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A little bit of heaven.

Space-based commercial development will happen sooner than you think. How a system of extraterrestrial property rights might emerge.

Jim Benson plans to declare ownership of an asteroid orbiting between Earth and Mars. And he doesn't much care what the United Nations has to say about it. "If the U.N. doesn't like it, they can send a tank up to my asteroid, which of course they can't," he told the San Francisco Examiner this past February. In an interview with REASON, the 53-year-old entrepreneur is in a less belligerent mood, but the gist of his message remains the same. "There's really no entity to which such a claim of ownership can be made," he explains. "Therefore I believe it just needs to be made to the public in general."

Benson is the founder and CEO of SpaceDev, a Colorado-based company that is planning the first commercial mission beyond Earth orbit. The firm's Near Earth Asteroid Prospector, which it hopes to launch by mid-2001, is a desk-sized probe that will move into orbit around one of the hundreds of known near-Earth asteroids, collecting and transmitting scientific data, which will be sold to NASA, universities, or other clients. The probe then will land on the asteroid itself, which will be the basis for SpaceDev's property claim - including the right to mine what could be a wealth of natural resources.

SpaceDev is a publicly traded company, a fact that Benson expects will bolster the claim's legitimacy; the stockholders will "help strengthen the cause of property rights in space through sheer numbers," he says. He emphasizes that SpaceDev will not be accepting any government subsidies, since these might weaken the firm's assertion of asteroid ownership. Benson realizes that the Near Earth Asteroid Prospector will be navigating not only the depths of space but also a realm that is in some ways even more forbidding: the uncharted legal territory, and unpredictable politics, of owning property out there.

Benson is right to be wary of the United Nations. International law regarding space property rights is murky at best, downright hostile at worst. In particular, there are two international agreements, written under U.N. auspices, that are relevant to the question of owning territory or resources on celestial bodies such as the moon, the asteroids, and the planets. These are the Outer Space Treaty of 1967 and the Moon Treaty of 1979.

The Outer Space Treaty, which has been ratified by over 50 nations, including the United States, prohibits any claim of national sovereignty on an extraterrestrial body. The treaty makes no mention of private property, but it undercuts the ability of any government to recognize or enforce a private claim. Negotiated at the height of the U.S.-Soviet space race, the pact was a creation of Cold War politics; it assuaged each superpower's fear that the other might claim the moon or place nuclear missiles there. (The treaty bans military bases, weapons testing, and military maneuvers on celestial bodies.) The economic potential of space - the first commercial satellites had just been deployed in the mid-1960s - was a secondary consideration at most.

The Moon Treaty, too, reflects the international political climate of its era, in this case the 1970s emphasis on wealth transfer from the West to the Third World. The treaty (which applies to all celestial bodies, not just the moon) prohibits the ownership of territory by any government, "non-governmental entity," or "natural person"; space resources are defined as "the common heritage of mankind" and placed under the governance of an ill-defined "international regime."

The Moon Treaty, however, was not ratified by the United States, and it has dubious international standing; its signatories include Austria, Pakistan, and a half dozen other nations, none of them major space powers. Nonetheless, the treaty is nominally in force and could serve as a precedent for future attempts to collectivize the solar system.

The upshot of these treaties, and of the general silence of national and international law on extraterrestrial property rights, is that no entity can lay claim to celestial territory with any assurance that the claim will be generally recognized. No one knows what would constitute a valid claim, or whether there is any such thing. No asteroid mining firm or similar enterprise can be certain that its "No Trespassing" signs will be respected, or that its revenues will not be confiscated by a national authority or "international regime." Four decades into the space age, the moon, the planets, and the solar system's numerous minor bodies are devoid of economic activity and trapped in legal and political limbo.

Since no one is yet mining any asteroids or otherwise employing celestial real estate, worrying about property rights might seem premature or even absurd. But the issue of extraterrestrial property rights deserves to be taken seriously. The technologies required for the first private sector forays into interplanetary space are not the stuff of some far-off future. SpaceDev's planned asteroid probe, for instance, is essentially a smaller (and cheaper) version of a NASA spacecraft already en route to a near-Earth asteroid. A telling display of the space industry's current capabilities occurred earlier this year, when the Hughes Space and Communications Company corrected the orbit of one of its satellites by sending it for a quick loop around the moon.

Meanwhile, the vast resources and potential economic uses of extraterrestrial bodies have begun to come into focus. Frozen water on the moon (as well as in the cores of numerous near-Earth asteroids) may someday serve as a propellant or means of life support. Lunar helium-3 or Martian deuterium might provide the fuel for nuclear fusion reactors. Asteroidal titanium, copper, and other metals might be used as construction materials for satellites or space stations; even ordinary rock could prove valuable, as a radiation shield for spacecraft.

