Modeling the bio-refinery industry in rural areas: A participatory approach for policy options comparison

Abstract

The development of bio-refineries has become a relevant topic in the EU's agenda. However, the promotion of a new industry in rural areas is typically hindered by the scarcity of human capital, lack of information, infrastructures, and competing interests. In this context, public support is unavoidable to assist promotion of this innovative sector. The various policy options reveal some strengths and drawbacks, posing the problem of finding the best trade-off to public decision makers. In this paper we aim at developing a methodology to support policy decision making within the biorefinery framework, with the purpose of determining a way to identify the most suitable policy option given the actual uncertainty in developing the bio-refinery industry in rural areas. The empirical experiment, based on a simulation of the enforcement of four identified policy instruments, highlights that, although subsidies and incentives to profitability of dedicated crops appear to have the greatest effects on the development of bio-refinery, the best performances are exhibited by technological innovation and information options.