Upholding labour productivity under climate change: an assessment of adaptation options

ABSTRACT

Changes in labour productivity feed through directly to national income. An external shock, like climate change, which may substantially reduce the productivity of workers is therefore a macroeconomic concern. The biophysical impact of higher temperatures on human performance is well documented. Less well understood are the wider effects of higher temperatures on the aggregate productivity of modern, diversified economies, where economic output is produced in contexts ranging from outdoor agriculture to work in air-conditioned buildings. Working conditions are at least to some extent the result of societal choices, which means that the labour productivity effects of heat can be alleviated through careful adaptation. A range of technical, regulatory/infrastructural and behavioural options are available to individuals, businesses and governments. The importance of local contexts prevents a general ranking of the available measures, but many appear cost-effective. Promising options include the optimization of working hours and passive cooling mechanisms. Climate-smart urban planning and adjustments to building design are most suitable to respond to high base temperature, while air conditioning can respond flexibly to short temperature peaks if there is sufficient cheap, reliable and clean electricity.

Key policy insights

• The effect of heat stress on labour productivity is a key economic impact of climate change, which could affect national output and workers’ income.

• Effective adaptation options exist, such as shifting working hours and cool roofs, but they require policy intervention and forward planning.

• Strategic interventions, such as climate-smart municipal design, are as important as reactive or project-level adaptations.

• Adaptation solutions to heat stress are highly context specific and need to be assessed accordingly. For example, shifting working hours could be an effective way of reducing the effect of peak temperatures, but only if there is sufficient flexibility in working patterns.

KEYWORDS:

• Heat stress
• heat and labour productivity
• climate change adaptation
• climate-resilient development

Acknowledgements

This research was supported by the UK Department for International Development under its Research for Development (R4D) programme. We are grateful to Jonathan Beynon, Siddhartha Haria, Jisung Park, Stephanie Trinci, Rosalind West and three anonymous referees. At the time of writing the paper Costa was supported by the European Community’s 7th Framework Program under Grant Agreement No. 308497 (RAMSES). Fankhauser acknowledges funding from the Grantham Foundation for the Protection of the Environment and the UK Economic and Social Research Council (ESRC) through the Centre for Climate Change Economics and Policy. The views expressed do not necessarily reflect the UK government’s official policies.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Sam Fankhauser http://orcid.org/0000-0003-2100-7888

Notes

1 The impact of ill-health on individual productivity can be much higher than heat-related productivity effects. However, since fewer individuals are affected, the aggregate effect on labour productivity across the population is lower.

2 Expert judgements were guided by the level of early benefits (to judge the low-regrets potential) and the likely economic life of an investment (to judge flexibility).

Additional information

Funding

This research was supported by the UK Department for International Development under its Research for Development (R4D) programme. We are grateful to Jonathan Beynon, Siddhartha Haria, Jisung Park, Stephanie Trinci, Rosalind West and three anonymous referees. At the time of writing the paper Costa was supported by the European Community’s 7th Framework Program under Grant Agreement No. 308497 (RAMSES). Fankhauser acknowledges funding from the Grantham Foundation for the Protection of the Environment and the UK Economic and Social Research Council (ESRC) [grant number ES/K006576/1] through the Centre for Climate Change Economics and Policy. The views expressed do not necessarily reflect the UK government’s official policies.