As global attention turned to Colombia and the recent Biodiversity COP16, one of the key concepts on the agenda was the "bioeconomy." Rooted in sustainability, the bioeconomy has the potential to transform how we approach economic development by leveraging biological resources to generate value, while restoring and conserving ecosystems and biodiversity.

But what exactly is a bioeconomy, and how can it drive meaningful change in sectors from agriculture to energy?

At its core, a bioeconomy refers to the sustainable use of renewable biological resources—like plants, animals, microorganisms, and organic waste—to produce goods and services. The idea is to replace the fossil-based economy with one that is ecologically sound, circular, and economically viable.

The bioeconomy is not just an environmental concept, but a robust economic model that offers opportunities for innovation, job creation, and sustainable growth.

A Pathway to Sustainability

“The bioeconomy represents a paradigm shift in how we think about natural resources,” explains Palladium’s Paulo Pulgarin-Restrepo. “It’s about moving away from the extractive practices that deplete ecosystems and towards systems that are regenerative and inclusive.”

Unlike traditional industries that rely heavily on non-renewable resources like oil, coal, and gas, the bioeconomy emphasises the use of renewable resources. These processes harness nature’s ability to regenerate itself, ensuring that economic activity does not come at the cost of biodiversity.

For Colombia, a country rich in natural resources and biodiversity, the bioeconomy is not only relevant but essential. “Colombia has the unique opportunity to lead by example in the global push towards a bioeconomy,” says Pulgarin-Restrepo. “From the Amazon rainforest to the Andean ecosystems, the country’s biological wealth is enormous, and with it comes the potential to develop industries that are both ecologically and economically sustainable.”

The Colombian government itself has promoted several public policies and technical instruments to foster a bioeconomy in regions with important natural assets such as the Chocó, Andes, and Pacific but also on rural areas nearby main cities.

Real-World Examples of the Bioeconomy

To understand how the bioeconomy works in practice, consider sectors like agriculture and forestry. Agroecology, a system of farming that works with nature rather than against it. By promoting biodiversity, improving soil health, and reducing the need for chemical inputs, agroecological practices help farmers maintain resilient ecosystems while producing food more sustainably.

In Colombia, agroforestry systems, which integrate trees into agricultural landscapes, have been widely adopted to restore degraded land and enhance productivity.

These systems provide not only timber and fruit but also ecosystem services like carbon sequestration, soil regeneration, and water retention. This approach not only boosts yields but also supports climate goals by capturing carbon from the atmosphere. A lesser-known yet powerful example comes from the realm of energy production.

Bioenergy, which involves converting biological materials into fuel, offers an alternative to fossil fuels. Biomass—such as wood chips, crop residues, and algae—can be processed to create renewable energy sources like biofuels and biogas. This process generates energy while closing the loop on waste, aligning with the principles of the circular economy.

“Bioenergy is a great example of how the bioeconomy can address multiple challenges at once,” explains Pulgarin-Restrepo. “It reduces waste, cuts greenhouse gas emissions, and creates new economic opportunities, particularly in rural areas.”

The Role of Innovation and Investment

For the bioeconomy to reach its full potential, innovation and investment are crucial. This is where organisations like Palladium step in, explains Pulgarin-Restrepo, connecting governments, businesses, and investors with sustainable solutions that generate both environmental and financial returns. Through programs like Partnerships for Forests, Palladium has been at the forefront of developing bioeconomy strategies across various sectors, from agriculture to conservation finance.

“We’re seeing more and more investors recognise the value of the bioeconomy,” says Pulgarin-Restrepo. “This is not just about doing the right thing for the planet. There are real financial returns to be made by investing in sectors like sustainable agriculture, ecosystem restoration, and bioenergy.”

A key component of this is creating markets for bio-based products and ecosystem services. One emerging mechanism that has gained traction is habitat banking, where developers or companies offset environmental damage by investing in the restoration or preservation of natural habitats. Terrasos, an innovative Colombian company has pioneered the habitat bank and biodiversity credit model in Colombia, and is seeking to scale to other South American countries. This creates a revenue stream for landowners and communities who manage these areas, all while contributing to biodiversity goals.

The bioeconomy also hinges on advances in biotechnology. From bio-based materials that can replace plastics to innovations in waste recycling, technological developments are making it easier to scale sustainable solutions. Palladium through partnerships with Amazonian centers for startups has witnessed the potential to use amazonian fibers to create sustainable materials that can replace plastics.

In Colombia, for example, biorefineries that convert agricultural residues into biofuels and bioplastics are gaining attention to reduce waste and reliance on petroleum-based products.

A Just Transition for People and Nature

While the bioeconomy holds immense promise, it also comes with challenges. One major concern is ensuring that the transition to a bioeconomy is inclusive and equitable. As industries shift towards bio-based solutions, it’s essential that smallholder farmers, Indigenous communities, and rural populations—many of whom depend directly on natural resources—are included in the process.

“This transition can’t be top-down,” warns Pulgarin-Restrepo. “It’s about creating value for communities and ensuring that they have a stake in the bioeconomy. Otherwise, we risk perpetuating the same inequalities that exist in the current system.”

In Colombia, integrating local and Indigenous knowledge into bioeconomy strategies will be key to ensuring sustainable and equitable outcomes. These communities have been managing their ecosystems for generations, often in ways that are far more sustainable than industrial practices. Their involvement in bioeconomy projects will not only strengthen biodiversity outcomes but also empower them economically.

The Road Ahead: Beyond COP16

As COP16 attendees gathered in Colombia to tackle some of the most pressing biodiversity challenges, the bioeconomy will play a crucial role in shaping the path forward. With the right policies, investments, and technologies in place, the bioeconomy has the potential to transform industries, safeguard ecosystems, and provide sustainable livelihoods for millions of people.

“The bioeconomy isn’t just a buzzword,” concludes Pulgarin-Restrepo. “It’s a tangible pathway to achieving global biodiversity and climate goals. If we get it right, it can be a game-changer.”

As discussions conclude at COP16, understanding the bioeconomy has been essential for anyone looking to participate in shaping the future of sustainability. Whether through innovative projects in energy, agriculture, or conservation, the bioeconomy offers a blueprint for a future where economic growth and environmental protection go hand in hand.