Perspectives on Business and Economics, Vol. 40

80 years (Osterkamp & Jorgenson, 2009). Soil contained in the permafrost can consist of gravel, sand, silt, and clay in varying concentrations bound together by ice. Much of the state’s infrastructure, such as highways and railroads, is built on top of permafrost. When the temperature below ground increases above the freezing point, the ice content of the ground melts and can weaken the soil structure, depending on the type of soil frozen. Permafrost with higher clay content has a much lower strength and stability than that with a high gravel content. Regardless, once permafrost melts, the soil is no longer bound together by ice, and it loses its stability and strength (Kanevskiy et al., 2013). When the ground thaws and refreezes each year, the soil contracts and sinks and then expands and rises, respectively, destabilizing the ground above it. Permafrost thaw can affect slope stability and cause gradual settling and sinking of the surface (Hong et al., 2014). Thawing permafrost poses a danger to any infrastructure built on it, because the structures may have been built assuming that the foundation would remain solid; as a result, it may not have been engineered to be stable on loose soil. Thawing permafrost in steep hill and mountain terrains increases the chances of rock falls and landslides, which can cause road closures (Berwyn, 2018). While permafrost melting is an issue in all arctic nations, Alaska is in the unique position of being the only US state to experience this phenomenon. The building of infrastructure in permafrost regions can itself accelerate the rate of permafrost thaw. Any simple construction project can disrupt the natural temperatures in the frozen layer. Using poor design or standard building techniques that are not adapted to the specific characteristics of the soil in permafrost regions potentially causes further permafrost thaw, which in turn weakens the very infrastructure built on it, introducing a cycle of thaw and damage. Once the initial permafrost layer is disrupted, the layer is more susceptible to the fluctuations in temperature. The permafrost melting and refreezing over varying temperatures cause damage to the infrastructure foundation itself (Hong et al., 2014). Additionally, the economic impacts of permafrost degradation extend beyond the direct physical damages associated with reconstruction and replacement of infrastructure. Thus, any secondary costs that may result must be considered, including effects on the local economy. Finally, identifying the parties responsible for dealing with the permafrost situation and encouraging them to do so are central to any resolution. There are significant direct expenses needed to cover the critical infrastructure maintenance due to permafrost degradation. Most of these economic costs are due to early reconstruction and replacement. A study conducted by the National Academy of Sciences (NAS) estimated that permafrost thaw is projected to be responsible for $5.5B in damages in Alaska by the year 2099, which represents 38% of the cumulative damage to infrastructure caused by various effects of climate change, including flooding, coast erosion, and permafrost melting. Permafrost thawing was projected to be responsible for 90% of road damage and the costs associated with it (Melvin et al., 2016). Since airport and railroad facilities are limited in Alaska, the damage and costs associated with them were projected to be responsible for 10% of the total Alaskan infrastructure. According to a public infrastructure report drafted by the Alaska Department of Environmental Conservation and Alaska Department of Transportation and Public Facilities, in the North Slope oil region of Alaska, maintenance and operations add up to approximately $10M annually due to melting permafrost’s impact on the infrastructure associated with oil extraction (Adaptation Advisory Group…, 2010). The local economy of any region in Alaska is also significantly affected by the worsened conditions of infrastructure that is vital to the survival of a community. Due to the remoteness of Alaska, having well-maintained transportation, education, and health systems is essential for a community to function and for its economy to run smoothly. Damage caused to infrastructure will have secondary or collateral economic damage. As permafrost melting destabilizes land, possible land and housing shortages might increase rents and temporarily leave people displaced, thus threatening public health, safety, and security (Alaska Department of Commerce…, 2012). For an economy dependent on tourism, a permafrost thaw–induced road closure puts the income of the locals at risk.