Space has fueled some of the most ambitious stories and in recent years prompted some of the biggest names in business to take action. In 2018, a Harvard professor named Matthew Weinzierl wrote about the emerging space economy in a work titled “Space, The Final Economic Frontier”. In this writing, he presents a framework based on three economic principles, “1) establishing the market through decentralization of decision making and financing for human space activities; 2) refining the market through policies that address market failures and ensure a healthy market structure; and 3) tempering the market through regulation in pursuit of social objectives” (Weinzierl, 2018, p.175). He argues that all three of these principles are fundamental and must necessarily be addressed in order for the space economy to develop.
Establishing a market by moving away from centralization was acknowledged in 2017, when the Transition and Authorization Act welcomed the private sector into a newly commercial low-earth orbit. NASA concluded that a partnership between government and the private sector would push forward accessibility to space, make costs more transparent, lower-cost execution, make time to market months instead of years, and boost international collaboration. The partnership would be split where the private sector develops the market, builds hardware, and secures funding while the government provides infrastructure and a foundation for the U.S. National Lab. The move towards decentralization has propelled innovation around space, which in turn has led to concerns, especially regarding space debri which leads to the next principle.
The second principle of ensuring a healthy market structure is still young, but developing. With the amount of space debri increasing dramatically because of “defunct satellites, spacecraft parts, and the pieces created by collisions between them” (Weinzierl, 2018, p.175), international entities have taken notice. Agreements have been made to require that objects put into space have automatic de-orbiting capabilities. These efforts demonstrate progress, but Weinzierl argues that a centralized entity is necessary in this regard to avert a tragedy of the commons scenario.
The third principle regarding social objectives is still a long ways away. Several treaties signed in the 60’s and 70’s encouraged cooperation based on responsible space action, but in 2015 the United States bypassed this convention. The country passed the Commercial Space Launch Competitiveness Act, which grants property rights to resources on a planetary body in a first come first serve type of way. This moves space away from a healthy economy because private property rights acquired in such a way could be used to the detriment of society.
Going forward, Weinzierl askes: “As the space economy is developed, how will the value it creates be shared among the countries, and people, on Earth and off, now and in future generations? Does competition across nations pose a risk of a race to the regulatory “bottom” in the context of asteroid mining? What is the first-best structure of property rights in space, and what is the (politically) constrained second-best option?” (Weinzierl, 2018, p.175)
Sources
Rainey, Kristine. “Commercialization of Low-Earth Orbit (LEO).” NASA, NASA, 21 Oct. 2015,
www.nasa.gov/mission_pages/station/research/benefits/commercialization_leo/.
Weinzierl, Matthew. “Space, the Final Economic Frontier.” Journal of Economic Perspectives,
vol. 32, no. 2, 2018, pp. 173–192., doi:10.1257/jep.32.2.173.
