Property Rights on the Moon?

Space law scholar Glenn Reynolds (AKA Instapundit) has an interesting USA Today column on the potential development of property rights on the Moon:

On Saturday, a Chinese lunar probe made the first soft landing anyone’s made on the moon since 1976….

Though the landing was a big deal in China, most of the rest of the world responded with a yawn. Moon landing? Been there, done that.

But October Sky author Homer Hickam was more excited. He wondered on Twitter if China might want to make a territorial claim on the moon, noting that the area the lander is exploring may contain an abundance of Helium-3, a potentially valuable fusion energy fuel that is found only on the moon. According to former astronaut/geologist Harrison Schmitt, China “has made no secret” of its interest in Helium-3. Schmitt observes, “I would assume that this mission is both a geopolitical statement and a test of some hardware and software related to mining and processing of the lunar regolith….”

The 1967 Outer Space Treaty provides that “outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.” But that’s not much of a barrier.

First, the treaty only prohibits “national appropriation.” If a Chinese company, instead of the Chinese government, were to stake a claim, it wouldn’t apply. And, at any rate, China — which didn’t even join the treaty until 1983 — can, like any other nation, withdraw at any time. All that’s required under the treaty is to give a year’s notice.

So if the the Yutu rover finds something valuable, Chinese mining efforts, and possibly even territorial claims, might very well follow. And that would be a good thing.

What’s so good about it? Well, two things. First, there are American companies looking at doing business on the moon, too, and a Chinese venture would probably boost their prospects. More significantly, a Chinese claim might spur a new space race, which would speed development of the moon.

If the Moon does turn out to have valuable resources that could be exploited, it will be important to establish a system of effective and stable property rights. Difficult questions will have to be addressed, such as how much property an individual, firm, or national government is allowed to claim, and on what basis. For example, if China establishes a base on the moon for mining purposes, is it entitled to claim only the land on which the base’s structures sit or some additional territory around it? In addition, it will be critical to allow private property on extraterrestrial bodies, not just government property. State ownership of some extraterrestrial property is probably inevitable and necessary. But private property rights are also essential. A vast socialist empire in space is unlikely to work any better than socialism here on Earth.

Obviously, the Moon might ultimately prove to be an economic dud, in which case property rights there won’t matter much. But the same issues are likely to arise with respect to other extraterrestrial bodies in the future. They deserve some serious advance consideration, as it is often easier to get institutional frameworks right in the first place than to fix bad institutions once they have become established and developed powerful interest group constituencies.