In Pursuit of a Sustainable Space Environment: Economic Issues in Regulating Space

Introduction by Michael A. Toman

Molly’s analysis of the seemingly arcane topic of space debris anticipated, by many years, a problem that now receives routine press attention. She deftly applied environmental economics principles to the issue of a sustainable space environment in ways that also reveal analogies with the economics of climate change. In both cases, the problem worsens as the negative side effects accumulate (whether debris or greenhouse gases). As a consequence, space vehicle manufacturers adapt to increased debris by adding costly shielding. Moreover, individual users of space underinvest in costly debris reduction and avoidance, because most of the benefits of those expensive efforts would accrue to other space users. International cooperation is needed to create agreed-upon norms and incentives that induce debris reduction or removal—but achieving broad participation in major debris prevention or reduction is difficult because of the incentive to leave it to others. Molly’s foresighted analysis of the challenges with space debris exemplify her skill in researching frontier topics. Her thought leadership remains sorely missed today.

Article by Molly K. Macauley

First published in 1993, in Resources no. 112.

Debris resulting from human enterprises in space could seriously hinder space activities in many orbital locations within a few decades. It may be useful to conceptualize management of such debris in terms of sustainable development on Earth. Like a sustainable Earth environment, a sustainable space environment would meet the needs of the present generation without compromising the ability of future generations to meet their own needs.

Accordingly, some debris may be endurable as long as its effect on future generations can be offset. Given that entities engaged in space activities may not be motivated to cover social losses resulting from the proliferation of debris, and that such losses may be much greater than private losses resulting from the collision of spacecraft with debris, regulation of debris-generating activities may be desirable.

In light of uncertainty about the proliferation characteristics of debris and the difficulty of specifying the benefits and costs of space activities, regulation must be considered carefully. However, regulation that incorporates economic incentives for debris control may be promising.

Debris resulting from human activities in space is a growing concern. Ranging from used rockets and derelict satellites to particulates from propellant fuels, such debris can collide with and destroy operating spacecraft. Even small pieces of debris can cause substantial damage.

For example, an aspirin-sized piece of aluminum that orbits at a typical velocity of about 10 kilometers per second has the same destructive energy as a 400-pound safe moving at 60 miles per hour. While most experts agree that the current level of debris is manageable, they caution that, at the rate at which it is accumulating, debris could render many orbital locations unusable within twenty years.

The amount of debris in space is estimated to be doubling every decade. This rate of accumulation is in part due to the self-propagating behavior of debris. Even without encountering any artificial objects, debris can proliferate in a chain reaction of collisions with other debris, including natural debris such as micrometeoroids. In response to the growing threat posed by debris, decisionmakers have begun to consider strategies to slow the increase of debris resulting from human activities and develop techniques to protect spacecraft from debris. While the magnitude of the cost of such strategies has not been estimated with certainty, it is expected to be large.

Although the space debris problem will loom larger in the future than it does in the present, it must be addressed today if near-Earth space is to be preserved for the use of future generations. Viewed in this context, the issue of space debris is comparable to the issue of sustainable development on Earth. Sustainable development could shed light on how to conceptualize the space debris problem. Moreover, international support of economically oriented strategies for achieving sustainable development—such as debt-for-nature exchanges and transactions to commercialize biodiversity in tropical areas of the world—suggests that similar strategies for mitigating space debris may be politically acceptable. International support for economically oriented strategies is crucial, because debris in space is an international problem.

A Sustainable Space Environment

As a concept for preserving Earth’s resources, sustainable development is generally taken to mean no net loss over time in the global stock of human and natural capital associated with environmental quality, atmospheric integrity, natural resource adequacy, biodiversity, and other desiderata. Such development would meet the needs of the present generation without compromising the ability of future generations to meet their own needs.

