What the melting Arctic means for the world’s economy

What the melting Arctic means for the world’s economy

Arctic ice image by NASA Goddard Space Flight Center via Flickr

What we don’t notice can hurt us. We are good at monitoring our immediate environment: competitive activity, consumer demographics, employee culture. When our world is stable, we don’t need to expand our focus.

But shifts in stability often begin with weak, almost invisible cues — indications that are easily overlooked.

Take the economic downturn. Questionable lending in housing markets and rapidly evolving financial instruments could have caused concern. But regulators — and the financial system more broadly — missed the cues.

Our observations — our “sensemaking processes” — tend to reinforce our existing worldviews. That’s why experts such as Karl Weick advise us to pay close attention to surprises, and to stories from experts on the front-line.

Frontline: Arctic

In 2007, the Earth experienced an abrupt surprise: a record Arctic ice melt. The volume of Arctic sea ice at summer's end was half what it was four years earlier. The Arctic ice retreats every summer, but never this much. “The Arctic is screaming,” Mark Serreze, senior scientist at the U.S. government's snow and ice data center in Boulder, Colo., told the Associated Press.

Last fall, the Arctic sent another message loud and clear. Arctic ice reached a new all-time low: almost 300,000 square miles less than in 2007. But were we listening?

What the melting Arctic means for business

Less Arctic ice represents economic opportunity to some executives and governments. The Arctic contains an estimated 30 percent of the world’s undiscovered gas and 13 percent of undiscovered oil. This means tempting short-term economic benefits to Arctic regions, especially with the increased feasibility of new shipping routes. Lloyds of London estimates that “investment in the Arctic could reach $100 billion within 10 years.”

But the changing Arctic will have greater and more damaging impacts, because of the region’s central role in stabilizing the Earth’s climate. Ice in the Arctic reflects sunlight, helping to cool the Earth. Less white in the Great White North means that the Earth will absorb more heat, increasing global warming.

In addition, large stores of methane, a potent greenhouse gas, are trapped in soil (permafrost) under the ice. When the ice melts, that methane may escape, further increasing warming.

In new research published in the journal Nature, my colleagues and I found that this methane release, because of its effects on climate, will have a cost equal to the size of the world economy: $60 trillion. We used U.K. and U.S. government models to identify the impacts: damage to crops, health, infrastructure and other resources.

Taking action

Our world is shifting, and the cues are there. How can we make sense of what’s happening, and respond appropriately?

We need to listen more closely to the scientists who study the Arctic carefully. And we need to consider how best to act on this knowledge: how to mitigate and adapt to such big shocks.

Increasingly, governments, industry associations and others are providing guidance on how climate change will affect sectors, and how to prepare. For example, North American regional impacts are described by the U.S. government’s Global Change program and Natural Resources Canada. A recent Network for Business Sustainability Thought Leader piece identifies ways that business can become involved in climate policy.

Surprises can teach us. We must recognize that what happens at our planet’s pole can affect our daily lives.

This article originally appeared on the Network for Business Sustainability’s Thought Leaders blog.

Arctic ice image by NASA Goddard Space Flight Center via Flickr