Negotiating the Trans-Planetary Trade Partnership
Human space travel has come in several phases, each defined by different incentives, different players, and different missions. The first came out of the cold war, and was less of a scientific renaissance and more of an international arm-wrestling match. 109 billion current year dollars was the price tag for the US moon landings. Proposing a public project of that scale without a reasonably practical justification relating to security or the economy would likely spell the end of a politician’s career today; governments simply no longer have national interest incentives to explore the solar system, and its questionable whether they ever did. In a sense, this is for the best: it can’t possibly have been sustainable or politically viable to churn many billions of taxpayer dollars annually towards precariously hurling astronauts at dead rocks in orbit.
Cue today’s era. The “New Space” revolution is marked by the privatization of space travel, as a handful of deep-pocketed entrepreneurs have creatively imagined new models for monetizing spaceflight. These are far from perfected. Take Space Exploration Technologies Corporation (SpaceX). In February of this year, the Wall Street Journal published information about SpaceX’s finances showing that its revenues had declined rapidly and that, even in up-years, profit margins were quite small. Still, that any profit whatsoever is being turned out of space transport is an encouraging milestone. This industry is in an infant, if not embryonic stage when compared to what it has been long theorized to become.
The next great human milestone will be the transport of human beings to Mars. SpaceX would like to do this in the 2020s with its planned Interplanetary Transport System (ITS). The first settlers would likely be scientific researchers. Over time, more transports will increase the settlement’s size and likely broaden its function. The colony would potentially evolve from a scientific outpost to something else. What is that something else?
The answer may lie in the asteroid belt. Ample amounts of valuable materials whose scarcity has been a reality in terrestrial economics are available to us throughout the solar system. They include nickel, iron, and cobalt. Many, especially spent comets, have water or hydrocarbons, which could be used for fuel, making costs lower. The Asterank database (http://www.asterank.com/) contains thousands of asteroids with estimates of their value and profit from mining them, as well as their composition, and logistical difficulty of reaching them. The highest-ranked target as of now is Ryugu, an asteroid which contains all of the above substances and is quite accessible, making a close pass to earth 2-3 times a decade. It’s value is estimated at $83 billion.
The Mars settlement may prove an excellent location for processing raw materials extracted from the asteroid belt before their transport back to earth, as well as for refueling before the long haul. It is thus not hard to imagine that Mars will become the economic center of the asteroid-mining industry, just as OPEC nations are a geographic locus of decision-making for the global oil economy. Like OPEC, Mars will gain a level of bargaining power against importers on earth. Cheap, abundant metals and hydrocarbons will become norms on earth, but a more “protectionist” Mars could undermine this. To avoid such a catastrophe, an interplanetary trade deal could be reached.
This deal would be a fascinating proposition because of the abundant nature of these resources. Mining one valuable asteroid could send commodity prices on earth tumbling towards a zero bound. The resultant consumer surplus would be concurrent with the ruin of many producers who sell the same materials. Economies of scale would disappear when the volume in question is so massive. If Ryugu were mined, the subsequent price deflation would threaten the profitability of the entire enterprise. Thus a trade deal would have to ensure price stability, with strict but fair mining quotas or tariffs that keep consumer surplus high but protect the mining industry from breaking down.
As much as it sounds like science fiction, there are well-funded players working tirelessly to make it a reality. They include Planetary Resources and Deep Space Industries in the mining sector and SpaceX and Virgin Galactic in transport. If they succeed, economists will have a brand new sandbox to play in. International trade may one day be remembered as a mere predecessor to something greater. We will be well-served to start marking the differences early on and planning accordingly.
WRITTEN BY EVAN OLINER FOR BESA
PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT