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

Eddy Bekkers (), Joseph Francois and Hugo Rojas†Romagosa

Economic Journal, 2018, vol. 128, issue 610, 1095-1127

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.

Date: 2018
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https://doi.org/10.1111/ecoj.12460

Related works:
Working Paper: Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route (2016) Downloads
Working Paper: Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route (2015) Downloads
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Economic Journal is currently edited by Estelle Cantillon, Martin Cripps, Andrea Galeotti, Morten Ravn, Kjell G. Salvanes, Frederic Vermeulen, Hans-Joachim Voth and Rachel Kranton

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