Weathering The Climate: Economic Challenges In The Era Of Global Warming

Iceland’s weather over the last year has been strange, to put it mildly. It has essentially been one long season—winter—with 2018 being the cloudiest and wettest on record. These odd conditions and an alarming report from the United Nations’ InterGovernmental Panel on Climate Change have added difficult questions to the contentious debate around the environment and natural resources in Iceland. Fisheries, tourism and power plants have been debated ad nauseam in Iceland, and climate change is adding a difficult and urgent dimension to the debate.
Heat Storm

This winter has been unusually mild, with nearly the same temperatures and precipitation patterns as the cold summer months that preceded it. Lightning struck downtown Reykjavík in December, which is rare event, even in summer. There has been such little snowfall that ski slopes were closed well into January. The workers and companies went without income. In addition to skiing, snowfall also replenishes glaciers which are a big draw for tourists. Many tourists hope for a winter wonderland when booking a trip to Iceland, especially around Christmas. This year though, they were treated to grey skies during the few hours of daylight. It was not unusual to see Icelanders in light summer clothing next to bundled up travellers. We are used to being comparatively under-dressed in the summer but we like to hide our Christmas kilos under sweaters, too.

This strange season coincided with the IPCC’s latest report on climate change, containing projections so dire they should make you sweat—even in inclement weather.

Growing Pains

Warmer waters have historically meant an increase in fish stocks, but the temperatures increasing in tandem with marine pollution and acidification is destroying ecosystems.

The changing climate is adding to the strained tourism environment. The number of tourists to Iceland has quadrupled in less than a decade, but the state has failed to regulate and invest in infrastructure, and industry has little coordination or long-term planning. Sensitive ecosystems have been damaged, garbage piles up, and tourists die needlessly. The state and industry have been debating who should be responsible for providing garbage and toilet facilities. Sensitive mosses and safe hiking trails are not always properly marked, resulting in damage that takes decades to recover.

Growth in tourist numbers has slowed significantly over the last year, which could be an opportunity for the infrastructure to catch up. The coalition government formed in 2017 promised to conduct studies and laid out broad goals. The coalition agreement foresees investment in infrastructure, sustainability, and a focus on the distribution of tourists throughout the country. Grants have been made to rural communities and the VAT increase delayed.

Under the Glacier

Glacial retreat is more than an aesthetic loss. Their mass is so great that they reduce volcanic eruptions and earthquakes. In addition to local damage, increased eruptions would release more greenhouse gasses. In 2010, the Eyjafjallajökull eruption disrupted flights in Europe for weeks. That eruption planted the idea of visiting Iceland in many travellers’ minds, but another similar eruption could cut the island off from tourists and the economic boost they bring to the country.

As glaciers retreat, eruptions are more likely to occur. Scientists believe all glaciers could gone in less than two hundred years. Glaciers are the source of freshwater for Iceland’s rivers, and their disappearance would impact fishing, and other recreational activities.

Iceland produces most of its power from hydroelectric and geothermal power stations. Melting glaciers could lower water levels in reservoirs and disrupt geothermal vents through earthquakes.

Thanks for all the fish.

Another potential economic victim of climate change is Iceland’s very lifeblood throughout the twentieth century: fisheries.

The complexities of Iceland’s coalition government system have stopped good intentions many times before.

After a series unilateral extensions to its exclusive economic zone—just Google “cod wars” for the big picture—Iceland controlled some of the most lucrative fisheries in the world. These were mismanaged for decades and nearly collapsed, but are now run is a more sustainable manner and serve as a model to other countries.
Warmer waters have historically meant an increase in fish stocks, but the temperatures increasing in tandem with marine pollution and acidification is destroying ecosystems.

The current government is emphasising sustainable quotas, a fair share of revenue for the state, and investments in research and technology that will make the fishing fleet carbon neutral.

Opportunity Cost

Not everyone sees climate change as a lose-lose scenario for Iceland. Pundits and politicians have floated the idea of the country being a shipping hub for emerging trade routes across the Arctic Ocean.

The ruling coalition has generally been reluctant to take bold action but has made some moves on environmental and tourist issues. The state will transition to electric vehicles in its next order, and is making strides to accelerate reforestation programmes. But the cabinet has only been in office for little over a year, and Iceland’s parliament has in recent years earned a reputation as a revolving door. This disrupts complex policies, which can take years to formulate and enact.

The current minister of environment is a lifelong activist, and spoke forcefully about the need for bold action at a recent environmental conference in Poland. But how the Minister’s intent will translate into policy remains to be seen. The complexities of Iceland’s coalition government system have stopped good intentions many times before.