Planetary Radio: Space Exploration, Astronomy and Science - Space Policy Edition: A Trillion-Dollar Space Economy?

Episode Date: July 3, 2020

Dr. Bhavya Lal joins the show to discuss the size of the space economy, where it's going, and how the term itself can mean many different things to many different people. In a world filled with breathless claims about trillion-dollar economies, we dive down into the fundamental assumptions about space commerce, its potential for growth, and the pitfalls of motivated thinking in the hyper-optimistic space community. Learn more about this month’s topics through links on the show page.  https://www.planetary.org/multimedia/planetary-radio/show/2020/space-policy-edition-51.htmlSee omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.

Music Music Music Music Music Music Music Hello and welcome to the July Space Policy Edition of Planetary Radio.

I'm Matt Kaplan of Planetary Radio and the Planetary Society joined by the Planetary Society's chief advocate and our senior policy advisor, Casey Dreyer. Welcome, Casey. Hey, Matt. Happy Fourth of July to all of our U.S. listeners, and happy Canada Day to all of our listeners in Canada. We are actually recording this on Canada Day, and our couple of Canadian colleagues are celebrating,

as they should be. It's a strange time to be celebrating, but certainly we still have a lot to celebrate, including a lot of great stuff happening in space exploration. Casey, I will jump right to something else. I mean, now is when we would usually push joining the Planetary Society, going to planetary.org slash membership. So there I just have. But it's not too late to talk about another drive that we have on underway right now, an advocacy campaign. That's true. As our listeners probably know, you and I don't work for free, even though we probably would if we could. Don't tell anyone. We probably would if we could.

Shh, don't tell anyone. But we're running a fundraising campaign that helps directly fund the advocacy and policy work that I do, that my colleague Brendan does, and the society writ large does on your behalf as members and supporters of the Planetary Society. As a reminder, right, we're not an organization that is funded primarily by corporations. We're not an organization funded by government. We're an organization funded by people. We need to ask our supporters every now and then to help focus their donations to specific programs. And this time of year, it's for the advocacy and policy program. So this helps us do our job, right? It helps us offset the costs of our salaries, of our travel, when we're able to travel again, working with partners to develop the great things like the Day of Action, developing policy solutions, outreach to the Biden and Trump campaigns going forward for next year, being ready to hit the ground running in 2021, no matter what the political change is, if any, in the US. So I hope you really consider if you like what you listen to here doing this kind of a show, or some of the writing that we do or working to reach out to members of Congress with our information, go to planetary.org slash advocacy, and you can chip in to the degree that you can.

And literally every dollar makes a difference because we don't operate on this huge, you know, massive thing here. We are a very efficient organization, and we put your money to work. Planetary.org slash advocacy. I was just reading another review in Apple Podcasts of Planetary Radio, someone who was talking about how much he loves the show and especially the Space Policy Edition. Well, if it weren't for the advocacy and policy effort by the Planetary Society, we wouldn't be doing this show, would we, on a monthly basis with the chief advocate?

wouldn't be doing this show, would we, on a monthly basis with the chief advocate. If this is something that you not only enjoy, but think is important, that you'll go to that site now. And of course, we hope you'll also consider becoming a member because then you really become a part of the family. Why not do both? Planetary.org slash membership as well. Casey, we've got a good, long, in-depth interview with your guest today. Do you want to say something about her? I just got to listen to the two of you talking live, and this is going to be fascinating for everyone. Yeah, the guest today is Dr. Bhavya Lal. She works at the Science and Technology Policy Institute in Washington, D.C., and I think she is one of the most intellectually consistent and thoughtful and critical,

in a good way, people working in space policy right now. I've been a big fan of her work for a long time. And she leads a lot of teams that take in some pretty in-depth and very analytical approaches to big problems in space policy. Today, we're talking about a recent paper that they just published the other month, which is on the size of the space economy and how important it is to define and openly analyze or share your decision process about what's actually defined as the space economy, what assumptions goes into it, and then how you can use that to drive good policy from government

going forward, and how we as people who support space exploration and those who may consider investing in it in the future, have a really clear understanding of what goes into people who talk about the future of space economy and space marketplace. So this is just a lot of fun to have her on finally. We link to that paper. You can read it for free in our show notes. I recommend that you do. You can find her work on STPI, a lot of papers that she does there. I also recommend reading. And if you want to find those show notes, which we provide every month, along with those for the weekly show, you'll find them at planetary.org

slash radio, because we know a lot of you are listening elsewhere, and that's perfectly fine. We don't care where you find us. All right, here is this outstanding conversation that Casey has just had with Bhavya Lal. And we'll be back right at the end to wish you a good month. Bhavya Lal, welcome to the Space Policy Edition. Thank you for being here this month. It's an honor to be here with you, Casey. Today, we're going to talk a lot about a recent paper that was released by your organization, the Science, Technology, and Policy Institute, about measuring the space economy. I just want to go right into it. What is the space economy as it is now? And I think what

we'll get into is how do different groups define that? That's a great question. Yes, we recently did complete this report and it is on our website for those of your listeners who would like to read it. Let me start the answer by acknowledging the team that worked on the project, a senior economist, Keith Crane and colleagues, Evan Link and Rachel Way, who've now gone on to graduate school and other awesome things. Getting right to your question, the definition of the space economy that we employed includes only the value of goods and services provided to governments, households, and businesses from space or are used to support activities in space. And by that, what I mean is our definition excludes activities that are enabled by space and are primarily generated

terrestrially. So for example, our definition will not include Uber. It won't include payments made to movie stars because of the payments that they're getting from direct TV, that sort of thing. We adopted this narrow definition because we think that focusing on activities from or in space would help the U.S. government develop better policies to foster the growth of commercial activities in space, and of course, help clarify for investors and entrepreneurs' interest in the space economy. So the idea behind our assessment was to focus exclusively on space. And obviously, as you said, there are other organizations who have developed some numbers and ours are different from theirs, and I can get into that. Yeah, I mean, this is ultimately what we'll get into,

from there. And I can get into that. Yeah, I mean, this is ultimately what we'll get into, I think, in today's discussion that I found just fascinating reading this report. And I do recommend everyone who listens to the show to read it. We'll put a link up on our show notes. So much of what we talk about of the space economy and kind of the hype, I would say, around it really depends a lot on who's defining the term and what it includes and then the resulting numbers and how big they look coming in and out of this. So maybe even before we kind of go and look at those comparisons, just maybe very broadly from the heuristic that you used and your team used on this report, what are some of the major sections of the space economy just to kind of ground our listeners before we go further as they exist now?

