Challenges and Opportunities for Sustainability in the Greenlandic Economy

After passing through Iceland, I arrived in Nuuk a few days ago and have been seeing Greenland's largest city and how it differs from what I saw in August. Needless to say, it’s an interesting time to be in Greenland. Trump’s ego aside, it all boils down to questions of mining: South Greenland has abundant deposits of rare earth minerals and uranium. Greenlanders are almost universally opposed to uranium extraction due to the Thule accident in 1968, particularly since said mines would be near existing settlements. Despite this, some mining has been allowed, and foreign mining corporations are perennially attempting to gain mining access. In other words, the current focus on Greenland is part of a long history of extractivist economics that Greenlanders want to end.  The question then becomes what is Greenland to do to facilitate local control of their future.

Since my first trip to Greenland in August, I have tried to bring my own expertise to the ongoing conversation about pathways for non-extractive economic development. My idea is that the economic challenges Greenland faces can be dealt with through the creation of local economic loops.

The major issues the Greenlandic economy faces are as follows:

1. High transportation costs

   For example, despite thousands of sheep in South Greenland, the costs of transporting wool are high enough that it is not economically viable to process the wool into yarn, and it is instead burned.

2. Lack of skilled labor

   Mining companies and large construction projects import their own technicians. Furthermore low level of production make it hard to retain skilled labor.

3. Concerns over the role of Nuuk

   People worry that Greenland will turn from a country with many viable settlements into a country with only Nuuk and its support.

4. An extractivist paradigm 

   People tend to look for exports for economic opportunity. While an export-based model was quite successful in cases such as China and Japan, these were exports of goods that could be used in the local economy. Exporting raw materials from Greenland does little to create a robust local economic network.

5. Import dependence

   Due to climate, there are some goods that simply cannot be made in Greenland, but the lack of manufacturing means that virtually everything is imported. Here we see the correlate of the extractivist paradigm- Greenland’s function in the global economy is to export fish and raw materials. This is a problem for a number of reasons, not the least of which is that as the climate warms, sea ice is becoming more unpredictable, causing problems in supply.

As a result of the issues cited, it is very difficult for Greenland to retain value in the local economy and substantial local inefficiency is introduced to the system: Any money that is made from an export or brought in from tourism goes right back out to pay for imported goods and labor. Additionally, even some local products must be refined outside of the country. For example, musk ox wool (which is softer than anything I’ve ever felt) is sent to Germany for spinning before being reimported.

There is also a lack of waste management in Greenland. This may seem like an odd tangent, but go with me here. Currently, waste, even recyclable waste, is put into a landfill, or, in some cases, sent back to Europe. One solution under discussion is to build massive incinerators in Nuuk and Sisimiut to burn the waste, which would have a massive carbon footprint. A better alternative to this would be to compost organic material and melt and recycle glass and aluminum here in Greenland. Of course, this requires energy. Fortunately, abundant hydroelectric potential is one of Greenland’s major natural resources.

This hydroelectric power is an incredible resource, effectively giving Greenland access to abundant renewable energy, and Greenland already generates the vast majority of its power from hydroelectricity. (Incinerators do exist but are used for waste disposal and as backup generators.) Further expansion of hydroelectric power for local projects would not be in the form of massive dams that flood entire valleys, halt fish migrations, and displace local populations. Rather, it will be as run of the river and small (or micro) hydro projects that can work as a distributed hydroelectric strategy that mitigates environmental impact. Neither do cold temperatures pose a problem - Iceland is able to generate 80% of its power from hydroelectric plants. 

The hydroelectric power would be used under two paradigms:

• It could be used in an extractivist way, for example to power data centers, (similar proposals are under consideration in Iceland.) This would bring in money from a corporation or client, but since the data centers do not provide a local service, any money brought in goes right back out.

• There is, however, a more circular, community-oriented way of using hydropower. It could be used to power composting and recycling efforts, as well as forges and tools to produce goods for the local community. This would be using what is available locally to directly address needs at the local scale and would work similarly to community gardens and maker spaces, while also serving as incubators by providing expertise and equipment for any who wanted to try their hand at making a product.

I suggest a Circularity Initiative using local recycling facilities, powered by local hydroelectric and organized as maker spaces to make use of these critical resources and thus serve as incubators for further industrial activity tailored to the needs of the community. For example, a community could channel its waste into constructing components and fertilizer for greenhouses.

There are two critical components to making this work: sequence and community orientation.

The order in which facilities and attendant capabilities are developed is very important, as using the output of an earlier phase as the input for a subsequent phase allows us to tackle progressively larger or more complex projects. By starting with waste management, we are already providing a service, bringing in revenue from those contracts. Production would start small and grow with time as the availability of material in the local market, access to production equipment, and experience with the tools available allowed people to decide what to make for themselves. What might start as a push for community greenhouses or bottles for a local brewery might turn into a thermos business or locally embedded electronics. The outputs of each successive phase can be used as inputs for the next, allowing people to tackle increasingly ambitious projects. Operating locally also decreases transportation costs.

The second key factor is community orientation. This should be a given in Greenland, where business norms follow the overall Scandinavian model characterized by a focus on social benefits and cooperation with strong labor unions, etc. (Though in the Greenlandic case, where many of the major corporations are state-owned, decentralization will be relatively unusual.)

Fundamentally, the goal is a flatter income distribution, which will result in a broader segment of the population being able to invest in new businesses, etc. But we’re also looking at encouraging people to build their own greenhouses, etc. The aims here are broader than GDP and are focused on quality of life. I think there is something to be said for non-market or non-globalized production. I will expand on this in a future post, but Greenland highlights a very interesting problem in developmental economics where the focus on efficiency in the global economy results in local inefficiency and underutilization of resources and human capital. The solution, I think, is to look locally and cooperatively and focus on what people can do, not how much it will earn as an export. Just as community gardens are changing the diets and lives of people in cities, so too can community production transform societies and I think, even facilitate sustainable economic growth.