Bonds Improve Post Mission Disposal Compliance and the Sustainability of Low Earth Orbit

Post-mission disposal (PMD) non-compliance is a major threat to the long-term sustainability of Low Earth Orbit (LEO). From 2010–2024, only 40% of satellites in non-naturally compliant orbits successfully deorbited. With launch rates rising rapidly and large constellations expanding the active population, reducing the number of long-lived derelicts is increasingly urgent. We evaluate an escrow-based PMD performance bond on satellite operators, designed to increase disposal compliance by making non-compliance financially costly while preserving access to orbit. The analysis uses an integrated assessment framework that couples an economic decision-making model for satellite operators with a model for the evolution of the space object populations in LEO, enabling launch decisions and debris risk to co-evolve endogenously over a 25-year horizon. Results show that bonds of $200k per satellite can reduce the mass of derelict satellite per year by more than one-third and increase welfare by up to 27%. Bonds greater than $1 million exhibit diminishing marginal returns. We also examine partial bond adoption and market leakage and find that a bond that only covers 20% of the global market can still achieve meaningful derelict reductions and space sustainability improvements. Broader participation improves both environmental and economic welfare outcomes.