Magnusson said researchers would first develop methods for using the sea lettuce that washes up on Bay of Plenty beaches "in order to turn what is currently seen as a bit of a problem into a resource".
"From what I have seen of the blooms of sea lettuce in the Bay, there is certainly enough there for the development of products," she said.
"In the end, the commercialisation, and the scale of this, will depend on interested takers of the product."
Researchers will also look at ways to make seaweed reproduce on demand.
The aim was to secure a more reliable supply of seaweed that did not depend on wild-harvesting of natural resources, she said.
"Seaweed farming is the future."
Magnusson said seaweed biomass could be used to make fertilisers and plant bio-stimulants.
Special sulphated polysaccharides in seaweed can be used to develop nutraceuticals and other health products for humans and animals, she said.
"They can also be used in developing new bio-materials or as a food additive due to their gelling properties, similar to agar and carrageenan which are currently produced from red seaweed mainly in Asia."
There was scope for businesses to be part of the new research and bring more research opportunities for students, Magnusson said.
Battershill said the research would help to find a use for the "nuisance seaweed" that washed up on the beaches.
"We have got all of the species that are likely to produce really good agrochemicals for application on land, simply because the product from the nuisance seaweed is valuable."
Deputy vice-chancellor of research Bruce Clarkson said the project "is a perfect fit, supporting research and development in Tauranga and across the Bay of Plenty".
Education Minister Chris Hipkins said the research was critical when seeking solutions for reducing cattle methane emissions, limiting nutrient run-off from pasture, and fighting agricultural and horticultural diseases in an environmentally sustainable way.
