The Heat is On: Effects of Global Warming on the Future of GDP Growth
Little Falls Community High School
Little Falls, MN
According to Global Climate Change: Vital Signs of the Planet, a website run by the National Air and Space Administration, currently global warming trends are “proceeding at a rate that is unprecedented in the past 1,300 years.” The website explains that the carbon dioxide concentration in the atmosphere has increased by more than a third since the beginning of the American Industrial Revolution, with levels at their highest in 650,000 years. Global temperature has already risen 1.7 degrees fahrenheit since 1980, and there is no end in sight (NASA, n.d.). This rise in temperature will have obvious environmental impact, but what about economical? Studies have shown that higher temperatures lead to lower economic productivity, largely due to the effects of heat on individuals. Additionally, the United States will face a choice between allowing the effects of global warming to go unchecked or dedicating a larger share of GDP to attempting to adapt to the phenomenon and prevent the situation worsening. This may mean the implication of a carbon tax, which would do even more harm to the nation’s GDP. Overall, the effects of global warming on the planet will likely make it difficult for the American economy to experience the type of long term growth it once did.
The decision to let rising temperatures go unchecked could be a costly one for the productivity of the United States economy. In Global non-linear effect of temperature on economic production, a study published in the scientific journal Nature in 2015, Marshall Burke, Solomon M. Hsiang, and Edward Miguel share their finding that 55.4 degrees fahrenheit is the average temperature that allows for an economy to be most successful. By comparing data on economic production versus average temperatures for 166 countries from 1960-2010, the researchers found that at temperatures up to 55.4 degrees fahrenheit, a country’s economic production remains smooth and fairly consistent. However, with any further increase in temperature, productivity begins to gradually decline, the decline accelerating the higher temperatures climb. The researchers concluded that poorer countries often appear to have larger responses to temperature not because they are poorer, but because they are already hotter on average. They argue that high temperatures negatively affect all poor countries, and also have significant or marginally significant effects on rich countries (Burke, Hsiang, and Miguel). Countries with an average temperature currently below 55.4 fahrenheit may not see any detrimental effects for a time as global warming continues, but the United States, which has an average temperature already very close to the threshold, will begin to see economic harm as the entire world warms.
The decline in productivity in higher temperatures that is associated with global warming is attributed to the human body’s extreme sensitivity to temperature changes. In 2014 the National Bureau of Economic Research published a working paper, Feeling the Heat: Temperature, Physiology, & the Wealth of Nations, that drew together the results of many past studies as well as medical literature to state that heat can have measurable negative effect on both physical and cognitive performance. The study points out that heat can make humans less effective at physical tasks, but can also lead them to choose certain activities over others, such as choosing to stay in the shade rather than work efficiently outdoors (NBER). In addition to this, Hsiang is quoted in the Guardian as speculating that heat can affect white collar workers as well as manual laborers: “There is a lot of interesting work showing that cognitive errors, or other types of mistakes, increase as workers are subjected to higher temperatures. So in places where increasingly we are relying on people to sit and think and be productive, that could be costly” (The Guardian, 2015). In the face of the kind of decreased productivity global warming will bring, it is more likely for the United States to see a fall in GDP growth rates than to see the same kind of growth as in the past, especially if global warming remains unchecked. But choosing to work to mitigate global warming will likely have even further detrimental effects on the American economy.
A 2015 article published in The Economist, titled Second-best solutions, makes the claim that if there is one thing economists agree on, it is that a carbon tax is the best way to tackle climate change. This may be true, but according to a website run by the U.S. Congressional Budget Office, if a carbon tax is ever implemented the United States economy will then be forced to deal with the effects of that tax. Though the tax would benefit the environment, the resulting rise in production costs of goods requiring high carbon dioxide emissions would discourage the production of those goods. The then-rising prices of those goods due to underproduction would cause a decline in the purchasing power of people’s incomes. As a result, disposable income would decrease, and investment spending would eventually decline as well (CBO, 2013). Furthermore, unless a carbon tax is eventually made global, the already existing effects of global warming may be slowed in the United States, but they will not disappear. In How Can the US Economy Grow? Headwinds and Tailwinds, Dr. William Wheaton of the Massachusetts Institute of Technology makes the point that although it is possible to adapt to the effects of global warming, doing so will require investments that absorb GDP to simply maintain current standards of living, a headwind that will make any long term growth especially difficult. Combatting global warming in the future will require a combination of adaptation to existing effects and prevention of future ones, both of which will be costly.
The United States is home to many critics of climate change, and perhaps even more people who are aware of the phenomenon but are choosing to ignore its capacity to affect the world. However, with carbon dioxide levels and worldwide average temperature at an all time high, global warming will become increasingly difficult to ignore. With the combination of the decreased economic productivity attributed to higher temperatures and the detriments attempting to control global warming’s present and future effects will have on the nation’s GDP, it is unlikely that the United States economy will be able to grow the way it once did.
Burke, M., Hsiang, S., & Miguel, E. (2015, October 21). Global non-linear effect of temperature on Economic production. Nature, 527(7577). doi:10.1038/nature15725
Carrington, D. (2015, October 21). Perfect temperature for economic success - 13C. The Guardian. Retrieved from https://www.theguardian.com/environment/2015/oct/21/ perfect-temperature-for-economic-success-is-13c-climate-change
Effects of a carbon tax on the economy and the environment (2013, May 22). In Congressional Budget Office. Retrieved from https://www.cbo.gov/publication/44223
Heal, G., & Park, J. (2013, December). Feeling the heat: Temperature, physiology & the wealth of nations. In National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w19725
NASA Earth Science Communications Team. (n.d.). Causes. In Global Climate Change: Vital Signs of the Planet. Retrieved January 8, 2017, from http://climate.nasa.gov/causes/
Second-best solutions. (2015, November 28). The Economist. Retrieved from http://www.economist.com/news/special-report/21678959-if-best-method-tackling-climate-change-not-offer-try-something
Wheaton, W. (2014, January 31). How can the US economy grow? Headwinds and tailwinds. In Massachusetts Institute of Technology. Retrieved from economics.mit.edu/files/9508