3 Ways Extreme Heat Can Hurt the Economy

As dozens of cities in the West experience all-time high temperatures, 2021 is expected to have one of the hottest summers on record. The extreme heat has caused hundreds of deaths, sparked wildfires and worsened drought conditions in over a dozen states.

Business Insider cites a large body of work that links heat to economic outcomes. Here are 3 ways they say extreme heat affects the economy:

1. Extreme heat hinders growth. A 2018 study found that the economies of US states tend to grow at a slower pace during relatively hot summers. Higher summer temperatures reduce growth in many industries, and workers are less productive when it’s hotter out.

2. Higher temperatures equal lower crop yields. Extreme heat takes a toll on some crops, including corn, soybeans and cotton. The consequently lower yields could be costly for US agriculture which depends heavily on those crops.

3. High temperatures drastically increase energy use. According to a 2011 study, just one day with temperatures above 90 degrees Fahrenheit can increase annual household energy use by 0.4%. This increase in electricity use stresses electric grids which can lead to blackouts. California’s 2019 blackout cost the state an estimated $10 billion.

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