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

Bekkers, Eddy Henricus; Francois, Joseph; Rojas-Romagosa, Hugo (2016). Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route. Economic journal, 128(610), pp. 1095-1127. The Hague: Wiley 10.1111/ecoj.12460

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A consequence of melting Arctic ice caps is the commercial viability of the Northern Sea Route, connecting North-East Asia with North-Western Europe. This will represent a sizeable reduction in shipping distances and a decrease in the average transportation days by around one-third compared to the currently used Southern Sea Route. We examine the economic impact of the opening of the Northern Sea Route in a multi-sector Eaton and Kortum model with intermediate linkages. This includes a remarkable shift of bilateral trade flows between Asia and Europe, diversion of trade within Europe, heavy shipping traffic in the Arctic, and a substantial drop in traffic through Suez. These global trade changes are reflected in real income and welfare effects for the countries involved. The estimated redirection of trade has also major geopolitical implications: the reorganisation of global supply chains within Europe and between Europe and Asia, and the highlighted political interest and environmental pressure on the Arctic.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Other Institutions > Teaching Staff, Faculty of Business, Economics and Social Sciences
02 Faculty of Law > Department of Economic Law > World Trade Institute
10 Strategic Research Centers > World Trade Institute

02 Faculty of Law > Department of Economic Law > NCCR International Trade Regulation

UniBE Contributor:

Bekkers, Eddy Henricus and Francois, Joseph

Subjects:

300 Social sciences, sociology & anthropology > 340 Law
300 Social sciences, sociology & anthropology > 380 Commerce, communications & transportation
300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

0013-0133

ISBN:

978-90-5833-690-3

Series:

CPB Discussion Paper

Publisher:

Wiley

Language:

English

Submitter:

Rebecca Anne Gilgen

Date Deposited:

26 Oct 2016 15:27

Last Modified:

17 Dec 2018 02:30

Publisher DOI:

10.1111/ecoj.12460

Related URLs:

JEL Classification:

R4, F17, C2, D58, F18

BORIS DOI:

10.7892/boris.89212

URI:

https://boris.unibe.ch/id/eprint/89212

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