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How Record-Setting Heat Waves Could Punish Economies Already Reeling from Inflation

July 20, 2022 | FlaglerLive | 3 Comments

A runner tries to beat the heat by working out in the morning. (AP Photo/Michael Probst)
A runner tries to beat the heat by working out in the morning. (AP Photo/Michael Probst)

By Derek Lemoine

Hundreds of millions of people struggled to keep cool amid a sweltering summer heat wave as cities across the U.S. and mainland Europe experienced record-high temperatures. In the U.K., thermometers topped 104 Fahrenheit (40 degrees Celsius) on July 19, 2022, the highest ever recorded.




While all this broiling heat is surely punishing on a personal level, it also has significant impacts on the broader economy.

As an economist who has studied the effects of weather and climate change, I have examined a large body of work that links heat to economic outcomes. Here are four ways extreme heat hurts the economy.

1. Growth takes a hit

Research has found that extreme heat can directly hurt economic growth.

For example, a 2018 study found that the economies of U.S. states tend to grow at a slower pace during relatively hot summers. The data shows that annual economic growth falls 0.15 to 0.25 percentage points for every 1 degree Fahrenheit (0.56 C) that a state’s average summer temperature is above normal.

Laborers in weather-exposed industries such as construction work fewer hours when it’s hotter. But higher summer temperatures also reduce growth in many industries that tend to involve indoor work, including retail, services and finance. Workers are less productive when it’s hotter out.

2. Crop yields drop

Agriculture is obviously exposed to weather: After all, crops grow outdoors.




While temperatures up to around 85 F to 90 F (29-32 C) can benefit crop growth, yields fall sharply when thermostats rise further. Some of the crops that can be hit hard by extreme heat include corn, soybeans and cotton. These reductions in yields could be costly for U.S. agriculture.

For example, a recent study I conducted found that an additional 2 degrees C (3.6 F) of global warming would eliminate profits from an average acre of farmland in the eastern U.S.

A prominent example of this was the collapse of the Russian wheat harvest in response to the country’s 2010 heat wave, which raised wheat prices throughout the world.

3. Energy use soars

Of course, when it’s hot, energy use goes up as people and businesses run their air conditioners and other cooling equipment at full blast.

A 2011 study found that just one extra day with temperatures above 90 F (32 C) increases annual household energy use by 0.4%. More recent research shows that energy use increases the most in places that tend to be hotter, probably because more households have air conditioning.

This increase in electricity use on hot days stresses electric grids right when people depend on them most, as seen in California and Texas during past heat waves. Blackouts can be quite costly for the economy, as inventories of food and other goods can spoil and many businesses either have to run generators or shut down. For instance, the 2019 California blackouts cost an estimated US$10 billion.

4. Education and earnings suffer

A long-term impact of increasingly hotter weather involves how it affects children’s ability to learn – and thus their future earnings.

Research has shown that hot weather during the school year reduces test scores. Math scores decrease more and more as the temperature rises beyond 70 F (21 C). Reading scores are more resistant to high temperatures, which this research claims is consistent with how different regions of the brain respond to heat.

One study suggested that students in schools that lack air conditioning learn 1% less for every 1 degree Fahrenheit (0.56 C) increase in the school year’s average temperature. It also found that minority students are especially affected by hotter school years, as their schools are more likely to lack air conditioning.

Lost learning results in lower lifetime earnings and hurts future economic growth.




The impact of extreme heat on development, in fact, begins before we’re even born. Research has found that adults who were exposed to extreme heat as fetuses earn less during their lifetimes. Each extra day with average temperature above 90 F (32 C) reduces earnings 30 years later by 0.1%.

Air conditioning can help – to a point

Air conditioning can offset some of these effects.

For example, studies have found that having a working air conditioner means fewer people die, student learning isn’t compromised and extreme heat outside during pregnancy doesn’t hurt fetuses.

Not everyone has air conditioners, however, especially in states such as Oregon and countries such as the U.K. that have more temperate climates but have nonetheless recently experienced unusually extreme temperatures. And many people can’t afford to own or operate them. Survey data from 2017 found that around half of homes in the U.S. Pacific Northwest
lacked air conditioning. And about 42% of U.S. classrooms lack an air conditioner.

While heat waves are shown to induce more households to install air conditioning, it’s hardly a panacea. By 2100, higher use of air conditioning could increase residential energy consumption by 83% globally. If that energy comes from fossil fuels, it could end up amplifying the heat waves that are causing the higher demand in the first place.

And in the U.S. South, where air conditioning is omnipresent, hotter-than-usual summers still take the greatest toll on states’ economic growth.

In other words, as temperatures rise, economies will continue to suffer.

Derek Lemoine is Associate Professor of Economics at the University of Arizona.


The Conversation arose out of deep-seated concerns for the fading quality of our public discourse and recognition of the vital role that academic experts could play in the public arena. Information has always been essential to democracy. It’s a societal good, like clean water. But many now find it difficult to put their trust in the media and experts who have spent years researching a topic. Instead, they listen to those who have the loudest voices. Those uninformed views are amplified by social media networks that reward those who spark outrage instead of insight or thoughtful discussion. The Conversation seeks to be part of the solution to this problem, to raise up the voices of true experts and to make their knowledge available to everyone. The Conversation publishes nightly at 9 p.m. on FlaglerLive.

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Reader Interactions

Comments

  1. Jimbo99 says

    July 20, 2022 at 11:47 pm

    Just a suggestion, instead of the normal gut reaction to turn the thermostat down lower in hotter weather, do the opposite, raise the thermostat setting a degree or 2. What has changed 2021 vs 2022 Summer. In 2021, June was dry, July broke that near drought June weather. 2022, we’ve had rain almost every day/other day in June & July. Even if the average temp is higher for each day, the higher thermost setting is going to feel about the same in the shade of a home that has curtains drawn. kWH is nearly identical for my June bill, the price of a kWH is a bigger difference in the total bill increasing month on month 2021 vs 2022. 2021, I was constantly going from 72-74* F for the thermostat setting. 2022, I’ve been going with 74-76* F settings. It’s been comfortable in the house, the HVAC has kicked on any more than it did by the kWH usage. At night the thermostat can easily be set to 77* F and not kick on. Looking at the weather app on the phone, Palm Coast High 92, Low 76, currently 84. As long as the HVAC keeps the RH% in the dwelling at 55-60%, it’s going to be comfortable.

    Another trick I learned in Miami with power outages from Hurricanes, cold water showers, wet hand towels, the water will cool your skin down by evaporating. That’s where the sensors are that send the signals to your brain to perspire. If you mentally feel cooler form water evaporating with the higher AC setting, you won’t be turning the thermostat down for colder AC. You’ll save money with colder showers, won’t be heating ground temperature water to replenish it.

    Reply
  2. ULTRA MAGA says

    July 21, 2022 at 3:40 pm

    Do NOT charge Electric Vehicles during a Heat Warm because it will cause Black-Outs!

    Reply
  3. A.j says

    July 22, 2022 at 10:13 am

    Weather is hotter. This year is very hot. When was the last time we saw Temps above 100 in Palm Coast. I know this is the first time I’ve ever seen Temps above 100 in Palm Coast. Please be careful out there. This is Fla. and the humidity is very high this time of the year. Please take breaks, stay hydrated. Take your time, dress light.

    Reply
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