Bioeconomy is any economic activity based on the use of natural renewable biological resources, from both land and ocean, to obtain food, materials, and energy in a sustainable way without compromising their availability for future generations. Specifically, bioeconomy comprises those economic activities related to the invention, development, production, and use of biological products and processes.
The business case for action on bioeconomy is straightforward.Over 30% of global GDP is estimated to be dependent on nature and its services. In fact, the latest global analyses, conducted in 2018, have shown that developing sustainable food and land-use business models could be worth up to an additional US$ 2.3 trillion per year and provide over 70 million new jobs by 2030. Further, there is an array of other bioeconomy sectors besides agriculture (i.e. fisheries, aquaculture, forestry, renewable energy, among others) that can also benefit from sustainable and modern business models for the use of renewable natural resources. Additionally, global assessments suggest that ecosystem services are valued at US$ 125-140 trillion per year. However, despite their high economic value, these ecosystem services are not considered in the national accounts of countries, undervaluing the economic potential and wealth of nations. In fact, both the degradation of biodiversity and the deterioration of their underlying ecosystem services are leading to significant economic losses for countries, businesses, and financial organizations that depend on the proper functioning of natural capital, but due to its lack of proper accounting, often goes unnoticed.
In the specific case of Latin America and the Caribbean region (LAC), the bioeconomy represents a significant sustainable investment and development opportunity. The region is one of the world’s biodiversity superpowers. In LAC, ecosystems contribute to economic growth, provide food, water, and energy, and ensure the livelihoods of their inhabitants. Also, LAC’s ecosystems are fundamental for resilience to climate change and poverty alleviation in the region. The monetary value of the region’s ecosystem services is estimated at US$ 15.4 trillion per annum, albeit not internalized in the region’s systems of national accounts. Nonetheless, as in other parts of the world, overexploitation, deforestation, pollution, habitat loss/degradation, and climate change are threatening LAC’s natural capital. The main drivers for those threats are population growth, urbanization, and changes in land-use. These threats have detrimental consequences on the well-being of local communities and organizations dependent on nature.
However, those same threats open different business opportunities that could leverage on the bioeconomy and could be a viable alternative for harnessing the potential of LAC’s rich natural capital.Not only that, but also, while facing those threats and correcting those distortions, it could potentially both generate alternatives that might help the region’s socio-economic recovery from the Covid-19 crisis and provide a way to embark the region on a long-term, low-emission and climate-resilient growth path that helps to restore and protect the region’s biodiversity. The bioeconomy has the potential to promote the sustainable use of natural capital to produce food, energy, and industrial goods through maximizing added value and minimizing waste in the region. We recognize that important work has been done in the agricultural sector in LAC in this direction, but, as we previously said, there are other bioeconomy sectors in the region such as fisheries, aquaculture, forestry, among others, that have not yet implemented the aforementioned modern business models.
Several institutional and market failures, as well as other barriers, hinder the region’s ability to capture the potential socio-economic and environmental benefits identified for the bioeconomy in LAC. These include incomplete policy and regulatory frameworks, financial and economic barriers, technical constraints, difficulty in aggregating business pipelines, and knowledge gaps. Figure 1 provides an overview of some of these barriers.
Figure 1. Main barriers limiting the development of bioeconomy in the region
To tackle these barriers, and to scale up public and private investment in the region’s bioeconomy, we propose a framework that is grounded in three interrelated components (See Figure 2). The latter is aimed at scoping and strengthening bio-enterprises and related value chains in biodiversity-rich LAC countries. To design and to implement these components, it is paramount to leverage strategic partnerships with National Development Banks, funders, and technical back stopper organizations to reach qualified small, medium, and large bio-enterprises. Therefore, we propose a cross-cutting framework —for the primary, industrial, and services sectors— that has the potential to enhance the intrinsic value of the region’s bioeconomy, mainstreaming it into policy and economic decision-making.
