Cislunar Economy 101 — Part 3: The 11 Cislunar Verticals
New to the series? You might want to start with Part 1!
Happy 2017! I hope everyone had a great break during the holidays. After being focused on Earth for the past two weeks, space is back in the menu, and it’s time for another post in my Cislunar Economy series. This first series has enjoyed a very warm welcome from our function(core) readers, and I want to thank every one of you for continuing to follow both this series and the function(core) publication.
After a short and exciting introduction in Part 1, Part 2 started defining the structure of the economy by reviewing the resources that we will most likely exploit in space. These resources will act as the basis of our Cislunar Economy, and define the production and distribution activities that will form our economic system.
Part 2 was a good theoretical exercise: we now know which space resources will likely see a market (demand) in the near future. This will allow us to design a model for the economic system from scratch, which can then be studied and used to inform business decisions. This was the goal of my work at NASA during summer 2016. What follows is the basics of an economic model for cislunar space that can serve as the foundation for informed business decisions.
A commonly used practice for describing an industry (which we extend in this case to the entire economy) is by using market verticals. A market vertical is nothing more than a group of companies that serve each other’s specialized needs, focusing on a single niche. An example of this is the 8 verticals of New Space created by NewSpace Global (NSG).
The advantage of using verticals is that they focus on niches, allowing us to treat them as independent units. We can then study them and their mutual relationships separately, which simplifies the problem of studying the economy. This is precisely what the 8 verticals from NSG do: by defining the different niches, they provide clarity in the mess that is usually the New Space industry. Chaoui has a great explanation of each of the NSG verticals, making everything even clearer.
I want to replicate this, but at a higher level, encompassing all the activities that will define the Cislunar Economy. The thesis I’ve been defending since Part 1 is that the current space industry is going to lead to the appearance of the Cislunar Economy in the near future. To do this, we want to see then which verticals will emerge from current space activities, and the NSG verticals are a good place to start.
Value in Space for Space
You might look at the NSG verticals and ask, “aren’t these already cislunar space activities?” After all, they have in-space services, space resources, space-based energy, and microgravity research. And indeed, all these activities happen in cislunar space. However, current New Space activities have one common characteristic that makes them unfit to be classified as cislunar verticals: they create value in space for Earth.
Even those verticals that can create value in space for space (resources, in-space services) have near-term plans that are focused on Earth. This is perfectly understandable — after all, the entirety of the human economic activity takes place on Earth right now. If someone wants to monetize their technology development, they need to create value for Earth.
How do we move on to cislunar space? If we want a self-sustaining space economy, we need to create value in space. We need to focus on activities that create value in space for space. There are two main reasons for this:
- High launch costs (at least $1700 per kg with Falcon Heavy) limit how much mass can be placed affordably in orbit, limiting how much input Earth can have on the Cislunar Economy.
- Strict launch requirements call for impedance matching, that is, creating spacecraft that operate exclusively in space and having transportation nodes to switch from one means to another. A spacecraft that does everything becomes prohibitively expensive using current technology (a good example of that is the Space Shuttle).
These space-for-space activities will be the core of the Cislunar Economy, and our verticals will be based on them.
This does not mean though that Earth gets nothing, or has no input. Space-for-Earth activities will likely serve as a bridge between Earth-based and space-based economy, potentially as a first customer for space-for-space activities. Also, the Cislunar Economy will have to return value to Earth, at least until we have permanent off-world settlements. The value chain of all human activities ends in people’s lives, and every human activity will have to eventually create value for people. How this value is realized in this case is up for discussion (platinum from asteroids, space-based solar power; there are plenty of options).
The 11 Verticals of Cislunar Space
With this understanding in place, we can now identify the activities that will form the market verticals of the Cislunar Economy.
Based on existing business plans and proposals, we can identify activities that will create value in space for space. We can then group them into activity niches, defining a vertical. This results in 11 market verticals. The table below has a summary of the verticals, along with potential companies that could (or aim to) undertake the activities in them.
The 11 verticals cover production activities from raw materials to component manufacturing, present a transportation network, and provide services to support the other activities. They can form an economic system that is based in space, creating value in space for space.
Now, remember how I talk incessantly about this being real in the near future? Notice how all the activities have companies that are either:
- Working in them.
- Working in adjacent fields.
- Creating technology for them.
The current New Space industry is working towards creating the Cislunar Economy; we are just in the very early stages.
Here is where timing comes in (remember Part 1). There are people working on all the different pieces of the value system in the Cislunar Economy, and they can help each other close their business plans. Also, there are space agencies, which I purposely left aside. If these come in at the right time in the right way, they have the potential to significantly accelerate the process.
After defining the 11 verticals, tons of questions pop to mind: What will appear first? How will the economy evolve? Where should I start a business now? Using the verticals, we can start answering these questions, at least at a very high level. One thing we can do is study their mutual relationships, and try to determine what will appear first.
In the following parts of this series, we’ll dive deep into the different verticals. I’ll discuss the existing proposals and plans for each, and we’ll begin to gain a better understanding of our current limitations and the potential evolution of the Cislunar Economy.
We’ll start with the fun part: space mining.
Enjoyed the article? Then you may like the rest of the articles in the Cislunar Economy Series.