Extreme heat will stifle cities’ economies for decades to come without decisive action

Source(s): Adrienne Arsht-Rockefeller Foundation Resilience Center

With extremely hot days set to double, even quintuple by 2050 in the Global South, new research quantifies economic and social impacts of heat in cities across the globe, identifies specific sectors, worker populations and neighborhoods at greatest risk today and tomorrow.

WASHINGTON, DC, USA — Today, the Adrienne Arsht-Rockefeller Foundation Resilience Center at the Atlantic Council released “Hot Cities, Chilled Economies: Impacts of Extreme Heat on Global Cities” a new report detailing the social and economic effects of climate-driven extreme heat through the prism of 12 cities, hosting more than 123 million people and spanning six continents: Athens, Bangkok, Buenos Aires, Dhaka, Freetown, London, Los Angeles, Miami, Monterrey, New Delhi, Santiago and Sydney.

The study—undertaken in partnership with Vivid Economics–provides new, quantitative evidence of heat-related productivity losses disaggregated across distinct populations and sectors of the economy and the effects on workers, as well as the expected increases in hot and extremely hot days in urban areas due to the heat-island effects.

“Climate-driven heat is changing the way we live and work, yet current awareness of this silent and invisible threat is dangerously insufficient. Heat’s disproportionate impact on cities—and the ironic reality that more and more people are flocking to them due to escalating climate impacts elsewhere—compelled us to quantify and explore the economic and social ramifications of our roasting planet,” said Kathy Baughman McLeod, SVP and Director of the Adrienne Arsht-Rockefeller Foundation Resilience Center at the Atlantic Council. “Our hope is that these findings will raise awareness and spur adaptation interventions, policies, and investment that cool cities and protect people.”

Heat’s disproportionate impact on cities—and the ironic reality that more and more people are flocking to them due to escalating climate impacts elsewhere—compelled us to quantify and explore the economic and social ramifications of our roasting planet.

Kathy Baughman McLeod, SVP and Director of the Adrienne Arsht-Rockefeller Foundation Resilience Center at the Atlantic Council

“Here in Miami-Dade County, we are all too familiar with extreme heat and the many ways it impacts our residents, our economy, and our environment,” said Miami-Dade Mayor Daniella Levine Cava. “Extreme heat kills more people each year than all natural disasters combined, disproportionately affecting our most vulnerable outdoor workers and shut-ins. Through education, green infrastructure, and increased tree canopy, we are working to both protect our residents and develop new mitigation strategies that can be adopted worldwide.”

“In Freetown we all live with the heat. That’s why we were the first African city to host a chief heat officer and have pledged to plant 1 million Trees in our “free town is a tree town” initiative – and why co-created market shading structures with women traders in the three of the biggest markets in Freetown’s informal communities. We will continue to work to protect Freetonians from this invisible threat,” said Yvonne Aki-Sawyerr OBE, Mayor of Freetown.

The following are some of the key takeaways from studying 12 cities that are already enduring and addressing dramatic impacts of extreme heat and their possible future conditions:

