarios the growth rate of closely related and mutually interdependent. gross domestic product is seen as noncritical. Critical descriptors, in contrast, 2. Analysis of the framework: The objective is to are characteristics whose development is specify the basic conditions in which the either regarded as essential to the analy- scenarios are to be developed and thus to sis of the problem or whose future define the final framework in which the sce- changes are subject to unforeseeable nario analysis is to take place. breaks in trends. The analysis of the framework (sometimes (ii) Definition of the development of non- also problem field), comprises four steps: critical descriptors: in most cases, • Specification of the system boundaries: simplified forecasts. Which elements of a system, e.g. sectors, (iii) Definition of the development of critical should be included. descriptors: Since the influence of • Determination of the relevant descriptors: critical descriptors is per definition Descriptors are values that characterize or crucial to the system, an elaborated describe partial aspects of the problem, for analysis of possible developments is example, population trends, developments highly recommended. Therefore, these of market prices, and events. descriptors also form the core of any • Classification of the descriptors with sensitivity analysis. regard to the control possibilities. (iv) Formation of (raw) scenarios. • Identification of system interdependencies. (v) Compilation of complete (end) 3. Assessment system: To evaluate the results scenarios. of the scenario analysis, an assessment system 5. Scenario implementation: Each scenario has to be implemented. This may be fairly developed in stage 4 describes a consistent simple with just one indicator, e.g. income set of assumptions regarding the development growth rate, or it may be an elaborated of the descriptors. These are inputted into system with numerous indicators. The the analysis framework defined in stage 2, to purpose of the scenarios determines the determine their effects on the causal problem choice of indicators. or target variable(s). If the analysis framework 300 E. Angenendt et al.

is captured, for example, by an algebraic 7. Recommendations for action: If scenarios model, the descriptors correspond to the exog- are used in decision-making contexts, the enous variables of the model. Specifically, the findings from stage 6 are expected to lead to effects of the descriptors on the target variable recommendations for action. In contrast, if the (s) can be calculated using an adequate solu- analysed scenarios are solely for orientation tion algorithm. The results can be understood purposes, i.e. explorative scenarios, informa- as alternative representations of future images tion on possible developments is systemati- with respect to the overall system under cally generated. This stage can be dispensed investigation. with if the project is not based on a concrete 6. Scenario evaluation: The future images decision-making situation. determined in stage 5 are assessed in several The recommendations strive to identify action steps: alternatives for the decision-makers in order • Plausibility check: Are the findings plausi- to solve the original challenge. They should ble? For example, a negative gross demand include suitable instruments for solving the is not plausible. problem and describe their design. To • Consistency check: Are the findings con- increase the success of decisions, analysis of sistent with respect to the assumptions? For possible implications should also identify rel- example, if a close, positive correlation evant groups, including stakeholders, who between demand and income is postulated, should be included in the decision-making a decreasing demand with increasing process. income is inconsistent. 8. Summary: The results should be summarized • Sensitivity analysis: How robust are the in a form understandable to the client/ findings with changes in relevant addressee and enable them to make decisions parameters? where necessary. The summary should • Assessment of the findings, using the contain: assessment system defined at stage 3. • Central results • Analysis of possible implications: This • Central assumptions depends on the type of scenario. In explor- • Essential recommendations for action atory scenarios, additional effects not covered in the scenario can be investigated. The eight stages should not be understood For example, an exploratory scenario as strictly sequential, but rather to be carried could examine the effects of an increasing out according to specific requirements in the share of algae-based biogas on the future literature. This means that at each stage, electricity mix, but not its effect on agri- newly acquired knowledge should be used culture. The analysis of possible to examine whether the chosen approach or implications might address the latter assumptions, as well as the results from previous aspect. In normative scenarios, questions stages, need to be revised or adapted. Figure 9.3 on the implications of these prospects for demonstrates the interrelation between the indi- the potential decision-maker may arise, vidual steps. e.g. which tools are available to the In practice, a clear separation of the individual decision-maker to realize the respective stages is not always possible. The correct order future image? Which internal corporate of stages 1–3 is arguable, and it soon becomes groups or stakeholders should be taken apparent that this is a chicken-and-egg situation. into account by the decision-makers in Ultimately it is up to the developers to decide at order to identify the relevant instruments what stage they want to start or if they can even and to make their implementation more combine stages 1–3. For new participants, we concrete? would recommend separating these three stages 9 Modelling and Tools Supporting the Transition to a Bioeconomy 301

Fig. 9.3 Stages in scenario building in order to keep track. Likewise, the order shown • Scenarios are not forecasts or predictions; this above has proven advantageous. By analysing also applies to reference or BAU scenarios. the problem and the framework precisely at the Scenarios never represent true future events. beginning, the defining of utopian or irrelevant • Scenario findings always depend on the initial goals can be avoided. A reiterative approach can, conditions or “ingredients” with which they however, also be recommended. are created. Their selection always depends to Finally, it should be emphasized once a certain extent on the priorities set by the again that, in the creation of scenarios, it scenario builder. Therefore, they are never is extremely important to make clear what completely objective or impartial. As such, is being done where and for what reason. the initial conditions should remain as trans- Even if in practice there are many deviations parent as possible. and special cases (see, e.g. “backcasting”), the structure shown here helps to make practitioners Scenarios do not offer a truth claim in the sense aware of the necessary steps and available of scientific knowledge. The criterion of the falsi- options. fiability of scientific theories is not applicable. Therefore, it is necessary that scenarios fulfil the criteria discussed above (see Sect. 9.2.3).

9.2.5 Conclusions 9.3 Integrated Model Approaches: Scenarios can be a strong instrument in Identifying the Ways structuring discussions and supporting decision- and Means makers, in particular if the object is the transformation of complex systems. But scenarios are Models can make valuable contributions to not a panacea in the formation of a desired the analysis of potential scenarios for a future: future bioeconomy. Due to the extensive 302 E. Angenendt et al. interdisciplinary approaches and the high degree approaches can be linked, however, some deficits of economic integration in bioeconomy models, and gaps in mapping the entire bioeconomy still the requirements are however enormous. A cen- have to be closed (van Leeuwen et al. 2015). tral challenge for holistic modelling is that both A multitude of drivers, such as demographic economic and ecological connections and future development and consumer preferences, influ- social developments must be taken into account. ence the development of a bioeconomy Currently, there is no modelling approach that (Fig. 9.4). In addition to drivers, societal can cover all aspects of a developing challenges such as food security need to be bioeconomy (O’Brien et al. 2015). taken into account. At the same time, natural Several studies have considered the necessary (e.g. water, land scarcity) and socio-economic structure and requirements of model networks for (e.g. education level, labour demand) constraints the assessment of a prospective bioeconomy, must also be considered. These data can be used including the project “Systems Analysis Tool to derive policy strategies for different sectors Framework for the EU Bio-Based Economy and protected subjects (van Leeuwen et al. 2015). Strategy” (SAT-BBE) within the EU 7th Frame- Based on this network of coherencies, it is work Programme. This study elucidated the possible to derive both substantive requirements dependencies in modelling and showed how and modelling levels for a comprehensive model existing model approaches can contribute to the network of the aforementioned relationships. The analysis of the entire “bioeconomy” complex. competition for land and forestry biomass for The study indicated that existing model food, feed, fuel, and fibre can thus be represented

Fig. 9.4 System overview of the framework of a developing bioeconomy (based on van Leeuwen et al. 2015) 9 Modelling and Tools Supporting the Transition to a Bioeconomy 303

Fig. 9.5 Overview of model types and groups when evaluating development pathways of a bioeconomy (based on van Leeuwen et al. 2015) by computable general equilibrium (CGE) terms, seeks to explain the balance between sup- models. However, a more precise assessment of ply and demand. These models are often used for possible competitive pressures should also be trade analysis. PE models are also based on this done at a sector or farm level. Since an increase neoclassical theory, but they focus on a speciﬁc in demand for biomass in a bioeconomy, e.g. in market or sector. They are useful in obtaining a an industrialized country like Germany, will more detailed understanding of a particular always be associated with a global impact, such sector. impacts must be included in addition to the national perspective (Fig. 9.5). 1. Examples of CGE models

The GTAP (Global Trade Analysis Project) 9.3.1 Economic Models is a global network of researchers conducting quantitative analysis of international policy This section provides an overview of different issues, coordinated by Purdue University in economic modelling approaches. Although the Indiana, USA. It provides a generalized CGE presented models were not originally developed modelling framework along with a comprehen- for the bioeconomy context, they can still be used sive database used for analysis in other CGE for modelling biomass supply and demand. The models. The standard GTAP model is a recursive focus is on macroeconomic, computable general dynamic CGE model. Its main applications are equilibrium (CGE) models and partial equilib- multilateral trade analysis and the effects of trade rium (PE) models as well as bottom-up liberalization. It represents the linkages between approaches for detailed analysis of specific sectors such as agriculture and energy and has questions within a bioeconomy. been extended to the bioenergy field, specifically ethanol, biodiesel, and their by-products; the Macroeconomic Models agricultural residue corn stover; the energy CGE models are based on the general equilib- crops switchgrass and miscanthus for second- rium theory; an economic theory, in simplified generation ethanol production; and palm oil 304 E. Angenendt et al. residues (Wicke et al. 2015). The statistical base aggregations into 28 global regions. Its crops and of a CGE is a so-called social accounting matrix forest sector details are based on physical (SAM). A SAM builds on a circular flow concep- parameters supplied by the more specialized tion like input-output approaches and thus could models G4M for forestry and EPIC (Izaurralde be used independently of a CGE for macroeco- et al. 2012) for agriculture. The global agricul- nomic analysis (cf. Poganietz et al. 2000). tural and forest market equilibrium is computed The MAGNET (Modular Applied GeNeral by choosing land-use and processing activities to Equilibrium Tool) is a recursive dynamic CGE maximize the sum of producer and consumer model developed at the Landbouw Economisch surplus subject to resource, technological, and Instituut (LEI; Wageningen University and policy constraints. GLOBIOM can be linked to Research, Netherlands) and builds on the GTAP energy models through information on macro- database. It is the succession model of LEITAP economic indicators and bioenergy demand. (Landbouw Economisch Instituut Trade Analysis The latter is split into first-generation biofuels, Project). It has a modular set-up with modules for second-generation biofuels, bioenergy plants, mapping the EU Common Agricultural Policy and direct biomass use for energy. Issues (CAP) and biofuels and evaluates long-term, analysed by GLOBIOM include the competition economy-wide upstream and downstream effects for land supply between agriculture, bioenergy, including price (Van Meijl et al. 2006). MAG- and forestry; examples are land-use change NET was applied to analyse the macroeconomic impacts of bioenergy policies, climate change impacts of large-scale deployment of biomass mitigation policies, and food-versus-environ- resources in the Netherlands (Hoefnagels et al. ment trade-offs (Kraxner et al. 2013). 2013), the macroeconomic impacts of a CAPRI (Common Agricultural Policy bio-based economy in Malaysia (van Meijl Regionalised Impact) analysis is a spatial PE et al. 2012), and the global leakage effects of model focussing on the agricultural sector in EU biofuel consumption (Smeets et al. 2014). Europe. It was developed to evaluate ex ante Recently, MAGNET has been extended by addi- impacts of the EU Common Agricultural Policy tional bio-based sectors such as second- and trade policies on agricultural production, generation biofuels, bioelectricity, biochemicals, income, markets, trade, and the environment and biomass supply sectors for both residues from a global to regional scale. CAPRI can ana- from agriculture and forestry and pretreatments lyse a broad range of policy measures while of agricultural residues that are utilized by other taking agro-environmental impacts into account. sectors (Banse et al. 2014). This extension spe- The comparative-static economic model is split cifically allows the impacts of developing and into a supply module and a market module. The implementing new biomass conversion supply module consists of independent technologies to be evaluated. non-linear programming models that represent activities of all farmers at regional or farm-type 2. Examples of PE models levels as captured by the economic accounts for agriculture. The market module delivers prices GLOBIOM (Global Biosphere Management used in the supply module and enables market Model) is a global, economic partial equilibrium analysis at global, EU, and national scales as model for the agriculture and forestry sectors well as welfare analysis. The link between the with high-resolution representation of global supply and market modules is based on an itera- agriculture, forestry, and land-use change. It tive procedure. These modules are linked to forms part of an integrated modelling frame- regional CGE models for each European country work at the International Institute for Applied with a specific focus on rural development Systems Analysis (IIASA; www.globiom.org). measures under the second pillar of the CAP The model encompasses all countries including (www.capri-model.org). 9 Modelling and Tools Supporting the Transition to a Bioeconomy 305

