Understanding the Arctic economy
The Arctic Council recently launched a circumpolar report, The Economy of the North ECONOR 2025. The ECONOR report presents updated statistics and gives a new understanding of the rapid changes in the Arctic economy, impacted by climate change and global demand for natural resources.
Small populations on large Arctic lands across nation states
The Arctic Ocean is surrounded by coastlines along three continents. Arctic lands comprise 8 percent of the Earth’s land area, whereas the total population of the Arctic is only around 9.5 million. The inhabitants of the Arctic live on vast areas, like the northern territories in Canada with a population density of 0.03 persons per square kilometer, in contrast to that of the EU at 109 persons.
The Arctic has abundant natural resources, petroleum and other minerals, fish and aquaculture, and land. The land and sea provide the nature-based traditional livelihoods of the Arctic Indigenous Peoples. Since time immemorial, the rich natural resources have drawn Indigenous Peoples and other Arctic residents to the Arctic. The land inhabited by the Indigenous Peoples of the Arctic span across nation-state boundaries, challenging land and resource management.
Natural resources – petroleum and minerals, fisheries and aquaculture, and land
The largest producers of petroleum and other minerals are Arctic Russia and Alaska. Northern Canada has large mineral deposits. Fisheries and aquaculture are major industries in the Arctic coastal regions. The economies of Greenland and Faroe Islands are largely based on fisheries, and in Arctic Norway, aquaculture dominates fisheries within the blue economy. Arctic Sweden and Arctic Finland take the lead in manufacturing industry. Iceland has a large fishing industry, but also a diversified economy, with tourism, renewable energy, metals, data storage and scientific services.
For Indigenous Peoples, their relationship with the land is the basis for their culture, and the traditional nature-based way of life and market economic activities are mutually dependent for improving livelihoods. New economic opportunities, and the development of renewable energy, against a backdrop of climate change, may exacerbate land use conflicts.
The rapid changes call for a new understanding of the Arctic economy, the wealth of natural resources, and the impacts on the livelihoods of Indigenous Peoples and other Arctic residents.
New report on The Economy of the North
The Economy of the North ECONOR 2025 was launched by the Arctic Council in May, when the chairship of the Arctic Council was passed from Norway to the Kingdom of Denmark with Greenland at the helm. The ECONOR report was prepared by a circumpolar team of statisticians and researchers, coordinated by Statistics Norway, CICERO Center for Climate Research in Oslo, and Laval University in Québec, Canada, and in close cooperation with Indigenous Peoples’ organizations in the Arctic Council.
Income in Arctic regions – comparison across space and time
In many Arctic regions, petroleum, minerals, and other natural resources generate high incomes in terms of Gross Regional Product (GRP) per capita, while disposable incomes of households per capita are not at the same high level (Figure 1). Comparing Arctic and non-Arctic regions within the Arctic countries, on average, GRP per capita is higher in the Arctic regions, while disposable income of households per capita is lower (Figure 2).
To compare across Arctic regions, with different price levels, GRP is calculated in terms of USD adjusted with Purchasing Power Parities (PPPs). PPPs are designed for comparison in space, for a given year, and adjustment in terms of PPPs is less suitable for comparison over time. One author in a recent article on Arctic Today Arctic Today presents growth in the Arctic economy, with data from ECONOR. A comparison over time would, in order to reflect growth, require that PPPs of the base year are updated annually. However, annual data to update regional PPPs are not available. Thus, it is problematic to compare PPP-adjusted GRP over time.
Alexandra Middlethon compares the calculated growth rate for the Arctic with the growth rate of the EU. This comparison, while interesting as an illustration, needs to be interpreted with caution when it is presented as a comparison over several years and the basis for the PPPs is not updated. In any case, exact growth rates should not be calculated based on a time series adjusted with current PPPs. Such “growth rates” would contain a price component in addition to the volume component.
Understanding the Arctic economy
ECONOR aims to inform decision-making and policy that prioritize sustainability, equity, and cultural integrity. Focus on economic growth in the Arctic does not show the full picture. Social indicators show large income inequality and disparities in living conditions across Arctic regions. Global indicators for the sustainable development goals (SDGs) may not capture the challenges of Arctic communities. ECONOR highlights both GRP and disposable income of households per capita, and the public services, especially in health care and education, that are important contributions to the standard of living, to give a better understanding of how the Arctic economy contributes to the people whose home is the Arctic.
Figure 1. Gross regional product (GRP) per capita and disposable income of households (DIH) per capita, by Arctic sub-regions. 2022. 1 000 USD-PPP.
