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The Economics of Living at the Top of the World

Letter from Svalbard

The Reindalen Valley in the Norwegian archipelago of Svalbard, April 29, 2015. NASA / Reuters

Norway’s Svalbard archipelago, which sits some 700 miles from the North Pole, is barren when it comes to people but abundant in coal. For decades, anyone who settled there was primarily in the area to mine, but in 2013, hit by low oil prices, coal became unprofitable and Norway decided to diversify away from fossil fuels. It committed to developing more renewable energy sources, transitioning slowly from oil to gas and selling off coal stocks from its $900 billion sovereign wealth fund, the largest in the world. Against this background, Norway closed its main coal mine in Svalbard early this year, sending shock waves through the economy of the largest town on Spitsbergen, the only permanently inhabited island in the archipelago. All this comes at a time when climate change and melting sea ice make Svalbard, perched at the Arctic crossroads between Russia and the West, an increasingly important foothold for managing

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