There’s no question that the extreme heat blanketing the globe costs the economy, as dangerous conditions push workers to stay home or cut their days short and businesses temporarily close.
However, the total price tag is just starting to come into focus as emerging research shows the costs of scorching temperatures is far higher than previously understood.
“A lot of studies have examined the impacts of extreme heat on health and mortality risks, as well as on labor productivity in certain sectors, like agriculture and construction,” Justin Mankin, an associate professor of geography at Dartmouth College, told Insider. Newly available economic data and more advanced climate models now make it possible to measure how extreme heat hurts the global economy.
Between 1992 and 2013, the world lost an estimated $16 trillion, on average, because of extreme heat fueled by the climate crisis, a study Mankin coauthored last year found. The losses were much higher in poor tropical countries, accounting for up to 6.7% of GDP per capita in the regions. Wealthier regions saw a 1.5% hit to GDP per capita.
The findings underscored the unequal burdens of the climate crisis, especially because rich countries were the largest polluters, Mankin said. The economies in low-income countries tend to be more vulnerable to extreme heat and other disasters because they’re agricultural-based, a large fraction of the workforce are outdoor laborers, and energy infrastructure isn’t resilient to stress.
The study also highlighted the cost of inaction, he added.
“The economic costs of extreme heat do not encompass the totality of the economic costs of climate change,” Mankin said. “So this implies that our economy, and our well-being that we secure via our economy, is far more sensitive to the climate than we understood previously.”
Headlines throughout the world proved this sensitivity, particularly as we lived through July, which is set to be the hottest month on record.
In the US, researchers found that reduced labor productivity alone during high heat cost the country $100 billion annually. That figure could double by 2030 and amount to an estimated 0.5% of GDP, a study by the Adrienne Arsht-Rockefeller Foundation Resilience Center found. The costs are compounded by lower crop yields on farms and negative health effects to people.
Texas’ gross state product could take a $9.5 billion hit this year, equivalent to a 0.47% lower growth rate.
Extreme heat has also battered Southern Europe and North Africa this year in countries such as Italy, Spain, Greece, and Tunisia. The heat is hurting tourism, and in some cities, workers are walking off the job, CNN reported.
The European Union lost more than $600 trillion between 1980 and 2021 because of extreme weather, and heat waves were responsible for 13% of the costs, the bloc’s environmental agency found.
These losses could end up being larger, Mankin said.
“Average temperatures are rising, so statistically, we are going to have more extreme heat in more places,” he said. “What’s unique about the extreme heat right now is the number of people it’s impacting. It’s lasting longer and is spread out over larger regions.
