3 minute read 16 Feb. 2021
Panorama of the Smeerenburg glacier Svalbard

Imagine the Arctic of the future

By EY Global

Multidisciplinary professional services organization

3 minute read 16 Feb. 2021

The region’s economic and environmental outlook depends on how policymakers and business leaders respond to unique threats and opportunities.

It’s one of the world’s few remaining largely unspoiled frontiers, larger than the United States and home to fewer than 10 million people. But what’s the future of the Arctic? The region – with areas claimed by the US, Canada, Russia, Denmark, Norway, Sweden, Finland, and Iceland – is facing the disruptive challenges of climate change and shifting global political, social and economic patterns. How policymakers and business leaders respond will dramatically affect its future.

Arctic 2050, a new report by the SKOLKOVO Institute for Emerging Market Studies and Nord University Business School, supported by EY, finds two critical dimensions of uncertainties could lead to a significant shift in the Arctic region: the quality of the institutional environment, including the effectiveness of environmental, social and demographic policies and regulations, the availability of financial incentives and the quality of governance; and the pace of development of technology and innovation, including the level of digitalization and connectivity, the commercialization of technologies, and the cost of doing business.

  • About the research

    The Arctic 2050 research initiative is being conducted by the Institute for Emerging Market Studies at Moscow School of Management SKOLKOVO and Nord University Business School, with support from EY. The research aims to identify how institutional and innovation development can make the intensification of economic activity in the Arctic a key driver of the sustainable development of the region, including social and environmental perspectives.

Different combinations of these critical uncertainties provide very different scenarios of how the Arctic might look decades from now. Arctic 2050 assigns distinctive historical periods to each scenario, providing a spectrum of potential outcomes:

  • Dark Ages. Development of the Arctic remains static, then deteriorates due to a lack of coordinated national and supranational frameworks and governance and the low pace of innovations and deployment of new technologies. The region depopulates, becoming an industrial site for the ruthless exploitation of exhausted fossil-fuel resources.
  • Age of Discovery. The region grows economically amid fierce competition for its resources, fueled by state-funded innovations attracting opportunity-seekers to the region. Fragmented environmental regulation and weak disaster response fails to slow the damage done to its ecosystem, resulting in the deterioration of natural habitats and the livelihoods of indigenous people.
  • Romanticism. The Arctic becomes a showcase for all things good for the ecosystem. There is only sustainable energy and transport, no mining and extracting, going back to nature. Money stops flowing to the Arctic. What once was a global magnet for business becomes a nature preserve.
  • Renaissance. Nations agree to make exploration of the Arctic a symbol of international cooperation and humanity’s eternal striving for progress and innovation. Governments agree on standards for doing business, incentivizing the use of best available technologies, and innovating to prove decoupling is possible.

All four scenarios have different social, environmental and economic implications. But they collectively underscore the urgent need for transformative, collective action to shape better policies and design progressive strategies to benefit local communities, strengthen the Arctic’s strategic position in the global arena, and drive new opportunities to advance sustainable development goals.

Read the full report and learn more about the Arctic 2050 research initiative.

 

Summary

The Arctic 2050 report lays out four scenarios for the future of the region, ranging from strictly utilitarian to deeply romantic. All of the scenarios make clear that collective action will be required in the decades to come.

About this article

By EY Global

Multidisciplinary professional services organization