The environmental changes that will likely be taking hold in the Arctic in the coming years and decades will lead to a host of new economic challenges and opportunities. As sea ice recedes, vegetation creeps northwards, and temperatures drift upwards, humanity will have new ways of exploiting the Arctic region for economic gain. At the same time, communities of indigenous Arctic peoples will undoubtedly be forced to change their ways of life. Traditional modes of survival, such as hunting and herding, may become unfeasible should the environmental changes discussed above indeed come to pass. If opportunity exists for economic gain, there will undoubtedly be many willing to take whatever risks are needed to realize it. This fact necessitates that careful consideration is given to the impacts of such economic ventures. The economic opportunities of greatest significance are likely those involving oil and natural gas, agriculture, and shipping. These are also the ones which might lead to the greatest damage of the Arctic region.
Large fields of oil and natural gas in the Arctic region have been discovered in the Arctic region. In 2008, the United States Geological Survey (USGS) published a report that put the recoverable resources in the Arctic at 90 billions barrels of oil, 1,669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids
. These quantities are substantial; if the statistics are accurate, it would mean that the Arctic regions contain 13% of the world's undiscovered oil and nearly 30% of its natural gas
. As these vast resources are found primarily offshore, it has until recently been economically untenable to invest in the infrastructure required to extract the resources. Added to this difficulty is the complexity of transporting the resources to processing sites. Pipelines are costly to build and maintain and pressure from environmental groups makes construction a lengthy process to even begin.
Rising temperatures have sparked resurgent interest extracting Arctic oil and natural gas resources. Receding sea ice has made it more practical to construct offshore oil drilling platforms. Furthermore, the state of global affairs, especially the turbulence in the Middle East, has pushed Canada, the US, Russia, and the EU to more vigorously investigate petroleum deposits that lie in more secure environs. The Arctic thus stands on the verge of an economic revolution. Countries and corporations stand to reap massive economic gains in oil export revenue. The construction and maintenance of extraction infrastructure could lead to an explosion of growth in cities and towns in Iceland, Greenland, northern Canada, and Russia. Greenland's economy, which today is based mostly upon agriculture, fishing, and mining could be transformed radically.
Although oil has the potential to radically change the economic character of the Arctic region, it is unknown if deposits will be extractable anytime soon. Research is being done daily to determine if the investments required to extract the oil would even be practical. And if extraction of oil does make economic sense, it remains to be seen how governments would deal with the possibility of catastrophe, such as a pipeline breach or a drilling site leak oil into environment. Natural gas offers considerable less risk for investors and, given natural gas' rise in popularity and use in recent years, perhaps offers a more concrete path towards economic revolution in the Arctic. Agriculture and shipping will also play a role in this process.
Agriculture in the Arctic has a long history. Farmers have cultivated cold-weather crops such as grains and potatoes throughout much of the broader Arctic region for centuries. Warming temperatures would have a clear effect on agriculture in the region. While a warmer climate may prove beneficial for increasing crop yields in some of the more southern Arctic regions, it would negatively impact how crops would be grown further north. Warmer temperatures "can speed crop development and thereby reduce the amount of time organic matter (dry measure) is accumulated"
. This would lead to significant structural changes in the region's agriculture industry and would perhaps be most impactful for indigenous communities. The Arctic Climate Impact Assessment (ACIA) also notes another disturbing consequence of warming temperatures: the amount of water that would be available for farmers - and Arctic communities in general - would decrease. A decrease in the water supply would lead to smaller crop yields and economic turmoil for communities across the region.
While agriculture faces clear threats from Arctic warming, it is expected that the positive effects would ultimately have more influence than the negative. As the Arctic warms, more land will be available for agricultural use. At the same time, rising temperatures would allow the population of the region to increase, boosting demand for agricultural products. Furthermore, melting sea ice would allow for cheap and quick transport of Arctic crops across the globe. While agriculture in the region will be forced to adapt to dramatic changes in the environment, it is expected that Arctic warming will also bring with it a number of opportunities that will be beneficial to the growth, development, and distribution of crop yields.
The potential dangers and opportunities of warming temperatures on the extraction of natural resources and Arctic agriculture are strongly linked to the third economic change to be considered here: the reduction in shipping distances as a result of melting sea-ice. As the amount of ice near the north pole shrinks, new shipping routes are being revealed. Ships that traverse the waters of the Arctic are presently limited by the sea-ice that is a year-round hazard for ocean-going vessels that have not been specially protected. This ice forces ships to take longer routes, thereby increasing both travel time and the cost of each voyage. Sea-ice's negative effects on regional shipping routes will be lessened by rising temperatures. It is thought that there will eventually be periods during which travel directly across the north pole will become possible. Shortened shipping routes will dramatically increase the flow of goods into and out of the Arctic region. Larger population centers will become sustainable and many forms of economic activities, especially resource extraction, would receive a significant boost. In all, an increase in the efficiency of Arctic shipping routes would result in a region that would be economically and socially different than today.