G-oil makes a biodegradable TC-W3 oil, check out their website, I think it's available on amazon:http://www.getg.com
For the little bit of fuel that will use, cost shouldn't be a big concern. From the website:
G-OIL® 2-Cycle Green Outboard Engine Oil is a superior performing engine oil engineered for all makes and models of outboard engines and personal watercraft as well as ULTIMATE BIODEGRADABLE, the highest biodegradability ranking as determined by ASTM Standards (2.1 ASTM D-5864)
Belray also makes a biodegradable TC-W3 oil:http://www.belray.com/marine-biodegrada ... gine-oil-0
Even though the motor looks excellent, be sure to check the coils as many are cracked just from age.