space||0

Practice area:	Space
Client:	N/A
Published:	19 November, 2024
Keywords:	modelling 2024 Economic model IAC International Astronautical Congress Kessler syndrome Simulation Space Space debris Tragedy of the commons

In this paper, presented at the 75th International Astronautical Congress (IAC) in Milan , 14-18 October 2024, we develop a dynamic economic model that considers the choice of multiple satellite operators on whether to develop and launch a satellite. This choice is dependent on the risk of collision, which is modelled as a function of the other operators’ decision to launch. Using this theoretical framework, we discuss various factors for policy makers to consider when deciding how to implement debris mitigation policies.

The space industry is a critical enabler of high productivity jobs, innovation, public services, and defence capabilities that have transformed life on Earth. While government-backed programmes like GPS and Copernicus remain critical to society, a combination of low-cost launch, cheaper manufacturing techniques, new design philosophies, and private capital have encouraged a huge increase in private sector participation in space. 

These private participants are driven by the promise of high returns in what is considered an underexploited frontier market at a critical inflection point: growing private interests are transforming space from a government-led endeavour with few participants and a small number of launches to one with diverse participants and a large and growing number of launch activities. 

However, the current way in which we launch satellite assets is unsustainable due to the growing problem of space debris. If left unchecked, the expected loss could accelerate as collision probabilities increase exponentially under a ‘Kessler Effect’. This growing problem stems from space being a common, shared resource, with satellite operators not considering the wider impact of orbital space debris (e.g. on other operators and wider society which benefits from space). This has led to a growing public interest in the space debris problem and sustainability in space. 

Discussions have centred on the various options of debris mitigation, and the relative benefits associated with their implementation for society, without assessing the subsequent impacts of space debris mitigation policies on satellite operators’ economic incentives. 

In this paper, we use a dynamic economic model to investigate the impact of debris mitigation policies on the incentives of private satellite operators to launch. We find that debris mitigation policies change the composition of satellite operators that remain ‘active’ in the industry, as those with the smallest margins (the difference between operational profit and the fixed cost of delivering a satellite to orbit) are more likely to leave the market following the imposition of these policies. We find that the cost of the policy that is levied on operators lowers the threshold collision probability at which no operator chooses to launch in the long run. Additionally, we find that the overall welfare of the debris mitigation policy will be determined by the relative change in the parameters characterising the fixed cost of delivering a satellite to orbit, and the proportion of satellites that are deorbited within each time period in the model. 

Key findings from this study including the model simulation presented below are presented in the attached paper and slide deck presentation which were prepared for the 75th International Astronautical Congress (IAC) in Milan, 14-18 October 2024.