Opinions

Why Distance Matters in Arctic Development

 

In general, the Arctic is known for its vast amounts of natural resources, low population, and the large distances between settlements. This situation is particularly relevant for the industrial development of the Russian Arctic, Canada's North, and Alaska. So, how does the distance shape the unique economy of the Arctic, and why is it so important?

A road in the Murmansk Region

The Russian Arctic has the longest coastline in the Arctic—approximately 22,600 kilometres. This, in itself, is a benefit, but it also brings a series of challenges: remoteness from the centre of Russia (where the majority of the population, manufacturing industry, and infrastructure are located) and the long distances between cities and towns in the Arctic, which make the establishment of central places more difficult.

Transportation is Cheaper than Production

Raw Resources in Exchange for Products

In many cases, the unique economy of the Arctic has taken the form of "mine here, produce there," which is often critiqued as the external markets are more important. This axiom effectively renders the domestic development of cities ineffective, as it is usually more beneficial to trade raw natural resources for finished products.

For example, it is not economical to sell different kinds of fuel in the Arctic (paraffin, petrol, diesel), as there are not enough consumers to justify the creation of specific manufacturing industries and infrastructure—such as pipelines and various tankers.

On the contrary, transport infrastructure makes much more sense when it enables the export and import of products cheaper and faster, offsetting the expenses that would otherwise occur with domestic production. For instance, agriculture, which is generally difficult to develop in the Arctic Zone, does not justify the expenses in this sphere—at present, it is cheaper to import food from other parts of the country.

Food Security

There have been some exceptions for industrial approaches towards growing plants in the southern parts of the Arctic, such as the south of Karelia, or creating botanical gardens and utilising technologies like hydroponics, but these have yet to show a substantial effect in sustaining demand.

There is also an important exception: aquaculture is one of the leading sectors in Arctic economic development and contributes to the region's food security. With the decreasing ice cover in the Arctic Ocean and more investment, aquaculture becomes one of the most prospective food industries of the North.

Nevertheless, there are certain issues too, and sometimes they are also caused by the large Arctic distances. E.g. the catch of the relatively cheap saffron cod (Eleginus gracilis) in the Nenets Autonomous Okrug with a goal to sell on outside markets is almost useless because the final price will be too high and won’t be able to compete.

More Beneficial to Form Agglomerations

Nadezhda Zamytina, a leading researcher at the Higher School of Economics, writes that the narrow market in the Arctic defines the connections between settlements.

For a modern economy, market size is one of the key parameters. The bigger the market, the greater the so-called economies of scale. By the way, this is achieved as a result of the 'agglomeration effect', and this is one of the reasons why it is favourable for cities to 'pile up'.

This economic tendency is quite natural and can be analysed through the initiatives of recent years, occurring more frequently in state policies and general discussions about the region's development. For example, the Government recently published a new Spatial Development Strategy focusing specifically on defining the role of agglomerations.

The role of distance also explains the rarity of full-cycle operations in the Arctic, as well as the high amount of time it takes the planning in terms of Northern Delivery to reach remote settlements, which, by itself, is very weather-dependent. The geographic realities of the Arctic, characterised by vast distances and challenging conditions, significantly shape its economic landscape. While the unique opportunities presented by natural resources hold the potential for development, the remoteness of communities and the inefficiencies in transportation and production complicate rapid progress. 

The Editorial Board of the Arctic Century

17.01.2025