Svalbard - Economy

Economy

The three main industries on Svalbard are coal mining, tourism and research. In 2007, there were 484 people working in the mining sector, 211 people working in the tourism sector and 111 people working in the education sector. The same year, the mining gave a revenue of NOK 2,008 million, tourism NOK 317 million and research NOK 142 million. In 2006, the average income for economically active people was NOK 494,700—23% higher than on the mainland. Almost all housing is owned by the various employers and institutions and rented to their employees; there are only a few privately owned houses, most of which are recreational cabins. Because of this, it is nearly impossible to live on Svalbard without working for an established institution.

Since the resettlement of Svalbard in the early 20th century, coal mining has been the dominant commercial activity. Store Norske Spitsbergen Kulkompani, a subsidiary of the Norwegian Ministry of Trade and Industry, operates Svea Nord in Sveagruva and Mine 7 in Longyearbyen. The former produced 3.4 million tonnes in 2008, while the latter uses 35% of its output to Longyearbyen Power Station. Since 2007, there has not been any significant mining by the Russian state-owned Arktikugol in Barentsburg. There have previously been performed test drilling for petroleum on land, but these did not give satisfactory results for permanent operation. The Norwegian authorities do not allow offshore petroleum activities for environmental reasons, and the land formerly test-drilled on has been protected as natural reserves or national parks. In 2011, a 20-year plan to develop offshore oil and gas resources around Svalbard was announced.

Svalbard has historically been a base for both whaling and fishing. Norway claimed a 200 nautical miles (370 km; 230 mi) exclusive economic zone (EEZ) around Svalbard in 1977, with 31,688 square kilometres (12,235 sq mi) of internal waters and 770,565 square kilometres (297,517 sq mi) of EEZ. Norway retains a restrictive fisheries policy in the zone, and the claims are disputed by Russia. Tourism is focused on the environment and is centered around Longyearbyen. Activities include hiking, kayaking, walks through glacier caves and snowmobile and dog-sled safari. Cruise ships generate a significant portion of the traffic, including both stops by offshore vessels and expeditionary cruises starting and ending in Svalbard. Traffic is strongly concentrated between March and August; overnights have quintupled from 1991 to 2008, when there were 93,000 guest-nights.

Research on Svalbard centers around Longyearbyen and Ny-Ålesund, the most accessible areas in the high Arctic. Norway grants permission for any nation to conduct research on Svalbard, resulting in the Polish Polar Station and the Chinese Arctic Yellow River Station, plus Russian facilities in Barentsburg. The University Centre in Svalbard in Longyearbyen offers undergraduate, graduate and postgraduate courses to 350 students in various arctic sciences, particularly biology, geology and geophysics. Courses are provided to supplement studies at the mainland universities; there are no tuition fees and courses are held in English, with Norwegian and international students equally represented. The Svalbard Global Seed Vault is a seedbank to store seeds from as many of the world's crop varieties and their botanical wild relatives as possible. A cooperation between the government of Norway and the Global Crop Diversity Trust, the vault is cut into rock near Longyearbyen, keeping it at a natural −6 °C (21 °F) and refrigerating the seeds to −18 °C (−0 °F). The Svalbard Undersea Cable System is a 1,440 km (890 mi) fibre optic lines from Svalbard to Harstad, needed for communicating with polar orbiting satellite through Svalbard Satellite Station and installations in Ny-Ålesund.

One source of income for the area is that from visiting cruise ships. The Norwegian government has become concerned in recent years about large numbers of cruise-ship passengers suddenly proceeding ashore to small settlements such as Ny-Ålesund, which is conveniently close to the barren-yet-picturesque Magdalena Fjord. With the increasing size of the larger ships, potentially up to 2000 people can be present in a community that normally numbers less than 40. The only part of the Ny-Ålesund community that profits from such numbers of visitors is the souvenir shop, which always attracts a long queue and invariably sells out of what limited stocks that it has. The government has recently passed legislation, effective from January 2014, severely restricting the size of cruise ships that may visit.