Space Activities, Space Tourism and Economic Growth

Abstract

Over the past half century, taxpayers of the world have paid nearly $1 trillion for civilian space activities, approximately half of this amount being spent on human space flight. If the same investment were made on a commercial basis, it would be generating revenues of several hundred $billions/year, employing more than 10 million people on a permanent basis, and earning tens of $billions/year of profits. However, although telecommunications and broadcasting satellites are now commercially self-sustaining activities they generate some $20 billion/year in revenues, and human space flight activities earn only a few tens of $millions/year. This paper argues that development of commercial passenger travel services to and from space is the key innovation needed to generate an economic return on the cumulative investment made in space capabilities to date. It is technically feasible using existing technology, and it is expected to grow into a much larger business than satellite communications. In addition it will have important macro-economic impacts by helping to overcome the current global deflation caused by world-wide over-capacity in older industries and insufficient innovation of new ones. Governments currently spend $25 billion/year on civilian space activities, but essentially none of this is aimed at realising passenger space transportation. This paper argues that facilitating the application of space technology to the development of passenger space travel services should be a priority of economic policy.

1 Introduction: Misunderstanding about Space

In projecting the future development of the world economy, mainstream economists fail to foresee a major part of the coming decades' economic activity because they suffer from a major misunderstanding about space activities that is unfortunately widespread both outside and inside the "space industry". This misunderstanding is held also by leading contemporary historians such as Samuel Huntington (1) and Francis Fukuyama (2), by leading contemporary sociologists such as Alvin Toffler (3), and by well-known economic commentators such as Robert Heilbroner (4) and Jeremy Rifkin (5).

(This misunderstanding might perhaps be called the " Player Piano Error" after the 1952 novel by the author Kurt Vonnegut (6): this describes an apparently plausible but economically unrealistic future condition of the USA in which most of the population is unemployed, spending their lives comfortable but bored on government "make work" schemes, while a small elite manage the highly automated industry that produces goods and services for everyone.)

The mistake underlying these writers' view of the future is the assumption that ordinary people cannot go to space. They believe that it is almost impossibly difficult to get to space, and that only specially selected people with extensive training can survive the "rigours" of space travel. Consequently they assume that space activities will remain trivially small in scale, and that humans' future will be essentially Earth-bound.

This idea is entirely mistaken: in fact it is not very difficult to travel to space - it has been done regularly for nearly 40 years (ie since before such basic features of modern life as satellite communications, colour television, Beatles' music, the Boeing 747, oral contraceptives, credit-cards, video-cassettes, heart pacemakers, micro-computers, microwave ovens, compact discs, optical fibres, the Internet, DNA finger-printing, mobile telephones, GPS and many others); and essentially anyone can travel to and from space without any stress or ill-effects.

Because of these facts, commercial space travel services can grow in future essentially without limit; and they are likely do so once private businesses start to earn profits from them, due to the very large unsatisfied demand for these services - as has recently begun to receive official recognition. This development will have a profound effect on the world economy and on human activities over the next few decades, making the visions of the future described by most economic commentators to date, including those mentioned above, seriously inaccurate.

1.1 Space Tourism Feasible

The main reason why passenger travel services to and from space are not available today is not because they are difficult or even particularly expensive to develop, at least by comparison with current government budgets for civilian space activities - but because government space agencies are not trying to develop them - although they spend $25 billion/year of taxpayers' money. As an example, the largest space agency, NASA, has the " X-33" reusable rocket under development, but it is unpiloted; its intended successor, "Venture Star", is not suitable for passenger-carrying; and it represents barely 2% of NASA's budget. Furthermore, government space agencies have never carried out market research on the demand for space travel services among the general public.

Because of the lack of research on the feasibility of tourism in space, the Japanese Rocket Society ( JRS), a private organisation established in 1956, started a formal "Space Tourism Study Programme" in 1993. A series of papers and reports on the results of this work has been published (7), of which major conclusions to date include:

1. the " Kankoh-maru" VTOL launch vehicle could carry 50 passengers to and from low Earth orbit at a price of some $25,000/passenger, and could be developed and put into commercial operation within 10 years at a total investment of some $12 billion.

2. Based on preliminary market research performed in Japan, Canada, Germany and the USA between 1993 and 1995 (8, 9), the popular demand for tourist trips to low Earth orbit ( LEO) is potentially large enough to justify producing some 50 Kankoh-maru vehicles, on which scale this activity could be self-financing.

3. Anyone in sufficiently good health to ride on a scheduled airline flight could make a short trip to and from space without any ill effects on their health, and without training (unless they were required to play some role in the vehicle's operation). If there was ever any doubt about this, the orbital flight by 77 year-old US Senator John Glenn in October 1998 eliminated it.

These results have recently been endorsed in general terms by NASA (10), by the American Institute for Astronautics and Aeronautics, AIAA, (11) and by independent researchers (12, 13), who confirm that commercial passenger space travel services could grow to a larger scale than all existing space activities.

1.2 Lost Economic Potential

A major contributor to the above error is the tacit assumption that government space agencies' costs for the space activities which they perform are representative of what business costs would be for similar activities. However, anyone with significant commercial experience can confirm that it is no more than "common sense" in the business world that, for well-understood reasons, government organisations and monopolies are poor at both cost reduction and at innovation. Indeed, launch services have been dominated by government organisations for decades - and they still use vehicles designed 40 years ago. Why have economists failed to see that these organisations' costs bear no relation to what businesses could charge for similar activities?

A number of non-government space engineers, notably Gary Hudson (14) and David Ashford (15), and including the authors of the recent JRS study which has been widely endorsed, have explained how the cost of space travel could be reduced to as little as 1% of present launch costs, by developing appropriate reusable vehicles and operating them on a large scale like airlines. The activities of NASA and other government space agencies using expendable and partly expendable transportation systems are therefore not a useful guide to what businesses could do in space - particularly in relation to the potential for cost reduction.

As a result of the above misunderstandings, most economists and other social scientists have a mistaken image of how humans' economic activities will develop in the next few decades: in particular, they greatly underestimate the scale of commercial space travel activities and their potential impact on the world economy, particularly in stimulating economic growth. In addition, the current priorities for taxpayers' $25 billion/year funding of space activities represent a serious loss of potential economic growth, and hence a serious misallocation of public resources. Correcting this misallocation will have great economic benefits for the entire world, as discussed in more detail below.

