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Environmental Minister Leona Aglukkaq, chair of the eight-nation Arctic Council, says an international economic council will be established to drive a better understanding of the challenges and opportunities of Arctic business development.Sean Kilpatrick/The Canadian Press

Canadians living in the Arctic should be looking to their counterparts in Russia or Norway to address their economic problems rather than southern businesses, federal Environment Minister Leona Aglukkaq said Tuesday as she announced the formation of an Arctic Economic Council.

Ms. Aglukkaq, who serves as chair of the eight-nation Arctic Council, said there has long been a gap in that group's work: the lack of a regional forum that would allow northerners from all the countries to work together on common issues of economic development.

"It will for the first time establish a forum that will bring [together] Arctic countries to deal with challenges in the North, share best practices around adaptation and climate, around energy development, shipping and so on," she said.

The minister said she conducted a series of consultations with northern Canadian residents before taking over the chair of the council, and heard frequent concerns about a lack of communication among Arctic people from other countries.

"It became clear there is a gap in Arctic-to-Arctic expertise; we tend to go south for solutions," she said.

She will formally announce the new council on Wednesday at the Northern Lights trade show, a biennial event that promotes business and cultural initiatives in the North, from the mining industry to seal-skin clothing designers. The minister said northern Canadians often encounter problems with business development that are unknown in the South. For example, Arctic communities have installed windmills to reduce their reliance on expensive diesel fuel, but often the turbines do not work at temperatures of -50 C. Meanwhile, windmills that can function in the extreme conditions have been installed in other Arctic countries.

She also noted that all countries are pursuing resource extraction in the Arctic region, including plans to drill for oil offshore in places such as Canada's Beaufort Sea. The economic council will be a place where standards and best practices can be shared.

In a report issued last week in Davos, Switzerland by the World Economic Forum suggested Arctic people need new collaborative approaches to development that give them real partnership with global corporations and national governments.

"Community-based approaches are thus a critical part of development, in addition to environmental protection and safety, in order to secure sustainable change in the Arctic," the World Economic Forum said.

Governments from the Arctic council agreed to set up a business forum at a summit in Sweden last May, and have spent the past eight months consulting with northern businesses, governments and indigenous groups on how to structure it. The membership is open to northern businesses of any size, though individual countries will determine the kinds of businesses that will sit on the body.

Canada lags other countries, notably Norway and Russia, in northern economic development, said John Higginbotham, a senior fellow at Carleton University who focuses on Arctic research.

The existing Arctic council has been more focused on research in environmental and cultural issues, and a business council would complement that work. But Mr. Higginbotham said success will be determined by how broad a mandate the economic group has, and whether it takes a "top down or bottom up approach."

A business-only forum would be less likely to pursue sustainable economic strategies that would bring much-needed jobs while protecting the fragile environment and cultural diversity of the region, said Martin von Mirbach, an Arctic researcher with World Wildlife Fund Canada. He said it is important that the economic council have broad-based membership.