Sunday, September 19, 2010

Climate change and the emergence of the "New North"

Unfreezing Arctic Assets
Part 2

A bloc of countries above the 45th parallel is poised to dominate the next century. Welcome to the New North.

By Laurence C. Smith
Wall Street Journal
September 18, 2010

At first blush all eight New North countries fulfill these requirements to some degree. Save Russia, they rank among the most trade-friendly, economically globalized, law-abiding countries in the world. They control a valuable array of coveted natural resources. Already, they enjoy more petitions from prospective migrants than they can or will absorb. They are friendly neighbors. Their winters will always be frigid, but less bitterly so than today. Biomass will press north, including some increased agricultural production in contrast to the more uncertain futures facing much larger agricultural areas to the south.

Already the New North possesses a sprinkle of sizable settlements from which to grow. Their biggest hubs—like Toronto, Montreal, Vancouver, Seattle, Minneapolis-St. Paul, Ottawa, Reykjavik, Copenhagen, Oslo, Stockholm, Helsinki, St. Petersburg and Moscow— are growing fast and attract many foreign immigrants today. Smaller destination cities include Anchorage, Winnipeg, Saskatoon, Quebec City, Hamilton, Goteborg, Trondheim, Oulu, Novosibirsk and Vladivostok. Some truly northern towns that might grow in a New North include Fairbanks, Whitehorse, Yellowknife, Iqaluit, Tromso, Rovaniemi, Murmansk and Surgut.

Cities are key to the New North because, like everywhere else, it is rapidly urbanizing. Even in the remote Arctic and sub-Arctic, people are abandoning small villages or a life in the bush to flock to places like Fairbanks, Alaska; Fort McMurray, Canada; and Yakutsk, Russia. Tiny Barrow, Alaska—a metropolis by Arctic standards—is absorbing an influx of people from remote hamlets across the North Slope. Paired with reduced winter road access and ground disruptions from thawing permafrost, this urbanization trend suggests abandonment of all but the most lucrative of remote interiors.

Outside the cities and towns it's hard to attract new settlers, especially in the Arctic hinterlands. With four million people and a gross domestic product slightly larger than Hong Kong's, the circumpolar Arctic holds a bigger population and economy than most people realize, but both are still fleetingly small. For example, with just 57,000 people and $2 billion gross domestic product per year, Greenland's population and economy are 1% of Denmark's. Furthermore, the mainstay of the Arctic economy is simply exporting raw commodities like metals, fossil fuel, diamonds, fish and timber. Public services comprise the second-largest sector, followed by transportation. Tourism and retail are significant only in a few places. Universities are rare, and manufacturing extremely limited except for a robust electronics industry in northern Finland around the city of Oulu (Nokia is one of the better-known companies operating there).

Thus, the Arctic economy is a restrictive blend of resource-extraction industries and government dollars, with an underskilled and undereducated work force. Most of these natural resource profits leave the far North, creating an apparent "welfare state" situation in which central governments prefer to deeply subsidize public services rather than surrender profits to local taxation.

Career choices are limited and although salaries are high, so is the cost of living. One can expect to pay $250 per night for a cheap hotel room and $15 for a cheeseburger in an Arctic town. Gas pipelines and diamond mines generate enormous wealth, but most of this revenue flows south (or west, in Russia), controlled by an array of private, multinational, and state-owned actors and central governments. In North America, much of what's left is controlled by indigenous-owned business corporations and/or regulated through a wave of comprehensive land claims agreements, now nearly complete, that return substantial political power to the region's original occupants.

Put simply, the Arctic is not an easy place for fresh arrivals and business start-ups outside of a narrow range of activities. Add to all this the infernal cold and darkness of the polar winter, followed by the steaming heat and billions of mosquitoes of the polar summer, and we see the Arctic will never be a big draw for southern settlers. Even the sub-Arctic hydrocarbon boom cities of Fort McMurray; Noyabr'sk, Russia; and Novy Urengoy, Russia, must recruit heavily to attract enough foreign workers. While Arctic settlements will grow with the region's rising energy, mining and shipping base, its fast-growing indigenous population (in North America), and the ongoing urbanization trend, it's hard to imagine big new cities spreading across it by 2050 or even 2100.

Instead, a better envisioning of the New North today might be something like America in 1803, just after the Louisiana Purchase from France. It, too, possessed major cities fueled by foreign immigration, with a vast, inhospitable frontier distant from the major urban cores. Its deserts, like Arctic tundra, were harsh, dangerous and ecologically fragile. It, too, had rich resource endowments of metals and hydrocarbons. It, too, was not really an empty frontier but already occupied by indigenous peoples who had been living there for millennia.

Flying over the American West today, one still sees landscapes that are barren and sparsely populated. Its towns and cities are relatively few, scattered across miles of empty desert. Yet its population is growing, its cities like Phoenix and Salt Lake and Las Vegas humming economic forces with cultural and political significance. This is how I imagine the coming human expansion in the New North. We're not all about to move there, but it will integrate with the rest of the world in some very important ways.

I imagine the high Arctic, in particular, will be rather like Nevada—a landscape nearly empty but with fast-growing towns. Its prime socioeconomic role in the 21st century will not be homestead haven but economic engine, shoveling gas, oil, minerals and fish into the gaping global maw.

—From "The World in 2050" by Laurence C. Smith, to be published by Dutton, a member of the Penguin Group, on Sept. 23. Copyright © 2010 by Laurence C. Smith.


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