Heat waves caused by climate change have cost the global economy trillions since the 1990s

This chart shows the relationship between each country’s median income and the impact man-made heat waves have had on their economy. Lower-income countries have emitted less CO2 and suffered greater losses from man-made heat waves since the 1990s. Photo credits: Christopher W. Callahan and Justin S. Mankin

Massive economic losses from sweltering temperatures caused by human-caused climate change are not just a problem for the distant future. A study in the journal Science Advances has found that more severe heat waves resulting from global warming have already cost the world economy trillions of dollars since the early 1990s – with the world’s poorest and lowest-carbon emitting countries suffering the most .

Dartmouth College researchers combined newly available, detailed economic data for regions worldwide with the average temperature for the hottest five-day period – a commonly used measure of heat intensity – for each region in each year. They found that heat waves from 1992 to 2013 statistically coincided with fluctuations in economic growth and that an estimated $16 trillion was lost to the impact of high temperatures on human health, productivity and agricultural output.

The findings underscore the immediate need for policies and technologies that protect people during the hottest days of the year, particularly in the world’s warmest and most economically vulnerable countries, the researchers report.

“Accelerating adaptation action during the hottest period of any year would yield economic benefits now,” said first author Christopher Callahan, a PhD student in geography at Dartmouth. “The amount of money spent on adaptation should not be judged solely on the price of those actions, but relative to the cost of doing nothing.

The study is one of the first to look specifically at how heatwaves affect economic performance, said lead author Justin Mankin, an assistant professor of geography at Dartmouth. “Nobody has shown an independent fingerprint for extreme heat and the intensity of that heat’s impact on economic growth. The true cost of climate change is far greater than we have previously calculated,” Mankin said.

“Our work shows that no location is well adapted to our current climate,” Mankin said. “The lowest-income regions of the world are those that suffer the most from these extreme heat events. As climate change increases the magnitude of extreme heat, these costs can be expected to continue to rise.”

Climate models and previous research have factored in heatwaves alongside other extreme events resulting from climate change, such as more frequent flooding and greater storm intensity, Callahan said. But heatwaves have a unique signature, he said. They occur on shorter timescales than droughts, and temperatures on the hottest days of the year are projected to rise much faster than the global mean temperature as human activities continue to drive climate change.

“Heat waves are one of the most direct and tangible effects of climate change that people feel, but they have not yet been fully factored into our estimates of what climate change has cost and will cost in the future,” Callahan said. “We live in a world that has already been transformed by greenhouse gas emissions. I think our research helps demonstrate that.”

The study results underscore issues of climate justice and inequality, Mankin and Callahan said. The economic costs of extreme heat – like the costs of adaptation – have been and are being borne disproportionately by the world’s poorest countries in the tropics and global south. Most of these countries have contributed the least to climate change.

The researchers found that while economic losses from extreme heat events averaged 1.5% of gross domestic product (GDP) per capita in the world’s wealthiest regions, low-income regions suffered a loss of 6.7% of GDP per capita. In addition, the study found that, to some extent, affluent subnational regions in Europe and North America – which are among the world’s largest emitters of CO2 – could theoretically benefit economically from periods of warmer days.

“We have a situation where the people who are causing global warming and extreme heat changes have more resources to withstand those changes and in some rare cases could benefit,” Mankin said. “There is a massive international transfer of wealth from the world’s poorest countries to the world’s richest countries as a result of climate change – and that transfer must be reversed.”

In July, Mankin and Callahan published a paper in the journal Climatic Change assessing the economic damage that individual countries have caused to others through their contribution to global warming. The study presented the science needed for nations to assess their legal standing to claim economic damages from emissions and warming.

In this latest publication, Mankin and Callahan point out that the world’s largest emitters should foot large parts of the bill for adapting to extreme heat events, in addition to helping lower-income countries develop low-carbon economies. In the global economy, sharing the cost of adjustment would benefit wealthy and developing countries alike, Mankin said.

“Almost no country on earth has benefited from the extreme heat,” Mankin said. “Global events such as the COVID-19 pandemic have highlighted the close interdependence of the supply chain and the global economy. Low-income countries have a disproportionate number of outdoor workers who often produce the commodities so critical to the global supply chain – there’s absolutely the potential for ripple effects.”

The paper “Globally unequal effect of extreme heat on economic growth” was published in Science Advances on October 28, 2022.

Costs of climate events: Heat waves cause exports to collapse worldwide

More information:
Christopher W Callahan et al., Globally unequal effect of extreme heat on economic growth, Science Advances (2022). DOI: 10.1126/sciadv.add3726. www.science.org/doi/10.1126/sciadv.add3726 Provided by Dartmouth College

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