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The Arctic will be perhaps the single most influential region on earth in the coming

century and yet almost no-one even lives there.

Eight nations have territory above the Arctic Circle—Denmark though their constituent

country: Greenland, Iceland, Norway, Sweden, Finland, Russia, the United States, and Canada—and

they are all in close quarters.

This circle represents the distance a plane can fly in three hours.

Most of these countries can reach each other faster than they watch Titanic.

Anchorage, Alaska is, in fact, closer to Tromsø, Norway than it is to New York because of the

short-cut over the pole.

Alert, Canada is so close to Tromsø, Norway that it could be flown by a turboprop plane

(Pilatus PC-12 NG.)

The only issue is, there's about to be some serious money in the high north.

The Arctic ice is melting, there's no question about that.

Some may debate the cause of the melt, but one cannot debate that there's simply less

ice up north than there was 50 years ago.

This melt has profound consequences.

Whole countries like Tuvalu and the Maldives could be largely underwater by the end of

the century because of the rising sea levels from melting ice.

But the melt has a different, more obvious effect—where there was once ice there's

now liquid, navigable water.

One of the greatest quests for early explorers was to find a Northwest Passage—a navigable

sea route connecting the Atlantic and Pacific Oceans through the Canadian Archipelago.

It was long thought to be myth until in 1906 Roald Amundsen and his six crew members arrived

at Herchel Island, Canada, having successfully completed a three-year voyage from Norway

via the new Northwest Passage.

The significance of the Northwest Passage is that, until 1914 when the Panama Canal

opened, traffic from the Atlantic could only reach the Pacific by sailing around Cape Horn—the

southern tip of South America.

This meant that a sea route between London and San Francisco—5,000 miles apart as the

crow flies—took 14,000 miles.

This was not efficient.

It was a significant hamper to development to the American west coast.

The Northwest passage would've revolutionized maritime trade—if it wasn't covered in ice.

Roald Amundsen's ship, the Gjøa, was small enough that it could snake through and slide

over ice.

Some of the waterways Amundsen took were as few as three feet deep—far too shallow for

the increasingly large commercial ships of the time.

More than 100 years later, in September of 2013, however, for the very first time, a

commercial bulk carrier, the MS Nordic Orion, transited an almost ice-free Northwest Passage

on its journey from Vancouver, Canada to Pori, Finland, and this was far from a publicity

stunt.

This ship saved $80,000 in fuel costs and was able to take 25% more cargo than if it

had gone through the Panama Canal.

Even thousand passenger cruise ships are now making the journey.

Ironically, global warming is actually opening a route that's better for the environment.

China is a country with a vested interest in the navigability of the northwest passage.

As an economy largely based on manufacturing for the western world, their maritime accessibility

has an enormous effect on their national wellbeing.

A reduction in time and cost of shipping to the American east coast would renew their

competitiveness in the manufacturing industry against emerging rivals such as Vietnam and

Bangladesh.

As China industrialized largely thanks to its manufacturing industry the standard of

living in the country increased which correspondently increased labour costs.

China's Maritime Safety Administration, recognizing the imminent explosion in usage,

recently published a 356 page guide to navigating the northwest passage and the country has

announced plans to send more and more commercial shipping traffic through the passage in the

coming summers.

The introduction of maritime traffic to the northwest passage could present a significant

opportunity for Canada.

The northern territories of Canada, through which northwest passage runs, are historically

underdeveloped.

Less than 120,000 people live in the Yukon, the Northwest territories, and Nunavut.

That's less than the population of Saguenay—a town small enough that you probably haven't

even heard of it—living in an area larger than the entire country of India.

It's not all that surprising considering just how inhospitable the area is, but other

places at similar latitudes such as Anchorage, Longyearbyen, and Murmansk have managed to

overcome the conditions thanks to the money that can be made in the far north.

If a large chunk of the worlds maritime traffic heads through the Canadian north, industry

will develop to support these ships.

Except, there's a problem.

