Is Global Warming Good For Business?
by Brian Lipson (Class of '05)
References:
Global warming is steadily melting the Arctic ice cap each year with some surprising side effects. The ice cap reached its lowest level ever recorded this last summer, and as the ice melts, new land and seas become uncovered. The newly exposed lands are potentially hiding valuable resources. Arctic nations are competing to claim the territory, fighting for possible new waterways for trading routes and oil drilling sites. However there is a rule about claiming territory. Countries are only allowed to claim territory that is part of the continental shelf off each respective coast. As a result, Arctic nations are scrambling to explore and map the topography of the ocean floors in the Arctic to find ocean floors with elevations that can be considered part of a continental shelf. The countries involved are the United States, Russia, Canada, Denmark, and Norway (the only countries with coasts on the Arctic Ocean). The expeditions sometimes include icebreakers to explore possible drilling sites, while others include sending scientists to map out the topography of the ocean floor for claming territory. Currently, Canada and the U.S do not agree on the ownership of the Northwest Passage, a potential major trading route in Northern Canadian waters that could open up due to melting ice. Canada claims it is theirs while the U.S. says it is international water. Canada is making efforts to reconnect with indigenous villages in the arctic to rally them in support of Canada's claims to the new lands. If it weren't for global warming, Canada would be paying no attention to its arctic lands, but due to the potential financial gain, the Canadian government now is taking measures to secure its northern territories. Norway is especially eager to claim oil-drilling sites in order to become a huge supplier of oil to countries in need like the United States.
Overall, there are several possible benefits of the melting ice. On the business side, new waterways that open up for trading vessels could make trade much more efficient. For instance, a trip from some ports in Russia to midcontinental North America usually takes around 17 days, taking a route through Canada via the St. Lawrence River and the Great Lakes. However, if ports like the one in Churchill, Manitoba (on the coast of Hudson Bay) have longer shipping seasons, ships could take advantage of the route that only takes about eight days (as is the case in Churchill). From there, railroads could transport goods the rest of the way. In the process, Churchill would become a hub for trading vessels, vastly improving the economy and business there. Also, if oil sites were discovered, major sources of new oil would make gas prices drop. The new and faster trade routes would reduce product costs because of more efficient trading and would increase business in new port locations. Cruise companies would have new routes to send customers on. Some indigenous villages in the arctic would have more visitors due to the longer shipping seasons. Tourist visits to arctic villages are vital to the economies, sometimes garnering as much as $40,000 American dollars per visit. As of right now, these tourist visits are rare, and only about five come annually. A continued thawing could increase the visits. A positive environmental side effect could be that new sources of oil could decrease the need for oil drilling in places like Alaska and end political arguments over drilling on fragile land on the North Slope.
It is only fair however to mention the negative consequences of global warming. Increased shipping in areas makes oil tanker accidents more likely. Not only are oil spills catastrophic for the environment, but on the business side, fishing communities such as ones in Norway are worried that an oil spill would wipe out the fishing industry (especially because oil spills take longer to clean in cold water due to less wave action). If the ice in the arctic continues to melt each year, ocean levels could increase to the point where coastal human settlements could be flooded. In addition, other more urgent effects like severe weather and changing climates could be having serious impacts on humans and animals. Many animals rely on the winter ice pack for food. For instance, polar bears use ice packs to hunt seals, but significantly reduced ice packs are starting to starve polar bears. A possible negative business side effect is that severe weather and climate changes could ruin crops and agriculture in general. Also, migrating fish, namely salmon, are moving farther and farther north for cold waters. Fisheries may have to relocate and move north to keep up with the migrating fish. Finally, in addition to the toll on humans that severe storms have, the cost for insurance and recovery efforts from severe storms could total around 150 billion U.S. dollars per year in the next decade alone.
Overall, there are several possible benefits of the melting ice. On the business side, new waterways that open up for trading vessels could make trade much more efficient. For instance, a trip from some ports in Russia to midcontinental North America usually takes around 17 days, taking a route through Canada via the St. Lawrence River and the Great Lakes. However, if ports like the one in Churchill, Manitoba (on the coast of Hudson Bay) have longer shipping seasons, ships could take advantage of the route that only takes about eight days (as is the case in Churchill). From there, railroads could transport goods the rest of the way. In the process, Churchill would become a hub for trading vessels, vastly improving the economy and business there. Also, if oil sites were discovered, major sources of new oil would make gas prices drop. The new and faster trade routes would reduce product costs because of more efficient trading and would increase business in new port locations. Cruise companies would have new routes to send customers on. Some indigenous villages in the arctic would have more visitors due to the longer shipping seasons. Tourist visits to arctic villages are vital to the economies, sometimes garnering as much as $40,000 American dollars per visit. As of right now, these tourist visits are rare, and only about five come annually. A continued thawing could increase the visits. A positive environmental side effect could be that new sources of oil could decrease the need for oil drilling in places like Alaska and end political arguments over drilling on fragile land on the North Slope.
It is only fair however to mention the negative consequences of global warming. Increased shipping in areas makes oil tanker accidents more likely. Not only are oil spills catastrophic for the environment, but on the business side, fishing communities such as ones in Norway are worried that an oil spill would wipe out the fishing industry (especially because oil spills take longer to clean in cold water due to less wave action). If the ice in the arctic continues to melt each year, ocean levels could increase to the point where coastal human settlements could be flooded. In addition, other more urgent effects like severe weather and changing climates could be having serious impacts on humans and animals. Many animals rely on the winter ice pack for food. For instance, polar bears use ice packs to hunt seals, but significantly reduced ice packs are starting to starve polar bears. A possible negative business side effect is that severe weather and climate changes could ruin crops and agriculture in general. Also, migrating fish, namely salmon, are moving farther and farther north for cold waters. Fisheries may have to relocate and move north to keep up with the migrating fish. Finally, in addition to the toll on humans that severe storms have, the cost for insurance and recovery efforts from severe storms could total around 150 billion U.S. dollars per year in the next decade alone.
References:
- The New York Times: "As Polar Ice Turns to Water, Dreams of Treasure Abound." By Clifford Krauss, Steven Lee Myers, Andrew C. Revkin and Simon Romero. Part 1 of "Big Melt" series, from October 10, 2005.
- The New York Times: "Old Ways of Life Are Fading as Arctic Thaws." By Steven Lee Myers, Simon Romero, Clifford Krauss, and Andrew C. Revkin. Part 2 of "Big Melt" series, from October 20, 2005.
- Wikipedia: "Global Warming (effects)"
- The Boston Globe: "The Heat is on." By Beth Daley, Globe Staff November 14, 2005
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