ESIM (European Simulation Model) is a detailed technologies and processes as well as global PE model for the agricultural sector that the behaviour of different players such as farms represents agricultural production, various or energy plants. Furthermore, a large number of processing activities, and demand for agricultural models exist that work at different spatial levels. products as well as international net trade This is of particular interest when analysing the (see Box 9.2). With its comprehensive model of availability and supply of biomass along with the the EU CAP, it is used to analyse EU agricultural related economic and ecological effects as well- and trade policies. It covers the EU member defined system boundaries are included. These states and accession countries, the USA, and the models can provide detailed insight into specific rest of the world (the latter as one aggregate). It issues. However, as a rule, bottom-up models are comprises the processing of oil seeds for not capable of producing indirect or induced biodiesel production and of cereals, sugar beet, effects (e.g. price responses, competition, and sugar cane for bioethanol; the production, replacement effects, and technological or struc- use, and foreign trade in biofuels; and the tural changes) beyond their relatively narrow production and use of side products (oil seed system limits (Wicke et al. 2015). For such cakes, gluten feed) in livestock production purposes, they would need to be linked, for (Deppermann et al. 2014). Recently, it has been example, to the CGE or PE models mentioned extended to include lignocellulosic biomass such above. Several examples of economic bottom-up as miscanthus and poplar. models for different sectors and disaggregation EFI-GTM (European Forestry Institute- levels are provided below: Global Trade Model) is a multi-product, multire- 1. Examples of agro-economic supply models gional PE model for the global forest sector. It integrates increasing forest resources, timber The model approaches presented here are suit- supply, wood-using industries (e.g. carpentry, able for simulating the adaptation reactions of pulp, and paper industries), and demand for for- farms or regions to changing political or techno- est products and wood-based energy as well as logical conditions. Their methodology predomi- international trade in forest products. The model nantly consists of mathematical linear or specifically calculates periodic production, con- non-linear programming models that result in sumption, import and export quantities, and the quantity of agricultural products produced product prices for forest sector products. It has under relevant conditions. They are often devel- global coverage with a focus on Europe. It also oped in research projects for specific issues or allows detailed impact analysis of the forestry locations only and are not used after the end of sector and detailed trade impacts through bilat- the project (Janssen et al. 2010). However, the eral trade flow. It has been used to address issues following models, which are exemplary of the such as increased investments in forest large number of existing agricultural bottom-up plantations in Asia and South America, increased models, are firmly established in research demand for bioenergy, impacts of carbon emis- facilities and have been continuously used and sion prices and fossil fuel prices on the use of developed for various economic and environ- wood biomass for energy, and impacts of trade mental assessments of agricultural systems. policies and forest conservation policies. Some farm-based models can be used at regional or sectoral levels with the help of projection Economic Bottom-Up Models methods. There are a variety of bottom-up models that can FSSIM (Farm System Simulator) is an optimi- answer a wide range of questions within the zation model that maximizes the total gross mar- framework of an overall bioeconomic complex. gin under a set of resource and political For the most part, these models analyse very constraints. It is a component-based framework 306 E. Angenendt et al. with modules for mapping farmer objectives, the representation of agricultural sector production risk, calibration, and both agricultural and envi- (Deppermann et al. 2014). It can currently ronmental policy instruments as well as current, be applied to the analysis of agricultural sectors alternative, and future production activities. The of Germany, Great Britain, the Netherlands, model is designed as a generic bioeconomic farm Hungary, and Switzerland. Together with the model. Through its flexible design, it can be used CGE and PE models of the Thünen Institute, it for a variety of climate zones, soil types, farm has also been used to model the linkage between types, research applications, and data sources agricultural, energy, and agricultural markets in (Janssen et al. 2010; Louhichi et al. 2010). For the context of the bioeconomy (Banse et al. 2016). instance, FSSIM has been applied to 13 regions in the EU and to different farm types. FSSIM is 2. Examples of techno-economic optimization also used to analyse the farm level (Ewert et al. models for biomass supply chains 2011) within SEAMLESS (“System for Environ- mental and Agricultural Modeling; Linking Biorefineries and bioenergy production sites European Science and Society”), an integrated often present two challenges that are difficult to modelling approach (see Sect. 8.4.3). combine in models. On the one hand, they EFEM (Economic Farm Emission Model) require a certain plant size in order to operate simulates agricultural production on micro economically. On the other hand, larger plants (farm)- and meso (regional)-levels. It is a supply need a significant feedstock and associated sup- model based on static linear programming. The ply area. Logistical costs often play an important prices for producers, production costs, and role in the cost-effectiveness of such plants. For capacities for typical farms are exogenously this reason, more and more optimization models determined. The model considers the most have been developed in recent years to determine important agricultural production methods in possible sites for bioenergy combustion plants or animal and plant production in Germany. On a biorefineries. Two such models are presented regional level, it differentiates with regard to below. yields, intensities, productivity, and costs. To BeWhere is a spatially explicit, techno- display the required farm model capacities, either economic engineering model for optimizing data from the Farm Accountancy Data Network renewable energy systems. It is a mixed linear (FADN) or survey data can be used. The model programming model and is used at the Interna- also calculates greenhouse gas emissions, other tional Institute for Applied Systems Analysis nitrogen fluxes, and carbon balances from agri- (IIASA) to evaluate localization, size, and tech- culture production (Schwarz-v. Raumer et al. nology of the renewable energy system (IIASA 2017). It has already been linked to various bio- 2017). It can be applied at both national and EU physical models (see Sect. 8.3.2) (Neufeldt et al. level. In the area of biomass use for energy 2006; Wagner et al. 2015). For analysing possi- purposes, BeWhere minimizes the costs of the ble bioeconomy development scenarios, it can be complete bioenergy supply chain, including bio- used in conjunction with other models in the mass harvest and transport, conversion, transpor- “Competence Network Modelling the tation, and delivery of biofuel and heat and Bioeconomy” (see Box 9.2). electricity sales. A great variety of feedstocks FARMIS (Farm Modelling Information Sys- can be considered in the model. Nevertheless, tem) is a comparative-static programming model the focus is on second-generation biofuels, and for farm groups based on datasets from FADN. It therefore crop residues, forestry waste, and lig- maps agricultural production activities in detail nocellulosic industrial waste are included at the farm level and accounts for competition (Wetterlund et al. 2013). between farms on important factor markets. BiOLoCaTe (Biomass value chain integrated Using a positive mathematical programming pro- Optimization for Location, Capacity, and Tech- cedure, the model is calibrated to a respective nology planning) is also a mixed linear program- base year. The use of aggregation factors enables ming model that is used to optimize biomass 9 Modelling and Tools Supporting the Transition to a Bioeconomy 307 supply chains. This techno-economic assessment 9.3.2 Ecological and Biophysical includes supply, logistics, and conversion pro- Models cesses and is based on achievable profit from revenue generated from selling either electricity The transformation from a petroleum-based and thermal energy or bio-based materials. The economy to a bio-based economy will inevitably model results can be used to support decisions in lead to increased demand for agricultural regional planning of biomass-based value chains and forestry biomass. This may result in (Rudi et al. 2017). In contrast to BeWhere, it is increased biomass production in certain not only used for evaluating renewable energy countries and on a global scale. However, this systems but also bio-based material production may also lead to a conflict of interest with envi- systems. Currently it is only applied in Baden- ronmental and nature conservation. As such, not Wuerttemberg (a federal state in southwest only the economic aspects but also the ecological Germany) but can also be adapted to other effects of a developing bioeconomy should regions or countries. Like EFEM, it is used for be taken into account. Since agricultural and holistic analysis of possible developmental paths forestry production is systematically linked of a bioeconomy in the “Competence Network to the use of natural resources, a large number Modelling the Bioeconomy” (see Box 9.2; of models have been developed over the past Schultmann and Rudi 2017). few decades to simulate these environmental effects. 3. Example of an energy system model Biophysical models are process-based models that represent biological, geological, The energy sector is generally integrated and chemical processes in environmental either through CGE models or with the help of systems. These include, but are not limited to, PE models. An example of a disaggregated, crop growth and soil physical models. Some bottom-up model is TIMES PanEU models examine a wide range of environmental (Pan-European TIMES model), which has been impacts of agricultural and forestry management applied in several analyses of the European systems. Others also examine different scales energy system (see Box 9.2). The model from plot to farm, region, and global levels. minimizes an objective function by representing Some models were originally developed and the total discounted system costs from 2010 to validated for smaller area units but were 2050 and assumes perfect competition among extended to regional and global scales due to various technologies and pathways of energy greater demand for agricultural and environmen- conversion and supply. It is a multiregional tal policy assessment measures. At the beginning model that covers, at the country level, all sectors of 2000, substantial political and scientific focus connected to energy supply and demand. TIMES was put on evaluating agricultural greenhouse PanEU includes all countries of the EU28 along gas emissions, which resulted in numerous eco- with Switzerland and Norway. In addition, both nomic models being combined with biophysical GHG emissions and pollutant emissions are models at a regional level. In particular, included by incorporating process-specific soil greenhouse gas emissions could be clearly emissions. captured, and at the same time, the costs of The model is flexible in terms of regionaliza- possible mitigation options could be assessed. tion (for instance, within Germany), and both For example, the models CAPRI and EFEM energy and nonenergy bioenergy use options in mentioned above were linked with the the energy system or modelled technology biophysical models DNDC (DeNitrification- pathways. A detailed analysis of competition DeComposition) and EPIC (Environmental Pol- between alternative technologies and energy use icy and Integrated Climate) (Neufeldt et al. 2006; of biomass paths can be taken into account for Britz and Leip 2009; Schwarz-v. Raumer et al. the overall economic perspective (Blesl et al. 2017). EPIC is also integrated into various 2012; Deppermann et al. 2016). integrated assessment models (Kraxner et al. 308 E. Angenendt et al.

2013; Zessner et al. 2017) and is described below response of carbon and vegetation patterns to as an example of the functions of biophysical climate change. It was developed by a consor- models. tium of scientists from the Max Planck Institute for Biogeochemistry in Jena, the Potsdam Insti- Examples of Ecological and Biophysical tute for Climate Impact Research, and Lund Uni- Models versity. To study the role of the biosphere in the EPIC (Environmental Policy and Integrated Cli- anthroposphere, it is crucial to represent both mate) was originally developed at the US Depart- natural and agricultural ecosystems in a single, ment of Agriculture to study the effect of internally consistent modelling framework. The agricultural production on erosion and soil pro- model is designed to simulate composition and ductivity. Since its creation, it has been further distribution of vegetation as well as stocks and developed by several research institutes into a land-atmosphere exchange flows of carbon and comprehensive terrestrial ecosystem model for water for both natural and agricultural simulating numerous ecosystem processes that ecosystems. Using a combination of plant physi- can also take a wide range of land-use manage- ological relations, generalized empirically ment options into account (e.g. tillage, harvest, established functions, and plant trait parameters, fertilization, irrigation, drainage, liming, burn- the model simulates processes such as photosyn- ing, and pesticide application). The main thesis, plant growth, maintenance and regenera- components in EPIC are crop growth, weather tion losses, fire disturbance, soil moisture, simulation, hydrology, nutrient and carbon run-off, evapotranspiration, irrigation, and vege- cycling, soil temperature and moisture, soil ero- tation structure. Consequently the model sion, tillage, and plant environment control facilitates integration of agricultural systems (Izaurralde et al. 2012; Balkovicˇ et al. 2013). into the global climate-vegetation system (PIK When combined with economic models or 2017; Bondeau et al. 2007). Within the frame- model networks to assess agricultural and for- work of the PIK model network, LPJmL is linked estry biomass production, EPIC can be used to to MAgPIE (Model of Agricultural Production address two major research questions: the effect and its Impact on the Environment) and of changing environmental conditions on bio- REMIND, a global multiregional model mass production, e.g. forecast crop yields incorporating the economy, climate system, and impacted by climate change ((Kraxner et al. a detailed energy sector. 2013; Kirchner et al. 2015), and the impacts of different management options for biomass production on the environment, e.g. erosion, nitro- 9.3.3 Land Use and Biodiversity gen leaching, or soilborne greenhouse gas in Life Cycle Assessment emissions (Schwarz-v. Raumer et al. 2017). The soil-crop model CERES-EGC functions Although a bioeconomy strives to be sustainable, in a similar way to EPIC. It has been used for associated technologies consume resources and more than 20 years to investigate the environ- cause environmental impacts. These technologi- mental effects of crop cultivation such as nitrate cal, process-, or product-related impacts can be leaching, soil greenhouse gas emissions, and calculated and compared using the standardized ammonia and nitrogen oxides (Durandeau et al. life cycle assessment (LCA) method. Specifically, 2010). CERES-EGC can also be used to predict in order to obtain a holistic view of the product yields of the most important agricultural crops chain, a life cycle perspective is necessary. A more (Mavromatis 2016). Both models can be used at in-depth description of LCA is given in Sect. 8.3. field and regional scales. In this chapter, the focus is on integrating land use LPJmL (Lund-Potsdam-Jena managed Land) and biodiversity aspects into LCA. is an example of a Dynamic Global Vegetation The importance of land and its related ecosys- Model (DGVM) that was designed to simulate tem services gained attention through the Millen- the global terrestrial carbon cycle as well as the nium Ecosystem Assessment (MEA). It was 9 Modelling and Tools Supporting the Transition to a Bioeconomy 309 conducted from 2001 to 2005 under the auspice on the basis of (geo-)ecological methods: erosion of the United Nations. The aim of the MEA was resistance, mechanical filtration, physicochemi- to assess the consequences of anthropogenic cal filtration, groundwater regeneration, and changes in ecosystems on human well-being biotic production. In 2016, LANCA® 2.0 was and to provide the scientific basis for needed produced which allowed for GIS-based measures for a sustainable use of ecosystems calculations of the five land-use-related environ- (Millennium Ecosystem Assessment 2005). The mental impact categories. Country-specific char- study underscored the global dependency of acterization factors (CF) can now be calculated mankind on nature with ecosystem services as (Bos et al. 2016). the basis for a healthy and safe life. As about The biodiversity potential field approach 50% of earth’s land area is strongly affected by (Lindner 2015) understands biodiversity as a mankind (Hooke et al. 2012), land use has enor- fuzzy object. Existing approaches integrating mous effects on ecosystem services and biodiver- biodiversity aspects into LCA often focus on sity. Therefore, in order to cover all relevant species richness of landscape types (Koellner environmental impacts of a product or process, and Scholz 2007, 2008; Baan et al. 2013; land-use aspects that impact ecosystem services Chaudhary et al. 2015). According to the biodi- and biodiversity ought to be integrated into anal- versity potential field approach, biodiversity of a ysis methods such as life cycle assessment. In patch of land is defined as a function of several recent years, methods for considering impacts on parameters, e.g. structural elements, pesticide ecosystem services and biodiversity have been input, nutrient balance, biomass utilization rate, successfully developed and applied in LCA. and crop diversity. The biodiversity potential Fundamental to integrating effects on ecosys- field of a region thus describes the relationships tem services and biodiversity in LCA is the con- within that region. For aggregating impacts of cept of occupation and transformation of land global value chains, weighting factors are use. The term occupation means the situation of defined for the respective regions. These are a studied patch of land, while it is used. It is based on the species richness of the regions and assumed that there is no change in ecosystem the rarity of the species occurring in the regions. quality during the entire period of use (e.g. 20 The result of this approach is a universal measure years for a short rotation coppice). Occupation is of biodiversity that is sensitive with regard to the expressed as the level of ecosystem quality dur- most important influencing factors. ing use compared to a specific reference quality. LCA has a bottom-up perspective and can In contrast, the term transformation defines a give evidence for the environmental performance change in ecosystem quality of a studied patch of a product. Therefore, the results of a LCA can that occurs between the initial quality of the serve as input data for other models such equilib- ecosystem and the end quality after the use rium models: phase ends and the land is regenerated. LANCA® (Land Use Indicator Value Calcula- • If models like EFEM for regional supply of tion Tool) is an approach to integrate the impacts agricultural biomass are, for example, on ecosystem services into LCA (Beck et al. extended to the aspect of land use and biodi- 2010; Bos et al. 2016). It was developed at the versity through a linkage with LANCA®, University of Stuttgart, Department of Life Cycle comprehensive statements can be made Engineering (Baitz 2002) and has been applied in about the supply of agricultural biomass and many projects. In LANCA®, indicator values are its environmental impacts. calculated that describe the environmental • By integrating LCA results, e.g. for impact impacts of land-intensive processes on various categories such as climate change and acidifi- ecosystem services, which are then integrated cation, in partial equilibrium models such as into the life cycle assessment. The following ESIM, these models can be strengthened by environmental impact categories are calculated the LCA results as environmental statements 310 E. Angenendt et al.

on the shifting effects of changing demand for as land and water use and interactions with certain agricultural products can be drawn in global cycles such as carbon in an integrated addition to economic statements. manner. Models can be linked in several ways to achieve an integrated assessment (Wicke et al. 2015): 9.3.4 Integrated Assessment Models • Align and harmonize input data for the differ- The idea of integrated assessment models ent models and levels of aggregation, e.g. the (IAMs) is to design and assess interactions number of economic sectors and scenario between human activities and the natural envi- definitions. ronment. To do so, models that depict either • Align and harmonize core assumptions: if this anthropogenic or (bio)physical systems are cou- is not possible, at least a systematic compari- pled. The envisaged integration can refer to the son of results and sensitivities should be car- analysis of coherent problems and to the integra- ried out to reveal differences between models tion of stakeholders, disciplines, processes, and to a greater depth. models at both temporal and spatial scales. This • Link models: integrate model ranges by using can be done in interdisciplinary and integrated results from one model as inputs for another approaches as stand-alone models or in a frame- model (one-way data exchange) or iterating work of multiple, coupled models that focus on inputs (two-way data exchange) through par- various topics or scales and which originate from tial integration via a simplified version of one different disciplines (Wicke et al. 2015). All model in another model, or full integration models described above can be part of such a solving models simultaneously is also a way. modelling collaboration. An alternative distinction within linking models is often made between soft links, Integrated Assessment Models (IAMs) i.e. where models are connected exogenously IAMs describe and assess the interactions through transferring outcomes of model runs between human activities and (global) from one model to another, and hard links, environmental processes. They include i.e. where models directly exchange information descriptions of socio-economic systems as and are solved iteratively so that the solutions are well as environmental systems and the internally consistent between the models. Soft interactions between the two. links allow for more components to be included but require careful coordination of data flows to The main advantage of IAMs is they over- avoid unnoticed inconsistencies between models. come the limits of models that focus on specific In contrast, hard links allow for more consistent topics, e.g. on the agricultural or the energy sec- representation of the systems yet increase com- tor, without considering impacts of human plexity and reduce transparency (Leimbach activities on (bio)physical systems. By coupling et al. 2011). different models, IAMs can cover a range of One well-known transdisciplinary IAM is different disciplines and fields of research includ- IMAGE (Integrated Model to Assess the Global ing economics, energy analysis, agriculture anal- Environment), developed at PBL Netherlands ysis, and biophysical science, thus bridging the Environmental Assessment Agency. IMAGE economic, social, and environmental dimension simulates global environmental change induced of bioeconomic developments. With respect to a by human activities and can be applied in the bioeconomy, IAMs could elucidate implications DPSIR framework for reflecting a systems anal- for both energy systems and natural systems such ysis view on the relationship between 9 Modelling and Tools Supporting the Transition to a Bioeconomy 311

Fig. 9.6 The IMAGE 3.0 framework (http://themasites.pbl.nl/models/image/index.php/IMAGE_framework) environmental system and anthropogenic system. The framework consists of drivers, Box 9.2: Competence Network Modelling pressures, state, impact, and responses (Smeets the Bioeconomy and Weterings 1999). The competence network modelling the IMAGE combines a number of existing bioeconomy established within the models such as MAGNET (agricultural econom- Bioeconomy Research Programme Baden- ics), GLOBIOM (biodiversity), and FAIR (cli- Württemberg is another example of a mate policy). The objective of IMAGE is to modelling network aimed at integrated model the long-term dynamics of global change assessments bridged across disciplines and caused by demographic, technologic, economic, scales. Besides the models EFEM, ESIM, social, cultural, and political factors (Fig. 9.6). TIMES PanEU, BiOLoCaTe, and GaBi a Table 9.4 lists a comprehensive overview of LCA Software, the competence network previously described model approaches. The integrates the CGE model PACE and the application areas of the different model material ﬂow model CarboMoG. The approaches along with their strengths and models in the network are linked at various weaknesses make clear that only the use of mul- stages (Fig. 9.7). All models were tiple approaches at different modelling levels harmonized with regard to deﬁned will provide a holistic view of a complex bioeconomy scenarios. The goal of the com- bioeconomy. This can be achieved by either cou- petency network was to compare and evalu- pling otherwise independent model approaches ate both the direct and indirect economic, or within the framework of an IAM. material, and ecological effects of different

(continued) 312 E. Angenendt et al.