2 World Economic Development

This fundamental misunderstanding by economists about the future role of commercial space travel activities is very important because of their relation to the present condition of the world economy, and their potential future contribution. To appreciate this, it is necessary first to understand the fundamental pattern of business development around the world: fortunately this can be explained very simply.

2.1 Global Trends

As described by Adam Smith in the first few pages of his book published in 1776 that established the foundations of economics (16), the main source of economic growth is the increase in individual productivity which arises through the "division of labour" or specialisation, combined with the use of markets where people can exchange their different specialised outputs. The larger that markets grow, the greater the scope for specialisation and so for economic growth and rise in incomes.

This process of specialisation is responsible for the enormous growth of engineering and scientific knowledge, and together with the use of machines it explains most of the process of economic development, from early societies in which everyone grew and collected food for themselves, up to modern societies in which productive efficiency is so high that about 5% of the population produce enough food for everyone, and the 95% of the population "released from the land" provide other products and services both for each other and for those who continue to farm.

This idea also explains the related phenomenon that the larger the group of people cooperating economically, the wider the range of different activities that they perform. Steel-making was not developed in a society of only 100,000 people; electricity generation was not developed in a society of only 1 million people; and computers were not developed in a society of only 10 million.

It also has the consequence that a wider range of activities is necessary in a larger population if economic growth is not to lead to unemployment of some members of society. That is, as the size of the economically cooperating population increases, industries operate on a larger and larger scale, and they need a smaller and smaller proportion of the population to produce ever greater output. Those who leave the older industries as they steadily restructure, are re-employed in new industries. Continual innovation is needed in parallel to generate a growing range of industries.

The process of developing new industries is relatively inefficient because innovation is often strongly resisted, particularly by those with an interest in maintaining the status quo. Politicians commonly try to win popularity by "protecting" older industries, which tends to delay timely restructuring. In addition, existing industries have large revenue streams which they use to resist the growth of new industries, which are economically and politically weak since they do not initially have revenues.

Another feature of the pattern of economic development that must be recognised in order to understand the major trends in the world economy is the movement of businesses to poorer countries. Because international communications and transportation are very advanced and efficient, as poorer countries develop and become capable of progressively more advanced industrial activities they "take over" relatively older industries due to their lower labour and other costs, exporting products to the advanced countries at prices with which those countries' own industries cannot compete. This brings further losses in employment in "old" industries in the advanced countries (replaced by employment in newly industrialising countries). The process which enables richer countries to import increasing quantities of developing countries' low-priced exports without thereby creating mass unemployment is also through developing new industries.

"Engel Coefficient"

Another concept that is helpful in understanding the direction in which the world economy is evolving is the "Engel Coefficient", defined as the proportion of peoples' income that is used to purchase necessities. Although there is wide scope for discussion about the precise definition, the trend is interesting: the Japanese government estimates such a coefficient on a regular basis and currently estimates it as between 0.3 and 0.4 for average Japanese families. That is, if necessary, an average family could reduce their expenditure by more than 50% without lacking any necessities - and this reflects the experience of most of the populations of richer countries today. Furthermore, the Engel coefficient is falling steadily. With real economic growth of 2-3 %/year it will fall to only 0.03 within another 100 years: that is, only 3% of people's income will be used on necessities.

Thus, although many people may feel that "real" work concerns necessities like growing food or making machines, in fact less and less effort is required to satisfy human needs in the advanced countries, and more and more resources are available to allow people to do what they want. Thus, when considering what activities will grow to become major new industries in future, it is useful to look at what people do with their incomes as they climb above subsistence level: education, sports, leisure, high-quality housing, travel, 2nd and 3rd homes, luxury products, entertainment, and so on.

2.2 Recent Acceleration

The economic changes described above have been advancing continuously for more than two centuries, but they have recently become problematic because, for several different reasons, they have accelerated - thereby specifically accelerating the need to develop new industries.

1. Technological progress has accelerated, particularly with the development and spread of electronic computers and communications into service activities as well as manufacturing.

2. Rapid economic growth in east and south Asia has accelerated the growth of the number of people cooperating economically, and the Asian middle classes have been growing rapidly. This has accelerated the restructuring of some industries in advanced countries.

3. The end of the cold war released a large number of engineers from military work, and also enlarged the economically cooperating population as previously communist countries started to focus on commercial economic development.

These changes have contributed to the present global deflation, since innovation has not increased sufficiently to provide vigorous growth of employment opportunities. As a result there is currently some 30% over-capacity in older industries such as motor manufacturing (capacity of 70 million cars/year vs demand for 50 million/year), steel-making (capacity of 800 million tons/year vs demand for 600 million tons/year), petro-chemicals, semiconductors memory chips and others, which are causing powerful deflationary pressures in the world economy.

The long-term solution to the slow economic growth and high and growing unemployment seen in continental Europe and Japan is the development of new industries and new activities. Although there can be a role for governments in smoothing the adjustment process, particularly in removing legal and bureaucratic obstacles to restructuring and innovation, ultimately they cannot substitute for the market: for example, government investment in uneconomic construction projects uses up capital resources without creating corresponding wealth. The new activities in which investment is primarily needed involve the production of goods and services that the general public will voluntarily choose to purchase. This will then create a virtuous circle of renewed economic growth, creating new employment.

2.3 Ceaseless Innovation?

However, the prospect of ever more innovation can seem alarming; the process of economic development causes profound social changes, and many people in both more and less economically developed countries are upset by these. To a considerable extent this is unavoidable: it is not under human control to prevent people from trying to better themselves - and this activity spontaneously brings about economic growth and change. Most of the world population lives at a standard of living far below that in the richer countries, and their efforts unavoidably reduce prices globally, thereby making it more difficult for people in richer countries to earn a high salary from low-productivity, old-fashioned work. Thus people in older industries are obliged to innovate and to work at higher levels of productivity if they wish to maintain or improve their standard of living.

However, the prospect of "ceaseless innovation" need not be as alarming as some people fear. For example, it need not require people to consume more and more resources, to continuously change their living-habits, to produce endlessly more consumer products of all sorts, or to do such meaningless work as disinformational advertising to persuade people to buy things that they do not need (as described in some dystopian fiction). An alternative, more attractive scenario is described in the next section.

