In South Korea, the scorching temperatures, close to 38 degrees, cut short in panic the global gathering of more than 40,000 scouts. In Las Vegas and several states in the western United States, the temperature reached 47 degrees. Spain is approaching its third heat wave of the summer with fear. For the past two months, record temperatures have abounded in many countries. Heat waves generate droughts and gigantic fires, difficult to extinguish and which cause their share of victims.
And, everywhere, heat waves weigh on agricultural activity, tourism and the economy as a whole. "Recent heat waves in the United States, Europe and Asia have already cost 0.6 points of GDP in 2023," say economists at Allianz Trade, referring to a "global boil". The credit insurer estimates that China, Spain and Greece are "the most affected countries, with an impact of -1.3, -1 and -0.9 points of growth respectively in 2023". On the other hand, the consequences of these episodes are more measured in the United States (-0.3 points) and in France (-0.1 points).
The economic impact of a day of extreme heat, above 32 degrees Celsius, is equivalent to the loss of activity of a half-day strike, notes Allianz Trade. Employees "reduce their work hours, experience slowdowns and make mistakes." Overall, the ability to perform physical work decreases by about 40% when temperatures reach 32 degrees, a recent study calculated. For the year 2021, the report by the international research group Lancet Countdown estimated that heat eliminated 470 billion potential working hours.
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Medical expenses
In terms of health alone, heat waves, "the most important extreme weather events in terms of mortality", have "an economic impact rarely taken into account", highlighted in 2021 a report by Public Health France. The national agency then estimated the cost of the heat waves that occurred from 2015 to 2020 between 22 and 37 billion euros, related to medical expenses, loss of well-being and the economic slowdown induced.
The impact of heat waves does not depend solely on their intensity. "Large developed economies are better able to cope with production losses," says the Allianz Trade study. This does not prevent the United States from facing annual losses of around 100 billion dollars (91 billion euros) due to the economic and social consequences of extreme heat alone, President Joe Biden recently recalled.
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Indirect impacts are generally more severe for low-income countries and smaller, less diversified economies," the study said. Governments everywhere are multiplying measures. In Thailand, the authorities have just restricted the sowing of rice, which consumes a lot of water, due to the lack of rainfall in recent months.
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Foreseeable risk
To deal with the next heat waves that will become recurrent, alert and prevention measures can be put in place. Especially since "unlike other natural hazards, they are predictable and it is possible to prepare for them both physically and economically," says Allianz Trade. In the short term, the optimization of working hours, staggered for example early in the morning or late at night, can play a role. And labour productivity could increase in the winter to offset some of the summer losses. But it is also necessary to prepare cities for climate change and adapt workplaces, by changing the design of buildings and focusing more on air conditioning, the study points out.