From Earth Economy to Space Economy

At the heart of the space economy lies the concept of in-situ resource utilization (ISRU) for building sustainable space infrastructure. This entails the extraction and utilization of space resources for various purposes, including life support, energy gen-eration, manufacturing, and construction. For instance, the Moon is abundant in water ice, which is extremely valuable resource for supporting lunar mining, human settlements and potentially fueling interplanetary missions. The same water is abun-dant on Earth and transporting this commodity to Earth has no economic sense. Similarly, asteroids harbor vast quantities of precious metals and minerals that could transform the way we source materials for advanced technologies in space. However, even the most valuable elements that can be mined on asteroids are not rare enough or valuable enough to (after taking into account the cost of investment in mines and transport costs) could compete with the same elements extracted on Earth. However, if our goal is to build self-sufficient space settlements, building mining infrastruc-ture on asteroids as part of the local supply chain for the outer space industry makes much more sense than importing these elements from Earth.

The deployment of sustainable human habitats beyond Earth presents numerous challenges, including radiation exposure, extreme temperatures, and the absence of a breathable atmosphere. Also there is no experience in building long lasting, big scale, fully automated space stations. However, these challenges can have to spur innova-tion in areas such as habitat design, life support systems, and closed-loop ecological systems. Researchers and engineers just started developing new technologies to overcome these obstacles and ensure the long-term viability of off-world settlements. But still much more progress is needed.

Furthermore, the space economy extends beyond the scientific and technological aspects. It encompasses legal, ethical, and geopolitical considerations. The international community must establish frameworks for resource allocation, property rights, and environmental protection in space, ensuring equitable access to space resources and preventing unsustainable exploitation.

Earth's Economy: A self-sustained system

The Earth's economy has historically operated as a self-sustained system, reliant on the finite resources available on our planet. While the term "closed economy" may not be commonly used in mainstream economics, it aptly characterizes how our eco-nomic activities have historically drawn all necessary resources and means from within the confines of Earth without the need for extraterrestrial imports. Throughout most of human history, societies functioned within the constraints of what Earth could provide. Agriculture, for example, was the backbone of early civilizations, with crops grown from local soil, watered by local rain or nearby rivers, and sustained by the nutrients of the land. The energy needed for human activities came primarily from renewable sources, such as biomass for heating and animal labor for transpor-tation.

Mineral resources, essential for toolmaking and construction, were sourced from local deposits. Early humans relied on readily available materials like stone, clay, and wood. This practice of localized resource utilization established “a closed economy” by necessity, as long-distance resource transport was prohibitively expensive and inefficient.

The Industrial Revolution marked a significant departure from model based on lo-cal resources. The development of steam engines and later, internal combustion en-gines, enabled the exploitation of fossil fuels, unlocking vast reserves of energy that could be transported globally. This revolutionized transportation, allowing resources, goods, and people to move across continents at an unprecedented scale.

The increase of range and scale of trade and the advent of container shipping in the 20th century further transformed the Earth's economy. Raw materials, manufac-tured goods, and even agricultural products began to traverse the globe, leading to the widespread perception of an planetary economy where resources seemingly flowed endlessly from one corner of the Earth to another. Over the past 200 years, extensive transportation (ports, airports, railroads, roads) and logistics (warehouses, transship-ment systems) infrastructure has been built in many parts of our planet, lowering the cost of operating the global economy and stimulating further investment. Thanks to the fact that it is possible to estimate both the costs and the rate of return on planned investments, and because of the changing needs of the population, there is also no problem in attracting potential investors willing to put up money for further projects related to both transportation and resource extraction in increasingly remote corners of Earth.

But while current global model has fueled remarkable economic growth, it has also introduced significant challenges, particularly in the context of sustainability. The extraction of non-renewable resources, such as fossil fuels and minerals, has led to environmental degradation and concerns about resource depletion. The carbon emis-sions associated with the global transportation of goods contribute to climate change, further underscoring the unsustainability of this model. Moreover, the Earth econo-my's dependence on global supply chains has made societies vulnerable to disrup-tions, as evidenced by recent events like the COVID-19 pandemic, which highlighted the fragility of a system where essential goods are sourced from distant locations.

Space Economy: independent or included?

The advent of space transportation and space exploration has raised the question for economists: is it possible to further expand trade and transportation in such a way that extraterrestrial resources such as energy and raw materials are also included in Earth's economic system? What might be the target relationship between Earth's existing economy and planned extraterrestrial colonies? Can analogies from the time of the Great Geographic Discoveries be applied in analyzing the development of the future of human settlement beyond Earth?

