Sustainable Business Development in the Nordic Arctic

Lise Smed Olsen, Anna Berlina, Leneisja Jungsberg, Nelli Mikkola, Johanna Roto, Rasmus Ole Rasmussen, Anna Karlsdottìr

NORDREGIO WORKING PAPER 2016:1 Sustainable Business Development in the Nordic Arctic Sustainable Business Development in the Nordic Arctic

Lise Smed Olsen, Anna Berlina, Leneisja Jungsberg, Nelli Mikkola, Johanna Roto, Rasmus Ole Rasmussen, Anna Karlsdottìr Sustainable Business Development in the Nordic Arctic

Nordregio Working Paper 2016:1

ISBN 978-91-87295-35-5 ISSN 1403-2511

Nordregio P.O. Box 1658 SE-111 86 Stockholm, Sweden [email protected] www.nordregio.se www.norden.org

Editors:Lise Smed Olsen, Anna Berlina Maps: Johanna Roto and Linus Rispling Cover photo: Rasmus Ole Rasmussen (Svalbard)

Nordic co-operation Nordic co-operation is one of the world’s most extensive forms of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland. Nordic co-operation has ﬁ rm traditions in politics, the economy, and culture. It plays an important role in European and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the global community. Common Nordic values help the region solidify its position as one of the world’s most innovative and competitive.

The Nordic Council is a forum for co-operation between the Nordic parliaments and governments. The Council consists of 87 parliamentarians from the Nordic countries. The Nordic Council takes policy initiatives and monitors Nordic co-operation. Founded in 1952.

The Nordic Council of Ministers is a forum of co-operation between the Nordic governments. The Nordic Council of Ministers implements Nordic co-operation. The prime ministers have the overall responsibility. Its activities are co-ordinated by the Nordic ministers for co-operation, the Nordic Committee for co-operation and portfolio ministers. Founded in 1971.

Nordregio – Nordic Centre for Spatial Development conducts strategic research in the ﬁ elds of planning and regional policy. Nordregio is active in research and dissemina- tion and provides policy relevant knowledge, particularly with a Nordic and European comparative perspective. Nordregio was established in 1997 by the Nordic Council of Ministers, and is built on over 40 years of collaboration.

Stockholm, Sweden, 2016 Table of Contents

Preface ...... 8 1 Introduction ...... 9 2 Employment in the Nordic Arctic ...... 11 3 Large-Scale Industries ...... 14 3.1 Key drivers of new large-scale projects ...... 14 3.2 Ongoing and potential industrial activities in the Nordic Arctic ...... 15 3.2.1 Mineral mines and deposits in the Nordic Arctic...... 15 3.2.2 Industrial mineral mines and deposits ...... 15 3.2.3 Oil and gas blocks in the Nordic Arctic ...... 17 3.3 Impact assessments of large-scale industries ...... 17 3.3.1 Environmental impact assessment...... 17 3.3.2 Social impact assessment ...... 19 3.3.3 Strategic environmental impact assessment ...... 19 3.3.4 Socio-economic involvement...... 20 3.4 Connecting a local labour market to large-scale industries...... 21 3.4.1 Indirect employment opportunities ...... 21 3.4.2 The role of industry clusters ...... 22 3.4.3 Transnational and cross-border co-operation ...... 22 3.5 The global market’s connection to large-scale industries ...... 23 3.6 Large-scale industries and sustainable regional development ...... 24 4 Bioeconomy ...... 25 4.1 What is a bioeconomy? ...... 25 4.1.1 Sustainability of the bioeconomy ...... 26 4.1.2 Policy support for the bioeconomy in the Nordic countries ...... 27 4.2 Bioeconomy in the Nordic Arctic: current status and future potential ...... 27 4.3 Blue bioeconomy...... 27 4.3.1 Fisheries ...... 27 4.3.2 Aquaculture ...... 29 4.3.3 Seaweed ...... 29 4.3.4 Biotechnology related to marine products ...... 29 4.4 Land-based bioeconomy ...... 30 4.4.1 Forestry ...... 30 4.4.2 Bioenergy production ...... 31 4.4.3 Biofuels...... 33 4.4.4 Biorefi neries ...... 35 4.4.5 Agriculture ...... 36 4.4.6 Reindeer husbandry ...... 37 4.5 Future opportunities and challenges in the bioeconomy ...... 39 4.5.1 Labour-market effects ...... 39 4.5.2 Increasing local processing ...... 40 4.5.3 New bio-based businesses ...... 40 4.5.4 The role of cross-border collaboration...... 41 4.5.5 Political support ...... 41 4.6 Bioeconomy in the Nordic Arctic and sustainable regional development ...... 41 5 Tourism ...... 43 5.1 Tourism development ...... 43 5.1.1 Sustainable tourism development ...... 43 5.1.2 Ecotourism ...... 43 5.2 Management and development trends in the Nordic Arctic...... 44 5.2.1 Destination management ...... 44 5.2.2 Tourists: target groups, facts and fi gures ...... 45 5.2.3 Development trends and transnational collaboration ...... 46 5.2.4 Strategic development priorities ...... 48 5.3 Cruise tourism ...... 49 5.4 Sami tourism development...... 50 5.5 Food and consumptive wildlife tourism ...... 51 5.6 Tourism in the Nordic Arctic and sustainable regional development ...... 53 6 Creative Industries ...... 54 6.1 What are the creative industries?...... 54 6.2 Creative industries in the Arctic ...... 55 6.2.1 Creative industries as drivers of regional development in the Arctic ...... 55 6.2.2 Peculiarities of the creative class and capital in the Arctic ...... 56 6.3 Current trends in the Nordic Arctic ...... 56 6.3.1 Festivals ...... 57 6.3.2 Film ...... 57 6.3.3 Music ...... 58 6.3.4 Design and handicrafts...... 59 6.3.5 Sami culture and creative industries ...... 59 6.4 Creative industries and sustainable regional development ...... 59 References ...... 61 List of tables and fi gures

List of tables: Table 1: Employment in the Nordic Arctic Region 2013...... 11

List of ﬁ gues: Figure 1: High and low value added products in the bioeconomy ...... 25 Figure 2: Green Highway transport corridor...... 34 Figure 3: Some deﬁ nitions of creative industries ...... 55

List of Maps: Map 1: Public and private sector employment in 2013 ...... 12 Map 2: Dominant branch of employment in the Nordic Arctic region 2013 ...... 13 Map 3: Mineral mines and deposits in the Nordic Arctic ...... 16 Map 4: Industrial mineral mines and deposits in the Nordic Arctic...... 19 Map 5: Oil and gas in the West Nordic region ...... 18 Map 6: Employment in ﬁ sheries in 2013 ...... 28 Map 7: Forestry land in the North Calotte region ...... 31 Map 8: Share of the forest sector in regional GVA; Employment in the forest sector in Northern Finland, Norway and Sweden ...... 32 Map 9: Solid wood fuel consumption in the North Calotte region ...... 32 Map 10: Bioenergy potential from forestry residues including stumps in the North Calotte region...... 33 Map 11: Energy potential from forestry residues in the North Calotte region ...... 34 Map 12: Full-time jobs in bioenergy production by type in the North Calotte region...... 35 Map 13: Reindeer herding areas and districts in Sápmi 2014 ...... 38 Map 14: Overnight stays in 2014 ...... 46 Map 15: Overnight stays by foreign citizens in 2014 ...... 47 Map 16: Cruise tourism in 2014 (for Greenland 2015)...... 48 Map 17: Employments in art, entertainment and recreation in the Nordic Arctic ...... 58 Preface

Th is publication has been produced as part of the pro- An investigation of social sustainability involves ject Foresight Analysis for Sustainable Regional Devel- questions about attracting and/or keeping young peo- opment in the Nordic Arctic, commissioned by the ple and women in peripheral communities. A signifi - Nordic Working Group for Sustainable Regional De- cant part of the foresight analysis comprises a work- velopment in the Arctic. shop series of three steps: the vision phase, the realism Th e purpose of the project is to assess opportunities phase, and the implementation phase. First, in the vi- and challenges for sustainable regional development sion phase, local workshops are organised in two se- in the Nordic Arctic and to identify future develop- lected local communities in each region of the Nordic ment perspectives. Th is provides more comprehensive Arctic with the participation of local inhabitants (a knowledge, and input for development of the Nordic total of 12 workshops). Second, in the realism phase, Arctic policy. Th e work is commissioned by the Nordic dialogue is conducted at the community level with a Council of Ministers, and the Committee of Senior Of- workshop that also includes municipal, regional and fi cials for Regional Policy (EK-R). national representatives (a total of six workshops). Fi- Th e foresight analysis is carried out in three stages, nally, in the implementation phase, two transnational where communities, regions and national authorities workshops are organised: one for the West Nordic re- contribute with their perspectives on the potentials and gion and one for the North Calotte region. challenges for future, through a series of workshops on Th e Working Group has been established by the Nor- sustainable regional development in the Nordic Arctic. dic Committee of Senior Offi cials for Regional Policy Foresight analysis is a method that is used in the de- for the period 2013-2016. It comprises representatives velopment of local economic and social development from the Norwegian Ministry of Local Government strategies, based on a structured dialogue between rel- and Modernisation (chairmanship), the Norwegian evant actors and with input from local, regional and Ministry of Climate and Environment, the Icelandic national actors. Th e objective of this process is to create Regional Development Institute, the Prime Minister’s a foundation for action, focusing on the opportunities Offi ce of the Faroe Islands, the Greenlandic Ministry that become evident from the analyses. of Industry, Labour and Trade, the County Adminis- Th e Working Group places emphasis on identifying trative Board of Norrbotten in Sweden, and the North the opportunities and challenges for business develop- Calotte Council in Finland. ment and the perspectives of young people on their Th is publication Sustainable Business Development own future opportunities in the Nordic Arctic. in the Nordic Arctic contributes with insight into the Th e Nordic Working Group for Sustainable Regional key areas of private business activities in the Nordic Development in the Arctic has defi ned three key ques- Arctic of large-scale industries, the bioeconomy, tour- tions for this foresight analysis: ism, and the fi eld of creative industries in an Arctic What social and resource conditions - both natural context. Focus is placed on the opportunities and chal- and human-related - can be expected to have a decisive lenges for sustainable regional development, including infl uence on regional development in the Arctic over practical examples from the Nordic Arctic region. the next ten, twenty, and thirty years? How will the management of these conditions af- Lisbeth Nylund Kjell Nilsson fect the living standards and future prospects for the Chairman, the Nordic Director, Nordregio regions? Working Group Stockholm, January 2016 What are the implications of the identifi ed challeng- Oslo, January 2016 es for future planning and regional policy?

8 NORDREGIO WORKING PAPER 2016:1 1. Introduction

Th e purpose of this publication is to contribute to an ment of the mining and oil sectors would benefi t from understanding of the opportunities and challenges for stabilization measures, but would have to be carried sustainable regional development with a focus on key out under the strictest environmental regulations, 3) private sector business activities in the Nordic Arctic. the territories could gain from diversifying their pro- Th e Nordic Arctic comprises all of Greenland, the Far- ductive base—ecological tourism, research related to oe Islands and Iceland, and the northernmost counties climate change, ice, water and Arctic and sub-Arctic of Norway (Nordland, Finnmark, Troms), Sweden products—and further development of renewable (Norrbotten) and Finland (Lapland). Th e report will energy sources and 4) higher value added and niche shed light on today’s role of the selected industries in products from the marine sector could be further de- the economy of the Nordic Arctic region and consider veloped; e.g., with opportunities for expanding natural future development options. Furthermore, the study tourism and cruise tourism. aims to identify the main challenges associated with Aft er an introduction to the employment structure the development of economic activities from the per- in the Nordic Arctic supported by maps, the four busi- spective of social, environmental and economic sus- ness development areas of large-scale industries (the tainable development. bioeconomy, tourism and cultural and creative in- Sustainable development has been defi ned as “de- dustries) are examined in this publication. Literature velopment that meets the needs of the present without reviews are carried out for each chapter, including ac- compromising the ability of future generations to meet ademic and policy documents with a focus on sustain- their needs” (WCED, 1987:43), which is the defi nition able regional development. used in this report. Large-scale industries have had an impact on sev- Th roughout this publication, the North Calotte re- eral local communities of the Nordic Arctic. As part gion denotes the counties of Nordland, Finnmark, of the foresight workshops, the socio-economic conse- Troms, Norrbotten and Finnish Lapland. Th e West quences have been evident both in places where large- Nordic countries will be used in reference to Green- scale projects have been run and then closed down, and land, the Faroe Islands and Iceland, and the West in places where the projects are still running. In some Nordic region, in addition to these three countries, in- cases, new business opportunities have developed fol- cludes the coastal areas of Northern Norway. Th ese are lowing the establishment of large-scale industry pro- common constellations for cross-border/transnational jects. Th e chapter on large-scale industries in the Nor- collaboration in the Nordic Arctic. dic Arctic explores the main drivers of new large-scale Th e report Growth from the North (Prime Minis- projects including factors such as investment drivers, ter’s Offi ce, 2015), a co-production of an expert group socio-economic impacts, education and inclusion of a set up by the Prime Ministers of Norway, Sweden and local workforce, price fl uctuations and volatility in re- Finland in April 2014, highlights four key drivers of lation to development planning for surrounding com- growth where the three countries share common eco- munities. nomic, environmental and social interests in the North Th e bioeconomy is mainly concerned with local pro- Calotte region. Th e identifi ed drivers are: 1) liquefi ed cessing of natural resources as important opportuni- natural gas and renewables, 2) greener mining solu- ties for future development, which was highlighted at tions, 3) increased tourism, and 4) ice and cold climate most of the foresight workshops. Th is involves the pro- solutions. duction/processing and sale of forestry, fi sheries, aqua- In 2011, an OECD Territorial Review of the NORA culture and agriculture resources (in some cases also Region (OECD, 2011a), the West Nordic region, was mineral resources, which in this report are included as published. Th e Review highlighted that 1) sustainable a large-scale industry). Th is chapter thus focuses on the development of fi sheries will be essential for the re- primary sector and new business opportunities of the gion’s long-term competitiveness, 2) further develop- bioeconomy.

NORDREGIO WORKING PAPER 2016:1 9 Tourism was emphasized as an opportunity for fu- at some foresight workshops; e.g., in connection with ture development at all local foresight workshops, al- Sami culture. Th is chapter will include a literature re- though the extent to which it is a source of jobs and view on the topic of cultural and creative industries in economic growth varies across the local communities. Arctic and other peripheral regions, and will explore In most cases, tourism was referred to as being inter- current trends in the Nordic Arctic. Four key areas linked with the bioeconomy. For this chapter, respon- in which potential development was identifi ed are re- sible destination management organizations for the viewed in this chapter including fi lm production, mu- Nordic Arctic regions were interviewed to obtain a sic, design and handicraft s, and Sami culture and crea- better understanding of the most important develop- tive industries. ment challenges and development trends of the tour- Each chapter concludes by outlining discussion ism industry. Cruise, Sami, food and wildlife tourism points that are relevant to consider in discussions on were identifi ed as key development trends to be further future strategies for sustainable regional development explored. in the Nordic Arctic. Cultural and creative industries were highlighted

10 NORDREGIO WORKING PAPER 2016:1 2. Employment in the Nordic Arctic

Corresponding author: Johanna Roto

Th ere are regional variations in the Nordic Arctic re- Th e Arctic economy has been maturing while it grows fl ecting the extent to which the regional economies are and comprises not only small villages and resource en- dependent upon natural resource exploitation and/or claves but also towns and cities of signifi cant size. Th ese services and the public sector. While the economic out- urban economies now provide the trade, personnel, gov- put of certain industries, like mining and off shore in- ernment, business services and product manufacturing dustries, represent a substantial share of GDP, labour that were historically supplied from outside the North. demand in these industries is less signifi cant. Th is is true Th e growth of these agglomerations has resulted in the for many of the Arctic regions in the Nordic countries. growth of businesses that replace imports. While Finland, Norway and Sweden are diversifi ed in Th e rise of northern industries with no direct con- terms of jobs, some areas in the North are more mono- nection to extractive resources may be partly a result of dependent in terms of what jobs are available. In Green- the existence of these urban areas. Some of these new inland, central islands of the Faroe Islands, parts of North- dustries are connected to the region’s resource base. Th e ern Norway and Northern Finland, dependence on Arctic’s natural beauty supports a growing tourism in- public sector jobs is signifi cant, along with jobs in pri- dustry, and the aluminium smelting industry in Iceland mary industries. benefi ts from the low-cost energy that the country off ers.

Table 1: Employment in the Nordic Arctic region 2013.

Employment in 2013* Total nr of employed Share of employment in Sector of employment, % persons in region public sector Primary Secondary Tertiary Faroe Islands 23 600 40,1 10 ,0 1 8 , 8 71,2 Finland Kainuu 29 700 35,7 7,6 17,8 74,6 Lappi 70 400 36,3 5,3 20,3 74,4 Pohjois-Pohjanmaa 157700 31,7 5,3 23,4 71,3 Greenland 25500 50,5 14,3 10,6 75,2 Iceland 174900 28,9 9,0 17,9 73,1 Norway Finnmark 37700 39,7 6,6 18.7 74,8 Nordland 116300 39,0 5,2 19,2 75,6 Troms 82900 42,4 3,5 14,3 82,2 Sweden Norrbotten 122700 35,0 3,8 23,9 72,4 Vasterbotten 126900 38,0 3,9 21,3 74,7

Nordic-Arctic region 968000 35.7 5,9 19,9 74,2 Nordic Countries, total 12425 000 29,7 2,7 20,0 77,3

*ﬁ nland 2012 FO, Gl, IS: Education, health and social work services included as public Secondary sector including: Extraction of raw materials, Industry, Electiricitv and water supply and Construction

Source: National statistics institutes

NORDREGIO WORKING PAPER 2016:1 11 Map 1: Public and private sector employment in 2013

Th e electronics manufacturing industry in Northern the municipality (e.g., Vadsø and Tromsø in Norway). Finland is another important non-traditional industry. In contrast, there are cities such as Kiruna (Sweden) Furthermore, a similar number of people are employed and Kemi-Tornio (Finland) where larger industries are in the culture sector in Iceland as in the fi sheries sector the main employers. However, there are a number of or the hotel and restaurant sector (AHDR, 2014). large state- and/or publicly owned companies in the Employment in the Nordic Arctic region is character- Nordic Arctic region, such as LKAB in Kiruna. Em- ized by a relatively large public sector and a large share of ployment in the Nordic Arctic region, therefore, is not employment in primary production (see Table 1). “private” to the extent illustrated on the map. Th e map above shows the share of employment in Th e lowest shares of public employment can be the public sector. Generally, employment in the public found in small municipalities with a large number of sector is higher in the northernmost regions compared business services, especially within the tourism indus- with the national average. In Finland, Norway and try, or with a large share of employment in primary Sweden, the highest values at both the municipal and production. regional (Lappi, Troms and Norrbotten) levels can be However, business ownership structures and state found in the Nordic Arctic region. In the Faroe Islands policies vary between the countries. In Northern Swe- (40.1%) and Greenland (50.5%), the public sector in den, where the share of employment in the public sec- general is employing a large share of people, a fact that tor is smaller than in other Nordic Arctic regions, the is related partly to the small size of the countries and share of employment in publicly owned companies is limited possibilities for industrial activities. In Iceland, much larger than in other Nordic countries. Publicly the public sector is small compared with other Nordic owned companies are especially important for employ- countries. ment in Norrbotten, where they employ 9.4% of the la- Th e role of cities varies. In a number of cities, the bour force. Th e state-owned mining company LKAB in share of public employment is relatively large, as a re- Kiruna is a good example of this. Furthermore, in Nor- markable share of public services, such as regional ad- dland and Finnmark, employment in publicly owned ministration, hospitals and universities, are located in companies is higher than the Norwegian national aver-

12 NORDREGIO WORKING PAPER 2016:1 Ma p 2: Dominant branch of employment in the Nordic Arctic region 2013

age. In total, publicly owned companies employ some forestry is the main primary industry, whereas in Nor- 3.7% of the labour force in the Nordic Arctic region. way, Iceland and Greenland, it is fi sheries. Together, Taken as a region, the employment structure in the these two cluster categories represent over half of the Nordic Arctic is characterized by a relatively large Nordic Arctic municipalities. share of employment in primary production compared Other common employers are “transport, commu- with the Nordic average, but when looking at the eco- nication and public administration” and “balanced nomic profi les of the municipalities, a generic “Arctic” municipalities with minor overrepresentation of health profi le does not seem to exist (Map 2). and social work services”, both employing some 15% of A cluster analysis on employment in diff erent NACE people in the Nordic Arctic municipalities. Th e over- 1-digit level categories (12 classes) shows a variety of representation of public administration and the trans- employment profi les in the Nordic Arctic municipali- port sector is visible in small regional centres, such as ties. First, it is important to point out that a remarkable Vadsø (Norway) and in the Faroe Islands and Green- number of “Arctic” municipalities are close to the Nor- land, whereas the minor overrepresentation of health dic average profi le (‘balanced industrial profi le’). Th ese and social-work services seems to be most frequent in “balanced municipalities” are oft en larger in size, in Norway. In addition, Finnish Lapland has a remarkably terms of either being a regional centre or having an large share of employment in the tourism sector, partly above-average number of inhabitants and geographical related to the location of the country’s largest tourism size, which is the case for many Swedish municipalities. resorts of Levi, Ylläs and Saariselkä. Th e second signifi cant group is the municipalities Fly-in–fl y-out workers are becoming common in that are characterized by larger proportions of people remote areas, such as the Nordic Arctic, and are dis- working in the primary sector. Th ese municipalities are cussed in more detail in Chapter 3 in relation to the oft en small rural municipalities. National diff erences mining industries. should be noted in this regard. In Northern Finland,

