Heatwaves have cost global economy trillions since 1990s

Heatwaves don’t just cause environmental devastation and have a severe impact on human health, they also negatively affect the economy, new research has shown.  

Severe heatwaves have cost the global economy trillions since the early 1990s, a study by Dartmouth College has found, with the poorest and lowest emitting nations the worst affected.  

Researchers combined worldwide economic data and average temperatures of the hottest five-day period for each region for each year over 1992-2013.  

Results showed heatwaves coincided with variations in economic growth, with an estimated $16 trillion lost due to high temperatures impacting human health, productivity and agriculture. 

‘Accelerating adaptation measures within the hottest period of each year would deliver economic benefits now,’ said first author Christopher Callahan, a doctoral candidate in geography at Dartmouth. ‘The amount of money spent on adaptation measures should not be assessed just on the price tag of those measures, but relative to the cost of doing nothing. Our research identifies a substantial price tag to not doing anything.’ 

The study is believed to be the first of its kind, as previous studies have included heatwaves along other climate crisis driven events, like flooding.  

Heatwaves occur on shorter timescales and temperatures on the hottest days of the year are projected to rise much quicker than global average temperatures.  

‘No one has shown an independent fingerprint for extreme heat and the intensity of that heat’s impact on economic growth. The true costs of climate change are far higher than we’ve calculated so far,’ said senior author Justin Mankin, an assistant professor of geography at Dartmouth. 

The study highlights how costs of the climate crisis will be disproportionately felt by the poorest nations in the tropics and global South, as economic losses due to extreme heat averaged at 1.5% of GDP per capita for the wealthiest regions. Low-income areas, however, suffered a loss of 6.7% of GDP per capita.  

‘We have a situation where the people causing global warming and changes in extreme heat have more resources to be resilient to those changes, and, in some rare cases, could benefit from it,’ Mankin said. ‘It’s a massive international wealth transfer from the poorest countries in the world to the richest countries in the world through climate change — and that transfer needs to be reversed.’ 

Both authors suggest the world’s worst emitters should pay a large share towards adaptation measures to extreme heat and should financially aid low-income countries to become net-zero. They say sharing adaptation costs would benefit both wealthy and developing nations.  

‘Almost no country on Earth has benefitted from the extreme heat that has occurred,’ Mankin said. ‘Global events like the COVID-19 pandemic have revealed the close interconnectedness of the supply chain and the global economy. Low-income countries have disproportionate numbers of the outdoor workers who often generate the raw materials so crucial to the global supply chain — there is absolutely the potential for upward ripple effects.’  

Photo by Jarosław Kwoczała