  • Heat-related losses in worker productivity amount to USD 44 billion across the 12 cities in 2020, rising to USD 84 billion by 2050 without action to adapt or reduce emissions. To put the figures into a global context, estimated economic losses from all climate-driven weather catastrophes (MunichRe) were worth around 0.3 percent of the world’s output in 2021. Losses from heat alone are as high as 8.3 percent in Dhaka, and as low as .01 percent in Santiago projected to 2050. In addition to the USD 44 billion, losses to productivity also affect sales, income, and real estate tax revenues: as losses grow, they will increasingly constrain cities’ fiscal headroom for investment in public services.
  • Cities in the Global South face greater, more rapidly increasing impacts with losses from worker productivity as a share of output highest in low- or middle-income cities in Asia (Dhaka (8.3%), Bangkok (4.9%), New Delhi (4.2%) and Africa (Freetown (3.5%)). Further, as these cities expand more rapidly than those in developed countries, so do estimated losses, which in dollar terms are projected to increase five-fold in Freetown and to triple in Buenos Aires. These cities tend to have hotter and more humid climates, meaning they face a greater challenge from heat, and more labor-intensive economies with lower access to Active Cooling technologies (such as air conditioning and fans).
  • Impacts fall most heavily on those least able to bear them. Across all cities, productivity —and therefore wage—losses are concentrated in sectors reliant on outdoor manual work where wages tend to be lower than average. As temperatures rise and expected labor productivity falls (or grows more slowly), wages and salaries are likely to also drop. The effects are even more direct for hourly or informal workers who are paid only when they work and may face increasing work stoppages or choices between working in dangerous heat conditions or having no income. In many cities, the districts most exposed to heat are also home to poor or marginalized communities: examples include Villa 31, an informal settlement in Buenos Aires, and Kamrangirchar in Dhaka, where temperatures are 10-15°C more than surrounding areas.
  • Hot and extremely hot days in all 12 cities will more than double, ranging from two times to five times as many hot or extremely hot days. This analysis uses average daily temperatures, versus highest temperatures, in a 24-hour period. Nighttime temperatures are a critical aspect of predicting injury and loss from extreme heat. Miami will have 94 days that are hot or extremely hot and Freetown will go from 9 extremely hot days to 120 extremely hot days by 2050.
  • Many cities are already taking steps to reduce the impacts of heat on people and economies, but the results of this study call for even greater priority and accelerated action to improve climate adaptation and investment in heat resilience.
  • For this analysis, data availability was insufficient globally to determine the differences of heat’s economic impacts by gender. Broadly, further work is needed on gender and heat. We know that climate change has a disproportionate impact on women. Close to 80% of people displaced by climate change are women and 70% of the 1.3 billion people living in conditions of poverty are women. In urban areas, 40% of the poorest households are headed by women. Indoor work in unairconditioned spaces in female-dominated professions such as garment manufacturing, health and home care, and teachers in sweltering classrooms are not captured in the data.  The diversity of working environments across these sectors and the lack of information on indoor temperatures makes assessing risk more difficult, and may mean less attention is devoted to providing solutions for safer, more comfortable conditions for these workers.

Synopses of the key findings for each city

Athens: Heat related output losses are expected to increase from EUR 91.4 million to EUR 213.7 million by 2050, affecting a large number of workers through reduced wages or income. The losses will be concentrated among construction, manufacturing and public sector workers. If no action is taken to reduce emissions or enact cooling measures, “extreme hot days” in Athens will increase from roughly 9 to 27 days in a typical year by 2050, representing a threefold increase.

Bangkok: Currently, extreme heat causes losses of five percent of GDP (THB 293 billion). As extreme heat becomes more common, this will increase to six percent of GDP (THB 532 billion). These losses are particularly damaging to lower paid sectors, with outdoor workers losing 40 percent of output. If no action is taken to reduce emissions or enact cooling measures, the number of days with an average temperature over 30°C are expected to double by 2050.

Buenos Aires: Extreme heat is set to nearly double in Buenos Aires by 2050, with heat disproportionately affecting disadvantaged urban areas over rural areas. The city currently loses ARS 10,926 million in productivity due to climate change, and this will triple over the next three decades. Construction, manufacturing, and Buenos Aires’ burgeoning port are areas of the economy at greatest risk.  

Dhaka: The labor productivity losses due to hot weather represent eight percent of the city’s GDP currently, and is expected to increase to ten percent of the city’s GDP by 2050.  Sectors such as garment manufacturing, transport and retail trade can be particularly affected, impacting not only those who work in the industry, but the global supply chain as a whole.

Freetown: Lost output from heat and humidity-related labor productivity reductions is already significant (3.5 percent of total output), and year-round temperature increases are set to push these losses to over six percent of output by 2050 – the second-largest share of losses out of all cities in the study. The economy faces particularly high losses as it relies on labor-intensive production with more than 90 percent of working hours vulnerable to heat. The impacts of these losses will bear most heavily on the poor, including the 60 percent of the population who live in informal settlements. More than any other city in this study, Freetown faces the dual challenges of socioeconomic development and adaptation.

