Bongers, A., Molinari, B., Rouillon, S. and Torres, J. L. The Foundations of the Economics of the Outer Space: A premier overview.
This version: June 2024.
Abstract: Although it is probably too early to define a new field of economics named “Economics of the Outer Space”, the arising importance of the outer space for scientific, economic, and social development is beyond discussion. Nowadays, commercial satellites offer a variety of vital services to Earth’s consumers at the cost of congesting and polluting the space with orbital debris. However, this is just the beginning of the history, and several new commercial exploitations of the outer space will appear in the next future, with the consolidation of an almost autonomous industry in the space, further congesting and producing further market failures. This paper reviews seminal and initial works in this new field and discusses the connection with existing well-established fields in economics. Human activities in the outer space involves a number of economic and legal issues, related to regulation and property rights, congestion, pollution, militarization and weaponization, and exploitation of natural resources, that should be addressed as soon as possible to mitigate conflict among spacefaring agents and loss of welfare for the whole humankind. Finally, we put forward some suggestions for future research directions in this promising and highly unexplored research area.
Keywords: Outer space; Satellites; Earth’s orbit; Orbital debris; Anti-satellite weapon systems; Space industry; Satellite data.
Rouillon, S. Monopolistic competition in a limited orbital space.
This version: September 2024.
Abstract: In a context of intense competition for access to the Earth’s orbit, we study a model of monopolistic competition in which satellites operators diversify the variety of satellite services. We put this in perspective with the accumulation of in-orbit fragment debris and the risk it poses for the sustainability of orbital activity. Monopolistic competition leads to a sub-optimal outcome, in terms of both the number of satellites in orbit and the range of services offered. We show that monopolistic competition results in excessive orbit congestion, when Earth’s orbit carrying capacity is low and/or consumers’ preference for diversity is low, and always leads to an insufficient number of satellite services being offered. However, a strong consumers’ preference for service diversity, as it increases the market power of satellites operators, can mitigate congestion of the Earth’s orbit.
Keywords: Space economics; Orbital debris; Sustainability.
JEL classification: L1; L9; Q2.
Bongers, A., Ortiz, C. and Torres, J. L. DISE: A Dynamic Integrated Space-Economy Model for Orbital Debris Mitigation Policy Evaluation.
This version: October 2024.
Abstract: This paper presents the Dynamic Integrated Space-Economy (DISE) model, which is designed to study the economic implications of alternative policies aimed at mitigating orbital debris. The DISE model combines a standard neoclassical growth model with a physical space model for orbital debris dynamics. The economic model categorizes capital assets into two types: Earth’s capital and Space’s capital (i.e., satellites). DISE is intended to calculate the cost of space debris and its impact on the global economy. The model is simulated for a 200-year period under different scenarios, including a clean space environment, laissez-faire, de-orbiting policy, debris-free launch systems, a combination of de-orbiting and debris-free launch vehicles, and collision avoidance.
Keywords: Outer space; Orbital debris; Satellites; Integrated Assessment Model; Mitigation policies.
JEL classification: D62; E22; H23; Q53; Q58.
Bongers, A. and Torres, J. L. On the Social Cost of Orbital Debris.
This version: February 2025.
Abstract: Orbital debris represents a global environmental externality in outer space, akin to terrestrial environmental externalities, imposing a social cost on humanity. Accurately quantifying this social cost is crucial for designing and implementing effective debris mitigation policies. This paper estimates the social cost of orbital debris (SCOD) using a methodology inspired by climate-change economics, particularly the approach used to calculate the social cost of carbon (SCC) through projections derived from integrated assessment models (IAMs). We introduce an IAM that links economic activity with space activity, modeling orbital debris emissions as a function of launches and collisions. The model generates optimal trajectories for orbital debris emissions and consumption, which are then used to estimate the SCOD. Our results indicate that the SCOD is approximately $84,200 per piece of debris larger than 1 cm for the year 2023 (in international US dollars), based on a 1.5% social discount rate
and an intertemporal marginal consumption rate of 1.5.
Keywords: Orbital debris; Integrated assessment model; Social cost of orbital debris.
JEL classification: D62; E21; E22; Q53; Q58.
Bongers, A., Molinari, B. and Torres, J. L. Optimal satellite shielding and orbital debris.
This version: July 2025.