Right. So there are four major sections of the space economy. There is government expenditures on space, which are basically things like human space exploration or science or military space programs. Then the second one is space services, which are essentially expenditures by households and businesses on services generated in space for use on Earth or in space. And this would be things like broadband internet provided by satellites. The third is a space supplier industry. This is things like sales of goods and services like satellites, space launches, ground stations, things that make possible the achievement of government space missions or the production of goods and services in space for sale on Earth. And last but not least is what's generally called space service user support industry. So these are things like consumer

satellite TV dishes or GNSS hardware and services, things that are needed to utilize space services. And when you add all of it up, you see that this is where the differences between different organizations started to show up. We looked at data from 2016 for a variety of reasons, 2013 and 2016 for a variety of reasons. The most important of which is some of the more granular data that you need to be able to sum up, especially this fourth category of user support industry. More recent information is not as freely available.

And since we wanted to do our own map from scratch, we had to use the year for which all the information was available, which was 2016. And we found that the size of the space economy is about $170 billion. And, of course, our major finding was that that's about half that of what some of the other organizations have estimated. The Satellite Industry Association has, I think, about $300-ish billion for the year of interest,

and the Space Foundation's number is a little bit higher than that. Again, there's a variety of reasons why that's the case. And we will go into those. But again, let's just pause. Let's just pause and emphasize this. Yeah. What was it? 160-ish? 170. 170 for 2016. Let's just keep it simple. We'll talk about the 2016 number from here on out and not necessarily compare it to 2013. But half, half the size of what is kind of commonly reported. And I'll emphasize too, these other reports, these tend to be annual reports, particularly from the Space Foundation, that release this kind of summary. And this is used

in a lot of places, referencing these types of reports. And why don't we kind of outline too, why we're talking about this even? Why is this important to understand the size of the space economy before we kind of go in and really understand it? How are these reports generally used? And what was the goal with your report and your analysis trying to come in to kind of further help this whole discussion? The reports are actually used pretty heavily by obviously the private sector that is trying to understand where investments ought to be made. They're used by the government. And again, deciding where support is needed, where investments need to be made, and how the government can leverage this,

the emerging private sector. In particular, when you have this high base and you start to project forward at very high rates of growth, that's when you start to see estimates like the trillion dollar space economy by 2030 or 2040. I mean, already, there are some challenges with the predictions. But when you start on a very high base, you know, you obviously get to a very high, high point in the next 10 to 20 years. And again, there's lots of reasons why we want to be realistic in our forecasts, you know, partly because we don't want to be disappointed. I mean, I'm as much of a space cadet as the next guy. I want us to be a quadrillion dollar space economy. But, you know, that's one followed by 15 zeros, right? Not just 12.

So I'm absolutely a big fan that we want to grow the space economy. So I'm absolutely a big fan that we want to grow the space economy. I just happen to think that we just need to be realistic so we make good decisions around specific areas of investment or use of these products and services that are presumably available through the space economy, whether it's asteroid mining or space-based solar power or some of these new emerging areas that are being talked about. Another way of saying that, I'd say, is it's very sensitive to initial conditions,

these projections. And so depending on if you're looking at a $300 billion or $170 billion, how you then project forward is really going to change based on what the actual size is now. So let's go back to this idea of the space economy then. You know, you've outlined four major sectors, government being one, and then, you know, this kind of the users. And you said this term GNSS, that's a global navigation, right? From like GPS satellites and related types of satellites. That's right. GPS is the name of the US GNSS.

And, you know, the Chinese one is called Beidou and the European is called Galileo. So yeah, GNSS is a generic term for GPS. That's exactly right. Is it the largest or one of the largest chunks of the space economy is using this type of navigation system, I think, if I remember off the top of my head. And I don't have your report right in front of me, so you can jump in with any corrections with your more familiar details of this. But what strikes me, and again, this is something that I feel,

and I'll be curious to hear from our listeners if this was their experience too, that there's a difference, almost a chasm, between what's talked about as the, or at least in the media or in the public sphere, as the future of the space economy being this really ambitious, like, as you said, asteroid mining or space-based solar power or this cislunar space economy? And what is actually the space economy now, which is primarily navigation, communication systems, commercial satellites, and then a big chunk sponsored by government? It's not, it always strikes me, there's this functional kind of romantic difference.

It's like there's a romantic idea, but that's not a very big part of the space economy. And then there's the functional space economy, which, forgive me for lack of a better term, is kind of boring. Do you agree with that characterization? And then where do you think that comes from, that difference of understanding and discussion? So the largest chunk of the space economy is communication from GEO, so the Intel sets of the world. And a big chunk of the consumers are actually government buyers. So that's the biggest chunk of our space economy today.