NORDREGIO WORKING PAPER 2016:1 13 3. Large-Scale Industries

Corresponding author: Leneisja Jungsberg

Large-scale activities have the potential to contribute Box 1: Defi ning a Large-scale Industry signifi cantly to economic growth; however, because of Some common traits of a large-scale industry are as the scale of these activities, they can also have an im- follows. pact on the physical environment, land use and socie- High infl ux of capital assets. ties. Th is section reviews the literature and provides examples of ongoing, potential and fi nalized large- Requires comprehensive infrastructure (roads, scale activities in the Nordic Arctic. In a Nordic Arctic wires, power station). context, the understanding of what constitutes a large- Number of employees e.g. 3000–5000 in the con- scale industry diff ers (see Box 1). struction phase and a minimum of 1500 in the operation Th e most dominant large-scale industries are min- phase. eral extraction (Finland, Sweden, Norway, Greenland), Scale is a measure of production, where “large-scale” extraction of gas and oil resources (Norway, the Faroe indicates that production is higher than average industry Islands) and aluminium production (Iceland, Norway). production. Thus, any industry that is large scale pro- Th e impact of these activities depends on the type of duces at high volume. industry, the institutional framework in the region, the Because scale differs depending on country size and physical area where the industrial activities are taking population, this section of the report broadens the defi - place and the social resources residing there (Poulton nition of large-scale industries to include also medium- scale industries in the Nordic Arctic regions. et al., 2013; Rasmussen, 2013; Tonts, Plummer, & Law- rie, 2012). Th e majority of large-scale activities in the Arctic Global demand and prices: Economic trends such as are based on resource extraction rather than on renew- a growing middle class in China and India have in- able energy production. Th ese resource deposits are creased the global demand for minerals. Th ereby, ex- by defi nition not renewable, and their extraction has traction in remote areas such as the Nordic Arctic has a substantial environmental impact, which will be dis- become more profi table than previously (EU informa- cussed later in this chapter. tion sheet, 2014). In addition to the environmental impact, the fol- Technological advancement: Development of new lowing sections consider in detail the main drivers technologies that allow higher extraction rates are ex- of new large-scale projects, including factors such as tremely important for minerals in various types of de- investment, socio-economic impacts, education and posits (tunnel/open pit, etc.) (Prior et al., 2012). inclusion of a local workforce, price fl uctuations and Geology: Exploration and mapping of new and ex- volatility in relation to development planning for sur- isting mineral deposits is essential prior to extraction. rounding communities. International mining companies oft en invest in exploration for new opportunities knowing that their cur- 3.1 Key drivers of new large-scale rent deposits will eventually be depleted. Climate change: Physical changes such as increased projects accessibility because of the withdrawal of land-based Th e Nordic Arctic contains a vast amount of resources, ice in Greenland and opportunities for new sea routes but challenges such as a harsh climate creating diffi cult have created interest in mining activities in the Nordic work conditions, the need for a skilled workforce, long Arctic. distances and a lack of infrastructure are common Legal and institutional framework: Th e political challenges that need to be solved. Nonetheless, some framework for handling applications for mining pro- key factors are driving an international focus on re- jects is central to the realization of large-scale projects. source extraction in the Arctic. Conducive regulatory frameworks and co-operative and smooth administration processes are important

14 NORDREGIO WORKING PAPER 2016:1 aspects of this. Th e political and regulatory framework 2015, 29 of those were open mines. Th e sizes2 of the has in general been supportive for such development in open mines vary. Th ere are fi ve very large (Kiru- the Nordic Arctic, and the Nordic countries are ranked navaara, Malmberget, Aitik, Kemi, Talvivaara (Ni)), 12 well in terms of the mining companies’ perception of large, seven medium-sized and fi ve small mines. political attractiveness. Sweden had the highest score, In particular, the production of iron ore is remark- Finland the second highest, Norway is at number eight, able. At present, almost 90% of the European produc- and Greenland is at number 20 (EU information sheet, tion of iron ore comes from Northern Sweden, with 2014; Fraser Institute, 2014; Poulton et al., 2013). LKAB in Kiruna and Malmberget in Gällivare being the largest producers. Northern Sweden and Finland 3.2 Ongoing and potential indus- account for a substantial share of the EU´s production of gold, silver, zinc and copper (Aitik). Furthermore, trial activities in the Nordic Arctic chrome production in Kemi in Northern Finland is As illustrated by Map 3 and Map 4, the Nordic Arctic important for the production of stainless steel. region has a long tradition in mining and related in- Th e future potential for Greenland is remarkable. It dustries, but the potential of the region is still underex- is estimated that 58% of the world’s rare earth elements plored. Th is subsection discusses ongoing and poten- (REE) outside China and 65% of the heavy REE are lo- tial industrial activities by natural resource type. cated in Greenland (Naalakkersuisut, 2015). Th e Fennoscandian Shield, comprising Finland, Sweden and Norway, is the largest exposed area of 3.2.2 Industrial mineral mines and deposits Precambrian rocks in Europe, geologically similar to Map 4 below shows the most signifi cant industrial the famous mining regions in Canada and Australia. mineral deposits3 in the Nordic Arctic region and in- It has signifi cant ore reserves and potential as a metal- cludes active mines and quarries and potential depos- producing region on a world scale. It contains multiple its. About 10–20% of all registered industrial mineral commodities such as base metals, ferrous metals, gold, deposits in each country’s national database are plotted platinum metals, high-tech metals, industrial miner- on the map for the Fennoscandian shield. Th e locations als, diamonds, etc. (GTK, 2014a). are based primarily on the Fennoscandian Ore Deposit Just like nearly all regions across the globe with ore- Database (GTK 2014b). In total, there are over 160 sig- producing potential, Fennoscandia and Greenland nifi cant industrial mineral deposits in the Nordic Arc- in particular have seen an unprecedented increase in tic region, and at the beginning of 2015, 33 of these exploration activity during the fi rst decade of the 21st were open mines (GEUS, 2013; GTK, 2014b; IINH, century because of increased demand for metals and 2015). minerals. Furthermore, the region includes sub-areas Th e deposits illustrate the variation in type and dis- where the degree of industrial development remains tribution of industrial mineral deposits in the Nordic low, but the mineral-production potential is exception- Arctic region. Almost 40 diff erent types of commodi- ally high (GTK, 2014b). However, the activities in the ties exist, of which the eight most common commodi- region are highly dependent on global market prices, ties are plotted on the map individually. and therefore many of the existing mines, development projects and exploration projects have faced economic challenges in this decade.

3.21 Mineral mines and deposits in the Nordic Arctic 2 Based on the defi nitions and classes used in the Fennoscandian Ore Deposit Database (FOOD) (Eilu et al., 2007; GTK, 2014a), a deposit clas- Map 3 shows mineral mines and deposits1 in the Nor- sifi cation has been used. In order to compare the economic signifi cance dic Arctic region. Based on data gathered from the na- of metal deposits, the value of a deposit has been estimated. As the stand- tional geological institutions and some private compa- ards for calculating the sizes of the deposits vary between the countries, nies, there are almost 600 signifi cant metal ore deposits an “in situ” value for the deposits has been used. Th e method simply mul- tiplies the tonnage, grade and metal price, and does not consider all the in the Nordic Arctic Region, and at the beginning of potential obstacles to extracting the ore. Th e obtained “in situ” value for a deposit has then been used to classify the deposits into six size categories: “Very large”, “Large”, “Medium”, “Small”, “Showing” and “Potentially large”. 1 Included in this overview are base metals (which are non-precious metals such as lead, zinc, copper or nickel), ferrous metals (i.e., metals 3 Signifi cant mineral deposits displayed on the map include apatite, not containing any iron), precious metals (i.e., gems and gold) and special calcite, diamond, dolomite, graphite, olivine, quartz and talc, and the re- metals (i.e. rare earth elements, etc.). maining ones are grouped in the category “Other”.

NORDREGIO WORKING PAPER 2016:1 15 Map 3: Mineral mines and deposits in the Nordic Arctic

M ap 4: Industrial mineral mines and deposits in the Nordic Arctic

16 NORDREGIO WORKING PAPER 2016:1 3.2.3 Oil and gas blocks in the Nordic Arctic Gammur on the northern insular shelf of Iceland. Norway possesses large oil and gas reserves. Th e petro- Orkustofnun has granted three licences for explora- leum resources on the Norwegian continental shelf tion and production of hydrocarbons in the Dreki Area have been estimated at just over 14 billion standard cu- (Iceland National Energy Authority, 2015). bic metres of oil equivalent. Th is means that approximately 45% of the total expected (discovered and undiscovered) petroleum resources on the Norwegian 3.3 Impact assessments of large- shelf have so far been extracted (Norwegian Ministry scale industries of Petroleum and Energy, 2015). An impact assessment can be defi ned as: “… the pro- Since production started in 1971, oil and gas have cess of identifying the future consequences of a current been produced from a total of 96 fi elds on the Norwe- or proposed action” (iaia.org). Box 2 below presents a gian shelf. At the end of 2014, 78 fi elds were in produc- brief overview of the potential environmental, eco- tion. Overall production from these fi elds in 2014 was nomic and social impacts of large-scale activities to- about 217 million saleable standard cubic metres of oil gether with the potential policy responses that may be th equivalent (Sm³ oe). Th is makes Norway the 15 larg- relevant. Most commonly, impact assessments consist est oil producer in the world, and the 6th largest gas of an environmental and socio-economic assessment, producer (International energy and data analysis, 2015; and therefore these two will be described in more de- Norwegian Ministry of Petroleum and Energy, 2015). tail from a local development perspective. Exports of oil and gas have contributed signifi cantly to All EU members (and Greenland) are required to economic growth in Norway and to the fi nancing of comply with the Strategic Impact Assessment princi- the Norwegian welfare state. ples, while Norway and the Faroe Islands, as non-EU All the Nordic Arctic countries with Atlantic coast- members, are following less-restrictive conditions of lines (Norway, Greenland and Iceland, the Faroe Is- the Environmental and Social Impact Assessments lands) are conducting ongoing oil and gas exploration (EIA and SIA) (see Section 3.3.3). activities. For Norway, the intention is to continue regular production activities in the immediate future. Th e 3.3.1 Environmental impact assessment Norwegian Petroleum Directorate has estimated that Environmental impact assessment (EIA) is a common- around 37% of all remaining resources on the shelf are ly applied tool for identifying, evaluating and mitigat- undiscovered and that they are located in the following ing the potential environmental damage associated areas: 28% in the North Sea, 29% in the Norwegian Sea with a proposed project. Th e purpose of an EIA is to and 43% in the Barents Sea. ensure that decision makers consider environmental Map 5 shows oil and gas fi elds under active produc- changes caused by constructing and operating large- tion and those that received an exploration license in scale activities. the West Nordic region. No commercially viable dis- EIAs are part of the legislative framework in the coveries have been made in the Faroe Islands, Green- Nordic countries, meaning that companies cannot ob- land or Iceland, but expectations of fi nancial gain from tain an exploration license without conducting an EIA. oil extraction are high in all the countries. Since the Th e results of the EIA are to be taken into account fi rst exploration took place on the Faroese continental by the authorities in making their decision on whether shelf in 2001, nine wells have been drilled, and hydro- a development should proceed or not. carbons have been discovered but not in commercial Despite an EIA being a useful tool for project plan- quantities (Jardfeingi, 2015). ning, the extent to which the results of the EIA are tak- Greenland is believed to have substantial oil resourc- en into account in decision-making diff ers. When con- es. Oil and gas exploration is today being carried out in structing Alcoa production facilities in East Iceland, many parts of Greenland, and it has a long history of for example, the preliminary EIAs described a number oil production back to the 1970s. A number of licensing of problems that were diffi cult to manage (Rasmussen, rounds and open door procedures have been held. In 2013). Furthermore, several environmental and societal 2015, there were 18 exploration licenses in force, and 15 organizations pointed out a number of issues that they exploration wells have been drilled (Naalakkersuisut, believed were not given adequate consideration by Al- 2015). coa during the construction work (see Box 3) (ibid:12). Two areas on the Icelandic Continental Shelf are Th is example shows that in undertaking a project, it thought to have commercial-grade reserves of oil and can be a challenge to satisfy all interest groups. gas. Th ey are Dreki east and northeast of Iceland and

NORDREGIO WORKING PAPER 2016:1 17 Ma p 5: Oil and gas in the West Nordic region

18 NORDREGIO WORKING PAPER 2016:1 Box 2: Potential impacts of large-scale activi- anchored land claims of the indigenous Sami people ties and potential policy responses (Engström & Boluk, 2012). Th us, an SIA is a require- Environmental impacts ment in areas where large-scale industries will have an Changes in land, ecosystem, water and landscape impact on reindeer husbandry or other activities such Potential pollution of land and water as fi shery and hunting. Th e planning of new mines is Waste for many perceived as a threat to the traditional and Risk of accidents current livelihood of reindeer-herding Sami. Biodiversity, habitat, migratory paths, wildlife Greenland’s government has developed specifi c changes guidelines for SIAs where a social baseline study of the Confl ict with other activities current status of the community is included. Th e SIAs Social impacts can also serve as a tool for negotiations about impact benefi t agreements (IBA) where employment of local New job opportunities contractors is negotiated to be part of the large-scale Increased services provision activities. Such agreements ensure that local commu- Transfer of skills nities will benefi t from the large-scale activities taking Increased educational opportunities place and, in some cases, reduce unemployment rates Demographic change and help establish new companies providing services Health and well-being to the industrial operations. Change in other activities such as hunting pat- terns, reindeer herding, and tourism International companies have experienced pressure to perform beyond making profi ts and are expected to Economic impacts integrate social and environmental concerns in their Diversifi cation of supply business operations. Th ere are a number of require- Local employment and increased spending ments associated with justifying their operations and Investment by government and company documenting social and environmental performance; Revenues for public budget e.g., by supporting the local football team and provid- Increased local expenditure for public facilities ing information about their environmental protection Opportunity costs (i.e., the cost of not investing measures (Christiansen, 2013; Colclough, 2013; Jen- in infrastructure or competence development of the workforce in relation to large-scale activities). kins & Yakovleva, 2006). Boom and bust cycles In Australia, mining companies have in some cases established social partnerships by providing resources Potential policy responses to local government institutions, thereby obtaining a Identify regional drivers (e.g., catering companies) stake in future decision-making at the remote loca- to retain local value tions with regards to mining activity. Critiques have Review of sector-specifi c policies; e.g., energy supply, import of foreign labour, tax regulations of the been made that this is not socially sustainable because exported commodities (processed or unprocessed), the mining companies, aft er having extracted all the etc. resources, will stop providing local government sup- Environmental requirements as a follow-up to the port (Cheshire, 2010). Moreover, critiques of the indus- impact assessments try argue that international companies use the concept Funding of research aiming to mitigate possible of sustainability as a term covering economic develop- negative impacts ment and co-operation with communities without a thorough examination of negative environmental im- Source: (EU information sheet, 2014). pacts aft er project closure (Hansen et al. 2013; Heber 2005:253; Kirsch 2009). 3.3.2 Social impact assessment Social impact assessment (SIA) is a component of EIA 3.3.3 Strategic environmental impact assess- and focuses on how large-scale activities may aff ect ment population groups and settlements. In most countries, Strategic impact assessment (SIA), also known as stra- the requirement to perform an SIA is included in the tegic environmental assessment (SEA or just EIA in the legislation on EIAs. Th erefore, an SIA is usually carried EU terminology) has been discussed in the European out as part of, or in addition to, an EIA. Union since 1996 and was approved in 2001 by the EU Th e development of mines in the North Calotte re- Council by its Directive 2001/42EC. It became binding gion has confl icted with the historically and culturally for EU member countries in 2004. Th e SEA is offi cially defi ned as a process aimed at assessing the possible ef-

NORDREGIO WORKING PAPER 2016:1 19 Box 3. Brief overview: Alcoa in East Iceland EU when Denmark became a member in 1972, and left The decision to construct the Fjardaál aluminium the EU in 1985), but by committing to the Danish sign- smelter was made in 2002 by the government of ing of the EU protocol on a strategic EIA. Th e strategic Iceland, Landsvirkjun (the national power company) EIA approach is supposed to assist in implementing and Alcoa. the principles of sustainability, including: (1) provide Alcoa is the second largest producer of aluminium an opportunity for public involvement in policy for- in the world when all production facilities are included. mulation, (2) ensure systematic appraisal of choices, (3) The entire project constitutes the largest ever investment in Iceland. make it possible to analyse cumulative eff ects, (4) provide consideration to more diverse alternatives, (5) fa- The EIA revealed that the establishment of the hy- dropower plant would damage bird breeding grounds. cilitate more continuous communication between dif- The hydro power plant has created debate be- ferent actors and (6) deal with problems where system cause of the conﬂ ict between the construction of a boundaries may occur (Gjertsen et al., 2016). sustainable energy source and protection of a large area of wetland used for breeding by many bird spe- 3.3.4 Socio-economic involvement cies. Th e physical location of large-scale activities is important from a local development perspective in terms of fects of sector policy, policy planning, action programs co-operation between communities and companies, and other strategic documents and regulations upon and economic benefi ts including taxes and employ- the environment. Th is process analyses what direct or ment opportunities for communities. Below is an over- indirect changes to the environment could emerge and view of three types of locations that entail diff erent how they would aff ect the human environment, natu- types of regional involvement (Rasmussen & Koroleva, ral environment, biodiversity and climate, as well as 2003). landscape and material values. A strategic EIA pro- Enclave economies are characterized by mining ac- vides an opportunity, at an early stage of planning and tivities that are located in remote areas with a fl y-in– elaboration of strategic documents, to examine the fl y-out workforce. For mining activity taking place in possible eff ects of implementation of solutions includ- isolated locations, the main link to society oft en be- ed in the document, as well as to select the best alterna- comes the payment of taxes or fees and, if relevant, the tive (Gjertsen, Ivanova, & Rasmussen, 2016). recruitment of labour. If a mine has a certain capacity, Th e integration of the EU approaches to SIA into the the established mine-camp/city can continue to exist Nordic SEA frameworks has several implications. First, aft er mining activities have ceased. Th is was the case while the Nordic approach to EIA used to have a ten- with the Montagnais and Naskapi mines in Canada, dency towards limited community participant inter- which today are important centres for tourism. vention, the SIA has been more of a policy instrument Adjacent activities refer to situations where the op- also involving community participation, which has eration of a mine to some extent is based on co-oper- been an important issue in relation to SIA. Second, the ation with adjacent communities; e.g., food catering, assessment requires the involvement and collaboration mine workers spending leisure time in the community of the private sector, non-governmental organizations or offi ce administration of the mine located in the ad- (NGOs), citizens’ groups and other non-institutional jacent community. Examples of this type of location for organizations or individuals interested in, or aff ected large-scale activities are numerous and include Nanisi- by, the management of the specifi c activity. Th ird, the vik in Canada, Alcoa in East Iceland and Maamorilik, structures to achieve participation may, but do not al- Black Angel and Nalunaq Goldmine in Greenland. ways, include core steering groups of key stakeholders, Integrated activities occur when the mine creates the general forums that meet regularly, technical panels, majority of the employment in a community but where newsletters and various topic or issue groups as re- shops, schools, leisure activity unions and other indus- quired (Gjertsen et al., 2016). tries also exist in the community. Integrated mining An EU directive sets the minimum requirements for activities are not common, particularly for remotely carrying out strategic assessment of the eff ects on the located mineral deposits that have a short production environment, as well as defi nes a wide range of public life, because the community will not be able to survive plans and programmes to for which strategic assess- when mining production ceases. Th e former Green- ment is a compulsory demand. Th is aff ects the Nordic landic city of Qullissat is an example of a city where EU members Sweden, Finland and Denmark. Th ey, mineral production was integrated. Furthermore, in however, also infl uence Greenland, not as a member of the Norwegian city of Longyearbyen, coal mining used the EU (because Greenland followed Denmark into the to be an integrated activity, but today research is the

