Uncovering the Economic Impact of Thawing Arctic Permafrost: Exploring GDP Production in a Changing Landscape

Permafrost has undergone rapid warming since the 1980s. The resulting permafrost thaw has already led to economic consequences, for example coastal retreat requiring the relocation of several settlements, engineering costs necessary to repair or avoid collapses of buildings, airports, railways, roads, and pipelines, etc. Calculating Gross Domestic Product (GDP) at subnational scales, we estimate the total economic value and their potential loss in the Arctic Circumpolar Permafrost Region (ACPR) that is produced on permafrost cover, and as such which is likely to be exposed to hazards from permafrost thaw. Our results give a value of €83.9–189.3 billon in 2017. About 91–92 % of this total GDP is produced on the Russian territory. In the ACPR, natural resource extraction seems to be a key driver of GDP. This means many countries depending on Russian ACPR exports will be in troubles in case of reduced economic production due to permafrost thaw. To avoid international economic disruptions, public authorities in the ACPR countries should be willing to pay a certain percentage of the total permafrost GDP to adapt and reduce the economic impacts of permafrost thaw. We estimate the adaptation cost to be between 0.01 % and 14.6 % of the total permafrost GDP.