Building a lunar economy in two easy steps

Author: Carlos M. Entrena Utrilla

Adapted by: Alicia Vílchez Bedmar

Moon and Earth graphic and Lunar Economy title

Today, we continue our company philosophy series by talking about the creation of the space economy and how we will go about it. The timing of this post is not coincidental! We recently announced our partnership with ispace to collaborate in lunar missions. This is but the obvious first step of enabling the cislunar economy. Not so obvious? Let’s see why!

As we discussed when we talked about our company vision, Plus Ultra exists for a single purpose: to enable the cislunar economy.

Now, that’s a tall order. Creating an economy is not something that you just get up and do. On Earth, our current global economy feeds from thousands of years of infrastructure development. There’s also been countless failed economies in our history, and anything resembling a remotely successful economy was built by much more than just a central plan by a single entity. Economies are not built. Economies seem to just happen.

So how we enable the cislunar economy if they kind of just happen? Put like that, it can be very inspiring to think that the lunar economy will just get here sooner or later. However, it can be a bit obscure as a concept.

  1. What a cislunar economy is (and isn’t)

  2. Step 1: create value on the Moon for the Moon

  3. Step 2: build the lunar ecosystem

  4. History in the making

What a cislunar economy is (and isn’t)

Going back to basics, an economy can be defined as an area of production, distribution, trade, and consumption of goods and services by different agents. In the case of cislunar space, the area (or rather, the volume) is clear: the area surrounding the Moon and Earth. No need to give a precise definition of the distance, the physics of space travel will tell you when you’ve strayed too far for the economy. We also have a pretty good idea at this point of what goods or services are to be produced, distributed, traded, and consumed.

I’ve published about it before in Medium (way before Plus Ultra was a thing!) and an updated, more academic version of that content will be published later this year with the new edition of the Lunar Handbook (also written by yours truly). We’ll also talk more about it here in Plus Ultra’s Odyssey, but not today (because then this would become a dissertation).

So, we have all the elements needed for a space economy. We know what to do, and where. And we’ve known for a while: the first proposed processes for lunar mining date back to the 1960s. This isn’t new to anybody. Why don’t we have a cislunar economy already working?

The key is at the end of the definition: “by different agents”. An economy requires multiple agents working together for the mutual benefit of each other. In more modern lingo, an economy needs an ecosystem of actors. We have never had a lunar ecosystem of companies. For the past 50 years, the only players on the Moon had been large countries, always working on their own as investments in national technology, science, or pride. That’s not enough for an economy.

Earth close up day and night.
We have all the elements needed for a space economy. But why don’t we have a cislunar economy already working like on Earth?

Now, you could argue that NASA needed “different agents” to achieve Apollo. Indeed, many companies contributed to the design and production of the Apollo spacecraft. That created in and of itself a small economy centered around NASA sites.

However, we’re missing one part. The value wasn’t created on or for the Moon, it was for Earth. The moment the Saturn V took off, all the economic value had already been created. The astronauts did some great science on the Moon, but that’s not of economic value. All that Apollo activity was part of Earth’s economy, it wasn’t part of the cislunar “area”.

It has been the same with all space probes and stations (until Nanoracks started commercializing trips to ISS): the final value was generated on Earth, so it was part of Earth’s economy. This applies as well for GEO and other LEO applications: they may happen in space, but value is created for Earth.

To have an economy in a region, the final value has to be created in that region.

Going to the Moon just to bring stuff back to Earth isn’t a lunar economy. Going to the Moon just to do science isn’t a lunar economy. Going to the Moon as a single entity can’t be a lunar economy.

If we want a lunar economy, we need to:

  1. Create value on the Moon for the Moon; and

  2. Create an ecosystem of lunar agents that produce, distribute, trade with, and consume this value.

If you are not convinced about this reasoning, I’ll give you a more down-to-Earth example: Antarctica. Even if Antarctica has presence all year round (same as remote mines and oil rigs) no one considers it to have an economy. All activity that happens there is considered to be part of the economy of each of the countries running the respective base. No value is created in Antarctica for Antarctica. It’s the same story with offshore oil rigs or remote mining operations. If we want a cislunar economy, we need to create value on the Moon that stays on it.

Step 1: create value on the Moon for the Moon

The easiest part of creating an economy is finding what activities can and/or will be part of it. After all, we have an economy on Earth, and we know how to include activities in it: it’s called creating a company. We just need to look at the places where value can be created (e.g., inefficiencies, unmitigated risks) and see if it makes sense to create that value (i.e., design a business plan).

For the Moon, we’ve had decades of looking up since Apollo to figure out what kind of activities we’ll need there: transportation, mining, power production, habitation, communications… It’s all pretty clear, and there are plenty of companies pursuing each of those activities.

There is a key part missing, which is also the main challenge for all those lunar companies: where does the value go? In other words, who’s the customer? The challenge of the lunar economy is not creating the value on the Moon, it’s having it stay there. If we’re want to sell lunar resources back on Earth, we’re back in the Antarctica 2.0 situation.

Astronaut on moon on a dolar rain.
The challenge of the lunar economy is not creating the value on the Moon, it’s having it stay there.