Box 9.2 (continued) the further development of certain sectors of biomass usage pathways. Such a framework the economy, while economic costs arose allowed for comparing economic costs and from income losses as well as increased beneﬁts of different bioeconomy scenarios. biomass imports, which could have impacts Economic beneﬁts resulted from the on the environment in other parts of the improvement of environmental quality or world.

Table 9.4 Overview and characteristics of the most important model approaches for holistic modelling and assessing a bioeconomic development path (based on Wicke et al. 2015) CGE models PE models Bottom-up analysis IAMs Application Economy-wide impacts Sectoral impacts of Wide variety of Bioenergy resource of biomass and bioenergy policies on specific (technical) potentials under bioenergy policies, agriculture, forestry, aspects of biomass different assumptions including subsequent land-use change, production, conversion, (incl. sustainability effects on land-use energy system, and and use criteria) change and GHG GHG emissions Validation of other Possible contribution emissions induced by studies with a broader of bioenergy to long- these policies scope, such as PE and term climate policy Indirect substitution, CGE models and IAMs Impacts of bioenergy land use, and rebound policies on global land effects due to multiple use, water, and sectors and production biodiversity factors Typical Short to long term Short to medium term Short to long term Long term timeframe Strengths Comprehensively Covers in detail sectors Gives detailed insights Integrates various covers both economic of interest with full into techno-economic, relevant systems into sectors and regions to market representation environmental, and one modelling account for Explicitly represents social characteristics framework interlinkages biophysical flows and and impacts of Possibility to analyse Can explicitly models absolute prices bio-based systems feedbacks between limited economic Usually gives more human and nature resources details on regional systems and trade-offs Measures the total, aspects, policy and synergies of economy-wide, and measures, and policy strategies global effects of environmental Built around long- bioenergy policies indicators term dynamics (including indirect and rebound effects) Limitations Level of aggregation Optimizes agent Indirect and induced Too high a level of may mask variation in welfare, but only for effects outside the aggregation or underlying constituent the sectors included in boundaries of the study systems too complex elements the model not included, Unsuitable for short- Scope of CGE models Does not consider i.e. interactions with term assessments necessitates simplified macroeconomic other sectors often Requires large number representation of agent balances and impacts deliberately ignored of assumptions (and choices, in particular on not-represented communication of favouring smooth sectors these to the public) mathematical forms Needs large number of and reduced number of assumptions for long- parameters required to term projections calibrate the models Often none or few explicit representations of quantities for biophysical flows 9 Modelling and Tools Supporting the Transition to a Bioeconomy 313

PACE Agg Economy r CarboMoG duction egated producti o Macrod a ata on Aggregated prMacrodat

Sectors Biomass prices TIMES (Global and Baden- ESIM PanEU Biomass demand for energy Württemberg) Agr BIOLOCATE ic Substitut ultural

prices ion relationships Biomass demand

Biomass supply Single operations EFEM Exchange of technical and ecological Product/ coefficients, Production methods biomass GaBI cultivation area, bioenergy demand

Scales

Model typ Economic models Technology models

Fig. 9.7 Competence network modelling the bioeconomy Baden-Württemberg

Scenarios can present alternative futures 9.4 Conclusions: So What? based on assumptions and modelling results from diverse tools like CGE models, IAM Increasing scarcity of fossil and metal resources models, and environmental proﬁles of products in addition to the tremendous impacts on both the from life cycle assessments. As scenarios cannot natural environment and human health during present the realistic future, they instead give an extraction as well as during manufacturing, use, indication of how the transformation would look and disposal requires a radical change in current like if certain objectives were reached as well as strategy of generating wealth and income. Yet, as what could happen if there was no change in described, transforming an economic develop- lifestyle. A discussion of scenarios or modelling ment strategy at ﬁrst and consequently the entire results is especially helpful in raising awareness economy must be done in a rather complex envi- of possible unwanted and unsustainable ronment. Not only are the underlying economic development. and physical interdependencies not always Through interdisciplinary networking, known in detail, but also the preferences, exchanging, and production of data, various interests, and ideas on how a future economy models can be made more consistent thus should work differ widely in society. Therefore, resulting in more harmonized and realistic instruments are required to help society elaborate results. The higher the quality of the input data the “best” future. in representing possible and achievable future In this chapter, two widely used instruments conditions, the more realistic is the output of are presented: scenarios and algebraic models. the scenarios in question. That means discourse Whereas scenarios strive to help “reveal the pos- in analytics, science, politics, business, and soci- sible trails” of possible futures, models are used ety on objectives and system boundaries of the in “identifying the ways and means” of future global future is required in order to draw a com- paths. In practice, models are often directly mon picture of our future. linked to scenario exercises. 314 E. Angenendt et al.

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Environmental Economics, the Bioeconomy and the Role 10 of Government

Michael Ahlheim

#Jürgen Jarosch

Abstract The bioeconomy serves the goals of resource saving and of reducing environmental pollution and is, therefore, in accordance with principles of sustainable development. Since private markets alone fail to serve these goals successfully, the government is called for to promote the bioeconomy in order to ensure a sustainable development of the economy.

M. Ahlheim (*) Institute of Economics; Environmental Economics, Regulatory and Consumer Policy, University of Hohenheim, Stuttgart, Germany e-mail: [email protected]

# The Author(s) 2018 317 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_10 318 M. Ahlheim

In this chapter the concept of sustainability, which is essentially an intertemporal concept, is introduced. Thereafter, the basic principles of resource economics, i.e., the optimal use of natural resources over time, are discussed using a simple intertemporal model. Reasons for market failure in the environmental sector are discussed along with various governmental instruments and policies to address the different kinds of market failure.

Keywords Social welfare • Utility function • Pareto optimum • Sustainability • Market failure • Government policies • Externalities • Public goods • Common-pool goods

Learning Objectives À Á W w u x1 z u x2 z ... u xH z ; After studying this chapter, you should know: ¼ 1ð , Þ, 2ð , Þ, , Hð , Þ ∂w > 0 ð h ¼ 1, 2, ..., HÞ • The main concepts of sustainability ∂uh • The optimal exploitation of a nonrenewable ð10:1Þ resource over time • The main causes of market failure in an envi- In (10.1), W denotes the level of social welfare, ronmental context while w is the welfare function. The (well- • Instruments of government policy in the behaved) individual utility functions u describe bioeconomy h the wellbeing of citizens h (h ¼ 1, 2,..., H) as strictly monotonically increasing functions xh of theirÂÃ individual market consumption bundles x h; x h ; ...; x h ¼ 1 2 N and the vector of environmen- 10.1 Introduction tal quality parameters z ¼ [z1, z2, ..., zL] where the parameters zl (l ¼ 1, 2, ..., L)represent,e.g., Article 56 of the German Basic Law states the water quality, air quality, the area covered with oath of ofﬁce that has to be taken by the Federal forests, the state of biodiversity, etc., which are the President, the Federal Chancellor, and the Fed- same for all citizens. From (10.1), it becomes eral Ministers of the German Government: obvious that if the government wants to maximize I swear that I will dedicate my efforts to the well- social welfare, its main action parameters are the being of the German people, promote their wel- provision of market commodities x and the provi- fare, protect them from harm, uphold and defend sion of environmental quality z, all other things the Basic Law and the laws of the Federation, being constant. This is illustrated in Fig. 10.1. perform my duties conscientiously, and do justice to all. So help me God. (Art. 56 Basic Law for the While market goods are produced in the economic Federal Republic of Germany) sector, environmental quality accrues from the environmental sector. A welfare-maximizing gov- Expressed in terms of welfare economics, this ernment is responsible for both sectors. means that the government is required to maxi- From the ﬁrst-order conditions of a welfare mize a social welfare function, the arguments of maximum, it follows that every welfare maxi- which are the individual utility functions of the mum is also a Pareto optimum, i.e., a state of citizens of the respective country: the economy, where it is not possible to increase 10 Environmental Economics, the Bioeconomy and the Role of Government 319

Fig. 10.1 The role of government the wellbeing or utility of one individual without reducing the wellbeing or utility of some other clean air or a beautiful landscape or politi- individuals (Fig. 10.1), while the inverse impli- cal leadership or national pride, the (mar- cation does not hold. Therefore, a Pareto-optimal ginal) utility of enjoying these goods is not allocation of resources in the private as well as in reduced if others enjoy the same goods. the environmental sector is a necessary, but not The exclusion principle holds if the sufficient, condition for a welfare maximum. owner of a commodity can exclude others Pareto optimality is a pure efficiency criterion, from consuming this commodity. Market while a welfare maximum considers also distri- commodities like a bottle of water are typi- butional issues as represented by the welfare cal examples of goods where the exclusion weights ∂w/∂uh which describe the relative principle holds, while public goods like importance of the wellbeing of a household clean air or political leadership are examples h from the perspective of the welfare- of goods where this principle does not hold. maximizing government (Fig. 10.2). It should be noted that in Fig. 10.2, it is assumed that the MRS stands for “marginal rate of substitution” environmental variable z represents a pure public and MRT for “marginal rate of transformation.” good, i.e., it is rival in consumption, and nobody Nonnegative values of the implicit production can be excluded from consuming it. function F(•) describe the production possibilities of the economy for a given vector y of available Rivalry in Consumption and input quantities. Efficient production requires that Exclusion Principle F(•) ¼ 0. To keep the notation simple, the two Rivalry in consumption means that the households are denoted by the indices A and B. marginal utility of consuming a rival good L(•) is the Lagrangian function, which equals the decreases if some other person consumes sum of the objective function w(•), which we want the same good. For non-rival goods like to maximize, and the product of the Lagrangian multiplier μ and the restriction function F(•). It is 320 M. Ahlheim

Fig. 10.2 Welfare maximum and Pareto optimum well known from the theory of nonlinear optimi- sector in many different ways if it wants to maxi- zation that a saddle point (x*, z*, μ*) of the mize social welfare. In this chapter, we will dis- Lagrangian function (maximum w.r.t. x and z, cuss various problems of market failure in the minimum w.r.t. μ) at the same time characterizes environmental sector and the possibilities of amaximumw(x*, z*)À of the objectiveÁ function governments to address these problems. ∗ ∗ under the restriction F x ; z ; y 0 (cf., e.g., When maximizing social welfare, a responsible Silberberg and Suen 2001, p. 432 ff.). The optimal government does not consider only the wellbeing value of the Lagrangian multiplier μ*indicatesby or utility of the present generation of people but how much the optimal value of the objective also the interests of future generations. Therefore, function changes if the restriction is relaxed infin- welfare maximization has also an intertemporal itesimally. The multiplication of the restriction aspect which requires to ensure a sustainable function by the Lagrangian multiplier converts development of the economy in question. We the units in which the restriction function is have to make sure that we pass on our planet to defined into the units of the objective function. future generations in a state which enables also While the private markets in the economic future generations to pursue their own happiness to sector are (at least in principle and under ideal the same extent as we do. This implies that we conditions) able to implement a Pareto-efficient strive for no or only modest pollution of our envi- allocation of resources according to the main ronment and that we preserve a sufficient part of theorem of welfare economics (cf., e.g., Feldman our natural resources for them. This is where the and Serrano 2006, p. 3), this does not hold for the bioeconomy cuts in, since the transition to a environmental sector where we have to face vari- bio-based economy serves the goal of resource ous kinds of market failure and where for many preservation, because in the bioeconomy, the use environmental goods like biodiversity, landscape of nonrenewable resources is substituted by the beauty, etc., no markets exist at all. Therefore, the use of renewable resources. Since the bio-based government must intervene in the environmental economy cuts back the utilization of fossil fuels, it 10 Environmental Economics, the Bioeconomy and the Role of Government 321 serves the goal of slowing down global warming to throughput from the ‘factors of production’, a part improve the living conditions of future of which, at any rate, is extracted from the generations. The bioeconomy produces also less reservoirs of raw materials and noneconomic waste than the traditional economy since many of objects, and another part of which is output into its products can be composted naturally after use the reservoirs of pollution”—Boulding 1966, or can be reused as inputs in new production p. 11) to a “spaceman economy” (“... in the processes. Summing up, the bioeconomy serves spaceman economy, throughput is by no means a the goals of resource saving and of reducing envi- desideratum, and is indeed to be regarded as some- ronmental pollution and is, therefore, in accor- thing to be minimized rather than maximized. The dance with principles of sustainable essential measure of the success of the economy is development. Since private markets alone fail to not production and consumption at all, but the serve these goals successfully, the government is nature, extent, quality, and complexity of the called for to promote the bioeconomy in order to total capital stock, ...”—Boulding 1966, p. 11). ensure a sustainable development of the economy. The basic idea of Boulding’s spaceman economy The rest of this chapter is organized as is very similar to the idea of today’s bioeconomy, follows: in Sect. 10.2, we will introduce the since both are aiming for a sustainable use of concept of sustainability which is essentially an scarce natural resources. Already more than intertemporal concept. In Sect. 10.3, we will 50 years ago, Boulding described his idea of a discuss the basic principles of resource econom- sustainable economy as follows: ics, i.e., the optimal use of natural resources over In the spaceman economy, what we are primarily time, using a simple intertemporal model. concerned with is stock maintenance, and any Section 10.4 deals with market failure in the technological change which results in the mainte- environmental sector and discusses various gov- nance of a given total stock with a lessened throughput (that is, less production and consump- ernment instruments and policies to address the tion) is clearly a gain. (Boulding 1966, p 11) different kinds of market failure. Section 10.5 contains some concluding remarks. Looking into the literature on sustainable development, one finds a vast variety of different definitions of sustainability which often differ 10.2 Sustainability only in small details. These concepts can roughly be subdivided into two main categories, strong The goal of striving for a sustainable development and weak sustainability, but there are also of society and economy is motivated by the con- definitions of very strong and very weak cept of “spaceship earth”. In his seminal paper on sustainability, and within each category, one “The economics of the coming Spaceship Earth”, can find different definitions of one and the Kenneth Boulding (1966) described our planet as same kind of sustainability. Especially the older a spaceship, i.e., a closed system, drifting through concepts of sustainability are defined in physical the outer space where no possibility exists to or value terms. Konrad Ott (2003) summarizes exchange matter between the spaceship and its the basic idea of weak sustainability as follows: environment (cf. also Spash 2013). After we will Weak sustainability argues that what counts is the have used up all resources on our planet, we will overall value of the bequest package. Natural and not be able to take on board new supplies. And artificial capital are, in principle, substitutes. Therefore, the depreciation and degradation of when we will have filled our planet up to the rim natural capital is permissible under the idea of with our waste, there will be no chance to get rid intergenerational justice if artificial capital is proof it. This notion of our planet as a spaceship duced at the same rate. Note that ‘capital’ is just where only energy, but no matter, can be shorthand for ‘means of production’. (Ott 2003, p. 62) exchanged with the outer space, makes it necessary to trigger a transition from what Boulding Of course, it is difficult to derive practical calls the “cowboy economy” (“... the success of rules for sustainable development from the economy is measured by the amount of the definitions like that, since it is not clear, e.g., by 322 M. Ahlheim how much physical production capital or human This definition does not aim at the transfer of capital must be built up in order to compensate physical units of natural and produced capital to for burning one ton of crude oil. Things become future generations but at the satisfaction of even more complicated if we want to follow the human needs that can be generated by using concept of strong sustainability, according to this capital. Not the transferred capital has to be which natural and artificial capital are no constant over generations, but the satisfaction or substitutes but complements: utility it generates for different generations has to Strong sustainability, in contrast, emphasises that be constant. In the context of biology, this means the human sphere is embedded in a natural system that it is not the ecosystems that have to be (‘biosphere’) and assumes that natural limits ought counted and preserved for future generations to constrain our actions. Artificial capital can only but the ecosystem services and the utility they sometimes substitute for natural capital. In general, both kinds of capital are complementary. ... generate. Obviously, the Brundtland definition of Strong sustainability argues in support of a sustainable development is an anthropocentric constant-natural-capital rule. (Ott 2003, p. 62) definition, while weak and strong sustainability in the traditional sense are purely physical Following this concept of sustainability, each definitions. An obvious interpretation of the generation has to pass on a “constant-natural-cap- Brundtland definition is that it aims at the maxi- ital bequest package” to the next generation, while mization of an intertemporal social welfare func- the weak definition of sustainability requires only tion according to (10.3) where the utility a “constant-overall-capital bequest package”. functions u are interpreted as the level of satis- According to the weak definition, it is possible to t faction of different generations. This leads us to compensate a reduction of natural capital by the next section of this chapter where we will building up the stock of artificial capital, while briefly discuss the principles of intertemporal with the strong definition of sustainability, only welfare maximization with a limited and nonre- substitution within the natural capital sector is newable resource stock. allowed. Burning a ton of crude oil can be compensated by planting additional trees, but not by building up the production sector of the economy or by technological progress, since the over- 10.3 Welfare Maximization all natural capital stock has to be passed on to with Nonrenewable Natural future generations without reduction. Like with Resources the weak definition of sustainability, one has to In this section, we consider the optimization ask here what the “exchange rate” between renew- problem of a government that wants to maximize able (trees) and nonrenewable resources (crude oil) should be. The trade-off between different social welfare over different generations in the sense of a sustainable development. For kinds of capital cannot be solved based on these definitions. Further, it is not clear why we should simplicity’s sake, we assume that in this econ- follow at all such physical “book-keeping” types omy, there prevails perfect information with a uniform interest rate for lending and borrowing. of sustainability rules. From a welfare economic perspective, the We further assume that society is equipped with R definition of sustainability by the World Com- a given stock of a nonrenewable resource which can be consumed directly after extraction, mission of Environment and Development (1987), stated in the so-called Brundtland Report, i.e., there is no further refinement or production appears to be much more plausible. Here process between extraction and consumption of this resource. This kind of model is also known “sustainability” is defined as as the “cake-eating” model of nonrenewable humanity’s ability to ensure that it meets the needs resources. The government is supposed to maxi- of the present without compromising the ability of T future generations to meet their own needs. (World mize social welfare over s þ 1 generations or Commission of Environment and Development time periods t ¼ 0, 1, 2,..., Ts. We assume that 1987, p. 41) the utility of each generation depends on its 10 Environmental Economics, the Bioeconomy and the Role of Government 323 consumption xt of the resource R where overall case, the resource will be completely depleted consumption of all generations is restricted by after generation Ts according to condition (iv). the constraint From condition (ii), it follows that maximizing intergenerational welfare implies a resource allo- XTs cation such that for all generations with a posi- xt R ð10:2Þ x t¼0 tive consumption t, marginal overall welfare is the same for all generations: The government maximizes the intergenera- ∂w ∂u ∂w ∂u tional welfare function t x∗ t0 x∗ ∂u Á ∂x ð Þ¼∂u Á ∂x ð Þ À Á t t t0 t0 0 W ¼ w u ðx Þ, u ðx Þ, ..., uT ðxT Þ ; Âðt, t ∈ f 0, 1, ..., TsgÞ 0 0 1 1 s s ∂w ð10:4Þ > 0 ð t ¼ 0, 1, ..., TsÞ ∂ut ð10:3Þ Shadow Price under restriction (10.2). The respective first- A shadow price is a hypothetical or virtual order Kuhn-Tucker conditions are shown in price that is never actually paid. Like a Fig. 10.3. market price, it indicates the marginal Applying the interpretation of the Lagrangian value of a good or resource, but this good multiplier μ* according to function L above to or resource is not traded in markets, and, our optimization problem in Fig. 10.3, we find therefore, the shadow price is only of theo- that μ* indicates by how much maximum attain- retical importance. able social welfare increases if the restriction parameter R is increased by one unit. Therefore, From (10.4), we can see that generations with μ* expresses the marginal social value of the a high welfare weight ∂w/∂ut will be granted resource stock R or its shadow price (cf., e.g., higher consumption quantities xt (because of Silberberg and Suen 2001, p. 167). From condi- the diminishing marginal utility of consumption tion (i), it follows that μ* is positive if the mar- 2 2 ∂u ∂ ut/(∂xt) < 0), while generations which are ginal welfare of consumption ∂w Á t ðÞx∗ is ∂ut ∂xt considered less important by the central planner positive for at least one generation t. In this

