Ranking Space Policy Alternatives

[Mark Reiff <markreiff@xxxxxxxxxxxxx>]

FYI,

"Ranking Space Policy Alternatives"
The Space Review
http://www.thespacereview.com/article/358/1

: I am in favor of space access: the sooner the better, the more the
: better, and, especially, the cheaper the better. Here are some
: policy options that I have ranked according to the benefit/cost
: ratio.

: 1. Encourage other nations to sell their launches at marginal cost
: instead of just for “government launches” as espoused in the U.S.
: Space Transportation Policy (STP).

: Russia has surplus ICBMs. We should be grateful they are beating
: their swords into plowshares. We should encourage them to harvest
: their surplus equipment for cash to worthy Western buyers who want
: access to space so that they do not end up in the hands of bad
: guys. The best way to keep hardware out of bad guys’ hands is to
: make it really expensive by bidding up the price. Discouraging
: foreign governments from pursuing those markets will tempt them to
: pursue options such as proliferating to Iran, Pakistan, North
: Korea, and others.

: While we are on the topic, isn’t it about time we adopted the
: successful Cold War strategy of teaming with the Soviets in dealing
: with the Chinese? If they are subsidizing their Long March rockets
: and range costs and have lower regulatory hurdles for their
: launches, that could mean lower cost space access. Embrace China’s
: imitation of the 1960s American race to the Moon. Encourage them
: the way Kennedy did to do it together.

: The policy would have large benefits if successful. It may be a
: long shot, but it costs next to nothing to implement.

: 2. Subsidize major Evolved Expendable Launch Vehicle (EELV)
: manufacturers on a per-launch basis instead of a flat fee.

: Instead of funding fixed costs for EELV manufacturers as announced
: in the STP, the EELV manufacturers should be exposed as duopolists.
: The market for space access right now is inelastic: lower prices
: means lower profits for them. If they are going to be subsidized to
: stay in business, they should be subsidized at the margin. They
: should only get the subsidy if they fly.

: Figuring out how to divide the subsidy is difficult, but it should
: all be paid to fly and not for fixed costs. Paying fixed costs to a
: provider in an inelastic market does nothing to raise the flight
: rate. For example, if 5% of launch aid were paid for each flight up
: to 20 flights, at least we would have a strong incentive to fly at
: least 20 times. It might be better to pay 3% for 33 times, or pay
: no subsidy for the first 10 and 5% of the subsidy for each of next
: 20 launches. However, the current STP shows more about how Lockheed
: Martin and Boeing have captured the Department of Defense and the
: administration than it does about sound subsidization policy to
: enable space access.

: As duopolists make mistakes, it provides opportunity. By having
: such expensive products, Boeing and Lockheed leave the door open
: for competing space access companies such as SpaceX and Kistler.

: The STP already provides for subsidies. Retargeting these subsidies
: will increase the budget a little because the subsidy that Boeing
: and Lockheed Martin would be willing to accept would have to be a
: little higher. But obtaining more space access at the marginal cost
: justifies the policy even if the launches are sold to US commercial
: customers below the average cost.

: 3. Establish international coordination, with a threat of
: unilateral action by a certain date, to establish a Lunar property
: rights regime.

: I have been beating the drum for Lunar property rights for nearly a
: year. (See “Property rights and space commercialization”, The Space
: Review, May 10, 2004.) Establishing Lunar property rights would
: accomplish several things:

: - A market price would be established. Like inflation-indexed
: bonds, a market price for acreage on the Moon would provide a
: barometer of how far away settlement is and how viable and valuable
: it would be.

: - Lunar property rights would bootstrap a default industrial policy
: that would allow industrialists to buy up lunar property rights if
: they are cheap. This would allow them to benefit from providing
: transportation to the Moon the way land grants to railroad
: companies facilitated the building of the trans-American railroad.

: - Property rights would resolve uncertainty about legality of
: certain activities, which would make it more likely for business to
: participate jointly with government in exploration and colonization
: efforts.

: Lunar property rights can pre-date settlement by decades and still
: be very effective at coordinating R&D, investment, business plans,
: and government policy. If the price of Lunar acreage is zero, then
: very little regulatory effort is warranted. If the price is bid up
: to show that settlement is impending, at least at the Apollo sites
: and the poles, then more legal efforts are warranted, if not a
: renewed emphasis on private alternatives to NASA transportation and
: services.

: The property rights should have no residence or build-out
: requirements but they should be subject to eminent domain of FAA’s
: Office of Commercial Space Transportation. In addition to real
: estate, many of the following should be auctioned also: spectrum
: rights, mineral rights, air space (space space?) and the Lagrange
: points.

: The price of establishing property rights is low. The benefit may
: be high.

: 4. Introduce a broad-based subsidy per pound of payload delivered
: to orbit.

: One thing that got US aviation going was guaranteed airmail
: contracts. If the US subsidized launches at a rate of $1,000 per
: kilogram for the first five million kilograms, we would certainly
: have a race on our hands. Once the goal has been established to
: develop the low-cost transportation infrastructure, the beneficiary
: of all the extra launch weight can be determined by auction or the
: political process.

: My friends in Congress always ask me to mention where I am going to
: get the money for the proposed additional spending. I would
: privatize shuttle and ISS and use the saved subsidy money to
: subsidize private space access.

: 5. Encourage insurance reform.

: Consider a fund, supported by federal taxes, that would pay for
: damages for failures in excess of a 1-in-5,000 maximum probable
: loss (MPL) instead of a heady insurance requirement like
: 1-in-10,000,000. Launchers would owe to the government a multiple
: of what they paid to independent private insurers to insure their
: first million of losses or 1-in-5,000 MPL, whichever is higher. An
: industry mutual would be another idea. Encouraging insurance
: auctions for all launches or payloads paid for with any federal
: money would be my favorite for a start. The MPL for subsequent
: years would rise to reflect higher industry flight rates, but would
: never exceed the greater of 5,000 or 20 times the preceding year’s
: flight rate.

: 6. Subsidize range and tracking costs.

: This is a major cost of getting to orbit even launching outside the
: federal ranges. Building a highway to space, then charging hundreds
: of thousands in tolls, is a sure way to see it never utilized.

: 7. If you don’t want to adopt recommendation 3, consider a race to
: the Moon for property rights with occupation requirements like the
: ones advocated by the Space Settlement Institute (See “Races,
: beauty contests, franchises, and build-out requirements for lunar
: property”, The Space Review, September 13, 2004)

: 8. If you don’t want recommendation 4, consider a federal airmail-
: type contract instead of a subsidy for private payloads. There
: could be a depot for water delivery. (Would Bigelow do an aquarium
: version of the Nautilus?) The contract could just be for delivered
: payload for any purpose or a wide variety of other goals that the
: federal government wanted to commit to.

: 9. Zero g, zero tax.

: This is nice, but you already have zero tax if there is zero
: profit. A better approach is a subsidy like recommendation 4.

: 10. Start backing away from and renegotiating treaties that limit
: weapons in space.

: Today, this is an impediment to future development. By persisting
: with a more narrow and inflexible plan for protecting valuable
: space assets, hundred-billion-dollar projects are chilled.
: (See “Don’t wait for property rights”, The Space Review,
: July 12, 2004.) Granted there are many other reasons for them to be
: chilled.

: Policy flexibility, speed, and agility can test whether these
: factors are the missing pieces to cheap orbital access. If they are
: not, implementing them will help focus on the ones that are still
: missing.

--
Mark Reiff <markreiff@xxxxxxxxxxxxx>

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