It is growing at a three-ish percent rate. And there's a sense that once LEO, low Earth orbit broadband satellite constellations come into being as SpaceX is about to launch its next tranche of 60 satellites this weekend, the sense is that that will just, that'll expand. So today it's about $3.5 billion. And the sense is that in the next 10 to 20 years,

it'll be $300 billion. And again, we can talk about how realistic that is. But your question is, where does that schism come from? I think part of it may well be what you exactly said. Some of what we are doing currently is just the boring, the foundational stuff. What's really exciting is how much money can we make when we are mining asteroids? I mean, Neil deGrasse Tyson, whom I'm sure all of your listeners know well, talked about the first billionaires in the world would be working in space and basically mining asteroids, bringing platinum group metals back on Earth or, you know, mining asteroids for water and propellant. And that's exciting. So I think that's where some of the optimism about space comes from,

all the amazing things that will happen in the future. But as we know well, none of those things are currently even in play. No government agency is spending any significant money on either asteroid mining or space-based solar power or cislunar communications. or space-based solar power or cislunar communications. Of the current space economy, then, you identified, so communications is the largest chunk. What's the relative size of government expenditures? And this is global expenditures on government spending for space. Is that the second largest or one of the largest?

It is a quarter, so it is not the largest. It is a quarter of the largest? It is a quarter. So it is not the largest. It is a quarter of the total economy, if you believe the bigger estimates, the 300 billion-ish estimates. But when you look at ours, where we didn't do some of the double counting that is done, we didn't include some of the terrestrial activities that are counted, it is fully half. So the government activities are a very important part of the space economy currently. I'll just preface the rest of this discussion and say, I believe your numbers. So I'm going to take the half. But it's a huge chunk, right? And so that's, I think, also a really important consideration for people, too, as we discuss

the current space economy, that it is, I would say, dominated by government. And this is almost a whole other discussion. But I mean, this is direct government expenditures on things like NASA and the Chinese space program and ESA and so forth. And they're maintaining these types of GPS systems, right, which are all national systems or consortiums, even beyond that, you know, just those direct payments, space is just this highly regulated sphere, so to speak, right? To get into space, there's a huge amount of regulatory control by governments, whether it's spectrum control or access to kind of these shared slots in the geostationary orbits. This is not like this big open free market, I think, in the some way that people tend to maybe associate it with whatever romantic notions of westward expansion or like a gold rush, right? Like this is not just sitting there open to be exploited.

This is heavily regulated. Government is just a huge part of this no matter what. Yes. So currently the government is a huge part and there is a lot of regulation. The regulation is on launch and reentry. So anytime any private company or any private entity wants to launch, they need to go through the FAA, Federal Aviation Administration. You need to go to the FCC for spectrum licensing. You need to go to NOAA to get a license to do remote sensing from space. So yes, there's a lot of regulation. I think there is an effort underway to have a light touch regulation, especially for future activities. So if we do have a cislunar economy, for the sake of argument, if there's a big commercial economy on the moon, then I think the hope is that there would be minimal regulation and a lot of encouragement of private activity. So that's one point I wanted to make. The second point to make is, while the government is and will remain a large and a growing part of the space economy, in fact, with the US Space Force just being established, there's

a lot of, there's a sense that the national security side of government expenses, expenditure on space will grow. But having said all that there is also growing private investment in space there is venture funding that's going into space and I think this is where the distinction needs to be made between investment and customers while there is growing private investment in space it is unclear if there are growing private customers in space. And this is something the remote sensing community and the small satellite community learned in the last few years that despite hopes and aspirations, they weren't able to generate as

many private customers. And that was sort of a big change from the past that we were expecting to see that, you know, governments will no longer be the major players, we'll have more and more private entities. For many areas that hasn't panned out. And even when it has panned out, there's actually an important distinction that the ultimate customer may still be the government. So it is possible that Lockheed Martin gets a whole number of small companies that it pays to get services. And for those small companies, their customer is in the government, right? I mean, Lockheed Martin is a private entity, but ultimately the money is coming from the government. And I think some of these details and nuances get lost in the distinctions,

in the discussions. That's a really good point. And maybe let's just dwell on that for a minute more, this difference between investment and private customers. Well, first with investment, I mean, it's definitely grown over the past decade for sure, but I'm always struck still by the relative modest size of the investment. I think I have to do the numbers off the top of my head, but last year that we had the full data, it was like maybe a few billion dollars of private investment into space companies. The vastest, something like 80% of that private investment was chalked up to Blue Origin, which is kind of like, yeah, the one investor, which is the guy who owns it, SpaceX, of course, and then OneWeb, which just filed for Chapter 11 bankruptcy. And the rest of every other

space company that's out there getting private investment was something around a billion dollars. So, I mean, it's good that it's happening, but it's even compared to the size of the marketplace or the economy itself of 170 or so billion, that's small and relatively small for a lot of private economies and marketplaces. This has been this perennial issue with the commercialization of space, right? That it's just an expensive, hard, high-risk, uncertain payoff situation that doesn't necessarily lend itself to models of private investment that we've seen or developed over the last 100 or so years.

And so yeah, it seems like ultimately, government is setting a lot of the conditions and capabilities here. And it just continues to strike me, is that what we tend to think of when we're talking about this, that it's a government defined economy? Or do you see a way for this to move beyond that in kind of the classic sense of how people are maybe anticipating this future marketplace to look? There are sort of two, basically two categories of customers in the space economy. There are governments, as we've been talking about,

and then there's individuals, and call them households, and businesses. For the moment moment governments have been they're being game in town right i mean whether it's human science or human exploration or any of these in recent years we've had individuals or households and businesses that have become growing players so on the communication side, individuals are coming into play. If you buy services for satellite TV, for example, or satellite radio. In principle, real estate companies and others could be purchasers of remote sensing data,

buying pictures from areas from space. Companies, I mean, you hear these stories about Target and Walmart buying services from space to look at the size of parking lots and ascertaining, you know, what are Christmas sales. So there is a growing proportion of markets that are not governments. This is what I would add to what you just said. But I think where we don't know where things are going is how much would that grow? In the VC community, the sense is that will take over government expenditures.