Fig. 10.3 Welfare maximization with a nonrenewable resource 324 M. Ahlheim are given lower consumption quantities. If all the consumption of fossil resources. Therefore, generations have the same importance for gov- the transition of our economy to a bio-based ernment so that economy can be interpreted as an immediate consequence of the maximization of an intergen- ∂w ∂w 0 ¼ ð t, t ∈ f 0, 1, ..., TsgÞ ð10:5Þ erational social welfare function. ∂ut ∂ut0

it follows from (10.5) that the resource is 10.4 Market Failure distributed over the different generations such in the Environmental Sector that their marginal utility of consuming this and Government Policy resource is the same for all generations: for a Bio-Based Economy ∂u ∂u t ∗ t0 ∗ 0 ðx Þ¼ ðx Þð t, t ∈ f 0, 1, ..., TsgÞ ∂xt ∂xt0 The bioeconomy aims not only at the preserva- ð10:6Þ tion of natural resources for future generations but also at an optimal management of the envi- This corresponds closely with the definition of ronmental sector for the present generation. sustainability by the Brundtland Report “Our Therefore, we will focus on a comparative static Common Future” stated above. This principle analysis of the interaction between the economy of a sustainable development has reached enor- and the environment in this section, instead of an mous prominence not only among scientists but intertemporal analysis as in the previous section. also among politicians and broad parts of the First of all, the question arises what we under- public. It forms the guideline for most political stand by an “optimal” management of the envi- negotiations on environmental preservation and ronmental sector. In Sect. 10.1, we learned that climate policy. Condition (10.6) is, of course, a the government is expected to maximize a social marginal criterion which does not imply that welfare function as a strictly monotonically each generation should be able to consume the increasing function of the individual utility same quantity of natural resources as, e.g., the functions of all citizens, where each of these strong sustainability criterion requires. It is an utility functions is strictly monotonically increas- anthropocentric criterion which aims at the (mar- ing in market consumption x and environmental ginal) satisfaction of the needs of people and not quality z. In Fig. 10.2, we saw that a welfare at the resources at their disposal. maximum implies the realization of a Pareto Viewed in the context of a more general optimum. The difference between the two setting criterion, (10.6) can be interpreted as an concepts is that the welfare maximum also encouragement of the transition from a fossil- considers the distributional justice ideals of gov- based to a bio-based economy. Differently from ernment as represented by the welfare weights the strong and weak criteria explained above, ∂w/∂uh, while a Pareto optimum is a pure effi- sustainability in the sense of (10.6) is defined in ciency criterion. For each economy, there exists terms of utility, no matter from which resource an infinity of different Pareto-optimal allocations this utility is derived. If fossil resources become each of which implies a different distribution of scarcer or are not available at all from some individual well-being or utility. Based on the generations on, we have to make sure that this welfare weights ∂w/∂uh, the government generation has substitutes for these fossil chooses one of these Pareto optima for a welfare resources at their hands to guarantee the fulfill- maximum. Since we are not interested in distri- ment of condition (10.6). This will be possible butional issues here and since the welfare only after we will have developed new weights ∂w/∂uh cannot be determined on scien- technologies which can produce the same satis- tific grounds anyway, we concentrate on the faction of human needs from renewable or implementation of Pareto-optimal allocations of bio-based resources that we enjoy today from x and z in this section. Our main interest here is if 10 Environmental Economics, the Bioeconomy and the Role of Government 325 private markets, when left alone, are able to marginal utility of consuming some market implement a Pareto optimum without any gov- good) should equal the marginal production ernment intervention. If this is not the case, we cost of the public good (in relation to the mar- speak of market failure. ginal production cost of that market good). Because of the non-rivalry of public goods, all Public Goods households consume the same quantity and qual- From Fig. 10.2 we saw that a Pareto optimum ity of such a good simultaneously. Therefore, the requires that the marginal rates of substitution social marginal utility accruing from the con- (MRS) between any pair of two market goods sumption of a public good equals the sum of the are equal for all households and equal to the individual marginal utilities. The optimality con- marginal rate of transformation (MRT) between dition in Fig. 10.2, therefore, says that in a Pareto these two market commodities. The economic optimum, the social marginal utility should equal interpretation of this condition is that in a Pareto the marginal production cost. This is, in princi- optimum, the marginal utility of consuming a ple, the same condition that holds for market market commodity (in relation to the marginal goods. The difference between both conditions utility of some other market commodity) is equal is that the social marginal utility of consumption for all consumers and is also equal to the mar- equals the individual marginal utilities for a marginal production cost of that commodity ket good and the sum of the individual marginal (in relation to the marginal production cost of utilities for a public good. the other market commodity). Therefore, no real- Since the consumption of a public good is location of consumption or production could lead non-rival and since the exclusion principle fails, to a utility increase of one consumer without there is no incentive for private agents to invest reducing the utility of some other consumer. in the provision of a public good because they Because of the rivalry property of market will not be able to earn their money back. If all goods, each unit of a market good can be con- households were willing to pay a price for the sumed by one person only. Therefore, the indi- consumption of a public good according to their vidual marginal utility of consuming a market marginal utility of consuming that good, an opti- good equals the “social” marginal utility accru- mal provision of public goods in the sense of our ing from that good, so that our conditions in optimality condition would be feasible. But, Fig. 10.2 say that in a Pareto optimum, the social again, the non-rivalry in consumption and the marginal utility of consuming a market good failure of the exclusion principle make such a should be equal to its social marginal cost. so-called Lindahl solution (s. Lindahl 1919) We could also see in Fig. 10.2 that the sum of impossible. Private consumers have no incentive the marginal rates of substitution between a mar- to pay for enjoying the public goods since they ket good x and an environmental public good cannot be prevented from consuming it for free z equals the marginal rate of transformation without even compromising its quality. There- between the market good x and the environmen- fore, free riding is the optimal strategy for a tal good z. This optimality condition follows strictly rational “homo oeconomicus”, and, as a from the fact that in Fig. 10.2 we assumed that consequence, nobody will be willing to invest in z is a pure public good. While market goods are the provision of a public good. characterized by the criterion of rivalry in con- Though we know that psychological motives sumption and the exclusion principle, these like altruism, social norms, the need for social criteria are not fulfilled for public goods like approval, etc., set incentives also for a private clean air, the climate in a specific region, biodi- provision of public goods, these effects will not versity, etc. The economic interpretation of the be strong enough to trigger a Pareto-optimal pro- optimality condition in Fig. 10.2 says that in a vision, at least not with larger groups of people. Pareto optimum, the sum of the marginal utilities Therefore, governments have to intervene to of consuming the public good (in relation to the ensure a sufficient, if not optimal, provision of 326 M. Ahlheim public goods. This is why the transition to a the preservation and sustainable provision of bio-based economy, which serves the goal of common-pool goods. providing the public good “world climate” in a sustainable quality, will not happen without gov- Externalities ernment support. The most important cause of market failure in the environmental sector is the existence of so-called Common-Pool Goods external effects. An external effect exists, if an In the context of environmental protection and economic activity of one economic agent (house- sustainability, the group of so-called common- hold or firm) has an impact on another economic pool goods plays an important role. These are agent’s objective function (e.g., a utility function goods which are rival in consumption, so that or profit function) where this agent has no control their quality is diminished when they are con- over the effect. If the external effect is positive, sumed (i.e., the marginal utility of consuming we speak of an external benefit; if it is negative, it them is the smaller the more people are consum- is called an external cost. Especially external ing them), while nobody can be excluded from costs are responsible for the deterioration of utilizing them. Because of this combination of environmental quality. Examples are the pollu- rivalry in consumption and the failure of the tion of air, soil, and water as a by-product of the exclusion principle, rational individuals will con- production or consumption of market goods. If a sume as much as possible of such a good as fast river or lake or a groundwater aquifer is polluted as possible. The dominance of this consumption by the toxic wastewater of a production plant, strategy will lead to what Garrett Hardin (1968) this has consequences for the profits of other called the “tragedy of the commons”, i.e., a fast firms (e.g., fishermen living at the same lake or overuse of such resources which will lead to their river or producers of mineral water from that premature extinction, if the government does not aquifer), but also households using that lake for intervene. Examples of common-pool goods recreation or receiving their drinking water from suffering from this kind of market failure are that groundwater aquifer are affected. Without fish stocks in the open sea where everybody can government regulations, they have no catch as much as he desires, but also groundwater possibilities to influence the extent of pollution aquifers, rivers, or lakes which are exploited by or to stop it. But also households can cause different private parties or different countries, externalities affecting other households (e.g., rain forests in countries where no government car driving leading to particulate matter pollution regulation for their exploitation is enforced, etc. in our cities) or firms (e.g., by burning garden Without strict utilization regimes which are rubbish in the neighborhood of a hotel or an enforced by governments, these resources will open-air restaurant). Households and firms be lost within a short time. Besides setting up together cause negative externalities on the strict utilization schemes for such goods, the world climate by releasing carbon dioxide into government can support their preservation also the atmosphere, thereby affecting the profit by encouraging the provision of alternative functions of producers (e.g., farmers) and the commodities serving the same purpose as the utility functions of households all over the common-pool goods. In the case of endangered world. The bioeconomy addresses especially fish stocks, the government can, e.g., support this problem by developing new alternative financially the development of new kinds of products and new technologies which use less marine food like algae-based nutrition. This carbon-based inputs and cause less CO2 branch of the bioeconomy has been flourishing emissions than traditional production processes. over the past years, but this development has Markets alone ignore the existence of external been possible only because of government costs and benefits since the prices of market subsidies. Therefore, the bioeconomy depends commodities equal the marginal utility of on government intervention also with respect to households consuming these commodities on 10 Environmental Economics, the Bioeconomy and the Role of Government 327 the one hand and the marginal production cost of external costs imposed on society as a whole, producers on the other. The external costs of while the social marginal benefits consist of the production in the form of pollution are borne by individual marginal consumption benefits plus society as a whole, but no price is charged for the marginal external benefits. them, as long as we live in a laissez-faire econ- Our intuition is confirmed if we solve the omy with no government intervention. There- optimization problem leading to a Pareto opti- fore, we have a situation here where the mum with external effects as shown in Fig. 10.4. bioeconomy, which leads to a reduction of exter- As before, we deal here with an economy with nal costs, will not develop without government two households A and B, two market goods x1 support, since the development of bioeconomic and x2, and an externality s accruing from the production technologies is costly and nobody consumption (or production) of commodity will be willing to pay for it voluntarily. 1. The externality affects the wellbeing of both If the government decides to reduce negative households. In the case of a negative externality, externalities (and to boost positive externalities), good 1 could be, e.g., car driving leading to air the question arises which level or extent of pollution with particulate matter. A positive externalities is optimal. Reducing, e.g., pollution externality could accrue from using electric cars accruing from the production of market goods to by both households, which would lead to less air zero would in many cases mean that also the pollution and less noise. production of these goods would be reduced to The conditions for a Pareto optimum with zero, which probably would not be optimal for externalities are shown in Fig. 10.5. The first society. Economic intuition would advise us to three terms correspond with the optimality apply the Pareto optimality rule derived above in conditions for market goods as known from Fig. 10.2 also to the present problem. This would Fig. 10.2. The numerator of the last term captures mean to expand the production of a market good the marginal external costs or benefits accruing that causes a negative (positive) externality up to from commodity 1. ∂s/∂x1 is the marginal effect the point where the social marginal benefits of consuming one more unit of commodity accruing from that commodity equal its marginal 1 (e.g., driving one more kilometer by car) on social cost. The marginal social cost consists of the externality (e.g., PM pollution), while the the marginal production cost plus the marginal term in parentheses expresses the overall effect

