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Day-to-day temperature variability reduces economic growth

Author

Listed:
  • Maximilian Kotz

    (Potsdam Institute for Climate Impact Research
    Potsdam University)

  • Leonie Wenz

    (Potsdam Institute for Climate Impact Research
    Mercator Research Institute on Global Commons and Climate Change
    University of California)

  • Annika Stechemesser

    (Potsdam Institute for Climate Impact Research
    Potsdam University)

  • Matthias Kalkuhl

    (Mercator Research Institute on Global Commons and Climate Change
    Potsdam University)

  • Anders Levermann

    (Potsdam Institute for Climate Impact Research
    Potsdam University
    Columbia University)

Abstract

Elevated annual average temperature has been found to impact macro-economic growth. However, various fundamental elements of the economy are affected by deviations of daily temperature from seasonal expectations which are not well reflected in annual averages. Here we show that increases in seasonally adjusted day-to-day temperature variability reduce macro-economic growth independent of and in addition to changes in annual average temperature. Combining observed day-to-day temperature variability with subnational economic data for 1,537 regions worldwide over 40 years in fixed-effects panel models, we find that an extra degree of variability results in a five percentage-point reduction in regional growth rates on average. The impact of day-to-day variability is modulated by seasonal temperature difference and income, resulting in highest vulnerability in low-latitude, low-income regions (12 percentage-point reduction). These findings illuminate a new, global-impact channel in the climate–economy relationship that demands a more comprehensive assessment in both climate and integrated assessment models.

Suggested Citation

  • Maximilian Kotz & Leonie Wenz & Annika Stechemesser & Matthias Kalkuhl & Anders Levermann, 2021. "Day-to-day temperature variability reduces economic growth," Nature Climate Change, Nature, vol. 11(4), pages 319-325, April.
    • Handle: RePEc:nat:natcli:v:11:y:2021:i:4:d:10.1038_s41558-020-00985-5
    DOI: 10.1038/s41558-020-00985-5
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