Sustainable Business Model Innovation for Eucalyptus plantation management in the Atlantic Forest – barriers and opportunities

Abstract

Introduction: Radical deforestation of the Brazilian Atlantic Forest diminished it to only 7% of its original land cover. While natural forests continue shrinking, forest plantation areas are growing. These are represented mainly by Eucalyptus monocultures, providing only minimum ecosystem services and showing vulnerability towards climate change. Therefore, the first study objective was to explore economic and ecological aspects of alternative management approaches with enhanced ecosystem services provisioning compared to conventional Eucalyptus plantations. The second aim was to identify the barriers that need to be overcome for sustainable business model innovation through the implementation of these alternative management approaches in the pulp and paper industry.

Theory: This research follows a novel approach of applying transition theory for sustainable business model innovation. Laasch (2018) provides guidelines to analyse the current and potential innovative business models. The Technological Innovation System model from Hekkert et al. (2007) serves as the theoretical framework for the analysis of the barriers concerning business model innovation.

Methodology: An exploratory comparative case study design was chosen to examine the conventional business model and alternative Eucalyptus management approaches. Data was collected through literature research and 16 semi-structured interviews with stakeholders across the Eucalyptus supply chain that allowed drawing a holistic picture of the industry’s barriers to business model innovation.

Results: Although showing improved provision of ecosystem services, alternative approaches lack short-term profitability compared to conventional Eucalyptus monocultures, which was the key hampering factor to innovation. Legitimacy for alternative approaches through pressure from pulp customers and society is missing, just as public policy support for long-term success is lacking. Furthermore, the market structure for alternative products and services from the studied alternative management approaches is still in its infancy.

Discussion and Conclusion: The research shows suitability for applying the TIS framework to explore innovation dynamics of business models. However, this study advises an explorative approach to the barrier analysis since influences of all system functions were discovered, whereas the Hekkert et al. (2011) suggested a selective focus on certain functions. Furthermore, the findings provide policy makers and practitioners with practical recommendations, such as introducing favourable tax schemes and subsidies to address the unequal level playing field and establishing partnerships within the industry to facilitate market establishment for alternative wood products and ecosystem services.