3 Potential Contribution of Space Activities

When possible new fields of economic growth are discussed, the aerospace industry is often spoken of as a high-technology sector offering future growth prospects. Civil aviation has grown during the 20th century to a turnover of almost $1 trillion/year, and may grow to several $trillions/year as tourism spreads further around the world with continuing economic growth and growth of middle classes in developing countries.

In addition to aviation, aerospace also includes space activities. Today satellite tele-communications are a relatively mature commercial industry: satellite manufacturing and launch have grown to a scale of some $20 billion/year, and both are in the final stages of consolidation into just 3 makers world-wide, 2 in the USA and 1 in Europe, with some significant parts makers elsewhere, including in Japan. There is potential for some further growth, but no commentators foresee growth to levels very much higher than the present turnover, due to the expected reduction in launch costs by reusable launch vehicles.

(Some commentators add up the turnover of communications services handled by satellites and call these "space activities", thereby reaching a figure of $50 billion/year or more. However this is not helpful: communications is a different industry from space engineering, using terrestrial networks, optical fibres, radio and other systems as alternatives to satellites. Furthermore, telecommunications does not involve human space activities.)

3.1 Space Agencies' Scenario

Government space agencies have published a range of reports on future prospects for space development. Their collective vision is that some 30 years in the future space activities will remain largely taxpayer-funded. They have no clear targets for commercialisation beyond remote-sensing satellites, and none for human space activities. At current spending levels of $25 billion/year, over the coming 30 years space agencies would use $750 billion, which would maintain employment in the space industry at its current scale of about 1/2 million people world-wide. It is instructive to contrast this with the typical pattern of commercial investment.

A sum of $25 billion invested by businesses typically generates an annual sales turnover of a similar order, $25 billion / year (though the investment:revenue ratio varies considerably between industries). The profit margin on sales might typically be some 10% (ranging from a few % to more than 50% in different cases) which enables the businesses to repay investors perhaps twice their initial investment, say $50 billion over 20 years (thereby increasing society's accumulated wealth), while creating some 500,000 (250,000 - 750,000) permanent jobs. Over 30 years, $750 billion of investment could cumulatively create permanent profitable employment for 15 million people or more. The difference between these two outcomes is striking.

Figure 3.1 a): Cash-flow pattern of typical business investment

Figure 3.1 b): Cash-flow pattern of typical government space project

To date taxpayers have paid nearly $1 trillion for civil space activities, some one-half of this on human space activities. If this was commercial investment it would have generated a space business comparable to civil aviation, with annual turnover of hundreds of $billions. Unfortunately there is no such space business. Hundreds of $billions of investment in developing human space flight have yet to produce a commercial return - or indeed, any substantial commercial activity. However, this is not because it could not create such commercial activity: it is because the purposes for which this investment has been used, and continues to be used, have been non-commercial.

3.2 Passenger Space Travel

Innovation is not smooth. In history there are periods of rapid change and periods of relative stagnation, arising from a variety of causes. Through the centuries there have been several major waves of economic growth arising from the development of new transportation technologies - Roman roads, sailing ships, railways, steam-ships, automobiles, aircraft. Another major stimulus to economic growth was the spread of trade from Europe to successive new areas - the "Far East", north and south America, Africa, India. These developments have involved both private and public investment to different extents in different cases. Viewed in this perspective, it is clear that the development of an economic space transportation network has the potential to stimulate economic growth both as a new transportation system, and through the opening of new territories for business activity.

It is a fundamental point of this paper that development of commercial passenger space transportation is the key innovation needed to create an economical space transportation network; and that, in the near future, only commercial passenger space transportation will generate an economic return on the hundreds of $billions invested in developing space capabilities to date. Passenger space travel is itself likely to grow to a turnover of tens of $billions, but it will have further major economic benefits by reducing the cost of space transportation to an extent that no other activity will, due to its large scale.

There is only one way to achieve this outcome - that is to deliberately apply the accumulated knowledge of aerospace engineering and operations to create the vehicles and infrastructure needed to make it possible for the general public to travel to and from space. Unfortunately public officials responsible for space activities, as well as politicians who support their budgets, tend either to ignore this idea or to dismiss it as being "science fiction".

However, this is primarily a failure of these peoples' imagination: many products and services that are in widespread use today were predicted in science fiction stories in the past, from airliners, computers and robots - to lasers, cloning and video-phones. Passenger space travel is no more outlandish or unrealistic than these inventions - rather the contrary, since it is a straight-forward and long-overdue application of well-understood technologies.

An additional problem is that many people involved in space activities lack any substantial knowledge about aviation - its leading-edge technology (in propulsion, materials and avionics), its commercial operations generating nearly $1 trillion/year in revenues, its world-spanning real-time information networks, its global legal framework, its reliability engineering and safety philosophy, its decades of experience of international government-commerce cooperation, and other aspects. Instead they are still living by the cold war paradigm in which government organisations use taxpayers' money to build missiles with which they perform a range of space activities which they largely decide themselves. This cushions them from economic reality so that they feel no need to innovate, nor to develop services that the public wish to purchase.

Fortunately, major progress was made in 1998, with the formal admission by leading aerospace organisations that passenger space travel is feasible; is likely to be economically profitable; and will become the major commercial activity in space:

• In March 1998 NASA and the US Space Transportation Association (STA) published a report acknowledging that space tourism was likely to start soon and could grow into the largest activity in space (10).

• In July 1998, the AIAA published a report stating: "In light of its great potential, public space travel should be viewed as the next, large new area of commercial space activity" (11).

• In September 1998, Keidanren, the largest economic and business organisation in Japan, also recognised this in their pamphlet " Space in Japan" (17). In its 10 pages describing the range of space projects and technologies developed in Japan, the only activity that is considered to have promise for commercialisation of space activities is the Japanese Rocket Society's work on space tourism.

• NASA Administrator Daniel Goldin referred favourably to the promise of space tourism in 3 speeches in late 1998 (18).

In addition, the 2nd International Symposium on Space Travel in Bremen in April, the 1st U.S. Conference on Space Tourism held by the Space Transportation Association in June, and the 2nd "Space Fair" held in Long Beach, California by the Space Tourism Society in July, are further signs of the growing seriousness with which companies and researchers are viewing the new field of space tourism in 1999.

