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Economic Issues in Regulating Space
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Economic Issues in Regulating Space

These benefits could be obtained through command-and control regulation, where government would set out the technologies and methods to mitigate debris. However, the vast majority of experience with command and control regulation of polluting activity on Earth shows that it would come at a very high price, as it does not allow regulators the freedom to decide what is the best way to comply with regulations.

Other options for regulatory compliance include economic penalties for debris production. This could include compensation that might not necessarily be financial but may consist of transfers or in-kind resource (such as technology transfer), to non-spacefaring states or to other parties affected by debris. Also, taxes or fees levied on specific stages of space activities. Deposit-refund schemes are where deposits made for the launch of spacecraft are refunded after the spacecraft’s components are placed in disposal orbits or when excess propellant is vented. Another regulatory alternative could be tradable permit systems, in which commercial space companies and other entities are allowed to trade permits to produce a certain amount of debris; reliance to insurance markets and liability laws to assign financial accountability for debris generation and thereby decrease it; and bonds bought for space activities. These bonds, which could be redeemed upon proof that they have met all debris reduction goals, are similar to insurance, but would specifically be linked to debris mitigation activities. Performance bonds would be similar to insurance and deposit refund schemes, but would be easier for authorities to enforce. They would encourage self-policing.

Regulators would base their perceptions on the fairness and costs of the above-debris control strategies on the factors that affect the distribution of wealth, or the technological prowess or reputation of the parties. For those who have small compliance costs and are not subject to large distributional effects, the actions taken voluntarily or in response moral suasion, command and control regulation, financial penalties and insurance might be deemed fair. However, they may be perceived unfairly by those who have high costs and large redistributions. If there are financial penalties for the generation of debris, such as those that compensate regulatees who have higher compliance cost than others, or deposit-refund or tradable permit programs that aim to reduce the cost burden, these might be considered fair. If tax revenues are not redistributed to regulators or fees are based on some generally agreed-on basis, taxes might be considered unfair.

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