Fig. 10.4 Pareto optimum with externalities

Fig. 10.5 Pareto optimality conditions with externalities 328 M. Ahlheim of one more unit of the externality on the not with minimum abatement costs like with wellbeing of all households. The last term drives emission taxes according to the PSA or the a wedge between the marginal rate of substitu- Pigovian tax approach. tion between commodities 1 and 2 on the one Since with emission taxes or a cap-and-trade hand and the marginal rate of transformation on policy polluters have to pay for every single ton the other. Considering external costs explicitly of emissions, i.e., for every unit of a negative leads to a new Pareto-optimal allocation where externality, there exists always an incentive to the MRT is smaller than the MRS of the develop new abatement technologies to reduce households, while the existence of external the emission costs. Therefore, the taxation of benefits require an allocation where the MRT is negative externalities (external costs) and the larger than the MRS of the households. subsidization of positive externalities (external If a Pareto-optimal allocation according to benefits) are important instruments to trigger Fig. 10.5 is to be implemented in a market econ- the transition from a fossil-based to a bio-based omy, this can be done, e.g., by imposing a economy with minimum overall cost. uniform per-unit tax on a commodity causing external costs (or by granting a uniform per-unit subsidy on commodities causing external 10.5 Concluding Remarks benefits). The price a household would have to pay for a commodity causing a negative external- In this chapter, it has been argued that the gov- ity would then comprise the marginal production ernment is responsible for environmental man- cost of that commodity plus the marginal exter- agement in an economy and, especially, for the nal cost in terms of the tax. If this tax amount organization of the transition from a fossil-based equals exactly the external costs, it is called a to a bio-based economy. The existence of various Pigovian tax (cf. Pigou 1920 or Sandmo 2008). It causes of market failure in the environmental will implement a Pareto-optimal allocation. In sector prevents the implementation of a Pareto- practice it will not be possible to assess the efficient allocation of environmental resources exact amount of such a tax since the necessary without the help of government. In an information, especially the marginal utilities of intertemporal context, an optimal allocation of a households (cf. Fig. 10.5), is not available. nonrenewable natural resource requires the max- Therefore, the Pigovian tax represents a theoreti- imization of an intergenerational social welfare cal ideal only. A practical instrument for the function where the interests of the different reduction of a negative externality is the generations are considered in form of their utility so-called pricing and standards approach (PSA), functions. Private markets alone will only con- suggested by Baumol and Oates (1971). The PSA sider the wellbeing of the present generation recommends to impose a uniform per-unit tax on and, maybe, also of the next. Neglecting the goods causing negative externalities because this interests of all following generations prevents a will lead to a more efficient allocation than in the sustainable use of such resources in the sense of initial situation with a minimum of overall abate- the Brundtland definition. In a comparative static ment costs. In the case of externalities caused by context, the existence of public goods, common-

SO2 or CO2 emissions, an analogous effect can pool goods, as well as of external costs and be reached by introducing an emission trading beneﬁts of market consumption and production system, where emitters have to pay a uniform lead to market failure in the sense that without price per unit of the respective emission. Reduc- government intervention the implementation of a ing pollution by regulatory or command-and- Pareto-optimal resource allocation will not be control policy, where certain emission caps are possible. The principles and conditions of such deﬁned by government and any transgression of an optimal resource allocation were derived, and these emission limits will be prosecuted, leads different instruments for their practical imple- also to a reduction of negative externalities but mentation were discussed in this chapter. 10 Environmental Economics, the Bioeconomy and the Role of Government 329

Review Questions References

• Why is government responsible for the pres- Baumol WJ, Oates WE (1971) The use of standards and ervation of the environment in general and, prices for environmental protection. Swed J Econ especially, for the development of the 73, pp 42–54 Boulding KE (1966) The economics of the coming space- bioeconomy? ship earth. In: Jarrett H (ed) Environmental quality in a • Which are the most important concepts of growing economy. John Hopkins University Press, sustainability? What are their main Baltimore, pp 3–14 characteristics? Feldman AM, Serrano R (2006) Welfare economics and social choice theory, 2nd edn. Springer, New York • Please explain the characteristics of the Hardin G (1968) The tragedy of the commons. Science so-called cake-eating model of intertemporal 162 (3859), pp 1243–1248 resource use and its relation to the concept of Lindahl E (1919) Just taxation-a positive solution. In: very weak sustainability. Musgrave R, Peacock A (eds) Classics in the theory of public finance, 1st edn. Macmillan, London, pp • What are the main reasons for market failure 98–123 in the environmental sector and which are the Ott K (2003) The case for strong sustainability. In: Ott K, most important instruments of government Thapa P (eds) Greifswald’s environmental ethics. policy in this context? Steinbecker, Greifswald, pp 59–64 Pigou AC (1920) The economics of welfare. Macmillan, • What are the causes of the so-called tragedy of London the commons? Sandmo A (2008) Pigouvian taxes. The new Palgrave • Why is the government responsible for the dictionary of economics, 2nd edn. Palgrave provision of public goods? What could be Macmillan, London Silberberg E, Suen W (2001) The structure of economics: the incentives for private people to contribute a mathematical analysis. McGraw-Hill, New York to the provision of public goods? Spash CL (2013) The economics of Boulding’s spaceship • Please explain the first-order conditions for a earth. In: Dolfsma W, Kesting S (eds) Interdisciplin- Pareto-optimal regulation of external effects. ary economics: Kenneth E. Boulding’s engagement in the sciences. Routledge, London, pp 348–363 • What is the significance of the concept of World Commission of Environment and Development shadow prices in the context of environmental (1987) Our common future. Oxford University Press, policy? Oxford

Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Economic Growth, Development, and Innovation: The Transformation 11 Towards a Knowledge-Based Bioeconomy

Andreas Pyka and Klaus Prettner

# Jürgen Jarosch

A. Pyka (*) K. Prettner Institute of Economics: Innovation Economics, Institute of Economics: Growth and Distribution, University of Hohenheim, Stuttgart, Germany University of Hohenheim, Stuttgart, Germany e-mail: [email protected] e-mail: [email protected]

# The Author(s) 2018 331 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_11 332 A. Pyka and K. Prettner

Abstract To improve sustainability, the global economic system has to undergo severe transformation processes. This chapter deals with the possibility of an innovation-triggered transformation towards a knowledge-based bioeconomy, which is supposed to overcome the current lock-in into a

fossil fuel-based CO2-intensive production. To do this, a neo-Schumpeterian view is applied that highlights the complex interplay in knowledge generation and knowledge diffusion processes between ﬁrms, consumers, and government institutions. By applying the neo-Schumpeterian approach, it becomes obvious that innovation and economic growth are part of the solution and not part of the sustainability problem. The shift from quantitative growth to qualitative development makes the difference and affects all agents and institutions in an economic system, which needs to be designed as a dedicated innovation system supporting the transformation towards a knowledge-based bioeconomy.

Keywords Knowledge-based bioeconomy • Neo-Schumpeterian approach • Economic growth • Development • Innovation system • Economics of change

Learning Objectives industrialized economies from the beginning of After studying this chapter, you should: the industrial revolution at the end of the eighteenth century, has been questioned at the latest • Understand the technological, political, and since 1972 when the book The Limits to Growth social shifts that are necessary to achieve a trans- was published by the Club of Rome (Meadows formation to a sustainable bio-based economy. et al. 1972). After more than 200 years of indus- • Be able to assess the differences between the trial production, large parts of the world popula- two approaches: (1) conservation of resources tion are richer than ever before. However, by growth abstinence and (2) decoupling of industrial production in its current form is also growth and exploitation of resources. closely linked with the exploitation of natural • Understand the foundations of the resources and the strong accumulation of green- neo-Schumpeterian framework in the analysis house gases in the atmosphere, endangering of radical innovations. human survival. In economics two fundamen- • Beabletothoroughlydiscussthechallenges, tally different solution strategies are discussed opportunities, and consequences of innovations as a reaction on man-made climate change and such as the “sharing economy,” “biofuels,” and irreversible environmental damages: (1) conser- “digitalization” in the transformation towards a vation of resources by growth abstinence and knowledge-based bioeconomy. (2) decoupling of growth and exploitation of resources. In this chapter, we show that the first perspective with its emphasis on the efficiency of price competition is not suited to conceive a 11.1 Introduction transformation of the production system towards a knowledge-based bioeconomy. Only the emphasis of the superiority of innovation compe- The sustainability of modern economic growth, tition, inherent to the second perspective, allows as it developed in the todays Western 11 Economic Growth, Development, and Innovation: The Transformation Towards a... 333 for the inclusion of the required transformative only dismisses these most important qualitative perspective. dimensions. Such an analysis can only serve for a The supporters of the first approach (e.g., very short-term observation. Blewitt and Cunningham 2014; Kallis et al. The alternative approach of neo-Schumpeterian 2014), summarized under the headings of absti- economics (e.g., Hanusch and Pyka 2007) nence and downscaling, claim a renunciation of challenges this quantitative orientation and instead our lifestyles based on consumption and increasing emphasizes the importance of qualitative aspects, deployment of resources. This is considered the which make fundamental changes of economic only way to enable a sustainable and environment- structures over longer periods visible. Without friendly lifestyle and form of economic activity. At the consideration of the qualitative levels of eco- first sight, it might look surprising that these nomic growth, the quantitative figures cannot tell growth-hostile approaches are strictly in line with much about the massive technological and socio- the thinking put forward in mainstream neoclassi- economic developments. The neo-Schumpeterian cal growth theories. This follows from the fact that approach highlights that innovations, market the standard neoclassical approach relies on the forces, structural change, and urban ways of life assumption of stable economic structures and an are both part of the problem and part of the solution understanding of economic growth as a continuous to the sustainability problem. Innovation-triggered increase in the quantity of the goods that are pro- development generates both quantitative, i.e., duced. Figure 11.1 depicts the impressive growth income-increasing growth, and qualitative, i.e., performance of the German economy, where—in structure-changing development. Only the crea- particular in the period of the so-called tive solutions characteristic for capitalistic- Wirtschaftswunder after 1945—income per head organized economies will enable to reform our skyrocketed: at the beginning of the twenty-first future economy in the sense of sustainability, century, per capita GDP is approximately four thereby supporting the UN’s sustainability goals times higher than three generations earlier. But and simultaneously ensuring growth and develop- does this mean that German consumers today ment (Mazzucato and Perez 2015). have four Volkswagen Beatles in their garages? The central role of innovation in Obviously not! Today we have completely differ- neo-Schumpeterian economics highlights that ent goods and services in our consumption baskets, abstinence in the sense of economic downscaling we acquire different competences in universities, is neither the first nor the only solution. This does we work in different jobs, etc. Restricting eco- not mean that all ideas of the proponents of the nomic growth analysis to a quantitative dimension camp are rejected: in perfect accordance, certain

GDP per Capita (€) Fig. 11.1 GDP per capita in Germany (Maddison 20000 1995)

15000

10000

5000

73 98 1820 1870 1913 1950 19 1990 19 334 A. Pyka and K. Prettner past patterns like the high energy intensity of this transformation process is radical, qualitative, production because of too low oil prices not and long term. It was already in Business Cycles, covering the total environmental costs or published in 1939, when Schumpeter revitalized so-called planned obsolescence in consumption Kondratieff’s theory of long waves in order to require urgent adjustments. Especially concepts explain such processes as regular processes in resulting in a more intensive use of goods and long-term economic development. His illustration therefore contributing to the economization of of the discontinuous nature of economic develop- resources like the sharing economy or displacing ment is famous: “Add successively as many mail physical goods by digital goods are promising. coaches as you please, you will never get a railway The same applies for closed-loop material cycles, thereby” (Schumpeter 1934,p.64).Sofar,the recycling systems, and intelligent waste avoid- literature highlights five long waves: The begin- ance and treatment. These concepts are perfectly ning industrialization around the year 1800 applicable to foster learning and behavioral represented the first long wave and was fueled by changes on the supply and the demand side. the steam engine and by cotton processing. Then, The core idea of neo-Schumpeterian economics, starting around the year 1850, the widespread however, is the supply of and demand for new availability of steel and the diffusion of railways technological solutions within a comprehensive constituted a second long wave. Again, in the early economic transformation process (Geels 2002), twentieth century, this Kondratieff cycle was i.e., different goods and services are produced replaced by electricity and chemicals. In the post- and demanded in different, namely, sustainable war period, the third long wave gained momentum ways. Exploring and exploiting the technological by mass production and the automobile as well as possibilities of the bioeconomy not only creates the petrochemical industries. Since then, new investment opportunities but is also the con- manufacturing activities built on oil as a second dition sine qua non for the required socioeco- fossil fuel apart from coal. From the 1980s, one nomic and cultural changes. The consumers’ refers to the fifth long wave, which is reflected in acceptance of bio-based products and their the fast and ubiquitous diffusion and application of demand are indispensable for a successful trans- information and communication technology. formation. Innovations and changed consumer Now, at the beginning of the twenty-first century, attitudes are complementary conditions for the another paradigmatic change is in the air, being creation of a sustainable production system. characterized, however, by one major difference to Change can be either of an incremental type in previous situations of radical change: whereas pre- terms of small improvements step-by-step along vious cycles were driven by technological well-known technological trajectories, or it can be bottlenecks and their overcoming, in the twenty- fundamental, leading to structural changes and the first century, we face the vital question of how to emergence of new and the disappearance of old restore environmental sustainability of economic industries. To simplify, we assume in this chapter activities. The knowledge-based bioeconomy that incremental technological changes are based plays a key role in this transformation process on existing technological solutions, whereas radi- which, of course, like previous radical changes, cal technological changes question major existing still is confronted by fundamental uncertainty production processes. They might lead to massive (Knight 1921). upheaval in the global production system in the The literature provides many alternative terms sense of creative destruction (Schumpeter 1943). for the massive change, shaking global produc- Because this chapter deals with the fundamental tion systems: Freeman (1991) and Dosi (1982) transformation of current production systems, rad- call them techno-economic paradigm changes; ical technological innovations are in the spotlight Sahal (1985) uses cartographic analogies and which encompass the overcoming of the lock-in refers to technological guideposts that are situation in fossil fuels (Unruh 2000) and the estab- pointing to technological avenues. All authors lishment of a knowledge-based bioeconomy (Pyka highlight the confrontation with profound 2017; Pyka and Buchmann 2016). Without doubt changes economic systems are faced with over 11 Economic Growth, Development, and Innovation: The Transformation Towards a... 335 longer periods of time, which question all innovation processes. So-called innovation established production approaches. Not a single systems are composed of different actors technology is responsible for this phenomenon (companies, research institutions, political but several complementary developments that actors, consumers, etc.) and linkages between include, apart from a package of mutually depen- these actors (flows of goods, R&D cooperation, dent technologies (e.g., combustion engine, pet- knowledge transfer relationships, user-producer rochemistry, assembly line production), relationships, etc.). These linkages are required numerous infrastructural developments (e.g., to ensure mutual learning and common knowl- road structure, filling station network), behav- edge development to solve complex innovation ioral changes (e.g., suburbs and commuter flow, challenges. Such systems are characterized by shopping malls outside the city centers), as well their dynamic and coevolutionary nature and as institutional changes (e.g., spatial planning are thus enormously complex, as both actors and commuter allowance, etc.). The old para- and their knowledge and linkages and digm will not be replaced by the new one until interactions between actors may change all these elements interact. over time. The neo-Schumpeterian approach provides us Dosi (1982) takes this systemic conception as with crucial hints on the process of the forthcom- a starting point in defining technological ing change. For this purpose, we discuss in the paradigms as “[...] set of procedures, or a defini- following section how innovations are supported tion of the ‘relevant’ problems and of the specific by the discovery and successful diffusion of new knowledge related to their solution.” Transferred knowledge. Knowledge-based economies orga- to the knowledge-based bioeconomy, the core nize innovation systems composed of different idea is substitution, i.e., replacing carbon-based actors which establish a creative environment for materials and energy with bio-based materials mutual learning and knowledge creation. No and energy. This can only be achieved by apply- innovation would have ever been established if ing a variety of technological processes in the it had not attracted consumers’ interest and if it entire breadth and depth of the value-added had not been leveraged by their purchasing chain. In this process the exploration of eco- power. We will focus on these questions in nomic complementarities in terms of cross- Sect. 11.3. Knowledge-based societies consider fertilization of different knowledge fields new concepts in the sense of responsible matters. For example, to a large extent, digitali- innovation that are decisive in bringing an entire zation allows for an extension of value chains by economy on a new sustainable path-shaping increasing the added value in new sustainable growth and development. Section 11.4 deals production sectors in a CO2-neutral way (e.g., with the massive economic impacts originating by electric mobility based on renewables, by from these technological and knowledge-driven establishing so-called smart grids, etc.). The con- changes. It requires, besides technological cept of technological paradigms also illustrates change, also institutional change in a coevolu- that a paradigm shift is not possible at any time. tionary fashion, if new sustainable technologies A window of opportunity will only occasionally are to achieve the aspired transformation of the be opened and allow for a paradigm shift when economic system. several interconnected technologies are established and the creation of conducive demand side and institutional conditions happens 11.2 Innovation Systems simultaneously. This, of course, also holds for and Knowledge the emergence of a new bioeconomic innovation system and requires a sound balance of the vari- Neo-Schumpeterian scholars (e.g., Dosi et al. ous actors and their activities. For this reason, we 1988; Lundvall 1992, 1998; Nelson 1993) introduce the notion of a dedicated innovation strongly emphasize the systemic character of system. 336 A. Pyka and K. Prettner

