Arctic economy

written by Eleonora Milazzo – ACCEL European Fellow

 

We have already mentioned in the course of the Arctic 101 journey across the Arctic that this unique and complex ecosystem is also extremely rich in natural resources with relevant economic potential. It’s now time to take a closer look at these resources, to help us learn what is going on in the circumpolar regions and what to expect for the future.

Fishing, mining, shipping, and hydrocarbons are the main sources of wealth for the Arctic. They also attract a growing amount of investments from all over the world. The following sections will provide a detailed overview of economic activities sector by sector. But whose resources are these? How are they managed? What are the risks connected to the development of an Arctic economy?

Illustrations by Dayanita Ramesh, ACCEL North American fellow
Illustrations by Dayanita Ramesh, ACCEL North American fellow

 

Who owns Arctic resources?

We already introduced the United Nations Convention on the Law of the Sea (UNCLOS) as the main legal instrument regulating activities in maritime areas and in the Arctic. The UNCLOS defines and regulates territorial boundaries at sea, the right to enforce laws and exploit resources. The sovereign rights of the coastal states are gradually restricted as we proceed from the coastline to the high seas.

According to UNCLOS, all states may establish their territorial waters out to 12 nautical miles from their coastal baseline. In this zone, the coastal state enjoys sovereignty over the sea, the seabed and the airspace. Foreign vessels crossing this zone are only granted the right to innocent passage. Beyond this area and up to 200 nautical miles from the coast, coastal countries may establish an Exclusive Economic Zone (EEZ).[1] Within these waters, a coastal state enjoys sovereign rights to the management and exploitation of resources on the continental shelf and to living resources in the water column.

If the outer margin of its continental shelf is located beyond the 200-mile limit, a state may apply for an extension of its right to the continental shelf until 350 miles from the coast baseline. To have the right to an extended EEZ, the state is required to give evidence of the geological connection of the shelf to the mainland. Should any of these boundaries be subject to overlapping claims, the states involved are called to draw boundaries by agreement to achieve an equitable solution.

Unlike territorial waters, EEZ and continental shelves are not sovereign territories. In the EEZ, other states also have rights to shipping and scientific activities. High seas areas lie beyond EEZ territories; these waters and their airspace are open for all countries to access and use. Meanwhile, the seabed, called the “Area”, is subject to a separate regime under the UNCLOS. The exploitation of natural resources of the Area is administered by the International Seabed Authority.

 

Illustrations by Dayanita Ramesh, ACCEL North American Fellow
Illustrations by Dayanita Ramesh, ACCEL North American Fellow

What infrastructures?

In order to be viable, resource development needs a web of adequate transportation facilities. Shipping of goods to and from the Arctic occurs by either air or sea, while many regions have no road access.[2] However, air transport is extremely expensive and port and dock facilities remain inadequate.[3] Port infrastructures are therefore an absolute priority to support economic development across the Arctic, to reduce costs of shipping of goods, and to boost tourism.

Access to Information and Communication Technologies (ICTs) is another great challenge of infrastructure development in the Arctic.[4] According to the Arctic Communications Infrastructure Assessment (ACIA) Report, establishing and maintaining effective communications services in Arctic communities is a major challenge.[5] The ACIA Report also laments the lack of comprehensive strategies to connect Arctic communities. This also affects emergency responses and adaptation capabilities, as well as economic development.

 

Let’s now dive further into the topic of the Arctic economy!

 

[1] United Nations, 1982. Convention on the Law of the Sea, Art. 57.

[2] Christopher, J. and Fast, E., 2008. The Arctic: transportation, infrastructure and

communications. Library of the Parliament.

[3] Ibid.

[4] Information and Communications Technologies (ICTs) include radio, television, cell phones, and of course, Internet.

[5] Arctic Communications Infrastructure Assessment (ACIA), 2011. Report.

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