thermometer

Low temperatures in Spain after Storm Filomena hit in January 2021

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Economic growth is lower in regions that experience bigger swings in day-to-day temperatures, revealing a potential new cost of climate change that boosts the case for green investments and fossil fuel taxes.

Larger fluctuations in annual temperatures are known to damage economies by harming farming and other sectors, but the effect of daily differences in temperature is less well-studied. The impact is significant, according to a study by a team in Germany and the US that analysed daily temperatures and subnational economic data collected across 76 countries between 1979 and 2018.

Globally, the researchers found that each extra 1°C in day-to-day temperature variability was linked to a cut in the regional economic growth rate by at least 5 percentage points in any given year. That is a big change, even at a regional level where annual rates can swing by 16 percentage points each year.

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“What we show is if those high-frequency changes in the weather are going to change with climate change, that is going to have considerable impacts for the economy,” says Maximilian Kotz at the Potsdam Institute for Climate Impact Research in Germany.

The average economic hit masks differences around the globe. The cost was lower in places that experience large seasonal changes in temperature, such as Russia and Canada, than regions in the tropics, which don’t have such big seasonal swings. Kotz thinks that is because people living in places with hot summers and cold winters have ways of coping that are useful for abrupt daily changes too.

This map shows the percentage point change in economic growth rates for each extra 1°C of day-to-day temperature variability

The team found that at subnational levels, the economic harm of daily temperature changes was roughly the same in low-income countries as it was in high-income ones, suggesting affluence isn’t a protection against big daily temperature swings.

Scientists expect a warming world to bring more extreme weather and are exploring whether climate change will increase daily temperature variations too. Kotz thinks the team’s findings on the understudied area of daily swings in temperature gives authorities more to think about when they consider how climate change can affect economies.

“With climate change, one of the things we need to understand is how much will it cost if we do nothing about it,” he says. The extra cost of inaction on daily temperature swings may encourage governments to act on emissions, making support for technologies such as electric cars, heat pumps and hydrogen more economically attractive. “It may affect how fossil fuels get taxed in the future,” says Kotz.

Chloe Brimicombe at the University of Reading, UK, says when it comes to heat stress, people tend to think about unusually hot summer spells damaging crops and harming productivity. “This study suggests that while that is true, the bigger cost to society comes from smaller, less obvious but more incremental seasonal increases in temperature.”

The main limitation of the research is that many African countries are missing due to a lack of data, undermining the true global picture, she says.

Raphael Calel at Georgetown University in Washington DC says the research raises interesting questions, but more work is needed to unpick exactly how day-to-day temperature variability causes economic losses in practice.

Journal reference: Nature Climate Change, DOI: 10.1038/s41558-020-00985-5

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