The Final Frontier of Enterprise

Economics of Space Exploration 

In recent weeks, the world has been captivated by news about space exploration. It has dominated headlines and flooded our feeds, with countries such as The USA, China, and India all announcing their latest space-related accomplishments. The rekindling of the Space Race features not only the USA and its historic rival, Russia, but also exciting new players such as China, India, Japan and even NGOs - all drawn in by the reducing costs of space exploration. But why are all these countries clamouring to stake their claim in Space? Well, part of the answer lies in the economic advantages space exploration brings and in honour of world space week, let’s delve into the economics of space exploration. 

Lunar and Asteroid Mining 

On Earth, the last 200 years have seen immense increases in resources harvested from the ground, spurring new discoveries between the industrial revolution and the atomic age. However, as our resources deplete and economic activity continues to surge, we expand our horizons unto the heavens - to the unbelievable quantities of precious raw materials on the moon and the asteroids in our solar system. As various space probes (Galileo, Hayabusa2, OSIRIS-REx) have found, the asteroids found between Mars and Jupiter and, more importantly, those that have orbits near Earth’s, are composed almost identically to meteorites that impact the ground - meaning they contain vast quantities of gold, cobalt, iron, tungsten and even uranium. The moon also hosts surface deposits of (solid) Helium-3, which is a proposed fusion fuel incredibly scarce on our planet - the recent Chandrayaan-3 mission aiming to analyse features of the lunar South Pole. As such, the first companies that embark on asteroid mining or lunar habitation missions - from SpaceX and Blue Origin to the lesser–known TransAstra and Astrobotic - might just find themselves drowning in the milk-and-honey of interplanetary enterprise. 

Space Tourism 

From spending a few minutes in space cruising at an altitude of 300,000 feet to orbiting the earth for a week at over 1.3 million feet, the idea of holidaying in space is no longer confined to the realm of science fiction. Major private sector players in the industry, such as SpaceX and Blue Origin, are driving the industry’s growth by introducing innovative concepts and ideas. Space X’s Falcon 9 rocket, for example, proved that reusable rockets were both functional and cost-effective, not only allowing the space tourism industry to become more accessible to middle-class consumers that are expected to dominate demand in coming years, but also paving the way for more ambitious discussions and projects, such as colonising mars! However, private companies are not the only ones trying to make space tourism a reality - government-backed missions who have pre-existing access to infrastructure, substantial funding and a wealth of knowledge are also contributing to the development of the industry. NASA has already provided a budget for Blue Origin, Nanoracks and Northrop Grumman Systems Corporation to build commercial space stations - giving these companies the funding required to execute their innovative ideas. Moreover, government-endorsed space tourism projects also bring in a level of international collaboration, which creates a cooperative and unified market landscape that could positively shape the otherwise cutthroat space race. Overall, the space tourism industry is thriving with the global space tourism market expected to reach $678.3 million by the end of 2023 and both private companies and government-funded projects from all over the world are vying to dominate the market! 

Spaceports 

Spaceports are a linchpin in the space economy and essential to establishing sovereignty in the increasingly important space domain. Just like airports or sea ports, spaceports have infrastructure and operations that allow space vessels to access space. With 170 space missions and 24,000 space satellites projected to launch from now till 2031, spaceports have become more essential than ever, which is why nearly 30 new spaceport sites have been proposed - many in nations such as Australia, Indonesia and Peru which haven’t had much space presence in the past. 

These new developments have significant impacts on the communities surrounding these spaceports. A successful spaceport requires a range of expertise to function - everything from engineers, technicians to administrative staff. This allows for considerable job creation in local economies as well as consequent regional growth (due to the influx of specialist labour) and opportunities for innovation and entrepreneurship. For example, Spaceport Cornwall in the UK is expected to create 150 direct jobs and a further 240 jobs in supply chain and ancillary services - majority of the direct jobs will be filled locally, with external talent also allowing for the growth of the local skill base. Additionally, with the rise of space tourism, local communities surrounding space ports are likely to see their tertiary sectors develop in leaps and bounds. 

However, it isn’t all positive - spaceports have some major negative externalities. Space X’s Starbase spaceport in Texas has potentially caused a decline in local endangered species. Again in Indonesia, Space X’s spaceport on the island of Biak has led to a pushback from locals because of its potentially grave environmental impacts and the possibility that locals will be displaced. 

In Space Manufacturing

In-space Manufacturing is the term used to describe the process of creating new consumer and capital goods, extremely lucrative as the aforementioned valuable resources found on the moon and in asteroids could be utilised to produce energy, electronics, 3D printed habitats and artificially fabricated goods from jewellery to clothing for self-sustained communities in space. Some of the most important resources being considered for terrestrial-ISM applications include those that are very scarce on Earth and would allow entire industries to experience explosions in growth as they maximise economies of scale, including nuclear fusion reactors (Helium-3) and metals needed for electronics (gold and cobalt). Moreover, we would likely see the needs of these communities evolve, including the possibility of making wires with silver (a better conductor yet more expensive on Earth) and industrial-scale rocket production with more effective fuel economies, given the lower escape velocity for asteroids and the moon. 

The impossibly science-futuristic, hopelessly optimistic claims of ‘space entrepreneurs’ of the current age must be met with a healthy degree of scepticism - after all, in the 50-odd years after the moon landings, we have yet to successfully set up permanent habitation on the lunar surface and still lack the ability to process parts of asteroids known as feedstock in situ (generally agreed by most economists and astrophysicists to be the most profitable method of asteroid mining) to any degree. However, in those quiet moments of upwards-looking wanderlust and the comforting, unabashed hope of humanity in finding new homes and new fortunes nestled in the cosmos, it is evident that there must be some truth to the promises of space, and each passing day we must be inching closer to seeing realised visions of lunar bases, thriving communities centred around spaceports, holidays in orbit around the red planet, quadrillion-dollar asteroids - all in the palm of our hands and the sights of our spacecraft.

Written by- Dhruv Mathur, Ivannah Jacob

Edited by- Tanuj Waghray