The new heat wave that begins this Sunday in Spain will not only make sleeping worse or going out more tiring, but will also have a direct effect on economic activity. The high temperatures, together with the persistent drought and the El Niño phenomenon, can reduce productivity, accelerate the spiral of prices and the rise in rates and, as a whole, erode the GDP in Europe, especially that of the southern countries warns a recent ECB analysis. "Global warming in general and other risks, such as heat waves, are going to affect the economies that are most exposed, such as Spain," points out David García-León, a researcher at the Joint Research Center of the European Commission, where he analyzes the economic effects of climate change.
The excess of degrees and the lack of water produce a chain reaction that is already noticeable on a day-to-day basis. Food production is reduced and contributes to skyrocketing prices, as shown by the increase in the cost of the shopping basket last year; the rise in rates to control this inflation does not stop and mortgages continue to become more expensive; companies in the agri-food sector drop income despite the increase in prices, as is the case with olive oil; tourist and aquatic leisure companies stop the activity because rivers and swamps are running dry; Political and commercial conflicts increase, as has happened with the Doñana strawberry war...
The particular examples abound and the economic analysis now tries to verify with data the possible impact and its future evolution depending on the intensity of the increase in temperatures. Despite admitting difficulty in establishing predictions, the consensus points to the fact that the economy will suffer as a result of more extreme weather. One of the latest analyzes in this regard, by Allianz Research, quantifies the effect of the heat wave suffered until August 4 in Spain. Taking as a calculation previous analyzes that show a loss of productivity of 40% for each day above 32 degrees Celsius, they conclude that Spain may have lost up to a percentage point of GDP due to the accumulation of excessively hot days between May 1 and on August 4 of this year, the period analyzed. In this interval, 37 days were registered with temperatures above 32 degrees in the country, and each one of them above that temperature – adds the work – is equivalent to half a day of strike.
Together with Spain, China and Greece would be the most affected economies among the six analyzed, suggests the study –see graph–. For the entire world, the decline in GDP is estimated at 0.6%.
“The cost of the heat wave for Spain is greater since it had more days with a high temperature compared to the rest of the countries considered. The economic structure also makes a difference, since outdoor activities are more affected than indoor activities –such as construction work or tourism– as they cannot benefit from passive cooling systems or air conditioning. use of air conditioning”, comments Jasmin Gröschl, senior economist for Europe at Allianz Research and co-author of the report, via email.
The analysis, however, does not take into account the agricultural sector. "Although it is also greatly affected, the impacts on the harvest depend on the duration of the droughts and the availability of water, and this is a different matter," Gröschl clarifies. In Spain, agriculture and livestock employ less than 5% of the active population and contribute less than 5% of GDP. However, if all the associated activities of the agri-food system as a whole are taken into account –industry, transport and distribution–, it contributes 14.2% to employment and around 10% to GDP, and this year it is facing severe restrictions of water due to the lack of rain that is already diminishing, for example, the rice harvest in the Ebro Delta, as this newspaper explained this week, or the grape harvest.
“GDP affects the climate and the climate affects GDP. It is the first time in history that we have measured it and it is difficult to establish figures for the future, since climate change scenarios are just that, forecasts”, highlights Julián Cubero, economist at the BBVA Research Climate Change Economics Cluster. However, Cubero continues, if one looks at what has happened in recent years, greater certainty can be obtained from this relationship. A work by David García-León published in Nature Communications together with other authors analyzes the heat waves that occurred in four anomalously hot years (2003, 2010, 2015 and 2018) and compares the findings with the period 1981-2010. The conclusion: in the selected years, the estimated total damages attributed to heat waves amounted to between 0.3% and 0.5% of European GDP, with a higher proportion in southern countries. In the predictions, they argue that heat waves will cause Cyprus, Portugal, Spain and Croatia to gradually move from a loss range of 2% of GDP in 2040 to around 3% in 2060 if no action is taken to moderate the impact.
And therein lies the key, considers Cubero, from BBVA Research. Climate change should not be faced as a divine punishment against which there is nothing to do, since this leads to inaction. Because although it is true that its mitigation "has to be global", the adaptation to it "is in the hands of the countries". “The impact will depend on how that adaptation is, how intense the economic transformation is, and the decisions we make,” he adds. There will be affected and benefited sectors and groups, but it is in our hands that the balance is not negative, or not excessively.
