The economic impact of the pitiless heat wave that is scorching southern Europe, the United States and much of the Northern Hemisphere may be short-lived in most spots, with the temporary closure of tourist sites, the abandonment of outdoor dining and a rise in electricity use related to air conditioning.
But over the longer term, the economic fallout caused by climate change is likely to be profound.
Devastating fires, floods and droughts tend to dominate the headlines. Other insidious effects may generate less attention but nonetheless take a toll. Researchers have found that extreme temperatures reduce labor productivity, damage crops, raise mortality rates, disrupt global trade and dampen investment.
An analysis by researchers associated with the Centre for Economic Policy Research found that in Europe, France, Italy, Spain, Romania and Germany have been most affected by climate-related disasters over the past 20 years. Central and Eastern European countries, however, have been increasingly hit with climate troubles.
Such developments put added pressure on public spending, as governments are called on to replace damaged infrastructure and provide subsidies and relief. The analysis notes that tax revenues could also shrink when climate changes disrupt economic activity.
Economic losses related to climate change are expected to significantly increase in the future, according to estimates from the European Union, although it noted that there is no mechanism in most member states to collect and assess the economic costs.
Analysts at Barclays estimated that the cost of each climate-related disaster has increased nearly 77 percent over the past half century.
Globally, the losses will broaden. One study published last year that sought to measure the impact of human-caused heat waves on global economic growth concluded that the cumulative loss between 1992 and 2013 reached between $5 trillion and $29.3 trillion globally.
Poor countries in hotter climates suffered the most. “Lower incomes make tropical economies less able to adapt to increases in extreme heat,” the study said.
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