4. Some economists have begun factoring into their long-run aggregate supply evaluations the underutilized and untapped resource endowments near and within the Arctic Circle. Bringing those resources into broader use, these economists suggest, could do much to generate speedier rightward shifts of the long-run aggregate supply curves of the United States and other northern nations.

Lands with Unexploited Resource Endowments

The Arctic, the global region north of 66.33 degrees latitude, contains only slightly more than 4 percent of the earth's surface area. Nevertheless, nearby regions stretching southward to 45 degrees latitude encompass another 11 percent of the earth's surface and an additional 25 percent of its land mass. Wide swaths of these lands contain significant endowments of as-yet unexploited resources, including minerals, oil, and natural gas.

Three key explanations can be offered for the meager utilization of Arctic and near-Arctic resources. First, the region is not particularly hospitable to people, who must adapt to long summer days and winter nights and to lengthy periods of extreme cold. Second, large tracts of land are covered with thick permafrost and with heavy sheets of ice, or glaciers. Third, much of the land near and within the Arctic is publicly owned. Governments have fewer incentives than private individuals and businesses to extract productive resources from these lands. Indeed, failure to place Arctic and near-Arctic resources in private hands has done more to consign them to an economic deep freeze than the cold air above them.

Could unfreezing Arctic endowments heat up aggregate supply growth?

The volume of untapped Arctic oil is thought to be sufficiently large to provide the entire world's requirements for about half a year, and today's technology could fuel global natural gas requirements for an estimated 2 years. If all estimated Arctic oil could be extracted, it would last the world at least 3 years, and all of the region's likely natural gas reserves would be enough for about 25 years. Mineral endowments are less certain, but most geologists suspect that unexploited Arctic and near-Arctic lands contain vast amounts of metal ores.

Of course, making most Arctic resources accessible to private producers would gradually add to annual flows of resources that residents of northern nations such as the United States could use to produce goods and services. Estimates indicate that drawing on these endowments would boost annual U.S. real GDP growth by an appreciable fraction of a percentage point. Thus, reducing government ownership of these underutilized and untapped endowments would contribute to higher economic growth.

a. Why do you suppose that firms in Arctic nations are already developing specialized tanker ships and platforms for use in privately accessible Arctic areas?

b. What are possible opportunity costs of opening Arctic lands to private extraction of as-yet unavailable resource endowments?