(source:GettyImages)Today's article is a contribution by Victoria Herrmann (.), a Gates Cambridge Scholar and PhD Student at the Scott Polar Research Institute at Cambridge University.

Last month, President Obama announced that he would ask Congress to increase environmental protection in Alaska. His proposal calls for a ban on drilling for 12 million acres of the Arctic National Wildlife Refuge by designating it wilderness – the strongest level of federal protection afforded to public lands.

While applauded by environmentalists, his plan was met with fierce opposition from a number of American political and economic leaders. Alaskan Senator Lisa Murkowski called it "a stunning attack on our sovereignty and our ability to develop a strong economy that allows us, our children and our grandchildren to thrive."

But, according to a new report, President Obama's proposal should be seen as an economic opportunity instead of "a kick to the gut of Alaska's economy."

A long-running study released Tuesday concludes that while expectations are high for oil and gas production in the Arctic, prohibitively high costs of doing business in the north will persist long into the 21st Century.

The second Arctic Human Development Report is a long-awaited follow up to the first study released in 2004. Its findings, comparing human development across the circumpolar north, will be presented to the Arctic Council ahead of their next meeting in April, where the United States will take over the Chairmanship for the next two years.

With the expectations of expanding Arctic petroleum proving overly optimistic, not least because of the net costs of climate change and the uncertainty in commodity prices, America's Chairmanship provides an opportunity to focus investment on diversifying our northern economy.

In 2013 Alaska was the only state where real GDP decreased, in large part due to a decline in mining. With the effects of the ongoing fall in oil prices already seen in a soaring unemployment rate, Alaska is poised to continue its downward spiral and widen the already existing gap between its economic wellbeing and that of the lower 49.

Rather than focus on a resource rush in a melting Arctic, America should use its Arctic Council Chairmanship to strengthen a healthy, non-extractive polar economy that both benefits local communities and capitalizes on the globalization of its regional markets.

By supporting educational opportunities and entrepreneurship in Alaska, President Obama and Secretary Kerry could not only address the issues highlighted in the Human Development Report, but also set an example for investing in communities instead of companies across the circumpolar north.

Since the last Report in 2004, secondary education attainment has increased in all Arctic regions except Alaska. Only 68 percent of student in Alaska graduate high school, compared to the American national average of 81 percent. For Native Alaskans, only 42.5 percent graduate. Many students in Alaska face difficulties of remoteness and extreme weather in physically getting to class. Alaskan native students face additional cultural challenges once at school because of western-oriented education models.

Investing in virtual courses at the secondary level and the telecommunication infrastructure for residents to access them could significantly lower drop out rates, provide an educated workforce, and inspire students towards pursuing a variety of careers that would diversify the Arctic economy. The University of Alaska offers a number of distance-learning courses that focus on traditional knowledge, native cultures, and northern economic innovation. Such a program at the high school level could increase graduation rates and encourage other countries to work towards better access to secondary schools throughout the north.

But even with a high school education, today many Arctic students pursue higher education and settle permanently in the lower 48 where they can find more appealing, non-resource based employment after college.

In the European Arctic, non-recourse sector industries produce more than half of the economic output. This compares to only 37 percent in the North American Arctic. These Nordic economies are driven by innovation and knowledge rather than extractive industry. Innovation Norway, a government initiative to support the development of local business, has helped many small-scale entrepreneurial goods and services reach world markets and improve Arctic standards of living. The program gives broad business support, financial provisions, and networking services to small enterprises.

An Arctic American program akin to Innovation Norway could give Alaskans an opportunity to build their own local entrepreneurial economy. The program could provide strategic assistance and start-up financial support to Alaskans in the production of northern goods and services, partnered with successful American companies across the nation.

In response to President Obama's wildlife protection proposal, Senator Murkowski pledged that Alaska "will fight back with every resource at our disposal." While the National Wildlife Refuge is projected to hold large petroleum reserves, the new Arctic Human Development Report makes it clear that the physical restraints of remoteness and harsh climate will continue to hamper the rate of Alaska's recourse development.

Instead of seeing President Obama as an opponent, Alaska should see him as a partner in using the US Arctic Council Chairmanship to develop a strong, diversified economy that would the state to thrive for generations to come.

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