With regard to space, an analogous concept might be a “sustainable space environment.” According to one interpretation of this concept, the environmental impacts of present-day space activities need be moderated only at the point at which they unduly compromise future generations. Just as sustainable development does not require the cessation of all polluting activities, a sustainable space environment would not necessarily require the absence of debris in space. Some amount of debris may be endurable. The amount may be large or small, depending on whether technologies exist to offset the effects of space debris on future generations’ ability to meet their needs.

An aspirin-sized piece of aluminum that orbits at a typical velocity of about 10 kilometers per second has the same destructive energy as a 400-pound safe moving at 60 miles per hour.

Ascertaining the point at which present-day space activities unduly compromise future generations is challenging, because it requires us to presume to know the preferences of future generations and to make judgments involving the moral, legal, and economic values of these preferences. Individuals who contend that it is immoral or unfair—or both—to presume to know the preferences of future generations or to choose a discount rate with which to link present-day and future space activities might suggest that no space debris generated by people is endurable unless it can be fully cleaned up. This means that humans would be permitted to generate debris only if the effects of that debris on future generations are fully reversible.

As virtually every space activity generates some debris, eliminating debris would be tantamount to ceasing space activity. This is why decisionmakers have generally recognized the desirability of minimizing or reducing debris, rather than eliminating it. Assuming, then, that a sustainable space environment is one in which there is some socially optimal amount of debris, several questions arise: To what extent should debris in space be reduced? How much should be spent to reduce debris? I will argue that the costs of reduction need to be balanced against the benefits of reduction. Weighing these costs and benefits will indicate the desirability of adapting to debris and pursuing some combination of debris reduction and debris adaptation actions.

An Endurable Amount of Debris

Debris in space is a by-product of activities that provide many benefits. Satellite communications, for example, enhance the quality of life. Remote sensing of Earth from space contributes to national defense and provides information about weather conditions and the quality of the environment. Interplanetary exploration and experiments conducted in space augment our stock of knowledge. If we are to continue to reap these and other benefits from space activities, we must be willing to endure some debris generated by these activities. If we are, we must determine what amount of debris is endurable and how we can control debris so that it does not exceed this amount.

The problem of debris in space is somewhat different from the problem of pollution on Earth. When pollution is unregulated, polluters will pollute excessively because they can generally enjoy the benefits without bearing the costs of polluting activities. These costs are borne, for the most part, by third parties—that is, parties other than the polluters. However, the costs of debris generation can be borne by generators of the debris (spacecraft owners, for example) as well as by third parties. One aspect of this mutual harm is that, by taking actions to protect their spacecraft from debris, spacecraft owners can reduce harm to both themselves and third parties. For example, if they place shields on their spacecraft, spacecraft owners would reduce the likelihood that spacecraft would be harmed by debris and therefore the likelihood that spacecraft themselves would be a source of debris.

This reduction in mutual harm—or increase in mutual benefit—is not guaranteed, however. Because the vastness of space and the way in which debris propagates and migrates through various orbital planes complicate predictions about who or what will be affected by debris, spacecraft owners are likely to shield their spacecraft to the extent that it benefits themselves, rather than to the extent that it benefits third parties as well. Indeed, they may have an incentive to pollute excessively—that is, to contribute proportionately more to the total amount of debris in space than they may expect to benefit from their own efforts at debris reduction.

Given the costs associated with debris prevention, is there any situation in which the socially optimal level of debris resulting from human activities might be close to zero? The answer is yes, but only if the benefits of debris-generating activities never exceed the costs of debris reduction. In orbits that have no atmospheric drag to remove debris, and in orbits that are highly traversed by spacecraft, the optimal level of debris resulting from human activities may be close to zero.

At the other extreme, is there any situation in which the socially optimal level of such debris is unconstrained? Again, the answer is yes, but only if the benefits of space activities increase at a faster rate than the costs of debris reduction. In the early days of spacefaring, benefits did increase faster than costs. This is generally no longer the case.

