Economics of natural resource utilization - the case of macroalgae

The bioeconomy utilizes living organisms and processes them to produce of food, fuel, fine chemicals, and other substances. Macroalgae (seaweed) are promising feedstocks for energy and chemical products while sequestering carbon. A few species are already used as food products or supplements. There is a need for methodologies for economic and policy analysis of novel bioeconomy technologies, taking into account environmental side effects and physical and economic uncertainties. Farmers growing cellulosic energy crops face significant revenue uncertainty due to both production and price uncertainties. The literature reports a wide range of growth rates for macroalgae and the few business case studies show mixed results in terms of production frontier and profitability considerations. This paper contributes to existing literature on ex-ante assessment of algae-based biofuel production. The study points at both the scientific and economic challenges that require multidisciplinary effort to develop viable technologies, cost-effective harvesting equipment/techniques and processing facilities, and supporting infrastructure, as well as to, create the markets for novel, sustainably produced goods.