The Living World
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Opportunities for Economic Growth in Cold Environments

Economic growth can be defined in different ways. It can be measured by the increase or improvement in the market value of goods and services produced by a group or a country. Usually, growth is measured by calculating the GDP, the Gross Domestic Product.

Cold environments provide people with economic opportunities, but accessing resources for wealth puts the ecosystem at risk of collapse.

GDP is a measure of the market value of all consumer goods and services produced in a specific time period, by a country or economy. The more money in an economy, theoretically, the more money will be spent by the people in that economy. In cold environments, there’s the potential for massive economic gain by whoever has the means to extract it.

Opportunities

Challenges

For every opportunity available, there are many challenges that prevent communities in cold environments from profiting.

  • The extremely low temperatures and darkness cause problems when building.
  • Building decent infrastructure is challenging. The ground might be frozen when roads and railway tracks are built, but it can melt later in the year. Pipelines can’t be built underground due to the thick permafrost, so they have to be built above ground and must withstand freezing.
  • If the permafrost even partially melts, such as in Alaska, then the foundations on which buildings are built become unstable. Further development beyond what is already done is very difficult and fraught with danger.
  • Day-to-day living is difficult due to the mountainous terrain, making it hard to deliver goods and materials to remote areas.

Case Study: Alaska

Overview

Alaska is the most northern state in the USA. It covers more than two million square kilometres, making it one of the most sparsely populated places on Earth. Of its 750,000 inhabitants, more than half live in one city, Anchorage.

The indigenous people of Alaska include the Inupiat and Yup’ik tribes, among others, with the indigenous population standing at approximately 100,000.

The southern part of Alaska experiences relatively mild conditions, whereas a tundra environment and permafrost are found in the North. 

The indigenous tribes, part of the Inuit, have lived in the area for thousands of years, stretching back to the last ice age. European settlers joined the Inuit people in the 19th century. Currently, Alaska experiences a lot of temporary migration from people who come to work for mining and oil companies.

Development Opportunities in Alaska

Mineral Extraction

  • Alaska has an abundance of coal, copper, silver, zinc and gold. Gold is Alaska’s most valuable non-energy commodity, contributing 30% of Alaska’s wealth.
    • Gold is particularly rich around the Tintina Gold Belt, which is more than 150,000 square kilometres in size.
  • Gravel is also valuable for Alaska, with more than a billion tons mined.
  • Mineral resources contribute $2.1 billion to the Alaskan economy in the year 2021. 

Oil and Gas

  • Alaska is rich in oil and gas, which are valuable energy sources.
  • The energy sector accounts for more than half of Alaska’s income and employs more than 100,000 workers.
  • Oil fields are near Prudhoe Bay. The oil is transported south by the Trans-Alaska pipeline to Valdez, then shipped out. Transporting oil by pipeline avoids the dangerous, icy waters of the Arctic Sea. The oil is heated on its journey to prevent freezing.

Fishing

  • Around 8,000 people are employed by Alaska’s fishing industry.
  • The state has over 3,000 rivers, millions of lakes and 10,600 kilometres of coastline to fish in. These vast water resources are home to salmon, trout, crab and white fish, in abundance.
  • As an industry, fishing contributes more than $8 billion to Alaska’s economy.
  • Inuit tribes use the fish for food, clothing and oil, forming an important part of their traditional lifestyles.

Tourism

  • Alaska’s natural wilderness draws in 2 million tourists yearly, who are looking to see wildlife and natural features like mountains, forests and lakes.
  • Tourism provides thousands of jobs to locals in Anchorage, with tourists spending over $290 million in the city.
  • Cruises are popular in the summer, with more than 60% of tourists arriving this way.

Development Challenges in Alaska

Temperature

  • Winter temperatures frequently drop below -30°C in Northern Alaska. The extreme cold and limited sunlight make outdoor work challenging.
  • Too much exposure to such low temperatures can be life-threatening, and healthcare is not easily accessible in remote areas.
  • The extreme temperature freezes seas and leaves roads treacherous to drive on.
  • Equipment often fails in low temperatures, which requires timely and costly repairs.

Accessibility

  • Alaska is remote and relies on planes or ships for access. From the US, it takes 21 hours to drive to Alaska, and requires driving through Canada on some roads that are just as treacherous as parts of Alaska.
  • Transporting resources and supplies to remote regions, especially in the mountains, is expensive and logistically challenging.
  • Everyday goods are more expensive than in other areas of America due to shipping costs, as few consumer goods are manufactured in Alaska. Products can take months to transport, which only drives the prices up.
  • Employment can be tough to come by for those living outside of big cities, or away from oil fields.

A cold winter in downtown Palmer, Alaska

Infrastructure

  • All infrastructure must be built to withstand extremely cold temperatures and extreme weather.
  • Building on permafrost is unstable and dangerous. Houses and buildings are constructed on raised beds of gravel to reduce the effect of heat. As a result, building is difficult and expensive.
  • Most construction takes place in the summer, when days are longer and temperatures are higher.
  • Houses must be built to retain heat efficiently, with triple-glazed windows and geothermal power often necessary.
  • Parts of the Trans-Alaskan oil pipeline are on stilts, to ensure that the pipe is away from the permafrost on the ground. 

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