An obvious question related to the exploration and settlement of the moon is, "What do we do there?" America's NASA asked a similar question in 2006 and developed a set of Lunar Exploration Objectives.
Initially, lunar residents will focus on obtaining those products that would make them self-sufficient and not dependent on expensive products brought from earth. It may be impossible to completely eliminate dependence on earth products, but the goal should be to maximize the use of lunar sources that are less expensive than products transported up from earth's gravity well. Alternatively, sources elsewhere in the solar system, such as asteroids, should be investigated.
For long term sustainability, a space colony should be close to self sufficient. On site mining and refining of the Moon's materials could provide an advantage over deliveries from Earth – for use both on the Moon and elsewhere in the solar system – as they can be launched into space at a much lower energy cost than from Earth. With the expected immense cost of interplanetary exploration in the 21st century, the lower cost of providing goods from the Moon could be very attractive.
Water and Oxygen Extraction
Water is probably one of the most key resources the moonbase will require. Deposits of ice on the Moon would have many practical aspects for future manned lunar exploration. Recent discoveries confirm what planners had hoped, there is a lot of water on the moon. Mining these ice deposits would save a lot of money. Shipping water to the Moon from Earth would be extremely expensive ($2,000 to $20,000 per kg). The lunar water could also serve as a source of oxygen and hydrogen.
Oxygen is necessary for human life and both oxygen and hydrogen are constituents of rocket fuel. By weight, moon rocks are about 40% oxygen. By heating the top meter of 1 acre of moon dust to 1300 degrees Celsius, we get 3000 to 3500 tons of oxygen. Extracting oxygen requires 450 calories of energy per kilogram of oxygen produced.