Available online at www.sciencedirect.

com

Market-based instruments to incentivize more

sustainable practices in outer space
Romain Buchs 1,2,* and Thomas Bernauer 2,3,** ]]
]]]]]]
]]

Space infrastructure is highly interconnected with systems on Earth, but also a cause for concern regarding sustain­
Earth and is critical for many human activities. The rapidly ability in space. Near-Earth space is a highly valuable
progressing digitalization of our society, with massive growth of natural resource for humanity that is used for navigation,
Internet traffic and connected devices, and new applications of communication, Earth observation, technology devel­
artificial intelligence, will further accelerate the development of opment, and other purposes. Virtually all societies have
new space infrastructure and make it even more vital. However, become reliant on space-based services in a wide variety
this infrastructure is at risk because of increased congestion. As a of domains such as transportation and financial systems,
byproduct of space activities, space debris causes a collision risk emergency response, climate and environmental mon­
for operational spacecraft. Without intensified action to reduce this itoring, weather forecasting and resources management.
risk, future costs related to space debris could become enormous. Satellites are in fact key to improving the sustainability
Properly managing near-Earth orbital space is becoming crucial to of many human activities and monitor progress toward
enabling new benefits from space and protecting critical the sustainable development goals [1–4]. Developments
infrastructure. Based on a review of the current literature, we in artificial intelligence (AI) are likely to make remote
argue that market-based instruments could incentivize both space sensing data even more valuable [5–7].
debris mitigation and remediation, and help bypass obstacles to a
formal international apportionment of responsibility for the current The digitalization of economies and their increased
debris population. (inter-)connection needs are currently driving the de­
velopment of large satellite constellations for broadband
Addresses Internet [8,9] and the Internet of Things [10]. At the
1
ClearSpace SA, Renens, Switzerland same time, rapid progress in AI enables the develop­
2
Institute of Science, Technology and Policy (ISTP), ETH Zurich, Zurich,
ment and operation of ever more complex satellite
Switzerland
3
Center for Comparative and International Studies (CIS), ETH Zurich, communication systems [11]. Satellite Internet con­
Zurich, Switzerland stellations are often seen as a way of providing affordable
Internet access worldwide and bridging the digital di­
Corresponding author: Bernauer, Thomas ([email protected]) vide [12]. However, critics have also expressed concerns
*
https://orcid.org/0000-0003-3134-0238
**
https://orcid.org/0000-0002-3775-6245
that such services will be unaffordable to the ones who
need them most [13] and highlighted various sustain­
Current Opinion in Environmental Sustainability 2023, 60:101247 ability concerns associated with the launch of these gi­
This review comes from a themed issue on Open Issue 2023:
gantic systems of thousands of satellites [14–17],
Sustainability Science, Digitization and AI questioning their risk-benefit trade-offs.
Edited by Victor Galaz, Pauline Dube and William Solecki
Over the past 15 years, the cost of launching satellites
For complete overview of the section, please refer to the article has decreased and satellite components have been
collection, “Open Issue 2023: Sustainability Science, Digitization
and AI”
miniaturized, resulting in a burgeoning private space
industry — generally known as New Space [18,19]. The
Available online 6 January 2023
shift from overwhelmingly state-sponsored space pro­
Received: 20 July 2022; Revised: 24 November 2022; grams to a combination of the latter plus a dynamic new
Accepted: 30 November 2022
private space economy is rapidly increasing the (mon­
https://doi.org/10.1016/j.cosust.2022.101247 etized) economic value of Earth orbits. While in 2018
1877-3435/© 2022 The Author(s). Published by Elsevier B.V. This is the global space industry revenues were estimated at
an open access article under the CC BY license (http:// USD 360 billion, recent reports by Goldman Sachs,
creativecommons.org/licenses/by/4.0/). Morgan Stanley, and Bank of America Merrill Lynch
project a USD 1–2.7 trillion space economy by the
2040s [20].