3.3 Economies of Scale

The development of reusable launch vehicles which are needed to reduce launch costs faces a number of problems, but one which is not sufficiently addressed is the fundamental question of demand: "What should they be designed to carry?" As shown in the first part of Table 3.3, roughly 50 expendable rockets are built each year, and they launch some 50 payloads. The second section shows that if a reusable launch vehicle was developed that could fly once/week, it could launch all 50 payloads/year - that is, 100% of the current satellite launch market. It would therefore put all manufacturers of expendable rockets out of business; for this reason these companies are very uninterested in developing reusable launch vehicles. Furthermore, the government space agencies which have supported the growth of these companies also wish to protect them; they use large budgets for various forms of support; and they provide almost no funding for reusable launch vehicle development: currently

It is therefore of central importance to recognise that the only possibility of achieving such high flight rates is through passenger demand. Market research suggests that the potential demand for space travel services is indeed sufficient to support such a growth rate: at prices below $20,000/passenger demand could grow to millions of passengers/year (8, 9). It is worth noting, however, that in aviation the annual turnover and employment created by aircraft operations is many times larger than aircraft manufacturing. Thus, long before production of passenger space vehicles reaches 50 vehicles/year the turnover of passenger space flight operations will exceed that of expendable rocket makers today. Maintenance and component replacement will also generate substantial work for rocket manufacturers, as it does for aircraft and jet engine manufacturers.

In May 1998 NASA was reported to be studying launch operation cost reduction by reference to "airline operations". Richard Christiansen, then NASA's acting associate administrator of aeronautics and space transportation technology stated: "How do we bring the principles and practices of the aeronautics sector to space transportation? ..... One way is to bring to bear what we know about airline-like operations. That's where we have to focus our efforts with reusable launch systems" (20). However, roughly speaking, existing launch costs using expendable vehicles can be reduced by about 90% by using reusable launch vehicles - and by a further 90% by operating on a large enough scale to require daily flights by tens of vehicles. Space transportation will not be able to achieve the cost-efficiency of airlines without reaching the scale that only passenger demand can create - as it does for airlines.

3.4 Alternative 30-Year Vision

Based on the above discussion, we can lay out an alternative vision for the pattern of space activities 30 years in the future, based on the provision of commercial travel services to the general public. The JRS study concluded that the development of Kankoh-maru, and the production and operation of four test-vehicles through 1200 test-flights to achieve certification for passenger-carrying, will take 10 years.

The JRS scenario further envisages that, once the service begins, 8 Kankoh-maru vehicles/year will be manufactured and enter operation, with annual passenger numbers growing by some 100,000 passengers/year/year - reaching 1 million passengers/year after 10 years of operation. Thereafter it seems reasonable to project continued growth both in the number of customers and in the range of services offered - as seen in the travel and tourism industry on Earth - fuelled by rising incomes, growing middle classes, and commercial competition to attract customers around the world. Consequently, 30 years from now, tourist numbers traveling to low Earth orbit ( LEO) could reach as high as 5-10 million passengers/year (implying average growth rates of 18% - 26% /year for a decade).

A figure of 5 million passengers/year in 2030 would imply that the cumulative number of passengers at that time would be some 40 million people - or perhaps 2% of the middle class population of the time. Yet in market research, not only do most people say that they would like to travel to space, but a large proportion, particularly of younger people, wish to do so several times. And in view of the likely fall in costs as well as the development of progressively more entertaining facilities in orbit, this seems probable. Thus a traffic level of 5 million passengers/year by 2030 will be very far from satisfying the known demand, and so traffic levels even several times higher than this must be considered a possibility.

Such growth will also have interesting implications for the hotel industry. From market research, the great majority of customers can be expected to stay in orbit for 2-3 days or longer, from which it is simple to calculate that 5-10 million passengers/year will entail some 30,000 - 80,000 guests staying simultaneously in orbital accommodation. Assuming an average occupancy rate of 80%, this will require capacity for some 35,000 to 100,000 guests in orbit. It is worth noting that the technology required for initial orbital accommodation is much simpler than that needed for passenger launch vehicles or an orbiting research station. However, by 2030 orbital hotels will have moved beyond the first generation, comprising clusters of standard pre-fabricated modules, to include large structures like resort hotels and entertainment complexes assembled in orbit.

A further implication is that, assuming a staff:guest ratio of between 1:3 and 1:2, the number of hotel staff working in orbit 30 years from now will be between 10,000 and 50,000. Since staff will work shifts (probably of 2 - 3 months), the total number of people engaged in this work will be at least twice this figure, or between 20,000 and 100,000. Staff who work in space for the travel and tourism industry as hotel staff and space tour conductors (or " Specon" as they are coming to be known in Japan) can therefore be expected to outnumber government astronauts by hundreds-to-one by 2030. (These are therefore much more realistic career-goals for young people to aim towards than trying to be selected as one of the tiny number of government astronauts.)

Based on this simple analysis, we can project that 30 years from now there will be 100 hotels or more in orbit - the majority probably being in high-inclination orbits for economical access from high latitudes (21), and to give guests views of much of the Earth. There may be perhaps 20 hotels in equatorial orbit (the cheapest to reach) for customers who are more interested in zero gravity activities such as sports than in the range of views of Earth, 10 in polar orbit to give views of the whole of Earth, and a few in highly elliptical orbits to give guests views of the distant Earth.

With 100 or more scheduled flights/day to these hotels, and probably many more private flights, traffic control will be a long-established system: an integrated Space and Air Traffic Management System (SATMS) is, after all, already under study by the US Federal Aviation Authority, FAA, (22). In addition, hotels will probably operate in a small number of defined orbits, due to the safety and operational benefits that they will gain, and for which a number of legal innovations will be required (23).

Due to the commercial incentives that will exist in such a scenario there is likely to be at least one propellant "service station" in each of the main hotel orbits, and the supply of water from the lunar surface and comets to these stations (for conversion to oxygen, hydrogen and other chemicals), and to orbital hotels and entertainment-complexes will probably be a regular commercial activity (24).

Indeed, 30 years from now, the "leading-edge" of space tourism will have moved on, with businesses offering round-trips to stay in lunar hotels and scheduled daily flights. Thus we can expect to see one or two hotels in lunar orbit, and more on the lunar surface - perhaps at both poles where water is now believed to be readily accessible, and others at sites with particularly striking views. In case the idea of lunar tourism seems outlandish, it should be remembered that the technology needed to travel to the Moon is already 30 years old. Once the key step of developing regular passenger services to and from low Earth orbit is taken, there is no reason why travel to and from the Moon should not follow quickly.