Benefits and Costs of a Sustainable Space Environment

In addition to controlling the amount of debris generated in space, there may be other desiderata associated with preserving the environment of space. One objective might be to improve the capability to accommodate increases in the amount of space debris. This might be achieved by developing technological innovations—such as shields for spacecraft and debris “vacuum cleaners”—to adapt to debris, as well as by ensuring that increases in the amount of debris occur gradually, rather than abruptly, such that future generations have time to develop their own techniques for adaptation.

Another objective of a sustainable space environment might be to improve our ability to specify the location, rate of proliferation, and other parameters of debris. Present-day technology allows us to detect and track only those pieces of debris that exceed 10 centimeters in diameter. The probability, size, and economic consequences of collisions of artificial objects with debris too small to detect are difficult to model and quantify, as is the rate at which debris proliferates as a result of collisions that create additional debris. Advances in modeling and quantifying these parameters of debris could significantly increase the ability of present and future generations to adapt to debris.

A risk-based setting of priorities for remediating the hazards of debris resulting from human activities is another possible goal of a sustainable space environment. Presumably, the highest priority would be given to remediating the most egregious hazards, unless remediating less egregious hazards would contribute as much to overall remediation at lower cost. Priorities might range from the removal of the upper stages of rockets to the venting of excess propellant from these stages, which would reduce the potential for and the severity of chemical explosions.

Another objective of a sustainable space environment might be some notion of fairness in terms of who wins and who loses, both now and in the future, as a result of space activities and efforts to mitigate debris hazards. Issues of fairness could pit spacefaring nations against non-spacefaring nations, or developed countries against developing countries. They could also pit commercial entities against government entities, if the latter do not assess the relative burdens of the cost of collisions of spacecraft with debris and the cost of debris control on the former. If commercial launch vehicles or payloads are harmed by debris, commercial space companies would lose revenue and face increased insurance rates. However, efforts to control debris raise the cost of space activities. What is needed are policies that adroitly balance the benefits and costs of debris control.

The cost of mitigating debris includes several direct costs: the cost of mitigation activities; the cost of monitoring these activities; and, if the activities are undertaken in response to government regulation, the costs of enforcing the activities. These costs are privately borne by aerospace firms and by the budgets of government’s defense and space agencies. The cost of mitigating debris also includes indirect costs arising from the effects that the direct costs of controlling debris have on the pace and direction of long-run technological innovation and from the effects of the self-propagating nature of debris on future space activities. These costs are more generally borne by society.

Individual governments or companies are likely to ignore socially borne costs. If these costs are larger than privately borne costs, it may be desirable for governments, industry consortia, or other centralized entities to regulate debris generation. However, the costs of regulation must be smaller than the social costs of debris control for regulation to make economic sense.

Potential Economic Impact of Debris

Before focusing on strategies for mitigating debris, the potential economic impact of debris on space activities warrants some consideration. The monetary loss associated with a space activity not completed as a result of the collision of a spacecraft with debris can be experienced not only by the agent who is carrying out the activity—a corporation, a particular scientific community, or an agency such as the National Aeronautics and Space Administration—but by society, as well. Thus expected monetary loss should be distinguished as “private expected loss” and “social expected loss.”

One way to measure private expected loss is to multiply the cost of a space activity by the probability that a spacecraft in the orbit in which the activity takes place will collide with debris during its average operating lifetime. The assumptions implicit in this calculation are that the collision completely curtails the activity and that the cost to replace the activity can be approximated by adjusting the original cost of the activity for inflation.

One way to measure social expected loss is to estimate the costs that would be imposed on society by the collision of spacecraft with debris. These costs might reflect the contribution of a collision to debris in different orbits or in various longitudinal locations—some of which are more valuable and populated than others—along the geostationary orbit. (The geostationary orbit is the orbit in which most communications satellites that transmit live sports events, news, and other information are located.) These costs might also reflect the contribution of the debris to delays in a space program—for example, delays due to special investigations of or public concerns about the loss of a space shuttle as a result of the shuttle’s collision with debris.

