Worldwide heatwaves force changes in economy and policy

German insurer Allianz predicts global GDP will drop by 0.6 percentage points this year due to extreme heat. The U.S. economy is expected to shrink by the same margin, while China, Italy, and Spain could each lose about 1 percentage point. The International Labour Organization warns that heat-related reduced work hours could cost up to 136 million jobs by 2030.

Heatwaves are more than a nuisance. They threaten the economy. Dairy cows eat less when temperatures rise above 27 degrees Celsius, and milk production can drop by up to 20 percent when it exceeds 32 degrees Celsius. Reduced milk supplies disrupt cream production, causing problems for bakeries and cafés. In Jeju, flounder deaths linked to warmer waters have been reported. Last year, aquaculture losses due to warm seas reached a record 143 billion won, with fears this year could be worse. Cabbage supply is also unstable because summer crops grown at high altitudes are highly vulnerable to heat.

Cities are even more vulnerable. Urban areas absorb heat through concrete, brick, and asphalt, while air conditioners add to the problem. This urban heat island effect causes power lines to melt, railways to warp, and air conditioning costs to soar. Productivity declines, healthcare expenses increase, and governments face lower tax revenue while spending more to adapt.

Still, many remain indifferent to extreme heat becoming the new normal. Every year, elderly farmers die from heatstroke. Some local governments now use drones to broadcast messages urging people to rest. Construction workers suffer from heat illness or suffocate in manholes as oxygen levels drop and toxic gases build up.

Do heatwaves affect everyone equally? In France, vineyards have suffered significant losses. Meanwhile, in southwestern Germany, the warmer climate has helped the region emerge as a new wine producer, expanding from white wines to high-quality reds.

Seville, Spain, began naming heatwaves in 2022 and created a classification system to manage them such as hurricanes and typhoons. Japan and Germany have passed climate adaptation laws, with Japan implementing a national plan in 2018 and Germany enacting a federal law last year. The World Meteorological Organization says issuing heat warnings 24 hours in advance can reduce damage by 30 percent. The World Economic Forum recommends solutions such as urban greening and appointing a “Chief Heat Officer.” It is time to learn how to live with heatwaves.