Together the tourist activities listed here will represent a turnover of the order of $100 billion/year which, though far larger than space activities today, will still be only a few percent of civil aviation, which is projected to reach several $trillion/year by that time.

Electricity supply from space

The only other space activity that has been proposed as likely to grow into a comparably large new field of business is the supply of electric power from space to Earth, which will become commercially feasible at approximately the same launch cost/kg as tourism (25). If an early pilot plant such as the Japanese "SPS 2000" project is implemented in a timely manner and successfully demonstrates the potential economic feasibility of delivering environmentally benign power from space to Earth by microwave power transmission, this activity could also become a major new commercial space activity within 30 years.

Even at the relatively low US wholesale electricity price of $25/MWh, a 1 GW SPS achieving a 90% load factor could earn $200 million revenues per year, and with very low operating costs this could support several $billions of investment. 100 GW of SPS capacity could thus earn $20 billion/year, repaying several hundred $billion of investment over a plant lifetime of 30 years. Thus space tourism, by reducing the cost of access to space sharply, could also be extremely beneficial to the global environment by making the supply of clean power from space economically feasible.

Commercial space turnover

Over and above these activities themselves, the operation of hotels and power stations in Earth orbit will create new markets in orbit for a range of products and services, thereby creating many new commercial opportunities. And like the past expansion of shipping between Europe and the Americas and other countries, the creation of economical transportation links between Earth and space will open up a range of new resources for business use.

Together the activities described above could grow to a turnover of some $120 billion/year by 2030, as shown in Figure 3.4.2. This will create several million permanent jobs in aerospace and related industries, the majority of which will probably be in leading industrial countries (although the technical knowledge and experience on which they depend will be available in a wider range of countries in 2030 than they are today). The development of these new commercial space activities will also generate substantial exports of advanced transportation services and environmentally benign microwave energy, which will balance imports of an even greater quantity and range of goods and services than developing countries export today.

The $400 billion of cumulative investment over 30 years shown in Figure 3.4.2, the bulk of it starting in the later part of the period, is not a large amount within the world economy - an average of $14 billion/year, reaching $40 billion investment in the 30th year. (For comparison, annual investment by the domestic electricity industry in Japan alone is currently some $40 billion/year.)

In reality, the total amount invested commercially in passenger space travel services and other commercial space activities that develop from them over the next 30 years could reach several times the amount shown in Figure 3.4.2 - say $1 trillion - without strain. Indeed, that is only the amount of taxpayers' money that government space agencies are planning to spend over the same time period - though without comparable economic benefits. In that case this commercial investment will create several hundreds of $billions/year turnover of new commercial space activities, providing the basis for a well-founded, world-wide economic boom that could finally dispel all pessimistic concerns about the Earth's limited resources, the inevitability of poverty for much of the world's population, and so on.

3.5 Ending the Consumption Bottleneck

It is important to note that this scenario of humans' "space future" also answers some of the fundamental economic problems now facing the rich countries. As economic growth continues, salaries rise and people consume more and more goods and services. This has the corollary that if we do not consume more and more, then economic growth slows and unemployment rises. The prospect of having to consume more and more, and of the continual innovation and competition needed to survive in a growing number of industries in which there is over-capacity, is increasingly unattractive to a growing number of people, who find they prefer a more peaceful lifestyle. For many people this is associated with wishing to enjoy the beauty of a more natural environment.

However, some economists argue that widespread adoption of a "low-consumption lifestyle" will destroy economic growth, through inadequate demand to keep industry busy. As the "Engel Coefficient" continues to fall, more and more of the population's basic needs (for food, accommodation, clothing, transportation, welfare, etc) are satisfied, and genuine "needs" become fewer. Thus it is argued that unless new "wants" are stimulated, even unnecessary ones, then overall economic growth will slow and unemployment will increase inexorably. Suggestions for sharing out the limited amount of work that needs to be done are already being made in some richer countries.

However, this concern overlooks the fact that market research has already shown that tens of millions of people in the richer countries want to go to space. The high price that customers will pay for space tourism services will create an enormous amount of economic activity in high technology industries. During 1998 it was agreed in print by NASA (10), AIAA (11) and the Japanese Keidanren (15) that such space tourism services could become the largest activity in space. So it is deeply irresponsible that currently the space industry is making almost no efforts at all to develop these services - at the same time as there is record and rising unemployment in Europe and Japan - and shrinking employment in the aerospace industry. Yet, while many industries are being shaken up around the world by far-reaching restructuring that is leading to more profitable and economically efficient use of resources, space engineering companies continue to receive government subsidies of $25 billion/year to pay for a range of unprofitable activities which were started during the cold war - centring on the development and operation of unprofitable expendable launch vehicles and payloads for them.

"Spacenomics" versus Deflation

The current pattern of space expenditure is particularly wasteful from an economic point of view because, once the key step is taken to start commercial passenger services between the Earth's surface and low orbit, competition between service providers will lead spontaneously to commercial development of a wide range of other services: orbital hotels, use of extra-terrestrial materials, lunar tourism, energy supply to Earth and other activities will provide scope for limitless growth of commercial activities in space, involving unlimited numbers of people.

That is, the low cost access to space that space tourism will create will provide companies with many new opportunities for diversification. As a result, the pressure of competition in existing industries will ease, and there will be less pressure on companies to encourage wasteful practices such as trying to persuade consumers to eat and drink excessively, to replace products unnecessarily, to undergo unnecessary medical procedures, and so on.

A scenario combining an "advanced rural lifestyle" in economically more advanced countries with a large and growing commercial space travel market will be capable of generating unlimited economic demand, and productively employing essentially any number of people, without requiring continual changes in people's lifestyle or ever-increasing consumption of the existing range of goods and services. And in view of the many benefits that this scenario based on the space tourism activities illustrated in Figure 3.4.1 will bring, it seems reasonable to call it a new paradigm for space activities.

