Algae Crops: Coproduction of Algae Biofuels - Industrial Crops: Breeding for BioEnergy and Bioproducts - page 364

system, can reduce the use of chemicals and bacteria and decrease the energy that
would otherwise be needed.
The aquaponics system uses algae to filter out water pollution and then
recirculates the cleaned water back to the aquaculture production system. The
objective is to create sustainable aquatic production systems, where not only does
the aquaculture system produce a product (e.g., fish) but also produces algae; that is,
the algae are not only used to filter the water and consume the nutrients but are also
harvested and sold to biofuel producers (the economic model abstracts from other
options, some of which might be more lucrative than oil production using algae).
The idea is to combine aquaculture and hydroponics, such that algae consume the
effluents, which accumulate in the water and increase toxicity for the fish, with the
cleansed water that has been recirculated back to the aquaculture system. This is a
closed system that needs to achieve a delicate balance among various physical and
biological factors. Future research will need to show if such systems are sustain-
able, if they can be scaled up, and if income of coproduction is lucrative. Future
research will also need to set up pilot experiments and small-scale operations and
use the data collected to evaluate and assess these methods.
Using a stylized model to illustrate the potential benefit of coproduction of algae
biofuels, we show how socially optimal policy may impact decisions. Assume an
aquaponics production system that is composed of many farmers who want to farm
Tilapia fish in open ponds. To address the effluents that accumulate in the water, the
farmers may consider using a natural filter. They could potentially use algae, which
will consume the nutrients in the water—the fish waste will feed the algae. As the
algae grow, the farmers could harvest the algae and sell the algae to biorefineries
that will extract oil (lipids) from algae biomass and use it to produce biofuels. For
simplicity and without loss of generality, assume fish and algae are harvested in
batches and the growing period of the two is the same (assuming continuous
harvesting does not impact the results). Also, algae would not be used to feed the
fish, although such an alternative should be compared with one where the algae are
harvested and sold to biorefineries.
The proposed system produces two income streams: income from selling the fish
( R F ) and income from harvesting the algae and selling it to biorefineries ( R B ). The
former is a function of fish biomass (fish weight times number of fish harvested) and
price (which may depend on fish age and number of fish sold). The latter is a
function of volume of algae harvested, amount of oil (lipids) extracted from algae,
and the price. The farmer is also concerned with the production costs ( C P ), which
are a function of quantity and price of feed, labor, water, electricity, as well as other
fixed and variable costs. Farmer i profit function is

π i ¼

R F, i þ R B, i C P, i

Some farmers may have lower-cost structure than others. The farmer maximizes the
profit function (

π i ) subject to a time constraint.
The farmer, however, does not internalize the social cost of effluents that
accumulate in the water and/or the social benefit from filtering pollutants. The