The Midwest and Northeast are finally feeling some relief after a heatwave. However, record-high temperatures exact a toll on the US economy: the Atlantic Council estimates extreme heat costs the US GDP $100 billion annually, a figure that could double by 2030 as climate change accelerates. The Center for Climate and Energy Solutions (C2ES) president Nathaniel Keohane joins Market Domination Overtime to discuss how heat impacts the economy.

Keohane explains that heatwaves impact both agricultural productivity and labor productivity. "It's harder to do good work when the heat really climbs. And then there is also heat-related mortality in the US. That's less of an issue. It does happen in real bad heat waves, but globally, that's a big impact both in terms of human impacts but also in terms of economic impacts," he explains. Infrastructure is also impacted by extreme heat, as electric grids need to be updated to remain resilient.

He adds, "I think there's more that the federal government and the state governments can do. We're starting to see that FEMA, the Federal Emergency Management Administration, is starting to look at the investments that need to be made to adapt to a changing climate across the board, including on heat." To tackle these issues, he believes investments and policies need to be put in place to curb emissions contributing to climate change.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Melanie Riehl

Video Transcript

After days of dangerously high temperatures across the Midwest and northeast millions are finally getting relief.

But those record high temps come at a big cost to the economy.

The Atlantic Council estimates that extreme heat cost the US GDP $100 billion annually.

That's a figure that could double by 2030 as climate change takes its toll.

I'm joined now by Nathaniel Cohan, a president at the Center for Climate and Energy Solutions that thanks a lot for being here.

So obviously, it, it's on our minds when it's hot out in particular, but this is something that flares up increasingly here.

Um How are, what are the most acute sort of pain points when it comes to heat specifically and its economic effects?

Yeah.

Well, thanks very much for having me on.

And as you say, in much of the country, we're feeling a little bit cooler than we were a few days ago, but it was only a couple of days that we were a couple of days ago, we were setting heat records.

I uh my organization is based in Washington DC, hit 99 degrees a record high for late June.

Um And I think many of the parts of the country felt similar amounts of heat.

And as you say, it really does have an impact on the economy and that comes through a range of channels.

Think about uh first like agricultural production and crops, right?

When the heat gets too hot, that really can threaten agricultural productivity, it can undermine um farming and, and and farming productivity.

You think about um the cost of cooling that um that businesses have to spend on whether it's data centers uh increasingly or whether it's big box stores like Walmart, cooling their facilities or their warehouses, perhaps more surprising and more hidden really.

The big impacts are around labor productivity.

You mentioned that site that study by Atlantic Council $100 billion a year.

Currently, they estimate just from the hotter days due to climate change with that doubling by the end of the decade, maybe reaching $500 billion or half a trillion within a few decades.

And that's just the labor productivity piece.

It is harder to be productive, it's harder to do good work when the, when the heat really climbs.

And then there is also heat related mortality in the US.

That's less of an issue.

It does happen in real bad heat waves.

But globally, that's a big impact, both in terms of human impacts, but also in terms of economic impacts, you add this all together and we're looking at, you know, maybe a percentage point or two of GDP within the coming decades.

That's a pretty big amount for just one aspect of the changing climate.

Yeah.

And, and if, depending on the country, I'm sure that, that is even more, um, that's just for the US.

Right.

Exactly.

Um, I have to, uh, to, to be pers on a personal note.

Nat, um, I commute via New Jersey Transit and I don't know if you've seen the headlines but both New Jersey An Amtrak have been affected by the heat because apparently old wires do not like hot weather and they sag and then the power goes out to all the trains.

So, um do you feel that there is enough acknowledgment?

Let, let's just focus on the infrastructure side for a moment, you know, what are we doing and how are we addressing in the US?

Um How are we heat proofing for lack of a better term sort of our logistics and infrastructure systems?

Well, you're, you're absolutely right to raise infrastructure.

That's another category.

And particularly when you think about transportation infrastructure, you mentioned New Jersey Transit, Amtrak, but also the grid infrastructure, which of course is related to that as well, providing electricity to those trains.

We work at CTS, we work with a lot of companies and I will tell you electric utilities, this is one of the top issues on their minds, especially if you get out west where the heat issues are high, are more intense.

And there's also a bigger threat of wildfire.

So thinking about how we build resilient electric grids that can both be uh that can continue to perform and operate at higher temperatures.

The wires don't sag etcetera that, that don't present a risk of wildfire to surrounding areas.

You think about this is another area where really has struggled with maintaining the performance of its grid with really record record high temperatures.

So the short answer is we have to do much more to heat proof our infrastructure to build a more resilient grid and a more resilient economy.

And this is just one aspect of the way that climate change is really shaping our economy and requiring us to make real investments in adapting to it.

Well, now, I guess the question is, are we doing that right?

Are there examples that we see where the threat is being taken seriously?

And we are seeing those investments being made because it's already too late in a lot of situations.

But you know, I guess it's never too late because it's just still gonna continue to be hot.

Well, that's right.

So if you look first at the resilience, uh investments that we're making, so what are we doing to adapt to the changes we're already seeing, you do see a lot happening at the corporate level.

I mentioned electric utilities, you also have uh companies like Walmart thinking about how to do a better job cooling.

Their um their warehouses, their their stores, you have data centers, you know, utilities that are providing electricity to centers and the companies that are running those data centers worrying a lot about cooling.

So companies are starting to take this seriously.

And what's interesting is when they make investments in their own resilience to climate, they often look to also invest in the resilience of their communities.

I think there's more that the federal government and the state governments can do.

We're starting to see that fema the Federal Emergency Management Administration is starting to look at the investments that need to be made to adapt to a climate, a changing climate across the board, including on heat.

But the last thing I do want to say is we also need to get at the issue at its source, right?

So we can we need to invest more in a more resilient grid, a more resilient economy, more options to keep people cool.

But we also need to cut the emissions of climate pollution that are really driving up temperatures in the first place.

And that's an area where we've made a lot of progress.

There's much more to be done.

So on both fronts, we need to both make the investments to make our economy more resilient, but also make the investments in a cleaner grid and a cleaner economy overall, that will cut the emissions that are causing the problem in the first place.

Well, here's the thing.

Nat thank you so much, Nat Cohan.

Appreciate it.

Thanks very much for having me.