Warmer Temperatures are Impacting Our Productivity

Unfortunately I’m not talking about it being too hot to work on your thesis, or to do a problem set – I’m referring to economic productivity.

Not only is climate change destroying our atmosphere, making our seasons more harsh and/or unpredictable, and killing polar bears – but its also impacting our economic productivity. A study recently published in Nature claims that “growing evidence demonstrates that climactic conditions can have a profound impact on the functioning of modern human societies”.

Now this is what I call environmental economics (or ecological economics, I guess).

The main conclusion of the study (called Global non-linear effect of temperature on economic production) is that there is a strong correlation between the average temperature of a region and its economic productivity. Sifting through 50 years of data from over 100 countries (of various production levels), the research team found that 55 degrees Fahrenheit was the optimum temperature for human productivity – and once it gets hotter than that, human productivity takes a nosedive. This temperature limit apparently applies to both agricultural and non-agricultural production. And before you ask, air conditioning doesn’t seem to have an impact on productivity – as the study’s data showed that “technological advances or the accumulation of wealth and experience since 1960” has allegedly not “altered the relationship between productivity and temperature”.

Assuming this study holds water (an economist has already called the study “hugely problematic”), what does this mean from an economic perspective? Firstly, we’ll be seeing an overall decrease in economic productivity that is almost solution-less when you take a purely economic approach. A decrease in human productivity due to higher temperatures stems from biology – animals often slow down to conserve energy and be more efficient in higher temperatures. The solution most likely lies in a trans-discipline, maybe where economics is combined with biology or ecology. There are potential geopolitical impacts, as tropical countries close to the equator will likely suffer economic damage – not just more severe, but also sooner than countries farther from the equator. There are also many countries closer to the equator that are “third-world” or developing countries, that may suffer from lower productivity – causing a large gap in productivity and a reduction in growth that these poorer countries can’t afford.

This study is definitely a big deal – and will most likely prompt many responses and other approaches to this particular subject. It looks like climate change has yet another negative impact – how productive we are in society. Perhaps the threat of a lower GDP could be the push some countries need to take steps toward mitigating climate change.

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