Satellites orbiting at 800 kilometers should be charged 44 times more than those at 400 kilometers to prevent a space junk catastrophe.
April 26, 2026
Original Paper
Dynamic Pigouvian Fees for Orbital Debris: Discount Rate Sensitivity and Altitude-Specific Fee Schedule for 2026-2040
SSRN · 6634039
The Takeaway
Space junk is becoming a critical threat to orbital missions, but there is currently no financial incentive for companies to stay out of crowded orbits. This economic model proposes a Pigouvian fee that changes based on the altitude of the satellite. Because debris stays in high orbits for much longer, the fee for those regions is set drastically higher to reflect the long-term risk. This turns the abstract danger of Kessler Syndrome into a concrete line item on a corporate balance sheet. It would force satellite operators to weigh the benefits of a high orbit against the literal cost of the mess they might leave behind. This policy could be the key to keeping space accessible for the next century.
From the abstract
We extend the altitude-dependent Orbital Damage Function (ODF) framework (Malik, 2026a) to derive a time-varying Pigouvian fee schedule for orbital debris regulation across the period 2026-2040. Building on our finding that the Social Cost of Orbital Debris (SCOD) varies by two orders of magnitude across low Earth orbit (LEO), we conduct a comprehensive discount rate sensitivity analysis showing that altitude-dependence is robust across social discount rates of 1%-5%. We then derive a time-evolv