Enhancing efficiency in secondary biomass supply: the role of institutional quality in the EU regions

Abstract As the European Union accelerates its transition towards a Circular Bioeconomy (CBE), the sustainable and efficient production of biomass has become more critical than ever. Agricultural residues—long dismissed as waste or environmental liabilities—are now gaining recognition as strategic resources with high potential for bioenergy, bioproducts, and soil restoration. Yet, turning this potential into reality hinges on understanding the broader institutional conditions that shape their supply efficiency. This paper sheds new light on the role of institutional quality in determining how effectively agricultural residues are produced across EU regions. Drawing on Data Envelopment Analysis (DEA), we first estimate regional technical efficiency levels and then examine how key dimensions of institutional quality affect these outcomes through regression analysis. Our findings reveal a strong link between efficiency in agricultural residue production and institutional strength, notably government effectiveness, transparent regulation, and anti-corruption measures. These insights suggest that institutional reforms—aimed at boosting governance credibility, reducing bureaucratic hurdles, and enhancing transparency—can unlock underutilised biomass flows, advancing CBE objectives.