Adaptation Actions for a Changing Arctic: Perspectives from the Barents Area

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Adaptation Actions for a Changing Arctic: Perspectives from the Barents Area

countries as they become more prosperous (EEA, 2015), and recent forecasts have also lowered the growth rate until 2050 due to the slowdown in China’s economy, declining commodity prices, reduced capital flows to emerging markets, and increasing financial market volatility (EIU, 2015; OECD, 2016a). However, global growth is not expected to weaken dramatically.In some countries,economic growthwill be largely due to population growth, but rising productivity is generally the most important factor. Real growth in GDP will vary widely between countries and regions. In the mid- to long-term there is expected to be a major shift in global economic power away from the leading countries in North America,Western Europe, and Japan and towards Asia and a group of fast-growing emerging economies. Economic growth will bring substantial improvements in living standards and make resources available for development of public infrastructure and services. By 2050, the top three world economies will be China, the USA and India, and each will be richer than the next five (Indonesia, Germany, Japan, Brazil, and the UK) in total (EIU, 2015). Based on PPP valuation of country GDP, China surpassed the USA as the world’s largest economy in 2014 6 , but today’s most advanced economies will still continue to have the highest income per capita in 2050. According to OECD projections, Sweden, Norway, Finland, and Russia will see economic growth rates well below the world average. 7 All four countries will roughly double their economies between 2015 and 2050, with the highest real GDP growth in Sweden (110%) and the lowest in Russia (93%).The Barents area may develop in line with these trends or display a different pattern. In Sweden, Norway, and Finland, the northern regions have traditionally lagged behind the rest of the country economically. Compared to the more centrally located regions in each country, their industrial base is less versatile and labor market participation is lower.A significant proportion of the regional value creation also occurs in large companies, which tend to channel much of their earnings out of the region (Huskey et al., 2014). Despite government policies and transfers aimed at reducing regional disparities, the northern parts of Sweden, Norway and Finland are thus characterized by a lower GDP per inhabitant than the national averages. 8 In the Russian Federation the situation is different, with the resource-rich regions in the North, together with the capital region, having the highest GDP per inhabitant. Future economic growth in the Barents area will to a large extent depend on development of the extractive industries and on the government expenditure allocated to the region. Some places may experience boom (or bust) related to oil and gas activities, mining, seafood production, renewable energy, tourism, and shipping, but the most diversified centers, which are able to attract skilled people and facilitate innovation have the largest growth potential.

such as economic disparities, reorganization of industries, people’s aspirations and preferences, and public efforts to maintain settlement in the North. All population forecasts for the northernmost parts of Sweden, Norway and Finland show a continuing depopulation of rural areas. Statistics Sweden only publishes national figures, but the latest available regional forecasts indicate a slight population increase in both Norrbotten andVästerbotten over the next 20 to 25 years (Lindblad et al., 2015; NSD, 2015; Svenskt Näringsliv, 2016). Growth will mainly take place in and around Umeå and Luleå. In northern Finland, Statistics Finland (2015) projects a population decline in Lapland and Kainuu to 2040, but growth in North Ostrobothnia, concentrated in the Oulo region.Under the main alternative presented by Statistics Norway (2016), the counties of Finnmark, Troms and Nordland will all increase their population until 2040, but the rate of growth will only be half the national average. Tromsø and Bodø are the main centers of growth. Northwest Russia has seen a different development. In this region the population is mainly located in scattered mining and industrial centers with few physical connections between them. In general, Russian cities in the Barents area have larger populations than the cities in northern Sweden, Norway and Finland.The former Soviet Union attempted to equalize income among regions through centrally administered prices, wages and subsidies (Heleniak, 2016). In the North, people enjoyed a number of benefits. After the collapse of the Soviet Union, living in the northern parts of the country became more expensive and difficult and over 20% of the population moved out, mainly toward the bigger cities in central Russia (Sievert et al., 2011). Between 1989 and 2015, the population of Murmansk declined from 480,020 to 305,236, and in Arkhangelsk from 415,921 to 350,982. 4 The only exceptions to this trend were the capital cities of Karelia and Komi (Petrozavodsk and Syktyvkar, respectively) and a few of the booming oil and gas centers further east, such as Novyj Urengoi and Naryan-Mar. In the three Rosstat regional population projections (high scenario, balanced scenario, low scenario), both the balanced scenario and the low scenario (based on a continuation of the current trend) indicate further population decline in the Russian part of the Barents area to 2031. The only administrative unit for which population is projected to increase is the Yamalo-Nenets AO. 5 4.5.3 Uneven economic growth The world economy has been projected to grow at around 3% per year over the next 40 to 50 years (OECD, 2012a; PwC, 2015). With this growth rate, the world economy will double in size by 2037 and almost triple by 2050, measured in terms of world gross domestic product (GDP) based on purchasing power parity (PPP). Growth is expected to decelerate in many

4 City Population, http://www.citypopulation.de/Russia.html (accessed 17 January 2016) 5 Knoema, http://goo.gl/jMCiBG (accessed 17 January 2016) 6 www.imf.org/external/pubs/ft/weo/2014/02/weodata/weoselco.aspx?g=2001&sg=All+countries 7 https://data.oecd.org/gdp/gdp-long-term-forecast.htm (accessed 19 January 2016) 8 http://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_at_regional_level and www.ssb.no/nasjonalregnskap-og-konjunkturer/statistikker/fnr/ aar/2015-10-20?fane=tabell&sort=nummer&tabell=243268 (accessed 19 January 2016)