20 NORDREGIO WORKING PAPER 2016:1 primary activity of the city. to benefi t from the production further training was Th e most common type of large-scale activity in the necessary. In 2011, the Austurbrú–Fjardaal Industrial Nordic Arctic regions is the enclave economy and asso- School began facilitating education for adults through ciated activities. Th e more the large-scale activities are distance learning. Many of the enrolled students at integrated into the adjacent communities, the greater is Austurbrú are adults who are already part of the Ice- the dependence of these activities. landic workforce but who wish to enhance their skills and in the future carry out more advanced tasks. Th e 3.4 Connecting a local labour mar- curriculum is inspired by other education and training centres in Iceland, and the subjects available are ket to large-scale industries mainly in the areas of computer science, informatics, From a local development perspective, a central benefi t mathematics, physics, environmental examinations, of establishing large-scale activities is the potential for health and security, mechanical engineering and qual- job creation. It is, therefore, essential to integrate the ity assessments (Rasmussen & Jungsberg). local labour force. In order to benefi t from new jobs in Achieving alignment between employment, edu- emerging industrial sectors, it is also crucial to improve cational skills and regional development policy is be- the local workforce’s education and skills (OECD, coming more and more crucial (OECD, 2014). As the 2011c). Oft en, labour is imported as a fl y-in–fl y-out examples above illustrate, opportunities for the local workforce because the educational requirements do workforce to be included are to a large extent depend- not match the local workforce. ent on local upgrading of qualifi cations and skills. For An example of this can be found in Canada where many of the regions that have facilitated upgrading of the worker unions have been central in skill develop- qualifi cations and skills among the local habitants, the ment within the extractive industries. Th ey have, fur- result has been a positive increase in the size of the lo- thermore, been part of the recruitment processes by cal workforce. managing employment contracts and participating in defi ning the framework for the upgrading of qualifi ca- 3.4.1 Indirect employment opportunities tions and continuing training (Rasmussen, 2013). Indirect employment refers to the suppliers or support- Generally, it is of mutual benefi t to include as many ing activities of the large-scale activities. Indirect em- local employees as possible, given the additional costs ployment can thus be defi ned as jobs created by suppli- of a commuting workforce. While Nalunaq Goldmine ers in the provision of, for example, new equipment, A/S was operating in Southern Greenland, the munici- replacement of items, repair work, transport assistance, pality co-operated with the mining company in terms consultancy and auditor services, catering, etc. (Busi- of the recruitment of local employees. Additionally, ness Dictionary, 2015). basic mining courses were off ered to unemployed peo- Indirect employment can vary from approximately a ple to provide them with new skills and a possible job 1:1 ratio to 1:6 ratio between number of new workplaces at the goldmine. Overall, training was off ered to more in a mine and number of workplaces created elsewhere. people than there were jobs at the goldmine. Th is il- A number of factors infl uence the estimated socio-eco- lustrates the challenge of co-ordinating the upgrading nomic eff ects from a particular mine, but some of the of qualifi cations when the number of employees is to main principles are (Ejdemo & Söderholm, 2009): a large extent determined by external factors such as world market prices, supplier stability, and weather the location of the mine, conditions (Jungsberg, 2014). the scale of operations, and Possible synergies in relation to competence devel- the methodological and geographical scope of the opment and education exist within the contracting in- economic analysis. dustries where employees oft en work with, e.g., heavy machinery. Th erefore, it is relevant when investing in In Kiruna in Northern Sweden, approximately half of education to outline other employment opportunities the population are directly or indirectly employed by that could be relevant in case the large-scale industrial the iron ore mine (Avnish, 2015). Kiirunavaara Aktie activity is fully staff ed or in an employment down-turn. Bolag (LKAB) mining company was founded in 1890, Experiences from the Austurbrú–Fjardaal Indus- and today it is the world’s biggest underground iron ore trial School in Iceland illustrate how large-scale activi- mine. Additionally, indirect employment such as con- ties can generate new educational opportunities. When struction work is likely to be required, as underground Alcoa began production it became clear that in order production has expanded to the extent where it is nec-

NORDREGIO WORKING PAPER 2016:1 21 essary to plan a relocation of Kiruna city because of the in the mineral industry to ensure an improved com- mining-related cracks in the ground. petitiveness and value creation. Th e participants defi ne In East Iceland, six local companies merged to cre- diff erent projects where they can acquire knowledge ate Launafl , which supplies the large-scale industrial through courses, conferences and network events. production of Alcoa and Karahnjuka. Th e creation of Th rough the relations formed among the actors in the Launafl from six individual companies has made it extractive mineral industry in Norway, the objective is easier to provide services to industrial producers. Lau- to strengthen the industry in general. Th e members are nafl can be considered to be a one-stop-shop in terms actors from diff erent parts of the value chain. of providing services regardless of whether the need is Activities initiated by the members are as follows. for an electrician, a tradesman or a temporary contract worker. Development of the member’s company To support these large-scale industries, there is Development of more relevant education for the in- also the need for a knowledge-intensive labour-force dustry including engineering consultancies, technology ser- Co-operation among several research and compe- vices and heavy machinery maintenance. Knowledge- tence-development institutes domestically and abroad intensive industries contribute a number of services in Mapping of competence needs and market options the preparation and operation phases of large-scale ac- Internationalization through joint study trips and tivities. Experiences from Australia illustrate how their trade fairs mining technology services companies have helped to Working to improve visibility, communication and transform Australia’s mining industry towards also be- reputation ing a knowledge economy (Martinez-Fernandez, 2010). Consultancy and knowledge-based companies are pre- Th e mineral cluster in Northern Norway combines sent in many Nordic industry clusters. open knowledge environments with inter-organiza- tional activities. By organizing seminars for the cluster 3.4.2 The role of industry clusters members, the members access the overall knowledge Th e role of clusters is relevant because it illustrates why pool of global experiences. At the same time, experi- location matters in the global economy. Th e concept ences from Norway illustrate how face-to-face meet- emphasizes the importance of sharing knowledge and ings off er good opportunities for knowledge sharing experiences among actors in the same types of indus- between the companies (Nærings- og fi skerideparte- tries. Th e interactive element of co-production of mentet, 2014, p. 118). knowledge in an atmosphere of mutual trust stimulates individual organizations to grow and innovate (Isaks- 3.4.3 Transnational and cross-border co-opera- en & Karlsen, 2012. Th e establishment of clusters can tion be a result of the initiative of private and/or public ac- Cross-border co-operation in large-scale industries tors. Th us, clusters can occur as a network organized can be an enabling factor when initiating activities. Th e by the companies themselves, but in some cases, there co-operation can be related to infrastructure develop- are also public authorities involved in facilitating the ment, services and labour, as well as knowledge ex- knowledge exchange. change. Th e research previously done in the fi eld of Typically, regional clusters consist of companies, cross-border co-operation with a focus on large-scale research institutions and local authorities that form activities is limited. alliances based on co-operation as well as competi- Infrastructure development is a fundamental ne- tion. Th e companies compete in some areas, e.g., out- cessity for large-scale activities. In some cases this put markets, but co-operate in other ways, e.g., joint development requires cross-border co-operation. Th is training programs. Oft en, the most successful clusters was the case for the Kiruna mine, where Sweden and are characterized not only by strong linkages between Norway co-operated on establishing a railway between fi rms but also by co-operation with the public sector Kiruna and Narvik in 1902. Th e new railway made it (Th e Economic Competitiveness Group, 2015). possible to transport iron ore to Narvik, which has the CASE: Mineral cluster in Northern Norway nearest ice-free harbour. Th us, the railway enabled the Th e mineral cluster in Northern Norway is a net- mining production, and both Kiruna and Narvik de- work of actors engaged in mineral extraction, and the veloped from rural communities to industrial towns members are companies, suppliers, researchers, edu- (Berlina, Hörnström, & Diş, 2015a, p. 8). cational institutions, etc. Th ey facilitate co-operation Transnational co-operation with regard to services

22 NORDREGIO WORKING PAPER 2016:1 and labour has occurred for mining activities in Green- Box 4: Pajala mine in Northern Sweden land, where mining workers have been brought in from The expectations concerning economic growth and Iceland, Canada and the United Kingdom. However, it job opportunities in relation to large-scale activities can also be seen in the context of an imported fl y-in– are often very high. This was the case for the Pajala fl y-out labour force, which is oft en associated with loss- mine, where many people moved to the region to work, but after the closure approximately 1½ years es of workplaces for local population. In cases where later in 2014, the newcomers moved away again. the foreign labour force engage in competence development and co-operate with the local workers, there can Construction of the Pajala mine began in 2010 be an educational spillover eff ect if the management Production began in October 2012 provide “on the job training” and this is supplemented Low revenues meant the mine was operating at a with theory training at vocational schools. loss from the start Regarding knowledge exchange, several reports have The continued fall in iron ore prices made it impos- been produced with the aim of providing an overview sible to attract investors of processes and the impacts of large-scale activities Expectations had been high in terms of local (Rasmussen, 2013)—e.g., the Kearl oil sands near Wood employment Buff alo, in Alberta, Canada, and the Kárahnjúkar hy- The Pajala iron ore mine was expected to change dro project and the Alcoa aluminium smelter in East the negative population trend in the municipality. The Iceland (Robaey & Roo, 2011)—but more knowledge continuing decline in iron ore prices made it extremely could be gained by focusing on co-operation between difﬁ cult for the mine to raise the required ﬁ nancing, countries in terms of factors that infl uence start-up and thus the mine made losses from the start of pro- production, the workforce and education, as well as so- duction in 2012. The local community suffered from the decline in cial and environmental impacts. iron ore production, and many initiatives in Pajala city were terminated. The local population is declining, 3.5 The global market’s connec- with approximately tion to large-scale industries ing environment had changed, and the economic ben- Th e dependence on international fi nancing is particu- efi ts from employment and catering opportunities to larly distinct in large-scale industries. Huge capital as- the mine disappeared (Richards, 2009). sets are needed during the prospecting and construc- Examples from Finland illustrate how regional qual- tion phases of large-scale activities. Furthermore, ifi cations can be exported as a service. Finnish military investments from the municipalities are common in fl eets are ice reinforced, and the crews are skilled in terms of infrastructure and supporting the inclusion of navigating in ice conditions, and this has led to Finn- a local workforce. Investments in large-scale activities ish Arctic navigation skills being exported to North are sensitive to world market price fl uctuations. Th e America. When activities increase in the extractive in- majority of the companies engaged in large-scale industry in Northern Finland, a number of engineering dustries are highly dependent on investors exerting fi rms in Finland assist by providing maritime off shore pressure to produce a profi t in the short term by selling technology and solutions to winter navigation prob- minerals in the global market while prices are high. lems (Government of Finland, 2013; Hätönen, 2012). Th is can also mean that some mining projects only ex- Th e Nordic countries also market themselves to at- ist for a very short period, which can have important tract global investors. Th e government of Greenland consequences from a local development perspective. has participated in trade fairs to promote the oppor- One recent example is the Pajala iron ore mine, where tunities in Greenland’s extractive minerals industry. high expectations led to disappointment for the people In the last 10 years or so, substantial interest has been in the region (see Box 4). shown in mineral exploration in Greenland (Braden, Th e potential benefi ts of large-scale industries are 2010; Nuttall, 2013; Research Markets, 2012). Current- connected to their activities, and therefore the ben- ly, the companies investing in exploration in Greenland efi ts are mainly short term. Th is is also the case for are existing mining companies, particularly from Aus- the Nunavut region in Canada, where studies show tralia and Canada. Despite the large number of pros- that according to government offi cials and community pecting licenses, not many new mines have come into members, the two lead–zinc mines Polaris and Nanisi- operation. Th is illustrates the gap between exploration vik mainly had positive short-term impacts. When the fi nancing and the commencement of mine operations. mines closed aft er 20 years of operation, the surround-

NORDREGIO WORKING PAPER 2016:1 23 3.5.1 Large-scale industries and sustainable re- Socio-economic impact, labour market and local gional development business development Managing large-scale activities in the Arctic regions How can the existing labour market be connected to can be a challenge because of the harsh cold climate the large-scale activities? and in many cases the lack of basic infrastructure and How does the regional education and training sys- power. Expansive large-scale activities can cause severe tem need to develop in order to facilitate local employ- damage in cases where sustainability is not taken into ment? consideration. Th ree aspects of sustainability are rele- How can the fi rms running the large-scale activities vant in the Nordic case: environmental, social and eco- co-operate with local authorities to facilitate growth of nomic issues contribute to a holistic sustainability of local suppliers, consultants and subcontractors? industrial activities (Nordisk Ministerråd, 2015). What is the potential for co-operation between Because large-scale industries to a large extent are community representatives and regional and national driven by international investments, volatility within authorities to facilitate local involvement in the large- these industries is extremely high. Th is constitutes scale activities? a challenge for municipalities and regional planners when their investments in infrastructure, housing and Regional economic stability education become obsolete in cases where the large- How can the risks of global market fl uctuations be scale activities have to close down. Th erefore, ensur- taken into account? ing environmental and social sustainability could also How can economic profi ts be supported without benefi t from providing support to management in cri- compromising environmental and social sustainabili- sis situations involving signifi cant market fl uctuations ty? or other economic challenges. Which economic factors are the most important for Consideration for developing a sustainable approach to the large-scale activities to become ongoing and to pro- large-scale activities in the Arctic regions could there- vide economic stability and employment in the region? fore benefi t from a structured review focusing on these How can strengthened cross-border collaboration three aspects. facilitate sustainable large-scale industries, and what should be the main focus of the collaboration? Environmental impacts How can construction and operation of large-scale activities be adjusted in order to protect the surrounding landscape and environment? What obstacles could exist for the environmental protection? Which landscape changes are likely to take place because of the large-scale activities?

24 NORDREGIO WORKING PAPER 2016:1 4. Bioeconomy

Corresponding author: Anna Berlina

Th is chapter describes the bioeconomy in the Nordic several environmental and socio-economic challenges, Arctic by giving an overview of the development of the including food security, fossil fuel dependence and main bioeconomy sectors, including forestry, fi sheries, climate change. Th e bioeconomy is increasingly be- aquaculture and related activities. It describes not only ing promoted for its potential to contribute to rural traditional activities, such as reindeer husbandry, but development by providing employment, contribution also new and emerging bioeconomic opportunities, to business growth and security of energy supply, and which have a greater focus on research and innovation. societal impacts (see Box 5). Th is chapter contains some concrete examples of the At the core of the bioeconomy is sustainable utiliza- bioeconomic activities in the Nordic Arctic and in oth- tion of bio-based raw materials and capturing the max- er northern Nordic regions with similar conditions. imum value from the exploitation of the bioresources Th e chapter is divided into several sections. It begins by by increasing recovery, upcycling and recycling instead introducing the bioeconomy concept and putting it of increasing the consumption of raw materials. into a Nordic Arctic context. Th e chapter continues Chemicals and medicines are examples of products with an overview of the Nordic Arctic bioeconomy, with high added value and the lowest volume of bio- which makes use of marine resources, followed by biomass. Transport fuels and bioenergy are examples of economic activities on land, including forestry, agri- products with the lowest added value and highest vol- culture and reindeer husbandry. Finally, this chapter umes of biomass (Figure 1). Th e transition to the bio- sheds light on the opportunities and challenges in the economy requires a holistic and innovative approach, transition to a bioeconomy in the Nordic Arctic con- a combination of diff erent technologies, and co-oper- text. ation across sectors, including chemistry, technology, construction, energy and forestry. 4.1 What is a bioeconomy? Th e bioeconomy is concerned with both primary and secondary activities. Other sectors that provide With the growing realization of resource depletion and services to bioeconomy activities may also be linked climate change, sustainable utilization of resources and to the bioeconomy (Stefánsdóttir, 2014). Th e bioecon- reducing the use of fossil resources are becoming in- omy includes all industries and economic sectors that creasingly important for society as a whole. Th e bioec- produce, manage and otherwise exploit biological re- onomy has been attracting increasing political, public, sources (Kitchen & Lawrence, 2011). According to the business and scientifi c attention. Th is is exemplifi ed by Nordic Innovation Report (Rönnlund et al., 2014), the the OECD’s policy agenda Th e Bioeconomy to 2030 (2009) and the Strategy for Innovating for Sustainable Figure 1 High and low value added products in the bioeconomy Growth: A Bioeconomy for Europe (European Com- mission, 2012b). Th e EU has chosen the bioeconomy as a key area in its new Horizon 2020 programme (the EU Framework Programme for Research & Innovation). Th ere is no single defi nition of the bioeconomy. In a broad interpretation, a bioeconomy can be defi ned as an economy where the basic building blocks for materials, chemicals and energy are derived from renewable biological resources, such as forestry, agricultural and marine biomass, organic waste, etc. (Lindberg et al., 2015). Th rough production and conversion of renewable biological resources into food, feed, bio-based products and bioenergy, the bioeconomy contributes to tackling

NORDREGIO WORKING PAPER 2016:1 25 sectors that can be assumed to belong entirely to the sustainable jobs and growth within the marine bioec- bioeconomy are: onomy are aquaculture, maritime, coastal and cruise tourism, marine biotechnology, ocean energy and sea- agriculture, bed mining (European Commission, 2012a). fi sheries and aquaculture, forest and forestry industry, 4.1.1 Sustainability of the bioeconomy food industry, and Th e bioeconomy has a potential to contribute to eco- bioenergy and biofuels. nomically more robust and sustainable local communities and rural areas, as well as to maintain existing Th ere are also several additional industries that can be jobs and to create new ones (European Commission, classifi ed as bioeconomy-associated sectors (Rönnlund 2012; Nita et al., 2013). Despite clear links between the et al., 2014): bioeconomy and sustainability, the bioeconomy is not always sustainable. chemicals and plastic industry (e.g., bio-based It is important to keep in mind that although bio- chemicals and plastics that substitute for petroleum- mass is a renewable resource, it is also a fi nite resource based bulk chemicals), that is used as a raw material in a range of diff erent building and construction industry (e.g., bio-based products. Many national strategies and policies aiming materials used in construction of buildings, such as to increase the size of the bioeconomy oft en neglect to wood products, bio-based insulation materials, bio- consider the sustainable use of biomass, potential land based adhesives, paints), use confl icts and the global perspective (Kemp Stefáns- pharmaceutical industry (e.g., bio-based com- dóttir 2014). pounds that replace petroleum-based compounds), Bioeconomy development can entail confl icts be- textile industry (e.g., using bio-based raw materials, cause of competing claims on limited resources such such as wool, fl ax and hemp, but also cellulose-based as land and water. To ensure sustainability of the bio- ones), economy, a variety of sometimes competing interests tourism and other services (e.g., recreational activi- have to be reconciled, in diff erent ways to suit diff erent ty services, food services related to ecotourism), and situations (European Commission, 2013a). Confl icts wastewater treatment (e.g., recycling and utilization and competition can emerge between multi-use inter- of the bio-based materials in the wastewater and waste ests (e.g., reindeer husbandry vs intensifi ed forestry streams for heat and electricity production). activities and tourism) and between alternative uses of natural resources (e.g., land use for food vs fuel, bio- A greater focus on research and innovation is at the mass for chemical industry vs for biofuels). Th is may core of the bioeconomy. Th ere are a number of oppor- result in a negative impact on the environment, people tunities for smarter use of bio-based raw materials for and rural economies, and may have social and ethical producing new and enhanced value-added products within a number of diff erent sectors of society. Box 5. Contribution of local bioenergy pro- In recent years, the concept of the “blue” bioecon- duction to regional development (Lindblom & omy has developed, as distinct from the land-based Rasmussen 2008). bioeconomy, to emphasize the contribution of marine Social aspects of bioenergy development relate to resources to the bioeconomy. Th e blue bioeconomy an increased standard of living (household income promotes the optimized utilization of already exploited through better employment opportunities, as well as marine resources and the innovative use of underuti- cultural values and health) and increased social cohe- lized resources and residual biomass, as well as innova- sion (regional development and rural diversiﬁ cation). The macroeconomic effects of bioenergy systems tion across value chains, such as fi sheries and tourism relate to contributions to the main elements of regional (Norden, 2015). As in the case of the land-based bio- development, such as economic growth through busi- economy, transformation towards a blue bioeconomy ness expansion, employment, economic effects on calls for a change of mindset in the entire industry. It GDP and security of energy supply. will, among other things, require signifi cant changes The supply side effects result in improvements in to the fi shing fl eet, which is today highly dependent on the competitive position of the region, including attractiveness to inward investment. fossil fuel, and processing facilities. According to the The demand side effects refer to the extent and communication from the Commission: Blue Growth direction of capital ﬂ ows on employment and regional opportunities for marine and maritime sustainable income. growth, the sectors that have a substantial potential for

