All ideas, proposals, and opinions in this paper are our own, and expressly not those of the Federal Communications Commission (United States) or any Commissioners or staff.
Introduction: Growth of the Space Situational Awareness Sector
Orbital space is an economically and socially valuable resource that provides an array of orbital satellite services for consumers, businesses, scientists, and governments.
Earth orbit satellites derive commercial value from their use in agriculture, business and finance, internet services, mobile communications, remote detecting and monitoring, global positioning services (GPS), and broadcasting, among others. Estimates of worldwide commercial satellite sector revenues from 2012 to 2020 are given in Figure 1. 
The social value of orbital satellites derives, in part, from the collection of various types of environmental data relating to the earth's surface and atmosphere - data which help scientists monitor and better understand the evolving terrestrial environment. Indeed, national space and environmental agencies depend on orbital satellites to gather critical (often unique) data on landmasses, oceans, polar regions, and atmospheric conditions, among other things. These data are often combined with terrestrially gathered data and are used to inform a variety of environmental policymakers and environmental agencies, among others.
When satellites are launched and undertake missions in orbital space, they create pollution in the form of orbital debris, which damages and periodically destroys other satellites. National entities that use orbital space pledge to follow voluntary guidelines for reducing orbital debris, but many do not comply. This noncompliant behavior, along with an exponentially-increasing number of satellites in orbital space, causes the density of debris fields to increase, making it more likely that other satellites will be damaged or destroyed. The limiting case of this process is referred to as a “collisional cascade,” a scenario in which one destructive collision produces additional destructive collisions in a cascading fashion, potentially rendering orbits unusable for centuries, or longer.
Some Characteristics of Orbital Debris
Orbital debris is a negative externality generated by the upper stages of expended launch vehicles and by the satellites themselves, both as they reach the end of their productive lives and break up and as the result of impact with debris or with other satellites.
All else being equal, a collision with a piece of debris greater than 10 cm (about the size of a smartphone) will destroy a satellite and generate significant amounts of additional highly damaging debris. Debris smaller than 10 cm but greater in size than 1 mm (about the size of a grain of rice) can result in mission-ending damage to a satellite, and debris less than 1 mm in size will result in “degradation damage”. Even submillimeter-sized debris poses a threat.
Orbital debris has degrees of persistence in orbital space: a few days if the debris is less than 200 km (125 miles) above the earth's surface; a few years if it is between 200 and 480 km (125-370 miles); decades if it is between 480 and 800 km (370 and 500 miles); centuries if the debris is greater than 800 km (500 miles); and essentially forever if the debris is at greater altitudes, especially as one approaches geostationary satellite altitudes. Thus, at low altitudes (<200 km), space is quickly self-cleansing; however, peak debris density in low earth orbit occurs at 885 km, which suggests centuries would pass before the region self-cleans, assuming no additional debris is added during that time.
The first users of orbital space were the Soviet Union (Russia) and the United States (in 1957 and 1958, respectively) as they had both the technological knowledge and material resources to launch objects into orbit. Before the launch of Sputnik in 1957, resource and property rights over orbital space were global, and orbital space was, in effect, a vast open common. Shortly after the Sputnik launch, orbital rights were largely assumed and administered by the United States and the Soviet Union via the United Nations. Since then, technologically capable states (primarily the United States, Russia, China, Japan, India, and the European Union) have pursued their national self-interest in orbital space, and orbital rights have evolved into a complex blend of national, quasi-private, and international property (more-or-less in that order).
Of course, initially, orbital space was not crowded with satellites or anthropogenic pollution, but since the time of these first launches, much has changed. The technical skills to launch satellites have become widely diffused, the costs of launching satellites are falling at an increasing rate, and commercial and military interests have intensified. Importantly, orbital debris is growing at an increasing rate, as orbital space is currently on the cusp of the “industrialization” stage of development with the advent of so-called “mega-constellations” of many thousands of new satellites in low Earth orbit. Figure 23 presents the growth of radar-trackable objects (satellites, rocket bodies, and orbital debris) in low earth orbit since 1957.