The concept of space economics may seem like a far-fetched idea, but it is becoming more and more relevant as the possibilities of space mining and space manufacturing continue to grow. The potential for space mining and manufacturing could greatly impact the global economy and provide new opportunities for technological innova-tion. As the space industry continues to evolve, private companies are poised to play a significant role in the future of space mining and manufacturing.

What is space mining? Space mining involves extracting natural resources from celestial bodies such as asteroids, moons, and planets. The idea of space mining is not new, but it has become increasingly feasible with advances in technology. The re-sources available in space include water, precious metals, rare earth elements. These resources could be used to support further exploration and development in space, or they could be brought back to Earth for use in various industries.

The potential for space mining is immense, as it could provide a virtually unlimited supply of resources. On Earth, resources are finite, and there is a limit to how much can be extracted and used. With space mining, however, there is a vast amount of resources available that could be used to support further space exploration and development. The challenge is developing the technology and infrastructure necessary to extract these resources in a cost-effective and efficient manner [2].

What is space manufacturing? Space manufacturing involves producing goods and materials in space. The concept of space manufacturing is closely related to space mining, as the resources extracted from celestial bodies could be used to produce goods and materials in space. The potential benefits of space manufacturing include reduced costs, increased efficiency, and reduced environmental impact.

One of the key advantages of space manufacturing is the lack of gravity, which can be used to produce materials that are difficult or impossible to produce on Earth. For example, the microgravity conditions could be used to produce large structures (both in micro and macro scale) that are impossible to obtain on Earth. Space manu-facturing could also be used to produce materials for use in space, such as radiation shielding and insulation.

Space manufacturing could also reduce the environmental impact of manufactur-ing on Earth. Manufacturing processes on Earth often produce pollution and waste that can harm the environment. In space, however, these issues are largely eliminated, as there is no atmosphere to pollute, and waste can be recycled or reused.

Economy: demand and supply

In this situation, the question must be asked: what might be the economic role of resources sourced outside the Earth? Can they complement Earth's global economy, or is it more profitable to use these resources as the basis for an independent, separate space economy - local markets centered around local human settlements: orbital cities, habitats on the Moon or colonies on Mars? What might the relationships be-tween these centers look like - is there any chance for interplanetary exchange? What kind of relationships might connect Earth's economy with extraterrestrial markets?

If we go down to the lowest level of economics (see Fig. 1), the basic elements of the economy are resources such as energy and raw materials, and means of produc-tion such as machinery, land (space) and people. Analyzing the current situation of the global (planetary) economy, that thanks to long-term investment and technologi-cal progress, the Earth's economy has a large amount of means of production (which, however, are not evenly distributed) and a large population. It also has enough raw materials for current needs - although there are concerns about whether this amount will also be sufficient in the future. What the Earth's economy lacks is energy, espe-cially clean energy that does not generate atmospheric pollution. Sufficient space may also be a problem - while there is no problem of overpopulation in the sense that there are still vast spaces on Earth that are very sparsely populated, but on the one hand there may be a shortage of land that provides sufficiently comfortable living conditions (climate, water, energy, communications) as well as increasing costs (espe-cially ecological) of providing sufficiently high comfort for the entire population in places previously chosen for habitation (large metropolises). Both of these resources could be sufficiently (or even almost infinitely, given the size of the solar system) available outside the Earth, provided the problem of transportation costs and the construction and maintenance of adequate infrastructure were solved.

The biggest barrier to solving the demand-supply imbalance between Earth and near space is the high cost of transportation and the associated difficulty of building mining, production, storage and transportation infrastructure. High transportation costs are due to several reasons. On the one hand, they are a consequence of the environment itself. In the case of Earth, it is the problem of relatively high gravity ( three times higher than on Mars and six times higher than on the Moon), which signif-icantly increases the amount of energy required both to lift cargo into orbit and to bring it back. Also, Earth's dense atmosphere complicates both the launch and land-ing of large objects (high g-forces, friction, high temperatures). However, much of today's high transportation costs are also the result of a confluence of political and economic factors: the lack of competition, the dominant position of government agencies, unregulated legal issues concerning some aspects of space activities and the resulting risks, years of neglect and omission in building new space propulsion sys-tems (nuclear thermal rocket, aerospike propulsion systems, etc.) and vehicles.

Therefore, the dominant way to commercialize space was primarily to acquire and transfer intangible resources. In this way, logistical costs were significantly reduced, allowing space operations to be conducted even with relatively low capital availabil-ity. High transportation and commissioning costs have as far prohibited utilization of physical resources. The most valuable commodity obtained from space and used in the Earth's economy is information - especially that obtained from Earth’s orbit. Therefore, over the last 40 years, satellite orbital installations have not only been the main area of activity of the space sector, but also have undergone the fastest privati-zation and commercialization.