And, you know, maybe in the next 20 years it would, but so far we are not seeing those signs. So far the government remains a major buyer of space-based products and services. remains a major buyer of space-based products and services. And I guess the whole bet of SpaceX's Starlink system is that, right? That there will be a customer base out there for the space-based access to the internet, for example, in their case. That's right. I think the challenge there is that all the substantial number of people in the world do not yet have Internet access.

The challenge is that people may not be able to pay for those kind of services. You know, they have incomes, you know, less than the World Bank poverty line of two dollars a day. They don't have the ability to purchase satellite internet. Wealthier households, those who can purchase satellite internet or the SpaceX like broadband, they are concentrated in urban areas where fixed line connections are more competitive. So I think satellite internet may have a difficult time competing against cell phone operators for these cost sensitive customers. Although obviously they can, you know, they can earn revenues by providing back end network

services to cell phone networks. You know, with 5G becoming more common, again, there's more competition. It remains to be seen if satellite internet will be used outside of niche markets with use more likely in, you know, wealthier rural parts of the world, mobile users like ships and aircraft, which again, you know, they could be growing like gangbusters in monitoring pipelines

and other infrastructure that go through remote areas. However, these markets may not be in the range of hundreds of billions of dollars, which are some of the predictions. But again, I mean, I want to remain optimistic and say, I just want to, you know, I don't want to make anybody sad about this amazing new world of space. I think, you know, I say more power to all the ones who are developing new applications. Good point. And we'll talk about that.

We'll go into this being an optimist while being a realist too. I definitely want to discuss this. But first I want to go back. Let's go back to your report. Because again, I think this is just so interesting, particularly again, in contrast with some of these other reports and

how you define the space economy. How did you define the space economy that was different than some of the more regular kind of annual reports that helped make it that made it look smaller? Is it a function of just definition? Was there fundamental errors in the other reports? Or is just how you define what's part of the space economy? Great question. There's three reasons why our numbers were different. I mean, obviously, that was an important part of our work, we really wanted to understand if we got something wrong, right. So, so one thing I do want to say that all the organizations that do develop some of these estimates are well meaning, and I highly respect them. So I don't think anybody is, is trying to pull the wool over anybody else's eyes.

But just to kind of go through the things that we did differently, we all tried to sum the value of goods and services purchased or sold by each of those four categories I'd mentioned, right? However, in some cases, summing the value results in some double counting. So for example, when industry is selling rockets and spacecraft to government, and government is buying it, you either count the industry sale or you count the government purchase, but you don't count both. And when you add up both to put into a pie chart, when there's some amount of double counting happens, and that leads to inflated numbers. So this first one is sort of a mechanical issue. But the second one, as you said, is a definitional issue.

We confine the value of satellite services to services generated in space. We included only the revenues or imputed revenues based on costs generated from owning and operating satellites and transmitting signals to Earth. generated from owning and operating satellites and transmitting signals to Earth. We excluded, for example, as I said earlier, direct payments for royalties for films or other content or marketing expenses. The third major reason our numbers are different is that there's differences between how we estimate the value of the space service user support industry. Now, the fourth category I had mentioned, we only included the piece where the full value of a good or service is to receive or use signals from services, not the entire device itself.

So for example, for GNSS data, we didn't include the entire value of the iPhone, just the microchip and other components that make the reception of signals from space possible. And again, that reduces the total dollar value. Again, this is not to say that the other estimates are incorrect. We just have a tighter system boundary. I found that last point, how you include the value of things that receive GPS signals or

GNSS signals, really instructive. Why you have to read things carefully, right? Why you have to understand what's going into these types of discussions beyond reading the headline. The idea that the iPhone is a pure product of the space economy just doesn't, in my opinion, hold water. It would exist with or

without that GPS receiver in it. And with Wi-Fi mapping and cell tower pinging, you can still do some function of geolocation. For me, it comes down to what are some of the incentive structures and how we talk about the space economy? Not saying it's purposeful or not, but are we encouraged as a community, when given the option, maybe go for the larger number because then you get more attention and it helps the industry? It's complicated, I guess. And this is, I think, the value of having multiple analyses like this, and particularly

really open analyses like the one that your group did. Beyond this definitional aspect of how you include the value of these types of economies, how did you try to create this heuristic in advance? So how did you try to avoid similar types of either your own desires or optimisms for outcomes? Or what types of incentives were you trying to, structural incentives, if any, were you trying to avoid in your group? How did you choose this system to identify the size of the space economy? The only incentive we had was to just be very crystal clear about defining the bounds.

about defining the bounds. And we felt that a space economy is what is created in space or the interaction between ground and space, no broader. Because after a while, you don't know where to stop. A really good example is electricity generation, right? So if you asked me,

what's the electricity generation sector of the United States? The entire economy runs on electricity. We could say, well, it's the electricity generation sector of the United States? You know, the entire economy runs on electricity. We could say, well, it's an entire 20 trillion GDP. But that's not, you know, that's on the electricity generation sector. I mean, obviously, I'm exaggerating for effect here. Nobody else has done that. If we were to do the electricity generation, we would focus on the equipment used for the

power plants, the transmission lines, turbines, the fuel, the oil or gas or nuclear fuel, whatever else that you're burning to generate electricity. So that was sort of what we were trying to do, get a narrow assessment. And of course, we completely understand that this is subjective. And for some people, including Uber, may actually be part of the space economy. And I think that's why, Dana, you also mentioned this other thing about transparency, right? Sometimes it's just really not clear how something was done. So we need transparency of methods.

