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There are plenty of policy options that can be considered to improve access to and development of space. (credit: J. Foust)

Ranking space policy alternatives

I am in favor of space access: the sooner the better, the more the better, and, especially, the cheaper the better. Here are some policy options that I have ranked according to the benefit/cost ratio.

1. Encourage other nations to sell their launches at marginal cost instead of just for “government launches” as espoused in the U.S. Space Transportation Policy (STP).

Russia has surplus ICBMs. We should be grateful they are beating their swords into plowshares. We should encourage them to harvest their surplus equipment for cash to worthy Western buyers who want access to space so that they do not end up in the hands of bad guys. The best way to keep hardware out of bad guys’ hands is to make it really expensive by bidding up the price. Discouraging foreign governments from pursuing those markets will tempt them to pursue options such as proliferating to Iran, Pakistan, North Korea, and others.

Russia has surplus ICBMs. We should encourage them to harvest their surplus equipment for cash to worthy Western buyers who want access to space so that they do not end up in the hands of bad guys.

While we are on the topic, isn’t it about time we adopted the successful Cold War strategy of teaming with the Soviets in dealing with the Chinese? If they are subsidizing their Long March rockets and range costs and have lower regulatory hurdles for their launches, that could mean lower cost space access. Embrace China’s imitation of the 1960s American race to the Moon. Encourage them the way Kennedy did to do it together.

The policy would have large benefits if successful. It may be a long shot, but it costs next to nothing to implement.

2. Subsidize major Evolved Expendable Launch Vehicle (EELV) manufacturers on a per-launch basis instead of a flat fee.

Instead of funding fixed costs for EELV manufacturers as announced in the STP, the EELV manufacturers should be exposed as duopolists. The market for space access right now is inelastic: lower prices means lower profits for them. If they are going to be subsidized to stay in business, they should be subsidized at the margin. They should only get the subsidy if they fly.

Figuring out how to divide the subsidy is difficult, but it should all be paid to fly and not for fixed costs. Paying fixed costs to a provider in an inelastic market does nothing to raise the flight rate. For example, if 5% of launch aid were paid for each flight up to 20 flights, at least we would have a strong incentive to fly at least 20 times. It might be better to pay 3% for 33 times, or pay no subsidy for the first 10 and 5% of the subsidy for each of next 20 launches. However, the current STP shows more about how Lockheed Martin and Boeing have captured the Department of Defense and the administration than it does about sound subsidization policy to enable space access.

As duopolists make mistakes, it provides opportunity. By having such expensive products, Boeing and Lockheed leave the door open for competing space access companies such as SpaceX and Kistler.

The STP already provides for subsidies. Retargeting these subsidies will increase the budget a little because the subsidy that Boeing and Lockheed Martin would be willing to accept would have to be a little higher. But obtaining more space access at the marginal cost justifies the policy even if the launches are sold to US commercial customers below the average cost.

3. Establish international coordination, with a threat of unilateral action by a certain date, to establish a Lunar property rights regime.

I have been beating the drum for Lunar property rights for nearly a year. (See “Property rights and space commercialization”, The Space Review, May 10, 2004.) Establishing Lunar property rights would accomplish several things:

  • A market price would be established. Like inflation-indexed bonds, a market price for acreage on the Moon would provide a barometer of how far away settlement is and how viable and valuable it would be.
  • Lunar property rights would bootstrap a default industrial policy that would allow industrialists to buy up lunar property rights if they are cheap. This would allow them to benefit from providing transportation to the Moon the way land grants to railroad companies facilitated the building of the trans-American railroad.
  • Property rights would resolve uncertainty about legality of certain activities, which would make it more likely for business to participate jointly with government in exploration and colonization efforts.
The price of establishing property rights is low. The benefit may be high.

Lunar property rights can pre-date settlement by decades and still be very effective at coordinating R&D, investment, business plans, and government policy. If the price of Lunar acreage is zero, then very little regulatory effort is warranted. If the price is bid up to show that settlement is impending, at least at the Apollo sites and the poles, then more legal efforts are warranted, if not a renewed emphasis on private alternatives to NASA transportation and services.

The property rights should have no residence or build-out requirements but they should be subject to eminent domain of FAA’s Office of Commercial Space Transportation. In addition to real estate, many of the following should be auctioned also: spectrum rights, mineral rights, air space (space space?) and the Lagrange points.

The price of establishing property rights is low. The benefit may be high.

4. Introduce a broad-based subsidy per pound of payload delivered to orbit.

One thing that got US aviation going was guaranteed airmail contracts. If the US subsidized launches at a rate of $1,000 per kilogram for the first five million kilograms, we would certainly have a race on our hands. Once the goal has been established to develop the low-cost transportation infrastructure, the beneficiary of all the extra launch weight can be determined by auction or the political process.

My friends in Congress always ask me to mention where I am going to get the money for the proposed additional spending. I would privatize shuttle and ISS and use the saved subsidy money to subsidize private space access.

5. Encourage insurance reform.

Consider a fund, supported by federal taxes, that would pay for damages for failures in excess of a 1-in-5,000 maximum probable loss (MPL) instead of a heady insurance requirement like 1-in-10,000,000. Launchers would owe to the government a multiple of what they paid to independent private insurers to insure their first million of losses or 1-in-5,000 MPL, whichever is higher. An industry mutual would be another idea. Encouraging insurance auctions for all launches or payloads paid for with any federal money would be my favorite for a start. The MPL for subsequent years would rise to reflect higher industry flight rates, but would never exceed the greater of 5,000 or 20 times the preceding year’s flight rate.

6. Subsidize range and tracking costs.

This is a major cost of getting to orbit even launching outside the federal ranges. Building a highway to space, then charging hundreds of thousands in tolls, is a sure way to see it never utilized.

7. If you don’t want to adopt recommendation 3, consider a race to the Moon for property rights with occupation requirements like the ones advocated by the Space Settlement Institute (See “Races, beauty contests, franchises, and build-out requirements for lunar property”, The Space Review, September 13, 2004)

Building a highway to space, then charging hundreds of thousands in tolls, is a sure way to see it never utilized.

8. If you don’t want recommendation 4, consider a federal airmail-type contract instead of a subsidy for private payloads. There could be a depot for water delivery. (Would Bigelow do an aquarium version of the Nautilus?) The contract could just be for delivered payload for any purpose or a wide variety of other goals that the federal government wanted to commit to.

9. Zero g, zero tax.

This is nice, but you already have zero tax if there is zero profit. A better approach is a subsidy like recommendation 4.

10. Start backing away from and renegotiating treaties that limit weapons in space.

Today, this is an impediment to future development. By persisting with a more narrow and inflexible plan for protecting valuable space assets, hundred-billion-dollar projects are chilled. (See “Don’t wait for property rights”, The Space Review, July 12, 2004.) Granted there are many other reasons for them to be chilled.

Policy flexibility, speed, and agility can test whether these factors are the missing pieces to cheap orbital access. If they are not, implementing them will help focus on the ones that are still missing.