Authors: Amanda M. Countryman; Joseph F. Francois; Hugo Rojas-Romagosa
Addresses: Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO, USA ' World Trade Institute and Department of Economics, University of Bern, Bern, Switzerland ' CPB Netherlands Bureau for Economic Policy Analysis, The Hague, The Netherlands
Abstract: Arctic ice caps have been melting at an increased pace and projections imply that the ice cover will be greatly reduced in the near future. This climatic phenomenon has important socio-economic implications, as it would open up shipping routes in the Arctic including the Northern Sea Route (NSR) and the North-West Route (NWR). The NSR connects North-east Asia with North-western Europe, while the NWR connects North-east Asia and the East Coast of the USA. In this paper, we analyse the commercial feasibility of the NWR and the economic impact of reducing the trade distances between Asia and the US East Coast. In particular, we examine the extent to which the NWR would compete with the Panama Canal for certain trade routes. Such competition has significant geopolitical implications linked to changes in trade flows and the global supply chains that currently link East Asia and the USA.
Keywords: Arctic shipping routes; transport costs; trade forecasting; gravity model; CGE models; emissions; ice caps; ice cap melting; Asian trade; North America; Europe; climate change; economic impact; trade distances; modelling; trade routes; geopolitical implications; trade flows; global supply chains.
International Journal of Trade and Global Markets, 2016 Vol.9 No.4, pp.325 - 369
Received: 14 May 2015
Accepted: 26 Feb 2016
Published online: 24 Dec 2016 *