How permafrost insurance could revolutionize Arctic development

Permafrost — and its vulnerability to climate change — makes Arctic development risky and expensive. A robust, tailored insurance market could change that.

Polygon-shaped lakes are created by thaw permafrost on Alaska’s North Slope. (NASA / JPL-Caltech)

Say you’re a homeowner in Utqiagvik, Alaska, the northernmost American city. You have fire insurance for your home, insurance against the weight of snow damaging your roof, and maybe even flood insurance now that storm surges are increasing. It seems that you’re covered. But in reality, every day you are exposed to a much more prevalent threat, one that you have no way of protecting against. It’s a constant danger with catastrophic power: thawing permafrost.

Permafrost is no longer permanent. Rising global temperatures are thawing it away, discharging untold quantities of ancient carbon dioxide and methane into the atmosphere and warming the planet further in an unforgiving, vicious circle. When permafrost thaws, the soil contracts, sinking the ground haphazardly and wreaking havoc on infrastructure above.

This is not some faraway threat, and it does not just affect houses. Apartment buildings are already sinking. Highways are buckling. Schools, airports, bridges, pipelines, mines, industrial facilities — all are crumbling, warping, breaking up. Permafrost thaw causes about $40 million in yearly damages to public infrastructure in Canada’s Northwest Territories. 60 percent of the buildings in Norilsk, Russia, the largest city built on permafrost, have been damaged.  And one study expects losses of $1.6 to $2.1 billion from permafrost thawing of roads, buildings, airports, railroads, and pipelines through 2099 in Alaska alone.

It’s not just existing infrastructure that gets damaged; thawing permafrost renders as yet undeveloped and uninhabited land unusable. By 2050, 50 percent of Arctic permafrost could disintegrate. Clearly, in such unstable conditions, it is hard to build and feel confident that your infrastructure will last. The Arctic’s economic future hangs in the balance.

But it is doubly difficult to build in the Arctic if you cannot get insurance for the risks your infrastructure will face. Communities and businesses understandably don’t want to build in risky permafrost areas if their infrastructure is not insured. Meanwhile, insurance companies are not confident in their ability to profit off the risk of permafrost thaw. Hence, no market exists, and no one builds.

Through research, risk mapping, and public support, we’ve managed to create viable insurance markets for infrastructure in earthquake-prone areas around the world, from Mexico to the Philippines. Shouldn’t we be able do it in the Arctic with permafrost too?

You may be wondering: If we know permafrost is going to thaw, why built on it at all? First, it’s not that easy not to; more than 85 percent of Alaska, for example, is at least partially permafrost. While we know permafrost is thawing, what we don’t yet know is where exactly in the Arctic will experience the most severe effects, and where the thaw will be manageable and support construction. Second, it is of vital importance for indigenous communities in the Arctic to maintain their connection to their cultural and spiritual homes in permafrost-rich areas. Third, permafrost is found in places of strategic interest to government and business, like ports and mines, that require nearby infrastructure. And fourth, the alternative to permafrost is finding Arctic bedrock, which, while strong, is exceedingly complex and expensive to build on and creates urban sprawl and new transportation challenges.

That’s why researchers and engineers have developed remarkable, new construction technologies specifically designed to resist the devastating effects of permafrost thaw on infrastructure, from detailed guidelines on ventilation, drainage, and snow management to advanced techniques like thermosyphoning, flexible foundations, and screw jacking. But without a clear sense of the conditions in which each one of these approaches is best deployed, they are not being used.

So how do we turn insurance into a mechanism for climate change adaptation and kickstart an Arctic permafrost thaw insurance market? The first key ingredient is information. We need better models and maps for permafrost, including precise data on its location, depth, age, and likelihood of thaw over different time spans and different climate change scenarios. There are already scientific networks devoted to monitoring permafrost changes, but we need full public sector support to extend this monitoring all the way from community warning systems on the ground to satellite scans from space. With a more complete set of data, insurance companies can develop the permafrost risk maps and loss models that they use for other hazards like earthquakes and form the foundation for a robust hazard insurance market.

The second key ingredient is government-backed reinsurance for private coverage of the effects of permafrost thaw. This way, private insurers will gain the confidence needed for their products to spread. Together, these two critical elements form the basis for a new permafrost insurance regime in the Arctic. Other important pieces would be incorporated in the system too: incentives for banks to finance construction only where covered by insurance, insurance premium reductions for infrastructure that incorporates risk reduction measures, bundling of thawing insurance with other hazards, and others.

This vision does require substantial government involvement, from incentivizing the development of risk models and land surveys, investing in data quality, improving monitoring, and providing reinsurance. But it’s worth it. The economic value this innovation brings is enormous. An Arctic with permafrost thaw insurance significantly boosts human safety and economic development. It lets us build wisely, in places that will last. It promotes greater economic activity, encouraging construction and industry. It protects people who need to rebuild and relocate their towns in uncertain conditions. And it helps us understand the effects climate change is having on Arctic lands.

We have the construction technologies we need to mitigate the risk. We have networks devoted to monitoring permafrost changes. We have insurance companies searching for ways to make money in response to climate change. And we have the people of the Arctic, tenuously perched just above Arctic quicksand.

What we need is that final push from the government. That way, we can get Arctic residents, and the businesses and industries that are critical to the Arctic’s continued growth, the coverage they need for building well on solid ground, where they know they’ll be safe.

Ross Eisenberg is a joint Master in Public Administration and Master in Urban Planning student at Harvard’s Kennedy School of Government and Graduate School of Design. He works on poverty reduction, cultural preservation, and climate change resilience and adaptation.

This piece is one of a series of op-eds written by students of the Arctic Innovators Course at the Harvard Kennedy School’s Arctic Initiative. You can read the full series on this site.

The views expressed here are the writer’s and are not necessarily endorsed by the Arctic Initiative or Arctic Today, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary (at)