Rapid thawing of the Arctic could trigger a catastrophic "economic time bomb" which would cost trillions of dollars and undermine the global financial system, say a group of economists and polar scientists.
Governments and industry have expected the widespread warming of the Arctic region in the past 20 years to be an economic boon, allowing the exploitation of new gas and oilfields and enabling shipping to travel faster between Europe and Asia.
But the release of a single giant "pulse" of methane from thawing Arctic permafrost beneath the East Siberian sea "could come with a US$60 trillion (HK$465 trillion) global price tag", according to the researchers who have for the first time quantified the effects on the global economy.
Even the slow emission of a much smaller proportion of the vast quantities of methane locked up in the Arctic permafrost and offshore waters could trigger catastrophic climate change and "steep" economic losses, according to the study published in the journal Nature.
The Arctic sea ice, which largely melts and reforms each year, is declining at an unprecedented rate. In 2013, it collapsed to under 3.5 million square kilometres by mid September, just 40 per cent of its usual extent in the 1970s. Because the ice is also losing its thickness, some scientists expect the Arctic to be largely free of summer ice by 2020.
The growing fear is that as the ice retreats, the warming of the sea water will allow offshore permafrost to release ever greater quantities of methane. A giant reservoir of the greenhouse gas, in the form of gas hydrates on the East Siberian Arctic Shelf, could be emitted, either slowly over 50 years or catastrophically fast over a shorter period, say the researchers.
The ramifications of vanishing ice will also be felt far from the poles, they say, because the region is pivotal to the functioning of Earth systems, such as oceans and climate.
"The imminent disappearance of the summer sea ice in the Arctic will have enormous implications for both the acceleration of climate change, and the release of methane from offshore waters which are now able to warm up in the summer," said Professor Peter Wadhams, head of the Polar ocean physics group at Cambridge University and one of the authors of the paper published in Nature.
The authors calculated 80 per cent of the extra impact by value will occur in the poorer economies of Africa, Asia and South America. "Inundation of low-lying areas, extreme heat stress, droughts and storms are all magnified by the extra methane emissions," they said.
They argue that global economic bodies have not taken into account the risks of rapid ice melt. The only economic downside to the warming of the Arctic they have identified so far has been the possible risk of oil spills.
But, they say, economists are missing the big picture. "Neither the World Economic Forum nor the International Monetary Fund currently recognise the economic danger of Arctic change. [They must] pay much more attention to this invisible time-bomb," said Professor Gail Whiteman at the Rotterdam School of Management, who co-wrote the paper with Wadhams.
The Nature report comes as global shipping companies prepare to send a record number of vessels across the north of Russia later in 2013, slashing miles travelled between Asia and Europe by over 35 per cent and cutting costs up to 40 per cent.
Russian authorities said 218 ships from Korea, China, Japan, Norway, Germany and elsewhere have so far applied for permission to follow the so-called northern sea route this year.
Satellite data collated from the US National snow and ice data centre this week showed ice loss now accelerating and, at 8.2 million square kilometres, approaching the same extent as last year's record melt. Over 130,000 square kilometres of sea ice melted between July 1 and 15.
Compared to the 1981 to 2010 average, ice extent on July 15 was 1.06 million square kilometres below average.