The theory of industrial life cycles, which cognitive, or material reasons.” “Organizations emphasizes the strong dynamics in the emergence are durable entities with formally recognized and decline of industries, gives a first hint on the members, whose rules also contribute to the meaning of the development of a dedicated institutions of the political economy” (North innovation system supporting the transformation 1990; Hall and Soskice 2001). In this interplay towards a knowledge-based bioeconomy. Typi- between organizations and institutions, the knowl- cally, industrial development is divided into four edge base of an economy is created by the educa- stages: (1) a development phase (new knowledge tion and research system and represents one of the creates prerequisites for innovation), (2) an most important prerequisites for the transforma- entrepreneurial and growth phase (many market tion towards a bioeconomic production system entries of smaller innovative firms), (3) a satura- (Geels 2002). This automatically relates to a high tion and consolidation phase (formation of indus- level of uncertainty in particular concerning the trial standards, mergers, and acquisitions as well as required future competences. In this complex pro- market exits), and (4) a downturn phase (oligopo- cess, numerous individual knowledge fields are listic competition in only less innovative potentially relevant for the transformation and are industries) (e.g., Audretsch and Feldman 1996). already identified, e.g., synthetic chemistry, pro- Although the bioeconomy does not represent a cess engineering, genetic engineering, food tech- well-defined industrial sector, understanding the nology, or informatics. It is decisive to understand theory of industrial life cycles is of crucial impor- the dynamics of these knowledge fields and the tance to govern the transformation process towards possibilities of their recombination with other the knowledge-based bioeconomy. Without doubt, knowledge fields and adequate actors in order to the bioeconomy has to be characterized as cross create an innovation system. In many cases, sectional. On the one hand, several new sectors linkages of different knowledge fields (cross-fer- will emerge, e.g., in the fields of bioplastic, waste tilization) are responsible for the emergence of management, or biorefineries. On the other hand, extensive technological opportunities: for already existing sectors in the fields of vehicle instance, a complete new industry, bioinformatics, construction, battery technology, pharmaceuticals, has been initiated by the fusion of two so far etc. will gain new momentum by the arrival of unrelated knowledge fields, database technology bioeconomic approaches. Therefore, we argue and molecular biology. Because linking different that new sectors will emerge by establishing knowledge fields is highly uncertain, private actors bioeconomic technologies and development might not start and governmental innovation dynamics of some already existing industries will policies matter. Knowledge about future receive new impetus at the same time. potentials, therefore, is essential for supporting Adjustments of old and development of new research and innovation policies: the analysis of institutions (e.g., in Germany the Renewable knowledge and network dynamics allows for the Energy Act, the Greenhouse Gas Emissions Trad- identification of development trajectories showing ing Law, etc.), adjustments of consumer habits, sectors requiring public attention and support and the emergence of new educational concerning research and development in order to opportunities in terms of coevolution will accom- close existing knowledge gaps and build bridges pany these processes and establish the institu- between various knowledge domains (Burt 2004; tional, the industrial, and the consumer pillars of Zaheer and Bell 2005). a dedicated innovation system. The patterns and nature of new businesses in the bioeconomy are thus strongly influenced by 11.3 Innovation in Knowledge- national institutions and organizations (Casper Based Societies et al. 1999;Whitley1999). Institutions are defined as “a set of rules, formal or informal, that actors It has already been mentioned that also consumer generally follow, whether for normative, knowledge plays an important role for the 11 Economic Growth, Development, and Innovation: The Transformation Towards a... 337 development and establishment of sustainable fundamentally associated with uncertainty. The consumption patterns in a knowledge-based concept of responsible innovation summarizes bioeconomy (Geels 2002). Therefore, the analy- the future-oriented organization of development sis of the transformation process has to include and is currently discussed with a high priority by the interaction of technological development, European policy makers and institutions. A com- demand, and acceptance of innovative solutions prehensive working definition has been devel- as well as sociological variables. The latter oped by Von Schomberg (2011). He describes include education, age, income, and gender. All responsible innovation as “a transparent, interac- are important explanatory factors determining tive process by which societal actors and attention and readiness to deal with bioeconomic innovators become mutually responsive to each issues. A bioeconomic innovation will only be other with a view to the (ethical) acceptability, successful when consumers accept it. The direc- sustainability and societal desirability of the tion of the transformation process is, comparable innovation process and its marketable products to the importance of the policy realm, determined (in order to allow a proper embedding of scien- by consumers, i.e., an important question has to tific and technological advances in our society).” address consumers’ openness to the bioeconomy This means that innovations are not exclusively and its products. evaluated by their economic efficiency, but dif- Finally, (real and virtual) social networks mat- ferent aspects (e.g., consumer protection or eco- ter for the establishment of new consumption logical aspects; see Schlaile et al. 2017) also patterns. They can contribute significantly to a matter and are to be evaluated. Discussions on diffusion of consumers’ behavioral patterns and biofuels (“fuel vs. food”) show that both a pure values (Robertson et al. 1996; Valente 1996; economic and a one-dimensional ethical perspec- Nyblom et al. 2003; Deffuant et al. 2005). Recent tive are not sufficient. The quality of these studies show that attitudes are substantial for the discussions depends on the discussants’ mutual development of social relationships and that, in understanding which in turn depends on the turn, social relationships considerably influence participants’ level of knowledge. behavior and attitudes. In the field of renewable Modern plant breeding and production of energies, for example, the initiative of municipal seeds are bioeconomy fields of innovation in utilities’ customers has led in many cases to a which issues of responsibility are discussed fre- “green” orientation of regional power supply. In quently and controversially. German consumers some cases, citizens’ networks finally are skeptical about interference with the genome transformed to investment companies that are of food crops, but individual points of criticism engaged in wind farms. remain unclear. New breeding techniques Critical issues are to be dealt with in demo- introduced, e.g., genome editing, enable cratic processes in order to be widely accepted. scientists to selectively modify DNA strands of Not everything that is technically possible is also crop plants. These techniques are considered socially desirable. In the field of the bioeconomy, innovative as they may allow breeding of poten- this may, for instance, include the use of geneti- tially efficient plants in fast and cheap ways. cally modified organisms in agriculture. In fact, Species developed this way hardly differ from these organisms promise efficiency advantages those of conventional breeding. The Central with regard to the consumption of land and Advisory Committee for Biological Safety does water, etc., but their long-term health and envi- not classify these techniques as genetic engineer- ronmental risks cannot be completely (as with ing, especially because no new combinations of any new technology) anticipated. Accordingly, genetic material are made. As the Genetic Engi- technological developments require consumers’ neering Act does not explicitly address these acceptance and thus depend on the level of edu- techniques, legal clarification is still necessary cation in an economy. This raises the question of as to whether these techniques are classified as a society’s openness towards innovations that are genetic engineering at all. Dissemination 338 A. Pyka and K. Prettner potential and acceptance are influenced by this complementary relations giving further momen- result. Here again, the necessity to include edu- tum for the transformation process. First and cation and information policies becomes evident foremost, there are the possibilities and applica- to support the transformation towards a tion fields of digitalization. Digitalization allows knowledge-based bioeconomy. to replace many oil-based products and energy- The concept of social innovation (e.g., intensive services simply by bits and bytes. Hanusch and Pyka 2013) emphasizes the impor- Simultaneously, digitalization offers a wide tance of active citizenship in innovation. Thus, range of opportunities by coordinating according to the understanding of the European decentralized and very detailed bioeconomic Commission, this term includes innovations that technologies and processes such as energy pro- are social, both in relation to their objective and duction and distribution. This affects the compo- their instruments. In particular, this includes sition of individual sectors where a coexistence innovations referring to the development and of large diversified companies and small high- the application of new ideas (for products, specialized technology companies is a likely services, and models), covering at the same solution. Finally, digitalization also offers con- time social demand and creating new social sumer platforms to efficiently organize “sharing relationships or collaborations. The whole soci- economy” approaches. Finally, successful ety should benefit and contribute to generate new knowledge generation and diffusion of relevant impetus for improvement. Social innovations can bioeconomic knowledge depends on dynamic make a major contribution to rural development innovation networks (Pyka 2002) in which dif- and promote economic resilience in these regions ferent actors jointly share and create new knowl- by strengthening cooperative behavior. Rural edge. The consumers, represented, for example, cooperatives (e.g., regional producer and market- by consumer associations or politics, will play a ing associations, winegrowers’ cooperatives, key role in these innovation networks and will tourism associations, etc.) can help to develop help to establish networks in early stages of tech- regional competitiveness considering ecological nology development. and social aspects. As a consequence, within the In a knowledge-based bioeconomy, invest- framework of a bioeconomy, rural regions that ment and economic growth still represent a cru- are notably affected by the already imminent cial element for employment, international demographic change and subsequent depopula- competitiveness, and income generation. The tion receive new opportunities for economic bioeconomy can make important contributions development. to accelerate investments by providing new investment opportunities generated by fundamental innovations and thereby bringing cur- 11.4 The Economics of Change rently available large quantities of liquidity to a productive use. This, in turn, accelerates the The sections above illustrate that a transforma- technological paradigm shift (Pe´rez 2010). tion of the prevailing economic system towards a The time path of the transformation process bioeconomy is an extremely complex process. represents another critical component and has Various different actors participating in different been explored only partially so far. On the one roles are contributing different pieces of knowl- hand, it is high time to reduce carbon-based edge. In this process, innovative adjustments in production methods. On the other hand, there already existing industries as well as the emer- will be frictions in the transformation process gence of new and the disappearance of mature being caused, for example, by a lack of industries can be observed simultaneously. In specialists and required competences. In this addition to the substitutive relations of new context, the so-called sailing ship effects bio-based industries to traditional oil-based (Howells 2002), frequently observed with radical industries, there are numerous essential innovations, could be made of good use. In the 11 Economic Growth, Development, and Innovation: The Transformation Towards a... 339 middle of the nineteenth century, when the exis- transformation processes actively in order to tence of the established sailing ship technology obtain added value at their established locations? was threatened by the arrival of new steam ships, From this follows that distributional effects shipbuilders—not having changed their have an important regional dimension: does the technologies for many decades, if not bioeconomy strengthen divergence processes centuries—began to innovate again. Due to the between regions or does it help to achieve more threat of innovative technologies, adjustment convergence? The approach of creating networks reactions in predecessor technologies can be in the sense of the so-called smart specialization observed with the aim to prevent the ancient principle (Foray et al. 2009), connecting regional technologies to be quickly replaced. Such adjust- strengths along value-added chains in the best ment reactions are, for example, fuel-efficient possible way, is promising but only sparsely combustion engines and hybrid technologies as implemented so far. Thus, in general, polariza- a reaction to the emergence of electric vehicles. tion tendencies leading to economic as well as These adjustments are advantageous since they political and cultural concentration of power and pursue the same environmental objectives (e.g., resulting in strong center-periphery structures inner-city fine dust and noise reduction, etc.) and can be avoided. But it still remains unclear, thus provide more time to develop new how strong and operational meaningful politi- technologies. Accordingly, the transformation cally induced networks are in comparison to process will for longer periods of time feature a self-organized networks and how policy might coexistence of traditional and bio-based exert influence. First findings indicate signs of a industries. Furthermore, it will be important to potential disintegration of the networks when concurrently steer the relevant innovation pro- political support is withdrawn (Green et al. cesses in traditional technologies. This coexis- 2013). tence further increases complexity. At the same Transformation towards a knowledge-based time, innovation policy is given room for maneu- bioeconomic production system is supposed to ver and yet insufficiently developed technologies terminate the existing negative relations between are prevented from being introduced prematurely economic growth and environmental pollution, which might cause promising approaches to fail. use of resources, climate change, and energy Distributional effects of the transformation consumption and to promote a sustainable econ- process are important for social acceptance. A omy. The following questions are closely linked bio-based economy on an industrial scale will to the basic uncertainty of innovation and cannot largely represent a knowledge-based economy. be answered ex ante: “which contributions are to Consequently, additional demand for high- be made by individual sectors?,” “what complex skilled workers arises whereas opportunities for feedbacks for national and international compet- low-skilled workers decrease. This means a itiveness are to be expected?,” and “do the potential loss of jobs for less skilled workers in so-called rebound effects possibly reduce or traditional industrial production. But apart from even overcompensate the positive effects of the that, there will be demand for different goods and transformation?” Institutional rules, such as a services whose compensation potential with self-commitment of oil-producing countries to regard to added value and employment is still reduce their outputs due to the declining demand unclear. Moreover, it remains open to what caused by bioeconomics, are a way to reduce extent companies are prepared for this transfor- these uncertainties, at least partly. It remains mation into the bioeconomy. Transformation necessary for the leading actors, companies, processes will lead to a devaluation of households, and policy makers to refrain from competences so far responsible for economic optimization approaches and profit maximization success. How do established companies deal in this transformation process. The complexity with the so-called not-invented-here syndrome, and uncertainty of this process requires the overcome operational blindness, and shape awareness of all actors to experimental behavior 340 A. Pyka and K. Prettner