Due to its open access and subtractable nature, near-

Introduction Earth orbital space has become subject to the typical
Rapidly growing space infrastructure is an asset that can tragedy of the commons challenges that have been stu­
deliver services to support sustainable development on died with respect to natural resources on Earth [21]. The

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2 Open Issue 2023: Sustainability Science, Digitization and AI

Figure 1 commons in space, details the nature and level of colli­

sion risk, and looks into current governance approaches
to managing the issue, both internationally and nation­
ally. It discusses market-based policy interventions
proposed in the literature and argues that they could
provide greater incentives for reducing the risk and help
bypass the limitations of the current approach in
this area.

The looming tragedy of the commons

Space debris comes in a wide variety of shapes and sizes.
It includes spacecraft lost or abandoned, rocket bodies,
Current Opinion in Environmental Sustainability objects released through normal operations, and frag­
ments resulting from collisions and explosions. There
Sustainable space as sustainability OF the space infrastructure versus are currently around 5470 operational satellites in orbit
space infrastructure FOR sustainable development (inspired by van around the Earth [29], but more than 32 000 objects
Wynsberghe [26] in the context of AI). larger than around 10 cm in low Earth orbit (LEO) and
larger than around 80 cm in geostationary Earth orbit
(GEO) are tracked and cataloged [30–32].1,2 Fragmen­
key problem in this context is rapidly increasing tation events are a key contributor to the rapidly growing
amounts of space debris — nonfunctional human-made number of debris objects [34]. The dominant causes of
objects. These uncontrollable objects create a collision break-ups are deliberate destructions, propulsion-related
risk for operational spacecraft and increase the cost of explosions, battery explosions, and accidental colli­
operations. Concerns regarding the build-up of hardware sions [31].
are increasing and action to limit the growth of space
debris thus far remains scarce and weak [22,23]. In­ Only two mechanisms are available for removing non­
creased militarization of space and the potentially cata­ functional objects from orbits: atmospheric drag and di­
strophic consequences of a conflict expanding to or rect retrieval. The residual atmosphere drags objects
starting in Earth orbits are also a growing concern [24]. down. But this process can take from a few days to
Antisatellite weapon tests have in fact already con­ millions of years, depending on the initial altitude of the
tributed to space debris population growth [25]. object and its ability to overcome drag. Uncrewed direct
retrieval of debris has not been performed yet, but the
Space activities involve a classic trade-off between ex­ first mission to remove a piece of debris from orbit has
pected benefits, including improving sustainability on recently been funded by the European Space Agency
Earth, and anticipated risks, as the development of this (ESA) [35].3
infrastructure raises sustainability concerns. These two
aspects of sustainable use of space are illustrated The main sustainability problem for humanity asso­
in Fig. 1. ciated with space debris is that it creates a collision
threat for operational spacecraft. When equipped with
Humanity’s rapid expansion into space requires appro­ maneuverability capabilities, operational spacecraft can
priate governance and effective management mechan­ avoid cataloged objects. However, the predicted objects’
isms to avoid environmental degradation and ensure positions can have large uncertainties. Encounters with
continued (sustainable) benefits. There have been in­ low probability can still lead to a collision, and close
creasing calls to consider the orbital space around the encounters are sometimes identified too late to make a
Earth as an ecosystem worthy of protection and to con­ maneuver [36]. Only a small share of trackable space
sider broad environmental sustainability concerns asso­
ciated with space activities [27,28]. Forecasts of the
1
space economy’s future size are fueled by a focus on the LEO is the spherical shell that extends from the Earth's surface up
potential benefits but are subject to considerable un­ to an altitude of about 2000 km and GEO is a circular orbit at an al­
titude of about 35 786 km aligned with the equator. As both LEO and
certainty due to the anticipated risks. Congestion in GEO have a significant value for human activities, they have been the
near-Earth orbital space is a key concern in this respect most used orbital regions and are thus the most congested.
2
since it could become a major impediment to the reali­ Governments and private companies are currently working to re­
zation of additional gains from using space. duce these tracking limits with the deployment of new sensors
(e.g. [33]).
3
Missions to demonstrate debris removal capabilities with a planted
Based on a review of the current literature, this paper debris object have already been conducted, for example,
examines the drivers of the looming tragedy of the RemoveDEBRIS, launched in 2018, and ELSA-d, launched in 2021.

