Global warming is projected to have a serious negative impact on outdoor labor productivity this century. That impact could well exceed the “combined cost of all other projected economic losses” from climate change, as one expert has explained. Yet it has “never been included in economic models of future warming”!
At the same time, higher carbon dioxide (CO2) levels threaten indoor productivity, as I reported last year. The Harvard School of Public Health has found that CO2 has a direct and negative impact on human cognition and decision-making at CO2 levels that most Americans are routinely exposed to today.
Ironically, strong climate action would be a huge boost to productivity. Here’s what we know.
Productivity costs of higher temperatures
A 2013 NOAA study concluded that “heat-stress related labor capacity losses will double globally by 2050 with a warming climate.” If we don’t get off our current path of carbon pollution emissions, we face as much as a 50 percent drop in labor capacity in peak months by century’s end, as this figure shows:
A number of recent studies have projected a collapse in labor productivity from business-as-usual carbon emissions and warming.
Here’s a key chart from a 2010 Ziven-Neidell paper for the National Bureau of Economic Research, “Temperature and the Allocation of Time: Implications for Climate Change.” It plots “the number of minutes in a day that individuals (who work in outdoor or temperature-exposed sectors in the USA) spent working as a function of maximum temperature (in Fahrenheit) that day.”
Productivity starts to nose-dive at 90°F and falls off the cliff at 100°F.
Andrew Gelman, director of the Applied Statistics Center at Columbia University, summed up the research this way: “2% per degree Celsius … the magic number for how worker productivity responds to warm/hot temperatures.” The negative impact appears to start at about 26°C (79°F).
So what does this mean for productivity? Prof. Solomon M. Hsiang has explained: “In my 2010 PNAS paper, I found that labor-intensive sectors of national economies decreased output by roughly 2.4% per degree C and argued that this looked suspiciously like it came from reductions in worker output. Using a totally different method and dataset, Matt Neidell and Josh Graff Zivin found that labor supply in micro data fell by 1.8% per degree C. Both responses kicked in at around 26C.”
Here is the key chart from Hsiang’s own work showing “national output in several [non-agricultural] industries … declining more rapidly at very high daily temperatures.”
Hsiang states the central point. His calculations show that the productivity loss from warming could exceed the “combined cost of all other projected economic losses” from climate change — and yet it has “never been included in economic models of future warming.”
So the next time you see a projection of the economic cost from climate change — and a resulting social cost of carbon — you might want to double the numbers to get a more accurate picture of what we are risking by our callous failure to sharply restrict carbon pollution.
Productivity risk from higher CO2 levels
In fact, if carbon pollution remains unrestricted, we also risk increased losses in indoor productivity too. As I reported in October 2015, a landmark public health study from the Harvard School of Public Health found that CO2 has a direct and negative impact on human cognition and decision-making at CO2 levels most Americans and their children are routinely exposed to today inside classrooms, offices, homes, planes, and cars.
That study found that, on average, a typical participant’s cognitive scores dropped 21 percent with a 400 parts per million increase in CO2. Here are their astonishing findings for four of the nine cognitive functions scored in a double-blind test of the impact of elevated CO2 levels:
The researchers explain, “The largest effects were seen for Crisis Response, Information Usage, and Strategy, all of which are indicators of higher level cognitive function and decision-making.” In short, high indoor CO2 levels will impair productivity.
It may surprise you that CO2 levels in work places are routinely 800 ppm or more, but in fact the design standard for CO2 levels in most buildings is 1000 ppm. In classrooms, conference rooms, and other crowded closed spaces (like airline cabins) — where exhaled human CO2 can accumulate rapidly — they routinely exceed 1500 ppm.
The outdoor CO2 level is the baseline for indoor levels. For most of human evolution and modern history, CO2 levels in the air were in a fairly narrow and low range of 180 to 280 parts per million. Also, during the vast majority of that time, humans spent most of their time outdoors or in enclosures that were open (like a cave) or, later, in buildings that weren’t tightly sealed.
But in recent decades, outdoor CO2 levels have risen sharply, to a global average of 400 ppm — with levels in major cities from Phoenix to Rome many tens of ppm higher — up to 100 ppm or more. That’s because CO2 “domes” form over many cities primarily due to CO2 emissions from traffic and local weather conditions.
In modern tightly-sealed buildings with a large number of occupants, CO2 levels indoors are 200 ppm to 400 ppm higher than outdoors, and, as noted above, in particularly crowded and/or poorly ventilated spaces, can easily be 1000 ppm or more higher.
And that is with a current outdoor CO2 global baseline level of 400 ppm . Even with China, the U.S. and the rest of the world moving toward enacting the Paris climate agreement, we are still headed to much higher outdoor CO2 levels, as this chart by Climate Interactive shows:
We are still on a path to 675 ppm, which is too high for both the climate change impacts and the direct human cognition impacts. Worse, that level of warming will likely trigger many major carbon-cycle amplifying feedbacks that are not included in the climate models, such as permafrost melting. So we must take stronger action.
Productivity gain from climate action
What makes inaction doubly tragic is that a rapid transition to a clean energy economy would be a tremendous boost to worker productivity. A 232-page International Energy Agency report from 2014, “Capturing the Multiple Benefits of Energy Efficiency” found that “the uptake of economically viable energy efficiency investments has the potential to boost cumulative economic output through 2035 by USD 18 trillion,” which is larger than the current size of the U.S. economy!
In particular, the report found that green building design can achieve health benefits — including reduced medical costs and higher worker productivity — “representing up to 75% of overall benefits.” That is, the non-energy benefits of energy efficiency upgrades can be three times the size of the energy savings.
This study also found that when the value of productivity and other benefits of industrial efficiency measures were factored into “traditional internal rate of return calculations, the payback period for energy efficiency measures dropped from 4.2 to 1.9 years.” In other words, payback time was cut in half.
So, climate inaction would severely harm labor labor productivity while strong climate action would strongly increase it. Not exactly a tough choice for policymakers to make.