The Race to Exploit the Arctic's Resources Ignores the Costs

Rather than just look myopically at the economic benefits of melting Arctic ice we need to calculate the economic impacts. As explained in a recent report, the disastrous economic impacts of a warming Arctic are not being adequately investigated. Neither the World Economic Forum (WEF) in its Global Risk Report nor the International Monetary Fund (IMF) in its World Economic Outlook recognizes the potential economic threat from changes in the Arctic.

Melting Arctic ice is exposing vast mineral deposits as well as 30 percent of the worlds as yet untapped gas and 13 percent of untapped oil. We can also expect an ice free Arctic to give way to a number of new shipping routes. Lloyd’s of London has estimated that in the next decade we could see $100 billion investment the Arctic.

While many are eager to exploit the North's resources, we are slow to assess potentially catastrophic impacts.

We need to explore the link between sea-ice retreat and the strength and position of the jet stream. This relationship is thought to increase extreme winter and spring weather including the protracted cold spell in Europe in 2013. It is dangerously shortsighted to see the economic benefits of changes to the Arctic without an integrated analyses.

In 2012, noting that the far north is increasing in strategic importance and citing the need for informal dialogue among world leaders, the WEF launched its Global Agenda Council on the Arctic. While the authors of the report welcome this effort they clearly make the point that more action is needed. They suggest the WEF should invest in rigorous economic modelling and ask world leaders to factor the economic costs beyond resource extraction. They further suggest that the WEF should encourage innovative adaptation and mitigation plans.

We need more such discussions and further research to understand the global implications of changes taking place in the Arctic.

We need more economic models that incorporate feedback loops and tally the costs associated with the impacts of global warming on the Arctic.

© 2013, Richard Matthews. All rights reserved.

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