Julien Guyot & Sébastien Rouillon
(BSE)

– Online seminar –

Sustainable management of space activity in low Earth orbit

Abstract. This paper extends the analysis initiated by Rouillon (2020) of the externality caused by the accumulation of space debris. Satellite operators make choices about the design and launch rate of their satellites, while in-orbit servicing firms supply efforts to remove rocket bodies and inactive satellites. Focusing on the long-term steady state of the orbital environment, we compare two typical management regimes. The physico-economic equilibrium occurs under open access to the orbit. The socially optimal policy maximizes the net present value of the space sector. We investigate which set of economic instruments can be used to regulate space activity in order to implement a socially optimal outcome. We show that the combination of an ad valorem tax, a launch tax, and a market for active debris removal certificates can provide the right incentives. All results are illustrated based on a numerical application using a realistic calibration.