(trial and error) which always also includes the decisions supporting a new orientation of possibility of failure. research and innovation activities, exploitation of new energy sources, improvements in productivity of natural resources, and new sustainable 11.5 Conclusions ways of living and producing (Pe´rez 2013). Moreover, in such a transformation process, Socioeconomic systems have been exposed to catching-up economies have to be provided permanent transformation processes since the with new opportunities for economic develop- industrial revolution. While development pro- ment without overstretching global natural cesses so far have been driven “only” by result- resources and environment. Thus, a political oriented innovation processes, the character of and social direction is essential for a successful the bioeconomic transformation process is transformation process (Mazzucato and Perez clearly concretized by society and politics. In 2015). the past, mainly bottlenecks caused by Examples include the development of new scientific-technological restrictions were over- products within emerging bioeconomic come by vast technological revolutions, shifting innovation systems. In this perspective, the socioeconomic system on new trajectories innovations require an interplay of actors along without giving direct instructions to the direction value-added chains which might lead to the of the development process. At the beginning of development of new industries. In the past, for the twenty-first century, however, the massive example, the provision of cheap electricity accumulation of greenhouse gases in the atmo- led to the spread of fridges and freezers in sphere since the beginning of the industrial revo- private households which brought innovations lution and the vulnerability of our present in the fields of frozen food and packaging. ecosystems reveal that global thresholds are Similarly, the creation of a sharing economy almost surpassed. Thus, the level of freedom for may lead to new digital coordination platforms future developments is restricted in order not to and the creation of sustainable designs by irreversibly damage natural conditions for product manufacturers in the bioeconomy. human life and biodiversity. It is yet unclear Planned obsolescence, a phenomenon wasting whether this transformation process succeeds in resources and shortening product life cycles, the desired way and how it can be governed by would be eliminated this way, and new political influence to achieve existential sectors, for example, in the field of repair and objectives of the global human society. maintenance services are initiated. Important New technological developments alone are determinants shaping long-term development not enough to transform the socioeconomic sys- are networks and clusters. They help to reduce tem. In a first step, they only create the necessary uncertainty and support self-reinforcing effects. potential for radical changes affecting the econ- Furthermore, social changes and changing life- omy as a whole. Converging trajectories and styles are both an expression and a driver of this synergies that may finally introduce the paradigm transformation process (Mazzucato and Perez shift necessarily require a broad social consensus 2015). on a specific use of these technologies. This Therefore, the role of governments is not only means an initiation of a direction of development restricted to the correction of market failures. In which connects investment decisions, fact, by ensuring investment safety and reducing innovations, and the tackling of basic uncertainty risks and uncertainty, government instruments by politics (Pe´rez 2013). The “green growth par- prepare the emergence and flourishing of new adigm” based on bio-based technologies can be markets (Mowery et al. 2010). A crucial task such a direction bringing together the potential of for policies in the realm of innovation and entre- different technological developments and explor- preneurship is the transition from invention to ing their full potential. This requires political innovation, i.e., the expansion of bioeconomical 11 Economic Growth, Development, and Innovation: The Transformation Towards a... 341 activities in a market. Correspondingly, a growth • Describe the term “responsible innovation” path based on bioeconomics is more than a mere and discuss its meaning in the context of replacement of crude oil by renewable resources genome editing. or renewable energies. It rather needs a dedicated innovation system creating synergies, knowledge transfer, and networks between manufacturers, suppliers, and consumers. 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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. The Bioeconomist 12 Jan Lask, Jan Maier, Boris Tchouga, and Ricardo Vargas-Carpintero

# University of Hohenheim/unger þ kreative strategen GmbH

J. Lask (*) B. Tchouga • R. Vargas-Carpintero MSc Bioeconomy Program, Faculty of Natural Sciences, MSc Bioeconomy Program, Faculty of Business, University of Hohenheim, Stuttgart, Germany Economics and Social Sciences, University of e-mail: [email protected] Hohenheim, Stuttgart, Germany e-mail: [email protected]; J. Maier [email protected] MSc Bioeconomy Program, Faculty of Agricultural Sciences, University of Hohenheim, Stuttgart, Germany e-mail: [email protected]

# The Author(s) 2018 343 I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319-68152-8_12 344 J. Lask et al.

Abstract The transition towards a bioeconomy in a challenging and complex environment requires substantial interaction and collaboration between different players on various levels. In this chapter, the concept of a bioeconomy professional is discussed. This actor provides an integrative and connecting role for which the development of basic and key competences is required. The concept of T-shaped profiles, built up from disciplinary expertise and the ability to integrate different disciplines and players holistically, is considered an outstanding feature of bioeconomists. To achieve such profiles, interdisciplinary approaches and new learning environments are required during education process. Bioeconomists have relevant roles in all different stages of the value chain as well as in initially setting them up. Finally, various opinions of experts in bioeconomy fields are presented to get an overview of the potential career opportunities for such professionals.

Keywords T-shaped proﬁle • Collaboration • Mental model • Interdisciplinary competence • Problem-oriented learning • Bioeconomy professional

Learning Objectives as “wicked problems” (see Chap. 4). These differ After studying this chapter, you should: from “tame problems” in that they cannot be addressed using the linear logic of conventional • Understand the importance of the T-shaped rationality or understood through quantitative profile in the context of bioeconomy. and objective information alone (Innes and • Recognise the basic and key competences of a Booher 2016). Pacanowsky (1995) explains that bioeconomist and its relevant role as collabo- whereas tame problems can be solved by think- ration catalyst. ing “inside the box”, wicked problems force the • Realise the benefit of learning in an interdis- solvers to think “outside the box”. Dentoni and ciplinary environment supported by integra- Bitzer (2015) affirm that individual actions have tive methods. limited impact due to coordination failures, and therefore “wicked problems require collective action across societal sectors to generate impact- ful, transformative change of organizations and 12.1 Wicked Problems systems”. The approach to wicked problems and Collaboration requires a different strategy and logic than those usually applied to tame problems. Innes and The socioecological challenges with which pres- Booher (2016) argue that a different kind of ent and future generations are faced at all levels rationality, a so-called collaborative rationality (climate change, food security, poverty allevia- “built on collaborative dialogue and multifaceted tion, energy supply, etc.) are highly complex and information”, is needed to deal with wicked multidimensional. They demand a special inter- problems. This requires the integration of various action between the players involved to achieve views and perspectives under a “systems the best solutions. Such challenges are referred to approach”. This type of approach is 12 The Bioeconomist 345 recommended for the formulation and solution of problems (Polk 2015). Polk uses the term “trans- wicked problems (Rittel and Webber 1973). disciplinary co-production” as a research However, rather than being solved, wicked approach that includes practitioners and problems are addressed through effective researchers who interact along the knowledge solutions based on the definition of the problem production process starting with the joint prob- (Pacanowsky 1995). A collaborative dialogue lem formulation. that engages diverse stakeholders’ values, This new role of science triggers the need for knowledge and perspectives contributes to the new scientists who play a central role as reframing of untamed problems, rethinking and catalysts, managing and conducting more defining realistic goals and identifying possible contextualised research using collaborative and solutions through the emergence of innovation participatory frameworks. Thus, collaboration (Innes and Booher 2016; Head and Xiang emerges as a common vision, central for the 2016). Innes and Booher (2016) describe the resolution of wicked problems as well, which need for planners, who are professionals in demands the active leadership of professionals setting up, supporting and performing participa- to enable the interaction among stakeholders tive processes, and who have the role of active and to create participatory solutions to specific facilitators, following a collaborative rational challenges. In this chapter, a newly emerging approach to solving wicked problems. professional, the bioeconomist, is introduced and described as that catalyser and enabler of A Renewed Role of Science collaboration for the transition from a fossil- Seeing wicked challenges through systemic based economy to a bioeconomy, a systemic lenses modifies the role of science in society, shift that involves multiple complex challenges, from a disciplinary to more interdisciplinary, goals and agents. Therefore, bioeconomy participative and collaborative one. According professionals are expected to be specialised in to various scholars, including Schneidewind one field but also able to understand the scientific et al. (2016) and Batie (2008), the role of science language of associated disciplines. Furthermore, and what society demands of science have the increase focus on innovation and interdisci- changed in the last decades, due to the emergent plinary teamwork has created new student profile importance of sustainable development and the expectation to deal with global challenges and need to tackle socioecological problems. Polk find sustainable solutions. In this regard, the for- (2015) argues that “the role of science is seen mation and development of special competences as evolving to support more contextualized through inter- and transdisciplinary learning is research processes where the participation and fundamental. collaboration of different stakeholders and users is central to the ability of the research to create socially relevant and scientifically reliable 12.2 Professionals knowledge”, which could contribute to societal for the Bioeconomy change. Schneidewind et al. (2016) depict this new vision of science as one that “does not only observe and describe societal transformation Competences processes, but rather initiates and catalyzes The concept of competences supports the them” (Schneidewind et al. 2016, p. 6). This description of professional profiles. It aims to new role of science is built on the idea of inter- conceptualise abilities and thus provides an action and participation to co-produce knowl- explicit and commonly shared framework edge, integrating scientists and non-scientists (Wiek et al. 2011). and using different forms of knowledge, The Organisation for Economic Co-operation perspectives and experiences to address real-life and Development (OECD) describes 346 J. Lask et al. competences as the ability to meet complex compiled by various international organisations demands, by drawing on and mobilising psycho- and scientists. For instance, the World Economic logical resources (including skills and attitudes) Forum (2015) has elaborated an overview of in a particular context (Ananiadou and Claro basic competences required in the twenty-first 2009; OECD 2005). For example, the ability to century resulting from the interaction between collaborate effectively in an interdisciplinary skills and attitudes (Fig. 12.1). team is a competence that relies on an Basic competences are required by the major- individual’s capacity to understand different sci- ity of professional profiles (see Fig. 12.1) and are entific languages (knowledge) and the attitude he fundamental to the development of key or she has towards other team members. Skills competences. Thus, both are equally important, are designated as the ability to use one’s knowl- but the latter are specific to a particular scientific edge with relative ease to perform relatively sim- field or profession and underline specialised ple tasks, while knowledge is defined as the facts abilities. So far, there is no comprehensive set or ideas acquired by study, investigation, obser- of key competences for bioeconomy profes- vation or experience and refers to a body of infor- sionals in the literature. As sustainability is con- mation that is understood (OECD 2000). sidered a core principle of the bioeconomy (see The fulfilment of complex tasks goes beyond Chap. 3), Wiek et al.’s (2011) set of key com- the scope of skills and knowledge but also entails petences for sustainability provides a sufficient the strategies and routines needed to apply the basis for further elaboration. knowledge and skills, including the proper Figure 12.2 shows the results of a literature emotions and attitude and the effective manage- review on key competences for sustainability, ment of these components. The development of amalgamating those identified into five key com- competences depends both on the educational petences, namely, systems-thinking competence, institutions (schools) attended by an individual anticipatory competence, normative competence, and supplementary sociocultural environment strategic competence and interpersonal compe- such as family and friends (Rychen and Salganik tence (see Box 12.1 for further explanation) 2000). Multiple sets of competences have been (Wiek et al. 2011).

Fig. 12.1 Skills, attitudes and basic competences for the twenty-ﬁrst century (from World Economic Forum 2015) 12 The Bioeconomist 347

Fig. 12.2 Solving problems—basic structure (see Fig. 4.1) linked to key competences for sustainability

To explain the scope of the emerging key competences, the basic structure of “solving “Anticipatory competence is the ability problems” (see Sect. 4.1.2) can be used. to collectively analyse, evaluate, and craft According to this framework, problem solving rich “pictures” of the future related to sus- starts with the characterization of the present tainability issues and sustainability state, commonly the description of a complex problem-solving frameworks.” (p. 207) problem, the inherent system and the involved “Normative competence is the ability to stakeholders. Therefore, normative competence collectively map, specify, apply, reconcile, is the fundament of exploring the problem, and and negotiate sustainability values, princi- systems-thinking competence is applied to con- ples, goals, and targets. This capacity sider the bigger picture. The target state is enables, ﬁrst, to collectively assess the analysed via anticipatory competence, and nor- (un-)sustainability of current and/or future mative competence projects values and states of social-ecological systems and, principles into it. The process towards the target second, to collectively create and craft state, the operation, demands a sustainable tran- sustainability visions for these systems.” sition strategy designed with the professional’s (p. 209) strategic competence. Across the whole process, “Strategic competence is the ability to interpersonal competence facilitates cooperation collectively design and implement inter- and is key to a sustainable solution. ventions, transitions, and transformative governance strategies towards sustainability.” (p. 210) Box 12.1: Key Competences “Interpersonal competence is the ability for Sustainability (Wiek et al. 2011) to motivate, enable, and facilitate collabora- “Systems-thinking competence is the abil- tive and participatory sustainability research ity to collectively analyse complex systems and problem solving. This capacity includes across different domains (society, environ- advanced skills in communicating, deliber- ment, economy, etc.) and across different ating and negotiating, collaborating, leader- scales (local to global), thereby consider- ship, pluralistic and trans-cultural thinking, ing cascading effects, inertia, feedback and empathy.” (p. 211) loops and other systemic features related to sustainability issues and sustainability problem-solving frameworks.” (p. 207) 348 J. Lask et al.

With respect to interpersonal competence, a differentiation has to be made between typical members to explain and describe dynamics sustainability experts and bioeconomy profes- in order to coordinate and adapt to changes sionals. According to Wiek et al. (2011), inter- and tasks. Thus, this does not imply identi- personal competence is mostly associated with cal mental models of individual team facilitation and communication skills. However, members, but rather compatibility of indi- for bioeconomy professionals, interpersonal vidual mental models enabling a shared competence goes beyond the described set and understanding of particular situations includes a broad knowledge base. Thus, interper- (Jonker et al. 2011). sonal competence in the bioeconomy is extended by interdisciplinary competence. Due to the man- Integrative professionals are ideally also dis- ifold sectors in the bioeconomy, successful col- ciplinary experts, educated to incorporate and laboration demands strong interdisciplinary connect different disciplinary knowledge competence and an intermediary professional domains and methods. This is referred to as a with the ability to understand the subject matter T-shaped profile, a term first coined by Marco of all stakeholders along the biobased value Iansiti (1993). Metaphorically, the vertical stroke chain. of the T symbolises expertise or deep knowledge in a particular field or discipline. By contrast, the T-Shaped Profile horizontal stroke embodies integrative abilities, As indicated in the introduction, complex wicked allowing T-shaped professionals to act effec- problems require innovative approaches. The tively across disciplines and, through this, more challenging an issue, the greater the need catalyse, manage and conduct contextualised for the integration of various disciplinary experts research and innovation processes. These inte- and societal stakeholders within comprehensive grative abilities are based on extensive training frameworks to combine diverse knowledge and of collaboration competences. A professional methods. In order to improve collaboration effec- with a T-shaped profile is aware of the variety tivity, the emergence of shared mental models is of practices and methods as well as mental beneficial (Madhavan and Grover 1998). As models employed by different disciplines or outlined above, this collaborative process may professions and understands their strengths and be facilitated by integrative professionals, who limitations. use a particular set of competences to set up and The concept may be seen in contrast to the support schemes in order to build up trust more traditional profiles of I- or A-shaped between different academic and nonacademic professionals (Fig. 12.3). Currently, the majority players. of students graduate with an I-shaped profile, educated to become experts in a particular disci- (Shared) Mental Model pline. This means they have a high level of Rouse and Morris (1986) define mental knowledge and expertise in their field of study. models as mechanisms in humans that sup- However, I-shaped professionals may be disad- port the description and explanation of pur- vantaged in conducting interdisciplinary team pose, function and (future) states of efforts. Deficits in the comprehension of funda- systems. Accordingly, mental models mental ideas of other disciplines may impede allow and shape approaches towards and integration and communication with experts interaction within systems. from other areas. By contrast, A-shaped profes- In the context of teamwork, shared men- sionals have a high degree of expertise and tal models refer to knowledge structures knowledge in two areas, such as engineering within the team (the system), which allow and business, and thus may connect at least two fields efficiently (Karjalainen et al. 2009). 12 The Bioeconomist 349

Fig. 12.3 Examples of different professional proﬁles

The concept of T-shaped profiles goes a step Various stakeholders interact within such further. These professionals are not only trained frameworks. Thus, knowledge and skills are to work within multidisciplinary teams but also merged in order to address challenges. In this to facilitate collaboration and connections way, the framework represents a road map for between experts with various backgrounds. cross-fertilisation and the generation of combi- Initially, this idea was derived from “integration natorial innovations. This means that a set of teams” in “new product development”, as it ide- components may be combined and recombined ally contributes to more efficient innovation pro- in new ways to create cutting-edge approaches cesses (Iansiti 1993). Originally, Iansiti (1993) to (wicked) problems. For this, not only an emphasised the effectiveness of T-shaped inclusive and open culture is needed, but also a profiles in innovation creation through technol- common understanding of goals must be devel- ogy integration in the thriving high-tech sector of oped. Therefore, an important task for T-shaped the 1990s. integration specialists is to ensure interdepen- Due to the manifold sectors and disciplines dence of individual goals within the group. the bioeconomy comprises, the T-shaped profile Different stakeholders are likely to have different is designated to exploit the bioeconomy’s full peers, ideas and approaches, which means potential. Players within the bioeconomy have that the overall team success may be influenced to foster integrative approaches and common by individual research questions and norms. goals. Accordingly, intermediary bioeconomy For this purpose, it is necessary to context- professionals require a T-shaped profile, with ualize and assess the systemic impact of indi- expertise in a biobased product-chain-related dis- vidual actions and knowledge and adjust these cipline and broad knowledge in associated goals to the scope of the comprehensive frame- disciplines (from primary production to work. Therefore, integrative professionals in commercialisation, with processes, intermediates the bioeconomy have to be able to and products, see Part II of this book). The ability think strategically, requiring a goal-oriented and to understand different scientific languages, by long-term perspective that has to be in alignment knowing their terminology and methods, enables with different disciplinary views and practices. the mediation between stakeholders and the This profile description of a bioeconomist facilitation of collaboration. This allows bio- sounds fairly straightforward. In reality, profiles economists to form comprehensive frameworks and roles of bioeconomy professionals are highly for the collaboration of research or innovation diverse. Due to the vast size of the bioeconomic teams with diverse backgrounds within the bio- sector, there are numerous job possibilities, and economic sector. thus there is no one-fits-all profile. 350 J. Lask et al.

