Melting Arctic May Cost Global Economy $60 Trillion

Kiley Kroh, “New Research Finds Melting Arctic May Cost Global Economy $60 Trillion,” TP Climate Progress, July 24 2013

In findings published in the journal Nature, economists and polar scientists from the University of Cambridge and Erasmus University Rotterdam found that the ripple effects of climate change in the Arctic — unlocking frozen reserves of methane that speed global warming and cause destructive and costly climactic changes across the planet — could deal a severe blow to the global economy.

The release of methane from thawing permafrost beneath the East Siberian Sea, off northern Russia, alone comes with an average global price tag of $60 trillion in the absence of mitigating action — a figure comparable to the size of the world economy in 2012 (about $70 trillion). The total cost of Arctic change will be much higher.

“People are calculating possible economic benefits in the billions of dollars and we’re talking about possible costs and damage and extra impacts in the order of tens of trillions of dollars,” said Chris Hope, professor at Cambridge’s Judge Business School and report author, in an interview with Financial Times. …

The Arctic is melting at an alarming rate — about twice as fast as the rest of the globe — and the impacts thus far have been devastating. The National Oceanic and Atmospheric Administration’s 2012 Arctic Report Card documented a very grim year for the region and found “strong evidence of widespread, sustained change driving Arctic environmental system into new state,” including record-low sea ice extent, record ice sheet surface melting in Greenland, record-high permafrost temperature, and record-low snow extent.

The researchers from Cambridge and Erasmus explain that as the sea ice melts at an unprecedented rate, the thawing permafrost releases large stores of methane. Methane is an extremely potent greenhouse gas and, as is the case with the Arctic’s multiple positive feedback loops, increased concentrations of methane in the atmosphere will accelerate global warming — continuing the destructive cycle. …

These extreme events come with a huge price tag. If nothing is done to mitigate the effects of climate change, the researchers estimate that just one giant ‘methane pulse’ will lead to an extra $60 trillion of mean climate change impacts, or 15 percent of the total predicted cost of climate change impacts (about $400 trillion). While this number alone is extraordinary, they emphasize “The full impacts of a warming Arctic, including, for example, ocean acidification and altered ocean and atmospheric circulation, will be much greater than our cost estimate for methane release alone.”

Read the full article here.

John Vidal, “Arctic thawing could cost the world $60tn, scientists say,” The Guardian UK, 24 July 2013

The Arctic sea ice, which largely melts and reforms each year, is declining at an unprecedented rate. In 2012, it collapsed to under 3.5m sqkm by mid September, just 40% of its usual extent in the 1970s. Because the ice is also losing its thickness, some scientists expect the Arctic ocean to be largely free of summer ice by 2020. …

According to the authors, who using the Stern review, calculated that 80% of the extra impacts by value will occur in the poorer economies of Africa, Asia and South America. “Inundation of low-lying areas, extreme heat stress, droughts and storms are all magnified by the extra methane emissions,” they authors write. They argue that global economic bodies have not taken into account the risks of rapid ice melt and that the only economic downside to the warming of the Arctic they have identified so far has been the possible risk of oil spills.

But, they say, economists are missing the big picture. “Neither the World Economic Forum nor the International Monetary Fund currently recognise the economic danger of Arctic change. [They must] pay much more attention to this invisible time-bomb. The impacts of just one [giant “pulse” of methane] approaches the $70-tn value of the world economy in 2012″, said Prof Gail Whiteman, at the Rotterdam School of Management and another author.

Read the full article here.