Near-Earth space holds economic value — but we need international space governance

In November 1944, while World War II raged on, more than 50 countries sent delegates to Chicago to discuss civil aviation governance. Despite the serious war being fought in Europe and Asia, and even though few countries had civil aviation sectors, countries from around the world found it critically important to discuss civil aviation governance. But why? At the time, civil aviation was nascent but there was no doubt that aviation technology was progressing and that it eventually would have a critical economic impact on the world. 

The convention was a success — despite serious concerns over the dual-use nature of planes, a lack of shared technical standards and best practices, and the fact that some countries had large aviation sectors while others didn’t. That December, the Chicago Convention was drafted, activating a predominantly bilateral system of governance that today enables the $2.7 trillion civil aviation sector. 

Today’s space sector could learn a lot from the Chicago Convention.

Space, through satellite services, empowers the most advanced economies. From communications to earth imaging and global navigation, space has become a critical element of economic strength. With government and commercial companies developing new space technologies and services — small satellites, on-orbit servicing, and launch capabilities, among others — the near-Earth space economy is poised for dramatic economic growth. While commercial companies and governments are eager to further develop near-Earth space, a lack of effective international governance for space activities is limiting progress. 

To take advantage of the emerging economic value of near-Earth space, the U.S. must take a leading role in developing new international governance for outer space.

The economics

Today, the global space economy includes services provided by satellites on-orbit, the manufacturing sector needed to produce relevant space technologies and launch services. Commercial segments of the space economy makes up roughly 79 percent, or $329 billion, of the $415 billion global space economy. Moreover, some of the most lucrative economic sectors — including agriculture, mining, transportation, information technology, finance and insurance — rely upon space systems and services. 

Already a critical economic interest for the U.S., near-Earth space is set to become even more valuable. Economic projections suggest the space economy could reach $1 trillion to $2.7 trillion in the next few decades, fueled by technological advances that make near-Earth space more accessible and affordable to use. While many of these advances are in the early stages of development, new technologies expected to reshape the economic landscape include 5G telecommunication and other internet-of-things services. 

Countries big and small are eager to invest in space, but the lack of effective space governance leaves unanswered many critical questions about cooperation, investments, technology transfer and space sustainability. Without solutions to these questions, it is unlikely the U.S. (or other countries) will be able to capitalize fully on the economic value of this domain. 

The challenges to development

Predictions of near-Earth space economy growth are optimistic but they aren’t inevitable. Space debris — the human-made junk floating in space — is such a serious problem that it could prevent the use of some Earth orbits. It constitutes an environmental crisis with serious global economic and military ramifications, but, aside from voluntary guidelines, there are no international agreements to address this challenge. 

The dual-use nature of most space technologies poses an equally daunting challenge. Governments apply the dual-use label to items that could be used for both commercial and military applications, choosing to control these items over concerns that the technologies could give an adversary some sort of advantage. Nearly all software and hardware needed to build satellites, rockets or other space systems are controlled by governments under the dual-use label. As a result, commercial space companies often have a difficult time accessing international markets without restrictions that impose costs and limit business options. 

The need for new governance

Current space governance is a hodgepodge of national and international treaties and regulations that are incapable of governing most space activities. Internationally, five treaties produced between 1967 and 1979 attempt to govern space activities. Although still relevant, these agreements are ill-equipped to deal with many of today’s challenges and advancements, such as space debris and on-orbiting servicing. 

New national policies would encourage and support commercial space development, but are not capable of overcoming transnational challenges such as space debris and dual-use concerns. With the number of space actors and activities on the rise, national policies alone won’t be enough. 

Unfortunately, attempts to produce new governance through international forums, such as the United Nations, have been mostly unsuccessful. Since 1979, states have found little reason to compromise on matters of space governance. But the situation may be changing.  

Policy recommendations

The United States should take a leading role in the development of new space governance. First, the U.S. should consolidate national regulatory authorities to ensure the regulatory process at home encourages, rather than hinders, commercial space activities. Second, the U.S. should work with allies and partners to develop the necessary infrastructure, shared rules and best practices for space situational awareness and space traffic management. With a better understanding of what’s happening on-orbit, some fears over dual-use technology can be overcome. 

Finally, the U.S., with allies and partners, should create binding space debris mitigation agreements. While space debris cannot be solved without full international participation, no binding space debris mitigation agreements currently exist and any progress related to space debris should be welcomed.

These agreements should not depend on full international consensus. Rather, several bilateral or limited multilateral agreements with allies and partners should be the focus. New agreements should address specific functional or technical problems, and avoid including numerous space issues and challenges at once. These new treaties also should be developed with the understanding that they may require regular updating. 

For sure, some states won’t approve of new space governance or the framework laid out here, but that’s okay. History shows economic opportunity can be influential in the development of new governance. An incremental process of creating laws, regulations and norms should be the goal; as agreements begin to show their economic benefit, more countries likely will sign on. 

Adam Routh is a research manager with Deloitte’s Center for Government Insights in Washington and a doctoral student at King’s College London, where his research examines the development of the space economy. He is a former member of the Army’s 75th Ranger Regiment. The views expressed here are his own. Follow him on Twitter @AdamJRouth.