Report: Demand Drivers of the Lunar Cislunar Economy (IDA 2020)

Source: IDA

Executive Summary

For the next several years, a return to the Moon is likely to be the preeminent goal of the U.S. human space endeavor, with an initial landing of U.S. astronauts expected in the 2020s. Subsequent to the initial landing, the National Aeronautics and Space Administration (NASA) plans to develop a lunar base for a longer-term sustainable presence on the surface of the Moon. Some in the space industry have argued that a return to the Moon may lead to the creation of a more commercially oriented lunar economy that involves mining operations, tourism, scientific exploration, and other activities, which would be funded by governments, individuals, and businesses. If such a commercially oriented lunar economy emerges, demands on NASA to support lunar activities would be reduced. However, if demand for lunar goods and services from households and businesses is insufficient to create economically viable lunar businesses, the U.S. Government will need to play a more active role in supporting research, development, and the initial operations of lunar businesses to increase their economic viability.

To ascertain whether private sector demand could support commercial lunar activities, NASA requested that the IDA Science and Technology Policy Institute (STPI) examine the present contours and future scale of demand drivers of lunar and cislunar activities through 2040, with a focus on non-NASA commercial demand. This report summarizes STPI’s assessment of demand from civil and commercial sources for lunar and cislunar activities, including the factors that drive that demand. This study was performed between September 2019 and March 2020. We looked at but did not evaluate demand for lunar goods and services to enhance U.S. national security, due to the lack of information at an unclassified level. We identified goods and services that might generate sufficient non-government revenue to be commercially viable. We also highlighted other goods and services that will require enhanced support from the U.S. Government if they are to become economically viable.

Market Analysis

STPI estimated that the budget available for government-funded human lunar missions could be about $63 billion over 17 years, from 2024-2040. In principle, if this were all that governments were willing to spend, this figure would cap the amount of money available to the private sector to support the lunar human exploration activities of NASA and partner governments. In light of our estimated cost of a human mission to the Moon (S2.6 billion at the low end, and $4.9 billion at the high end), under this budget cap, it would be feasible to launch at least one mission a year to the Moon under the low cost scenario, but no more than seven missions over a decade under the high cost scenario.

For products and services that may be demanded by households, we explored more than a dozen markets and found that only markets for lunar tourism, lunar rocks, burials on the Moon, and lunar artifacts exist or are likely to exist. Other than advertising, we found no good or service purchased by businesses that was economically viable in the timeframe of interest. We also looked at derived demand for goods and services produced on the Moon to support other lunar activities. Mining lunar water to produce propellant could become economically viable under some conditions, but will need further analysis. Even our most optimistic estimate for the cost per kilogram of propellant on the lunar surface may be too high to enable the export of propellant to other destinations in cislunar space at an economically viable price.

All other activities are uneconomic, for one or more of four reasons: the underlying technology is underdeveloped; there are no likely buyers in the 2040 timeframe; the cost of providing the services exceeds revenues obtained from selling it; or the product is cheaper to produce terrestrially than to produce on the Moon. In general, private demand is insufficient to sustain a pure-play lunar company. Such companies, if they are to become economically viable, need to find ways to exploit existing proven markets, either terrestrially or in near-Earth space.

Our research shows there are two principal drivers of demand for lunar and cislunar goods and services: (1) government expenditures on Moon-related activities, which trigger a derived demand for transportation, capsules, landers, and other lunar goods and services, and (2) transportation costs, which drive the cost of producing and transporting goods on the Moon, but also drive costs of transporting goods from the Earth to cislunar space and the Moon. If launch costs fall as much as some predict, it may continue to be cheaper to transport water and propellant to the Moon rather than to produce them in situ. While private demand for lunar goods and services is not sufficient to sustain a pure-play lunar company, the government can still reduce its costs, accelerate its schedule, and build streams for emerging lunar capabilities by utilizing commercial acquisition practices to procure the services it needs for lunar exploration.

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