Warming in the Arctic directly contributes to the hundreds of billions of USD per year in climate-related costs, which means that capital needed for industrialization is diverted toward recovery efforts following climate-related disasters. The Arctic contains an estimated 22% of the world’s untapped fossil fuel reserves and trillions of dollars of rare earth minerals. The melting ice has also opened shortened shipping routes to industry. However, the exploitation of both of these is offset by the global damage that Arctic warming poses globally, including risks for the agricultural, insurance and water-reliant sectors, as well as those with assets in coastal regions that are facing sea level rise and extreme weather, both of which damage roads, bridges and other infrastructure.
Sustainable industrialisation, together with innovation and infrastructure, can unleash dynamic and competitive economic forces that generate employment and income. Arctic warming serves as a major obstacle to achieving this goal because of the risks it exposes. Arctic warming poses direct risks for the agricultural and insurance sectors, as well as those reliant on water or with assets in coastal regions that face sea level rise and extreme weather. A warming Arctic increases the likelihood of extreme weather events, which can destroy infrastructure and livelihoods at a current cost of hundreds of billions of USD per year. This means that capital needed for industrialisation is diverted toward recovery efforts following climate-related disasters.
Arctic Indigenous traditional knowledge has a lot to offer in terms of innovation. For instance, areas with herds of reindeer, horses and bison stay 2°C colder than herd-free areas on average by stomping the snow to increase its density and preserve permafrost, meaning resettling herds of large herbivores can help preserve Arctic permafrost. In countering the risks of increasingly unpredictable sea ice, the SmartICE initiative combines Indigenous knowledge with modern technology to produce information about how to travel across the ice without getting in harm’s way.
Arctic warming is creating a mineral boom as countries, communities and businesses race to gain access to opening natural resources. The Arctic contains an estimated 10% of the world’s oil, 25% of its natural gas, and 22% of its undiscovered fossil fuel reserves, as well as trillions of USD in minerals. On the southwest coast of Greenland, Kvanefjeld is the world’s second largest deposit of rare earth oxides and the sixth largest for uranium. It is developed by Greenland Minerals, a company part-owned by the Chinese Shenghe Resources (Hall, 2020). Similarly, in the Norwegian Kvalsund, a new copper mine was recently given green light for construction (Pulitzer Center, 2021). In addition to China, states like Bangladesh and Singapore have also asserted themselves as “near-Arctic states” in order to have access to opening resources–in their cases, trans-Arctic shipping opportunities. This wide-spread activity is changing the geopolitical landscape and increasing tension in the North.
Arctic permafrost thaw threatens infrastructure, affecting communities, businesses and defense industries, as buildings sink and roads crack. Coastal erosion also creates massive infrastructure challenges, such as causing buildings to collapse into the sea and forcing entire villages on the Alaskan Barrier Islands to relocate (Finnsson, 2022). Similarly, roughly 300 meters of the Kangerlussuaq airstrip, Greenland’s biggest international airport, has been severely damaged by the thawing permafrost (Finnsson, 2022). Built on permafrost, over 10 percent of buildings in the Arctic Russian city of Norilsk are now considered uninhabitable (Finnsson, 2022). In the Canadian Arctic, some of the most significant Inuvialuit archaeological sites are facing high risk of permafrost thaw-induced damage (Bowling, 2021; Coggins et al., 2021).