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Original Article

Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route

Eddy Bekkers

Corresponding Author

E-mail address:eddy.bekkers@wti.org

University of Bern

Corresponding author: Eddy Bekkers, World Trade Institute, University of Bern, Hallerstrasse 6, 3012 Bern, Switzerland. Email:

eddy.bekkers@wti.org

.
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Hugo Rojas‐Romagosa

CPB Netherlands Bureau for Economic Policy Analysis

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First published: 16 December 2016
Cited by: 5

We acknowledge support for this research under the European Union FP7 project ‘Impacts Quantification of Global Changes (GLOBAL‐IQ)’, grant agreement no. 266992, and the Swiss National Fonds NCCR Trade Regulation project. Ana‐Maria Vasilache‐Freudenthaler provided excellent research assistance. This article has benefited from the comments and suggestions by Richard Baldwin, Peter Egger, Rikard Forslid, Henri de Groot, Thomas Hertel, Douglas Nelson, Karen Helen Ulltveit‐Moe and participants at the 16th Annual Conference on Global Economic Analysis in Shanghai (June 2013) and the Annual Global IQ meeting in Rome (September 2013), ETSG Fifteenth Annual Conference in Birmingham (September 2013) and the Fifth Villars Research Workshop on International Trade (February 2014).

Abstract

One consequence of melting Arctic ice caps is the commercial viability of the Northern Sea Route, connecting East Asia with Europe. This represents a sizeable reduction in shipping distances and average transportation days compared to the conventional Southern Sea Route. We examine the economic impact of opening this route in a multi‐sector Eaton–Kortum model with intermediate linkages. We find remarkable shifts in trade flows between Asia and Europe, diversion of trade within Europe, heavy shipping traffic in the Arctic and a substantial drop in Suez traffic. Projected shifts in trade also imply substantial pressure on an already threatened Arctic ecosystem.

Number of times cited: 5

  • , How do the new shipping routes affect Asian liquefied natural gas markets and economy? Case of the Northern Sea Route and Panama Canal expansion, Maritime Policy & Management, 10.1080/03088839.2018.1445309, 45, 4, (543-566), (2018).
  • , Towards a balanced view of Arctic shipping: estimating economic impacts of emissions from increased traffic on the Northern Sea Route, Climatic Change, 10.1007/s10584-017-1980-6, 143, 1-2, (143-155), (2017).
  • , Assessing the shipping in the Northern Sea Route: a qualitative approach, Maritime Business Review, 10.1108/MABR-06-2017-0013, 2, 4, (389-409), (2017).
  • , Energy-Saving Potential and an Economic Feasibility Analysis for an Arctic Route between Shanghai and Rotterdam: Case Study from China’s Largest Container Sea Freight Operator, Sustainability, 10.3390/su10040921, 10, 4, (921), (2018).
  • , The welfare effects of free trade agreements in quantitative trade models: A comparison of studies about Transatlantic Trade and Investment Partnership, The World Economy, , (2018).