The Economics of Orbit Use: Open Access, External Costs, and Runaway Debris Growth

Akhil Rao and Giacomo Rondina

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 2, 353 - 388

Abstract: We present a dynamic physico-economic model of Earth orbit use with endogenous satellite collision risk to study conditions under which debris-producing collisions between orbiting bodies result in debris growth that may render Earth’s orbits unusable, an outcome known as Kessler syndrome. We characterize the dynamics of objects in orbit under open access as well as when external costs—the impact of an additional satellite launch on the collision risk faced by all satellites—are internalized, and we show that Kessler syndrome can emerge in both cases. Finally, we show that once the economic incentives of satellite launching are modeled, for Kessler syndrome to emerge, autocatalytic debris growth is essential. In our main calibration, Kessler syndrome can emerge anytime between the year 2040 and the year 2184, with the precise date being very sensitive to the calibration of autocatalytic debris growth parameters.

Date: 2025
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