Thursday, August 9, 2012

Economic Costs of the Hottest Year Ever

With a mild winter, summer in March, and an all-summer-long series of heat waves, 2012 could easily turn into the hottest year ever in North America. Weather this summer has also been dry. Last year’s epic floods in the middle of the continent are all but forgotten. Looking back at the floods, though, it is easy to say that some of the blame placed on water management authorities was misplaced. The late suggestion from elected officials and others that the reservoirs should have been emptied out in March would have been extremely costly had it been carried out this year. As it is, parts of the Mississippi River are so low that a few cargo ships have had to stay docked, and most are having to operate with lighter loads.

The hot weather has other economic costs. Most obviously, the added cost of cooling buildings on hot afternoons has more than erased the savings we got from heating the same buildings less during the mild winter. Sadly, weather-related deaths have taken some workers away from us. Those merely made dizzy by the heat may recover quickly with medical attention, but the medical care alone costs billions. And even those of us who think we are handling the weather just fine may be slowed down more than we realize. Heat accelerates muscle fatigue and can produce a hint of brain fog that may reduce productivity by a third on many vaguely defined but nevertheless important tasks. This effect includes shopping, and surely millions of people are simply forgetting to do some of the seasonal shopping they would otherwise be doing this week.

The unusual heat is doing material damage. A series of water main breaks in Philadelphia are believed to be heat-related. Railroad tracks in the United Kingdom are engineered to handle temperatures up to 45°C, and some have had to be rebuilt this summer, at considerable inconvenience, because of excessive heat. It is inconvenience enough when, on hot afternoons, trains operate at lower speeds as a precaution.

Of course, trains that arrive late may be carrying produce that does not have quite the same food value it might have had, delivered on time. Separately, hot, dry weather has negated at least 10 percent of U.S. corn and soybean crops. Of course, many crops have had to be irrigated more than usual, at an energy cost of billions of dollars. And I haven’t even mentioned the lost productivity from power failures. Power failures have, fortunately, have not been especially frequent this summer in North America, but the potential for an extended failure or rolling blackouts remains a worry as long as the heat waves continue.

None of this is huge by itself, but combined, these effects sap some of the energy from the economy. It will take a few weeks after a cooling trend finally hits before the economy gets its momentum back. In the meantime, economists will worry about the sluggish economy. Worry, of course, has economic consequences of its own.