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Economic and Environmental Tradeoffs in Cultivating Short Food Supply Chains With Urban Indoor Agriculture

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  • Joseph Seong
  • H. Christopher Peterson
  • Simone Valle de Souza

Abstract

This study advances the literature on sustainable urban agriculture and alternative sustainable food production systems, which have gained momentum due to the need to strengthen regional food supply chains and meet the growing urban demand for fresh food. Indoor agriculture (IA) holds promise for year‐round cultivation of fresh produce even in regions with less favorable climate by using controlled environment technologies. The study evaluates the economic and environmental sustainability potential of IA, advocating for short food supply chains to enhance urban food security. A multiobjective optimization model (IA‐MOO), integrating a bioeconomic model for lettuce production and optimal farm size based on planting schedules and densities, captures IA system dynamics from seeding to sales. The revenue module introduces an endogenously determined price premium for the hyper‐local attribute of IA‐produced crops. Two objectives, expected to present competing solutions, are defined: profitability, measured by earnings before taxes (EBT), and energy use efficiency (EUE). A coefficient of economies of scale was adopted to encapsulate capital investment and operating costs across farm sizes. To capture the social benefits of reduced food miles, IA‐MOO optimizes farm location relative to urban centers. It evaluates tradeoffs between land cost, transportation cost, and a hyper‐local price premium for IA crops produced within urban areas. Results indicated that EBT and EUE are generally not conflicting objectives, except for a short production schedule frame. This study provides insights into optimizing IA systems contributing to the sustainable development of urban agriculture and advancing the goal of sustainable food production for urban populations.

Suggested Citation

  • Joseph Seong & H. Christopher Peterson & Simone Valle de Souza, 2026. "Economic and Environmental Tradeoffs in Cultivating Short Food Supply Chains With Urban Indoor Agriculture," Agribusiness, John Wiley & Sons, Ltd., vol. 42(2), pages 798-814, April.
    • Handle: RePEc:wly:agribz:v:42:y:2026:i:2:p:798-814
    DOI: 10.1002/agr.22063
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    References listed on IDEAS

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