The Challenge
One of the deterrents to starting a hydroponic or aquaponic system is the investment costs and complex infrastructure required. Additionally, there are additional operating costs such as energy for lighting and water circulation, an increased demand for labor, and temperature control. While in the long run we may expect that advances in technology will raise crop yields and drive down some of the costs, it is apparent that hydroponics and aquaponics still present financial challenges.
Overview
- Hydroponics and aquaponics require significant investment costs, but these costs are still lower than that of traditional agriculture.
- Labor takes up approximately 50% of predicted operating costs, but may be reduced through automated systems. Other significant costs include energy use, particularly heating.
- In comparison to traditional agriculture, hydroponics and aquaponics do not face costs associated with factors such as pesticide, fertilizer, and water use.
- Hydroponic systems yield more crops than traditional agriculture but are more limited in the crops that can be grown. Aquaponic systems yield less crops than hydroponic systems and less fish than traditional aquaculture.
- The hydroponic market is predicted to grow at an annual rate of about 23% between now and 2025.
- Start-ups, developing technologies, and government subsidies may reduce the costs of setting up hydroponic and aquaponic systems.
Investment Costs
Much of the costs that are associated with hydroponic and aquaponic systems are incurred at the beginning of the operation, including infrastructure to house the crops and filtration and circulation systems.
A study conducted in Hawai’i in 2015 used data from existing farms to develop a representative model aquaponic farm.[1] The total investment cost was calculated at $217,078, with 49% from building the facilities and 80% from the hydroponics component (Table 1). In comparison, in traditional agriculture a large tractor can cost upwards of $75,000, which constitutes only one of many pieces of equipment required yet is equivalent to over a third of the total investment cost for aquaponics.
Operating Costs
Labor
The single largest contributor to cost is labor, estimated to be approximately 50% of all operating costs by two separate studies in the Midwest (Table 2) and Arkansas.[3],[4]
On the other hand, research is currently being conducted towards automating hydroponic systems. Factors such as water level and flow, light intensity, and pH can be regulated autonomously through automatic systems such as HydroAS and AHNPS (Automated Hydroponics Nutrition Plant Systems).[5] Similar management systems have also been developed by companies such as Autogrow, which markets a cloud-based system allowing farmers to control their crop conditions remotely.[6] As these technologies continue to be developed, the labor costs of hydroponic and aquaponic systems may decrease while also allowing for greater production.
Energy
The energy cost of hydroponics and aquaponics arises from multiple areas, including lighting, temperature control, and water filtration and circulation. The Midwest study estimates the energy costs of aquaponic systems to be $5,991.06 annually out of a total operating cost of $29,321.16.[8] The Arkansas study makes a similar estimate at a total utility cost of $7,337.04 per year.[9]
Heating makes up approximately 50% of these costs, though this may be highly variable depending on the location of the farm.[10] The cost of lighting is comparatively much lower and may be further reduced through rooftop farming, which is incidentally better suited for crowded urban areas.
Other Costs
In comparison to soil agriculture, vertical farming systems require additional consumables such as pH meters and other tools for monitoring water quality. However, significant costs may be saved from the lack of need for pesticides, herbicides, and traditional fertilizers. Water costs are also drastically reduced due to the much higher water reuse efficiency of hydroponic systems at 95%.[12] Additionally, while the cost of land may be higher in urban areas, the amount of land required for hydroponics and aquaponics is significantly lower since vertical farming allows multiple layers of crops to be grown in the same location.
Expected Revenue
The revenue associated with hydroponics and aquaponics varies based on the specific crops and fish that are being produced. For instance, leafy greens are currently the most profitable and have the highest average profit margin at 46% due to their high prices per pound, while tomatoes yield only a 10% profit margin.[13]
Overall, the most common crops grown in these systems are tomatoes, basil, and lettuce, none of which are the notable staple crops such as rice and wheat that make up the majority of our food supply. However, research is currently being conducted on the feasibility of adapting hydroponic methods to produce staple crops such as wheat and rice.[14],[15]
In contrast to hydroponics, aquaponic systems have been shown to yield less crops than hydroponic systems, likely due to the use of fertilizers rather than fish waste to provide nutrients (Tables 4 and 5). Aquaponics also produces less fish than traditional aquaculture.[16] Additionally, these systems incur extra costs in comparison to hydroponics alone, such as fingerlings (fish feed), tank maintenance, and increased water circulation. Overall, aquaponics is still a developing technology and it appears that hydroponics are currently more advantageous in producing greater quantities of crops at lower prices.
Though the costs associated with hydroponics are high, research has also indicated that hydroponic systems have the potential to yield a significant profit due to the greater ability to regulate growing conditions. For instance, a 2017 UN report indicated that intensive hydroponic culture can achieve 20-25% higher yields than intensive soil agriculture.[19] In addition, according to the consulting firm Grand View Research, the global hydroponics market was valued at $1.33 billion in 2018 and is expected to grow at an annual rate of 22.52% between 2019 and 2025, with a final forecast of $5.7 billion in 2025.[20]
Final Remarks and Future Outlook
Though hydroponic and aquaponic systems present unique costs and challenges, it is important to note that this is in part due to the fact that this is still a developing technology.
In order to create more successful and sustainable aquaponics and hydroponics systems, it is necessary to put more resources into the development of these technologies. Farmers that utilize more traditional forms of agriculture often are subsidized by the US government, and the government has also provided subsidies to other environmental projects, including those for developing solar and wind systems. Thus, through policy, it may be possible to get government subsidies for further development of hydroponic and aquaponic systems.
More importantly, while the immediate costs for hydroponics and aquaponics are high, it is important to note that the long-term drawbacks of land degradation and biodiversity loss may be much more expensive–for instance, only a robust ecosystem can maintain the pollinators that are integral to traditional agriculture. When viewed in the long-term, hydroponics and aquaponics have the potential to become a profitable and productive resource if the investment is made.