Difference between revisions of "Settlement Strategies"
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===Net Present Value (NPV) of Investments===
===Net Present Value (NPV) of Investments===
Revision as of 23:24, 17 February 2010
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.
- 1 Aspect of physical independence
- 2 Aspect of transport and development
- 3 Aspect of finance
- 4 Golden Mars scenario
Aspect of physical independence
The long term maintenance of complex equipment requires a huge number of persons. At a minimum, they will need to replace or repair critical components, such as life support, medical technology, food production, etc. It is hard to imagine that this can be done without electronics and chemistry. At least some technology must be maintained, for the Martian environmental conditions does not allow people to live naked on Mars. So, there is a critical mass for the number of persons in an autonomous colony.
Even if fully grown, a Martian colony is not considered a closed system without any input or output from and to Earth. It is rather an independent sovereign state, fully in control of its destiny. In that regard, it need not produce all of its needs locally. Even on Earth, no sovereign state would think of eliminating all trade with other nations. However, such a Martian colony can not perform a trade volume that is comparable with any state on Earth, because the shipment costs are bigger by several orders of magnitude. Therefore, the interplanetary commerce between Earth and Mars will be reduced largely to data and services that can be transmitted via a radio link.
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.
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.
Aspect of transport and development
To get an idea of the transport costs of a physically independent industrial infrastructure, the current industrial infrastructure on Earth may be estimated as 1 billion workers and 100 tonnes of structure, equipment, and spare parts per worker -- round the total mass budget to 100 billion tonnes. It currently costs $200,000 to land a kilogram on Mars. Additional infrastructure is required for Mars (e.g. pressure vessels and agricultural illumination systems), so double the infrastructure required to 200 tonnes per worker. That comes to 440 million trillion dollars. To reduce this cost by one or two orders of magnitude by creative selection of industrial equipment and workers is probably easy: some of Earth's industry is redundant in terms of self-sufficiency and thus required only for a population of billions. One or two orders of magnitude drop in transport costs may also be possible in the long term. But this only reduces the cost to at least 44 thousand trillion dollars. To reduce these costs to a reasonable sum, i.e. to the range of tens to hundreds of billions of dollars, requires radical reduction in the size of the industrial infrastructure required, which requires radical redesign of the technology (Strategy 1), or it requires further radical reductions in transport costs (Strategy 2), or a combination of both.
Strategy 1: Minimum transport and intelligent self development
Shipping costs are probably lower for small scale machines than large scale machines, and the financial frame will always be tight. The perfect, but unrealistic, way to colonize Mars is sending a one-kilogram probe with a handful of nanobots, preparing the whole colony, before sending a second one-kilogram probe with a handful of frozen fertilized human eggs, etc. This science fiction scenario is, of course, not realistic, but can serve as an ideal to strive for: minimize the mass and volume that needs to be launched from Earth, both initially and on an ongoing basis, by maximizing the self-sufficiency of Mars' industrial and agricultural infrastructures. This probably requires a radical redesign of almost every piece of equipment, and a radical rethinking of industrial infrastructure generally. Lo-tech (see e.g. pneumatics, hydraulics), small-scale-tech (see e.g. blacksmith, brick, glass), and flexible tech (see e.g. 3D Printer) are promising approaches.
Strategy 2: Mass transport of ready-to-use technology
A colony needs large machinery for life support and further expansion. All machinery is shipped from Earth to Mars. Plans can be developed for massive colonization ships moving in repeated transfers between Earth and Mars without stopping. Only the cargo and passengers start and stop. Sending a complete industrial economy to Mars is theoretically possible. It just takes a long time, a launch volume much higher than current, or some combination of the two. See cost estimates above. For example, we might spend $100 billion per year for 4.4 million years to set up an independent Mars colony using the same industrial equipment and global-scale economy as Earth, by simply transporting all needed people, structures and equipment (minus one or two orders of magnitude for creative selection of a subset) over this period of time, without any redesign except to account for Martian environmental conditions (low gravity, near-vacuum, etc.)
Strategy 3: Develop industry on the Moon and then transport it to Mars
This is inspired by the 1970s idea of Gerard O'Neil to build massive solar power plants out of lunar materials. Removing the task of industrial development to the Moon mostly just switches the location of the problem. It still faces the same order of magnitude of transport costs from Earth(currently about $100,000/kg), and it may make the industrial development problem worse, because of the paucity of volatiles which are crucial and voluminous inputs to industry. It's easier to think about and solve the self-sufficiency problem in a volatile-rich setting like Mars.
Aspect of finance
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
Net Present Value (NPV) 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. 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).
For more information, see your spreadsheet's help pages for "NPV", "IRR", and related functions.
Golden Mars scenario
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?