By creating limitless new fields for profitable commercial space activities, space tourism will also make a potentially critical contribution towards overcoming the current deflationary pressures in the world economy caused by over-supply in older industries and insufficient development of new industries. It should not be forgotten that the last period of global deflation was "solved" by creating the horrifically wasteful activity of World War 2. Clearly, building a space tourism industry is in every way more desirable than war, even if some government funding is used to accelerate its development, and its benefits are unevenly distributed in the earlier stages.

Finally, it is worth restating that the development of space tourism will also be socially beneficial (26). Realising access to the limitless resources of near-Earth space will help to dispel the unease that many people feel about the future due to projections of the limited resources of Earth, and increasing pressure of competition from rapidly developing countries with large and growing populations. These social benefits will perhaps be greatest for young people in the rich countries who, comfortable since their birth, have had little real adversity to face. Although the business world and other careers offer challenges, the existence of a real geographical frontier for them to aim towards, offering an enormous range of genuinely new employment opportunities, seems sure to have a positive and stimulating influence.

4 Recommendations

From the above discussion it is clear that the development of passenger space travel services in the near future will be profoundly beneficial to the world economy, by creating a new field of dynamic growth in the advanced economies which will help them to raise their overall rate growth, thereby in turn helping the developing countries to develop economically, as a minimum through reducing protectionist pressures.

Space tourism will also earn an economic return on the enormous investment that governments have made to date in developing a range of space technologies that have not yet reached commercial use. In particular, the scenario sketched above is the only way in which human space activities, which account for some 50% of total space investment to date, will contribute significantly to economic growth.

By creating a range of new industries, this development will also help to counteract the deflationary tendencies in the world economy today caused by over-capacity in older industries. The sooner that this outcome is achieved, the better for overall growth in the world economy, and hence for overcoming the poverty of much of the world population.

Thus the argument over whether general public space travel and tourism represents a good future direction for the space industry is already over: during 1998 it was accepted by NASA, AIAA and Japan's Keidanren that it is the most promising route to commercialisation of space activities. This fact alone should make it a priority for an industry that has so far absorbed approximately $1 trillion of taxpayer funding, without commensurate economic return, since it thereby offers a way for space activities to contribute to economic growth rather than continuing to be an economic cost. The uncertainties that remain concerning the development of a space tourism industry do not concern whether it is desirable, but how best to bring it about, and how quickly and profitably this can be done.

However, for more than a decade government space agencies have ignored the possibility of space tourism. Recently they have started to consider it, but they generally take the position that since passenger space travel will be a private business activity it is not their responsibility. They therefore continue to ignore it; allocate nothing from their budgets of $25 billion/year to the subject; and do nothing to encourage its realisation. This is not a satisfactory position - and, in truth, it owes more to space agencies' desire to protect their existing activities than to being a justifiable policy in the public interest. If space agencies persist in this attitude - that they have no duty to help realise the wishes of a majority of the general public to travel to space, nor to achieve commensurate economic benefits from the $25 billion of taxpayers' money that they use every year - then it seems probable that their budgets will continue to be cut as they have been in recent years due to declining popular support. And they will surely deserve such treatment if they continue to put their own convenience above the wishes of the taxpayers who pay for them.

Furthermore, there are many actions that space agencies and other government departments can readily undertake in order to facilitate this development which will be so economically valuable, even allowing for the fact that space tourism itself will be a private business activity. Some of these are listed below.

4.1 Recognise Space Tourism as Key Goal

Although a space tourism industry on the scale described above may be challenging to realise, there is no preferable alternative. Current government space activities are not leading towards new commercial activities - merely to continued use of taxpayers' funds with no clear economic benefits. Space agencies' published 30-year scenarios are perfectly clear about this: they comprise a collection of activities that is of interest neither to the business world nor the general public, but to the agencies themselves.

So it is now time for space agencies to "bite the bullet" and acknowledge that space tourism is not only a legitimate target of space development, but it is the key target, and what is more, the only one that is going to generate wealth from space in the foreseeable future. Repeated public acknowledgment of this by authoritative figures will have a profoundly beneficial economic influence in itself, not least in helping to educate the investment world. It will also enable the many companies which receive contracts from space agencies to work openly on space tourism without fear of "offending" the agencies and therefore risking the loss of their contracts - a serious problem in view of the agencies' monopolistic position today. This acknowledgment should include the rewriting of space agencies' scenarios of future space activities which currently show only activities based on taxpayer funding to include passenger traffic, orbital hotels, and other commercial activities, as shown in Figure 3.4.1.

In this connection it must not be forgotten that it is a fundamental feature of financial markets that they react in anticipation to events. The present value of financial claims such as bonds and shares is determined by expectations about the future performance of the company or organisation that issued them. Consequently the widespread understanding, official recognition, and public acknowledgment that the above projections are realistic, likely to be economically profitable, and beneficial to the rest of the economy by providing a highly desirable new source of economic growth, will have a highly beneficial effect immediately.

Consequently, formal acknowledgement in speeches and policy statements by government and business leaders of the validity of this potentially very profitable outcome of space investment would not only contribute greatly to its credibility, which is key to raising the investment funds needed to realise these projects, but could also help to create the economic optimism that will in turn help to stimulate the developments in question.

It could also contribute greatly to dispelling the short-sighted pessimism that is widespread today in the richer countries. This pessimism mistakes the current economic dislocations caused by over-capacity and inadequate innovation for fundamental economic problems facing humanity. Yet the truth is that humans have recently resolved the dominant political quarrel of the 20th century - whether democracy or totalitarianism is preferable - and humans' "space future" is now beckoning us forward into the next great era of world economy. But unfortunately the traditional cold-war mind-set that is predominant in the space industry is standing in the way, and thereby preventing us from benefiting from the economic opportunities that are available.

Until this situation changes, the world economy will continue to offer an inadequate range of activities to keep everyone usefully employed. The sooner that political leaders face this reality - that revising the priorities of the space agencies to which they give such enormous quantities of taxpayers' money every year could have these profoundly beneficial consequences - the better for economic growth and so for human welfare throughout the world.

4.2 Space + Aviation Collaboration

The initial development of a profitable, self-sustaining space tourism industry need use only a fraction of the amount of money that government space agencies currently spend. However, due to unfamiliarity in the financial world, to the inevitable uncertainties associated with this new activity, and to the negative environment created by government funding of unprofitable space activities, raising the required funds commercially is still difficult. Governments can facilitate this process in many ways other than by providing finance themselves.

