A Bit About Finance

What about finance? And what about cost? Two linked problems. The cost estimates that I have seen are very speculative. Elon Musk's big vision of a colony of 80,000 people eventually is looking at a possible cost of $36 billion. In Apollo era terms that estimate is very small, but Musk plans to use fully recyclable rockets which could bring present day costs to Earth orbit down by a factor of 100. Musk envisages starting work on a colony with a first group of 10 settlers but he hopes to make the colonial build up economically viable by ultimately charging each new colonist $500,000 for an emigration ticket. For a colony of 80,000, that adds up to a cash inflow of $40 billion. Hey presto, a ten per cent profit, given Musk's cost estimate. Does that seem just a bit too neat? You bet! When you are pulling figures out of the air it is easy to make them come out the way you want them. What is needed of course is a proper projection of cash flow and costs over the life of the project, year by year. In particular, funding is needed up front for the hugely costly research and development phase; and for the work on the martian surface in building housing, facilities and, most especially, indoor crop farming acreage.

The Musk funding formula does not fully address the up front cost issue. It will be crucial to keep government funding to a minimum; taxpayers are just not going to stand being bled dry for the years it will take to build a colony. Were, however, the US Congress to cause NASA to switch to a private sector ethos more fully, not just for supply of the space station but for deep space exploration as well; then by cancelling both the Orion and launch system projects, a large amount of seed funding would become available for the Mars colony project, without increasing budgets. Using that funding to leverage massive private sector investment would be difficult, though the approach has certainly worked in the case of space station resupply and crew transport. But what is needed are early sources of income, not just investment capital. That applies at the other end of the timeline as well, of course. $500,000 a seat may finance initial colony growth but a colony will need a commercial economy for the longer term. Put bluntly it will need to be able to sell things! I will return to the issues of up front and long term income in a future post.