Settlement Strategies

The colonization of Mars can be planned and performed in various ways. This article wants to line out basic colonization strategies with the final goal to establish a sustainable, self reliant Martian colony, that can exist and even thrive independently from Earth.

Aspect of physical independence

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Strategy 1: Independence step by step

An initial colony could start with a few persons. More colonists arrive later. In the beginning it does not supply all of its needs locally. Until critical mass is attained, the settlement will need to buy certain advanced technology. Interplanetary commerce is part of this strategy. It allows starting much simpler and earlier.

The first step is an Earth-supported colony. With further shipments it can be enhanced to a semi-autonomous colony. Finally the colony can be equipped with equipment for autonomous growth.

Strategy 2: Independence at once

Due to the risk of an interruption of the colonization program, this strategy aims at the full independence from the very start. The first settlement is built in a very spartan, but nonetheless sustainable way, with all vital supplies produced locally. This first settlement is constructed remote controlled and is fully functional before the first group of settlers head for Mars.

Spartan technology (and hence spartan standard of living) can reduce the critical mass. The inevitable food production is the most critical part. If that can be accomplished with simple technology, the critical mass could be small enough to gain independence at once. However, this includes mining and processing of all needed materials from local resources.

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Aspect of finance

Introduction

Frontier settlements are capital investments from which investors expect some utility. Rarely small amounts are donated to altruistic causes (e.g. expanding humanity). Governments invest small sums in science and larger sums in national security. Most commonly, investors demand a profitable return from their investments. The sooner a colony becomes financially self-sufficient, the less investment is required, and thus the sooner an investment is likely to be made in the first place. Since radical elimination of all imports is probably impossible in the short run (see above), a colony is much more likely to be financed if it can generate exports that match or exceed the costs of imports. Since imports are costly, the exports must be valuable. They must also be affordably transportable to Earth: high value and low mass.

Initial Capital Investments

The colony requires equipment sufficient equipment to sustain agriculture to feed and clothe the personnel, to generate exports sufficient to pay for imports, and to make at least the heavy replacement parts for the equipment itself. The colony should also preferably grow from an early capital investment rather than continuing to require massive equipment transports from earth in order to expand operations.

Imports/Expenditures

Treating the colony as a single financial entity, its ongoing expenditures will be equal to the cost of ongoing imports.

Exports/Revenues/Profits

Treating the colony as a single financial entity, its ongoing revenues will be equal to the ongoing proceeds from exports. Profits in a given period will be equal to revenues minus expenditures in that period. In the single financial entity model the profit of the colony in a period thus equals proceeds from exports minus the cost of imports during that period.

Net Present Value (NPV) and Internal Rate of Return (IRR) of Investments

Given a series of cash flows, for example annual expenditures and revenues over a period of thirty years, and an interest rate, the NPV function computes the net present value of these cash flows at the start of the series. It is in other words the net present value of profits to be expected by the investors. NPV should exceed the initial capital investment (or alternatively, if capital investments are counted as cash flows, NPV should be positive).

In NPV analysis risk is represented by increasing the interest rate (the "risk premium"). If risk is not fairly evenly distributed over time NPV is less accurate and real options analysis is required for both for accuracy and for designing better strategies. However for most purposes NPV is fine, and it's also easier (you can use a spreadsheet, whereas real options analysis requires more sophisticated software).

In the model treating the colony as a single financial entity, the cash flows in a period are just the proceeds from exports (positive) and the costs of imports (negative) in that period. The net present value of the ongoing exports and imports should exceed the initial investment given an interest rate that includes a risk premium reflecting the risks of the financial failure of the colony.

The internal rate of return (IRR) of an investment gives us the rate of return as an output instead of the interest rate as an input. The initial capital investment is treated as a cash flow in the first period(s).

For more information, see your spreadsheet's help pages for "NPV", "IRR", and related functions.

Golden Mars scenario

Introduction

We need concrete strategic and financial scenarios to work with. Since colonizing Mars is currently far from economically viable, we have to make some hypothetical, but plausible, assumptions, in order to develop scenarios that are financially and otherwise strategically viable. Here is one, the Golden Mars scenario:

(1) The same geological processes that formed gold ores on Earth once operated on Mars and have left there concentrations of gold on its surface not seen by humans since they first started finding the easy pieces on Earth c. 4000 BC. In particular, 1,000 kg of equipment on the Martian surface can find and ship to the Mars spaceport 10 kg of gold nuggets and flakes per year. Some technological goals to strive for: 10,000 kg of imported equipment (or 100,000 kg of native equipment, because these would be the bulkier parts) requires one person to operate and maintain it, and that person requires another 10,000 kg of equipment to support him. Some of aforementioned equipment should be made on Mars if that increases the economic return, which requires further labor, otherwise it should be imported.

(2) Because of the development of ISRU-based propellants, the costs of transport from Earth have been reduced by two orders of magnitude (to $2,000/kg) and the costs of transport from Mars surface to Earth surface are $1,000/kg.

(3) Plausible assumptions can be made about making things from Martian raw materials, as long as every part (use parts lists) and every material can be accounted for all the way back to through the supply chain (really supply tree, it keeps branching at every step) to Martian mines.

(4) The price of gold on Earth is about the same as today: $1,100/oz. * 1/28 oz/g * 1,000 g/kg = $39,000/kg. The market for gold production on Earth is about $100 billion/year, and the above-ground inventories are in the trillions of dollars, so you can produce at least $50 billion/year worth of gold before you start saturating the market and the price drops. (To be more precise about this, look up research on the supply/demand curve for gold, I'm sure economists must have researched this many times).

Can you design this Mars colony to be profitable, and thus attract investors?

Links

• Another Contin(g)ent Concept
• The Human Mission to Mars — Colonizing the Red Planet (The Greatest Adventure in the History of Humanity Edited by Joel S. Levine, Ph.D., NASA, Co-Chair, Human Exploration of Mars Science Analysis Group (HEM-SAG) of the Mars Exploration Program Analysis Group (MEPAG).; Rudy Schild, Ph.D., Center for Astrophysics, Harvard-Smithsonian In Association and Collaboration with the Mars Society