12.3 Education for the Bioeconomy environments. However, at university level, the coordination of a collaborative curriculum means Most higher education programs, especially uni- established disciplinary structures need to be versity programs, are designed to develop an overcome. I-shaped profile (Repko et al. 2017). Graduates The majority of interdisciplinary education have profound expertise in one discipline with a programs already established in the field of specialisation in a particular research field. How- bioeconomy are master programs (see Box ever, in recent years, education programs with 12.2). With a view to the development of a interdisciplinary curricula have been established, T-shaped profile, a completed disciplinary bach- especially in the field of sustainability science, elor degree would be beneficial. Disciplinary which put emphasis on interdisciplinary expertise (the vertical stem of the T) already research. Bioeconomy is an excellent example acquired at bachelor level can be extended by of an interdisciplinary research field and thus is interdisciplinary expertise (the horizontal bar of predestined for such interdisciplinary education the T) in postgraduate studies. In addition, programs. Integrated disciplinary expertise from students from different cultural and academic various knowledge domains connected to the backgrounds create an international and interdis- biobased value chain benefits the understanding ciplinary atmosphere, which facilitates the of the challenges within the bioeconomy and learning process. However, the students’ diverse support designated bioeconomy professionals to academic background is also part of the chal- develop a T-shaped profile. lenge. The first step of an interdisciplinary edu- In general, interdisciplinary study programs cation program is to establish a common ground combine two or more academic disciplines. by filling knowledge gaps. In the MSc Students acquire knowledge in these disciplines, Bioeconomy program at the University of learning methods, concepts and theories, as well Hohenheim, the students are introduced to natu- as their integration and application to complex ral science concepts, learn basics of agricultural research problems, within interdisciplinary production and become acquainted with eco- teams (Repko et al. 2017). In these teams, shared nomic thinking. group processes, differing opinions and After a common ground has been established, approaches are not only tolerated but appreciated the focus is on the central topic: the bioeconomy. (Barth and Burandt 2013). Repko et al. (2017) Students learn what the bioeconomy is, why it is identified key terms in available definitions of both a chance and a challenge and how the shift “interdisciplinary studies” and brought these towards a bioeconomy can be managed. The together in the following definition: concept of biobased value chains and the basics of biobased resources, processes and products Interdisciplinary studies is a cognitive process by along these chains are taught. The open curricu- which individuals or groups draw on disciplinary perspectives and integrate their insights and modes lum also enables students to develop their own of thinking to advance their understanding of com- individual profile. plex problems with the goal of applying the under- In addition to this multidisciplinary knowl- standing to a real-world problem. (Repko et al. edge, education for the bioeconomy places an 2017) emphasis on the development of competences, Acquiring the ability to integrate and collabo- in particular interdisciplinary competence. This rate is key to the development of interdisciplin- is an integral part of the learning process, ary competences (Repko et al. 2017) and thus a because competences are seen as learnable but main objective of education programs for the not teachable (Barth and Burandt 2013). bioeconomy. The programs are intended to Barth et al. (2007, p. 4) promote a new impart multidisciplinary knowledge and facili- learning culture which is “enabling-oriented, tate the development of interdisciplinary based on self-organisation and centred on com- competences by means of collaborative curricu- petence”. The acquisition of competences is lum design with innovative learning based on the interplay of cognitive (skills) and 12 The Bioeconomist 351 noncognitive (attitude) components. For some settings, learning may even be incidental, instance, the development of complex (shared) with no previous intention to learn, but an aware- mental models is a result of cognitive skills. ness of having learnt something afterwards. The Noncognitive components include value social component of informal learning settings is learning, social interaction and reflective skills. an additional factor in the promotion of compe- Both cognitive and noncognitive components tence development (Schugurensky 2000). support the development of new competences. Whether formal or informal, the proactive The internalisation of new competences is shaping of a T-shaped profile is a unique selling ensured by applying them to multiple contexts point for graduates. The innovative potential of via problem-oriented learning (Barth et al. 2007). the bioeconomy calls for forward-looking collab- In this light, the new learning culture is oration specialists, driven by the goal of the tran- associated with open learning environments, sition towards a biobased economy. which means that learning takes place in manifold forms and depends on individual learning Box 12.2: Examples of Interdisciplinary styles. Open learning environments facilitate Study Programs in the Field competence development by following three of the Bioeconomy key principles (Barth and Burandt 2013): During the last few years, a range of study programs dedicated to the bioeconomy 1. Self-directed learning aims to stimulate sector has been developed, including intrinsically motivated learning. For instance, Europe’s first Bioeconomy degree program project-based learning or e-learning empha- at the University of Hohenheim (MSc sises the active development of knowledge. Bioeconomy). Other examples are MSc It takes students’ varying education levels Biobased Sciences (Wageningen Univer- and learning speeds into account. Shallow sity); MSc Biobased Materials (Maastricht supervision can guide students towards University); MSc Biocircle (Bioeconomy learning goals. in the Circular Economy) (University of 2. Collaborative learning requests participation Bologna, University of Milano-Bicocca, and empathy. Project work in groups in par- University of Naples Federico II and Uni- ticular promotes the development of interdis- versity of Turin); MSc Management of ciplinary competence. Bioeconomy, Innovation and Governance 3. Problem-oriented learning considers real- (University of Edinburgh) and Master of world problems. Therefore, the first two Engineering Leadership in Green principles are prerequisites for a successful Bio-Products (University of British problem-oriented approach, often in collabo- Columbia). Common elements include the ration with external stakeholders study of entire biobased value chains and (e.g. companies). the focus on the ecological, social and economic impacts of bioeconomic develop- In the context of learning competences, the ments. The general goal is to educate interplay between formal and informal learning professionals able to identify innovation settings is of particular value (Barth et al. 2007). opportunities through the integration of Study courses with open learning environments multi- and interdisciplinary perspectives offer manifold opportunities for learning in a and diverse knowledge sources. As such, formal environment. However, informal settings, interdisciplinary problem-based group such as volunteering in a student group, also work activities are a common feature of contribute to the personal learning process and these programs and curriculums. competence development. Here, learning is self- directed without the assistance of an educator. In 352 J. Lask et al.

12.4 The Bioeconomist and the Job engagement of various players are enriched by Market the involvement of bioeconomy professionals. In this manner, the understanding, assessing and The bioeconomy is expected to generate a addressing of possible conflicts and trade-offs large number of employment opportunities in are enhanced (German Bioeconomy Council the coming years, as documented by various 2015). This supporting role is also to be per- reports and national strategies worldwide formed within the knowledge and innovation (German Bioeconomy Council 2015; European system (KIS) introduced by the European Com- Commission 2015, 2016). With a focus on mission as a basis for fostering the bioeconomy high added value and creation of new eco- (Kovacs 2015). nomic activities, the bioeconomy will require Due to the novelty of interdisciplinary skilled professionals along the biobased value programs for the education of bioeconomists, chains. Firstly, bioeconomists have an impor- there is as yet no empirical information on the tant role in setting up and organising value positions they may hold. This is confirmed by the chains, for which key competences as the Global Bioeconomy Summit Manifesto, which ones illustrated in this chapter are necessary states the need “to initiate a dialogue among (horizontal stroke of the T). Secondly, the var- stakeholders regarding the knowledge, skills ious stages of the value chains demand differ- and competencies, which will be crucial for ent types of disciplinary expertise (vertical implementing the bioeconomy, and to promote stroke of the T). mutual capacity building efforts” (German For instance, the European Bioeconomy Bioeconomy Council 2015, p. 8). Some thoughts Stakeholders Manifesto, issued in 2016 as a and insights from selected bioeconomy experts result of the 4th Bioeconomy Stakeholder Con- with regard to the job market and the role of ference in Utrecht, emphasised connectivity as bioeconomy professionals are presented in the the new productivity, arguing that “the added Box 12.3, as a mean of building up this dialogue. value of the bioeconomy lies in the interaction between its diverse areas that provide oppor- Box 12.3: Excursus Box: Insights from tunities for new innovation” (Bioeconomy Stake- Bioeconomy Professionals holder Conference 2016, p. 4). Based on this, Prof. Dr. Werner Kunz: “In a world of bioeconomic practitioners and researchers with growing complexity, easy solutions are an developed key competences (see Sect. 12.2) act illusion. In the future, entrepreneurial suc- as connectors and catalysers of bioeconomy. cess and a respectful treatment of the These roles are to be performed in managerial global environment will be interdependent. and leading positions in private, public and third- This challenge requires the connection of sector organisations in the field of research and various disciplines and, consequently, development, rural development, advisory demands a more comprehensive education services, sustainability-oriented institutions and and training of future professionals. Eco- policy-making bodies. A special role for biologists have to be able to communicate economist due to the T-shape profile is the lead- with economists and, in turn, both need to ing of interdisciplinary teams and projects, have the confidence of engineers and tech- performing as a project manager in the context nicians. Life Cycle Assessments will be as of sustainability and bioeconomy. important as business plans and the asso- Particular career development options are ciated process technologies. offered by start-ups, which are considered key With this is mind, I am convinced of drivers of innovation in the bioeconomy. The the necessity of interface managers design and implementation of bioeconomy gov- (“Schnittstellenmanager”), who will ernance structures and policies through the (continued) 12 The Bioeconomist 353

Box 12.3 (continued) Bioeconomy should be envisaged as a true connect relevant players along the value circular economy, better: as circular eco- chain. Remarkable progress can already nomies, which are specific to the eco- be observed in particular sectors of the biological, social, and technological diversity economy. However, at the same time, a of regional and local conditions. deficit in connectivity is impairing more Future “bioeconomy professionals” comprehensive development and should therefore not only have knowledge innovation. of innovative technologies, as promoted by For this reason, I aspire to more inter- most governments and industries. They disciplinary programs in Germany and the should also understand ecosystems, their entire world. These education programs cultural aspects included. And they should ought to be committed to the connection have training in communication and dia- of highly complex disciplines and fields in logue capabilities. holistic approaches. This will be funda- The latter should be a priority because a mental for the future and beneficial for lot of conflicts will have to be resolved. society, industry and environment.” And, even more important: opportunities Prof. Dr. Werner Kunz is Chair of Phys- for efficient uses and re-uses will not be ical and Theoretical Chemistry at discovered without organising intense Regensburg University, where his research cooperation—and thus: communication. A is dedicated to solution chemistry. He has bioeconomy respectful of given natural or performed numerous projects with indus- cultural limits will only develop fruitfully trial partners and runs his own company in if industries and city governments, the field of the bioeconomy (SKH GmbH). scientists and professionals, citizens and environmentalists all work closely Christiane Grefe: “Education—but for together, coordinated by bioeconomy which bioeconomy? There are so many dif- experts.” ferent definitions of what bioeconomy is Christiane Grefe is a ZEIT journalist and what it could or should be (and so and author of the book Global Garden- many controversies even about whether ing—Biookonomie:€ neuer Raubbau oder the term makes any sense at all), that a Wirtschaftsform der Zukunft?, Antje “bioeconomy professional” cannot be Kunstmann Verlag, München, 2016. described without further clarification of what his/her role should be tailored to. Markus Frank: “Being a professional in the In my view, the term bioeconomy must bioeconomic sector requires, besides deep go beyond changing the resource basis knowledge in one field of expertise, from fossil to renewable, as well as beyond competences in managing scarce biobased applying genome editing to different resources, and thus, implies fundamental industrial, medical or plant breeding pur- understanding of sustainability. Therefore, poses; it must also go beyond producing education for future professionals in this “more with less” or creating innovative field should be designed to develop best value chains in order to achieve “green” practices for integrating sustainable man- economic growth. The added value of the agement concepts into work routines. concept is to consider all this in its inter- In this context, two concepts are of par- dependencies and trade-offs in the context ticular interest. First, life-cycle thinking of our planetary boundaries and a just dis- enables impacts along the entire value tribution of all natural resources. chains to be reflected upon, and the

(continued) 354 J. Lask et al.

Box 12.3 (continued) real-world problems should be emphasised displacement of negative environmental, in the curriculum.” social, and economic impacts to be Markus Frank works for the department avoided. Second, learning about stake- “Global Sustainability & Product Steward- holder theory and the engagement of ship Crop Protection” at BASF SE. He stakeholders promotes the mutual under- holds a PhD in Biology and a MBA from standing of different players’ interests and Surrey Business School. At the University needs. Both approaches comprise key of Hohenheim, he supervises students competences for project managers in the within the module “Projects in area of biobased economies in order to Bioeconomic Research”. analyse trade-offs and deal with complex Dr. Michael Schweizer: “As a company challenges. The learning of these key within the biobased sector, we recognise competences demands practically oriented the importance of the development of new education environments; a shift from class- curricula. Professionals for biobased com- room teaching towards project-based panies should be characterised by a special social learning through working on real- set of skills. I would like to emphasize the life problems. In this context, collaboration additional benefit of graduates capable of with companies, political or regulatory understanding both the technical and eco- stakeholders, NGOs and associations can nomic dimension of products or services. be of benefit. Supplementary international This is of outstanding relevance in small and interdisciplinary study programs on the and medium enterprises (SMEs) in parti- science behind project management, strat- cular, as the conversant use of economic egy development and implementation, mar- figures and also technological and eco- keting, and financial valuation as well as logical data is a prerequisite for successful stakeholder engagement should help communication with costumers. Corre- students to transfer what they have learnt to spondingly, employees should ideally other case studies in their professional life. have a mindset that allows them to under- Clearly, there is a demand in the job stand terms and mental models of key market for graduates with such com- players active in areas related to the bio- petences. However, it is crucial for the based company. employer to also see a “basic skill set” Especially in small enterprises, (e.g. in business, natural science, agron- employees are in constant touch with omy, or engineering) beside the special other disciplinary specialists, as a clear focus on bioeconomy and sustainability department structure is often not given, management: Most, if not all, professionals and companies are less hierarchically will be exposed to very different areas structured. In this context, work is highly inside the organisation. dependent on group efforts and therefore In a nutshell, the unique value proposi- social ability and teamwork efficiency are tion of a graduate combines deep knowl- indispensable skills that should not be edge in the field of biobased value chains, underestimated. Accordingly, abilities the concepts of life-cycle thinking and such as team leading, project management stakeholder engagement with a profound and presentation skills are a vital part of background in project management, team relevant education programs. working and strategic thinking. To achieve However, even more important for this, project-based learning addressing bioeconomy professionals is openness and

(continued) 12 The Bioeconomist 355

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Open Access This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made. The images or other third party material in this chapter are included in the chapter’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. Erratum to: Bioeconomy: Shaping the Transition to a Sustainable, Biobased Economy

Iris Lewandowski

Erratum to: Chapters 5, 6, 7 and 8 in: I. Lewandowski (ed.), Bioeconomy, https://doi.org/10.1007/978-3-319- 68152-8

The original online version of this book was inadvertently published with incorrect author details in the chapters 5, 6, 7 and 8. In the original publication, the Editor’s name was inadvertently presented as the author of these chapters. This has now been amended with the correct author- ship details.

The updated online versions of these chapters can be found at https://doi.org/10.1007/978-3-319-68152-8_5 https://doi.org/10.1007/978-3-319-68152-8_6 https://doi.org/10.1007/978-3-319-68152-8_7 https://doi.org/10.1007/978-3-319-68152-8_8 https://doi.org/10.1007/978-3-319-68152-8

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