In one way or another, the two-way influences of global climate on the Arctic, and of the Arctic on global climate, center on its ice and freshwater budget. As the Arctic sea-ice declines, climate models anticipate regional effects on the atmospheric circulation (e.g. through changes in albedo and ocean-atmosphere heat exchange); and since the pioneering work of Bryan and Manabe in the 1980s, we have come to expect remote effects also, as a changing freshwater efflux from the Arctic reaches south to affect the Atlantic thermohaline circulation. That said, however, it remains true that climate models are inherently weak in quite a long list of the processes that are important to our understanding of how change takes place in northern seas and how it might affect climate. And the fact that the Arctic-subarctic system is both under-sampled and rapidly-changing is also problematic when establishing freshwater budgets; put simply, the large variability in the supply, storage and transfer of freshwater throughout this system may prevent us from discriminating inconsistency from change in our estimates.

After a brief recap of a representative freshwater budget for the Arctic and of how climate models expect the freshwater delivery to the Arctic to change, this talk concentrates on five areas where our understanding of the freshwater budget and the processes important to it appear to have been materially advanced during recent years, including but not necessarily restricted to the IPY. These include: (1) new ideas on the behaviour of the greatest oceanic freshwater reservoir on Earth (Proshutinsky, Toole); (2) new intricate ideas on ocean-climate feedback processes along the Arctic margin of the Beaufort and Chukchi seas as the land-fast ice thins and breaks free (Shimada); (3) new ice-thickness techniques in support of sea ice prediction (Laxon/Giles,  Wadhams, Gascard); (4) a new and practical approach to monitoring the freshwater flux through the Canadian Arctic Archipelago by combining observations with models (Prinsenberg, Peterson); and (5) new direct observations of the freshwater flux passing south through the Fram Strait (de Steur et al., Rabe et al.). Such a diverse set of examples serves to illustrate the broad front over which progress is needed -- and is being made -- in developing our understanding of these processes, their changes, their feedbacks and their likely climatic impacts to the point where they can be of practical use to the development of climate models. Meanwhile, in many cases, we are still in the process of exploration.