26 NORDREGIO WORKING PAPER 2016:1 implications. resource-effi cient economy, bioeconomy development Confl icts between the diff erent uses of forestry re- also opens up new opportunities for the Nordic Arctic sources in the peripheral areas may also appear in con- region (NKJ NordForsk, 2013). nection with tourism and second-home owners. As tourists and second-home owners in the Nordic Arctic 4.2 Bioeconomy in the Nordic region are mainly attracted by the pristine nature, increased deforestation for energy purposes could lead to Arctic: current status and future a loss in the recreational value of forest areas, which potential could aff ect the tourism industry and the economic ac- Th e diff erent bioeconomy sectors in the Nordic Arctic tivities dependent on the servicing of second homes. are of varying importance. Because of the long coast- Increased renewable energy production—for instance, line and access to the sea, the marine sector naturally through the expansion of the land area used for energy plays a crucial role in the bioeconomies of Iceland, crops—may be met with objections from these groups Greenland, the Faroe Islands and the Arctic regions of (Lindblom & Rasmussen, 2008). Norway. Th ere is a high demand for Arctic seafood Finding trade-off s between the bioeconomy sectors, particularly because of the clean Arctic waters and the economic activities and nature, as well as developing high quality of the catch. Th e sub-Arctic marine renew approaches to multifunctional land uses, presents gions host some of the world’s most productive fi sher- opportunities in the bioeconomy. Local food produc- ies. In addition to fi sheries and aquaculture, the Arctic tion, for instance, can have a positive eff ect on tour- blue economy includes a variety of activities, including ism, while the agricultural residues and manures can whaling in Norway, Greenland and Iceland, and seal be used for bioenergy production. hunting in Norway and Greenland (ACCESS, 2014). In a study by Lindblom & Rasmussen (2008), the so- Th e potential for a land-based bioeconomy (especial- cio-economic benefi ts associated with local bioenergy ly forestry) is higher in the Arctic areas of Sweden and production and its contribution to regional develop- Finland. Other traditional subsistence activities, such ment were presented, which can also apply to the bio- as reindeer herding, gathering and family/small-scale economy in general (see Box 5). resource production continue to play an important role in some of the regions. Although the indigenous com- 4.1.2 Policy support for the bioeconomy in the munities no longer depend entirely on these activities, Nordic countries they provide an important contribution to economic Being rich in natural resources, the Nordic Arctic re- well-being and may provide additional opportunities gion already has substantial experience in some of the in the bioeconomy. bioeconomy sectors, forestry and fi sheries in particu- Th is chapter provides an overview of the main bio- lar. Today, the bioeconomy has become an important economic activities and future potential of the Nordic component of regional, national and Nordic policy dis- Arctic. It begins with an overview of marine-related ac- course in the Nordic countries. For instance, the bioec- tivities and continues with the land-based bioeconomy. onomy was chosen as one of the main focus areas of the Icelandic chairmanship of the Nordic Council of Min- isters (NCM) in 2014. Th e circular bioeconomy based 4.3 Blue bioeconomy on marine resources was chosen as one of the themes 4.3.1 Fisheries for the Danish Presidency of the NCM in 2015. Th e Currently, the marine-based bioeconomy mainly in- Faroe Islands are chairing the Nordic fi sheries and aq- volves the food industry in the coastal areas of the Nor- uaculture co-operation in 2015 under the Danish Pres- dic Arctic. Today, fi sheries are the most important ex- idency (Norden, 2015). port sector in the West Nordic region. Th e main In 2014, the bioeconomy of the West Nordic region markets for Arctic seafood products are Japan, South was studied extensively by Matís in Iceland (Smáradót- Korea, the US and Europe (Arctic Catch, 2015). Ex- tir, Johannessen, & Paulsen, 2014). In 2014, a few oth- ports of fi sh and other marine products account for er important developments took place in the Nordic about 93% of total exports in Greenland, about 91% in countries; namely, Finland launched a national bio- the Faroe Islands, about 37% in Iceland and about 34% economy strategy, and Denmark established a Bioec- in Nordland County in Norway (Nordland County onomy Panel Denmark, designed to have an impact Council, 2014; Smáradóttir et al., 2014; SSB, 2014). Th e on the national bioeconomy policy (Nordregio, 2014). fi sheries sector has a greater impact on the economy Th ese initiatives indicate that with increased focus on a than the national accounts indicate when all multiplier transition from a fossil-fuel-based economy to a more

NORDREGIO WORKING PAPER 2016:1 27 eff ects are considered. Th ere are several industries that ing guts and entrails as a raw material for the chemical are connected indirectly to the fi shing sector that pro- industry, for instance, it is possible to create a higher vide the sector with resources or further process its value per unit of biomass. Other examples of increas- production (Iceland Ocean Cluster, 2011). ing the value of products include refi ning fi sh oil and Map 6 shows that fi sheries play an important role in meal products, which have undergone signifi cant de- employment in the West Nordic region. In some parts velopment in recent decades (Nordic Marine Th ink of the northernmost regions of Norway and some areas Tank, 2014). Such development has already taken place in the Faroe Islands and Greenland, the fi shing sector in the Nordic Arctic, and some examples are given in accounts for more than 15% of jobs. Th e northernmost Subsection 4.3.4. county in Norway, Finnmark, had the highest number Th ere is substantial innovation in fi sheries in Ice- of registered fi shermen in Norway in 2013 (Norwegian land today, but much of it has taken place not in the Directorate of Fisheries, 2014). In some of the coastal fi shing towns but elsewhere, mostly close to Reykjavík. communities in Iceland, the importance of fi sheries in While cod landings have fallen by 60% over the past 25 employment is close to that of the Faroe Islands. In the years in Iceland, the total export value of cod products Westfj ords region, for instance, the largest number of has tripled over the same period. Th is is attributable to jobs is within the food industry and almost exclusively increased raw material utilization, product diversifi ca- in fi sh processing within that sector (Lindberg et al., tion and innovation (Lindberg et al., 2015). In Green- 2015). Traditionally, the fi sheries sector has provided land, on the contrary, the fi shing industry generates employment for local people, but over the years, it has large quantities of waste, of which only 20% is current- become a large-scale industry with a large share of for- ly utilized (Smáradóttir et al., 2014). eign workers. Th e fi sheries sector in the Nordic Arctic has been Striving to create higher value products is among the evolving from traditional fi shing and fi sh processing objectives of the bioeconomy. Today, a large amount of practised locally into a large-scale industry involving a marine biomass is used in the fi sh oil and meal indus- variety of fi elds such as technology, logistics and mar- tries, which produce fairly low-value products. By us- keting (Keskitalo, 2013).

Map 6: Employment in ﬁ sheries in 2013

28 NORDREGIO WORKING PAPER 2016:1 With regard to the bioeconomy, the Nordic Arctic Box 6. Small innovative business examples region could capitalize on further development of the Harvesting seaweed in Iceland sector, particularly of high value-added food and non- Seaweed Iceland is a small family-owned business food products from the marine sector. It has a strong based in Grindavík. Sustainably harvested seaweed is knowledge base acquired through traditional fi shing sold as a food ingredient in selected specialty stores and fi sh-processing activities, which would facilitate and online. The electricity for the seaweed drying such development (OECD, 2011b). Th ere is therefore a process originates from a geothermal plant (Seaweed substantial potential for increasing the degree of local Iceland, 2015). processing, linked to the development of enhanced and Diving for sea urchins in Nordskot, Northern new products from fi sheries, which would have a posi- Norway tive eff ect on employment and the economy. Diving for urchins (a shellﬁ sh used as a culinary ingredient) in the icy fjord has become a full-time job 4.3.2 Aquaculture and a good source of income for Roderick Sloan, a Fish farming is an important complement to the tradi- Scotsman based near Bodø, Norway. Sea urchins are not a traditional catch in Northern Norway, and this is tional fi shing activities in the Nordic Arctic region. an inspiring example of a niche business. Roderick Small coastal communities in Norway and the Faroe Sloan supplies urchins to dozens of the most exclusive Islands are especially well suited for fi sh farming be- restaurants in Europe, including Noma in Copenha- cause of the clean water, remote location, comparative- gen and the 12-seat Fäviken in the wilds of Northern ly high sea temperatures and sheltered locations within Sweden (Jenkins, 2013). the long and deep fj ords. Th ese conditions allow low- cost technology to be employed (ACCESS, 2014). Nordic Arctic region has good opportunities for sea- Norway and the Faroe Islands were early adopters of weed cultivation and processing, and also because of marine aquaculture and during the past 10 years have its strong competence within aquaculture, for off shore more than doubled their fi sh farm production. Th ere construction and biotechnology. Among the main Eu- are also good natural environment preconditions for ropean producers today are Norway and Iceland. On a aquaculture in Iceland, especially in the Westfj ords global scale, their share is, however, less than 1%. and East Iceland regions (Smáradóttir et al., 2014). An example of seaweed production on an industrial During the last two decades, the industry has devel- scale is the Ocean Rainforest company in the Faroe Is- oped from small, locally based family businesses to a lands. Th e company has been producing marine bio- modern, capital-intensive, globalized industry domi- mass from macroalgae in open ocean cultivation facili- nated by large corporations (Nordland County Coun- ties since 2007 (Ocean Rainforest, 2015). cil, 2014). Seaweed production has also taken place on a small Among the current challenges associated with fi sh scale (see Box 6) (Gregersen, 2015; SINTEF Fisheries farming is its large energy consumption in producing and Aquaculture, 2014). fodder for aquaculture. To address this challenge, at- Although cultivation and harvesting are being prac- tempts are being made to develop new types of fodder tised in the Nordic Arctic region, processing of mac- that are much more energy effi cient, and land-based roalgae into high value-added products has not yet been proteins are replacing fi sh that could otherwise be used developed to an industrial scale. Th is provides unique for human consumption (GREECO, 2014). commercial opportunities for the region. For future growth of the industry, there is a need for developing 4.3.3 Seaweed appropriate cost-eff ective pre-processing technologies Seaweed (macroalgae) farming has been practised for but also political action on spatial planning and licens- several decades in Canada, Ireland and other European ing, as well as investment support (Gregersen, 2015; countries for producing starch and other edible prod- Smáradóttir et al., 2014). ucts. Nordic countries have been rather slow in exploit- ing this biomass resource because of their rich fi sh 4.3.4 Biotechnology related to marine products stocks but are now catching up to other countries with Th e application of biotechnology enables an increase in longer traditions of seaweed production. the value of biomass production or the production of Seaweed can be used as biorefi nery feedstock for higher valued products from biomass, including waste sustainable production of food, feed, fertilizers, biofuel streams and underutilized biomass, such as macroal- and electricity. Macroalgae are mainly harvested, but gae. Th e main areas of application of marine biotech- they can also be farmed. Cultivation of macroalgae is nology today are in the health sector (nutritional sup- attractive for third-generation biofuel production. Th e plements, vitamins, etc.). Biotechnology is also

NORDREGIO WORKING PAPER 2016:1 29 increasingly being applied to improve aquaculture pro- forestry industry and bioenergy production (Lindholt, duction and energy production from photosyntheti- 2008). Map 7 shows that Northern Finland and Sweden cally generated biomass, as well as in the production of possess large forestry resources. Th e forestry sector’s enzymes and proteins. share of regional gross value added (GVA) in the Arctic In Northern Norway, an increasing number of com- regions of Sweden and Finland is about 4–6%. Forestry panies and R&D organizations are involved in the pro- accounts for about 6–9% of regional GVA in Kainuu duction of enzymes, bioactive compounds, biochemi- region and about 1.5–3% in the North Ostrobothnia cals and special products (oils, proteins, DNA, etc.) region in Northern Finland (Map 8). Th e largest num- from Arctic marine resources for the nutrients, food, ber of jobs is in forestry and logging, as well as manu- cosmetics, medicines and biotechnology markets. facturing of wood and wood products (Norrbotten, Th ere are over 30 enterprises engaged in these activities Västernorrland and Northern Ostrobothnia) and in Tromsø city alone that are members of the BioTech manufacturing of paper and paper products (Lapland North marine biotechnology cluster. 4 and Norrbotten) (Map 8).Th e forestry and agriculture Iceland has been involved in biotechnological R&D sector in the Kainuu region in Northern Finland pro- since the 1980s. In recent years, creating greater val- vides employment to about 11% of males in Kainuu ue for existing resources such as fi sh by-products has (2009), which is twice the national average (Regional been an important R&D priority in Iceland. A num- Council of Kainuu, 2014). ber of small companies that utilize genetic and bio Th e forestry and wood processing industries have resources have been established within the cosmetics, been the corner-stones of the economies in these re- folk medicine and food supplements industries (Lind- gions for a long time (Lindholt, 2008). Th e main for- berg et al., 2015). Among the interesting examples of estry industries are sawmills and pulp and paper. Th e recent biotechnological inventions from Iceland is the paper industry, however, has been in decline in Finland production of fi sh skin transplants for skin and tissue and Sweden, and many paper mills in the region have repair used for medical purposes. According to Iceland been closed. To help further advance growth in the Ocean Cluster (2013), the companies working with by- wood industry, the application of modern technologies products and/or biotechnology related to marine prod- and increased co-operation between companies and ucts in Iceland had a turn-over of about EUR 150 mil- research organizations are crucial. lion in 2012, which is 17% higher than in 2011. As noted above, forestry has a strong economic and Iceland has important preconditions for building a historical importance in these regions. In Northern dynamic biotechnology sector because of restricted ac- Sweden, forest owners include the state, large multina- cess to human capital and natural resources (Lindberg tional corporations and a number of small-scale private & Teräs, 2014). According to Iceland Ocean Cluster owners. Th ese actors own land, while the practitioners (2015), the biotech industry in Iceland is an attractive of reindeer husbandry possess parallel user rights. In sector for foreign investors. At the same time, there are Northern Finland, the forestry companies also have still a number of barriers to developing the biotech in- specifi c benefi ts compared with other land uses, such dustries in Iceland that need to be overcome, includ- as reindeer husbandry. Forestry has been historically ing the lack of specialized marketing support, lack of supported here as a favoured form of land use because support regarding registration of products in foreign of its role as an employer. With a decline in employ- markets and an unclear regulatory system. Th e emer- ment in the forestry sector over time from increased gence of new companies as well as increased foreign use of technology, discussions on how to develop other and domestic investment in biotech are very important land uses that also provide local income, such as tour- for giving the biotech industry a boost (Lindberg & ism, have emerged (Keskitalo, 2013). Teräs, 2014). Northern Finland and Sweden possess an array of expertise, knowledge and research on wood process- 4.4 Land-based bioeconomy ing and wood products and other aspects of using forestry resources. Th e University of Oulu, North- 4.4.1 Forestry ern Ostrobothnia region, has substantial expertise in Many people’s livelihoods depend on forests, which wood-related research. It has been an important actor have multiple functions in Northern Finland and Swe- for accelerating the growth of the wood and forestry den, from gathering, game hunting and tourism to the industries in the Northern Ostrobothnia and Kainuu regions (Kainuun Etu, 2010). Maintaining and fur- 4 Read more about the BioTech North cluster and its member compa- ther developing this expertise creates opportunities, nies at http://biotechnorth.no/about-us. in particular for small- and medium-sized enterprises

30 NORDREGIO WORKING PAPER 2016:1 Map 7: Forestry land in the North Calotte region

(SMEs) (Prime Minister’s Offi ce, 2013). Th e opportuni- dition of using wood as a fuel source for heating, which ties for SMEs are related to fi nding new business niches accelerated in response to the oil crisis in the early and clients (OECD, 2012). 1970s. Over the past decade, forestry growth has acceler- District heating systems represent a large market for ated in the Arctic Finland and Sweden, as in the rest of biomass in Sweden and Finland. Local utilities are in Europe (Th e Finnish forest industries, 2010). Th is al- many cases fed with locally collected forestry residues lows for wood use to be increased in the future. It is provided by small forest owners. Local utilities provide emphasized in Finland’s Strategy for the Arctic Region cheap energy for rural industries and supply heat to the (2013) that “greater local demand needs to be created municipalities, which oft en results in a reduction of the and new uses found for the growing volumes of tim- cost of heating for locals. ber.” Th e strategy promotes improving the competi- As shown on Map 10 and Map 11, there is substan- tiveness and profi tability of forestry while at the same tial potential for bioenergy production from forestry time stressing the importance of giving consideration residues, including stumps, in Finland and Sweden. to other forms of land use and the reconciliation of Forestry residues such as branches and tops are a cheap the confl icting needs (Prime Minister’s Offi ce, 2013). energy source but are expensive to collect and trans- From producing raw materials in the past, the future port. Th erefore, the best alternative is to use them lo- possibilities involve the processing of wood to create cally. fi nished products and developing new biomass-based Local energy production has a positive eff ect on products, materials, services and forms of energy. rural and regional development. Th e expansion of the bioenergy market, specifi cally through fi rst- and 4.4.2 Bioenergy production second-generation biofuels, is viewed as a means of Th e energy sector in the Arctic Sweden and Finland stimulating regional economic growth and providing uses large quantities of local wood fuels, peat and waste additional income for farmers and forest owners (Lind- products from the forestry industry for heat and elec- blom & Rasmussen, 2008). According to Lapland’s En- tricity production (Map 9) (Aresta et al., 2012; Berg- ergy Strategy (Finland), the use of forestry chips and ström, Matisons, & Eds, 2014). Th is refl ects a long tra- peat for local energy production could create a direct

NORDREGIO WORKING PAPER 2016:1 31 M ap 8: Share of the forest sector in regional GVA; Employment in the forest sector in Northern Finland, Norway and Sweden

Ma p 9; Solid wood fuel consumption in the North Calotte region

32 NORDREGIO WORKING PAPER 2016:1 Ma p 10: Bioenergy potential from forestry residues including stumps in the North Calotte region

increase in annual employment fi gures by 1000 man- tion of transport fuels from renewable sources. years in relation to the building of a new biofuelled Biogas is likely to play an important role as one of combined heat and power (CHP) plant in the city of the energy solutions that contribute to replacing fossil Rovaniemi and a biodiesel refi nery in the city of Kemi fuels in the transport sector (Bernström & Burgman, (Regional Council of Lapland, 2008a). 2014). Biogas production is more common and has Th ere is an increasing demand for local energy pro- greater potential in the southern regions of the Nordic duction in connection with the development of new countries. Th is can be explained by the availability of mining areas, and bioenergy can play an important more substrate for biogas production in areas with a role in this. Th e Talvivaara mining area in the Kainuu higher level of livestock farming. region is a good example of the growing demand for Map 12 shows a regional overview of the labour CHP (Kainuun Etu, 2010). market eff ects of bioenergy production in the Nordic Arctic. Th e map shows that among diff erent types of 4.4.3 Biofuels bioenergy, the largest number of full-time jobs is with- Long distances and sparse settlement in the Arctic in biogas production from manure and straw. It can make the region highly vehicle dependent. As a conse- be seen from the map that in Northern Ostrobothnia quence, the region has a high consumption of vehicle County in Finland the labour market eff ects of bioen- fuel and among the longest average distances travelled ergy production are particularly high and the bioener- per person. gy production is diverse, including biogas, bioethanol While renewable energy accounts for a signifi cant from grain and bioethanol from straw. share of energy consumption in Sweden and Finland, In Northern Sweden and Finland, biomass use in the transport sector is the main challenge. Th e trans- the transport sector is promoted through several ini- port sector is lagging behind in terms of renewable fuel tiatives, of which the most visible and well known is use and is still highly dependent on fossil fuels. In or- the Green Highway (GH). GH is a cross-border initia- der to reach the targets of the EU’s Renewable Energy tive aimed at reducing the dependence on fossil fuels Directive, there is an increased demand for the produc- in transportation and boosting investments in green

NORDREGIO WORKING PAPER 2016:1 33 M ap 11: Energy potential from forestry residues in the North Calotte region

technology. Th e GH transport corridor is 450 km long populated counties in central Sweden and Norway. Th e and connects Östersund and Sundsvall in Sweden and highway is specifi cally designed for “green vehicles” Trondheim in Norway (Figure 3). Although GH is be- with a number of charging stations for electric cars and yond the focus of this study geographically, it is still a renewable fuels along the route (OECD, 2012). Th e pro- relevant example, as it bypasses peripheral and sparsely ject is driven by the municipality of Östersund together

Figure 2: Green Highway transport corridor

Source: www.greenhighway.nu/

34 NORDREGIO WORKING PAPER 2016:1 Map 12: Full-time jobs in bioenergy production by type in the North Calotte region

with Sundsvall and Trondheim. Energy companies and biodiesel from the pulp mill waste product, tall oil. Th e research organizations are also among the partners. In company is located in Piteå, in Arctic Sweden, and is a the next phase of the project (2015–2018), the focus will good example of developing innovative green technol- be on liquefi ed biogas (LBG). ogy and creating new jobs. Th e raw material used in Cross-border co-operation is central for the devel- a biorefi nery comes from Swedish forests and forestry opment of sustainable and integrated transport solu- industries. Th e cost of investment was around SEK 350 tions, and the GH initiative is a good example of such million, and the construction was completed in 2010. co-operation. Th e GH contributes to improved infra- Th e production of rosin from tall oil will start in 2015 structure, reduction of emissions and dependence on in co-operation with the chemical company Lawter. fossil fuels in both Sweden and Norway (North Swe- Increased use of tall diesel is in the national inter- den, 2014). est, because it contributes to the objective of having a Th e BioFuel Region is a network that brings to- fossil-free vehicle fl eet by 2030 (Svebio, 2013). Th e next gether actors from academia and the business sector subsection provides a more detailed overview of the bi- to promote increased biogas production and use in the orefi ning activities in the Nordic Arctic. transport sector in Norrbotten, Västerbotten, Jämt- land and Västernorrland counties (BioFuel Region, 4.4.4. Bioreﬁ neries 2015). Th e network is involved in several projects.5 Refi ning of biomass, or biorefi ning, can be defi ned as One of them is aimed at accelerating biomethane and the processing of biomass raw material into more use- LNG development in the North of Sweden (BioGaC), ful and valuable forms. Th is processing is diff erent which is one of the EU’s TEN-T projects. During the from conventional biomass processing undertaken by project, two new compressed natural gas (CNG) fi lling the agricultural, food or forestry industries. It focuses stations will be built in Northern Sweden (European on value chains containing steps involving the decom- Commission, 2013b). position of the raw materials at a chemical level, and SunPine is the fi rst company in the world to extract not on value chains containing only mechanical processing (Joelsson & Tuuttila, 2012; Lindblom & Ras- mussen, 2008). 5 For details, see: http://biofuelregion.se/.

