Three broad trends – in policy, markets and innovations – will shape the bioeconomy and have the potential to change market conditions for the forest sector, in turn improving prospects for the financing of nature-based solutions that benefit people and the environment. However, the implementation of novel policies and innovations carries some risks, and it is critical that nature-based solutions which deliver the most beneficial environmental and social outcomes are financially competitive with forestry activities that do not.
Policy trends
The bioeconomy strategies and action plans highlighted above aim to unlock public funding, stimulating public R&D in technology programmes and promoting the development of bioeconomy-related standards, as well as providing tax incentives. These policy signals provide investors with greater confidence that substantial policy will underpin the bioeconomy. While not always legally binding, strategies drawn up by local and national governments and supranational bodies can help build policy certainty and emphasize the future importance of the bioeconomy in achieving sustainability ambitions. For example, the EU’s European bioeconomy strategy, as updated in 2018, aimed to disburse research and innovation grants via the Horizon 2020 programme and committed to creating a €100 million Circular Bioeconomy Thematic Investment Platform.
Market trends
Consumer awareness surveys point to increasing concern over the consumption of forest-based products and the risk that their production and trade may bring about environmental harm. These environmental concerns are driving consumers’ purchasing choices. A survey conducted in 2021 on behalf of the Forest Stewardship Council (FSC), an international certification organization, identified that 86 per cent of the sample interviewed (which amounted to 12,000 participants across 15 countries) preferred to avoid buying forestry products that directly cause damage to biodiversity.
Procurement policies are a powerful tool shaping demand for biomaterials in global markets. The need to decarbonize heavy industry and curb carbon-intensive production of concrete and steel has begun to influence public and private procurement policies, which are shifting towards the increased use of biomaterials. For example, in September 2022, the Biden–Harris administration in the US announced a new Buy Clean Initiative, prioritizing low-carbon construction materials for 98 per cent of the materials purchased by the federal government.
Shifting demand in the construction materials sector has translated into long-term market demand for long-lived wood products. For example, in recent years there has been increased demand in both the US and Europe for bio-based materials such as cross-laminated timber (CLT). According to one estimate, the global CLT market is expected to show a compound annual growth rate of more than 13 per cent between 2021 and 2028.
Innovation trends
Innovation and emergent technology can be integrated at different stages along the forestry supply chain. For example, the use at the planting and growing stage of precision forestry, which uses sensors and artificial intelligence-powered decision-making tools, can automate the precise application of water or fertilizers to support the growth and development of young trees or plants.
At the supply-chain stage, new processing technologies can transform raw feedstocks (i.e. harvested plants and trees) into new types of bio-based products. For example, lignin, a by-product of the pulp and paper industry, is increasingly being integrated into pharmaceuticals, fibres and 3D printing composites, after being fractionated in advanced biorefineries.
Business models in the forest sector have traditionally been based around plantations of introduced monoculture of non-native tree species. There is increasing recognition of the economic opportunities offered by increasing the genetic diversity of plantations and, notably, by planting native tree species, both of which can provide new avenues for the creation of bio-based products. There is also a growing recognition of the risks to biodiversity from the monoculture model. The Green Climate Fund’s Amazon Bioeconomy Fund – a $600 million investment programme – is investing in native tree species and aims to encourage private investment in six key areas of the bioeconomy in the Amazon region.
The use of innovative technology will improve the resilience of plants and trees to pests, fungal disease and long-term acute effects of climate change such as reduced rainfall. It may include the use of new synthetic technologies that allow scientists to genetically alter the genes of trees and plants, and their offspring, to reinforce characteristics that may improve their resilience to climate change impacts. However, the introduction of synthetic technologies can have unintended consequences or create novel risks, altering ecosystems in complex, unpredictable ways and giving rise to public concern.
Implications for land availability and land-use dynamics
Trends in policy, markets and innovation, among others, will also affect the total land footprint of the bioeconomy – in other words, the area of land that needs to be designated for growing sufficient numbers of plants and trees to meet increased demand for bio-based products. However, there will be competing demands for this space. In 2020, the Corporate Statistical Database division of the Food and Agriculture Organization of the UN (FAOSTAT) estimated that nearly 37 per cent of the world’s land area (excluding Antarctica) was allocated to agriculture and more than 31 per cent to forests. Forecasts by the World Resources Institute indicate that in the period to 2050 there will be increased demand for land across a number of non-forestry sectors: for example, animal-based products, crops, bioenergy and urban development.
The findings of a remote sensing survey conducted by the Food and Agriculture Organization of the UN and published in 2021 indicated that agricultural expansion drove almost 90 per cent of global deforestation between 2000 and 2018.
These land-use dynamics will have cascading impacts on global supply chains as well as on prices for goods and services. For example, one study estimates that, globally, the expansion of urban land into agricultural areas will bring about a decline in crop production (rice, wheat, maize and potatoes) of between 1 per cent and 4 per cent by 2100. The IPCC has estimated that large-scale afforestation (being the planting of new forests on previously unforested land, which is different to reforestation or forest restoration – see Box 1) could increase food prices by up to 80 per cent in 2050. The findings of a remote sensing survey conducted by the Food and Agriculture Organization of the UN and published in 2021 indicated that agricultural expansion drove almost 90 per cent of global deforestation between 2000 and 2018.
Prioritizing land uses that deliver multiple functions – by combining production, biodiversity protection and livelihood creation – will enable more to be done with less. But identifying where it is best to prioritize certain types of land allocation will require land-use models that connect demand scenarios for the bioeconomy with proposals for combining the provision of ecosystem services and livelihood creation, alongside other types of land use. The analysis needs to take account of projections for future demand as well as for future technological adoption and land footprint.
