Group 01

Vertical Farming: A Microeconomic Response to Climate Change

Author
Affiliation

Byeong-Hak Choe

SUNY Geneseo

Published

November 25, 2025

Dear Group 1,

Thank you again for your thoughtful Research Kick-off Report. You did a strong job motivating vertical farming within climate and food-systems challenges, which reminds me of the Malthusian trap. You clearly articulated why positive externalities (water savings, lower emissions, reduced land use, health co-benefits) matter. Your use of the St. Louis case study is especially helpful for grounding the discussion in real numbers.

Overall, the potential for this project is high, especially if you sharpen the economic mechanism, make the private–social gap very concrete, and connect your evidence to clear policy implications for your Final Proposal.

Next Steps

You are working toward both the presentation and the final proposal. Focus on economic reasoning supported by existing literature and descriptive evidence.

  • Clarify your core focus.
    Decide whether your Final Proposal will emphasize
    1. identifying and explaining the types of positive externalities associated with vertical farming, or
    2. analyzing why private adoption remains limited despite these external benefits.
      You may incorporate both, but choosing a primary angle will strengthen the proposal.
  • Use the St. Louis case study to illustrate key economic points.
    Pull out a few clear numbers (costs, revenues, profitability) that help demonstrate:
    • Why private profitability is uncertain or low
    • Why social benefits may justify policy support
      This is about summarizing the most relevant evidence from your sources.
  • Draw on key background readings (recommended).
    For your Final Proposal and presentation, you may find it helpful to consult—and, where appropriate, cite—the following background sources on vertical and smart farming:
  • Include simple visuals or descriptive information if useful.
    For the Final Proposal and especially your presentation, optional visuals could include:
    • A comparison of traditional vs vertical farming on water use or emissions
    • A brief summary table of St. Louis cost–revenue figures
      These are not required, but can help motivate the economic story and clarify the private–social gap for your audience.
  • Discuss vertical farming within the broader “smart farming” movement.
    Vertical farming is increasingly integrated with smart farming technologies—AI-driven controls, IoT sensors, automation, etc. It has attracted interest from major IT firms and philanthropists (e.g., Jeff Bezos; the Bill & Melinda Gates Foundation). If relevant, reflect on whether this innovation ecosystem changes:
    • Who pays
    • How costs evolve over time
    • How public vs private incentives align (or fail to align)
  • Sharpen the underinvestment story.
    Clearly explain why vertical farming may be privately underprovided even when socially beneficial:
    • High fixed and operating costs
    • Private marginal benefit < social marginal benefit
    • Learning spillovers and technology diffusion
      Then identify one or two policy tools that are economically justified to address this underinvestment (e.g., subsidies, R&D support, pilot programs, zoning reform, or other targeted interventions).

Questions to Think About as You Refine Your Final Proposal

You do not need to answer all of these, but they may help you refine your narrative and policy recommendations.

1. Citizen / Community & Equity Angle

  • If vertical farming is socially beneficial, what policies or institutions would help it scale beyond niche projects?
  • Does it risk becoming a premium urban product?
  • What changes would help extend its benefits to underserved communities?

2. Who Should Pay?

  • For expensive, early-stage vertical farming projects, who should primarily bear the cost: consumers, taxpayers, private investors, or a mix?
  • Which economic arguments (externalities, equity, dynamic efficiency) support your preferred allocation?

3. Consumer Behavior & Demand

  • Under what conditions might consumers pay more for vertically farmed produce?
  • How do willingness-to-pay differences across income groups influence your proposed policies?

4. Smart Farming & Innovation Pathways

  • What are the benefits and risks of vertical farming being integrated into smart farming ecosystems dominated by large tech firms and philanthropies?
  • How can policy ensure that innovation remains socially aligned, rather than skewed toward private interests?

Best,
Byeong-Hak Choe

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