World economic forum principles for arctic investment: responsible arctic investment protocol adopted at Davos.

• Author: Goforth, J. Pennelope
• Position: ARCTIC

In Davos, Switzerland, on January 22 at the World Economic Forum the Guggenheim Partners formally endorsed a revolutionary plan for a global investment firm that fast-tracks Alaska's future as a major Arctic player.

The Arctic Investment Protocol (AIP) is an enlightened multi-national effort to sustainably develop the emerging wealth of the Arctic--and, for the first time in any "new frontier" building effort, to do it in concert with the indigenous residents of the Arctic.

This protocol lifts off on a high trajectory of cooperation with local communities across national boundaries and a long-term view to protect the environment to "help ensure private-sector and other organizations do the right things for the right reasons."

The New El Dorado

The Arctic has been called the last frontier, the new El Dorado. Estimates vary, but economists estimate that by 2030 from 5 percent to 25 percent of the total world shipping trade could transit the Northern Sea Route and the Northwest Passage. This represents billions of dollars in savings in just moving goods and commodities from one part of the world to markets in another.

Scientists estimate the Arctic holds huge reserves of minerals, metals, and fuels. Extracting these resources and bringing them to market is just beginning. Norway has begun drilling for oil and Russia encourages traffic. The United States has leased miles of potential oil fields that are active through 2020 off Alaska's Arctic in the Chukchi Sea. Shell's continuing interest in protecting its leased assets led the company to appeal the recent Department of the Interior refusal to extend those, and the Beaufort Sea leases, which expire in 2017. By 2050, at the rate the region is becoming more accessible, aquaculture and fisheries could increase by 60 percent to 70 percent.

Expensive Build-Out

However, building the wherewithal for Arctic nations to take advantage of the probable wealth the thawing Arctic offers will cost in the billions. Guggenheim's Chief Investment Officer Scott Minerd estimates about a $1 trillion in investment is needed to realize the riches of the Arctic: roads, airports, seaports, fuel dumps, railways, and aids to navigation, plus safeguards for ships in danger and possible oil spills. Governments alone can no longer afford to subsidize the massive kind of infrastructure the Arctic will need to give up its treasures.

To move the potential for public/private partnerships from speculation to reality, former...