Complicating the orbital debris problem is the periodic intentional destruction of satellites in orbital space, driven by military rivalry or the desire to protect military secrets. Indeed, it is no secret that spacefaring nations use orbital space for military purposes. Many of the activities undertaken in orbital space are integral to national militaries, and their diminishment, intentional or otherwise, has an asset value to competing national militaries. The intentional destruction of the Fengyun-1C satellite by the Chinese in 2007 can be interpreted in this light as implying that orbital space is (1) currently not as valuable to us as it is to you, and (2) we know how to make conditions worse. Military rivalry, signaling behavior, and value asymmetries of this sort are a complicating factor for users of orbital space.
Orbital Debris and Climate Change: International Free-Riding is the Key Problem
The fact that orbital debris has a single unambiguous cause-and-effect mechanism (satellites are launched, debris gets created) implies less complexity (and less misinformation) about the sources and nature of the problem, compared to that experienced with anthropogenic climate change. In other words, maybe there is a somewhat simpler economic solution to the orbital debris problem because there are fewer “moving parts” and uniform scientific convergence on cause-and-effect. Indeed, this has been the case with at least some individual types of terrestrial pollution. For example, some terrestrial pollution has unambiguous single-source elements that are addressed in a relatively straightforward fashion, such as SO2 cap-and-trade markets in the United States. So, why not replicate this or similar architecture for orbital debris? This is likely an appealing initial take for economists because mechanisms such as cap-and-trade have attractive features that harness prices and market forces to internalize externalities and incentivize technological progress.
Unfortunately, things are not quite this simple, because non-harmonized national approaches do not add up to a workable international approach. International climate agreements, including the Kyoto Accord and the Paris Agreement, fell short of expectations because they did not solve the “free-rider” problem. In each case, many nations voluntarily committed to undertake large reductions in emissions but did not follow through on these voluntary commitments. These failures suggest that voluntary targeted emission reductions do not provide sufficient economic incentive for nations to reduce emissions to target levels. In short, the free-rider problem cannot be overcome unless agreements are binding, and there are incentives and disincentives that induce the parties to take actions that yield socially efficient outcomes.
Similar to terrestrial climate change, the effects of lax international stewardship of orbital space range from modest to catastrophic - there is uncertainty over how the orbital environment will evolve - but among the possible outcomes are ones where a great deal of economic and scientific value is destroyed, with serious costs and consequences for terrestrial life. These costs would be distributed well beyond the advanced nations that deploy satellites and benefit most from their use, although the cost to these nations would be enormous. Less wealthy, non-spacefaring nations also rely on the services provided by satellites for cell phones, internet access, and a wide range of other valuable uses, and many of these poorer nations have fewer and arguably less-efficient substitutes in the event of a discontinuity.
Current Orbital Debris Remediation Policy
Voluntary guidelines will not resolve the issue of orbital debris because, as reflected in the similar context of climate change, voluntary participation is subject to the free-rider problem. According to the voluntary guidelines governing orbital space, users are expected to de-orbit their satellites within 25 years after the end of their useful life. However, the European Space Agency reports that the de-orbiting compliance rate with the United Nations debris mitigation guidelines is currently below 45% for objects larger than 10 kg in mass. Compliance rates by satellite mass are shown in Figure 34. Moreover, NASA reports that de-orbiting compliance rates have averaged only 20% to 30% over the last decade. It is important to note that current guidelines actually contain valuable guidance on how to maintain a safe environment in orbital space. They are, however, ineffective in controlling the debris problem, just as voluntary guidelines cannot and will not solve the CO2 problem.
Many policymakers and government organizations appear to favor one particular proposed form of technology-driven debris remediation, called “active debris removal”. Proponents of active debris removal suggest that removing “key” large pieces of debris in important orbits will substantially improve the environmental health of orbital systems and reduce the probability of collisions. Given that it is possible to identify the most dangerous extant pieces of orbital debris, why not simply remove them?