We need that analysis to be publicly accessible. It needs to have peer review, right? I mean, we are perfectly happy if you and others come back to us and say we got A, B, and C wrong, and we will try to fix it. But I think the peer review part is also pretty important. I mean, there's things that the government can do to make this better. Right now, we don't have in the Commerce Department, we don't have space-specific industry codes to be able to very narrowly capture some of these things. I think it's like aerospace, which includes, of course, mostly aeronautics and aviation. So I think there's a whole bunch of things that we need to do as a community

to get a better handle of what the size of the space economy is. Much more of Casey Dreyer's conversation with space policy expert Bhavya Lal is just ahead. Stick with us. If there's one lesson to take away from this discussion, it's that it's actually surprisingly hard to definitively answer that question about the size of the space economy, right? Because it's so subjective. We've just been talking about to definition, and then your methods just can be very different in terms of how you approach it.

It's so much context dependent, I guess, which is maybe just the fundamental, what was it, the dismal science of economics, I suppose, right? It's very context dependent on what you define and what you're looking to understand. While reading the paper, for example, I went back and forth on whether DirecTV payments for royalties was part of the space economy or not because i was like well obviously it doesn't depend on things in space like hollywood doesn't depend on space but would they be making those payments if they didn't have satellites in space and i could see a gray area you know i could see kind of both arguments for that there's a difference between the size of the space economy and the size of the space economy and the impact of

the space economy and the impact is quite outsized as you just mentioned right that our banking system depends on space that our transportation and logistics services depend on space that pokemon go depends on space doesn't mean they're part of the space economy right i mean it just means that our investments in space have a multiplier effect on our society and economy, and we need to nurture and protect the space domain. So I think sometimes we get confused between, is it the size or is it the impact? And we try to incorporate the impact into the size,

and maybe that's something to discuss. That's a really good point. Again, it's like the idea that I was trying to think of in my head of a way to think about what is the space economy and as nicely just the impact of it, who advocates for space policy that helps them, right? So I don't see Hollywood demanding regulatory reforms to commercial launches to enable more, let's just say, lower cost of commercial satellite services or something that would give them some impact effect through revenues. And I think maybe that's like a rule of thumb, perhaps. If there's no direct

self-advocacy through an industry, is it really part of the space economy? Or is it just benefiting from something else that someone else is doing? That's an interesting rule of thumb to go with. I'm trying to see in real time if there is a community I can think of that isn't advocating but benefiting. But you're right, that's actually an interesting point. You know, I was just thinking you mentioned Hollywood. I mean, I think the role of Hollywood in the space economy should not be underestimated. I mean, I think the role of Hollywood in the space economy should not be underestimated. I mean, the movie Gravity was impactful enough that there were hearings in Congress with the title How to Avoid a Real-Life Gravity in Space. I think it really brought the idea of orbital debris to the fore of people's minds. And, you know, movies like Martian, I mean, oh, my God, you cannot underestimate the impact of movies like that on our society.

I heard that after that movie came out, JPL's Recruitment Day, I think they had like a 30-mile backup of people wanting to go and put their names in the industry fair or whatever fair they were having for recruitment that day. Well, that's the classic what you were just saying about the difference between impact, right? And there's a great Roger Lanius paper looking at the public history of support for space and seeing this jump in public support in the mid-1990s that has no other correlative

explanation beyond the fact that Apollo 13 movie came out around that time. That probably caused like a permanent 10% or a 10 point boost in public approval of space. It is incredibly impactful, but at the same time, it's like the inverse of it, right? It's creating a public perception, and it can certainly drive awareness and discussion through culture. But by doing that, they're not also then advocating for the actual policies to enable the type of self-serving incomes. And I guess that's what it comes down to. To me, are they doing self-serving industry advocacy? Because I think that's where you come down to how important is space to a business?

Well, if they're going to spend money on a lobbyist to directly impact regulatory structures or whatever types of industry subsidies or support technology investment from government, that's how you kind of know if they're spending their own money to get more. So Lockheed Martin obviously spends a lot of money on lobbying on space issues because a huge chunk of their business depends on it. I'm not sure if Disney does. You know, they might. I'll be happy to be wrong. But I think that's the that invert that that kind of division that you were discussing that between impact, the secondary impacts of space versus the direct kind of economic measure of space. Yeah, I absolutely 100% agree with you. I'm just thinking of this

recent news announcement that Tom Cruise is going to be filming on the space station. So, you know, now we are adding space tourism and, you know, so yes, it is getting, you know, it is getting more nebulous as we go forward. And I'm excited about that. I mean, I want more people to be going up in space, although for 55 million a shot, which is, I think, the last number I saw for Axiom Space, I don't know if it's going to be too many people going. future with projections. And this was a whole section of your paper. And this is maybe important to kind of segment out the context of this too, is that, you know, we've been talking about these other reports from the Satellite Industry Association and the Space Foundation. But those are kind of snapshot reports. Other groups have been taking those snapshots and making projections. Merrill Lynch, Bacon America, other banks kind of investment type firms that then move this forward, like into the future. So these are two different groups of people who are

one is doing the snapshot and other types of groups are doing projections. What are the range of projections that are being put out there? And then let's discuss what ideas and assumptions are going into them. So we identified five reports, not all of which actually were available publicly. UBS made a projection for 2040 that it would be $926 billion by 2040, the size of the face economy. Again, they were starting with a base of $340 billion. And if you do the math, it's about 4.3% compound annual rate of growth. Morgan Stanley started with about the same number, $339 billion, and they projected it

out to $1.1 trillion, which is a 4.9% growth rate, roughly. And again, these are all 20-year estimates through 2040. The U.S. Chamber of Commerce actually just did a straight line projection, 6%. And they went from $383 billion to $1.5 trillion. Bank of America looked at it a little bit farther, 2045. And they went from $340 billion today to $2.7 trillion, which is a 9% increase. And Goldman Sachs, the numbers are a little bit difficult to pin down since most of the report wasn't public, but, you know, they kind of called it a multi-trillion economy. It seemed like about 9.5% compound annual rate of growth. So it kind of went from, you know, 4.3% to 9.5%,

from 926 billion to multi-trillion or at least $2.7 trillion. I should just clarify one thing. Unlike the snapshot where we actually did make our own estimates for projections, we did not have our estimate. We just looked at what the other estimates were and we tried to critically review them, what they included, what they didn't include. Yeah, it was a lot of fun to read these reports. I mean, they're certainly ambitious.

