Ross U.S. Chamber of Commerce
Commerce Secretary Wilbur Ross, speaking at a U.S. Chamber of Commerce space industry event in December, called for more institutional investment in the space industry. Credit: SpaceNews/Jeff Foust

“Foust Forward” appears in every issue of SpaceNews magazine. This column ran in the June 10, 2019 issue.

One of the central beliefs of advocates of the growing commercial space industry is the concept of the trillion-dollar space economy. They argue that, with current growth and the development of new markets, space will generate at least $1 trillion in annual revenue by 2040, estimates backed up by studies from major Wall Street financial firms.

“We truly believe that today’s $400 billion global space economy will quickly grow to $1 trillion, and perhaps to $3 trillion, by 2040,” Commerce Secretary Wilbur Ross said in a speech June 4 at a meeting of the Advisory Committee on Commercial Remote Sensing, or ACCRES, in Washington.

But what if those numbers — both the current and future size of the space economy — are way too high? That’s the argument that a member of ACCRES made later that day.

Bhavya Lal of the Science and Technology Policy Institute (STPI) led a group that examined estimates of the current side of the space economy published by organizations such as the Satellite Industry Association and the Space Foundation. Those estimates have put the size of the space economy at between $360 billion and $384 billion in 2018.

“We identified three ‘buckets’ of challenges in the way they compute this,” she said. In some cases, there is double-counting between categories in the studies, overstating the size of the economy. A second issue is including services generated on the ground by space companies, like those of satellite television companies. A final issue is including products and services not related to space at all, like production of navigation receivers.

“Some of these are qualitative, subjective issues, and reasonable people can agree or disagree on them,” she said. By STPI’s estimate, removing the double-counting and unrelated revenues can cut the estimated size of the space economy in half.

Even if you accept the higher figures, though, there’s the problem of growing the economy to a trillion dollars or more in two decades. Those future estimates require annual growth rates of five to 11 percent, she noted.

“They don’t seem consistent with some of the trends that we are seeing,” she said. The SIA study saw growth of only 3 percent for the satellite industry overall in 2018. Yet Wall Street analyses project satellite broadband will grow from $2.5 billion in annual revenue to $300 billion by 2040.

The studies also assume significant contributions from new markets, from space tourism and point-to-point suborbital space travel to space mining. Those markets, she noted, are unproven and growth estimates may be unrealistic — especially given the long delays in the emergence of space tourism and setbacks suffered by the first asteroid mining startups.

While officials like Ross continue to promote those trillion-dollar estimates, others in government acknowledge more study is needed. “Government ordinarily doesn’t serve a financial advisory role,” said Patrick Sullivan, deputy director of the Office of Space Commerce.

Yet, the department has been doing work along those lines, convening meetings on topics like space investment and insurance to help stimulate the growth of the industry and overcome barriers to growth. To be effective, it needs good data and realistic forecasts.

Sullivan said the office was working with other agencies on analyzing the value of the space economy. “If it’s going to help advance a policy perspective, we’d love to either develop or get the data from the private sector,” he said during a presentation at the National Space Society’s International Space Development Conference June 5 that again referenced those trillion-dollar projections.

“How do we help give Commerce an argument that they can use in the interagency [discussions] that is not based on fantasy but based on facts that are hard to obtain?” asked Brian Weeden of the Secure World Foundation at the ACCRES meeting. “We’re never going to be able to do that perfect study.” There is, though, evidence that such studies can be improved so that regulators can help the industry without setting expectations too high.


Jeff Foust writes about space policy, commercial space, and related topics for SpaceNews. His Foust Forward column appears in every issue of the magazine.

Jeff Foust writes about space policy, commercial space, and related topics for SpaceNews. He earned a Ph.D. in planetary sciences from the Massachusetts Institute of Technology and a bachelor’s degree with honors in geophysics and planetary science...