Economics for a Sustainable Bioeconomy—Theory and Policies

Abstract At the centre of economics lies the question of how best to allocate scarce resources. This section, therefore, addresses the challenges and limitations posed by resource scarcity in the bioeconomy, a field where the optimal allocation of limited productive resources is crucial for achieving sustainability across economic, social, and environmental dimensions. Economics, as a discipline focused on resource allocation, provides a range of analytical tools for designing sustainable pathways. Several economic approaches contribute unique insights relevant to bioeconomy actors, including consumers, producers and policymakers. Welfare economics focuses on maximizing social welfare by relying on market mechanisms; environmental economics examines market failures, particularly those involving externalities and public goods, and offers policy solutions. Ecological economics advocates for a circular bioeconomy that respects planetary boundaries, and climate and energy economics explores the bioeconomy’s potential to mitigate climate change, with a particular emphasis on biofuels and their associated trade-offs. Together, these perspectives outline a multifaceted economic framework essential for advancing a sustainable bioeconomy.