STPI Questions $1 Trillion Space Economy Claims

A new analysis by the Science and Technology Policy Institute (STPI) calls into question claims about the size of the “space economy” today and projections for the future.  Trump Administration officials routinely cite forecasts of a “trillion dollar space economy” that are supported by reports from well known financial institutions, but STPI concludes they involve methodological mistakes or misunderstandings about the space business that result in overstating the value of commercial space activities.

The STPI analysis by Bhavya Lal, Keith Crane and Evan Linck was presented to a Department of Commerce (DOC) advisory committee yesterday.  That committee provides advice on commercial remote sensing regulation, the segment of the commercial space industry regulated by DOC today.

The Trump Administration plans to greatly expand DOC’s role in commercial space, however, putting it in charge of regulating all space activities not already under the oversight of the Department of Transportation (commercial launch and reentry services) or the Federal Communications Commission (spectrum).   It would also become the interface between the Air Force and non-military satellite operators for space situational awareness and space traffic management.

Secretary of Commerce Wilbur Ross is enthusiastic about making DOC a “one-stop shop” for commercial space and creating a Bureau of Space Commerce to that end.  Congress has not approved that yet, but he is one of the most prominent Trump Administration officials to talk about the “trillion dollar space economy” that he sees emerging from the burgeoning commercial space sector and the Administration’s push towards deregulation.  At the March 26, 2019 meeting of the White House National Space Council, he cited a “wave of innovation” in space commerce, including remote sensing, communications, navigation, weather forecasting, satellite servicing, tourism, and, in the future, space habitation and asteroid mining.

The current value of the space economy is estimated in the $360-384 billion range.  For the future, in a February 28, 2019 op-ed in the Orlando Sentinel, Ross cited projections by Morgan Stanley of a $1.1 trillion space economy by 2040 and Bank of America with an even more optimistic $3 trillion.

STPI, part of the Institute for Defense Analyses, took a look at how those and other organizations came up with their numbers.  Lal told SpacePolicyOnline.com that STPI will release a report with its analysis in the next couple of weeks, but for now her presentation to the DOC Advisory Committee on Commercial Remote Sensing (ACCRES) summarizes its conclusions.

She and her co-authors found a number of shortcomings in the methodologies used to value today’s space economy caused by double-counting, including services generated on the ground instead of in space, and including costs and revenues that “could be considered unrelated to space.”

Consequently, STPI concluded that the current value of the space economy is significantly overstated.

As for the projections by Morgan Stanley, Bank of America and others, STPI found their estimates of growth in commercial space to be inconsistent with current trends — revenues from satellite television and earth observation went down, not up, in 2018 — and questioned projections that satellite broadband revenues will grow from $2.5 billion today to more than $300 billion in 2040.

More broadly, STPI wondered whether the organizations making the projections really understand the space business and the technologies that underpin it.

STPI often performs analyses for government customers, especially the White House Office of Science and Technology Policy, but Lal told SpacePolicyOnline.com that this analysis was an internally funded project.

Meanwhile, Ross, NASA Administrator Jim Bridenstine, DOD Under Secretary of Defense for Acquisition and Sustainment Ellen Lord and others will be at the National Press Club on Thursday to preview U.S. participation in the Paris Air Show later this month. Commercial space will be a focus at the U.S. Pavilion.  DOC and the Department of State are also getting ready to host a Space Enterprise Summit in Washington the last week of June with sessions on commercial space activities and opportunities and challenges for industry to collaborate internationally.