Rising temperatures and heatwave are being seen as a major calamity across the world. A recent report by CNN highlights how record breaking heatwave is proving to be a nightmare for the Americans and leading to huge losses to business in the country.
CNN has pointed to studies which predict that extreme heat could lead to productivity loss to the tune of whopping $100 billion annually in the United States.
“The recent heat waves and scorching summer temperatures demonstrate the economic cost of heat stress,” Chris Lafakis, Moody’s Analytics’ director of economic research, wrote in an emailed response to a CNN query.
“Heat waves can cause mortality and produce disruptions in business continuity. Heat waves can also stress regional power grids, driving up the cost and availability of space cooling,” added Chris.
According to Moody’s Analytics, “chronic physical risk from heat stress could reduce worldwide GDP by up to 17.6% by 2100.”
Kathy Baughman McLeod, director of the Adrienne Arsht-Rockefeller Foundation Resilience Center at the Atlantic Council, which released a report in 2021, analysing the potential $100 billion in productivity losses, has highlighted how extreme heat affects work.
“The way that heat hits us, our thinking gets slowed down, our concentration is really tough, our hand-eye coordination is off, we’re tired, we make mistakes,” said Kathy.
Kathy informed that the losses are highest in sectors such as agriculture and construction but all businesses are getting adversely affected. She made a point that an employee who works in an air-conditioned environment doesn’t necessarily get the same facility at home which may lead to disruptions in sleep, causing exhaustion and poor performance at work on the next day.
“The heat is accelerating so quickly that our self-perceptions of risk are not keeping pace. And so that also means as an employer, our perceptions of our workers’ risks are not keeping pace either,” she said.
Joshua Graff Zivin, an economist and University of California San Diego professor talked about the impact of ongoing heatwave on the US economy.
“You think about the kind of heat we’re seeing now, and there’s not an early enough time to start to make this work,” said Graff Zivin.
That leads to diminished hours worked and, ultimately, to less output, he said.
“This might be the first time in modern US history where we might see a small dip for quarterly GDP, if not annual. It’s not crazy to imagine this quarter’s GDP is going to look a little bit different,” said Graff Zivin.