NORDREGIO WORKING PAPER 2016:1 35 Today, the Nordic countries are increasingly focus- Box 8. Bio4Energy research platform ing on upgrading bioresources to produce, for exam- Umeå University in Västerbotten is the lead partner ple, feed and food ingredients, biomaterials and biofuel in the Bio4Energy research platform for developing (Norden, 2015). Biorefi ning contributes to the renewal sustainable bioreﬁ nery processes. The academic clus- of existing forestry industries and is seen as a mecha- ter co-operates with the industrial sector to develop advanced biofuels, “green” chemicals and new bio- nism to support regional development and to achieve based materials from biomass based on woody raw environmental goals (Aresta et al., 2012). Th ere are materials or organic waste. This research programme several biorefi nery projects under way or planned in is leading efforts to develop one of Sweden’s “strate- Northern Finland and Northern Sweden (see Box 7). gic areas for research” from 2010 to 2015, based on a Today, many biorefi neries use existing pulp and pa- €20 million grant from the Swedish government. Bio4Energy is aiming to develop technologies for con- per mills and infrastructure because it is less costly to verting forest-sourced biomass into biofuels and other convert existing utilities into biorefi neries. From this bio-based products (Joelsson & Tuuttila, 2012). perspective, biorefi ning can improve existing mills and create more value, new chemicals and materials, and projects targeting the biorefi nery area that utilizes increase both economic effi ciency and the effi ciency of forestry biomass in the northern regions (see Box 8). feedstock usage (Lindberg & Teräs, 2014). Th e majority Furthermore, several clusters have emerged as a means of large pulp and paper companies in Sweden and Fin- to improve co-operation, to synchronize eff orts and to land are already working on biorefi ning and are mainly attract funding. focusing on the production of liquid biofuels for the transport sector (Bergström et al., 2014; Lindberg & 4.4.5 Agriculture Teräs, 2014)the pulp industry (and other players. With regard to agriculture, most parts of the Nordic Örnsköldsvik, Sweden, is among the most well- Arctic region, with the exception of some areas of Swe- known success stories of bioeconomic development den and Finland, are constrained by the size and qual- based on a biorefi nery cluster. Th e region experienced ity of the land available, as well as diffi cult weather con- an industrial down-turn in the 1990s, and there was a ditions. Th ese constraints limit the production of crops “sense of urgency” to create new industries and jobs, and livestock breeding. Th e land in the Faroe Islands, which paved the way for the biorefi nery initiative. Th e Southern Greenland and Iceland is suitable for sheep cluster today consists of 21 member companies mainly farming, where it makes an important contribution to connected with the forestry, chemical or energy in- the local economy. dustries (Lindberg & Teräs, 2014). Th e SP Biorefi nery Maintaining and developing agricultural activities Demo Plant for development and demonstration of cel- off ers an array of opportunities and is crucial from a lulosic ethanol production (second-generation biofuel) food security perspective in the Nordic Arctic region. was inaugurated in Örnsköldsvik in 2004 (Joelsson & Such factors as remote location, limited transport in- Tuuttila, 2012). Th e plant is the largest of its kind and frastructure, harsh climate and high global prices for Sweden’s only demonstration unit for bioethanol pro- food commodities and oil make the cost of food and duction. It is already capable of competing with similar its distribution challenging in the North. Th erefore lo- plants located in Norway, which have more experience cal agricultural production, gathering and hunting are in this industry (Cooke, 2013; OECD, 2012). vital for the Arctic inhabitants for health and dietary For Örnsköldsvik and similar small regions with reasons. usually less diversifi ed economies, development of bi- Despite the limitations, there are a number of op- orefi neries could be a good alternative to already exist- portunities to increase agricultural production in the ing traditional industries. Today’s challenge is to bridge future related to research on new crop variants that are the gap from R&D projects to larger-scale projects and more adaptable to harsh environments, as well as us- commercialization. Th e obstacles are related to insuf- ing greenhouses to produce local vegetables. Th e Nor- fi cient demand for green solutions, large capital invest- dic Arctic region could also benefi t from using smaller ments and insuffi cient political support (Lindberg & amounts of pesticides, as pest infestations are currently Teräs, 2014). Cellulose-based ethanol is a big political limited because of the cold climate (Smáradóttir et al., uncertainty today. Th ere is an ongoing discussion in 2014). In addition, in the light of the changing climate, the EU on whether forestry resources can be classifi ed there is a potential for an extended growing season and as renewable and thus whether biofuels produced from a larger variety of crops (UArctic, 2013). forestry biomass can be considered to be renewable Many agricultural and food producers are small (SEKAB interview, 2015). companies that have managed to establish niche busi- In recent years, there have been many large research

36 NORDREGIO WORKING PAPER 2016:1 nesses (see Boxes 6 and 9). In the case of Iceland, a Box 9. Niche industries in the fi eld of food, public R&D institute Matís played an important role in agriculture and fi sheries in Iceland. facilitating the development of innovative niche prod- In the South Iceland region, several small-scale in- ucts. It provided support for co-operation between novation activities have been developed in the food innovation centres of Matís. These include develop- farmers or food processing companies; for instance, ing ways to export cod liver, developing green “kale by matching people with innovative food development snacks”, “potato chocolate”, dried fi sh products as ideas with those who have access to the necessary ma- souvenirs, raw goat sausages and the development terials (Teräs et al., 2014). of hot smoked mackerel products (Teräs et al., 2014). Agricultural production is also important in con- Another example is fi sh skin leather produced in North nection with the multifunctionality aspect, as agricul- Iceland from different fi sh species in Iceland. The fi sh leather is used as a material for high fashion, clothes tural residual products and livestock manure could be design, furniture or anything else (“Atlantic Leather”, used for biogas production, as fertilizer or as inputs 2015). into other industries. Biogas can be used for CHP and district heating, and also in transportation aft er be- In some parts of the Nordic countries, only people ing refi ned and compressed (Lindblom & Rasmussen, designated as Sami can practise reindeer herding. Nor- 2008). Th ere is a growing interest in biogas production way and Sweden have passed a law allowing the Sami from agricultural residues and by-products such as population to engage in reindeer husbandry, although manure and haulm, straw and crops in some Nordic there are exceptions to this law in both countries. Th e Arctic regions like Norrbotten. A recent study (Bern- exceptions include concession reindeer husbandry in ström & Burgman, 2014) shows that biogas production Sweden (koncessionsrenskötsel) and tame reindeer through thermal gasifi cation appears to be a good solu- husbandry (tamreinlag) in Norway (Jernsletten, 2007). tion for energy supply in Norrbotten. In Finland, in principle, all citizens of the European Agriculture has strong links with the tourism sector, Economic Area (EEA) living permanently within the as tourists are generally interested in local traditional defi ned area for reindeer herding can engage in the foods. Meat, game, fi sh and a rich variety of berries and industry. In practice, however, it is more complicated mushrooms are among the ingredients used in every- because reindeer husbandry is organized at the district day meals in the Arctic food culture. Visitors to the re- level (Paliskunnat), and two important preconditions gion greatly appreciate the purity and high quality of have to be met: the reindeer owner must reside within the food ingredients. the borders of the district, and the board of the dis- Ipiutaq guest sheep farm in Southern Greenland is a trict needs to approve membership. Membership au- good example of such a collaboration. Th e guest farm tomatically releases grazing rights. Th e reindeer herd- off ers vacation packages that include a combination of ing area is divided into three reindeer herding areas: experience tourism (fi shing, hiking and other outdoor the Sami reindeer herding area, the special reindeer activities), agriculture (working on a farm), a comfort- herding area and the reindeer herding area. Th e dif- able homestay and a French–Greenlandic gourmet ference between them is that reindeer herding in the gastronomy based on local and traditional products Sami reindeer herding area should be prioritized and (Ipiutaq, 2015). given special attention in issues related to encroach- ment. Reindeer herding in the special reindeer herding 4.4.6 Reindeer husbandry area should also receive some attention in this regard. In Northern Norway, Sweden and Finland, reindeer Th e borders between the districts are decided by the husbandry is an economic activity that is strongly provincial government. Reindeer husbandry is organ- linked to the Sami indigenous population. Reindeer ized in 54 districts in the reindeer husbandry area. Th e herding is seen as central to Sami livelihood and is 13 northernmost districts are so-called Sami districts viewed as a fundamental part of Sami culture—even (Jernsletten, 2007). though only some 10–15% of the Sami people are today In each district, an upper limit on the number of economically involved in such practices. Th e Reindeer reindeer and an upper limit on the number of rein- herding area—from the highlands of Oppland to the deer that one person can own is set. Th e Ministry of east coast of the Kola Peninsula covers a land area of Agriculture and Forestry set these limits for a 10-year over 500 000 km2. In each of the Nordic countries, this period. In 2010, the maximum number of reindeer per equates to approximately 30–40% of the total land area person was set to 500 livestock in the special reindeer (Roto, 2015). Map 13 provides an illustration of rein- herding area and to 300 in the southern districts. Th e deer herding areas and districts across Sápmi in 2014, number of reindeers per district varies from 500 to including the number of domesticated reindeer.

NORDREGIO WORKING PAPER 2016:1 37 Map 13: Reindeer herding areas and districts in Sápmi 2014

38 NORDREGIO WORKING PAPER 2016:1 12 000 (FINLEX, 2010). Th e upper limits per district ternational Centre for Reindeer Husbandry, 2015). are set to help operators cope with both a lack of good A Sami reindeer husbandry district is an adminis- pastures and excessively large herds of reindeer. trative unit that includes a specifi c geographical area In Sweden, reindeer husbandry is regulated by the and whose main task is to organize reindeer husbandry Swedish Reindeer Husbandry Act of 1971. According within the district. Th e Act of 2007 has retained the to this Act, the right to engage in reindeer herding be- system of districts but has incorporated some parts longs to the Sami people. Th e reindeer herding area in of the traditional Siida system. In the Act, the Siida is Sweden is divided into 51 Sami co-operatives. Th e co- understood as one or several groups of reindeer own- operatives are further divided into 33 mountain Sami ers within a district engaged to carry out the practical co-operatives, 10 forestry Sami co-operatives and eight work with reindeer in a given area. Th e Siida unit is a concession Sami co-operatives. In the mountain Sami family or individual who represents a unit within the co-operatives, the herding is characterized by long mi- district and is engaged in reindeer herding in a Siida gratory routes between summer and winter pastures, managed by an individual, a married couple or a couple whereas in the forestry Sami reindeer herding villages, living together. Th e system of Siida units, or operational herding is more static and is conducted in forested ar- units as they were named until 2007, was introduced in eas. Eight of the herding villages in the Torne Valley order to monitor the industry and to control reindeer are so-called concession Sami co-operatives. Within numbers. In order to lead a unit, a person is required to each Sami co-operative, there are a number of reindeer have reindeer husbandry as his or her main profession herding enterprises. An enterprise is defi ned as the (International Centre for Reindeer Husbandry, 2015). reindeer owner and his/her household, and thus com- Today, reindeer husbandry is facing similar chal- prises the family. Th e sizes of the Sami co-operatives lenges across the North Calotte region. Land-use con- range from a few active reindeer owners to several hun- fl icts between reindeer husbandry and resource extrac- dred (Jernsletten, 2007; Sametinget, 2015). tive industries, such as mining and forestry, remain an Only fi nancial activities associated with the rein- issue. Low profi tability is a key challenge, which also deer are part of the Sami co-operatives. It is required complicates generational succession by raising a barri- that the main income (more than 51%) of the members er against young people engaging in reindeer herding. of the Sami co-operatives be generated from reindeer Predation is another issue that has a negative impact on herding. Additional income should be derived from reindeer herding. In Sweden, predators have been esti- other employment. During the last decade, national mated to consume 15–20% of the reindeer, and there is authorities have focused increasingly on Sami co- an upward trend. It has been highlighted that reindeer operatives’ being able to benefi t from other economic herding has signifi cant indirect economic impacts on opportunities. If such changes are implemented, not maintaining the service level in rural communities. everyone in a co-operative would have to engage in Th e reindeer are an attraction and an important sym- reindeer herding; rather, some members could produce bol used in branding the North Calotte region. Fur- and sell handicraft s, work in tourism, or process and thermore, reindeer meat is an important element in the sell fi sh and berries within the co-operative framework regional cuisine (Eriksson, 2014). (Jernsletten, 2007). In Norway, according to the Norwegian Reindeer 4.5 Future opportunities and chal- Herding Act of 2007, only those who have the right to a reindeer earmark can conduct reindeer husbandry lenges in the bioeconomy in the Sami reindeer herding area. Th e right to a rein- Th is chapter sheds light on the opportunities and chal- deer earmark requires that the person be Sami and that lenges in the transition to a bioeconomy in the Nordic they, their parents or their grandparents have or had Arctic context. Despite being rich in natural resources, reindeer herding as their primary occupation. Rein- the opportunities for development are constrained by deer husbandry is conducted primarily in the Sami several factors, including weather conditions, demo- reindeer herding area, which is divided into six region- graphic change, peripherality and distance from the al reindeer herding areas. Th e areas are further divided market. Some of the enabling and hindering factors for into 89 districts. Some of these districts are only used bioeconomy development are discussed in this section, seasonally, although most practise the use of seasonal and suggestions on how to tap the full potential of the pastures, such as spring, summer, autumn and winter bioeconomic activities are given. grazing. In addition, there are four so-called conces- 4.5.1 Labour-market effects sion areas in Southern Norway, where both Sami and In the process of technological development and effi - non-Sami people are engaged in reindeer herding (In-

NORDREGIO WORKING PAPER 2016:1 39 ciency improvement, many traditional jobs in the pri- dynamics can reshape the community. Such a develop- mary sector have been lost. Despite increasing the vol- ment has positive economic eff ects on the local com- umes of production, the primary sector employs munity but at the same time has created concern over signifi cantly fewer people than before. Development of integration of workers into the local communities (AC- bioeconomy, therefore, is unlikely to contribute signifi - CESS, 2014). cantly to growth in employment. However, it can contribute to maintaining and creating valuable jobs in 4.5.2 Increasing local processing regions where there are otherwise limited employment Th e economies of some regions in the Nordic Arctic, in opportunities (OECD, 2011b, 2012; Smáradóttir et al., particular the West Nordic region, are based on raw 2014). Moreover, in addition to the direct jobs related to material production. Until today, processing prior to the establishment and maintenance of a production fa- transportation from the area has rarely taken place, al- cility, most of the long-term jobs are indirectly related though it creates additional positive local and regional to the bioeconomy sectors and are created along the impacts and diversifi es the economy. Due to require- supply chain, including R&D, manufacturing and ments for high capital, R&D and other knowledge-in- transportation (OECD, 2012). tensive stages of production, further processing of re- In the Nordic Arctic context, the lack of human capi- sources oft en remains outside the Arctic region. High tal is among the limiting factors for development of the capital requirements are associated with, for instance, bioeconomy. Harnessing the full potential of the bioec- harsh weather conditions and higher energy consump- onomy requires a mix of existing skills and traditional tion. occupations (e.g., farming and fi shing), but also new Future opportunities are clearly linked to increasing high- and low-tech skills in a range of biorefi ning and secondary production and local processing of the raw bioprocessing technologies. Young people today are materials (Smáradóttir et al., 2014). Such development less interested in taking on traditional primary occu- could contribute to regional economic growth and job pations such as fi shing and farming, and an increasing creation within innovation, research, distribution, re- number of youth see themselves residing permanently tailing and catering. Availability of cheap locally pro- in urban areas in the future (Karlsdóttir & Jungsberg, duced energy could play a facilitating role in increasing 2015). Th erefore, a lack of adequately trained or edu- local processing. cated young people represents a signifi cant challenge Some regions have made increased local process- for future development of the bioeconomy in the Nor- ing a regional priority. Th e county plan for Nordland, dic Arctic. Norway, involves promoting increased value creation Increasing the attractiveness of jobs in the primary in fi sheries and aquaculture through a greater degree of sector to youth and making them want to live in rural local processing. It is stated in the county plan that such areas remains a challenge. One of the possible solu- development would contribute to greater competitive tions is related to further developing educational and advantages for Nordland’s marine business communi- vocational training opportunities (including distance ties by facilitating collaboration, the accumulation of learning) in the Arctic region, thereby providing more knowledge, the exchange of experience and industry- incentives for the youth to stay. Creating new and at- related research (Nordland County Council, 2008). tractive employment opportunities within the bioeconomy sectors as well as supporting entrepreneurship 4.5.3 New bio-based businesses and innovation in this fi eld may also limit outmigra- Developing the bioeconomy does not necessarily re- tion of young people from the region or may even at- quire high technology and advanced large-scale solu- tract new residents. tions. Future opportunities within bioeconomy might Migrant workers may be a solution for employment be within small-scale innovations developed using the in the primary industries in the Nordic Arctic. Already local knowledge and competence of the local people today, the fi shing industry in the Nordic Arctic region (e.g., food innovation) (Teräs et al., 2014) (e.g., see Box- relies on foreign workers willing to settle in remote ar- es 7 and 10). Good opportunities exist within small- eas along the coast and on unskilled seasonal migrant scale developments that are based on cross-sectoral labour. Many jobs in the fi sheries sector are taken by collaboration. Combining coastal fi sheries, agricul- foreign labour, as the native-born workers prefer to ture, the food industry and tourism could be one of the work in the secondary and tertiary sectors (Wojtyńska, alternative development paths for local communities 2012). In Norway, one-third of employees in the fi sh (Teräs et al., 2014). processing industry are foreigners. In remote coastal Development of niche industries has been sug- communities, even small changes in the population gested as an alternative path in Rönnlund et al., 2014;

40 NORDREGIO WORKING PAPER 2016:1 Smáradóttir et al., 2014. Some good examples of niche waste management in the Kiruna–Narvik border area. industries have been presented in the previous sections Since 1998, a waste management company on the Nor- (see Section 4.4.5). In this regard, an increased involve- wegian side of the border (HRS Miljø) has been selling ment of small- and medium-sized enterprises (SMEs) waste to an energy company in Kiruna (Tekniska Verk- in the value chain could be further strengthened. It is en) for district heating production. Today, about 60% stated in the Blue Growth in the North East Atlantic of all waste at HRS Miljø is exported across the border. and Arctic report by Nordic Marine Th ink Tank that Th e waste trade between the two companies has been the business models involving co-operation between both economically and environmentally sustainable an SME that only controls a small part of the value (Berlina, Hörnström, & Diş, 2015b). Another good ex- chain and multinational companies should be inves- ample of cross-border collaboration is the Green High- tigated and promoted. An illustrative example of this way initiative mentioned in Subsection 4.4.3. is the co-operative arrangement between Chitinor AS (Norway), which is a manufacturer of high-quality bi- 4.5.5 Political support opolymers from raw materials from the fi sheries and Above all, the transition to the bioeconomy is infl u- aquaculture sector in biomedical, cosmetic and life-sci- enced by political decisions. Political commitment and ence applications, and DuPont Nutrition Biosciences long-term political support are crucial for any invest- Ltd. (Denmark), which is a multinational company in ment and development to take place. Th is issue is high- the fi eld of functional ingredients that has the ability to ly relevant regardless of the geographical context. Th ere control the entire value chain. is currently insuffi cient demand for green solutions In Northern Finland, the Bioeconomy Development and substantial political uncertainty regarding cellu- Strategy of Oulu Region 2015–2020 emphasizes the role lose-based ethanol (Lindberg & Teräs, 2014). Th ere is of the SME sector in all value chains. According to this an ongoing debate in the EU about whether forestry strategy, the annual turn-over of the region’s bioecon- resources can be classifi ed as renewable and thus omy will increase by EUR 2 billion, and 4 000 new jobs whether biofuels produced from forestry biomass can will be created by 2030 (Council of Oulu Region, 2015). be considered to be renewable (SEKAB interview, Th e challenges in some of the regions in the Nordic 2015). Th e actors involved in the forestry industries Arctic are related to the underdeveloped culture of en- and energy producers unanimously agree that there is trepreneurship because of the dominance of old large a need for long-term demand-increasing measures industries. Forestry industries are oft en conservative (e.g., green certifi cates, taxation) in taking the next step businesses that have been hesitant to try something in developing the bioeconomy. Th e low price on fossil new and uncertain. Th e main focus of the forestry in- fuels is another factor that hinders the transition to dustries has been on cost reduction and improving ef- greener alternatives (based on interviews). fi ciency and little attention has been paid to innovation and new product development. As a result, new busi- 4.6 Bioeconomy in the Nordic nesses have had problems entering the market. Moreo- ver, there has not been any pressure on SMEs, as they Arctic and sustainable regional can easily survive as suppliers to a few customers (e.g., development LKAB in Kiruna) (based on interviews). To address Bioeconomic activities have traditionally played an ex- this challenge, there is a need to improve the culture tremely important role in the regional economies in of entrepreneurship and collaboration, and to facilitate the Nordic Arctic, ranging from forestry and wood the emergence of new bio-based businesses through processing to fi sheries and reindeer husbandry. Th e empowerment, developing good practices, building Nordic Arctic region has good preconditions, in terms confi dence, etc. of its natural conditions and traditional industry, for converting to a bioeconomy. Th ere is a substantial 4.5.4 The role of cross-border collaboration amount of valuable knowledge and experience existing In the context of the bioeconomy, cross-border collab- in the region today in activities associated with the pri- oration may, among other things, contribute to greater mary industries. If this knowledge is combined with cost-eff ectiveness in public investment, strengthening R&D, technological change, an innovative approach economic complementarities and providing more di- and political support, the Nordic Arctic region could rect and eff ective solutions to environmental problems benefi t from a transition to a bioeconomy and could (Hörnström, Berlina, & Tepecik Diş, 2015). achieve important environmental, economic and soci- A practical example of cross-border activities in etal benefi ts. the Nordic Arctic region is co-operation in the fi eld of

NORDREGIO WORKING PAPER 2016:1 41 Bioeconomy development has a signifi cant contri- Where is the largest growth potential within the bution to make to sustainable regional development bioeconomy in terms of maintaining and creating jobs through diversifying the local economy, creating new and regional added value? Should we prioritize the de- jobs and increasing energy security by using locally velopment of large-scale or small-scale bioeconomy ac- produced bioenergy, among other possibilities. In de- tivities? veloping the bioeconomy, it is crucial to consider the Th e role of SMEs in the bioeconomy has been em- sustainable use of biomass, potential land use confl icts phasized in connection with fi nding business niches and the global perspective. Some questions that may and participating in the value chains. What role do be addressed in the development of regional and local SMEs play in the region today? How do we facilitate initiatives for the bioeconomy in the Nordic Arctic are growth of SMEs and support small-scale innovations? the following. Are there any confl icts of interest between diff erent uses of natural resources (e.g., land use for food vs fuel, How do we ensure that bioeconomy development is biomass for chemical industry vs for biofuels) or be- environmentally, socially and economically sustaina- tween multi-use interests (e.g., reindeer husbandry vs ble? forestry activities and tourism) in your region? How As the forestry, agriculture and tourism sectors are could such competing interests be reconciled? How do interlinked, a mutually benefi cial co-operation can be we address the potential confl icts that could emerge in fostered between the sectors. Local food production, the future? for instance, can have a positive eff ect on tourism, What are the main challenges for further develop- while the agricultural residues and manure could be ment of the bioeconomy and how can they be over- used for bioenergy production. What potential exists come? for co-operation across diff erent sectors in the bioeconomy, and how can such collaboration be strengthened? How do we address labour market shortages in the Nordic Arctic region? How do we increase the attractiveness of jobs in the primary sector among young people?

