Analysing socio-economic cost-benefits for circular business models in agriculture, forestry and aquaculture

Authors: Alberts Auziņš, Ieva Leimane

During the last couple of months, researchers from the Institute of Agricultural Resources and Economics (AREI) (Latvia) have been engaged in several activities of the CIRCLE project. The most recent ones are related to the cost-benefit analysis of circular business models explored in national case studies. Additionally, we took part in the project’s consortium meeting in Tartu (Estonia), which provided a possibility to meet project colleagues and visit sites of circular business initiatives.

An ongoing project’s activity is the socio-economic cost-benefit analysis of circular business models. AREI team, in cooperation with the project’s partners BSC and VU, has performed qualitative cost-benefit analysis of circular business models implemented by the farm “Lielkrūzes” (Latvia) and AB “Auga Group” (Lithuania). This analysis involves qualitative assessment of socio-economic benefits (including environmental benefits) and socio-economic costs by comparing the scenario of implementation of the given circular business model with the baseline scenario (a typical alternative to the circular business model is usually a linear business model). “Lielkrūzes” implements quite a small-scale circular business model, which involves a probably unique practice in Latvia, removing sludge from fishponds and using it as a fertiliser. This way they ensure the circulation of bioresources on the farm between aquaculture and agriculture. Meanwhile, AB “Auga Group” is a successful large-scale vertically integrated organic food company (the largest in the EU). Its circular business model integrates organic animal husbandry with growing vegetables and mushrooms, producing bioenergy, and practicing regenerative agriculture.

AREI team is also conducting qualitative cost-benefit analysis of several other circular business models in Norway, Lithuania, and Estonia. These circular business models involve such circular economy initiatives as the production of vegetarian ready-made meals based on vegetables otherwise discarded, the production of energy, fertilisers, and mulch from by-products of grain processing, the creation of sustainable materials such as lignin and cellulosic wood sugars from wood residues, and others.

In cooperation with BSC, VU, RURALIS and EMU, the AREI team is carrying out also quantitative cost-benefit analysis for circular business models in Latvia, Lithuania, and Norway. The circular business model explored for this analysis in Latvia is related to the circular combination of dairy farming, fish farming, and biogas production as a bridge sector. The respective case studies of circular business models used for quantitative cost-benefit analysis in Lithuania and Norway both involve the use of food leftovers (waste) for growing insects and producing insect (larvae) meal as a fish meal substitute in animal (also fish) feed. While both cases are similar, there are also quite notable differences between those. A comparative socio-economic cost-benefit analysis of these two latter circular business models will be used as a basis for a joint scientific publication with colleagues from EMU and RURALIS.

Image: Nika Yagushinskaya from Pixabay