And natural resources may compose only one sector of the extraterrestrial economy. Already, ideas abound for entertainment, tourism, and other industries. Virginia-based LunaCorp seeks to place a remote-controlled rover with a camera on the moon, to be operated by paying customers. Looking further ahead, Hilton International has toyed with the idea of a lunar hotel.

Some proposals for extraterrestrial enterprise may turn out to be fanciful; others may succeed beyond anyone's dreams. These are matters for the market to decide, in an ongoing process of trial and error. But that process is distorted, or even preempted, by the current legal ambiguity concerning property rights. Because of the uncertainty about who can own what, enterprises that would make use of celestial territory may find it difficult or impossible to obtain capital. High startup costs are hard to justify, and long-term planning is thrown into doubt; the few proposals that gain credibility do so by identifying short-term revenue sources that don't depend on a property claim (such as SpaceDev's planned sales of asteroid data). The crucial role of expectations in giving value to land or other resources before they are used is gravely weakened by the insecurity of ownership.

The lack of property rights not only makes it harder for the private sector to reach extraterrestrial bodies; it also creates perverse incentives for how to behave once there. Lawrence D. Roberts, an expert on space law at Seton Hall University, notes the possibility of a celestial "tragedy of the commons": companies rushing to grab communal space resources (before anyone else does) without regard to environmental consequences. Mining companies might create an atmosphere of dust around the moon, for instance, or overexploit the known sources of lunar ice (located in craters near the satellite's north and south poles). Lest such concerns seem remote or farfetched, it is worth noting that space already has an environmental problem, in the thousands of pieces of old satellites and rockets that clutter Earth orbit and pose dangers to manned and unmanned spacecraft.

Still, from a libertarian viewpoint, the ambiguous status of celestial bodies in national and international law might seem to have a positive side. After all, governments are forbidden from making claims of national sovereignty, while few clear restrictions are imposed on the private sector. California entrepreneur Dennis Hope has cheerfully pushed this interpretation to an extreme: His firm, Lunar Embassy, sells paper "deeds" to lunar real estate, since the Outer Space Treaty does not prohibit such private claims. Other space enthusiasts speak of a "loophole" in the treaty. The agreement is normally interpreted as allowing an entity to keep material it has "extracted"; thus, the U.S. government became the owner of moon rocks from the Apollo missions. Under the principle of extraction, some argue, a company could assure its ownership of an asteroid by moving it to a new orbit.

But any notion that the legal vacuum could prove helpful to economic activity - with companies operating in deep space, blissfully free of taxes and regulations - is quite implausible given legal and practical realities. The Outer Space Treaty explicitly subjects all nongovernmental space activity to governmental "authorization and continuing supervision." The pact may prevent the authorities from protecting private property, but it does not stop them from expropriating it (or its proceeds). Nor is it likely that sheer physical distance will effectively remove space enterprises from governmental jurisdiction; it will be a long time before any private entity is able to operate in space without extensive support facilities (and a bank account) on Earth. And the central problem of "anarchocapitalism" - protecting property against private transgressions - is not resolved simply because the property happens to be located on a celestial body.

Any workable system of extraterrestrial property rights, then, requires more than merely not violating, or creatively interpreting, existing laws and treaties. Such rights must be legally recognized and enforceable; some form of authority must be involved, and its role (and limits) clearly defined. There must be explicit standards regarding the acquisition and use of property. This is not to say that all legal and regulatory details can or should be determined in advance; the system must be sufficiently flexible to cope with evolving uses and problems. But in broad outline, a property rights system can be conceived, and put into practice, right now.

Two key questions must be addressed: First, who is the relevant authority (and how does it enforce the rules)? And second, how does someone become a property owner? To find plausible answers to these questions, it is worth considering a range of possibilities, including some that have serious drawbacks.

With regard to the question of authority, one can imagine several untenable extremes as well as a viable middle ground. One extreme would be a unilateral assertion of national authority. For example, the U.S. government could abrogate the Outer Space Treaty and declare sovereignty over some or all of the moon (while noting that the American flag is already there). Or, a bit more subtly, a government might extend recognition to certain property claims (probably those of its own citizens or companies) even without claiming sovereignty over the territories in question. Such unilateralism, however, would generate international tensions and, in all likelihood, competing claims by foreign governments. The rights of the supposed property owners - recognized by the courts of only one country - could hardly be said to exist.

The opposite extreme would be excessive internationalism: placing jurisdiction over extraterrestrial property rights in the hands of the U.N., for example, or requiring a global consensus among governments. An international body charged with such responsibility probably would be either powerless (lacking its own enforcement mechanisms) or dangerously powerful - and in either case, lacking the accountability instilled by democratic, national elections. A broad multilateral consensus is, at best, a distant goal, and would require the consent of various regimes that have shown little respect for property rights on Earth, let alone in space.

