Cost in Space: Debris and Collision Risk in the Orbital Commons

As Earth’s orbital space fills with satellites and debris, debris-producing collisions between orbiting bodies become more likely. Runaway debris growth, known as Kessler Syndrome, may render Earth’s orbits unusable for millennia. We present the first dynamic physicoeconomic model of Earth orbit use under rational expectations with endogenous collision risk and Kessler Syndrome. As long as satellites can be destroyed in collisions with debris and other satellites, there is a continuum of open-access equilibria determined by the excess return on a satellite. Under reasonable physical assumptions, all are inefficient. When autocatalytic debris production is possible this continuum allows for multiple steady states, which can be destabilized by increases in the excess return on a satellite. Further, open-access launch rate paths are likely to overshoot steady states. Overshooting can cause short-run rebound effects when physical or economic parameters change, for example when environmental processes increase the debris decay rate or the costs of launching a satellite decrease. Kessler Syndrome is inefficient, and open access is increasingly likely to cause it as the excess return on a satellite increases. ∗We are grateful to Dan Kaffine, Jon Hughes, Martin Boileau, Miles Kimball, Alessandro Peri, Matt Burgess, Sami Dakhlia, Sébastien Rouillon, participants at the University of Colorado Environmental and Resource Economics, Macroeconomics, and Applied Microeconomics seminars, and participants at the CU Boulder Environmental Economics workshop and the Western Economic Association International 2018 AERE sessions for helpful comments and feedback. Funding for this research was generously provided by Center for Advancement of Teaching and Research in Social Science and the Reuben A Zeubrow Fellowship in Economics. All errors are our own. †Department of Economics, Warner Hall, 303 College Street, Middlebury College, 05753; akhilr@middlebury.edu