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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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How Extreme Temperatures Could Melt The U.S. Economy

  • The frequency and intensity of heatwaves in the US have increased over the past 70 years, affecting worker productivity and health.
  • When temperatures rise above 90°F, productivity declines by 25%, and it plummets by 70% at temperatures above 100°F, leading to a $100 billion annual economic loss.
  • By 2050, the U.S. economy is projected to lose $500 billion annually due to heat exposure, disproportionately impacting the poorer regions of the country.

Extreme heat is costing the United States economy billions of dollars each year. As weather patterns change around the world, heat waves are getting more frequent, more intense, and longer in duration. But many of the buildings and factories that the U.S. workforce spends its days in were not built with extreme heat in mind, and many lack air conditioning entirely, especially in the industrial sector. The result is a massive dip in productivity that is costing the United States billions of dollars on a yearly basis, and that price tage is only going to keep growing.

According to the Environmental Protection Agency (EPA), the frequency of heat waves in U.S. cities has increased steadily over the last 70 years, from two per year in the 1960s, to six per year this decade, while the duration of those heat waves has also increased by about one day on average. The season of heat waves has also increased significantly, with a window now 49 days longer than the heatwave season of the ‘60s. “ Timing can matter, as heat waves that occur earlier in the spring or later in the fall can catch people off-guard and increase exposure to the health risks associated with heat waves,” says the EPA. And while the heat waves of the dust bowl era of the 1930s remain the most intense in U.S. history, the average intensity is nonetheless statistically significantly higher now than ever before in 46 out of the 50 U.S. cities studied. 

Source: EPA

The result of extreme heat does not just pose serious health and environmental risks, it also causes considerable economic hardship for indoor as well as outdoor industries as workers are less productive, make more mistakes, and are more prone to injury. As temperatures reach 90 degrees Fahrenheit, overall productivity decreases by about a quarter, and when temperatures top 100 degrees, productivity drops off a cliff, plummeting by an incredible 70 percent according to a 2021 study published in the International Journal of Biometeorology. Scientists have only recently begun to track and quantify exactly how the negative correlation between heat and productivity are impacting the economy writ large, but initial results show that the impacts are severe, sweeping, and going to get worse as the climate change continues its warming trajectory.

“We’ve known for a very long time that human beings are very sensitive to temperature, and that their performance declines dramatically when exposed to heat, but what we haven’t known until very recently is whether and how those lab responses meaningfully extrapolate to the real-world economy,” R. Jisung Park, environmental and labor economist at the University of Pennsylvania, recently told the New York Times. “And what we are learning is that hotter temperatures appear to muck up the gears of the economy in many more ways than we would have expected.”

While worker productivity may seem like a relatively small piece of the cost of climate change when compared to, say, flood damage, wildfires, and rising sea levels, it turns out that overheated laborers have a major impact on the economy as a whole. Data compiled by The Lancet shows that more than 2.5 billion work hours were lost in the United States in 2021 alone over the agriculture, construction, manufacturing, and service sectors as a direct result of heat exposure. Altogether, this lost productivity is costing the U.S. economy about $100 billion per year. While that may sound like a lot, it’s chump change compared to projected figures over the next decades as climate change worsens. By 2050, productivity losses due to heat exposure are expected to reach $500 billion annually. 

The impact of these economic losses will have a more adverse impact on poor parts of the United States than on more affluent ones. A 2021 study found that poor workers lose up to 5% of their pay on each hot day, while workers in wealthier areas lose less than one percent. “Temperature projections for 2040–50 suggest that earnings impacts may be 95% smaller for US counties in the richest decile relative to the poorest,” the paper found. “Considering the within-country distribution of vulnerability, in addition to exposure, to climate change could substantially change estimated within-country differences between the rich and poor in income losses from climate change.”

This unequal impact of climate change on the rich and the poor holds true on an international scale as well. While the U.S. economy stands to lose a lot as a result of climate change, the risk for poor nations is much, much higher. It’s a cruel irony, as the most developed countries have contributed the most greenhouse gasses leading to climate change, but the poorest countries with the fewest historical emissions will suffer most

By Haley Zaremba for Oilprice.com

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