Extreme Heat Gets a Price Tag

“Summer has taken its time arriving in the Northeast, but it’s coming in HOT.” 

That was the warning from the National Weather Service this week as a blistering heatwave prepared to sweep across the US. For the millions without access to effective cooling — or anyone working outdoors — the health risks are clear. What’s less obvious, but no less serious, is the economic fallout this kind of extreme temperature event may bring.

This may be changing, however. Researchers and climate intelligence start-ups are working to quantify the dollar impacts of severe heat events, and use their findings to help businesses shape adaptation strategies. The Heatwave Economic Impact Forecast from climate intelligence company EHAB and adaptation consultancy DSR & Partners is one example. (Disclaimer: Climate Proof works with DSR & Partners on the monthly Adaptation10 series).

This combines EHAB’s 15-day meteorological forecast with an economic impact framework developed by DSR & Partners to estimate the financial damage of high heat events in countries around the world — starting with Germany. Unlike general climate risk models, which purely focus on long-term scenarios, the EHAB tool also offers near-term insights.

As of today (June 19), the tool estimates a €719.7mn (US$825mn) economic hit to Germany over the next two weeks from heat-induced productivity losses, higher cooling costs, business disruptions, and more. It’s the sort of number designed to force policymakers and business leaders to pay attention and take action.

“Putting a number on things is the only way that we’re going to address heat risks, because society don't seem to care about anything else anymore,” says Dr Andrea Nakoinz, an anesthesiologist and a member of the expert advisory board at DSR & Partners who masterminded the economic impact framework.