TCS Daily

Buy Space Bonds

By Kenneth Silber - January 16, 2004 12:00 AM

President Bush's space initiative is a laudable blend of vision and pragmatism. Sending humans to the moon and Mars is a far more inspiring goal than sending them in circles around the Earth. But shooting for the moon first, and thus developing technology and expertise for a later Mars mission, is pragmatic. It avoids the vastly higher near-term costs and risks that would be involved in a crash program aimed straight at the red planet.

Although I have long been an advocate of a Mars mission, I welcome the moon-first approach. The moon has merit both as a testing ground and as a destination in itself. The future moon may have scientific bases, astronomical observatories, solar arrays, tourist lodges, mining operations, defenses against Earth-threatening asteroids, and more.

In its financial aspects, the Bush plan also is pragmatic -- indeed, too much so. The president's proposal would increase NASA's budget very modestly in the near term, pushing more expensive tasks into the future. This approach may avoid an immediate political backlash. But it also limits the prospects for near-term technological progress. Moreover, it gives little assurance that the moon-Mars program will survive the longer haul, amid changing administrations, economic fluctuations, and competition from voracious entitlement programs.

Something more visionary is needed. Getting to the moon and Mars will require innovation on the financial side as well as in space hardware. One way to achieve this is for the U.S. government to issue space bonds. These would have some similarity to the war bonds issued during World Wars I and II (and to the Patriot Bonds that the government began issuing several months after September 11). However, space bonds, properly structured, would not just be a way for people to express support for the space program. They would also be a way for people to become genuine investors in space.

Imagine the following deal. You can buy a 30-year space bond. It yields regular interest payments, and can be traded on the open market. Yet, its ultimate value depends on what happens in space. Halfway through the bond's lifetime, NASA expects to return astronauts to the moon. By the time of maturity, NASA hopes to send humans to Mars. Moreover, the government, under the Space Bonds Act, has committed to supervising a registry of extraterrestrial property rights (and has negotiated with several foreign governments or international bodies for reciprocal recognition of extraterrestrial property claims).

Thus, as your bond matures, you have the option of converting the principal, or a portion thereof, into an extraterrestrial property right. Such rights might include deeds to portions of the surface of the moon or Mars. But they could take various other forms: mining rights, for instance, or shares in electricity generated by solar panels on or near the moon, or fees from any commercial revenue produced by a specified extraterrestrial body within a specified timeframe. Such commerce might include relatively near-term activities such as allowing customers on Earth to operate remote-controlled rovers on the moon.

Once NASA has sent humans back to the moon and to Mars, the attractiveness of such extraterrestrial property would grow immensely. Property values would reflect the now-plausible potential uses of extraterrestrial territories. Even if commercial revenues are still well into the future, properties would have value based on speculation about when and how they would be used. The bonds could also be structured so that, if NASA keeps its timetable for human missions, a portion of principal automatically converts into property rights. In any event, the government would have a clear incentive to achieve its stated objectives in space, since doing so would reduce its space-bond debt. Subsequent issues of space bonds could be pegged to further objectives on Mars, the Asteroid Belt, or beyond.

For investors, space bonds would offer an opportunity to help build a human future in space, and possibly achieve superior returns in the process. It's hard to have a diversified portfolio when it's all on one planet.


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