So what are some of the common assumptions that these reports make that get you from a few hundred billion, let's say, just as their starting point, to the trillion-dollar kind of space economy, which seems to be the phrase thrown around quite often about where this is going. One area where you see a large role across the board was satellite broadband internet services. In fact, Morgan Stanley's prediction at $1.1 trillion, over three quarters of this number came from an increase in broadband internet demand. And actually, this is important,

accompanying demand for ground equipment. And then they included secondary effects. For example, now that there's global broadband internet availability, there's going to be more e-commerce. There's going to be more online advertising. There's going to be more social media revenues. So they included all of that in their $1.1 trillion economy,

which brings us back to that original question of, where do you draw the boundary? I mean, do we want to draw the boundary at online advertising because there is greater internet access? And in some cases, there were some very specific assumptions on that there will be a thousand astronauts in low-earth orbit. There will be a populated lunar habitat. will be a thousand astronauts in north orbit. There will be a populated lunar habitat.

There will be space solar power from geo and active lunar regolith and asteroid mining. So in some cases, there were specific assumptions for the next 20 years. And space tourism and space mining kind of showed up in many of these estimates. Not all of them, but at least two of the five of them. A lot of things that basically haven't happened yet, they would say, that's what gets you to the trillion dollars, you know, whatever-ish type of economy. Is that an accurate way to characterize it? Maybe a pithy way to characterize it? Like if you assume magic, right?

Or if you assume things happen, like that haven't, don't exist yet, then it's sure, it can be worth a lot of money. like that haven't don't exist yet then it's sure like it can be worth a lot of money but they're not i mean they're projecting what we have now but it's kind of you identify a couple of areas of what we do have data for and they tend not to match that growth projections already that they're identifying that's right sort of a side fun fact in 2002 there was a study by futron which is a actually a very impressive space consultancy and forecasting company. They predicted that by 2021, just next year, there will be over 15,000 passengers flying annually on suborbital flights with revenues exceeding 700 million. And, you know, it's a year away from 2021 and we are still waiting for the first passenger to fly.

I mean, I'm confident that this market will take off, but, you know, we don't know how big it will be and by when. And of course, on orbital flights as well. You know, we've had only, what, seven people who ever flown to the space station on eight separate trips. Again, as I said, you know, Axiom has offered $55 million per passenger. Space Adventures just this week or last week signed up two passengers for a spacewalk. But these are onesies and twosies, right? These don't make a market. If you want to talk about a market,

a tourism market, for example, needs to be closer to an airline market, not five to 10 a year. So I think that's one of the issues. The other, I think the underlying problem with some of these estimates isn't even really sort of optimistic assumptions on asteroid mining and some of these things. Some of them is just extrapolating some trends which are not really extrapolatable, right? So for example, one of the reports talked about Dennis Tito went to the space station

for $20 million. And now we can do 80 kilometers for $250,000. So the point they're making is, hey, the prices have come down towards a magnitude, just keep extrapolating and they'll keep coming down. However, I think the lack of understanding there is that flying to suborbital space isn't the same as flying to orbital space, right? It takes 50 times as much energy to get to the space station

as to at some point in suborbital space. The same with sort of, there's this point about, oh, we have rocket lab and it's a hundred times cheaper than the space shuttle. Well, yes, absolutely. But the space shuttle is doing different things and you cannot be going,

you won't be taking human beings to the moon with a Rocket Lab rocket. Or in fact, the specific example I'm thinking of is, you know, Rocket Lab's going to an asteroid again. I mean, it's an awesome company and i adore everybody there and all the great things they are doing but it's unclear that you can take that price point and say we can now mine asteroids so the costs haven't come down for the same capability and some of it seems to be that because these are banks maybe doing the work, they don't understand some of these aerospace subtleties and nuances that you do need to understand to be able to make these claims.

Right. This is where understanding of physics certainly is useful when it comes to analyzing space issues. This is really an important point. You know, everybody has to have some aerospace engineers in their life. So I try to make sure anytime I'm trying to understand something or write something, I try to reach out to aerospace folks and say, hey, what does this mean? Explain this to me. What's the difference between specific impulse and thrust? How does solar electric propulsion do A versus chemical propulsion differently? So you just need to make sure that even when you're writing for a policy audience,

which is what we do for a living, our math is right, you know, our understanding of the principles is correct, which means you just need to get those, you know, the right sort of technical experts involved. So your background in nuclear engineering was then helpful for your recent report on nuclear launch policy then? That is correct. Okay, which just came out. Well, we'll link to it if anyone's ready. I thought that was also interesting, but we don't have time to talk about that one today. This really comes to me, again, this reinforces this idea of incentives. Not ascribing malintent from these folks at the investment banks who are putting this together, but it certainly aligns with any sort of structural incentives to take the most optimistic projection of a future economy if you

are then going to be selling financial products to potential private investors about that future economy, right? The incentives align to enhance that type of bullish analysis. That's where I think people just, it's important to understand how these come together, if you're considering or just analyzing this. Maybe this is a good time, I think, for our listeners, and for people who follow this, how should they take in statements and claims like this? Because I guess you kind of approach this in a similar way, I mean, as a professional, but how do you approach these types of claims? And what are good things to keep in mind just as a person when seeing someone wave around a $3 trillion space economy claim, for example?

