The new heat wave that begins in Spain on Sunday will not only make sleeping worse or going out more tiring, but will also have a direct effect on economic activity. The high temperatures, with the persistent drought and the phenomenon of the , can decrease productivity, accelerate the spiral of prices and the rise of 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, will affect the economies that are most exposed, such as the Spanish one", highlights David García-León, a researcher at the European Commission, where he analyzes the economic effects of climate change.
The excess degrees and the lack of water cause a chain reaction that is already noticeable on a daily basis. Food production is reduced and contributes to the increase in prices, as demonstrated by the increase in the cost of the basket in the last year; the increase in rates to control this inflation does not slow down and mortgages continue to become more expensive; companies in the agri-food sector have lower incomes despite the increase in contributions, as is the case with olive oil; tourist and water leisure companies stop the activity because rivers and swamps are drying up; political and commercial conflicts increase, as has happened with the Doñana strawberry war...
There are plenty of particular examples and economic analysis is now trying to verify with data the possible impact and future evolution depending on the intensity of the increase in temperatures. Despite admitting a certain difficulty in establishing predictions, the consensus points out that, indeed, the economy suffers as a result of a more extreme climate. One of the latest analyzes on this issue, by Allianz Research, quantifies the effect of the heat wave suffered until August 4 in Spain. Taking as a calculation previous analyzes that give a loss of productivity of 40% for each day above 32 degrees Celsius, they conclude that Spain may have lost close to a percentage point of GDP due to the accumulation of excessively hot days between May 1 and August 4 of this year, which was the period analyzed. In this interval, 37 days were recorded with temperatures above 32 degrees, and every day above this temperature - adds the study - is equivalent to half a day of strike.
Along with Spain, China and Greece would be the most damaged economies among the six analysed, suggests the study - see graph. For the whole world, the decrease in GDP is estimated at 0.6%.
"The cost of the heat wave for Spain is greater, as it had more days with a high temperature compared to the rest of the countries considered. The economic structure also makes a difference, as outdoor activities are more affected than indoor activities – such as construction work or tourism – as they cannot benefit from passive cooling systems or the use of air conditioning," says 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 very affected, the impacts on the harvest depend on the duration of the droughts and the availability of water, and that is another issue", clarifies Gröschl. In Spain, agriculture and livestock occupy less than 5% of the active population and contribute less than 5% of GDP. However, if you take into account all the associated activities of the agri-food system as a whole - industry, transport and distribution - it contributes 14.2% to employment and around 10% to GDP, and this year is facing serious water restrictions due to the lack of rain, which is already diminishing, for example, the rice harvests in the Ebro delta, as this newspaper explained this week, or the harvest.
"The GDP affects the climate, and the climate affects the 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", emphasizes Julián Cubero, economist in the climate change economics cluster at BBVA Research. However - continues Cubero - if you look at what has happened in recent years, you can get more certainty about this relationship. A paper by David García-León published in Nature Communications along 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 bottom line: In the selected years, the estimated total damage attributed to heat waves rose to between 0.3% and 0.5% of European GDP, with a higher proportion in southern countries. In the predictions they state that heat waves will gradually move Cyprus, Portugal, Spain and Croatia from a range of losses of 2% of GDP in 2040 to around 3% in 2060, if not acts to moderate its impact.
And here is the key, believes Cubero, of BBVA Research. Climate change should not be faced as a divine punishment against which there is nothing to be done, as this leads to inaction. Because while it is true that mitigation "must be global", adaptation to this change "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 sectors and groups harmed and benefited, but it depends on us that the balance is not negative, or not excessively so.
