A System Dynamics model has been built for biotechonomy analysis at sectoral, federal or national level. Allocation of land for production of bioresources and further production of high added value products is based on the highest added value of product chain produced from the bioresources in a sustainable way. Ten submodels are interlinked within the model: acquisition of raw material; production of products from raw material; infrastructure and technologies; research, development and education; investments and financing; demand, supply and prices; revenues, costs and profit, and sustainability index. The model is applied to one agriculture sector in Bauska county in Latvia. Results show the dynamics of agriculture land allocation for different products based on the highest added value of product chain operating on market conditions only, i.e., without policy interventions. Policy tools are discussed.