Monday, April 09, 2007

Who Should Own the Moon?

The BBC tells of an American named Dennis Hope who is selling plots of land on the moon. He apparently decides which ones to offer by “closing his eyes and pointing to a map of the Moon.” Most astonishingly, he claims to have made $9 million from individuals (including celebrities) and major corporations, including Hilton and Marriott, alike. (Whether people are buying as speculation or pure novelty is unclear.) Technology may soon make both permanent colonization and industrial/mining activity on the moon feasible. How should property rights be allocated when they are currently unowned?

The Moon is valuable because of the resources contained in it – minerals, ores, and apparently helium-3, the latter very rare on earth but potentially very valuable as an energy source. In principle, given the technological know-how, these resources could be made useful to those of us on Earth. It is even possible that manufacturing done in a low-gravity environment could lead to technologically superior products; I vaguely recall that experiments have been done in the space shuttle to test this possibility.

But finding these resources, establishing a human presence, and transporting the materials (and the people) back to Earth is very costly. I would want to use a property-rights system to give people incentives to learn how to do this cost-effectively, and to reward those who have (or are likely to have in the future) the knowledge to exploit these resources.

Any selling of moon plots before anyone has even gone there for commercial purposes is inefficient. There is no reason to think at this initial stage that anyone knows how enforceable those rights will be, and the necessary exploration work has yet to be done. To incentivize such exploration, it is critical to make it potentially profitable. The proper solution, it seems to me, is to simply allow anyone who makes it to the moon stake a claim by means of establishing a permanent presence, manned or unmanned. Indeed, it might even be beneficial to require the establishment of claims to all resources within a definitively surveyed area. This will presumably limit the ability of a first-arriver to claim the entire orb, while providing people incentives to go out and look for the valuable stuff - by rewarding actual extractors rather than merely explorers. The scheme bears some resemblance to the old Homestead Act provisions that encouraged settlement of the West, with the exception that under the latter you could establish ownership merely by fencing property off. That worked then because much of the presumed highest-value uses of such land – ranching, crops – involved no new technology. Here extraction of resources – there will be no horticulture on the surface of the moon – is prohibitively expensive and highly speculative. The incentive we want to provide is to find the resources, which requires making finding them profitable. I would thus argue in favor of establishing some kind of specific underlying resource claim, which might then also include other resources fortuitously found under the same plot.

One possibility – placing the moon under some kind of multinational body like the UN – is clearly a nonstarter. This would lead to all sorts of majoritarian rent-seeking on behalf of poor societies unlikely to mount any lunar resource extraction, or to frustration of private efforts to go get the resources to get them to begin with. Resources owned by everyone are owned by no one. The moon is valuable; we should encourage the expenditure of value to go out and get what makes it valuable. To answer the question in the title, no one - yet.


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