London: London’s generally mild climate means it is unprepared for episodes of high heat, which are happening with increasing frequency.  Losses from labor productivity alone are already significant, at 0.2 percent of output in 2019, and would be higher when other effects are considered—for example, through heat-related transportation failures that prohibit workers from commuting. Research found that parts of the London Underground are hotter in the summer than is legal to transport livestock in the UK.

Los Angeles: Under current conditions, heat costs Los Angeles almost $5 billion in lost worker productivity in a typical year – nearly half of the entirety of the city’s annual budget of $11.2 billionrising to $11 billion annually by 2050. Every sector of the city’s economy will be affected, with absolute losses concentrated in finance, insurance, and real estate, but with disproportionate impacts on construction workers. Health impacts of heat in Los Angeles are expected to be concentrated among its elderly, low-income, ethnic minority, and homeless populations. The city also faces related hazards from wildfire and drought, which can both be triggered by and compound the physiological impacts of hot weather.

Miami: In Miami, the number of extremely hot days is projected to increase fivefold by 2050. High heat combines with humidity to reduce labor productivity, leading to losses of over $10 billion under current conditions — more than Miami-Dade county’s annual budget. By 2050, without action to reduce emissions or adapt to increased heat, losses could double to more than $20 billion.  

Monterrey: Heat and humidity-related labor productivity losses are already causing economic damages in a typical year worth MXN 36.1 billion, on a par with losses from the worst natural disasters in the region, such as 2010’s Hurricane Alex. Without adaptation or global action to reduce emissions, this impact could double as a share of output by 2050, reaching MXN 78.6 billion. Compared to other cities in this study, labor productivity impacts are concentrated in manufacturing, with two-thirds of the city’s overall losses falling in the sector. Controlling these losses, which are otherwise projected to grow from 0.9 percent to 1.5 percent of output by 2050, could involve moderating indoor temperatures through active and passive cooling as well as the uptake of technologies to reduce heat from machinery.

New Delhi: The impact of extreme heat on labor productivity alone already amounts to four percent of New Delhi’s output, rising to five percent by 2050. Construction workers bear the brunt of the heat – despite producing just nine percent of New Delhi’s output, they account for one-third of the city’s losses, due to labor-intensive production and over 60 percent of working hours spent outdoors. Impacts of heat on people in New Delhi are aggravated by air pollution, poverty and unreliable access to essential services.

Santiago: In a typical year in Santiago, the economic costs associated with heat and humidity-related worker productivity losses amount to over CLP 83,085 million – enough to fund the construction of one of the city’s new metro line extensions. By 2050, losses may increase to over CLP 187,025 million per year. Current losses fall disproportionately in administration and public services, but the changing profile of heat exposure means future losses are concentrated in ‘outdoor’ and active indoor occupations such as construction or utilities. Interventions can reflect the seasonality of the climate to prevent increasing winter heating costs, and policy action can target the most vulnerable to ensure they have access to cooling mechanisms, particularly when heatwaves and droughts coincide.

Sydney: Heat is a particular concern in Western Sydney, where the local microclimate and urban design features such as dark roofs combine to cause temperatures up to 15°C more than rural surroundings. These hotspots in Western Sydney are likely to spread by 2050. Heat exposure within Sydney already causes labor productivity losses that could amount to AUD 432 million in lost output in a typical year currently – in contrast, flooding costs all of New South Wales around AUD 250 million every year. Without further adaptation, worsening conditions for exposed workers may double heat and humidity-related labor productivity losses to more than AUD 974 million by 2050.

For this report, only a subset of the ways in which extreme heat can impact a city’s economy and society were examined, and appraises impacts in ‘normal’ vs. unusually warm years, meaning it provides a conservative view of the social and economic costs of heat. It does not look at impacts or costs to infrastructure, health care systems, reduced learning, or the loss resulting from business interruption.

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