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The scientific literature on physical changes in the Arctic region driven by climate change is extensive. In addition, the emerging understanding of physical feedbacks and teleconnections between the Arctic and the rest of the world suggests that the warming in the Arctic region is likely to cause impacts that extend well beyond the region itself. However, there is only limited research on how Arctic change may affect economies and individual industry sectors around the world. We argue that there is a pressing need for more research on this topic and present a conceptual framework to guide future research for assessing the regional and global economic impacts of Arctic change, including both possible benefits and costs. We stress on the importance of a transdisciplinary approach, which includes an integration of the natural sciences, economics and social sciences, as well as engagement with a wide range of stakeholders to better understand and manage the implications of Arctic change.

The extensive melting of Arctic sea ice driven by climate change provides opportunities for commercial shipping due to shorter travel distances of up to 40% between Asia and Europe. It has been estimated that around 5% of the world's trade could be shipped through the Northern Sea Route (NSR) in the Arctic alone under year-round and unhampered navigability, generating additional income for many European and East Asian countries. Our analysis shows that for Arctic sea ice conditions under the RCP8.5 emissions scenario and business restrictions facing shipping companies, NSR traffic will increase steadily from the mid-2030s onwards, although it will take over a century to reach the full capacity expected for ice-free conditions. However, in order to achieve a balanced view of Arctic shipping, it is important to include its detrimental environmental impacts, most notably emissions of short-lived pollutants such as black carbon, as well as CO and non-CO emissions associated with the additional economic growth enabled by NSR. The total climate feedback of NSR could contribute 0.05% (0.04%) to global mean temperature rise by 2100 under RCP8.5 (RCP4.5), adding $2.15 trillion ($0.44 trillion) to the NPV of total impacts of climate change over the period until 2200 for the SSP2 socio-economic scenario. The climatic losses offset 33% (24.7%) of the total economic gains from NSR under RCP8.5 (RCP4.5), with the biggest losses set to occur in Africa and India. These findings call for policy instruments aimed at reducing emissions from Arctic shipping and providing compensation to the affected regions. [ABSTRACT FROM AUTHOR]

Arctic feedbacks accelerate climate change and could jeopardise mitigation efforts. A release of carbon to the atmosphere from thawing permafrost results in a positive feedback. Similarly, the loss of sea ice and land snow increases solar absorption in high latitudes, creating a positive albedo feedback. A constant albedo feedback and zero permafrost feedback have been the legacy values used in nearly all climate policy studies. However, observations and models show that both feedbacks are nonlinear with the permafrost feedback being the stronger of the two. Here we use novel dynamic emulators of complex physical models in the integrated assessment model PAGE-ICE to estimate the impacts of including these nonlinear Arctic feedbacks on the global climate and economy under a range of scenarios consistent with the Paris Agreement. In most scenarios the combination of the two nonlinear feedbacks causes extra warming globally compared with their legacy values. The permafrost carbon feedback is increasingly positive in warmer climates while the albedo feedback is either similar to or weaker than the legacy values. The combination of these two factors increases the mean discounted economic effect of climate change by 4.1% ($25trillion) under the 1.5°C scenario, 5.6% ($34trillion) under the 2°C scenario, 4.8% ($67trillion) under levels of mitigation consistent with the current national pledges. Our findings support the need for more proactive mitigation measures to keep global temperature rise below 2°C. [ABSTRACT FROM AUTHOR]