The Long Duration Exposure Facility, which carried 57 experiments, was designed to test the performance of spacecraft materials, components, and systems that have been exposed to the space environment for a long time. Scientists began evaluating the condition of the satellite, which orbited Earth for nearly six years, after it was retrieved by the space shuttle Columbia on January 12, 1990

The relative (rather than absolute) magnitudes of private losses and social losses suggest that losses for private agents may be significantly smaller than losses for society at large. Consequently, private agents—who confront only private expected losses—may not find it worthwhile to take actions to mitigate the impact of debris on space activities. Consider the following scenario: A commercial communications satellite is nearing the end of its operating life, at which point it will be debris. A few months’ to one year’s worth of the satellite’s fuel supply is needed to boost the satellite out of its geostationary orbit. If a year’s worth of fuel is needed, the satellite would cease operation one year earlier than planned; consequently, the satellite operator would forgo several million dollars in revenue. To induce the satellite operator to boost the satellite out of its orbit, another spacecraft operator would have to compensate the satellite operator in this amount. However, the spacecraft operator is unlikely to do so, as he or she faces a private expected loss due to damage caused by debris of only $500,000.

This private loss is small because the estimated probability that the satellite will be damaged by debris is low. The probability that a space shuttle will be damaged by debris is also likely quite low, given the brief amount of time a shuttle is in orbit. While the estimated cost of a shuttle flight—which is based in part on imputed value-of-life estimates for the shuttle crew—is on the order of $1 billion, the private expected loss due to a shuttle’s collision with debris can be much smaller.

The social expected loss values for space activities may be much larger than private expected loss values, as the risks posed by debris are increasing. Debris experts estimate that the probability of a geostationary satellite colliding with debris will increase from 0.001 to 0.4 by the year 2000. Based on this estimate, private expected losses will increase from $500,000 to $200 million in 1992 dollars. The difference in these losses—about $200 million—reflects the costs imposed on operators of satellites in the year 2000 by today’s satellite operators, given current launch rates, the operating parameters of today’s satellites, and the potential of today’s satellites to contribute to debris in space. Thus, some fraction of the $200 million could be ascribed to each of today’s satellites to represent its social loss.

Parties engaged in space activities may be motivated to take actions to cover their private expected loss values—to use insurance to cover losses due to debris or to place shields around spacecraft to protect their payloads, for example. However, they may not be motivated to cover social expected loss values by taking actions to prevent debris generation, such as using lanyards to secure external components of spacecraft or boosting spent spacecraft out of the geostationary orbit. If so, and if the differences between private and social expected losses are large, regulation may be desirable to compensate society for losses resulting from the proliferation of debris resulting from human activities.

Debris Mitigation Strategies and Techniques

The most desirable types of strategies for mitigating debris are those that would minimize the sum of debris control costs and damage costs, thereby allowing the widest range of opportunities to achieve given debris mitigation goals. Limiting the ways that entities directly involved in space activities can contribute to a given overall reduction in the level of debris would probably increase the costs of complying with regulations to control debris. Therefore, flexible strategies, which would allow such entities to implement least-cost debris mitigation techniques, are desirable. This means that debris mitigation techniques should probably not be limited to reducing debris at the source—for example, by designing and operating spacecraft in such a way that their potential to explode or break up is reduced, venting excess propellant, using lanyards to secure external spacecraft components, or boosting geostationary satellites into so-called disposal orbits. Rather, they should also include recycling, changes in the production or operation of spacecraft, and “end-of-pipe” controls. Recycling would involve the capture and reuse of spacecraft or spacecraft components. Production and operation changes would involve the attachment of shields to and the incorporation of redundant components in spacecraft, and the modification of a spacecraft’s orbital parameters. End-of-pipe controls would involve the removal of human-made debris from space and improved and increased monitoring, modeling, and measurement of debris, which would allow spacecraft to avoid debris.