First, a proven civil technology for active debris removal does not exist, although some nations and organizations are actively promoting its development. Importantly, active debris removal research and development by any individual economic actor or nation will be subject to the free-rider problem, which will, at a minimum, delay development. What entity is willing to independently bear the costs of cleaning up others' orbital pollution and capture only fractional beneﬁts for itself? Moreover, active debris removal systems are “provocative” in that they can be “dual-use”; that is, a technology that can safely retire an expended rocket body can also retire an adversary’s active satellite (fleet). International cooperation, perhaps along the lines of that achieved in constructing and operating the International Space Station, may be essential in successfully deploying these technologies.
Second, even if a functional debris removal technology exists in practice, removal of these dangerous nationally identiﬁable large trackable pieces would be subject to the permission of the nation or state that owns the debris (the majority of the most dangerous pieces are Russian), and these permissions would require negotiation. Why? Because satellites and rocket technology are proprietary, and nations and ﬁrms want to protect their military assets and commercial trade secrets from others, just as they do in a terrestrial setting. Thus, having a third party inspecting, manipulating, or de-orbiting these technologies is a major hurdle to overcome.
In fact, sequestering orbital debris by deorbiting via active debris removal would be helpful - analogous to planting vast forests to capture CO2 - but reducing the rate of growth in the total quantity of debris needed to maintain a sustainable orbital environment over the long term is paramount. The current voluntary international policy framework will not achieve this outcome.
A Policy Proposal
Meaningful CO2 abatement has been difficult to achieve due to disagreements over the correct price of carbon, the appropriate price mechanism for CO2 markets, weak international incentive structures, and follow-on free-riding by individual nations. There is agreement among economists that penalties for noncooperation and rewards for cooperation are needed to induce agreement, bind participation, and eliminate free-riding. Indeed, some (e.g., William Nordhaus) have proposed establishing an international “climate club,” where members reap benefits that make participation self-reinforcing, while punishing nonmembers with economy-wide tariffs. In fact, this sort of climate club structure has received recent political support in the European Union. This type of approach may well be useful in addressing orbital debris. Orbital pollution is analogous to human-produced CO2, in terms of the increasing economic and social costs of environmental damage over time and the difficulty in binding nations to international agreements that ensure abatement. Because orbital satellites are vital to monitoring terrestrial conditions and provide unique data on the current state of the global environment, we suggest there is a natural linkage between them, and thus it may be appropriate to include orbital space in terrestrial climate change negotiations. Although this might complicate climate change negotiations, we suggest it could also usefully expand the overall bargaining space, providing new opportunities for agreement. Moreover, even if these combined negotiations were to fail, there are international benefits to be derived from such an attempt.
The benefits of international trade are well-known for their contributions to economic efficiency. Differential opportunity costs of production generate a comparative advantage. When countries specialize in producing products and services for which they have a comparative advantage (i.e., a lower opportunity cost of production), trade unlocks mutual gains that are enjoyed by trade partners. The idea for a combined market for CO2 abatement and debris abatement exploits just such a framework. In this combined market, nations can specialize and trade abatement credits within this larger, combined framework. This unified abatement framework gives nations greater flexibility in terms of abatement specialization, while promoting economic efficiency in not just one, but rather two areas of compelling environmental need. This framework is fully explicated in Adilov et al. (2022).
While including negotiation of orbital pollution may complicate terrestrial climate change negotiations, the effort is worth expending due to its potential benefits. Even if agreement on orbital pollution cannot be reached in this broader framework, greater awareness among policymakers and the international public community about the use of orbital resources and the nature and extent of orbital pollution will cultivate a better general understanding of the value of orbital assets. This may be helpful in promoting future negotiations. In short, efforts toward effective remediation of international problems typically require a broad international understanding of the issue, and a greater general appreciation of how orbital space is related to terrestrial life will be a valuable ally. This is by no means a guarantee that serious efforts will be undertaken, but we can be reasonably sure they will not, absent these types of efforts.
 Adilov, Alexander, and Cunningham. 2022. “Understanding the Economics of Orbital Pollution Through the Lens of Terrestrial Climate Change,” Space Policy, Volume 59, paper 101471.