Carl Sagan once said extraordinary claims require extraordinary evidence, right? So I think if somebody makes a claim about you know something really incredible you want to just look for what are the what what's the data what's the evidence and it really helps to kind of have a combination of optimism and skepticism so keep the fundamental in mind who's the customer who's buying this stuff how much does it cost do the growth rates make sense uh do they follow historical growth rates? So for example, if, you know, the space sector has been growing at three to 6% annually, thinking that it will grow at 15%, it may be possible and, you know, fingers crossed that it is, but it just something that should give you pause. So I think that sort of thing would be useful. Look for common errors in analysis,

which are not, again, as you said, said due to malice but show frequently double counting you know what are the system boundaries are they explicit are they justifiable and again the core point you made that you know just think about whether there could be motivated reasoning you know do people writing the report have a reason for exaggerating capabilities and i think this is where some of the things, something like this, it may be time that the government takes a bigger lead on it. I mean, Bureau of Economic Analysis and the Department of Commerce develops estimates for all sorts of subsectors of the economy. Maybe this is something they should be doing for the space sector as well. And actually, I'm saying that, and I actually happen to know that they have begun doing this.

So that's a very good development because there's, you know, it's more likely than not that it's going to be transparent from a methods perspective. It'll be accessible publicly. It is likely going to be subject to peer review, you know, use common definitions across various different entities, whether it's commerce or treasury or the National Science Foundation or OECD even, when sort of these authoritative organizations develop these products,

they are likely to be using common definitions. So I think we may be getting on a good trend here. That's a good point. I mean, that's just kind of a good plug for the value of non-interested public or nonprofit analysis and data collection for a larger community. It's a public good. I was just thinking out that you can tell me this is too far along the analogy, but the idea of back in the gold rush era, people would put up these advertisements in the East Coast saying, gold everywhere in the West Coast, come on out, eat jobs free for everybody, you'll be immediately rich, to paraphrase. Those were put by people who were incentivized to make it sound better than it was

to draw a bunch of cheap labor out West. In a way, by having a public organization or public data gathering analysis, their financial outcome doesn't depend on inflating those numbers or showing really exciting outcomes of those numbers is probably a very important aspect to counter that type of boosterism that is otherwise type of just like a part of human nature. Right. And there's a balance to be had, right? So one of my favorite stories to tell is that in 2012 the national academies actually wrote a report for the air force on reusable booster systems and their bottom line was that given uncertainties in the business case and the yet to be mitigated technology risk

it is premature for the air force space command to program significant investments in a reusable booster system capability so So the authorities in the country, the national academies, were telling the Air Force, don't bother with reusable first stages. And guess what happened? About the same time, SpaceX started investing in the area, and in the next three to four years, they landed a booster and refluid, right? And actually, yesterday, actually launched a payload, the latest GPS satellite, I think, for the the air force or i guess space force now and landed the booster so

so there was value right i mean so i think i'm glad that there's there is folks who are pushing the boundaries and i mean another example is the in the dot com bus right i mean sure most of the companies there was a lot of hype in the system and most companies went out of business. But out of the ashes came Amazon and eBay and some of these other ones. Sure, you know, that pet sock went away, thank God. I don't know if you remember that pet sock comment. But, you know, so I think there's, I guess, a case to be made for balance. And technology really is moving fast.

You know, there's this thing called Amara's Law. we as humans overestimate technical risk in the near term, and underestimate it in the long term. I guess my point is that let the government do what the government needs to do, which is kind of some portfolio of mostly conservative, but also some high risk things. And let the private sector kind of, you know, push the boundaries a bit more. Although I would like to make the case that the government needs to have more of a portfolio approach to its investment and do a few more high risk things

than it does currently. Let me just take the fun perspective on that National Academy study. I guess they were totally right in a way, right? Like it's a good thing the government didn't start to invest in it because then SpaceX just went and did it, right? So in retrospect, government didn't even need to put extra money into SpaceX or other, you know, reusable rocket technology because it was then solved maybe in a cleaner fashion. So maybe ironically,

that report ended up being the right pathway from a policy perspective, but they just, or just maybe they got lucky. But the bigger point that you're making, I think, is worth dwelling on a moment that projections are hard, and they're frequently wrong. And so I can hear listeners saying, you know, well, people said you couldn't do exactly that. You couldn't use reusable rockets, you know, so why should we listen to you about the future of Starlink or other things? Because, for example, Elon Musk has proved people wrong his whole life. You can't make an electric car company. You can't

make a reusable rocket company. Can't go to Mars. So how do you factor in the idea of just this kind of unpredictable aspect of development. Everyone's wrong until one person is right. And then that may, you have this paradigm shift in terms of what's possible. So is it even worth looking at predictive or critiquing predictive analyses like this? I think there's probably grains of reality and truth in almost all predictions. So I think it is worth looking and examining the assumptions and then kind of seeing what doesn't stand up to reason versus what does. So I think there is value to predicting. So one area we recently wrote a report on is on orbit servicing assembly and manufacturing for our assignment by

the sponsor. Our job was to make predictions and we did. So I hope we have a chance to discuss that report sometime. But, you know, we kind of lay out why we think the market and servicing would be this or assembly would be that. It may be useful for private companies wanting, let's say, to have, you know, fuel depots in North Orbit or not. I actually think it's worth the effort, but I think the key is to make sure that you examine them critically and do not take away just the top line, the runaway trillion dollar or growth rate of 15% kind of assessment. It's almost like the difference between the idea that it will

and the idea that it might happen. That maybe it just comes down to that informed consent or informed risk of how risky is something. Particularly with space, I think, where we touched on this a little bit, but there's so many basic physical challenges to being in space for humans and to spacecraft, right? Like it's just a harsh environment. Orbital mechanics, you can't shortcut orbital mechanics, right? You can't shortcut the rocket equation. Those all feed into ultimately what's likely versus unlikely to happen. So I guess I kind of see it in terms of like when you're making those projections, particularly, at least in space compared to something like software, where it's a lot harder to predict because it's just software ultimately and clever programming and so forth.

