Investment in the Arctic could reach $100bn –report
Investment in the Arctic “High North” could reach $100bn within ten years, according to a report released by specialist insurer Lloyd’s in conjunction with UK think-tank Chatham House.
Sustained high commodity prices are driving renewed interest in Arctic projects across the board, raising the prospect of a transformation of the Arctic’s role in the global economy.
Oil and gas exploration, mining and the shipping industry are predicted to be the biggest drivers and beneficiaries of economic development in the region. But tourism, fisheries and scientific research are also expected to take advantage.
But the report warns that governments and businesses must ensure development of the region does not lead to irreparable damage.
“Arctic opening: Opportunity and Risk in the High North”, says research to consider the substantial and unique risks businesses will face in the region must start soon. The potential environmental consequences of any disasters, and the difficulty and cost of clean-up are likely to be significantly greater than in other regions.
Richard Ward, Chief Executive of Lloyd’s, said business activity in the Arctic region is “undeniably increasing”, and the impact of climate change means this is likely to grow significantly in the future. But as new opportunities open up, decisions on exploiting them need to be made with the best possible understanding of the risks.
“Businesses, governments and industry must start to think now about how they will manage the substantial, and unique, risks they will face when doing business in the Arctic region.” Lloyd’s is a member of ClimateWise, the global collaboration of leading insurers focused on reducing the risks of climate change.
The report recommends:
Governments should provide strong and transparent oversight in the region and establish procedures for monitoring future activity in the area.
Businesses need to start strengthening their risk management plans, including risk mitigation and rigorous insurance policies for their future activity there.
Industries with an interest in the region have a responsibility to start establishing industry-wide standards for future Arctic activity now.
All parties should begin considerable further research and analysis to fully assess the range of hazards of Arctic operations and the vulnerabilities of technical systems, equipment and the Arctic environment to disruption and harm.