The problem is, we don’t really have a way to keep value on the Moon yet. But we will in a few years. All the first lunar companies that will fly focus on transportation, and all their customers are Earthers (scientists, mostly). However, this wave of lunar landers can act as the customers for other lunar businesses, providing the first way to keep economic value on the Moon.

In particular, the first wave of lunar landers will need communication and navigation relays to properly scout out the Moon. Once routine operations are established, they will also be the first customers for refueling or power production stations. But that’s a little further down the line, communications & navigation are the immediate need (hence why we’re working on Harmony!).

However, this can only be a temporary solution. These landers depend on Earther customers for their business. We can have the sketch of a lunar economy with them, but in the end, they generate value for Earth, and if these customers dry up, the whole lunar economy collapses.

The true long-term solution is then straightforward: we need people living on the Moon, permanently. Be it a scientific base, a military base, or simply a lunar outpost, we need people on the Moon acting as the endpoint of the value chain for our cislunar economy to be sustainable.

However, a permanent base on itself isn’t a solution (remember, we don’t want Antarctica 2.0). To actually have an economy, we will need multiple players, interacting with each other, with independent interests.

Step 2: build the lunar ecosystem

It’s never been our plan to just build the lunar economy ourselves. It has been tried before (see the Space Exploration Initiative): a grand master plan, orchestrated by a central government that decides what needs to be done by when in order to develop a sustainable space presence. That description should already make you think of something else: a planned economy. At this stage of the 21st century, it’s been well demonstrated that such a concept doesn’t work (Soviet Union et al., 1991).

The space economy will be no different. If someone tries to plan it in a centralized way, it will just never happen. Instead, we will have an ever-growing, monstruous, government-sponsored plan that mutates with every new administration while somehow still working on the same project and with the same providers, always on a very long, 20-year-plus timeline. This probably sounds familiar as well, because that was the overall state of affairs of the space economy until very recently, when NASA started moving towards commercialization.

We can’t build it, so we have focused on the enabling part. If we defined a big, ambitious mission for the Moon, we’d fail, no one would follow us. However, we can incentivize others to join the lunar race, by making it easier to build a lunar business, and making it simpler to create value on the Moon. There are various ways to achieve this, but most of them require you to be Bezos-level rich or a government.

As a company, the only way to enable an ecosystem is by building infrastructure, the pieces that make everything else easier to do.

And here’s another piece of insight on Harmony’s raison d'être. If we want to enable the cislunar economy, we need to work on infrastructure that makes it easier for everyone else to join, and the first piece of it that will make sense is the communications infrastructure. Hence, Harmony. It’s just the obvious approach.

And yet, it’s not enough to just build a bunch of satellites and put them into space. The “build it and they will come” approach does not always work. We’re not building an app store here, where any developer can join for negligible cost of entry. We’re talking about incentivizing the execution of multi-million-euro projects, based on a future infrastructure, based on a future market. Not the ideal scenario for investors.

The alternative is doing exactly the opposite: “gather them and they will build it”. The success of Harmony (and that of the cislunar economy) relies essentially on its capability to gather other companies to work towards its success. Future customers, providers, commercial partners, investors… we need to bring them all to the table, roughly at the same time, for our project to succeed.

Satellite flying around the moon.
The key is to gather other companies and work together towards the cislunar economy success.

It is this very same process that creates the lunar ecosystem. Future lunar customers will know to rely on Harmony’s systems to improve their business plans, commercial partners will support the identification of new ways to create value on the Moon for the Moon, providers will develop systems that other companies can later use, investors will lose their fear to the lunar industry and start financing lunar projects… The “different agents” that will conform the future lunar economy all start their interactions now, thanks to infrastructure projects like ours.

We’re not the only ones doing this, but it’s harder to do with other systems. A manufacturer of a specific satellite system cannot create their market in the same way, as the availability of a better or cheaper system will hardly ever change the outcome of a customers’ business plan.

Same goes for example for a company aiming to do advertisement on the Moon, or a specific satellite platform. They can maybe provide a new service to the market, but hardly any business case will rely on it for its success. Ecosystem creators must offer infrastructure, and in today’s Moon this means transportation and communications.

History in the making

Our MOU with ispace is precisely a snapshot of this ecosystem-building process. Plus Ultra is improving ispace’s lunar business with better communications and navigation, incl. better coverage and access to the far side. Meanwhile, ispace may improve Plus Ultra’s lunar business by providing a launch platform directly to the Moon and providing new customers to Harmony.

We are both companies working on infrastructure (creating value on the Moon for the Moon) and enabling other lunar businesses (building the lunar ecosystem). Not only that, but we are now teaming up, creating one of the first agreements between companies to create value exclusively in the cislunar economy: on the Moon for the Moon.

We are lucky that companies like ispace share our vision and share our approach to developing the lunar industry. Their work so far in transportation has paved the way for others like us to start working on communications. Together, we will enable the next generation of lunar businesses, looking at the lunar surface not as their final target, but just as their location for doing business for other lunar companies. Our little MOU, ladies and gentlemen, history in the making, lunar history.

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