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 Market-based instruments for space sustainability Buchs and Bernauer 3

objects is maneuverable, meaning that most encounters continuing supervision of those activities [40]. The
cannot be avoided. Objects too small to be tracked Liability Convention creates a fault-based liability re­
cannot be dodged but can still lead to a catastrophic gime for damage caused in space, but does not define
collision resulting in the complete fragmentation of the fault [41]. Given the vague provisions and weak en­
spacecraft or in a lethal collision disabling the spacecraft, forcement mechanisms in these agreements, it remains
depending on the intensity of the collision. unclear whether and to what extent they can help ad­
dress the space debris issue [42–45].
The greatest danger is a cascading effect — the Kessler
syndrome — that could arise once the number of objects Unilateral action and multilateral guidelines
in orbit increases past a tipping point. Collisions be­ In view of this gap in global space governance, some
tween resident objects could generate more fragments unilateral governance efforts have emerged. National
than the atmosphere can clear, slowly rendering some space agencies have first developed orbital debris miti­
orbits economically unusable [37]. Models extrapolating gation guidelines, from which international nonbinding
current behaviors to the future show an exponential in­ guidelines have been derived [46]. The latter have then
crease in collision rates, suggesting that we have already fed back into national licensing requirements. The first
passed the tipping point [38]. The rising cost associated and most relevant international guidelines were devel­
with space debris will not only affect spacefaring nations oped in 2002 by the Inter-Agency Space Debris Co­
but also nonspacefaring nations, as the vital services ordination Committee (IADC) and last updated in 2021
provided from those orbits will become more expensive [47]. They formed the basis of the Space Debris Miti­
or even unavailable. gation Guidelines, adopted by the UN Committee on
the Peaceful Uses of Outer Space (UNCOPUOS) in
2007 [48]. In 2019, UNCOPUOS approved a set of 21
Weak international rules Guidelines for the Long-Term Sustainability of Outer
The main reason for increasing congestion in near-Earth Space Activities, which are high-level recommendations
orbital space is a collective action problem. Space actors not only concerned with space debris [49].
generate debris because they do not take into account
the underlying cost they impose on others. A space actor The top-level standard on space debris mitigation de­
has only weak incentives to limit the creation of new veloped by the International Organization for
debris objects as it bears all costs of such effort, but the Standardization — ISO 24113 — is a critical tool, as it
benefits are shared among all space actors. The financing can be continuously reviewed as the global space in­
of remediation actions to clear space from debris faces a dustry grows and can be readily applied to commercial
similar collective action problem. Management of near- space contracts [50,51]. The IADC and UNCOPUOS
Earth orbital space is complicated due to its open access guidelines, as well as the ISO standard, are often used as
and rivalrous nature. That is, it is very difficult and often requirements in licensing procedures that are defined in
impossible to prevent a space actor from accessing an national space regulation or legislation [52]. These
orbit, but once an actor uses an orbit, others cannot use guidelines are complemented by more ambitious re­
it [39]. quirements developed by the industry, such as the Best
Practices for the Sustainability of Space Operations of
Activities in space were traditionally undertaken by the Space Safety Coalition [53]. To provide greater vis­
governments for civil and military purposes, but are in­ ibility to space actors who design sustainable space
creasingly carried out by private companies, which adds missions, the Space Sustainability Rating has recently
complexity to management efforts. The booming space been established [54]. This assessment tool will rate
economy, with plans for launching tens of thousands of missions using a composite indicator and could provide
satellites in the next decade, is bound to exacerbate the an incentive for operators to implement more sustain­
space debris problem. Although the challenge is global, able designs and practices.
its management is, thus far, primarily undertaken by
national governments, with the United Nations (UN) Arguably the most important guideline to limit space
developing mainly soft law instruments. debris growth is the requirement to limit the orbital
lifetime of spacecraft and rocket bodies in LEO after the
The only binding legal instruments in global space completion of operations to 25 years.4 However, 20 years
governance are five UN treaties adopted in the 1960s
and 1970s. While none of those treaties includes rules
4
regarding space debris, they are still relevant to the In GEO, the guideline requiring operators to maneuver their
space debris issue. The Outer Space Treaty places the spacecraft when terminating the mission into a graveyard orbit that
does not interfere with the GEO region is similarly important. This
responsibility on States for their national activities, even guideline is included in the UNCOPUOS and IADC guidelines, as
if conducted by nongovernmental entities, and requires well as in the International Telecommunication Union recommenda­
states to undertake appropriate authorization and tion ITU-R S.1003.2 [55].