Despite the general friendliness of most of the arctic countries, there are geopolitical

issues in the high north.

Even more surprisingly, one of them is between the US and Canada.

When there's a navigation choke-point restricting certain countries from accessing an ocean,

it's convention to declare that waterway an international waterway.

For example, the Danish Straits—fully surrounded by Denmark—are an international waterway

in order to give the Baltic and Scandinavian countries ocean access; the Turkish straits,

fully surrounded by Turkey, are international waterways to give the black sea countries

ocean access; and the Danube River is an international waterway to give landlocked Austria, Hungary,

Moldova, Serbia, and Slovakia ocean access.

When a waterway is declared an international waterway no country can restrict access or

charge dues to passing boats except during a time of war.

Canada considers the waterways comprising the northwest passage in their archipelago

as their own waters.

In the past nobody challenged this since there was no reason anyone would cross through these

frozen waters.

With its promise to cut shipping routes by thousands of miles, the northwest passage

will almost certainly become an important shipping route so that's why countries like

the US firmly believe that the northwest passage should be and already is an international

waterway.

One of the tensest moments in history between the US and Canada was when, in 1985, a US

Coast Guard Icebreaker travelled through the northwest passage without prior permission

from Canada.

In Canada's mind, this was a military invasion of their sovereign territory—debatably an

act of war.

Canada argues that the northwest passage is not an international waterway because it has

failed to meet an important criteria—usefulness.

Of course the northwest passage is useful on paper—it shortens the route between the

oceans—but Canada has pointed out that in previous cases determining whether a waterway

is international, what proves a route's usefulness is if a significant number of ships

have already successfully transited it.

In the northwest passage's case, the number of successful commercial journeys is in the

double digits.

There's also merit to Canada's argument that the passage should be their sovereign

waters.

Currently, Canada has almost no search-and-rescue capabilities in their archipelago.

Since there's almost no traffic yet, there's no real reason to spend the money to put ships

and aircraft up there.

Most previous journeys have been highly coordinated and often escorted by the Canadian Coast Guard.

If a ship just went through with no prior coordination nowadays and sank, however, there

would be almost no chance of rescue for the victims.

If in a few summers hundreds of ships transit the passage, Canada would have an obligation

to put resources in the northern provinces for the safety of both the country and sailors

and that takes money.

If treated as an internal waterway, Canada could charge passage fees just as there are

for the Panama or Suez Canal—the other major shipping shortcuts of the world.

These could fund the infrastructure needed to safety regulate and police the route.

But on the other hand, should one country have the capability to chose who can get from

the Pacific to Atlantic faster?

Letting, for example, Vietnamese ships through the route but banning Chinese ships would

make the Chinese goods uncompetitive for the Western European and Eastern American market.

Canada would have the capability to choose which economies can succeed and which will

fail.

There's a reason the issue's so contentious.

Scientists disagree on the exact date, but there's a general consensus that by the

year 2050 there will be a summer when there is no ice in the Arctic.

This will have enormous and irreversible consequences on our globe, but it could further revolutionize

how we get our goods.

An ice-free arctic will open up the greatest shipping short-cut in the world—the Arctic

Ocean.

Ships traveling between Japan and western Europe, for example, instead of heading south,

across the Indian Ocean, through the Suez Canal, and across the Mediterranean sea, will

be able to head north through the bering strait, directly across the arctic ocean, and down

between Greenland and Norway to Europe.

That's a 7,000 mile route compared to the 13,000 mile route of today.

That has the potential to slash shipping prices in half.

That means cheaper products across the entire world.

But at what cost.

Every degree of climate warming in the US alone is expected to cause $144 billion dollars

per year of economic loss.

If the US climate warms by 12 degrees, which the EPA says is possible by 2100, the US can

expect to lose more than $1.7 trillion per year—that's more than a full percent of

its GDP.

On top of that, by 2050, climate change is expected to cause more than 250,000 deaths

per year.

Surely that can't be worth it for some cheaper goods.

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