The economic impact of heat waves

One factor that needs to be taken into consideration for long-term investing is the economic impact of heat waves. We are seeing evidence that the frequency, duration, and intensity of heat wave are already increasing in many regions due to climate change, a trend likely to continue for the foreseeable future. Increasing trends in regional heatwaves | Nature Communications

The economic impact of heat waves is only now being quantified but it appears to be substantial. One study estimated that for the USA, the economic cost of extreme heat is at minimum $100B/year, which will double by 2050 without reduction in GHG emissions.

CNN had a recent article providing anecdotal impacts of the recent Arizona heat wave on the local economy.

A European study compared the European economy during heat waves in the anomalously hot years of 2003, 2010, 2014, and 2018 with that in a historical baseline period. It estimated cumulative damages resulting from heatwaves amounted to as much as 0.5% of gross GDP. Current and projected regional economic impacts of heatwaves in Europe | Nature Communications

Another study put losses from anthropological extreme heat as between $5T-$29T globally for the 20 year period 1992-2013, with poorer countries more extremely impacted.

There is general agreement that India will be the next region of high economic growth. However, the subcontinent is a high risk area for the more extreme impacts of climate change. I wonder if financial analysts are underestimating how much of a burden global warming will be on the Indian economy, beginning with the rising incidence of Indian temperature extremes. India needs to urgently spend resource to adapt to rising temps, particularly in its extremely dense urban areas.


Just some food for thought


I wonder what is the impact on EV batteries… something EV manufacturers have been silent about.

The range of EV batteries begin to decline below rated levels at about 90F on average:

However this probably depends on manufacturer as battery chemistry and the thermal management system can have a big impact.

Tesla states the following about its batteries:

“For better long-term performance, avoid exposing Model 3 to ambient temperatures above 60° C or below -30° C for more than 24 hours at a time.”

High Voltage Battery Information.

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60C = 140F. Not yet, but getting there–slow but sure. This is the same upper temp limit set by many hard drive manufacturers.

-30C = -22F. This happens now in central US near Canada border and all the time in the winter in northern Canada. Northern MN gets this temp every year, and even the TC metro area has a few nights sub -20F. Outside metro area gets colder due to no heat island effect.

I’m pretty sure that the “one percent” have decided that they and their familes can cope with rising heat and more severe storms by purchasing the available technology, and moving to more sheltered pastures. As long as the damage is contained to the third world and black and brown people, patriotic American capitalists are fine with it – there’s still money to be made.



Perhaps the 1% that make their money in fossil fuels. In reality though much of the effort to mitigate global warming is coming from the rest of that 1%. The big insurance and tech companies have all warned that the dangers of climate change are real and significant. The global warming mitigation movement is being led by “the educated elites” who can afford to be among the first movers to buy EVs and put solar panels on their roofs.

In the US, most of the resistance to global warming mitigation policies is found in the poorer rural and working class counties. Farmers have long been antagonistic to the notion of anthropogenic warming even as they get revenue from putting wind turbines on their land. The auto unions want to eliminate federal support for EVs. Your average worker is not willing to vote for a carbon tax. One will get a much warmer reception when advocating the closing of coal power plants within the ivy-covered walls of Harvard than in a West Virginia community center.

It makes sense that people who live paycheck to paycheck are more likely to be reluctant to make economic sacrifices today for policies that will mostly benefit future generations. That has always been the big hurdle for those, like me, who believe that climate mitigation is a much better strategy than adaptation. Americans have difficulty making sacrifices to support their own retirement, let alone future generations.