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4 Open Issue 2023: Sustainability Science, Digitization and AI

Figure 2

Current Opinion in Environmental Sustainability

Relationships between space debris-related actions (inspired by Bonnal et al. [64] and Lal et al. [66]).

after its adoption in the IADC guidelines, analysis of (SEA) component. Their relationships are illustrated in
post-mission disposal shows a very low level of com­ Fig. 2.5
pliance with this guideline. Although the level of com­
pliance has increased over the years, only about 50% of SSA is the foundation for all debris-related action as it
the non-naturally compliant spacecraft perform a suc­ provides the necessary data on the space environment
cessful deorbit maneuver [56]. Recent studies have for SEA, STC, and STM. It includes detecting, catalo­
shown that limiting the growth of the space debris po­ ging, and predicting the orbits of objects, which is fun­
pulation will require much higher levels of compliance damental to collision avoidance and safe space
with this rule, especially in the case of large satellite operations [66]. STC is the planning, coordination, and
constellations [38,57–59]. synchronization of space activities, which requires in­
ternational cooperation [65]. It only concerns a small
Yet another problem is that nonbinding international share of the objects in space, as only a fraction of them is
guidelines and requirements at the national level, es­ maneuverable. STC is complemented by STM which
tablished thus far, only address the creation of new concerns the licensing and supervision of spacecraft
pieces of debris, but do not address the legacy of derelict performed at the national level. To avoid collisions
objects. This is a significant gap given that current among the noncontrollable space object population, SEA
modeling suggests that even with complete adherence to and SEM activities are required. SEA involves evalu­
the current guidelines, removing large derelict objects ating the level of risk and the cost-effectiveness of mi­
will be necessary to keep orbits sustainable in the long tigation and remediation measures, which are then
term [60–62]. Moreover, national requirements often implemented by STM and SEM, respectively. Space
only address space debris by mandating the use of cer­ debris mitigation consists in reducing the sources of
tain procedures or by requiring an ex-ante evaluation of a space debris (e.g. avoiding explosions and increasing
mission’s potential space debris creation. Once in orbit, satellite reliability). Modeling of the space environment
the policies in place at the national level fail to in­ and evidence on low compliance with international
centivize operators to reduce debris creation to reach a guidelines indicate that mitigation will likely be in­
social optimum. sufficient.

Addressing the unsustainable growth of the debris po­

Technical approaches to address pulation requires remediation activities that can take
collision risk three forms: active debris removal (ADR) [67,68], just-
Activities undertaken to manage collision risk can, ac­ in-time collision avoidance (JCA) [64], and debris res­
cording to the current literature, be grouped in three urrection (DR) [69].6 ADR consists of actively removing
components: space situational awareness (SSA), space
traffic coordination (STC) or management (STM), and
5
space environment management (SEM) [63,64]. To There is no commonly agreed definition of these components, with
different studies developing their own definition [65].
clarify the role of these components, we separate STC 6
The emergence of in-orbit services, such as life extension, re­
and STM, and add a space environment assessment fueling, repair, and upgrade, are bound to make the space economy

