Space Economics

Economics has only recently become a significant consideration for investments in the space sector. During the early space race of the 1950s, governments invested in space programs for reasons of national defense and geopolitical competition. This has changed in recent years. The economic utility of space has become apparent for Earth observation, communications, and positioning, navigation, and timing (PNT) systems such as GPS. Private companies now provide these services to the general marketplace with government being one customer among many. Private investors have started investing in an ambitious set of next generation applications (in space manufacturing, space based solar) including beyond low earth orbit (lunar and asteroid mining, in-space propellant production), but scalability and long-term profitability of these remain major economic uncertainties.  Additionally, the growing use of public-private partnerships and milestone-based funding models to expand humans’ presence in space has increased the focus on the economic factors leading to sustainable projects. As a consequence, the economics of space have become an increasingly important consideration.

Achieving market-based profitability for these ventures depends on several critical tipping points, including launch and in-space transportation cost reductions, technological breakthroughs, and regulatory enablers. These tipping points represent thresholds where economic, technical, and policy factors align to enable sustainable commercial space activities. The activities with a high probability of positive return on investment are also areas where there will be growing geopolitical competition, with a commensurate growth in national security activities.