The middle ground is found in reciprocal obligations among national governments. In such a scenario, the United States and several other countries (possibly a small number to begin with) agree to recognize certain extraterrestrial property claims by private entities of each other's countries (as well as their own). The participating nations explicitly forswear any claim of national sovereignty; long-term questions, about self-governing space colonies and the like, are held in abeyance. Any national government can join the system, provided it agrees to basic standards regarding the validity of property claims (and civil or criminal penalties for their violation). Even private entities located in nonparticipating countries are eligible for property ownership, provided they agree to be subject to the same standards and penalties.

How is any of this enforced? No all-powerful international court is required; the courts of the participating nations adjudicate claims and disputes (in accordance with agreed-upon standards). Nor is it possible to trample extraterrestrial property rights with impunity from outside the borders of the signatory countries. Any product made in defiance of a recognized property claim (using materials extracted from someone else's asteroid, say) is subject to confiscation or punitive tariffs upon entry to a participating nation. Furthermore, any government or other entity using force to override a property right is subject to military action as well as economic sanctions. And these penalties all can be implemented on Earth; at least for the foreseeable future, no space-based army or police force is required.

Regarding the initial acquisition of property rights, here too the system's viability may depend on its capacity to balance competing approaches and priorities. A venerable legal tradition, traceable to ancient times, supports the granting of ownership to the first entity that literally sets foot upon a particular territory. Yet modern courts also have recognized certain territorial claims established without a direct human presence, as when salvage firms explore undersea wrecks via remote-controlled cameras. By analogy, one can imagine a hierarchy of claims in space: Full ownership of territories (of specified size) might be reserved for entities that conduct manned missions or establish human settlements. More limited forms of ownership (mining rights, for example), or simply smaller land grants, might be allocated to entities that send robotic probes to survey a territory (to a specified degree of precision).

Some proponents of manned space exploration oppose the notion of granting property rights based on robotic expeditions. Alan Wasser, a board member of the National Space Society, argues that such rights would diminish the incentives and prospects for human space colonization. Why, he writes, "would we want to give someone a land grant for some small step and allow them to do nothing more for the next 20 years except stop anyone else who is ready to settle and develop the land?" This argument is questionable even if one shares Wasser's priorities. Robotic missions might well provide the technological and economic underpinnings for subsequent human activities. And robotic missions may have economic and social benefits in their own right and for that reason alone be worthy of property protection.

Extraterrestrial property could also be allocated through procedures requiring no physical staking of claims by either humans or robots. As a few space enthusiasts have suggested, governments might simply auction unused or unexplored portions of celestial bodies to the highest bidders. A rough precedent can be found in present-day auctions of intangible assets such as use of the electromagnetic spectrum. But such an approach, whatever its benefits in generating public revenue and assigning immediate value to the properties, should be used sparingly, if at all. Weakening the link between territorial claims and actual exploration could undermine the perceived legitimacy of the property rights system, and so could the implication that the properties were "public" in their initial state. That notion could open the door to property distributions based on interest-group politics or arbitrary government power.

However they are initially established, extraterrestrial property rights will have little meaning unless they are transferable. One can imagine a brisk celestial property market taking shape as territories and resources are bought, sold, consolidated, subdivided, and speculated upon (with speculators providing much-needed liquidity and risk tolerance). Properties could even be linked to new types of "derivative" instruments - Martian deuterium futures, say, or lunar Real Estate Investment Trusts - tailored to various investor needs. Such financial "rocket science" might prove almost as important as the nuts-and-bolts type in creating a prosperous extraterrestrial economy.

Would such a property rights system result in dominance of space by some narrow economic elite? To the contrary, space is likely to prove hostile to concentrations of economic power. The territories and resources involved are vast; the markets are new and unpredictable. A company owning a dozen asteroids may find that it is just a bit player in the larger scene. The workings of a shareholder economy may distribute ownership among a broad public, and entrenched terrestrial industries may encounter new competition from space. Will the Third World be left behind? The current proliferation of space technology indicates otherwise, as nations such as India, Brazil, South Korea, Turkey, and Malaysia venture into the commercial satellite industry and other space-related fields.

To be sure, any attempt to create an extraterrestrial property rights system will draw resistance. Social critics might argue that celestial bodies are "the common heritage of mankind" and should be shared accordingly. The burden will be on them, however, to explain why socialism would work better in space than on Earth. Environmentalists might argue that such bodies are emphatically not the "heritage" of mankind and thus should be owned by no one. But as noted earlier, it is the absence of property rights that creates incentives for wasteful exploitation of celestial bodies. Moreover, space industries may provide crucial environmental benefits to Earth by tapping cleaner forms of energy and allowing pollution sources to be located far from human populations.

The debate could be a vociferous one, but it is well worth having. Property rights and free markets are too important to be confined to a single small planet.

Kenneth Silber ( has written about space technology for Insight, The Weekly Standard, and other publications.
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Title Annotation:space-based commercial property development
Author:Silber, Kenneth
Date:Nov 1, 1998
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