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 Market-based instruments for space sustainability Buchs and Bernauer 5

Figure 3

Current Opinion in Environmental Sustainability

Summary of technical approaches to minimize collision risk (according to T. Maclay).

derelict objects to reduce the probability of collisions. mechanisms in this area are weak and nonbinding. When
JCA involves lowering the probability of a predicted international guidelines are translated into national laws or
collision by externally affecting the trajectory of one of regulations, which is not always the case, usually only ex-
the two pieces of debris prior to the predicted collision ante requirements are implemented. Operators are gen­
time. DR relies on nano-tugs to upgrade derelict objects erally required to submit a space debris mitigation plan to
with collision avoidance capabilities. Different ADR, obtain a license. The lack of ex-post monitoring and
JCA and DR methods have been proposed. While ap­ sanctions results in weak incentives to commit to the plan
plication of JCA and DR remains distant, ADR missions and a low adherence to existing guidelines. Space actors
have been funded and the first uncrewed debris removal have only limited incentives to make greater efforts to
could be performed as early as 2025 [70]. Because re­ mitigate the generation of space debris as they would incur
mediation is likely to be more costly than mitigation, all the costs without reaping all the benefits. The com­
there is much agreement in the literature that it is pri­ mand-and-control approach commonly used, which pre­
mordial to achieve a stronger adherence to mitigation scribes what is allowed or not, could be partially replaced or
standards alongside conducting removal missions. While complemented by economic incentives.
mitigation is at the core of international guidelines, re­
mediation has only attracted limited research, policy By deploying market-based instruments, such as sub­
attention, and funding. Fig. 3 summarizes the technical sidies or taxes, national and international regulators
approaches to minimize collision risk from space debris. could encourage or discourage certain behaviors.
Market-based instruments are often claimed to provide
Market-based instruments numerous advantages and are often seen as a cost-ef­
Could market-based approaches7 to risk reduction be fective way of addressing market failures and in­
helpful, as they are in many domains of domestic and, to a efficiencies [71]. Benefits of resource improvements,
more limited degree, international environmental policy? such as removing debris from orbits, are not internalized
under a command-and-control approach, and thus re­
In principle, the most cost-efficient approach to reducing source-preserving investments are not incentivized [72].
space debris risks is mitigation, but it is currently under­ Market-based policy interventions could internalize the
provided. The only existing international governance benefits of investments in space debris remediation and
thus encourage them.

(footnote continued) Ex-ante requirements applied uniformly across operators

more circular and will help the development of space debris re­ with different compliance costs are inefficient, are often
mediation. Life extension has already been demonstrated in GEO with inadequate to regulate a fast-changing industry, and
two servicing satellites currently prolonging the life of commercial
provide limited incentives for developing and im­
communications satellites.
7
Market-based instruments, or market-based policy interventions, plementing remediation technologies. Below we review
aim at internalizing the cost of pollution or environmental systems market-based instruments proposed in the literature to
degradation and thus at providing incentives for polluters to reduce or incentivize risk-reducing behaviors in space:
eliminate negative environmental externalities. The establishment of
market-based instruments requires government intervention but le­
verages market mechanisms and thus creates, shapes, or manipulates • Liability insurance — Through risk classification and
markets and the behavior of actors therein. premium pricing, insurance could act as a surrogate

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6 Open Issue 2023: Sustainability Science, Digitization and AI