Operating passenger space vehicles will have a great deal in common with aviation. Thus, in addition to acknowledging the feasibility and desirability of passenger space travel authoritatively and publicly, organisations and companies involved in space activities should collaborate actively with the aviation industry in order to realise the potential economic benefits of this development as soon as possible.

The aviation industry currently operates commercially successfully with a global turnover approaching $1 trillion/year. If the "space industry" aimed to realise passenger space travel services as soon as possible it should make substantial budgets available for joint studies with aviation in order to benefit from the wealth of experience that aviation has of carrying passengers safely through an inhospitable environment in technologically highly advanced vehicles (27). Subjects that should be studied include the following:

1. develop and operate piloted sub-orbital rocket vehicles, both HTOL and VTOL;

2. start to generate operating statistics on rocket engines by test-running suitable engines hundreds of times, while developing maintenance procedures in parallel;

3. join the FAA's ongoing studies on SATMS (Space and Air Traffic Management System); and contribute to their plans for regulation of reusable space vehicles (see 4.3 below).

4. plan the removal of space debris from Earth orbit, as discussed further in section 4.3 (28)

5. study routes to and from low Earth orbits which are convenient both for airports and for Earth sight-seeing;

Arguments such as "Space tourism might not be profitable initially" or "Passenger vehicle development will cost more than estimated" must be recognised as being no justification for continuing the status quo - namely zero funding for the only space activity that has the potential to earn an economic return. The main effect of that would be to spend $1 trillion of taxpayers' money over the coming 30 years with no financial return - and without enabling the public to travel to space. There can be no justification for governments to continue to waste such large quantities of economic resources in this way.

4.3 Create Regulatory Framework

Even if passenger launch vehicles were available today, there is no legal framework enabling them to be used. Governments should therefore be making preparations to create such a framework as soon as possible. The office of Commercial Space Transportation within the US Federal Aviation Administration (FAA) is currently pioneering this field. With their recent document on a "concept of operations" for integrated air and space traffic control in the year 2005 (22), the FAA is taking a leadership role, as they do for global aviation today. Space agencies could aid aviation authorities in preparing regulations covering the concept of "spaceworthiness" of passenger vehicles.

A regulatory framework for passenger space travel needs to be international, as aviation regulations are, and the FAA has already proposed the formation of an International Space Flight Organisation (ISFO) to play the role of the International Civil Aviation Organisation (ICAO) in relation to space travel. It is desirable that other leading countries should respond to this initiative by collaborating in rapidly creating a framework that will facilitate growth in this area, while preserving public safety.

The Commercial Space Transportation Legislation Research Committee of the Japanese Rocket Society is following the FAA's work in this area closely, and is preparing a report making recommendations for the Japanese situation. Among other issues, the committee has specifically identified the need to create appropriate legislation, standards and procedures for a range of different space vehicles, not only launch vehicles, including for transport vehicles that do not return to Earth and for orbital accommodation facilities and industrial facilities, among others (29).

To date the FAA's work in this field applies to reusable space vehicles in general, whether piloted or unpiloted. However, based on the FAA's long experience with civil aviation, this work should be readily extended as required to apply to passenger-carrying vehicles and operations. A major difference is that passenger launch vehicles will probably operate from airports, since these are existing specialised facilities designed for handling large numbers of passengers safely and economically, and problems concerning rocket noise and propellants are believed to be soluble (30). Turnover of even 10 million passengers/year is less than the traffic of a single large airport today: consequently operating passenger space flights from specialised facilities at airports will be much more economical than building and operating dedicated new sites.

An important additional issue that needs to be addressed is the revision of existing space law. International space law today comprises a number of intergovernmental treaties which were negotiated during the cold war. As such they are inappropriate for commercial space activities in certain respects and need revision. Being inter-governmental agreements, they are likely to take longer to revise than international commercial law: this is a reason for governments to start discussions on the matter soon.

Another important issue is that of space debris. Government space agencies have created working parties to study this, to assess the problem accurately, and to suggest guidelines for reducing the rate of growth of debris in orbit. However, permanently orbiting accommodation facilities will be statistically in much greater danger of collision than launch vehicles which spend only a few hours in orbit. Thus it is necessary to plan the removal of space debris. Conceptual work has already shown that at low launch costs larger items can be collected economically (and this could occur quite rapidly if a law of space salvage is introduced), while the spontaneous re-entry of smaller pieces of debris can be accelerated by use of high-power lasers. Furthermore, this could be done economically using ground-based lasers, as proposed by Bekey (28). Almost all space debris was created by government organisations, and so its comprehensive removal should therefore receive government space agencies' best efforts in the near future.

4.4 Remodel Government Space Activities

Once low-cost passenger transport to and from low Earth orbit is available, government space agencies' activities will change accordingly. Launch costs will be only a few percent of their present levels; expendable launch vehicles will no longer be used; and space agencies will need much less funding to perform the same activities. This will build on the trend already under way by which the US Congress is pressing NASA to commercialise its operations: first the space shuttle fleet, currently its operating satellites, and next the international space station. It can be expected that space agencies in other countries will follow the US lead both in moving to commercialise space operations, and in making aviation authorities the government body responsible for the oversight of commercial space operations including passenger flights.

In view of the economic success of aviation it is desirable that NASA should return to its roots in R&D, and possibly even revert to the name NACA (updated to stand for National Advisory Council on Aerospace). There is a wide range of different topics on which research is desirable to aid the realisation and optimisation of passenger space travel services. These are notably different from the research that space agencies currently do, which focuses on non-commercial goals such as long-term habitation in space, and will have greater economic value. A simple example is a study on how technology developed for the international space station could best be used for orbital passenger accommodation, since this is the most promising way in which investment in that project might earn an economic return (although it is not optimised for that purpose). Typical examples in different fields are listed in (31).

The main obstacle to the rapid development of commercial space travel services is the conservatism of the industry. As Penn has described: "There are no fundamental obstacles to such a development [space tourism]. Probably the largest obstacle is the complete culture change that would be required..." (32). If launch costs were to remain at present expendable rocket levels, space activities would continue to create few economic benefits, and consequently the sooner this objective is achieved the better. Governments should therefore ensure that space agencies act positively to move the space industry in this direction, instead of grudgingly and only under pressure.

