oa The Economics of Vertical Farming: exploring the feasibility

Today, over 800 million hectares of land is committed to soil-based agriculture in order to support the World's population. Significantly, it is predicted that the World's population will rise to at least 8.6 billion within the next 50 years. This, together with the implications of climate change will inevitably lead to challenges in terms of food shortages if we continue to rely on conventional agricultural methods. As such, vertical farming may provide one of the most promising advanced options for meeting food demands in terms of quantity and quality through an urban farming solution. This is particularly the case in countries with very large urban populations, limited agricultural land, prone to natural disasters, or unable to meet their own food requirements. Vertical farming typically involves hydroponically or aeroponically growing plants in an artificially controlled environment in multi-layers on each floor within multi-storey or even high-rise buildings. The concept of vertical farming has been drawing unprecedented attention from academia to business communities for the past decade. However, despite a number of obvious advantages it has yet to progress beyond conceptual stage except a few experimental small scale examples existing in developed countries. The largest barrier to the promotion and realization of vertical farming is not the availability of technology or the ability to design and construct such a structure but the uncertainty of its economic feasibility. As such, can investors and developers make an acceptable profit and can the consumer afford the price of the produce? Although a few architects, engineers and economists have attempted financial calculations based on capital budget or operating cost, they have tended to be crude and based on certain particular circumstances or case-by-case study. This has resulted in significant limitations particularly the fact that these attempts cannot be transplanted to other cases or places. These different calculation methods are presented and analysed in this paper. More importantly, the design of vertical farms can be various, but it needs a 'benchmark' to provide more realistic economic costing. For any potential investor or developer, it may be preferable that a more accurate budget estimation is obtained at the very beginning to inform decision-making. However, the dilemma is, without detailed design drawings, the estimation is likely to be inaccurate, beyond a specific tolerance. Indeed, because the vertical farm is a relatively new building typology, without much statistical data there is no current 'cost model' for reference. Based on an elemental cost plan method, this paper proposes a modeling method for vertical farm cost estimation. The paper will outline and analyse various variables that may circumstantially influence the total budget of a vertical farm in different phases (design, construction and operation). Methodological considerations are also illustrated in terms of data resource, model validation, model transferability (re-usability of integrated modeling approaches to other research contexts) and linking of model components. Keywords: vertical farming; economic consideration; cost estimation; modelling methodology; design benchmark.