What follows is an edited transcript of my interview with Alex Salter about the economics of space. The first half deals primarily with the issue of space debris, while the second half deals with the possibility of private governance in space. There's something in this episode for everyone to enjoy, so I hope you'll listen, read, and share it with your friends. Petersen: My guest today is Alex Salter of Texas Tech University. Alex, welcome to Economics Detective Radio. Salter: Thanks very much for having me. Petersen: Our topic today is the economics of space. Alex has written two papers on the subject. The first is entitled, "Space Debris: A Law and Economics Analysis of the Orbital Commons." The second is, "Ordering the Cosmos: Private Law and Celestial Property Rights." So Alex, let's start by talking about space debris. What is it and why does it matter? Salter: So space debris is basically junk in space that no longer serves any useful purpose. So as you can imagine, since the first piece of space debris launched up in 1957---which was the rocket body from Sputnik I---a lot of orbits around the Earth, especially low Earth orbit, have become kind of cluttered with space junk. And the reason it gets cluttered is because no one has an incentive to clean it up. It's a problem because a lot of this stuff is big enough and moving fast enough that if it strikes something like a communications satellite, it can take it out. So the probability of a collision right now that will cause serious damage is currently low, but there are a lot of worries among scientists who study the problem that as debris occasionally collides with more debris, you get a sort of snowballing effect of the clutter. So if we're going to get a handle on it, it needs to be earlier rather than later. Petersen: I think intuitively it seems like the sky is so big and satellites are so small that we'd never have to worry about collisions. So why is that not the case? Salter: So there's obviously quite a bit of room up there, but the problem is that some orbits are more valuable than others. In particular, geosynchronous orbit, which is I think 36 thousand kilometers above the Earth, is a really valuable place for specific satellites. And also low Earth orbit is a valuable place for specific satellites. Now, there's still a lot of room there, but it's significantly restricted. If my communications satellite is taking up a particular orbit, your satellite can't be in the same place. So there's only so much of it to go around, and again, what we're really worried about is debris colliding with something, which creates more debris, which can collide with more stuff. We're really worried that snowball effect, which is sometimes called the Kessler syndrome after the scientist who first wrote about it. Petersen: So the odds of a single collision might be low, but given one collision, it becomes much more likely that we'll have two and three and four---a chain reaction of collisions. Salter: Exactly. So right now the probability of collision is pretty low over the life of a satellite, for example in low Earth orbit, it's no more than one in a thousand. But conditional on getting hit, that can cause a pretty serious business disruption and economic losses, and as you said, given that one increases the likelihood of all future collisions, it's kind of like a positive feedback loop. So that can get pretty nasty pretty quick. Petersen: Have there been any collisions in the past? Salter: There have been many collisions in the past. I think the most notable one was actually intentional. In 2007, China performed an anti-satellite test, where it purposefully took out one of its old satellites that was no longer useful. And it created, I think, about a hundred and fifty thousand new pieces of space debris with that one anti-satellite test. So I'm not aware of any instances of grave, private sector disruptions caused by space debris collisions, but honestly unless there's some m