Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route
Eddy Bekkers (),
Joseph Francois and
Hugo Rojas-Romagosa ()
No 11670, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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.
Keywords: gravity model; Northern Sea Route; quantitative trade models; trade and emissions; trade forecasting (search for similar items in EconPapers)
JEL-codes: C2 D58 F17 F18 R4 (search for similar items in EconPapers)
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Working Paper: Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route (2015)
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