Erratic weather slows down the economy

Changes in weather patterns due to climate change will slow down the economy, according to researchers at the Potsdam Institute for Climate Impact Research. 

In a new study published in the journal Nature Climate Change, the researchers juxtaposed daily temperature changes with economic data from more than 1,600 regions worldwide over 40 years.

The researchers compared each year’s day-to-day temperature variability between 1979 and 2018 with the corresponding regional economic data, analysing a total of 29,000 individual observations.

They found that if the temperature varies strongly from day to day, the economy grows less.

They also found that economies in low-income regions of the global South are particularly affected, as co-author of the study Leonie Wenz explained: ‘We find that familiarity with temperature variations is important: Economies in Canada or Russia, where average monthly temperature varies by more than 40°C within a year, seem better prepared to cope with daily temperature fluctuations than low-latitude regions such as parts of Latin America or Southeast Asia, where seasonal temperature differences can be as small as 3°C. This is likely because farmers and small business owners have cultivated resilience against temperature variability.

‘Furthermore, income protects against losses.

‘Even if at a similar latitude, economies in poor regions are more strongly affected when daily temperature fluctuates than their counterparts in rich regions.

‘If the daily temperature deviates from seasonal expectations, fundamental elements of the economy are negatively impacted – including crop yields, human health, sales and operational costs.

‘The real problem caused by a changing climate are the unexpected impacts because they are more difficult to adapt to. Farmers and other businesses around the world have started to adapt to climate change. But what if the weather becomes simply more erratic and unpredictable? What we have shown is that erratic weather slows down the economy. Policymakers and industry need to take this into account when discussing the real cost of climate change.’

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