Economic consequences of climate change

New research shows that higher temperature leads to more productivity loss and increasing costs of health services.

“We wanted to find out how productive people are when they are exposed to heat”, said Marc Suhrcke, senior researcher at Luxembourg Institute of Socio-Economic Research. He has done different types of economic analyses to find out more about the impact that heat stress has had on certain economic outcomes. This is a part of Exhaustion, an EU-project that seeks to understand how heat exposure affects the health of individuals living in different areas.

“Part of the work focused on detailed empirical studies of the UK, Italy and Norway, focusing on how the health effects cause shifts in the supply and demand for labour, with implications for employment and unemployment”, said Suhrcke.

He emphasizes that the findings are quite revealing. Climate change decreases labour productivity and increases the cost of healthcare. Higher wages and higher prices of goods and services increase unemployment. These changes affect international trade and can have a negative, though moderate, impact on a country’s GDP.

Suhrcke exemplifies that productivity loss has mostly to do with efficiency.

“You are at work, but you feel that you do less than you could have done. You are not completely dropping out, but you feel you could have done more” said Suhrcke. He emphasizes that the effects varied depending on the season.

Marc Suhrcke, Professor, Luxembourg Institute for Socio-Economic Research (LISER). Photo: Amund Aasbrenn

Productivity loss among females
Suhrcke did the study together with CICERO-researcher Lin Ma, among others. She fills in:

“Higher temperature leads to more productivity loss and there will be increasing costs of health services due to warmer weather”.

They also found that there are groups differences between age and sex.

Higher temperature leads to more productivity loss and there will be increasing costs of health services due to warmer weather. Photo: iStock

“Our research showed that in Norway, individuals aged 67-74 are more sensitive in response to rising temperatures than other age groups. Additionally, we found that younger females aged 25-37 experience a higher productivity loss due to temperature increases than males in the same age range”, Ma said.

However, males aged 40-66 show a larger reduction in productivity with rising temperature compared to female counterparts.

“The reasons behind these results are potentially related to the diverse demographic of each gender-age group, which possibly includes factors such as the industry of employment, the geographic location of individuals, and their family status. This requires further research”, Ma concludes.

Antonio Gasparrni, Professor of Biostatistics and Epidemiology at The London School of Hygiene & Tropical Medicine and Lin Ma, Researcher at CICERO. Photo: CICERO

Vulnerability in the population
As a part of the same project, Antonio Gasparrini, Professor of Biostatistics and Epidemiology at The London School of Hygiene & Tropical Medicine has done a statistic analysis of administrative data from 15 European countries.

“The idea is to understand why some people are more vulnerable to heat and cold than others. So, we looked at specific indicators and tried to identify some patterns”.

Gasparrini’s team took into account many socioeconomic indicators, like education and income levels of the population, urban characteristics, and presence of green areas. They also took environmental variables into account, like air pollution and climatological variables.

He emphasizes that a complexity of the analysis is to look at each indicator independently. Places with a high prevalence of green areas seem to be wealthier and probably the people living there have high education. The researchers have tried to account for these characteristics to achieve a cleaner comparison.

“This is the most comprehensive analysis on temperature-related mortality risks in urban areas across Europe. Combining information from multiple indicators gave us a good predictability”, said Gasparrini. He explains that there is a north-south gradient in heat-related mortality, with South of Europe badly affected, while cold-related risks have a west-east differential, with Eastern Europe particularly at risk.

There is a north-south gradient in heat-related mortality, with South of Europe badly affected, while cold-related risks have a west-east differential, with Eastern Europe particularly at risk. Photo: Gunnell E. Sandanger

Next step and further research
The Exhaustion project will come to an end in a few months. But the researchers are still in the process of finding out more.

“It takes much longer than four years to find a full characterization. We have a framework now, and hopefully we can continue the research with the models we have developed”, Gasparrini concludes.

In the EXHAUSTION-project, researchers have been studying differences in response to heat and assessing if there is an increase in mortality or hospital admissions. 

The project seeks to understand how heat exposure affects the health of individuals living in different areas, whether urban or rural, and under various socio-economic conditions. By examining the impact of heat on different demographics and individual characteristics, researchers hope to identify ways to reduce the adverse effects of heat on human health.