Extreme heat taking its toll on US, European economies

Experts say extreme heat is making it increasingly difficult for workers.

July 22, 2022, 6:23 AM

It's been a pressure cooker of a summer for economies in both the U.S. and Europe, and experts say the extreme heat is making it increasingly difficult for workers to do their jobs -- especially those who work outdoors.

A historic and deadly heat wave has been scorching western Europe, killing more than 1,000 people in Spain and Portugal and displacing thousands in France, Greece and Italy. In Britain and Germany, the excessive heat is unprecedented. At the same time, much of the U.S. is baking under oppressive heat, as temperatures in Texas and Oklahoma topped 113 degrees.

A video this week of a UPS delivery driver collapsing in the triple-digit heat of Scottsdale, Arizona, went viral. A UPS spokesperson confirmed the incident in a statement to Phoenix ABC affiliate KNXV, saying in part: "We appreciate the concern for our employee and can report that he is fine... Our employee used his training to be aware of his situation and contact his manager for assistance, who immediately provided assistance."

An image from a doorbell video shows a UPS delivery driver collapsing in the triple-digit heat, July 14, 2022, in Scottsdale, Ariz.
Courtesy Brian Enriquez

Worker productivity losses due to heat cost the U.S. an estimated $100 billion a year, according to a report by the Washington, D.C.-based think tank Adrienne Arsht-Rockefeller Foundation Resilience Center. As days of extreme heat become more frequent, the report claims that figure is projected to double to $200 billion by 2030, or about 0.5% of the country's gross domestic product (GDP).

According to the National Oceanic and Atmospheric Administration, the average temperatures of several major U.S. cities have increased over the last 120 years, with Los Angeles County getting 3.4 degrees hotter and New York County experiencing a rise of 3.2 degrees in the average temperature. In Dallas County, Texas, the average temperature rose 1.2 degrees in the past 60 years, according to NOAA, and experts say the Southeast and Midwest are projected to face the highest economic toll from extreme heat.

Texas loses an average of $30 billion a year due to its climate and the large number of people working outdoors, according to the think-tank's report. That number is projected to jump to $110 billion a year by 2050, amounting to 2.5% of Texas' total economic output.

That same report found that industries most affected by extreme heat are construction and agriculture, where workers are most exposed to the elements. By 2050, construction is projected to lose 3.5% of its total annual economic activity to heat, or $1.2 billion per year, while agriculture is estimated to lose 3.7%, or nearly $131 million a year.

President Joe Biden this week announced new executive steps to combat climate change but fell short of declaring a climate emergency. The move comes after a major legislative package with more than $300 billion in clean-energy tax breaks stalled on Capitol Hill. "Since Congress is not acting as it should... This is an emergency and I will look at it that way," Biden said.

The initiatives include $2.3 billion in funding for a program that helps communities prepare for disasters by expanding flood control and retrofitting buildings, as well as funding to help low-income families cover heating and cooling costs.

Americans' electric bills are expected to increase by 20% to an average of $540 for this summer, compared to the same period last year, according to the National Energy Assistance Directors Association. It comes at a time when consumers are already battling the highest inflation in 40 years with soaring prices for food, gas and other essentials.

But not all of that increase in energy bills is due to a rise in usage. The rise is partly fueled by a jump in the price of natural gas, which is used to generate electricity. Natural gas prices have surged this year following a production slump during the pandemic, as well as shortages due to the war in Ukraine.

Europe's heat wave is adding pressure to the continent's energy crunch. Electricity prices are already on the rise as Russia chokes off Europe's natural gas supply. One of Germany's largest power producers, Uniper, is asking for a government bailout after higher energy prices and rising demand for power amid soaring temperatures depleted the company's cash.

Residents take a dip in a pool to cool off during a heatwave, July 19, 2022, in Leeds, U.K.
Christopher Furlong/Getty Images

The mercury reached a record 104 F in the U.K. this week, a country not accustomed to such extreme temperatures. The average temperature in the U.K. in July is 75 F so far, and most homes and businesses don't have air conditioners. The Met Office, the country's national weather service, warned that the heat will have "widespread impacts on people and infrastructure." Luton Airport, north of London, suspended flights Monday after record heat caused a surface defect on the runway, while the country's main rail network urged people to travel only if "absolutely necessary."

Analysts say the sweltering heat comes at the height of tourism season for Europe and threatens foot traffic at retailers as shoppers choose to stay indoors.

Record high temperatures and wildfires in France, Greece, Spain, Portugal and Italy, which is suffering through one of its worst droughts on record, are destroying crops, pushing already high food prices even higher. More than half of the 27 countries in the European Union now face the threat of drought, made worse by extreme heat, according to a report from the European Commission's Joint Research Centre.

According to a study last year by European economists and climate experts published in the journal Nature Communications, heat waves on average had lowered overall annual economic growth across Europe by as much as 0.5% in the past decade.

A boat sits on the dry Po River bed in the region of Veneto, Italy, where water rationing is in effect, July 5, 2022, as the worst drought to affect northern Italy's rivers in 70 years continues.
Marco Sabadin/AFP via Getty Images

Italian Authorities in the northern region of Lombardy said 70% of crops are gone in the Po River delta and warn that water supplies for agriculture could run out by the end of July. The Italian farmers' association, Coldiretti, said that each fire costs Italians about $25,000 an acre to rebuild, and the group estimates that wheat production in Italy will decline by 15% because of an increase in production costs and the drought.

"We're working carefully, alongside different associations," Lombardy President Attilio Fontana told a press conference in Milan on Tuesday. "Unfortunately, the only thing we can hope for is that it starts to rain again."