Our forward-looking framework should seek to provide private investors with the tools and required knowledge to invest and to finance bio-ventures in LAC while also addressing associated financial risks. By designing upstream custom-built investment vehicles, as well as supporting the development of natural capital project pipelines, private investors will have more reliable avenues for allocating funds to bioeconomic projects. We believe that this approach will be a fundamental piece of the puzzle in order to carry out the much-needed private investment in biobusiness in the region.
Figure 2. Components for a holistic integrated framework for the bioeconomy
The framework that we advocate for also seeks to develop metrics to transparently monitor, evaluate, and report results with the aim of integrating bioeconomic principles into decision-making. Specifically, it would meet the needs of: i) investors who seek Environmental, Social and Governance (ESG) investment opportunities and call for metrics to measure the impacts of those investments, as well as their risk exposure in bioeconomy ventures, and ii) financial regulators who call for the mainstreaming of natural capital into investment.
In summary, we argue that our integrated framework for the bioeconomy should deliver SMART (i.e. specific, measurable, achievable, relevant, and timely) ESG benefits for bioeconomy investments, which could accelerate the sustainable recovery of LAC countries while contributing to the attainment of i) the Sustainable Development Goals, ii) the Paris Agreement objectives, iii) the National Biodiversity Action Plans, and iii) the Convention on Biological Diversity Targets.
[i] Lago, C., Caldés, N., & Lechón, Y. (Eds.). (2018). The Role of Bioenergy in the Emerging Bioeconomy: Resources, Technologies, Sustainability and Policy. Academic Press.
[iii] World Economic Forum (2020), Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.
[iv] New Climate Economy (2018), Unlocking the Inclusive Growth Story of The 21st Century: Accelerating Climate Action In Urgent Times based onBusiness and Sustainable Development Commission (2016). Valuing the SDG Prize in Food and Agriculture – Unlocking Business Opportunities to Accelerate Sustainable and Inclusive Growth.
[v] OECD (2019), Biodiversity: Finance and the Economic and Business Case for Action – A report prepared by the OECD for the French G7 Presidency and the G7 Environment Ministers’ Meeting, 5-6 May 2019 – based on Kering (2017) and DNB (2019).
[vi] World Bank (2012). Biodiversity: Finding the Funds to Keep Latin America Green. https://www.worldbank.org/en/news/feature/2012/10/17/america-latina-biodiversidad-conservacion
[vii] IPBES (2018), Regional and sub-regional assessments of biodiversity and ecosystem services: regional and sub-regional assessment for the Americas – Hernández-Blanco M. Basado en data en Costanza et al. (2014) y Kubiszewski et al. (2017).
[viii] See e.g. UNEP (2016), The State of Biodiversity in Latin America and the Caribbean – a Mid-term Review of Progress Towards the Aichi Biodiversity Targets; IPBES (2019), Global Assessment Report on Biodiversity and Ecosystem Services;
[ix] See e.g. P.R. Shukla, J. et al. (eds.) Technical Summary, 2019. In: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems; IPBES (2019), Global Assessment Report on Biodiversity and Ecosystem Services; WEF (2020), Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.
[x] Source: adapted from: The Global Bioeconomy Summit 2018 defines it as the “production, utilization and conservation of biological resources, including related knowledge, science, technology, and innovation, to provide information, products, processes and services in all economic sectors aiming toward a sustainable economy”; FAO (2018), Assessing the Contribution of Bioeconomy to Countries’ Economy.
[i] See e.g. Dinero.com (2019), ¿Qué es la bioeconomía y qué tan buen negocio es?; Betancur G. (2018), Estudio Sobre La Bioeconomía Como Fuente De Nuevas Industrias Basadas En El Capital Natural De Colombia N.º 1240667, FASE I; Rodriguez A.G., La bioeconomía: Oportunidades y Desafíos para el Desarrollo Rural, Agrícola y Agroindustrial en América Latina y el Caribe.Gobierno de Ecuador (2017), – Forest Investment Program – Investment Plan – basado en MAE (2017);
[i] SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. It is a framework for identifying indicators for the assessment of projects.