Gail Whiteman, Chris Hope & Peter Wadhams, Nature, July 2013
Methane released by melting permafrost will have global impacts that must be better modelled
Unlike the loss of sea ice, the vulnerability of polar bears and the rising
human population, the economic impacts of a warming Arctic are being
Most economic discussion so far assumes that opening up the region will be beneficial. The Arctic is thought to be home to 30% of the world’s undiscovered gas and 13% of its undiscovered oil, and new polar shipping routes would increase regional trade 1,2. The insurance market Lloyd’s of London estimates that investment in the Arctic could reach US$100 billion within ten years 3.
The costliness of environmental damage from development is recognized by some, such as Lloyd’s 3 and the French oil giant Total, and the dangers of Arctic oil spills are the subject of a current panel investigation by the US National Research Council. What is missing from the equation is a worldwide perspective on Arctic change. Economic modelling of the resulting impacts on the world’s climate, in particular, has been scant.
We calculate that the costs of a melting Arctic will be huge, because the region is pivotal to the functioning of Earth systems such as oceans and the climate. The release of methane from thawing permafrost beneath the East Siberian Sea, off northern Russia, alone comes with an average global price tag of $60 trillion in the absence of mitigating action — a figure comparable to the size of the world economy in 2012 (about $70 trillion).
The total cost of Arctic change will be much higher. Much of the cost will be borne by developing countries, which will face extreme weather, poorer health and lower agricultural production as Arctic warming affects climate. All nations will be affected, not just those in the far north, and all should be concerned about changes occurring in this region. More modelling is needed to understand which regions and parts of the world economy will be most vulnerable.