The economics of space sustainability
A new approach: information economics and common-pool resources
Despite this lack of a private space economy and lack of progress in putting into place classical microeconomic policy mechanisms to deal with space debris, there has been progress on other initiatives. In 2007, a body formed by several national space agencies published a set of voluntary guidelines for minimizing the creation of space debris. These guidelines were endorsed by the United Nations in 2008 and many countries around the world are in the process of implementing them into national regulation. In 2011, the United Nations Committee on the Peaceful Uses of Outer Space (UN COPUOS) initiated a Working Group on the long-term sustainability of space activities with the goal of developing a set of voluntary best practice guidelines to promote the sustainable use of space. And in 2012, the United States declared it would work with the European Union and other spacefaring states to develop an International Code of Conduct for Space Activities. At first glance, these initiatives all seem to be purely political and unrelated to economics. They even appear to violate Mancur Olson’s zero contribution thesis that suggests rational, self-interested individuals will not act to achieve their common or group interests. However, these initiatives do take on new meaning when viewed through the lens of more recent developments in economics such as information and game theory.
Although purely self-interested behavior and rampant free ridership does hold true for a single-round game such as the traditional Prisoner’s Dilemma, a large amount of evidence shows it does not hold true for games involving multiple rounds (iterations) and multiple types of players. In particular, the development of norms and mechanisms for players to reward those who follow norms or punish those who break norms can lead to situations where players act against what would be considered their private self-interest. These principles underpin much of the strategic bargaining concepts developed by Thomas Schelling and successfully implemented during the Cold War. In the space context, these principles were behind the development and implementation of the voluntary debris mitigation guidelines and the diplomatic pressure on the Chinese over their 2007 antisatellite test that violated them at least in spirit.
Information economics also plays a role in the current space sustainability and security initiatives, and in particular the effort underway to increase the space situational awareness (SSA) available to space actors. SSA is information about the space environment, human activities there, and the relationship between the two. Only the United States and Russia currently have significant SSA capabilities, and there are significant limits to their capabilities as a whole. These limits create a situation of missing information where knowledge of the current state of the resource environment is not uniform across all actors, and under this bounded rationality actors are often reliant on common sense and ideology in making decisions even if it results in additional harm or inefficiency. Efforts to increase SSA among all space actors can have collective benefits by both providing missing information to all actors and eliminating information asymmetry that could lead to mistrust, misperceptions, or divergence of private values from group norms.
Most recently, initial research has been done on the potential for applying Nobel Prize winner Elinor Ostrom’s principles for sustainable management of common-pool resources to the near-Earth orbit CPR. The goal of this research is to use Ostrom’s theoretical framework for sustainable polycentric governance of CPRs to identify gaps in the current space governance structures and inform both current initiatives and potential future initiatives that foster the long-term sustainable use of outer space. The particular usefulness of Ostrom’s approach is that it is developed for situations where neither of the two traditional solutions to the tragedy of the commons, complete privatization or a leviathan to impose rule of law, are feasible, as is the case for Earth orbit.
The initial results from this research indicate several important focus areas for space governance. Historically, nearly all of the discussion and negotiation of formal governance mechanisms has been through United Nations structures such as UN COPUOS and the Conference on Disarmament (CD). While these entities give voice to nation states, they exclude private entities from formal membership and restrict the role of non-governmental entities. Ostrom’s principles indicate that for there to be useful progress on space governance, most resource appropriators affected by rules governing use of a resource should have a voice in both making and modifying said rules. Thus, a discussion on potential new fora for true multi-stakeholder discussions on space governance is currently an important issue.
This research also provides guidance on what direction efforts to SSA should take. Ostrom’s principles indicate that for maximum effectiveness, the monitoring of the CPR should be done by the resource appropriators themselves. This indicates that rather than push for a single nation or international entity to provide SSA to all space actors, efforts should instead focus on increasing SSA capabilities among and data sharing between many space actors. This allows many space actors to verify at least some of the activities in space using their own capabilities, leading to greater overall trust.
Given the recent prominence of space debris and space sustainability in official policy statements and the near-term potential for policy action, it is extremely important for those in the field to have a solid understanding of the economic principles involved. The proclivity for some to treat all of outer space as a global commons obscures some of the true characteristics of the problems we face in use of Earth orbit and can lead to misapplication of policy solutions.
Although on the surface the problem of space debris in LEO appears to be related to pollution in a global commons, this is a flawed understanding of the situation. While outer space as a whole may be a global commons, depending on which definition of the term is used, the most highly used areas of Earth orbit such as LEO and GEO are neither public goods nor global commons. They are more appropriately viewed as CPRs within the global commons of outer space. The measureable private benefits from LEO and costs due to space debris are small, and the vast majority of the social benefits are derived by publicly-funded activities. These two factors prevent standard microeconomic policy mechanisms from being a feasible solution to space debris and space sustainability. Until such a time as a private space economy can be developed in LEO, policy approaches and initiatives that utilize principles from information theory, game theory, and polycentric approaches to governance of CPRs are more relevant for dealing with space debris and the long-term sustainability of space activities as a whole.
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