The modern bioeconomy aims to harness renewable natural resources to produce sustainable alternatives to fossil fuels and other nonrenewable materials in the manufacture of fuels, pharmaceuticals, plastics, and related products. While some elements—such as corn- and sugar-based biofuels—are already in widespread use, the bioeconomy remains an evolving system. We anticipate that ongoing research and policy developments will lead to the creation of new crops and organisms that can serve as feedstocks for renewable production. Additionally, building a resilient bioeconomy necessitates the development of efficient technologies to convert these feedstocks into a diverse range of bio-based products.
Once new technologies become available, farmers and consumers have to adopt them. It is important to distinguish between adoption—the decision by an individual to use a new technology or grow a different crop—and diffusion, which refers to the aggregate level of adoption across a population. Economists have studied these phenomena extensively and have found that the diffusion process often follows an S-shaped curve as a function of time, reflecting slow initial uptake, followed by rapid expansion, and eventually a plateau as the market becomes saturated.
The cumulative effects of individual behavior, population heterogeneity, and dynamic learning processes drive the S-shape of the diffusion curve. Individual adoption choices typically unfold in several stages. The first stage is awareness—an individual must become aware of the technology and its characteristics. This awareness may arise through various channels, such as observing the choices of others, word of mouth, or more formal sources, including advertising, extension services, newspapers, and other media. The second stage is assessment. Individuals apply different criteria to evaluate the technology. Some may imitate influential early adopters, while others may independently assess whether the technology is valuable to them. This evaluation includes weighing the expected benefits against several potential costs: the financial investment, the effort required to learn how to use the technology, the possible need to modify existing operations, and the risk that the technology may not fulfill its promise. The assessment ultimately leads to a decision: to adopt the technology, to reject it, or to defer adoption for future consideration—perhaps when the price drops, more information becomes available, or conditions become more favorable. Finally, after adoption comes reassessment. Policymakers may be satisfied with their choice, but may later find it mistaken and seek a way to reverse it.
Policymakers, educators, and marketers are aware of these elements of individual behavior. They developed educational and marketing strategies to enhance adoption. Policymakers use subsidies, extension efforts, and sometimes standards that are likely to increase the benefit of adoption. Marketers use advertisements, various forms of demonstration, and policies to accommodate reassessment and regrets, like money-back guarantees and warranties. Our studies show that when potential buyers have a way out, in case the product doesn’t meet their needs, they are more willing to pay more and buy the product.
There are multiple ways to introduce new products. Potential adopters may have the option to buy a new product, rent or lease one, or purchase used products. These diverse offerings relate to a second key element to understand diffusion: Heterogeneity. Potential adopters vary in multiple dimensions. One is the economic situation, income, and wealth. Generally, higher-income individuals are more likely to afford new technologies, and when all factors are equal, they tend to be early adopters. Education is another source of heterogeneity. The more educated, especially in technical fields, tended to be early adopters of computers. Health is the third factor. Medicines are products that target individuals afflicted by some disease. Then we have hobbies, attitudes, location, and climate that affect adoption choices. Marketers are aware of the importance of heterogeneity and spend considerable money on focus groups to identify market segments that are more likely to adopt their new technology, using the responses to improve the technology.
The third element that affects diffusion is dynamics. New technologies change over time. As manufacturers gain experience, the cost of production declines – a phenomenon referred to as learning by doing. Experience with the latest technology, as demonstrated by buyers or acquaintances, may increase willingness to pay for it – a phenomenon known as learning-by-using. Certain technologies may become more valuable as the number of adopters grows; a phenomenon known as network externalities. As diffusion rates increase and exceed a certain threshold, tipping points may occur, resulting in multiple changes that enhance adoption. For example, users may establish cooperative buying arrangements, or local dealers may be introduced, reducing costs and increasing quality.
Understanding the factors that enhance the adoption of a new technology is crucial to building the bioeconomy. Once new products, such as a new biofuel or a macroalgae that serves as feedstock for fuel and pharmaceuticals are available, manufacturers and government agencies need to assess potential diffusion patterns and benefits for different groups at various locations. Such assessments may lead to interventions, including marketing strategies, government policies, outreach, and sometimes subsidization. Feedback from potential adopters and users should guide product development. Therefore, an important element of bioeconomy research is social and policy science. It’s not enough to develop great technology; it’s equally important to create institutions and policies that facilitate its adoption.