Arctic Ice-Melt Cost Seen Equal to Year of World Economic Output

Arctic Ice-Melt Cost Seen Equal to Year of World Economic Output

The cost to the world from melting Arctic ice is equal to almost a year of global economic output as releasing methane trapped in the frozen continent leads to extreme weather, flooding and droughts, scientists said.

The methane emissions are an “economic time-bomb” that may cost $60 trillion from effects on the climate, according to research published today by the University of Cambridge and the Rotterdam School of Management at Erasmus University. Extreme weather events would mainly affect developing nations.The research in the scientific journal Nature follows plans by companies including Royal Dutch Shell Plc (RDSA) and OAO Gazprom to explore the Arctic for resources. Shell halted operations off the Alaskan coast after accidents in 2012. Environmental groups such as Greenpeace criticize the plans, saying oil spills above the Arctic circle would be almost impossible to clean up.

“The global impact of a warming Arctic is an economic time-bomb,” said Gail Whiteman, professor of sustainability, management and climate change at Rotterdam School of Management. Global organizations such as the World Economic Forum should urge leaders to discuss the issue and encourage investment in economic modeling to explore the effects, she said by e-mail.

The release of 50 gigatons of methane over a decade from thawing permafrost beneath the East Siberian Sea would bring forward the date at which the gain in global mean temperature exceeds 2 degrees Celsius by 15 to 35 years, said Chris Hope, a reader in policy modeling at Cambridge Judge Business School. The United Nations has called for the world’s governments to act to limit global temperature increases to 2 degrees.

East Siberia

“Our response to the rapid warming of the Arctic should be a concerted attempt to shift away from fossil fuels towards a more efficient renewable energy system that will increase the resilience of our economies,” Ben Ayliffe, head of Greenpeace International’s Arctic oil campaign, said by e-mail. “This new research should be required reading for politicians and businesses looking to avoid the huge costs that climate change will bring.”

The researchers said costs may be higher than $60 trillion including effects such as ocean acidification. Discussions about the warming Arctic focus on benefits such increased fossil fuel drilling and new shipping routes, the authors said. These are “missing the big picture on Arctic change,” they said.

Global nominal gross domestic product was $71.7 trillion in 2012, up from $58 trillion in 2009, World Bank figures show.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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