Arctic Thawing to Cost $60 Trillion
Scientists and economic analysts (Polar Ocean Physics Group at the University of Cambridge) say that the thawing of the Arctic will set off what they have termed an “economic time bomb” in years to come, incurring costs to the value of trillions of dollars.
Some had previously believed that the thawing might in actual fact enable the discovery of new sources of energy or that the thawing of the ice caps would open up faster routes between Asia and the Europe, thus improving trade by shortening transport times. Now, the economic boon may turn into a catastrophic scenario when the ice thaws and methane reserves are actually freed. Researchers say that this will have a price attached to it and it will be a price that is going to hurt. We will indeed be able to exploit the methane and even oil reserves, but, they will have a hefty price of $60 trillion attached to them.
In a new report (Nature) that has been published this is the first piece of research that has predicted the effects on the global economy and tried to establish some sort of monetary cost related to the thawing. The Arctic Sea melts to a large extent in the summer every year and reforms in the winter months. However, levels in 2012 were roughly about40% of what they were in the 1970s regarding the ice that is formed. Scientists have predicted that the summer ice will probably disappear completely in 2020 and there will be no ice at all in the summer months. That means that as the surface area covered by the ice becomes smaller and smaller it will allow the permafrost to release more methane reserves as the retreating of the ice progresses.
Scientists have said that the disappearance of the summer ice in the Arctic Sea will have the consequence of accelerating climate changes around the world. That increased release of methane will affect the developing countries in the world the most, bringing extreme weather conditions, flooding and a knock-on effect on agriculture and also as a consequence health. The report states that 80% of the effects will be in the poor economies of the world inAfrica, South America and also Asia. The group from the University of Cambridge warns that at the present time nobody in the world has evaluated the impact on the global economy from the thawing of the ice and the release of methane. The World Economic Forum and the International Monetary Fundhave not even recognized that there will be an impact on the world. The report states that the rise in temperature that has been suggested to be at 2° Celsius would be advanced by at least 15 to 35 years and would come about probably in 2035.
But, just last month, the International Energy Agency stated that world temperatures would probably increase this century by between 3.6° C and 5.3° C (although they should be kept below +2° C). The reasons behind that? Quite simply the fact that the world has seen record levels of carbon-dioxide emissions from fossil fuels (an increase of1.4% in 2012, now reaching the highest level ever of 31.6 billion tons). At the beginning of June 2013, the IEA recommended reducing energy-related emissions by:
Increasing the number of energy-efficient buildings as well as promoting the use of energy-efficient transport (meaning a reduction of 4% in emissions).
Reducing the number of power stations in the world running on coal (meaning a 20% reduction).
Phasing out the use of fossil fuels (reducing emissions by 12%).
Although, it seems highly unlikely that that will actually happen at all. We are certainly not on the way to eliminating or even curbing the use of fossil fuels, are we?
Lloyds of London has estimated that oil reserves and methane reserves in the Arctic would draw $100 billion in investment over the next ten years. In April, the oil rush was predicted to cause the downfall of the ecosystem by Lloyds. The London insurer believes that any oil spills that occur will cost billions in cleaning-up. They called it “a unique and hard-to-manage risk”. Companies were being urged by Lloyds to hold back from investing in the exploitation of oil and gas reserves in the Arctic until the risk had been fully evaluated. But, honestly, it rarely seems as if the ecosystem can compete with the rules of the market and if there is a buck to be had, then people will join the race to get it first.
At the moment, the only benefit that economies are seeing is the short-term advantages of the thawing during the summer months releasing routes that were once blocked. Russia, Japan, Korea and China as well as Norway and Germany, for example, will be sending within the next few months at least 218 vessels across the Northern Sea Route (using the Bering Strait between Alaska and Siberia). Normally, the route is only open a few months in the year, but 2012 saw the biggest melt ever of the Arctic Sea and that means that the route will be open longer. Compared with previous years, that’s a record number of ships that will be using that route this year. In 2011, there were only 4 ships that went down the Northern Sea Route. In 2012, that figure rose to 46. The route is a means to shore off at least ten to fifteen days from the total transport time needed between China and Norway, for instance.
But, business and the environment hardly go hand in hand. We haven’t invested nearly enough money as we could have done in producing viable sources of alternative energy to power our economies. We have taken the dark road of shale gas and that has destroyed the water tables and polluted the water we use every day. When there are two choices to make, either the economy or ecology, the dithering doesn’t take too long to decide which road we take in the fork. We privilege economy over ecology. The only thing that we are likely to preserve is the dollar engrained on the land that we use to boost our economies.
Remember that if the cost of the Arctic Sea melting stands at $60 trillion, according to the report’s estimates, then the present global economy is only worth $70 trillion, and that’s dangerously close.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.