Climate Change, Temperature and Productivity

The Economist
Oct, 2015

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Temperature and Productivity – I Paper
Temperature Shocks and Economic growth: Evidence
from last century Melissa Dell, Benjamin F Jones,
Benjamin A Olken, MIT (
http://scholar.harvard.edu/files/dell/files/aej_temperat
ure.pdf
) – Major findings
1. Hotter the climate lower the productivity, but only in poor
countries – 1 ° C rise in temperature reduced economic
growth by 1.3 %
2. Rich countries – not much of an impact
3. Precipitation – Mild impact in both rich and poor countries
© Confederation of Indian Industry
Temperature and Productivity – I Paper

Temperature Shocks and Economic growth:

Evidence from last century Melissa Dell, Benjamin F
Jones, Benjamin A Olken, MIT (
http://scholar.harvard.edu/files/dell/files/aej_temp
erature.pdf
) – Major findings
4. Affects agricultural yields
5. Affects investments or institutions that affect
productivity
6. Adverse impact on industrial productivity in hot years
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Temperature and Productivity – II Paper
Global non-linear effect of temperature on economic
production – Marshall Burke, Stanford University
(http://www.nature.com/nature/journal/vaop/ncurrent/full
/nature15725.html) – Major findings
1. Temperature impacts economic productivity – all countries
2. Productivity peaks at an average temperature of 13°C &
declines (both agricultural and non agricultural) if temperature
is beyond 13°C
3. Climate change - reduce global income by 23 % by 2100
4. Brazil – 3 C increase in temp. – 3 % fall in output

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 Temperature rise –
Good for some, Bad for Many!
 Good for Germany, France
 Present average temperature is below 10 °C
 Adverse for US, China
 Present average closer to 13 °C
 US a hot day – 24 hrs of 24 - 27°C lowers average income
by 20 % & Very hot day - 30°C lowers income by 28 %
 More adverse for India, Brazil
 Already average between 23 and 25 °C

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Optimum temperature studies
 UK Navy studies in 1940
 Morse code operators made 10 times more
mistakes at 40 °C than at 30 °C
 US workers – more than 29 °C – worked one
hour less per day
 28 % of US workmen are exposed to weather
 Climate change will increase electricity
consumption by 83 % for air-conditioning –
between 2010 - 2100

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