42 NORDREGIO WORKING PAPER 2016:1 5. Tourism

Corresponding author: Lise Smed Olsen

In the Arctic, tourism is increasingly highlighted in re- constitute a key element in tourism development, gional development policy as an opportunity for job maintaining essential ecological processes and helping creation. Arctic tourism covers a range of activities that to conserve natural heritage and biodiversity. vary between destinations, but generally, nature is the Respect the socio-cultural authenticity of host com- underpinning attraction. With a few exceptions such munities, conserve their built and living cultural herit- as Finnish Lapland, summer tourism is generally the age and traditional values, and contribute to intercul- most popular in Arctic destinations. Arctic tourism in- tural understanding and tolerance. volves nature-based, culture-based and sports activi- Ensure viable, long-term economic operations, pro- ties (Grenier, 2011). In the context of tourism develop- viding socio-economic benefi ts to all stakeholders that ment policy and practice, the concepts of sustainable are fairly distributed, including stable employment and tourism development and ecotourism are frequently income-earning opportunities and social services to referred to. host communities, and contributing to poverty allevia- tion. 5.1 Tourism development Sustainable tourism development requires the in- 5.1.1 Sustainable tourism development formed participation of all relevant stakeholders, as Sustainable tourism development has emerged as a well as strong political leadership to ensure wide par- subset of sustainable development. As has been the case ticipation and consensus building. It is important to with the broad concept of sustainable development, acknowledge that the three pillars of sustainable tour- sustainable tourism development has been interpreted ism development are mutually reinforcing and in com- and adopted in many diff erent ways. As part of the petition, and the means to achieving sustainable devel- Earth Summit in Rio in 1992, ecotourism was promot- opment is to ensure balance between them (UNEP and ed as an approach to enhancing sustainable forestry UNWTO, 2012:1). management and planning. Since then, new forms of tourism such as ecotourism and responsible tourism 5.1.2 Ecotourism have emerged as “environmentally conscious” ap- Th e concept of ecotourism has been adopted by the in- proaches to tourism (Saarinen, 2014). Th e overall defi - dustry itself as a marketing tool. Broadly, ecotourism is nition of sustainable tourism as presented by the UNEP defi ned as sustainable tourism in natural areas (Die- and UNWTO in 2005 is as follows. drich, 2010; Pforr, 2001). Th e International Ecotourism “Tourism that takes full account of its current and Society (TIES) defi nes ecotourism as “responsible trav- future economic, social and environmental impacts, ad- el to natural areas that conserves the environment and dressing the needs of visitors, the industry, the environ- improves the well-being of local people” (TIES, 2015). ment and host communities.” TIES has developed a number of guidelines for assess- Management practices for sustainable tourism de- ing the eff ectiveness of ecotourism in meeting conser- velopment are applicable to all forms of tourism in all vation and development objectives. types of destinations, including mass tourism and the various niche tourism segments. Sustainability princi- Minimize impact. ples refer to the environmental, economic and socio- Build environmental and cultural awareness and cultural aspects of tourism development, and a suit- respect. able balance must be established between these three Provide positive experiences for both visitors and dimensions to guarantee its long-term sustainability. hosts. Th us, sustainable tourism should achieve the following Provide direct fi nancial benefi ts for conservation. aims. Provide fi nancial benefi ts and empowerment for local people. Make optimal use of environmental resources that

NORDREGIO WORKING PAPER 2016:1 43 Raise sensitivity to host countries’ political, envi- ing eff orts for the Icelandic tourism industry and pro- ronmental and social climate. motes Icelandic culture abroad. Th e Icelandic Tourist Support international human rights and labour Board is an independent authority under the Ministry agreements. of Industries and Innovation, which is responsible for destination development and domestic marketing of Ecotourism has also been pushed by governments tourism. Th e Tourist Board collaborates with the re- through the development of policies and strategies, gional marketing agencies, tourist information offi ces based on its potential for job creation in local commu- and tourist business associations across the country. nities. Th ere are 11 tourist information centres and seven re- Th is chapter identifi es current approaches to des- gional marketing offi ces in Iceland that are managed tination management and development trends in the in similar ways with some funding allocated from the Nordic Arctic. Th en, development trends, selected Icelandic Tourist Board, some from the municipalities, from a literature review and interviews, are further and some from the tourism industry. explored from the perspective of sustainable tourism Th e Regional Council of Lapland and local destina- development. Th ese themes include innovation and tion management organizations (DMOs) are respon- knowledge in tourism, cruise tourism, Sami tourism, sible for destination management in Finnish Lapland. and food and wildlife tourism. Th ere are 10 local destination management organizations active in Finnish Lapland, such as Levi and Ylläs and Marine-Lapland. Th e DMOs focus on common 5.2 Management and development marketing strategies and more practical activities trends in the Nordic Arctic such as managing joint booking systems, maintenance Th e following is based on interviews with representa- tasks, etc. Th e Regional Council of Lapland serves as an tives of national tourist boards in the Faroe Islands, intermediate organization and is the strategic partner Greenland and Iceland, and with representatives of re- of the actors in Lapland, while it also collaborates with gional tourist boards/authorities in Norway, Sweden the Finnish Ministry of Employment and the Econo- and Finland. Th e interviews were conducted in order to my and the Ministry of Transport and Communica- identify the way in which destination management is tions. Based on this co-operation, a tourism strategy organized, which tourism segments are being targeted, for Lapland has been formulated and is revised every what are the key development trends and what are the four years. key strategic development priorities. Visit Northern Norway was established in 2010 aft er a merger of separate destination management organi- 5.2.1 Destination management zations of the three counties of Northern Norway. Th is Visit Faroe Islands is the national tourist board of the was part of the national policy implemented by the pre- Faroe Islands and a government-owned agency. It has vious government to reduce the number of destination existed in its current form since 2012, and the main fo- management organizations, with funding provided to cus of the organization is the branding and marketing the merged organizations for a three-year period. Inno- of tourism in the Faroe Islands. Visit Faroe Islands col- vation Norway has the role of a national tourist board. laborates with the local tourist information offi ces that Five regional DMOs were established in Norway, and are funded by the municipalities. the intention was to establish fi ve to eight local organi- Visit Greenland is the national tourist board of zations below each regional DMO. In Northern Nor- Greenland and a government-owned agency for the de- way, the local destinations are organized diff erently: velopment of tourism in Greenland. It has existed in its some have an industry association that is either funded current form since 2010. Visit Greenland presents six or co-funded by the municipalities, some have only a regional destinations on its website. Th ere are diff er- tourist information offi ce funded by the municipality, ences in the ways that the destinations are being man- and in the destination of Lofoten, a local DMO is run aged across the country. In most cases, municipalities and fully fi nanced by local companies. It has not been fi nance a tourist information offi ce. possible to merge and develop local DMOs, because Promote Iceland is a public–private partnership es- funds are not allocated for the process. Today Visit tablished to improve the competitiveness of Icelandic Northern Norway is funded by the three county coun- companies in foreign markets. Its department of Tour- cils, and the tourist board is becoming a more active ism and Creative Industries aims to attract tourists to partner in tourism development projects. the country with co-ordinated promotion and market- Swedish Lapland Visitors Board is partly funded by the County Council of Norrbotten and 10 lo-

44 NORDREGIO WORKING PAPER 2016:1 cal destination management organizations. Th e Lapland as a “modern humanist” (Visit Finland, 2014). regional tourist board manages marketing, sales In the marketing of the Faroe Islands, the interest and destination development. Th e local DMOs6 groups of fi shing, hiking and dining are being targeted. pay membership fees to Swedish Lapland Visitors In Northern Norway, the development of a value-based Board and are in turn funded by municipalities and segmentation model is under way, which will also ad- the tourism industry. With the ongoing project Local dress diff erent interest groups. Th e key purpose of this destinations—from words to action, Swedish Lapland process, which has not yet been initiated, is to incorpo- Visitors Board is collaborating with the local DMOs to rate the role of the tourists as key promotors of North- identify better ways to organize destination manage- ern Norway; e.g., through social media. ment. Th e project has three focus areas—destination Map 14 provides an overview of the number of over- development, marketing and communication—and night stays in all types of accommodation in 2014. In is a dynamic knowledge organization. Th e idea is to 2014, Lapland, Norrbotten and the Reykjavík region use resources in a better way. Th e County Council of were the most visited regions in the Nordic Arctic, all Norrbotten and the County Administrative Board of with some two million stays. Th e origin of the visitors Norrbotten are important co-fi nanciers of develop- varies. In the North Calotte, over 70% of the visitors ment projects undertaken within the framework of the were domestic, whereas in the West Nordic countries, regional DMO. only 23% were nationals of those countries. Local organization and marketing initiatives for Map 15 provides an overview of overnight stays by cruise tourism are organized diff erently across the foreign citizens in 2014. Th e Reykjavík region and the Nordic Arctic. Only in Greenland is the tourist board, Lapland region were the most popular destinations for in this case Visit Greenland, responsible for market- international tourists. From the total number of over- ing both land-based and cruise tourism. In the Faroe night stays by foreign visitors in the Nordic Arctic, Islands, marketing is managed locally by the two key 23% of the visitors came from another Nordic country, cruise destinations, Th orshavn and Klaksvík. Th e 16% from Germany and 13% from the UK. National organization Cruise Iceland has been established to diff erences exist. In the Faroe Islands, Greenland and co-ordinate the promotion of Iceland as a cruise ship Northern Sweden, the majority of visitors came from destination with harbour offi ces that manage the pro- the other Nordic countries. In Finland, the largest motion of local destinations. Similarly, in Norway, the groups of visitors were from Russia and the UK, while organization Cruise Northern Norway and Svalbard Germans were the largest group visiting Northern has been established to promote cruise tourism. Norway. Iceland received the largest range of visitors, with visitors from the UK, the US, Germany, France 5.2.2 Tourists: target groups, facts and ﬁ gures and other Nordic countries being the most prominent. Th e representatives from the destination management Cruise tourism is another type of tourism that has organizations have diff erent ways of defi ning their key gained prominence in the past two decades in Iceland, target groups. However, “globetrotters” who are inter- Greenland, Norway and the Faroe Islands. Map 16 ested in nature and culture is the most common way of shows the number of cruise ship calls to Nordic Arctic describing tourists travelling to the Arctic. Th e key at- ports in 2014 and the annual average change in pas- tractions can be summarized as nature, culture and senger numbers from 2011 to 2014 (with the exception adventure experiences. Some of the DMOs are focusing of Greenland, where only data from 2015 are available). on target groups as defi ned by market segmentation Th e map only includes international cruise ship pas- studies. Swedish Lapland Visitors Board operates using sengers and calls. It does not show regular, scheduled the defi nitions of the national tourist board Visit Swe- ferry connections such as Hurtigruten in Norway. den in three key segments: Double Income, No Kids; In Northern Norway, cruise ship tourism is centred Wealthy, Healthy Older People; and Active Families on a few ports; in particular, Nordkapp (122 000 pas- (Visit Sweden, 2015). Visit Greenland has undertaken a sengers from 109 ports of call) and Tromsø (112 000 study to clarify the key tourism segments. Eleven seg- passengers), followed by Leknes (60 000 passengers) ments were identifi ed, which are being used in market- have large passenger numbers. Longyearbyen received ing promotion activities (Visit Greenland, 2015). A 37 100 passengers from 36 cruise calls in 2014 and is study conducted by the national tourist board Visit another destination with a clear upward trend in pas- Finland defi nes the typical tourist travelling to Finnish senger numbers of 17% in the period 2011–2014. In Iceland, the largest cruise ports in 2014 in terms of passengers were Reykjavík (105 000 passengers), 6 Including Skelleft eå based in the county of Västerbotten. Akureyri (73 000 passengers), and Ísafj örður (40 000

NORDREGIO WORKING PAPER 2016:1 45 M ap 14: Overnight stays in 2014

passengers). An upward trend can be observed for all tion tourists are similar to “adventure” tourists, who three destinations in the period 2011–2014. A number generally prioritize experiences over comfort. Th is is of other cruise tourism destinations exist across the refl ected in the work that is currently being undertaken Icelandic coastline, and most have seen increasing visi- to develop a separate site on Greenland.com to target tor numbers. expedition cruises where many of the same features In the Faroe Islands, Torshavn is the primary desti- that attract adventure tourists can be used. nation for cruise ships, with 35 calls in 2014. In com- parison, Klaksvík had eight calls and Kollafj ørður had 5.2.3 Development trends and transnational col- four calls in 2014. Passenger data for the Faroe Islands laboration are only available at the national level. Th ere has been The West Nordic countries an average increase in passenger numbers of more than In recent years, there has been an upward trend in 10% during the period 2011–2014. tourism in Greenland, facilitated by Air Iceland open- Cruise ships embarked in almost 20 cruise desti- ing up routes to a number of locations. In Iceland, some nations across Greenland in 2015. Th e major ports in of the larger tour operators are fi nding that tourists re- terms of number of calls (above 40) in 2015 were Ilulis- visiting Iceland are requesting new activities. Because sat, Maniitsoq and Kangerlussuaq. In addition, Uum- of the volume of tourists, there is also substantial pres- mannaq, Qeqertarsuaq, Qaqortoq and Nuuk had more sure on some of the most popular destinations in Ice- than 20 calls each. Notably, Qaqortoq had the most land. Th is provides an opportunity to deliver more passengers, almost 14 000 from 23 calls, while Ilulis- “raw” adventure experiences in Greenland. Th erefore, sat had the highest number of calls (51 calls) but only Icelandic and Danish tour operators have started off er- received 8600 passengers. Th is indicates that Qaqortoq ing combined tours to both countries. receives more of the large cruise ships. A number of innovation and development projects As will be further elaborated in Section 5.3, a dis- have been run by the Icelandic Tourist Board in collab- tinction can be made between larger cruise ships and oration with Innovation Centre Iceland on the themes expedition cruise ships. For example, from the tourism of cultural tourism, food tourism and health tourism segment study in Greenland, it was found that expedi- services. Currently, there is an increasing awareness

46 NORDREGIO WORKING PAPER 2016:1 M a p 15: Overnight stays by foreign citizens in 2014

among tourism businesses of the need to enhance the through collaboration between Visit Greenland, Visit quality of their products in order to be able to charge Faroe Islands, Promote Iceland and the Icelandic Tour- higher prices and to be more in control of who and how ist Board. Key activities of NATA involve organizing many they are targeting. Year-round tourism destina- the annual West Norden Travel Mart, providing grants tions are developing in Reykjavik and Southern Iceland for tourism development and marketing projects, and as well as in the Akureyri area. Th e remaining destina- travel support for school groups, sports organizations tions are still mainly summer destinations with a four and cultural exchanges. month season. Tourism experiences in the Faroe Islands are in- The North Calotte region creasingly developed based on traditions of hospitality Finnish Lapland has in previous years experienced the and knitting; e.g., home concerts and storytelling while growing phenomena of individuals traveling indepen- knitting, and having dinner in private homes. Knit- dently, rather than in traditional group trips and ac- ting is also associated with a number of Faroese-based tivities. Individual travellers oft en seek activities and designers, of which Gudrun & Gudrun are the most experiences outside the mainstream attractions. Fol- famous. Nature-based adventure experiences such as lowing this trend, the small-scale entrepreneurs and bungee jumping and climbing have started to develop. destinations have gained leverage in Lapland by off er- Furthermore, food culture is gaining prominence in ing tailor-made, exclusive services to predefi ned cus- Th orshavn, where a number of quality restaurants have tomer groups. Marketing oft en uses targeted strategies opened up in recent years. Th ere is an ongoing genera- bound to certain markets, addressing, for instance, tion change in the tourism industry, with many new Japanese tourists via Japanese traveling blogs. Another start-ups being founded by younger people, some of distinctive trend is the wellness theme, consisting of whom have higher education in tourism management. diff erent treatments focusing on detox and restoration, In terms of transnational collaboration, the North including the Finnish sauna tradition. Th is fi eld is also Atlantic Travel Association (NATA) is an organiza- strongly linked to the natural product theme, based on tion that has been established to promote and support organic local resources. tourism development for the West Nordic countries In Northern Norway, nature-based activities are be-

NORDREGIO WORKING PAPER 2016:1 47 Map 16: Cruise tourism in 2014 (for Greenland 2015)

coming more and more important for tourists. Authen- Interreg co-funded project called Visit Arctic Europe tic cultural experiences such as eating locally produced was initiated between Visit Northern Norway, Swed- food and experiencing Sami culture are other visible ish Lapland Visitors Board and the Finnish Lapland development trends. Winter tourism in particular has Tourist Board. Th e background to the project is the re- been growing in Northern Norway. Th is developed alization that the three regions are widely perceived as initially in Tromsø but has also spread to smaller, less one destination by the tourism market. Th e purpose of developed destinations. Furthermore, winter cruise the project is to develop new “product packaging solu- tourism is becoming increasingly popular in Northern tions” across the borders and to develop approaches for Norway. more common marketing. In Sweden also, there is a demand from tourists to experience the local food culture, and Swedish Lapland 5.2.4 Strategic development priorities Visitors Board is using the brand “Taste of Swedish With the re-organization of Visit Faroe Islands in 2012, Lapland” to market the best restaurants serving lo- a new vision and strategy were developed that included cally produced food in the region. Furthermore, there the objective of doubling the size of the tourism indus- is an increasing demand for Sami culture experiences try in terms of the number of jobs and tourists by the by tourists. Th e area where Sami tourism is most de- year 2020. An improved approach to collecting data for veloped is in Kiruna. Th is has been facilitated by the the development of the industry was initiated from presence of the Ice Hotel, which for many is the pri- 2013, and recent data show that they are well on the mary attraction in the area. Abisko is another area that way to meeting the target. A strategic priority is to pro- is experiencing increasing tourism, because of the na- long the tourism season, and one way in which this is tional park, hiking opportunities in summer and the approached is through more focused eff orts to promote Northern Lights in winter. business tourism. Th e tourist destination management organizations Visit Greenland’s key development priorities cur- in the North Calotte Region have not had a tradition rently include regionalization of the national brand of collaborating. However, in the autumn of 2015, an and extension of the tourism season. Regionalization