regulator [73]. A well-functioning liability insurance All three mechanisms could incentivize both space
market could yield the necessary incentives and re­ debris mitigation and remediation. The proceeds from
quires limited government intervention [74]. How­ regulatory fees or the auction of marketable permits
ever, the weak international liability framework for could be used to fund the development and deployment
in-orbit activities coupled with the remote nature of of remediation technologies. These mechanisms could
space, which prevents damage investigation, greatly also help bypass the difficulty of allocating the cost of
hamper this solution. As premium rates are priced remediation of past space activities among space actors
commensurately with the risk of a claim and not the [91]. From a distributive justice point of view, this would
probability of a collision, the pricing mechanism of make actors from the present pay for unsustainable
liability insurance premium rates currently cannot commons use in the past. The inability of the interna­
induce risk-reducing behaviors [75]. Improvement in tional community to successfully address this allocation
tracking capabilities with services provided by private of responsibility may justify this option.
companies and the intensification of commercial
space activities leading to claims brought to court Multilateral action would be needed to avoid debris-re­
could change the ability of liability insurance to in­ lated risk leakage from jurisdictions with stronger rules
centivize risk-reducing behavior. to jurisdictions with weaker rules in this area. However,
• Marketable permits — Tradeable licenses for the gen­ as a first step, unilateral action by the United States (US)
eration of a specific level of debris-related risk per and the European Union (EU) could be effective be­
time period could internalize the cost of debris gen­ cause the same requirements could be applied to entities
eration [76,77]. A cap-and-trade scheme might be the requiring access to US and EU markets. This me­
most effective mechanism in this context, as it would chanism could prevent operators from seeking a license
limit the number of new pieces of debris created to a in countries with weaker regulations and could help
pre-defined amount [78]. However, designing a drive regulatory change abroad.
tradeable and fungible unit of risk that encompasses
all channels of debris creation is a challenge [79,80]. Yet another policy option to address the space debris
Improved tracking and cataloging capabilities would issue could be the allocation of property rights [92].
help define a comprehensive unit of risk that can However, this approach is not compatible with the cur­
easily be monitored by a given regulatory authority. rent legal regime, and the definition of orbital slots in
Such a scheme would create incentives for space LEO is challenging [93]. Given the difficulties of es­
debris remediation as risk-reducing activities, such as tablishing a centralized coordination mechanism to
ADR, would yield valuable permits. manage near-Earth space, and following work high­
• Regulatory fees — Space users could be required to pay lighting the ability of polycentric systems to govern
a regulatory fee for the generation of debris-related common-pool resources on Earth [94], some authors
risks [81–84]. Defining the unit of risk that triggers have argued that a decentralized approach could en­
the fee liability faces the same challenges as in the courage a more sustainable use of Earth orbits [95].
case of marketable permits. Regulatory fees offer However, the necessary conditions for an effective
more certainty concerning compliance cost and mo­ polycentric space governance system are far from being
tivate long-term investments in mitigation. However, met [96,97].
determining the efficient fee level is difficult as reg­
ulators are likely to lack information regarding the
current and future abatement costs of the regulated Conclusion
actors [79]. A few economic models address the effect Space debris constitutes an important impediment to the
of regulatory fees on space debris creation, but they realization of a thriving and sustainable space economy.
often use the launch as the unit of risk [85–88]. A It raises the costs of operating in space and could result
recent study shows that introducing an optimally in major disruptions in critical infrastructure. Addressing
sized tax on orbital use in 2020 would increase the net this growing risk requires a combination of strong miti­
present value of the satellite industry from around gation action (e.g. effective collision avoidance, post-
USD 600 billion to around USD 3 trillion by 2040 mission disposal) and remediation (e.g. removing already
[89]. The most concrete example in this area is the existing debris), both of which are currently weak. Our
recent proposal by the US Federal Communications assessment of current research and policy shows that the
Commission of a post-mission disposal bond [90]. regulatory landscape does not (yet) provide sufficient
Deposit and refund schemes would incentivize op­ incentives for pursuing both sets of actions. Government
erators to reduce unplanned debris creation and per­ interventions can contribute to more sustainable space
form post-mission disposal. practices, but they will require support by key

Current Opinion in Environmental Sustainability 2023, 60:101247 www.sciencedirect.com

 Market-based instruments for space sustainability Buchs and Bernauer 7

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personal relationships which may be considered as po­
14 Boley AC, Byers M: Satellite mega-constellations create risks
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making it the highest ranked activity to be pursued [98].

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8 Open Issue 2023: Sustainability Science, Digitization and AI

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