The UN set it as a goal in a February 2021 report: the global economy must absolutely change its model to reduce its impact on the climate. But this is already affecting global GDP. The recent heat waves will thus have very concrete and harmful consequences for the economy, according to a new report from the insurer Allianz Tradepublished Friday, August 4.
Global warming, massively caused by modern economic activities, could cost 0.6 points to global GDP in 2023, the report estimates. July 2023 was indeed the hottest month ever recorded on Earth, according to the European service Copernicus. A period of heat waves, heat waves and fires which reached 1.5°C above the pre-industrial level, the ultimate limit set by the Paris climate agreements. The insurer lists the anticipated losses for the year 2023 in different countries. China should be cut by 1.3 points from its GDP; Spain, by 1 point; Greece, by 0.9 points; Italy, by 0.5 points; the United States, by 0.3 points; and France, by 0.1 point.
Decreased productivity due to high temperatures
The main cause put forward by the Allianz Trade report is that of a drop in productivity linked to high temperatures. “A day of extreme heat exceeding 32 ° C is equivalent to half a day of strike”, notes the report in a colorful way. Allianz Trade relies in particular on a 2021 study published in theInternational Journal of Biometeorology. The ability to perform physical work would thus decrease by around 40% when temperatures reach 32 ° C, explain the researchers. If the mercury continues to rise, the average drop in productivity is even more dramatic, falling by two-thirds from 38°C. The heat would first affect the amplitude of the hours of work, sometimes adapted to escape the hottest hours or reduced because of the exhaustion caused by the temperature. At the same time, the study notes that the hotter it is, the more workers slow down in their tasks and make mistakes. Adverse impacts also increase with consecutive days of extreme heat (above 32°C), with prolonged periods accentuating physical shock and decreasing comfort during rest.
But these results should be put into perspective depending on the country. In disadvantaged regions, several parameters can further aggravate the aftereffects of heat. First of all, a decisive factor for the loss of productivity is the thermal quality of buildings (insulation against heat) and access to means of cooling (air conditioning). People who have to work outdoors are more at risk, as are older workers, who are more vulnerable to high heat. Finally, access to toilets is also important, as explained by Indian researcher Joy Monteiro, author of a study published in the journal Nature. Workers who are deprived of it often drink less water and become more dehydrated, which affects their well-being and thus their productivity.
Disrupted climate, world impossible to insure?
According to figures for 2021, the France Assureurs federation estimated the cost of claims linked to natural events over the years 2020-2050 at 143 billion euros – almost double the figures for the last thirty years. In addition to the impact on productivity, climate change also implies an increase in the risk of floods, storms and periods of drought… A list of potential damage to make any insurer green with envy. Drought, in particular, is of concern both for its impact on the degradation of real estate, biodiversity, agriculture, but also on access to drinking water – Spanish villages have already experienced such difficulties since the summer 2022.
More recently, on the occasion of the Aix-en-Provence Economic Meetings in early July, Pascal Demurger, Managing Director of Maif, warned of the risks of submersion in coastal areas exposed to the rising waters caused by climate change. With the free competition of the market, some insurers now refuse to cover goods threatened with certainty by these climatic perils in order to preserve their commercial activity and protect their solvency. These areas increasingly deserted by insurance could soon become “uninsurable”, and leave a growing number of French people vulnerable to the vagaries of the weather.
Already in 2015, Henri de Castries, then CEO of Axa, affirmed that a “2°C increase in the average temperature in the world [pouvait] still be insurable [mais qu’une] 4°C rise was not.”