The need for substitution of fossil resources with renewable alternatives, for an efficient use of the bio-resources, and for the development of knowledge-intensive sustainable economies call for the design of policies to create and govern biotechonomic systems. The goal of this study is to create a tool to facilitate such policy design, - aimed at the development of biotechonomic systems by use of a system dynamics model. This model constitutes a general framework for the representation of critical biotechonomic sectors; their land use, production and consumption of raw material, research and development, investments in and utilization of production capacities (i.e. capital investments), their utilization of labour, finances (value creation, capital and operating costs and profit), and sustainability. A sustainability index, based on emergy is applied to assess the environmental performance of the various sectors considered. Moreover, the model is operational and lends itself to the simulation of the development of these sectors, both past and future. This model may be applied to a variety of biotechonomic sectors and extends to the cyclical economy at large. As the purpose of this model is to facilitate the development and testing of policies, the model allows for the inclusion of structural components that represent such policies, including the extension of production lines, the utilization of taxes and subsidies to modify the land use and to encourage the redirection of materials, and support for the investment in research, development and capital. Model is applied to example of birch use as raw material. Results show that model framework can be applied to micro, meso and macro level planning and policy making.