Algae are an attractive source of biomass energy since they do not compete with food crops and have higher energy yields per area than terrestrial crops. In spite of these advantages, algae cultivation has not yet been compared with conventional crops from a life cycle perspective. In this work, the impacts associated with algae production were determined using a stochastic life cycle model and compared with switchgrass, canola, and corn farming. The results indicate that these conventional crops have lower environmental impacts than algae in energy use, greenhouse gas emissions, and water regardless of cultivation location. Only in total land use and eutrophication potential do algae perform favorably. The large environmental footprint of algae cultivation is driven predominantly by upstream impacts, such as the demand for CO2 and fertilizer. To reduce these impacts, flue gas and, to a greater extent, wastewater could be used to offset most of the environmental burdens associated with algae. To demonstrate the benefits of algae production coupled with wastewater treatment, the model was expanded to include three different municipal wastewater effluents as sources of nitrogen and phosphorus. Each provided a significant reduction in the burdens of algae cultivation, and the use of source-separated urine was found to make algae more environmentally beneficial than the terrestrial crops.