Abstract: Orbital debris, or space junk, presents a negative environmental externality and poses significant hazards to human activities in outer space. The increasing number of satellites and spacecraft in orbit, from commercial, military, and scientific ventures, has led to an increase in space pollution with millions of pieces of fragments traveling at high speed. This creates a greater risk of collisions and the destruction of spacecraft. This paper examines the consequences of spacecraft shielding, which affects also the emission of orbital debris. By using shields to protect satellites, the probability of destruction in the event of a collision is reduced, along with the creation of additional debris. This serves as an example of how spacefaring operators can take steps to address the negative impact of space pollution within a decentralized system resulted from a profit maximization strategy. Our analysis demonstrates that when individual agents take steps to minimize the risk of collisions and satellite destruction this is equivalent to the internalization of the externality, with a positive impact on the space environment. Nevertheless, we find that the optimal shielding rate is lower than that of a centralized economy, indicating that the negative externality is not fully internalized in the decentralized economy.
Keywords: Orbital debris; Satellites; Risk of collision; Shielding.
JEL classification: D62; L80; Q53.
Bongers, A. and Torres, J. L. Optimal path for orbital debris.
This version: September 2025.
Abstract: This paper introduces the DISE-2024 (Dynamic Integrated Space Economy) model, an Integrated Assessment Model (IAM) designed to analyze the economics of efficient mitigation policies for orbital debris. The DISE-2024 model integrates an optimal neoclassical economic growth framework with a physical model of the Earth’s orbital environment, capturing the dynamics of orbital debris and the likelihood of collisions. The economic component of the model determines the optimal consumption path and investments across two capital assets: Earth capital and space capital (i.e., satellites). The physical component models the endogenous generation of orbital debris, accounting for factors such as launch activity, in-orbit breakups, and collisions. The model is simulated over a 200-year horizon under various policy scenarios, including no intervention, de-orbiting policy, no breakups, reusable launch vehicles, debris-free launch systems, collision avoidance, and the European Space Agency’s (ESA) zero debris policy. A key finding of the study is that mitigation policies targeting debris emissions alone have a limited impact on reducing the long-term accumulation of orbital debris. Only scenarios involving complete collision avoidance can prevent the catastrophic chain reaction predicted by Kessler syndrome.
Keywords: Outer space; Orbital debris; Satellites; Integrated assessment models; Debris mitigation guidelines; Optimal policy.
JEL classification: D62; E21; Q53; Q58.
Bongers, A. and Torres, J. L. Optimal Active Debris Removal policy in the Long-run.
This version: September 2025.
Abstract: This paper evaluates optimal active debris removal (ADR) policies for managing space pollution caused by orbital debris. ADR refers to ex post mitigation efforts that involve removing debris from orbit. We extend the DISE-2024 model, an integrated assessment model (IAM) of the global economy and space environment, by incorporating ex-post abatement cost functions for different types of orbital debris. The model determines optimal abatement expenditures and the optimal proportion of debris (derelict satellites, rocket bodies, and fragments) to be removed in order to maximize social welfare. Our findings indicate that the optimal removal rate for small debris fragments is higher than for larger objects such as derelict satellites and rocket bodies. The cost of implementing ADR policies increases over time as space activity expands. Importantly, optimal ADR policies help prevent unlimited accumulation of orbital debris, avoiding the risk of a Kessler syndrome.
Keywords: Outer space; Orbital debris; Satellites; Abatement cost; Optimal policy; ADR policies.
JEL classification: D62; E21; Q53; Q58.
Bongers, A. and Torres, J. L. Business as Usual and Orbital Debris Path.
This version: October 2025.
Abstract: Computing the so-called Business-as-Usual (BaU) scenario in Integrated Assessment Models (IAMs) that include environmental externalities is a non-trivial task. Traditionally, general equilibrium growth models with such externalities are solved in a centralized framework, where a social planner maximizes welfare by fully internalizing the environmental damage. This is the approach taken in the well-known DICE model by Nordhaus (1992). However, in DICE, the BaU scenario is defined as the social planner solution with zero abatement, even though the externality is already internalized through investment decisions to maximize social welfare. This creates a mismatch when comparing the BaU scenario to the true first-best allocation. This paper solves the DISE-2024 (Dynamic Integrated Space Economy) model in a decentralized economy, using a fixed point method to compute orbital debris trajectories under a laissez-faire setting, and compares them with the first-best optimal trajectories from a centralized economy.
Keywords: Orbital debris; Satellites; Integrated assessment models; Business-as-Usual; Competitive decentralized equilibrium.
JEL classification: D62; E21; Q53; Q58.