48 NORDREGIO WORKING PAPER 2016:1 refers to strengthening of distinct regional brands in Visitors Board and the local DMOs is to work more collaboration with tourism co-ordinators and tour- consciously towards sustainable development; i.e., to ism actors at the local level in order to strengthen the consider not only the objective of economic sustaina- link to the national brand. Attempts to extend tourism bility but also that of social and environmental sustain- seasons diff er between destinations. In Ilulissat, this ability in development initiatives. A number of actors involves extending into the shoulder seasons from Feb- in the region have gained the certifi cation of Nature’s ruary to October. In Southern Greenland and in the Best, which is a quality label for ecotourism fi rms (Na- capital of Nuuk, it involves attracting more tourists ture’s Best, 2015). Another priority is for more tourism during July and August, where there is substantial free actors to become professional businesses that can re- capacity. A project, in collaboration with the airlines, is ceive foreign tourists. Competence development is im- currently developing a brand for the capital as a sum- portant, and there is a need for more tourism-related mer destination. Iceland has a tourism development strategy for 2011–2020. It is currently being revised to include an Box 10: R&D projects to support product development in tourism in Northern Norway implementation plan. Th e Icelandic Tourist Board pre- Collaboration between knowledge institutions, busi- viously allocated funds to the regional marketing offi c- nesses and public authorities in the area of tour- es, tourist information offi ces and tourism associations ism has gained momentum during the last decade separately, but starting in 2015, they will receive shared in Nordland in Northern Norway. The key actors funds. Th ey are being encouraged to develop a regional are Nordland Research Institute and University of strategy for tourism development and to co-ordinate Nordland, Nordland County, and a group of tourism it with the wider regional development strategy. Th e fi rms and organizations in Lofoten, Salten, Narvik and Vesterålen, most of them delivering different types of approach to the increasing infl ux of tourists has been nature-based experiences. Initially, the actors were reactive from the side of both the local authorities and brought together by the cluster initiative Arena Innova- the tourism industry, and with the local strategic devel- tive Experiences. The businesses that participated in opment work, the intention is to plan more proactively this cluster development project have been recruited for tourism development and to strengthen collabora- by the regional offi ce of Innovation Norway, based on tion between public and private actors. an assessment of their ability to manage long-term development work. More than 30 businesses are part Th e goals for tourism development in Northern of the cluster initiative, most of them from Lofoten Finland are outlined in Lapland’s Tourism Strategy (Flatnes & Furre, 2012). The project, funded by the for 2015–2018. According to the document, Lapland national Arena Programme for cluster development, strives to be a vital, international, easily accessible and was intertwined with a project funded by the national year-around destination. It sets three strategic objec- Programme for Regional R&D and Innovation (VRI). Today, the network Innovative Experiences is partly tives related to accessibility, product development and funded as a membership organization and is managed marketing. Th ese objectives are intended to tackle the with the help of project funds from Nordland County. current problem of decreasing numbers of tourists dur- During the course of the project period, closer links ing the summer season. between the tourism actors and the researchers have Strategic priorities for Visit Northern Norway in- developed. Nordland Research Institute and Uni- clude becoming more involved in development projects versity of Nordland have established the Norwegian Research Centre for Experience-based Tourism (NO- in the region and improving marketing approaches. In- VADIS) to provide an opportunity for tourism enterpris- creasingly the tourist board has become aware of the es to discuss their R&D needs. They now host events necessity for the marketing of the region to correspond such as monthly tourism lunches, where the industry with the experiences of the tourist. For example, im- is invited to discuss selected themes, and there is an ages that include symbols of Sami culture, including opportunity for fi rms and researchers to meet. Cur- the traditional costumes and reindeer, are being used rently, another major R&D project, Experiences in the North—Knowledge-based Value Creation, is being to market the region. However, the supply of Sami ex- implemented, comprising a consortium of tourism periences is limited in the region, it is rare to meet Sami research establishments in Northern Norway. This is people in their traditional costumes, and the reindeer funded by the Research Council of Norway’s NOR- migrate away from tourist destinations at certain times DSATSING initiative and involves a project period of of the year. Th is has been approached in the develop- eight years starting in 2009. The national programmes ment project Sami Tourism in Northern Norway. Con- to support cluster development and regionally implemented R&D projects have been instrumental in the tinued strengthened collaboration with the local desti- collaboration that has been initiated between knowl- nations is also prioritized. edge institutions and the tourism industry. One of the strategic priorities of Swedish Lapland

NORDREGIO WORKING PAPER 2016:1 49 education programmes. Swedish Lapland Tourism in- tends to strengthen collaboration in terms of research Box 11: Association of Arctic Expedition and education with knowledge and higher education Cruise Operators—sustainability initiatives institutions. The Association of Arctic Expedition Cruise Operators (AECO) is a membership organization for expedi- Establishing stronger links to knowledge institu- tion cruise operators, tour operators, port agents and tions is the ambition for some of the destination man- travel agencies. It was established in 2003 with the agement organizations in the Nordic Arctic. In North- purpose of developing a common practice concern- ern Norway, collaboration on R&D projects has been ing environmental issues. Today, the organization is successfully initiated with a number of tourism fi rms. regulated by fi ve sets of guidelines that all members Th is is described further in the example below. are obliged to follow. Visitor guidelines Site guidelines 5.3 Cruise tourism Operational guidelines In the Nordic Arctic, cruise tourism has been a grow- Wildlife guidelines ing industry in Greenland, Iceland, Norway and the Biosecurity guidelines Faroe Islands since the 1990s. Cruise tourism is a form The visitor guidelines are developed for the expedition of mass tourism, and as such, it has a number of impli- cruise tourists and describe to the tourists how they cations in terms of sustainable tourism development are expected to show consideration for the environment, safety and culture of communities visited. Site (Lück, Maher, & Stewart, 2010). Meanwhile, based on guidelines have been developed for specifi c places in the interviews with destination management organiza- Svalbard describing which considerations should be tions, cruise tourism is considered to be an important made in terms of the natural environment, culture, cul- source of local economic development in some local tural remains, fl ora and fauna in each location (AECO, destinations in the Nordic Arctic. 2015). Site guidelines have also been developed for Cruise tourism can be considered to be environ- some local destinations in Greenland. Operational guidelines were developed for Svalbard in 2004 and mentally unsustainable because of the large groups of were made applicable for Jan Meyen and Greenland people visiting natural and cultural sites, which leads in 2007 (general, not site specifi c). Parts of the guide- to crowding of remote peripheral communities. Th e lines have been developed for use in tour planning, ecological challenges of cruise ships include anchor preparation and operation by the tour operational damage to fragile marine ecosystems, illegal dumping offi ce of AECO members, also including wildlife and biosecurity guidelines. In consideration of sustain- of trash and pollutants, and impacts from dredging able tourism development, the operational guidelines and building associated with the construction of new include the following four headlines. ship ports. Further issues include problems and pol- Before the visit: e.g., inform the local community lution related to incidents and accidents, and the size contact person/offi ce about your planned call well in of modern cruise liners working the polar waters (Die- advance, and give information on deviations from the drich, 2010; Lück et al., 2010). schedule. Socio-cultural sustainability issues arise when local Provide benefi ts: e.g., make local purchases, use inhabitants are forced to deal with overcrowding and local providers of sightseeing tours, shows and other related problems. Cruise tourism involves short-term activities. daily infl uxes of large numbers of people, whereas the Cultural understanding: e.g., inform/educate guests about local history, contemporary culture, norms and land-based tourists are usually dispersed more broad- values. ly across a region. In some places, cruise tourism has When visiting: e.g., ask before you photograph— started to have a negative impact on both local resi- hesitation means NO; inform guests about restric- dents and land-based tourism (Brida & Zapata, 2010; tions, local customs and expected behaviour (AECO, Klein, 2011). 2013:21–22). Research has found that cruise tourism is oft en eco- According to a representative of Visit Greenland, the nomically unsustainable because the majority of eco- work of AECO has been extremely important for their nomic benefi ts do not fl ow to local people. Instead, a increasing calls in smaller settlements in the country. large amount of the expenditure by cruise tourists is Previously, expedition cruises often showed up unannounced, which led to frustration among inhabitants, received by the cruise company (Brida & Zapata, 2010; whereas today, collaboration with the local commu- Diedrich, 2010; Klein, 2011). During passenger shore nities and codes of conduct for visitors have been excursions, cruise ships usually retain 50% or more improved. It is hoped that more local tourism fi rms will of the tour fee paid by the passengers. Th e passengers be established to benefi t from expedition cruises. thereby expect an experience equivalent to the amount

50 NORDREGIO WORKING PAPER 2016:1 that they have paid, although the shore excursion pro- traction.” (Hinch & Butler, 2007:5). Th e indigenous ac- vider may only make a small profi t. If passengers are tivities appeal to an affl uent global market, although unhappy, they will usually blame the shore provider, the number of visitors is small, as the prices of these unaware that the cruise ship has retained most of the activities are high. More aff ordable indigenous tourism excursion fee (Klein, 2011). Cruise tourism in a sense activities involve Easter festivals in Kautokeino and is a competitor to land-based tourism because the Karasjohka in Norway, and the winter markets in Jok- cruise ships become a substitute for air travel, and they kmokk, Sweden (Viken & Müller, 2006). provide accommodation, food and activities. In some Th e risk of misrepresenting Sami culture in tourism cases, passengers will choose to stay on board the ves- promotion and in the development of tourism products sel instead of disembarking because the ships are des- exists. Examples of this type of development include tinations in themselves. While cruise tourism brings in traditional Sami attributes such as the Sami clothing more visitors, the economic impact is relatively small and tents, and reindeer being used by non-indigenous and usually concentrated among a few actors (Brida & tourism operators in marketing the destination and Zapata, 2010; Klein, 2011). in interactions with tourists in a way that does not Th e following example introduces initiatives of the represent the way that they are used in everyday life. Association of Arctic Expedition Cruise Operators Furthermore, there is a tendency to create an exotic (AECO) to promote responsible expedition cruise and exaggerated image of the Sami in the media and tourism. Expedition cruises are in some ways deﬁ ned in marketing of the traditional culture, which causes as a separate sector within the cruise tourism industry, some fi rst-time visitors to arrive with unrealistic ex- because the purpose of expedition cruises is to deliver pectations (Pettersson, 2006; Pettersson & Viken, 2007; adventure, wilderness, education and personal experi- Viken, 2006). ences. These ships do not travel on a direct route but Th e main constraints for Sami tourism development rather focus on viewing landscapes at close range. “This in Sápmi include how tourism may damage or infl u- involves accessing shore-locations, seeking wildlife and ence Sami culture and how it may disturb the rein- ice, venturing into new, different or challenging and deer. Sami people themselves are divided; some stress sometimes uncharted waters, and interacting with lo- the opportunities of indigenous tourism development, cal people.” (Dawson, Johnston, & Stewart, 2014:89). and some focus on the risks. Tourism development has Expedition vessels are smaller and commonly carry been noted to be a balancing act between these oppos- about 120 passengers. They offer an educational ex- ing views (Pettersson, 2006). Th e following example of perience with environmental and cultural guides on Visit Sápmi involves a project initiative implemented to board (Lück et al., 2010). address these issues. According to a representative of Visit Greenland, the work of AECO has been extremely important for their increasing calls in smaller settlements in the 5.5 Food and consumptive wildlife country. Previously, expedition cruises oft en showed tourism up unannounced, which led to frustration among in- Food tourism refers to a form of tourism in which food habitants, whereas today, collaboration with the local is one of the motivating factors for travel. It can have communities and codes of conduct for visitors have diff erent roles, from being the peak experience in gour- been improved. It is hoped that more local tourism met tourism to being a complementary experience in fi rms will be established to benefi t from expedition rural tourism. Eating local food entails appropriating cruises. the nature, culture and identity of the specifi c area. In connection with this, urban food tourism commonly 5.4 Sami tourism development appeals to people seeking a sophisticated lifestyle, while food tourism in rural areas appeals to people In Sápmi, the indigenous Sami culture is considered to seeking tradition (Bertella, 2011). Furthermore, food be an asset for a growing tourism industry. Sami tour- tourism in peripheral regions diff ers from more central ism activities involve museums, cultural events, out- locations in the sense that tourism demand and tour- door cultural sites and places where Sami handicraft s ism industry support for northern cuisine is relatively are sold (Müller & Huuva, 2009; Pettersson, 2006; Vik- new. In the Arctic as in other peripheral regions, there en & Müller, 2006). Indigenous tourism has been de- is a trend in the tourism industry to provide local expe- fi ned as “tourism activities in which indigenous people riences through food for visitors to Arctic regions (de la are directly involved either through control and/or Barre & Brouder, 2013). through their culture serving as the essence of the at-

NORDREGIO WORKING PAPER 2016:1 51 Box 12: Visit Sápmi—Quality assurance and collaboration The project Visit Sápmi was initiated by the Swedish Sami Association (an NGO representing members of Sami co-operatives and Sami associations) as a response to the growing tourism industry. The purpose of the project is to help the Sami to profi t from tourism and to infl uence tourism development. During the project period, collaboration was initiated between the project management and VisitSweden, which resulted in an “Agreement on guidelines for collaboration”. This concerned how the national tourist board would improve its use of Sami culture in its marketing initiatives, in order to ensure that this would be done in an ethical manner. Thus, the agreement states the following. “When Sami culture is used by Visit Sweden it is done in agreement and collaboration with Visit Sápmi, another representative of the Sami people, or the Sami who are “portrayed”. If the Sami become involved they will also be able to offer outstanding fi rst-class tourism experiences (…) Collaboration should therefore provide a more credible and more interesting image of Sami culture to the benefi t of both Sweden and Sápmi.” (VisitSweden and Swedish Sami Associa- tion, 2012:2) A key result of the project was the development of the certifi cation system Sápmi Experience for Sami tourism enterprises. Building on Nature’s Best, the certifi cation of the Swedish Ecotourism Association, a set of ethical criteria was added for the certifi cation process of Sami tourism enterprises. For example, criteria concerning respect of reindeer herding, including the requirement to make an agreement with the Sami co-operatives that tourists visit. A course was developed to understand the certifi cation requirements, and during the project period, approximately 60 people at- tended the course. Seventeen fi rms have gained the certifi cation, which is described as follows. “Quality, sustainability, safety and credibility are key words for Sápmi Experience. Businesses that have got the Sápmi Experience certifi cation have got a holistic approach to the Sápmi habitat. They can tell you about it, and they are professional in taking care of the visitor in this habitat. When you meet companies that have got the Sápmi Experience certifi cation, you know that it is authentic Sami experiences with Sami hosts that are offered.” (Visit Sápmi, 2015) Today, there are only approximately 25–30 fi rms in Sweden that might gain the certifi cation, and almost all of them are micro fi rms. Future funding is uncertain, but it is the intention to establish Visit Sápmi as an interest organization with paying members from all of Sápmi. There has been interest in the initiative from Norway particularly. Furthermore, there has been interest in plans by Visit Sápmi to develop the certifi cation Friends of Sápmi. This would include agreements with sponsors and with collaboration partners. Sponsorships may come from companies that wish to demonstrate that preservation of Sami culture is important. Friends of Sápmi is a certifi cation that may be granted to non-indigenous people who make a collaboration agreement with Visit Sápmi to deliver Sami experiences. A course would then be developed for fi rms interested in gaining the certifi cation. The Sami Parliament will be in charge of approving sponsorships and certifi cation of Friends of Sápmi. The Swedish Sami Association that initially owned the project has stated that they would like to see Visit Sápmi established as a membership organization and to be represented in the certifi cation committee.

Arctic regions have been noted to have created ad- zation Swedish Lapland Visitors Board has started advantages by promoting themselves in ways that associ- vertising culinary tourism. Some of these culinary ex- ate the local geography with the slow food movement. periences are provided by Sami entrepreneurs and can A signifi cant part of this movement is to embrace and include visits to a Sami tent with food prepared by a lo- recreate local values and traditions. Moreover, issues cal guide. In Sweden, two food organizations have been of food security are part of the slow food movement. created with a focus on Sami food: Renlycka, which is Today, most food consumed in the Arctic regions is im- a quality trademark association for the Sami reindeer ported from southern domestic or international pro- herders, and Slowfood Sápmi, which is the slow food ducers. Th e impacts of climate change are uncertain organization for the Sami people. Other entrepreneurs with the melting of permafrost; it may increase agricul- combine serving of food with a dog sledge ride, or hik- tural opportunities by creating more arable land, but it ing tours with serving of local food, which may include may also result in the loss of whole ecosystems, which specialities such as reindeer meat, associated with Sami may have a negative impact on agricultural opportuni- culture (de la Barre & Brouder, 2013). ties. Furthermore, with people’s increasing awareness Consumptive wildlife tourism is a form of niche of climate change, the amount of carbon emissions as- tourism that involves hunting or shooting game ani- sociated with travel to distant places and from travel- mals and fi shing in natural sites or in areas created for ling between places in the Arctic has been highlighted these purposes. Th is form of tourism has commonali- to add to the relevance of promoting slow food tourism ties with sports and ecotourism. It is also associated (de la Barre & Brouder, 2013). with cultural tourism, especially in cases where tour- Food tourism in the Arctic is interlinked with indig- ist activities are organized by indigenous people using enous culture in some places. For example, in Sweden, traditional hunting or fi shing practices. In most parts the regional tourism destination management organi- of the world, hunting and fi shing are managed with

52 NORDREGIO WORKING PAPER 2016:1 a view to the long-term sustainability of the fi sh and 5.6 Tourism in the Nordic Arctic game populations. Most hunting organizations have and sustainable regional develop- similar codes and a requirement that hunters attend compulsory education and training sessions to ensure ment hunter safety and ethical hunting practices (Lovelock, Sustainable tourism has been defi ned as tourism that 2008). In order to ensure sustainable fi shing tourism, takes full account of its current and future economic, it has been suggested the amount of information given social and environmental impacts, addressing the to fi shing tourists should be increased. Th is includes needs of visitors, the industry, the environment and information/training on how to handle the releasing of host communities. In the Nordic Arctic, various types undersized fi sh, and providing tourists with GPS and of tourism activity exist, ranging from mass tourism, maps to help them to avoid areas with small fi sh and e.g., in the form of cruise tourism, to niche tourism, instead to go to areas with bigger fi sh and sustainable e.g., in the form of Sami tourism experiences and con- stocks. Furthermore, attention should be paid to catch- sumptive wildlife tourism. Maintaining a balanced de- ing species that can endure exploitation, as well as to velopment in terms of economic, socio-cultural and the joy of cooking and eating your own fi sh while on environmental sustainable development is challenging holiday (Normann, 2008). and poses a number of questions that must be ad- Interactions between fi shing tourism and other uses dressed in the development of regional and local strate- of coastal and marine environments can cause disputes gies and initiatives for tourism development. Th ese over resource management. Areas of confl ict between questions include the following. the fi shing industry and the tourism industry can What is the value of quality assurances; e.g., for eco- involve competition for space and diff erent environ- tourism, local food, and Sami tourism? Is this an area mental views. In Norway, this debate is hampered by a for collaboration across the Nordic Arctic? lack of facts about the amount of fi sh that is caught by What is the potential for strengthening collabora- tourists. Th ese types of confl icts between the tourism tion between public authorities, knowledge institutions and commercial fi shing industries have been noted to and the tourism industry for education, research and be less prevalent in the northern part of the country, innovation? partly because there are fewer people and more space How can sustainable development be promoted in available. Moreover, in cases where they are the two connection with mass tourism (e.g., cruise tourism)? main local economic sectors, tourism and fi shing are What is the usefulness of site guidelines or other ap- to a large extent interrelated. For example, in Lofoten, proaches? most people in the fi shing industry look at tourism as a How can Sami tourism development be supported natural part of the coastal industries in Norway (Nor- in an ethical and sustainable way? How can “over-com- mann, 2008). mercialization” of Sami culture be avoided? What is the potential for food tourism? How can collaboration between local food production and the tourism industry be strengthened? How can sustainable development of consumptive wildlife tourism (fi shing and hunting) be ensured?

NORDREGIO WORKING PAPER 2016:1 53 6 Creative Industries

Corresponding author: Nelli Mikkola

Th is chapter focuses on creative industries in the Nor- tionally been classifi ed into three categories: primary dic Arctic context. It outlines the defi nition of creative production, industrial production and service produc- industries and its core concepts while also looking at tion. It has been argued that the creative industries recent research. It then moves to discuss creative in- should be considered as a fourth category rather than dustries’ role in the Arctic and peripheral environ- falling under one of the three existing categories (Ein- ments and considers the specifi c features and precondi- arsson, 2014). tions of these regions. Finally, it describes some In light of the argument that human creativity is the examples of creative industry activities in the north- ultimate economic resource, the creative industries are ernmost parts of the Nordic countries. Th e chapter seen as increasingly important for economic well-being concludes with issues for further discussion. (Florida, 2002). It has been widely predicted that industries of the 21st century will to a greater extent depend 6.1 What are the creative indus- on the generation of knowledge through creativity and innovation (Landry & Bianchini, 1995). tries? Th e development of successful creative industries is Th e widest defi nition of creative industries includes oft en linked with urban regions and wide, dense cul- several key sectors such as: advertising, architecture, tural networks characterized by a creative class. Th e art and antiques, craft s, designer fashion, fi lm, interac- creative class, which is the key form of human capital tive computer games, music, the performing arts, pub- for creative industries, can be defi ned as a group of lishing, soft ware and television (Figure 3) (Nordic In- individuals with either a high level of education or an novation Centre, 2007). Another defi nitional approach engagement in creative types of activities, including is to look at individuals and their jobs and professions. scientifi c, artistic or technological, that translate their In economics, production in the economy has tradi- creativity into economic returns. (Gibson, 2010)

Figure 3: Some deﬁ nitions of creative industries.

Source: Einarsson, 2014.

