Changes in labour productivity feed through directly to national income. An external shock, like climate change, which may substantially reduce the productivity of workers is therefore a macroeconomic concern. The biophysical impact of higher temperatures on human performance is well documented. Less well understood are the wider effects of higher temperatures on the aggregate productivity of modern, diversified economies, where economic output is produced in contexts ranging from outdoor agriculture to work in air-conditioned buildings. Working conditions are at least to some extent the result of societal choices, which means that the labour productivity effects of heat can be alleviated through careful adaptation. A range of technical, regulatory/infrastructural and behavioural options are available to individuals, businesses and governments. The importance of local contexts prevents a general ranking of the available measures, but many appear cost-effective. Promising options include the optimization of working hours and passive cooling mechanisms. Climate-smart urban planning and adjustments to building design are most suitable to respond to high base temperature, while air conditioning can respond flexibly to short temperature peaks if there is sufficient cheap, reliable and clean electricity. Key policy insights The effect of heat stress on labour productivity is a key economic impact of climate change, which could affect national output and workers' income. Effective adaptation options exist, such as shifting working hours and cool roofs, but they require policy intervention and forward planning. Strategic interventions, such as climate-smart municipal design, are as important as reactive or project-level adaptations. Adaptation solutions to heat stress are highly context specific and need to be assessed accordingly. For example, shifting working hours could be an effective way of reducing the effect of peak temperatures, but only if there is sufficient flexibility in working patterns.
Day, E; Fankhauser, S; Kingsmill, N; Costa, H; Mavrogianni, A
Upholding labour productivity under climate change: an assessment of adaptation options
Climate Policy