Orbit as a most valuable space resource: Information Acquisition and Dissemination

One of the most prominent and impactful uses of space is Earth observation. Satel-lites in various orbits, including low Earth orbit (LEO) and geostationary orbit (GEO), provide an unparalleled perspective of our planet. These satellites capture high-resolution images, monitor weather patterns, track natural disasters, and assess the health of ecosystems. This data is invaluable for agriculture, environmental protec-tion, disaster management, and urban planning. GEO satellites enable global com-munication and navigation systems. They facilitate real-time voice and data trans-mission, making international business, telecommunications, and navigation services such as GPS an integral part of the modern global economy. Satellites become also important source of scientific knowledge. Space telescopes like the Hubble Space Telescope [4] have expanded our understanding of the universe, capturing images of distant galaxies and celestial phenomena. These observations have not only enriched our knowledge but also inspired scientific discoveries with applications in fields as diverse as physics, astrophysics, and cosmology.[5]

The interconnectedness of the world relies heavily on space-based communication networks. Satellites facilitate Internet connectivity, enabling instant access to infor-mation, e-commerce, and online education on a global scale. This connectivity drives economic growth and innovation. Financial institutions heavily rely on space-based communication for rapid and secure data transfer. Stock exchanges, trading plat-forms, and banking systems use satellite links to ensure uninterrupted connectivity and information flow. Space-based information plays a pivotal role in disaster man-agement and response. Satellites provide early warning systems for hurricanes, tsu-namis, and wildfires. They also aid in coordinating relief efforts and assessing the extent of damage in affected areas. Climate change monitoring, deforestation track-ing, and wildlife conservation efforts depend on data collected from satellites. This information is critical for shaping policies and strategies in industries like sustainable agriculture, renewable energy, and eco-tourism.

Earth-Moon economy

As progress is made in construction of new generation of space transportation sys-tems (Starship, New Glenn and others), the relationship between Earth, the Moon, and beyond could become increasingly interconnected. The Moon, with its proximity to Earth and rich reservoirs of resources, presents a tantalizing prospect for resource utilization. Simultaneously, Earth's orbital settlements, including space stations and future platforms, are emerging as vital hubs for scientific research, commercial activi-ties, and even human habitation. In this section, we explore the potential for a mutu-ally beneficial exchange between the Moon mining industry and Earth orbital settle-ments, highlighting the synergies that could drive the development of an integrated Earth-Moon economy.

Moon as a Resource Haven. The Moon is a treasure trove of resources that could be pivotal in supporting both lunar and Earth-bound endeavors. Water ice, believed to be abundant in lunar polar regions, represents a crucial resource. It can be split into hydrogen and oxygen for life support and rocket propellants, reducing the cost of deep-space missions and supporting long-term lunar habitation. The Moon holds significant quantities of rare minerals like platinum-group metals and rare-earth min-erals, which are vital in advanced technologies on Earth. Lunar regolith, composed of loose soil and rocks rich in titanium and aluminum oxides, can serve as a source of raw materials for construction and manufacturing, both on the Moon and for poten-tial export to Earth orbital settlements.

Moon mining operations could supply essential resources to orbital settlements. Water extracted from the Moon, for instance, can be used for life support, as well as for growing food and generating oxygen on orbital platforms, reducing the need for costly resupply missions from Earth. Lunar resources, including regolith, could be transported to orbital settlements for manufacturing and construction purposes. In the low-gravity environment of orbit, the utilization of lunar materials might lead to innovative construction techniques and the production of unique materials. The Moon can become a refueling station for missions departing from Earth's orbit to deeper space destinations. By producing rocket propellants from lunar water ice, orbital settlements could potentially reduce the cost and complexity of deep-space exploration.

While the synergies between Moon mining and Earth orbital settlements hold tre-mendous promise, several challenges and considerations must be addressed. Over 53 years after first lunar missions we still don’t have reliable and cost-effective lunar mining and transportation technologies. We don’t know also realities of water mining and processing in Moon environment. Both lunar mining and orbital settlements must demonstrate economic viability to attract private investment and government sup-port. Also the establishment of a regulatory framework for lunar mining and resource utilization, as well as for commercial activities in Earth's orbit, is essential to ensure responsible and sustainable development.

