Friday, September 12, 2014

Mining in outer space and property rights

Although it seems a pretty conventional simplification in economic to put natural resources as some exogenous wealth transfer in the budget constraint (i.e. instead of a properly modeled production sector, an early example is Sachs & Warner, 1995, NBER 5398, p. 37), during the early days of my PhD I was challenged to back that assumption up a bit better. Shouldn't you model the process of discovery and trade properly? I used this article [] (original study here []), suggesting that gold came with meteorites to earth from outer space in the first place, to show that the simplification is valid, because the alternative becomes unwieldy requiring not only to model the planet but indeed the universe (a true economist's reply, if I may say so).

Now it appears that we may not be waiting for stuff to come to us, but explore space itself. Notwithstanding the physical barriers, there is a niftier one: the law. VOX [] reports that the US congress is considering a bill (acronym: ASTEROID) to provide the appropriate regulatory framework and property rights, in order to incentivise future investments. The issue is that a 1967 UN treaty prohibits any nation to expropriate celestial bodies, but allows free use of them. But does this allow private corporations to expropriate bodies (since they are not nations), or is mining (and the stuff you bring back) considered under 'use' (NASA took moon dust/stones back to earth and claimed ownership)? More details on testimonies here [].

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