Wednesday, August 5, 2009

Sunk Cost

When I was in engineering school, one of our courses was called “engineering economics.” Presumably, this was meant to help us should we quickly become managers, as so many other U of T engineers had. One of the most interesting concepts presented was the importance of a sunk cost. Specifically, that any sunk cost was worthless and that we should resist the siren’s song of trying to use something just because it was costly when ignoring it would be cheaper. The classic example was the construction of a $10 billion nuclear power plant. If on the day of its completion power could be generated more cheaply from other existing sources letting the plant fall into disrepair was the responsible option.

However, when talking about unique deployed space hardware it’s hard to make that same choice. On the one hand, continued support eats up funding that could be used to forge ahead in other areas. On the other, shuttering a program before its senescence could leave vital or unique science undone which may cost more to do later on. An excellent case is the Lunar Seismic Network, deployed by the Apollo astronauts, which was deactivated for budgetary reasons in the 1970s. The amount of money required for that project to continue was minuscule compared to what we are considering spending in order to put seismometers back on the moon.

So what then to do with the International Space Station? NASA has revealed its plans to deorbit the orbiting laboratory in 2016 shortly after it is completed. ( ) I must admit that I have never been an enthusiastic fan of the station. The $100 billion or so spent on its construction by the United States alone always seemed to me to be money better put to more targeted uses. However, now that it has been nearly completed it seems a shame to see it removed even if its utility to the Moon-Mars program is tangential at best. Not to mention that even if it became a desirable asset once again, it would be unlikely to be rebuilt given the time and the expense required.

Instead of looking at the station as a sunk cost or even a liability, perhaps NASA could view their orbiting platform as an opportunity? After all, it is a unique asset which might even be able to fund itself or become a net revenue stream, given the right uses. Perhaps an auction could be arranged – I’m sure that private enterprise might be interested in a unique research environment, manufacturing facility or even a hotel of sorts. Perhaps it would eventually give Virgin Galactic or a similar company a destination. The Russian Space Agency often takes paying tourists on board their spacecraft, so there is a market for that out there, at the very least.

The only sticking point I could see would be that whoever were to take over the property would need to be responsible for orbit maintenance. Certainly, an uncontrolled de-orbiting or a collision in LEO is undesirable. Perhaps the best plan would be a long-term lease. In that way, at worst, NASA will simply move out its plans for de-orbiting and at best provide effective technology transfer, improve its bottom line, and help the human race to take a first step off the surface of the planet outside of direct governmental action. If it proves profitable for either partner, we could be in for some exciting times!

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