9 market trends shaping the future of Earth observation for climate action

With 2023 officially recorded as the hottest year on record by the World Meteorological Organization, and increasingly frequent extreme weather events impacting the world, the urgent threat of climate change is undeniable. Concurrently, many regions aspire to reach the standard of living of developed nations, presenting a dual imperative that is one of the most pressing challenges of our century. We must ensure the long-term survival of our species, while addressing the immediate needs for improved living conditions worldwide.

Earth observation (EO), enabled by both remote sensing and in-situ sensors, can help address this critical dilemma by capturing data that support climate mitigation and adaptation, while also creating new economic opportunities. A recent report from the World Economic Forum highlighted that EO could add $3.8 trillion to the global economy between 2023 and 2030. Additionally, it could help businesses and governments cut over 2 billion metric tonnes of CO2 equivalent annually; more than a third of the emissions from all cars globally.

An earlier blog related to this report identified six industries that stand to benefit the most from EO, illustrating the size of the opportunity for each. With hundreds of possible applications, the global potential of EO is immense, but as yet unrealized. This follow-up sheds light on nine market trends impacting the growth of the EO market and end-user adoption, outlining pathways to realize these opportunities and extract significant value.

The supply-side outlook is largely positive, with EO providers, empowered by supporting technologies such as AI, innovating to expand the possibilities of the technology. However, key barriers remain on the demand side that must be addressed to unlock the potential global value of EO.

1. Commercial competition. The EO market has historically been dominated by government. However, a marked shift has occurred in the past decade with the proliferation of commercial EO satellites. In 2022, an estimated 71% of EO satellites were commercially owned, up from only 10% in 2014.

2. Consolidation and integration. As the EO market has become more commercially saturated, funding has also become more selective. Commercial EO companies are now often refocusing efforts from building new imaging capabilities to profitability, leading to consolidation through acquisition, with vertical integration down the value chain.

3. Advancements in EO data quality. Over the past decade, EO providers have made remarkable advancements in the modality, sensitivity, accuracy and frequency of available Earth data. Innovations in commercial sensors have brought spatial resolution as high as 15cm per pixel. At the same time, the miniaturization of components and plummeting launch costs have made deploying EO satellites cheaper than ever before, leading to more frequent observations of the same point on Earth that yield more up-to-date information.

4. Advancements in computing. Just as the quality and volume of EO data have grown exponentially, so have advances in complementary technologies used to process and analyze it. Key examples include high-performance computing, cloud, edge processing and AI. Simply put, advancements in computing are a force multiplier for advanced analytics, enabling fusion of large, diverse data sources for a comprehensive view of Earth's systems and their interaction with other systems of interest.

5. Value-added services. Many players in the EO industry are working to develop more intuitive UI/UX for EO data and analytics platforms that can provide end-to-end solutions for specific industries and/or use cases. Also, new “as-a-service” business models and consumer-oriented applications have emerged to help improve the accessibility of EO data and its derivatives.

6. Consumer awareness. According to EO companies, market awareness represents one of their most significant barriers to growth. Addressing this barrier is largely a matter of educating end users, but it is not just the role of commercial EO providers. In order to open up greater end-user awareness, the entire EO ecosystem should continue to share success stories and advocate for EO’s use in applications that benefit society and the economy.

7. Government-driven market. Despite the potential of downstream EO services for commercial markets, a majority of EO revenues today still stem from government purchases. Because government budgets tend to be steadier than commercial market demand, EO providers often prioritize government markets over industry users, which at times limits the progress needed for commercial EO use to reach scale.

8. From data to insights. Historically, organizations using EO data would require specialized expertise to process their EO data to derive actionable insights. However, with the explosion of commercially available EO data, this paradigm has begun to shift. Beyond the continued data and technology improvements, business model innovation is critical to designing EO systems that end users can use.

9. The environmental imperative. Growing awareness of environmental degradation has spurred a push for monitoring and accountability. Ranging from elective to directive, a slew of new environmental standards is taking effect. Businesses are increasingly expected to report on their environmental impact, sustainability efforts and climate-related risks. To do so, having ready access to trusted, transparent data is key, with EO being a potential valuable source.

While these dynamics indicate a promising future for EO, they must be amplified and accelerated to achieve the intended impact. Multistakeholder collaboration is crucial for this amplification, as it brings together the diverse expertise, resources and perspectives needed to drive systemic change.

The World Economic Forum’s Earth Observation community comprises over 40 EO providers, users and experts committed to driving positive change. Their latest report, Amplifying the Global Value of Earth Observation, provides a comprehensive view of the economic, climate and nature opportunities that EO can unlock. It also outlines five key strategies, building on the trends mentioned above, to accelerate EO usage.

Looking ahead, this community aims to bring these insights to key decision-makers, encouraging the policy and business actions required to unlock EO technologies' full potential. Business, climate and technology leaders, whether familiar with EO or seeking to learn more, are invited to join this group and contribute to a more prosperous, sustainable and resilient future.

This article was created in collaboration with Deloitte Consulting LLP, an entity within the Deloitte organization. The findings, interpretations and conclusions expressed herein do not necessarily represent the views of any Deloitte entity or its employees and no Deloitte entity or employee shall be liable for any loss in connection with this article.