Growing an economy from nothing
Economists have a unique challenge in Mars because most growth challenges have some foundations to push off from. Growing a Martian economy would thus require radically different approaches. There are many competing ideas on how to do it and there is no clear answer.
A potential major source of revenue for the extraterrestrial colony is real estate. A wave of colonists will certainly create a real estate market that could boost the Martian economy considerably. With sufficient property rights, it could be a crucial source of income for the colony. This need not involve setting up a legal system on Mars; the property registry of say, the USA would be adequate. Estimates suggest that land values on Mars could grow over 100-fold (to $36 trillion) once terraformed. So once enforceable property rights are in place, private owners should have the incentive to terraform their land themselves, as long as the cost of doing so is limited by technological advancement.
“Their motives for [immigrating to Mars] will parallel in many ways the historical motives for Europeans and others to come to America, including higher pay rates in a labor-short economy, escape from tradition and oppression, as well as the freedom to exercise their drive to create in an untamed and undefined world. Under conditions of such large scale immigration, sale of real-estate will add a significant source of income to the planet’s economy.”-Robert Zubrin
I am more apprehensive about the significance of a Martian real estate economy. Zubrin, a famous author and aerospace engineer, overestimates people’s zeal-depending on droves of ordinary people sell all their terrestrial possessions to buy land on (on top of a ticket to) Mars may be naive. By his own estimates, Zubrin thinks a habitable dome measuring 100 metres in diameter can enclose $1,000,000 of real estate value. Though I claim no expertise in engineering matters, it seems highly improbable that this will cover the value of construction of these domes; decades of technological progress will be needed to reduce construction costs before this happens.
Raising the cost of Martian real estate to cover these expenses would be so substantial as so as to deter the immigration of colonists. Then land would certainly be bought exclusively by people who are wealthy enough to do it simply for the novelty of it. Then there question of who has the right to sell the land on Mars. Would it be SpaceX or the US government? Many such complications will arise under a system of private land ownership, which leads me to suggest that some sort of public land ownership among the colonists will be required- at least in the short term.
A better possible economic backbone for the Martian economy could be natural resources. Precious metals from the Red Planet such as gold, platinum and europium could be exported back to Earth for a very high profit as long as transportation costs are kept in check. This would perhaps be done by using reusable rockets to deliver the cargoes into Mars orbit, and then continuing the journey to Earth using cheap and expendable chemical stages (which could even be manufactured on Mars).
Planetary scientist Gary Stewart claims we can cut costs further by establishing an automated mining facility in a metal-rich crater on Mars. Robots could survey, extract and refine the metals themselves. The metals could then be fashioned into bullion, electronic components or jewelry with the aid of techniques like 3D printing. Stewart claims the facility would be self-sufficient with solar panel farms, local ice and salt deposits. He also contends that the facility could offer lucrative returns over time, allowing subsequent mining facilities to be established. Therefore, it is perhaps possible to lay the groundwork for a Martian export economy before we even set foot upon the planet.
Of course, we need to walk before we can run. Before we can think about the Red Planet, it is sensible to practice running a natural resource-centric economy using the Moon. Large profits could be made through the Moon’s supplies of Helium-3: the isotope could be exported back to Earth for use in thermonuclear fusion reactors. We should also acknowledge that it’s hard to gauge whether there are large bodies of precious metals on Mars in the first place.
More verifiable are the riches of the asteroid belt. These could be extracted if we use Mars as a base. Though asteroid mining poses noteworthy financial and technological challenges, Goldman Sachs believes this possibility is within reach. Profits should comfortably offset any costs and transform the economies of both Mars and Earth. Goldman even predicts that asteroid mining will produce the world’s first trillionaire, though it should be acknowledged that this individual will likely be a billionaire to begin with.
Some are skeptical about the cost-feasibility of a material-export economy altogether, such as SpaceX’s Elon Musk and previously mentioned Robert Zubrin (though Zubrin sees some potential in extracting deuterium, which is used as a moderator in nuclear fission reactions). Instead, both believe that the greatest economic potential is in licensing intellectual property and selling research back to Earth. A range of academics, from scientists to historians, can see how there could be a deluge of inventions from travelling and living on Mars. The planet’s challenging conditions could spur the development of new technologies just as labour scarcity in 19th century America led to a flood of inventions.
It is very difficult to foresee how technology developed for the Mars project could impact everyday life, but there is undoubtedly a large scope for innovation from space exploration. Many inventions that originated in the space sector have made their way to the consumer space: camera phones, baby formula, memory foam, invisible braces, computer mice, water filtration systems, prosthetic limbs, LEDs, freeze dried food- I could go on. The idea is that innovation from Mars colonization has huge potential to transform economies.