54 NORDREGIO WORKING PAPER 2016:1 Th e concept of creative industries is still being de- and revitalization of the region. veloped, and the distinction between the terms crea- Th e role of creative capital for economic well-being, tive industry and cultural industry has been discussed sustainable living and overall human development widely. Th e question of how the economic and social in the Arctic region has become a prominent and re- value of culture should and could be manifested and searched topic. However, contemporary studies con- measured is likely to remain as a debated issue, even ducted on creative industries in the Arctic regions have though diff erent categorizations have been made. Th e focused mainly on the north of Canada and Alaska. term “creative industry” encompasses a broader range Th e role of creative capital in the Nordic Arctic re- of activities that include the cultural industries plus all mains rather unstudied. cultural or artistic production. (UNESCO, 2006). Th ere is some evidence that the arts are currently Today’s creative and cultural industries are under- booming in the North, and the production, marketing going considerable changes as a result of the recent and consumption of northern art seem to be a growing economic crisis, increased use of digital technologies market, both in terms of indigenous and non-indige- and the evolution of intellectual property rights. Fol- nous art production. While music, literature and fi ne lowing the shift of global investment and industrial arts have been traditionally prominent in the North, production to developing countries, such as China and Arctic fi lm productions and diff erent types of festi- India, the post-industrial Western countries have been vals are fairly new and successful phenomena (AHDR, challenged increasingly to develop their services sector 2014). and to use their creative capital. Th is has posed both It has been emphasized that there is a need for new challenges and opportunities for the Nordic countries creativity in the Arctic in order to cope with the eco- in particular, which have one of the most highly skilled nomic challenges with an emphasis on human creativi- and highly educated labour forces in the world (Hau- ty (Pelyasov & Unesco, 2009). For many small commu- tamäki, Kainulainen, & Turkki, 2009). nities across the Arctic, the lack of job opportunities Furthermore, the global economic down-turn has has led to population decline. However, there are also drawn international attention to the employment po- communities where a combination of local entrepre- tential of creative industries. Th ese industries provide neurship, political leaders and government initiatives opportunities for self-employment and engage numer- has created encouraging examples, where thriving ous SMEs, entrepreneurs and freelancers. However, businesses as well as cultural revival contribute to a public sector support for the creative and cultural sec- meaningful way of life in a viable community. tors has remained vital. Simultaneously, the cultural sector has traditionally been among the fi rst public 6.2.1 Creative industries as drivers of regional sectors to face cuts at the national level in times of eco- development in the Arctic nomic down-turns (Hautamäki et al., 2009). Recent studies have indicated that creative capital, One of the core challenges related to the enhance- widely defi ned, is likely to play a defi ning role in the ment of creative industries stems from the lack of clear regional transformation of remote areas and that many indicators and tools to measure and elaborate on the Arctic regions have greater-than-expected creative re- development of this sector. Th is in turn aff ects the crea- sources. Nevertheless, it is diffi cult to argue that the tion of feasible strategies and the ability of fi nancial ac- creative capital in the peripheral northern communi- tors to consider the potential of creative sectors. Th is ties could make them competitors for national and problem has been worsened by certain legislative com- global innovation ventures, but it is plausible to suggest plications, such as intellectual property rights, varying that creative industries in peripheral regions could im- tax regimes and mobility issues (European Commis- prove the prospects for future economic transforma- sion, 2012c). tion and development (Petrov, 2014). One explanation for these substantial creative re- 6.2 Creative industries in the Arctic sources can be drawn from arguments suggesting that the less favourable social and business environment of Creative capital and the potential of creative industries the periphery highlights the importance of creativity to foster economic development as an alternative or and innovation, and requires even more creative eff ort, complement to recourse-based development has be- originality and ingenuity from actors to overcome bar- come a salient issue in the Arctic context. It has been riers and capacity shortages compared with the core argued that creative capital is critical for economic de- regions (Petrov, 2007). velopment and socio-economic transformation in the Th e emphasis placed by smaller nations on cultural Arctic, as it holds potential for economic reinvention activities has also been linked to their fi ghting for their

NORDREGIO WORKING PAPER 2016:1 55 cultural heritage in a world characterized by increasing tive capital. According to Petrov (2014), a number of globalization. Another reason for less populated coun- Arctic regions could become test sites for implement- tries to support cultural matters is to safeguard their ing alternative strategies of regional development based independence and national characteristics (Einarsson, on creative capital, and knowledge-based and cultural 2005). economies.

6.2.2 Peculiarities of the creative class and capi- 6.3 Current trends in the Nordic tal in the Arctic Overall, the role of the creative class in peripheral re- Arctic gions has been more widely reconsidered recently, as Th is chapter aims to focus primarily on the creative in- northern peripheral regions have encountered demo- dustries in the Arctic parts of the Nordic countries and graphic and economic restructuring; for instance, in to outline the current trends in the region. It also brief- terms of outmigration and outfl ow or down-turn of ly provides selected, depictive examples of creative in- large-scale industries. Arctic regions face several barri- dustry sectors and cultural management activities in ers in sustaining a local creative class and attracting the region. talent to the region. Th ere are three main groups of municipalities in the Creative capital in itself is not a guarantee of a suc- Nordic Arctic where employment in the arts, enter- cessful and economically viable creative industry sec- tainment and recreation (as a percentage of employed tor in peripheral regions and generally requires addi- people) is relatively high and above the Nordic aver- tional development incentives. Th e starting point for age. Th e fi rst group is municipalities with remarkable the regional development of creative industries occurs tourism activities, especially in the winter season, such in the interface of strategic development policies and as Kittilä and Kolari in Finland. Th e second group in- self-steering cultural activities. Successful regional de- cludes capitals and regional centres, such as Reykjavik velopment work contributes to new cultural activities in Iceland and Tórshavn in the Faroe Islands. Th e third and creates preconditions for the accumulation of crea- group includes a group of municipalities with large tive activities and know-how in the regions, which con- proportions of Sami people, such as Guovdageaidnu– sequently fosters regional competitiveness and stimu- Kautokeino, Unjárga–Nesseby and Divtasvuodna–Ty- lates economic gains. Among the existing examples is sfj ord in Norway, Inari (Anár) in Finland and Jok- the Lapland Strategy for the Creative Industries, which kmokk in Sweden. served as a business-based development plan for the Employment in the arts, entertainment and recrea- creative industry sector in Northern Finland between tion in the Nordic Arctic is presented in Map 17. Tak- 2008 and 2013. Introduced by the Regional Council of ing into consideration the fact that the content and Lapland, the Strategy and its toolbox aimed at improv- defi nition of creative industries is a contested topic, ing business and employment in the creative indus- statistical classifi cations of creative industry activi- tries, thereby enhancing the region’s attractiveness and ties can be made in numerous ways. Map 17 looks at economy (Regional Council of Lapland, 2008b). creative industries from a wide perspective including On the other hand, the creative industries are spon- several subcategories of the arts, entertainment and taneous and endogenous by defi nition, and therefore recreation; namely, creative, arts and entertainment ac- the role of calculative development and governmental tivities; libraries, archives, museums and other cultural steering is limited and can at worst turn into a con- activities; gambling and betting activities; and sports straining element (Ruokolainen, 2008). activities and amusement and recreation activities. One of the distinctive features of Arctic creative in- In order for peripheries to become “hot spots” of industries and development is the need to reconcile local- novation and economic growth, there has to be a con- ly oriented sustainable development and the realities of nection to localized knowledge and a social setting that globalization, including contemporary capitalism and can be formed with building of institutions and for- international competition. In the Arctic regions, crea- mation of civic society (Aarsæther, 2004; Petrov, 2011). tive industries operate in an environment character- Creativity in peripheral regions is usually strongly in- ized by the many aspects of aboriginalism, identities, terconnected to the local environment and based on environmentalism and industrialism (Hayter, 2003; understanding it. In the Nordic Arctic, inspiration is Petrov, 2007). drawn especially from the rich cultural heritage and Arctic creative industries remain a subject of ongo- the natural environment. Strong sectors of creative ing research, and much of the creative capital literature industries in the Nordic Arctic are festivals, fi lm and is devoted to developing measures to quantify the crea-

56 NORDREGIO WORKING PAPER 2016:1 Map 1 7: Employments in arts, entertainment and recreation in the Nordic Arctic

music, as well as design and handicraft s based on local dustry for marketing of Finnmark. A minority of the raw materials. Local actors and entrepreneurs are oft en festivals are based on commercial interest or private the fi rst ones to recognize new opportunities requiring ownership. Even though not signifi cant in terms of em- action (Finnish Ministry of Education 2009). ployment, the economic turn-over of the festivals gives them legitimacy as belonging to the cultural trade or 6.3.1 Festivals experience economy (Jaeger & Mykletun, 2009). Towns, villages and communities are increasingly keen Another major cultural festival in the Nordic Arctic to showcase their culture and environment and to hemisphere is Nordic Days in Murmansk. Th e festival share them with visitors in the form of festivals is a joint initiative by the Norwegian Consulate Gen- (O’Sullivan & Jackson, 2002). Festivals in peripheral eral in Murmansk, the Consulate General of Finland in regions rarely provide suffi cient paid employment for St. Petersburg, Murmansk Offi ce, the Consulate Gen- the inhabitants, but they serve as rich opportunities to eral of Sweden in St. Petersburg and the Information participate in creating cultural expressions. Entrance Offi ce of the Nordic Council of Ministers in St. Peters- and ticket fees, sales of merchandise, sponsorship and burg. Bringing together a wide range of Arctic actors, public funding are the most important sources of fi - the Nordic Days include a wide range of exhibitions, nancing. A wide range of themes are represented in concerts, fi lms and discussions with a focus on vital these festivals in which culture and identity play roles and contemporary issues in the North. as ideological bases and cultural framing of the events (Jaeger & Mykletun, 2009). 6.3.2 Film A depictive case for the thriving festival scene in the Th e fi lm industry has become prominent in the Nordic Nordic Arctic is Finnmark, a Norwegian peripheral Arctic. In addition to the creative industries’ direct role Arctic region known for its large and versatile festivals- in regional development and growth through employ- cape, where most of the festivals identify themselves by ment in these industries, they can also generate addi- ethnicity, culture, geographical location, place identity tional eff ects. Film and other creative industries not and nature. Some of the festivals are known outside the only have a direct impact on regional development region and also abroad, and are used by the tourist in-

NORDREGIO WORKING PAPER 2016:1 57 the Ministry of Industry, which allows producers to ap- Box 13. Nordic co-operation in the fi eld of ply for reimbursements from the state treasury of the creative industries costs incurred in the production of fi lms and television With an ambition to create more intense and struc- programmes in Iceland. Furthermore, Northern Nor- tured Nordic co-operation in the fi eld of creative and way has implemented incentives to attract fi lm crews cultural industries, the Nordic Council of Ministers launched an initiative called KreaNord in 2008. Krea- to the region through the National Film Commission Nord was designed to improve the growth prospects of Norway. Combining fi lm and festival, Sodankylä, a for the cultural and creative industries in the Nordic small town in Finnish Lapland, is the annual venue for region. It did not have a special Arctic focus, but its the international Midnight Sun Film Festival. Th e 30th elements are also relevant for the Nordic Arctic. year of the festival in 2015 attracted around 30 000 in- KreaNord’s mandate during 2008–2015 was: ternational visitors. to continue to develop and create frameworks for the Nordic countries as pioneers in the creative 6.3.3 Music industries, Th e Nordic music industry is in a stage of rapid growth, to create added value in the creative industries in in terms of both employees and turn-over. Th e reve- the region, which will also contribute to growth and in- nues of music industry and number of music festivals novation in the arts and cultural life as well as in other has increased in the northern parts of all Nordic coun- industries, tries and represents a signifi cant element of the creative to be a strong Nordic platform and a meeting point activities and cultural expression in the region. A for the exchange of experiences, knowledge and formation of strategic partnerships, and growing type of creation of value in the music industry to provide the framework for co-operation between is a result of related industries, such as the production authorities in the Nordic countries, private companies, of music videos, soft ware, distribution of digital mate- creative and cultural entrepreneurs and educational rial, etc. (Einarsson, 2005). institutions. By international standards, the size of the music In the European context, KreaNord serves as a unique markets in the Nordic countries is small. However, example of cross-border and cross-sectoral policy co- despite certain limitations, some of the Nordic coun- operation in the fi eld of creative industries. Its novel tries have been successful in exporting and branding approach and pilot projects have since been copied their music. Sweden, for example, is the third largest and implemented elsewhere in Europe (Åstedt, Hallin, exporter of music in the world. Music has a signifi cant & Strömblad, 2015). Co-operation concerning cultural and creative impact also on exports from Iceland, particularly by industries after KreaNord has continued through indirect means; e.g., through the tourist industry. A EntreNord, KreaNord’s entrepreneurship project, and number of tourists come to Iceland as a result of the through the Lighthouse-project “Culture and Creativ- infl uence of famous performers, such as Björk, Sigur ity for Growth” launched by Nordic Innovation in 2015. Rós and Of Monsters and Men. Revenues from foreign The aim of this lighthouse project is to develop Nordic co-operation between the cultural and creative indus- tourism have increased substantially in recent years, tries and to promote activities in these industries. partly as a result of cultural activities, including musi- cal activities, such as the numerous music festivals held For more information, see: http://www.kulturkontakt- nord.org/en/grants/kreanord in Iceland (Einarsson, 2005). http://www.entrenord.dk/da Especially in terms of music, the global, exogenous forms of culture have been adopted and adapted in the through growth and employment but also contribute Arctic regions for local purposes—for local cultural re- to factors such as quality of life, personal development, vitalization and expression (AHDR, 2014). learning and social inclusion. Th ese factors then in Th is has been evident, for instance, in Greenland turn can make a more indirect contribution to regional and the Faroe Islands. With help from funding agen- development in the long term. Film industries in the cies, these regions with limitations in terms of size and Arctic regions represent a successful example of how budget have created a lively and internationally known policy decisions and initiatives from governments, music sphere. For instance, the biggest Greenlandic re- county councils and municipalities have a signifi cant cord label, ULO, releases everything from Greenlandic impact on regional development (Dahlström, 2005). rock bands, pop singers and hip hop music crews to A case in point is the Icelandic fi lm industry, which Inuit folk music (AHDR, 2014). has gained a high profi le in the international fi lm in- Th e Faroe Islands are famous for their choirs. dustry in recent years and is backed by an incentive by Oral tradition (quinces / ballads / chain dances and hymns) is deeply rooted in the Faroese society, which is

58 NORDREGIO WORKING PAPER 2016:1 thought to be one of the reasons why music plays such tival receives permanent support from the Norwegian an important role on the Faroe Islands today. TUTL is Government, the Sami Parliament, Troms County and a record label and distributor of Faroese music. TUTL’s Kåfj ord Municipality.9 catalogue today comprises over 500 releases of national Modern media also play a key role for creative Sami as well as international acclaim (both ethnic, folk, jazz, industries. Th e visibility of Sami culture, for instance, pop, rock, heavy metal, classical, choral, children’s mu- through Sami TV news has increased in recent years, sic, country, gospel, etc). 7 and the (social) media have become an important tool for self-expression and for the realization of crea- 6.3.4 Design and handicrafts tive and entrepreneurial projects. A good example is Design has appeared as a novel and promising creative Ođđasat, a Sami television news programme broadcast industry in the Nordic Arctic. It is undoubtedly an in- in Norway, Sweden and Finland as a joint production dustry that has already demonstrated a sustained ca- by NRK, SVT and YLE (the public-service broadcasters pacity to grow in the Nordic countries along with in- in their respective countries). ternational demand. Th e role of design for the Nordic Sami culture is addressed both by national legisla- Arctic has been increasingly under scrutiny, in terms of tion and regional activities, and also through cross- both sustainability and economic gains. Under this border initiatives. For instance, in Norway, the Sami umbrella, the northernmost design week in the world, Parliamentary Council has introduced a programme Arctic Design Week, is being annually held in Rovanie- for Sami culture with the aim of assisting and encour- mi in Finnish Lapland.8 aging cultural players to earn their living through their Handicraft s are a traditional creative industry in artistic and cultural expression. Th e programme also the Nordic Arctic. Th ey come in many forms and are addresses the profi tability aspect of creative industries usually based on traditions and distinctive local ma- by bringing together regional actors and investors who terials. As merchandise and souvenirs, they play a role will work jointly on business development using com- in generating income via creativity, local production petence mapping, idea development, business creation and skills specialization. At the same time, the local and development, and strategies (Sami Parliament of producers, and especially Sami products, have faced Norway, 2013). competition from similar items and copies produced Th e EU’s Interreg North Programme for the facili- in growing developing economies with lower manu- tation and advancement of cross-border activities and facturing costs (World Intellectual Property Organiza- joint ventures in the northern hemispheres of Norway, tion, 2015). Sweden and Finland has a subprogramme called Sáp- mi. Th e programme supports and promotes projects 6.3.5 Sami culture and creative industries focusing on the Sami culture industry and Sami cul- Sami culture is seen as one of the most distinctive fea- tural activities. Th e Sápmi programme also stimulates tures of the Nordic Arctic, and it provides a basis for creative Sami industries through product, service and tourism and the creative and cultural industries. Th ese method development and marketing, and through the opportunities are, however, tied to the preservation of creation of mutual forums for commercial entrepre- Sami culture and knowledge, and their transfer from neurs (Interreg IV A North, 2007). one generation to another, which as such is one of the main concerns regarding the indigenous population in 6.4 Creative industries and sus- the North Calotte region (AHDR, 2014). Today, Sami culture is visible, for instance, through tainable regional development many annual festivals taking place in diff erent Nordic Creative industries have emerged as sustainable alter- countries. One of the largest international Sami festi- natives to economic development and socio-economic vals, entitled “Riddu Riđđu” (which in the Sami lan- transformation in the Arctic. Th e role of creative in- guage means “Little storm by the coast”), has since dustries and cultural capital bears signifi cant potential 1991 taken place annually in Kåfj ord in Northern Nor- for the demographic and economic restructuring of the way. Th e festival celebrates coastal Sami life and cul- Arctic regions, which are struggling with outmigration ture, encompassing music, performing arts, courses, and a down-turn in traditional large-scale industries. seminars and movies, among other activities. Th e fes- Arctic local culture with its distinctive characteristics, such as nature and the Sami tradition, has pro-

7 See more: http://tutlrecords.com/about.php

8 See more: http://arcticdesignweek.fi / 9 Festival website at: http://riddu.no/.

NORDREGIO WORKING PAPER 2016:1 59 vided inspiration and content for creative industries in How can fi nance for creative Arctic industries in the the Nordic Arctic. Strong sectors within the creative Nordic countries be attracted? industries in the Nordic Arctic are festivals, fi lm and How can the Nordic Arctic region become an at- music, as well as design and handicraft s from local raw tractive location for competent creative actors? materials. How can the demand for Arctic creativity be in- Th e development of creative industries in the Nordic creased? What should be done in order to create a big- Arctic does, however, include certain barriers related ger market share for peripheral creative industries? to sustaining a local creative class, attracting talent to What kind of role should the public sector (i.e., gov- the region and making Arctic creative industries com- ernments, regional councils, funding agencies, etc.) petitive. Moreover, the Arctic creative industries are have in the development of creative industries in the inclined to achieve a balance between locally oriented Arctic? sustainable development and the realities of globaliza- What are the key strengths of creative industries in tion and international competition. the North Arctic? Which sectors have the most poten- Within this context, regional development initia- tial to become creative industries? tives and funding opportunities can contribute to the Who has the right to benefi t from local creative cap- emergence and expansion of creative Arctic industries, ital, and how should the indigenous aspects be taken consequently fostering regional competitiveness, eco- into consideration? nomic gains and viability of the local communities. Creative economies in the Arctic may also create However, the role of calculative development and gov- negative externalities,10 meaning that the activities of ernmental steering can only have a limited eff ect, as the creative industries can also have a negative impact on creative industries are spontaneous and endogenous by third parties in terms of economic inequality, housing their very nature. aff ordability, environmental impacts, over-consumption and political infi ghting. How should the issue of negative externalities be addressed?

10 A negative externality is a cost that is incurred by a third party as a result of an economic transaction. In a transaction, the producer and consumer are the fi rst and second parties, and third parties include any individual, organization, property owner or resource that is aff ected indirectly.

60 NORDREGIO WORKING PAPER 2016:1 References

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NORDREGIO WORKING PAPER 2016:1 65 Interviews

Anders La Cour, Visit Greenland, January 2015 Guðrið Højgaard, Visit Faroe Islands, April 2015

Dan Jonasson, Visit Sápmi, December 2014 Hilde Bjørkli, Visit Northern Norway, September 2015

Einar Lier Madsen, Nordland Research Institute, April 2015 Hrafnhildur Ýr Víglundsdóttir, Icelandic Tourist Board, August 2015 Erika Mattson, Swedish Lapland Visitors Board, April 2014 and follow-up November 2015 Satu Luiro, Regional Council of Lapland, May 2015

66 NORDREGIO WORKING PAPER 2016:1 ISSN 1403-2511 ISBN 978-91-87295-35-5

Nordregio P.O. Box 1658 SE-111 86 Stockholm, Sweden [email protected] www.nordregio.se www.norden.org