Strategies for reducing debris can be evaluated on the basis of their expected costs and their expected benefits, which are defined as the objectives of a sustainable space environment. A number of strategies may garner these benefits. These strategies include actions that parties may voluntarily and unilaterally take to reduce debris and other actions in response to moral suasion, such as exhortations from governments, industry associations, or others to reduce debris. Both types of action would foster a sustainable space environment, but might not be as likely as other actions to garner all four of the above-noted benefits.

Command-and-control regulation, in which government would specify the technologies and methods to be used in mitigating debris, would attain these benefits. However, if the general experience with command-and-control regulation of polluting activities on Earth is any indication, it would do so at a fairly high cost, given that it does not allow regulatees to take what for them would be the least-cost approach to complying with regulation.

Other potential regulatory alternatives include economic penalties for debris generation, including compensation that might not be strictly financial but might consist of transfers of in-kind resources (such as technology transfer) to non-spacefaring nations or to other parties harmed by debris, and taxes or fees levied on particular stages of space activities. The latter could include deposit-refund schemes whereby deposits made on the launch of spacecraft, for example, are refunded when components of the spacecraft are boosted to disposal orbits, excess propellant is vented, and so on. Yet other regulatory alternatives might include tradable permit schemes, in which commercial space firms and other entities would be allowed to trade permits to generate some specified amount of debris; reliance on insurance markets and liability law to assign financial responsibility for debris generation and thereby reduce it; and bonds purchased for space activities. Such bonds, which would be redeemable upon proof of compliance with overall debris reduction goals, would be similar to insurance but would be specifically linked to debris mitigation actions. Like deposit-refund schemes and insurance, performance bonds would likely be less difficult to monitor and enforce than other debris control alternatives because they would encourage self-policing.

Regulatees’ perceptions of the fairness of the above debris control strategies would be based on compliance costs and on other factors that operate to shift distributions of wealth or that affect a party’s technological prowess or prestige. Actions taken voluntarily, actions taken in response to moral suasion, command-and-control regulation, financial penalties, insurance, and performance bonds might be perceived as fair by regulatees for whom compliance costs and distributional effects are small, but perceived as unfair by those who face high costs and large redistributions of wealth. Financial penalties for debris generation that explicitly compensate regulatees who face higher compliance costs than other regulatees, or deposit-refund and tradable permit schemes that seek to minimize the cost burden, might be seen as fair. Taxes might be considered unfair unless the tax revenues are redistributed to regulatees, or fees are graduated according to some generally agreed-on bases.

None of the above debris control strategies appears to outperform the others on all bases. However, the economically oriented strategies—especially those that encourage self-enforcement—may be promising.

Need for International Cooperation

To be effective, debris mitigation actions will probably require the consensus of those currently using space, those who will be using space in the future, and those who may never use space directly but who benefit indirectly from space activity. If the record of global environmental cooperation on Earth is any blueprint, however, reaching consensus on space debris policy may require an explicit resolution of the potential clash between environmental protection of space and the development of spacefaring capability by nations not presently active in space. With respect to sustainable development on Earth, accommodating global environmental protection and individual countries’ economic development has been difficult, due to the lack of or argument over the specification and sharing of property rights.

Similarly, the muddled specification of rights in space is bound to complicate space debris policy. Assigning property rights may be viewed as contrary to international law. However, assigning countries responsibility for minimizing debris in specific orbital locations—such as the geostationary orbit—could be tried, particularly as countries that are geographically positioned to best use various geostationary orbits already have incentives to boost spent satellites to disposal orbits in order to make room for their own next-generation spacecraft. Nations or regions might also be assigned responsibility for tracking and monitoring debris generation and for enforcing compliance with debris control regulation in various orbits. As an inducement to take on this responsibility, they could be given assistance in developing their own tracking and monitoring technology.

When this article was first published, Molly K. Macauley was a senior fellow at Resources for the Future. She passed away in 2016.

A version of this article appeared in print in the Winter 2022 issue of Resources magazine.

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