You're restricted by these real physical limitations. And so it's good to understand those, I suppose, when you're making these types of bets on the future. How do you then take that knowledge? And particularly as a professional who's been doing this a while, you know, I was thinking about how when you write a report like this, and you're saying, hey, actually, you know, the space economy we think is half the size of what other people report it. I don't see any politicians going up at hearings and waving that around as like, ah, yes, finally, the space economy is half the size we hoped it would be. Like, no, people keep talking about the trillion dollar space economy, right?

They don't necessarily want to hear this information. You know, but having said that, two things did happen. So the Department of Commerce did start, and again, I don't want to attribute that start to our report alone, but the Department of Commerce did start an effort to, in earnest, estimate the size of the space economy. And so did OECD. And both entities invited us to come kind of present our work and look at some of the ways they were proceeding. So I think there is that kind of impact at the sort of nuts and bolts of the policy level. But you're right.

I don't think we will stop seeing the trillion economy, trillion dollar economy claims going away. And, you know, if it gets people excited, as long as the government is not overly taken by these claims and continues to make good decisions, we should be OK. And I'll give you an example. So the asteroid mining, just yesterday there was a Twitter feed that the asteroid mining market would be, I don't know, $4 billion by 2025 in five years. I really hope the government doesn't take that as reality. We finished a report recently where we looked at the case for asteroid mining. And in fact, as we were doing our interviews and data collection, we learned that the two major companies that wanted to do asteroid mining, like they went out of business during the course of our study. We were like, can you please

wait until it's over? So, you know, the starting assumption was a private sector is all set. There's no need for government funding. These private companies will go do what needs to be done. Turns out that that's not the case. That is not going to be the case. Asteroid mining is hard. It will take a lot of government investment all the way from prospecting as in knowing what asteroids have materials of interest to us. And then from there to the equipment that's needed to mine asteroids, to capture the materials, to bring them to places of interest. It is likely not going to be private investment.

I hope that our report helps NASA and other government organizations understand that if living off the earth is of interest to us as a society, as an economy, as it is, then they won't just say, yeah, this thing is taken care of, the private sector is going to take care of it, let's just invest in other things. So I hope that does happen. activities, I always try to balance that out. And it's I struggle with it, frankly, right? Like I want to be an optimist sometimes where even though I feel pessimistic, so how do you balance this out through your professional career of taking these critical looks at these ambitious ideas? How do you personally work through that contradiction? Have you remained an optimist

going through this? Absolutely. I mean, I believe humans need to be a multi-planet, face-faring species. I want millions of us living and working in space. I believe the solar system is brimming with resources. We need to bring the solar system in our economic realm. However, this is the optimist part of me. However, I think, and this is where I put on my policy analyst hat, I think the way, and I believe it will happen, maybe not all of it in my lifetime, but I think the way it will happen is with careful planning, with government investment and partnership with the private sector. We just have to be deliberate and methodical in this planning, right? So one example, the government needs to design mission plans and architectures that are flexible. So let's say when a commercial company does reach adequate readiness levels, they can be incorporated in these missions and architectures.

And we aren't stuck in some old, outdated, monolithic paradigm. So these asteroid mining companies or moon mining companies, let's say they do develop a water extracting system that is significantly cheaper than what the government is developing. Our architectures should be in place that the government can quickly transition their operations to exploit them. Also staying evidence and data driven and trying to find points of interjecting sanity or I guess reality and optimism. Clear-eyed optimism. Yes, I like that. I think my husband uses this term apocalyptic, which is, you know, so you have basically if you don't kill ourselves, we have a really bright future. So that's one term that I've used to describe some people. Seems very appropriate at the moment, especially.

Dr. Bhavya Lal, I want to thank you so much for joining us on the Space Policy Edition this month. I hope you'll come back sometime in the future. Casey, that was so much fun. I had a great time. Thank you so much for inviting me. And I think what you do and what the Planetary Society does is just fantastic. Keep doing it. Well, thank you. Great conversation, Casey, as usual with your guest, Bhavya Lal. I really do look forward to hearing her again on

the show. She's terrific. And if you have not been to this week's show page at planetary.org slash radio, that's where you'll find this month's edition of SPE. You got to see the photo she gave us with her bio of her leaning against the biggest rocket engine ever built, the F-1 built for the Saturn V. It's great fun. I also learned before the two of you started talking, Casey, that she is a sister Trekkie.

So she automatically got extra points in my book. That's true. We should have a whole separate episode about that one at some point. Oh, I hope we can. Anyway, great conversation. Thanks for inviting her to the show. And with that, I guess we're done other than maybe reminding people of how they can become a part of all this. Yeah. Well, obviously just planetary.org slash membership. The most basic thing you can do starts at four bucks a month? Yeah, well, obviously, just planetary.org slash membership, the most basic thing you can do starts at four bucks a month. Really, again, I cannot emphasize how true the statement is that I'm about to say, we depend on having members. Absent members of the Planetary

Society, we do not exist. There is no big corporate funding, there's no big government money that's keeping us afloat is only through the dues and donations from individuals just like you. So I hope you consider doing that. Or you can also donate right now to the advocacy program, the program that I run with Brendan Curry in Washington, DC at planetary.org slash advocacy. Every dollar you give there goes right to our program. That's Casey Dreyer, the chief advocate for the Planetary Society and our senior policy advisor. I'm Matt Kaplan, the host of Planetary Radio. Hope you will tune in. Right now, as this show comes out, we're featuring a great conversation with Jim Bell, happens to be the president of the Planetary Society, but he's also the principal investigator for Mastcam-Z on the Perseverance rover heading to Mars before long.

It's a great conversation. We have him all the time here on Planetary Radio. Casey, I look forward to our next one on the first Friday in the month of August. We'll talk then. And thank all of you for joining us. As always, have a great month at Astra.