In the European Union (EU), biowaste represents 34% of the municipal waste generated. Managing this waste stream is crucial for a circular economy, as it provides soil amendments, fertilizers, and biogas through recycling. However, a high proportion of biowaste still goes to landfills or incineration. EU Directive 2018/851 established a mandatory separate biowaste collection by 2023. In pursuit of a circular economy and sustainable waste management, the directive allows territorial derogations where separate collection is not technically, economically, or environmentally feasible. This study proposes a decision-making method to assess the feasibility of separate biowaste collection in waste management planning. The aim is to find the most precise geographical distribution of biowaste generation within a region. A new indicator, “Artificial Urban Area”, was developed to assess the built-up area where biowaste is generated, defined as the ratio between the built-up area within a geographical region and its total area. With defined thresholds, the suitability of areas for separate biowaste collection was determined. Using Mainland Portugal as a case study, the results show that selective biowaste collection is viable in 52% of the Portuguese national parishes, representing 87% of total biowaste generation. This spatial understanding of built-up areas where biowaste generation is concentrated will support efficient allocation of waste management resources.