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The Case for Lunar Property Rights
longacre writes "Who owns the moon? In a thought provoking piece, Instapundit blogger/law professor Glenn Reynolds gives us a brief history of earthlings' discourse on lunar property rights, a topic which has stagnated since the 1979 Moon Treaty. Is it possible to claim good title on land that is not under the dominion of a nation? He goes on to plead his case for the creation of lunar real estate legislation. From the article: 'Property rights attract private capital and, with government space programs stagnating, a lunar land rush may be just what we need to get things going again.'"
The investors laugh. This planet we will own, they ask, is it Earth? No? Well, then, how much is it worth? The investors explain to the Mars expert: Owning Mars-getting all the way to Mars and back-is getting to first base. In order to have a successful venture, a venture to invest in, the property must be valuable.
How valuable? $10 billion? Hardly. A successful, manned Mars mission, according to the most optimistic estimates, would take a minimum of 10 years from planning to completion. Venture capital firms, in order to justify their high-risk investments, seek a minimum of 10 times growth in their investment over five years. And they want to be able to "cash out"-to sell their initial investment if they want to. Assuming that the $10 billion would be spent smoothly over the 10 years (i.e., tying up the capital an average of five years), means that after the successful mission, Mars would have to be worth at least $100 billion in order to justify the investment of $10 billion. A hundred billion is almost $3 an acre.
Now, even after a successful, manned Mars mission, why would other investors pay the original venture capitalists $100 billion for Martian land? (Why would they even pay $100 million, or one million?) The land would be almost completely undeveloped. For anyone to invest in such a risky proposition, there would have to be a reasonable chance for the land to be worth at least 10 times as much five years later-one trillion dollars, 15 years after the beginning of the original project.
That's almost $30 an acre. Today, you can still buy range land in New Mexico for $40 an acre. And that is with Earth's atmosphere included, and substantially lower transportation and energy costs.
?giS
You can see the outcome of this kind of "property-is-theft" attitude in china. There land in the countryside for farming is state owned and city land is privately owned. The net result is that the poor in the cities have some hope of social mobility as there is availability of collateral to raise capital, fund enterprise and create jobs. In the country, farmers have no way to raise funds to start their own businesses or improve their farms, leaving them dependent on the state to improve their lot. Somewhat predictably the state favours uncompensated land-grabs, turning the land to more profitable (for the state) uses. All courtesy of the people.
In short, property rights are helpful for development and reducing poverty, even though it's not immediately obvious. That does depend on the value of land use being higher than the costs, something that's not true everywhere on Earth, let alone the moon.
It's a reasonable argument, but you seem to be assuming the only purpose of land is to live on. Hardly. There's a reason that range land in NM is $40 an acre and Manhattan real estate is probably roughly a million times more. It's what you can do there that matters.
So what can you do on the Moon that would make it so fabulously valuable? Beats me. The only unique resources the Moon has (exceedingly low temperatures in the shade, unbelievably good vacuum) you can also get in orbit, where you don't have to worry about any gravity at all, and can build eight-mile wide factories out of gossamer and shoe strings, if you want.
But it could happen. Suppose it turns out 1/6 gee allows you (don't ask me how) to grow perfect crystals of membrane-bound proteins fast and easy, something nearly impossible to do on Earth. That could lead to the possibility of rational design of fantastically valuable drugs, e.g. genuine cancer cures and the like. What would that be worth? Very likely far more than $100 billion. (The cholesterol-lowering drug Lipitor will have earned its inventors about $65 billion by the time its patent expires in 2010.)