New opportunities for economic development in the Arctic are fraught with high risks of environmental disaster, in part because of huge gaps in knowledge about the region, a British report said Thursday.
The report was released by the Lloyd's of London insurance market and the Royal Institute of International Affairs, a respected think tank also known as Chatham House.
They say the Arctic region could attract $100 billion or more in investment in minerals, fisheries, shipping and tourism in the next decade.
"Though the prospects are significant, the trajectory and speed of Arctic economic development are uncertain," the report said. "There are huge infrastructure and knowledge gaps across the Arctic, constraining development and increasing the risks of frontier projects."
The report said major investment was needed in infrastructure and surveillance to promote safe economic activity.
"In many areas — shipping, search and rescue — infrastructure is currently insufficient to meet the expected demands of economic development. Public/private cooperation is needed to provide this infrastructure," the report said.
The report urged the Arctic Council members — Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States — to take the lead in promoting strong regulations for economic activity in the region.
Questions remain about whether offshore drilling rigs can stand up to the severe and frequent Arctic storms, the report said, citing the capsizing of the Kolskaya floating drilling rig off the eastern coast of Russia in December. Fifty-three people died in that disaster and damage exceeded $100 million, the report said.
"Damage caused by icebergs and offshore sea ice is a further risk for mobile drilling rigs and, with melting sea ice increasing the area of open waters, these rigs will need to cope with stronger waves," the report said.
The head of Lloyd's said risk management firms will need up-to-date information to successfully analyze the risks in the Arctic.
"There is a clear need for sustained investment in Arctic research," said Richard Lloyd, chief executive of Lloyd's.