Estimated $6.2 billion climate change hit to Australian economy in 2013/14

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Absenteeism and lower productivity because of heat stress may have cost the Australian economy an estimated US$6.2 billion in the 2013/14 financial year (Image via @PaulStewartII)

Australian researchers measure cost of drop in workers’ performance as global warming drives temperatures to record levels, writes Tim Radford from the Climate News Network.

CLIMATE CHANGE can be bad for a country’s economic health. Absenteeism and lower productivity because of heat stress may have cost the Australian economy an estimated US$6.2 billion in the year 2013/14, according to new research in Nature Climate Change.

The summer of 2013 brought the hottest year ever recorded to Australia, a year marked by record temperatures linked to human-made climate change as a consequence of the burning of fossil fuels.

Studies of physiological response to unusual heat predict that economic productivity could be affected. But Kerstin Zander of Charles Darwin University in Darwin in the Northern Territories and colleagues decided to find out directly by asking people what happened to them as the temperatures soared to dangerous levels, and stayed there.

In 2014, they asked 1,726 employed Australians – office workers, labourers, managers, technicians, sales people and professionals – to recall the days that they missed work because of the heat and the days on which they went to work but didn’t achieve very much because of the heat, and then calculated an economic loss linked to each answer.

More accidents

The average across all questioned employees came to US$655 for the year. Then they scaled this total across the entire workforce to arrive at an annual national cost of $6.2bn.

Unusually hot weather might be welcome during beach holidays but – the risks of potentially lethal heat stroke and heat exhaustion aside – it is also linked to higher work accident rates because of lapses of concentration, higher levels of fatigue and poor decision-making, and higher stress hormone levels.

The employees who went to work in the heat did their best – three quarters of them said they put in longer hours to make up for the lost output – but they also calculated that they achieved 35% less under such conditions.

Australia’s $6.2bn loss represents less than half of one percent of Australia’s gross domestic product (GDP) and if the heat extremes of 2013 were a once-in-a-century event, this figure would be insignificant — but all the climate forecasts promise more such heat waves to come for the world’s largest island.

Global warming may have increased fivefold the probability of more record-breaking summers, according to one set of studies and 2014 was marked by more of the same. Other research groups have linked Australia’s drought and fire risk to anthropogenic emissions of fossil fuels but, paradoxically, the levels of greenhouse gas emissions in Australia itself are on the increase.

The authors note that productivity models based on human physiology and climate projections suggest that by 2080, some places – parts of Asia and the Caribbean, for instance – could be subjected to heat extremes that will make work difficult or intolerable. The forecasts say productivity could fall during the hot months in such places by 20% by 2050 and by up to 27% by 2080. In that context, Australia in 2013 had a taste of things to come.

As the authors say:

'Although this was a period when many Australians experienced what is at present considered exceptional heat, our results suggested that adaptation to reduce heat effects should be adopted widely if severe economic impacts from labour productivity are to be avoided, if heat waves become as frequent as predicted.'

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