Earth’s orbital settlements: early cash-flow. Earth's orbital settlements, including space stations such as the International Space Station (ISS), provide a unique envi-ronment for scientific research, technology development and commercial activities. These settlements can be laboratories for cutting-edge scientific research in fields ranging from materials science and biology to astronomy and physics. As is well known, the performance of early space stations (such as the ISS) is diminished by limited space and energy and a lack of personnel (a small number of astronauts liv-ing in orbit). Space stations provide an ideal environment for research in areas such as pharmaceuticals, materials science, and biotechnology. This potential for ground-breaking discoveries can attract research partnerships and investment. New genera-tions of space stations, should accommodate not only more personnel, but also should have more efficient energy sources (larger solar panels) and should be much better equipped with more sophisticated laboratory facilities and equipment. That could accelerate research on many space technologies that are necessary for the development of extraterrestrial settlements. Orbital settlements have the potential to host commercial ventures such as space tourism, early space manufacturing, and commercial research and development, offering a platform for businesses to experi-ment and thrive.

The concept of private space stations introduces a new dimension to space com-merce. Companies such as Axiom Space and Blue Origin have plans to build and operate commercial space stations, offering a range of services from research labora-tories to tourist destinations, but the economic viability of private space stations is influenced by prospects of market expansion. As space launch technology advances, private space stations can accommodate research, manufacturing, tourism, and oth-er activities. These diverse revenue streams may enhance their economic prospects and encourage investors to become more involved in long-term private space pro-jects.

Commercial space tourism, once considered the stuff of science fiction, is now a burgeoning industry with the potential to redefine leisure travel. Several companies, including SpaceX, Blue Origin, and Virgin Galactic, have invested heavily in develop-ing spacecraft and suborbital flights for paying passengers. The key driver of eco-nomic viability is market demand. A growing number of individuals with substantial disposable income are expressing interest in experiencing space travel. Estimates suggest that the potential market for space tourism could be substantial, given the right pricing and safety considerations. Achieving affordable ticket prices is a critical factor. Companies must balance the high costs of spacecraft development, launch operations, and maintenance with the need to attract a broad customer base. Reduc-ing launch costs through reusability and technological advancements is crucial in this regard. Also ensuring passenger safety and establishing robust regulatory frameworks are essential for building trust within the industry. Any accidents or incidents can have severe repercussions for the entire sector. The economic ecosystem of space tourism extends beyond suborbital flights. Companies can capitalize on services such as space hotels, lunar tourism, and orbital experiences to diversify their revenue streams. That can provide cash flow necessary for exploring longer term endeavors as building human permanent living orbital habitats and space-based supply chains and logistics.

The synergy between the Moon mining industry and Earth orbital settlements represents a promising avenue for the development of an integrated Earth-Moon economy. As technology advances and the commercial space sector continues to evolve, this exchange has the potential to reduce the costs of space exploration, pro-mote sustainability, and unlock new economic opportunities both in orbit and on the lunar surface. As we look to the future, collaboration between these two realms may well define the next phase of humanity's journey into space.

While political, organizational and technical barriers can be lowered to some ex-tent by mass production of rockets based on well-known and proven industrial techniques (choice of steel as a construction material, use of smart industry solutions, serial prototyping, mass-production), the natural limitations in the form of gravity or the influence of a dense atmosphere cannot be overcome in a short period of time and with technologies we already know. This means that the cost of transportation to and from space will always be higher than the cost of transportation within the Earth's atmosphere. Also, distances (i.e., delivery times and information flow times) make it unlikely that it will be possible to build an integrated economic space between Earth and, for example, Mars or the asteroid belt in the coming century. On the other hand, it is within our reach to create local economies centered around human settle-ments and linking extractive centers, such as mines, with production and consump-tion centers. Exchange between these local economies will for a long time be limited to the exchange of very high value-added goods such as machinery and equipment and space tourism. However, the high indebtedness of these economies and the asso-ciated possible political crises (the quest for autonomy on the one hand and the con-trol resulting from debt on the other) will probably not be avoided.

The solution would be for wealthy investors to settle in these space settlements, which again favors settlements close to Earth, with good access to Earth's communi-cations infrastructure and the ability to travel to and from Earth's surface relatively quickly. These constraints largely affect the assessment of the possible linkage of Earth's economy with space economies, rather pointing to a scenario of gradual construction of 1) large, comfortable orbital settlements around Earth, populated rather by wealthier social groups (shareholders and executives of space companies with their families) and technical service of these settlements 2) raw material facilities, logistics and processing facilities in the form of partially or fully automated mining centers, warehouses and transportation facilities 3) more remote and isolated re-search centers dependent on local and much weaker mining and supply networks. The comfort of living in such centers - due to their isolation and only loose connection to the Earth-Moon system - is likely to be much lower for a very long time to come, and will therefore tend to be based on people of decidedly lower social stand-ing.[8][9] Recruitment to work and live in such places is also likely to be much more difficult and these settlements are likely to face high population instability (migration tides).[10]