Melting Economies: Extreme Heat is Costing Nations Billions
This July is set to be the hottest month ever. In recent years, studies have shown that extreme heat can be dangerous, expensive and impacts nearly everyone.
- In the US, heat kills more people than any other weather-related incidents, pressures power grids and threatens outages.
- Over the past 50 years, the cost of extreme weather events has grown 77% — estimated to cost countries 1.5-6.7% of their GDP annually.
For US consumers, home energy bills are expected to rise 11.7% this summer to an average of $578. It’s also forcing small businesses to close during severe heatwaves.
How does extreme heat impact the economy?
1/ Lower productivity: The International Labour Organization predicted that companies will lose 2% of working hours by 2030 from unworkable conditions or slower working speeds.
2/ Redirect government spending: Extreme heat will impact the lifespan of roads, bridges and other public infrastructure — requiring more frequent replacement.
3/ Increase labor-related costs: In 2021, a deadly heatwave struck British Columbia, leading to heat-related work injury compensation jumping 180% from the previous three-year average.
Better get used to it: Researchers warn that a hotter world will likely be the norm moving forward. But existing working conditions and practices were set in place for a cooler climate, and factories and warehouses haven’t been designed for the hot temperatures, per the Institution of Mechanical Engineers’ Laura Kent.
Crank up the air con
It’s not just warmer temperatures keeping sales hot for the HVAC industry. Manufacturers have been expecting a sales boost thanks to the passing of last year’s climate bill — giving Americans tax breaks and rebates on energy-efficient cooling systems.
HVAC sellers and manufacturers have seen their returns far surpass the S&P 500’s in recent years:
- Carrier Global Corp (NYSE:CARR) has risen over 300% since its 2020 debut in the market.
- AAON (NASDAQ:AAON) is also up 176% in the past five years.
Thought you could live without AC? Give it a couple more years, and that might not be the case.