4.5 Political Support

By stimulating economic growth, the development of space tourism will benefit everyone; and by leading to the utilisation of new resources of energy and materials it will benefit the terrestrial environment. With recognition of the realism and economic potential of space tourism now spreading, more and more politicians in the advanced countries should come to see the overwhelming economic advantages of following this new direction rather than continuing with the present paradigm of space activities.

However, it has been said that "Everybody's business is nobody's business" - that is, that special interests are more effective in stimulating political action than the general welfare. It may therefore still be a long time before votes for space tourism grow to outnumber those of politicians who resist it, defending the existing pattern of government funding to the benefit of their local space organisations and companies. It is a test of the democratic political process to see how long it takes to bring about this highly desirable global change.

Fortunately, in addition to the general interest, as knowledge about the feasibility of space tourism spreads, those who wish to travel to space will increasingly become a vocal "special interest group" - comprising most middle-class taxpayers and consumers. Politicians who help to devise effective means of encouraging profitable investment in developing space travel services, and the many other space activities to which they will give rise, will be able to benefit from this.

Technological development is an irreversible process, and popular space travel is now a near-future possibility which will greatly enrich the world. Those countries that refuse to participate will be left behind.

5 References

1. S Huntington, 1998, " The Clash of Civilizations and the Remaking of World Order", Touchstone Books.
2. F Fukuyama, 1993, " The End of History and the Last Man", Avon Books.
3. A Toffler, 1991, " The Third Wave", Bantam Books.
4. R Heilbroner, 1996, Foreword to (5).
5. J Rifkin, 1996, " The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era ", Putnam Group.
6. K Vonnegut, 1997, " Player Piano", Laureleaf.
7. M Nagatomo, ed, 1995, Space Tourism Special Issues 1 & 2, Journal of Space Technology & Science, Vol 9, no 1 and Vol 10, no 2, Japanese Rocket Society.
8. P Collins et al, 1994, "Commercial Implications of Market Research on Space Tourism", Journal of Space Technology and Science, Vol 10, No 2, pp 3-11; also downloadable from: www.spacefuture.com
9. P Collins et al, 1995, "Demand for Space Tourism in America and Japan, and its Implications for Future Space Activities", AAS, Advances in the Astronautical Sciences, Vol 91, pp 601-610; also downloadable from: www.spacefuture.com
10. D O'Neil et al, 1998, "General Public Space Travel and Tourism - Volume 1 Executive Summary", NASA/STA, NP-1998-03-11- MSFC; also downloadable from www.spacefuture.com
11. M Gerard and P Jefferson, (ed.s) 1998, " International Cooperation in Space: New Government and Industry Relationships", Report of an AIAA/ CEAS/ CASI workshop, AIAA; also downloadable from: www.spacefuture.com
12. D Koelle, 1998, "A Cost-Engineered Launch Vehicle for Space Tourism", Proceedings of 49th IAF Congress; also downloadable from:www.spacefuture.com
13. I Bekey, 1998, "Economically Viable Public Space Travel", Proceedings 49th IAF Congress; also downloadable from: www.spacefuture.com
14. www.spacefuture.com/cgi/glossary.cgi?gl=who&term=Gary%20Hudson
15. www.spacefuture.com/cgi/glossary.cgi?gl=who&term=David%20Ashford
16. Adam Smith, 1776, 'An Inquiry into the Nature and Causes of the Wealth of Nations', various editions, downloadable from: www.shef.ac.uk/uni/projects/gpp/Tapestry/society/aninqu1.html
17. Anon, 1998, " Space in Japan", Keidanren Aerospace Section.
18. D Goldin, 1998, in "Interest in Space Tourism Continues to Grow", STA Space Trans newsletter, Vol 8, No 6, pp 1, 6, 11.
19. P Collins and H Taniguchi, 1997, "The Promise of Reusable Launch Vehicles for SPS", Proceedings of SPS '97 Conference, Canadian Aeronautics & Space Institute, pp 209-214; also downloadable from: www.spacefuture.com
20. R Christiansen, 1998, Interview, Aerospace America, May, p 14-16.
21. T Williams and P Collins, 1997, "Orbital Considerations in Kankoh-Maru Rendezvous Operations", Proc. 7th ISCOPS, AAS Vol 96, pp 693-707; also downloadable from: www.spacefuture.com
22. P Smith, 1999, "Commercial Space Transportation Concept of Operations in the National Airspace System in 2005", Federal Aviation Administration, AST (Associate Administrator for Commercial Space Transportation); also downloadable from: www.spacefuture.com
23. P Collins, 1989, "Legal Considerations for Traffic Systems in Near-Earth Space", Proceedings 31st Colloquium on the Law of Outer Space, IISL, pp. 296-303; also downloadable from: www.spacefuture.com
24. P Collins, 1998, "Tourism in low Earth Orbit: the Trigger for Commercial Lunar Development?", Proceedings of Space 98, ASCE, pp 752-756; also downloadable from: www.spacefuture.com
25. M Nagatomo and P Collins, 1997, "A Common Cost Target of Space Transportation for Space Tourism and Space Energy Development", Proceedings of 8th ISCOPS, AAS Vol 96, pp 617-630; also downloadable from: www.spacefuture.com
26. P Collins, 1991, "Benefits of Commercial Passenger Space Travel for Society", Proceedings of 5th ISCOPS, AAS Vol 77, AAS, pp 41-52; also downloadable from www.spacefuture.com
27. E Anderson and P Collins, 1997, "Pilot Procedures for Kankoh-Maru Operations", Proceedings of 7th ISCOPS, AAS Vol 96, pp 647-692; also downloadable from www.spacefuture.com
28. I Bekey, 1997, "Orion's Laser: Hunting Space Debris", Aerospace America, May, pp 38-44.
29. Y Funatsu, 1999, "Some Aspects of Space Navigation Law", Proceedings of 2nd International Symposium on Space Travel, Space Tours GmbH, in press.
30. M Nagatomo et al, 1995, "Study on Airport Services for Space Tourism", AAS Vol. 91, pp 563-582.
31. P Collins et al, 1999, "Space Tourism in Japan - the Growing Consensus", Proceedings of 2nd ISST, Space Tours GmbH, in press; also downloadable from: www.spacefuture.com
32. J Penn and C Lindley, 1997, " Requirements and Approach for a Space Tourism Launch System", Proceedings of IEEE Aerospace Conference.