The limits of green incentives: a stochastic profitability analysis of sugar kelp farming in Europe

Seaweed cultivation can deliver carbon sequestration and nutrient removal, which have value beyond the market price of the biomass. If these ecosystem services were quantified, certified and compensated, they could provide additional income for farmers. This study evaluates whether such payments, together with other green incentives, can make sugar kelp ( Saccharina latissima ) farming in Europe profitable, and how much each incentive contributes. A stochastic profitability model, informed by a targeted literature review and data from the SeaMark project, was used to compare a baseline scenario with seven scenarios introducing payments for nutrient remediation, higher carbon prices, a price premium for sustainable products, lower capital costs, and combinations thereof. Even in the most favourable scenario, mean annual profit remains negative at about -€16,300 per hectare, and the probability of breaking even is effectively zero (below 1%). All incentives together reduce the baseline loss by only 18%; ecosystem service payments contribute about €1,240 per hectare, mostly from nutrient removal, while carbon credits add about €105 per hectare. Breaking even would require a price of about €2,050 per tonne wet weight or a yield of about 31 tonnes wet weight per hectare. Even with 40% lower production costs, the probability of breaking even remains below 13%; only when combined with 25% higher yields does it reach about 33%. Operational and capital expenditure, yield and biomass price, rather than ecosystem service parameters, are the strongest drivers of profitability. Under the assumptions made, ecosystem service payments can support, but not replace, improvements in production efficiency. The results provide insights for producers, policymakers and private sector actors.