I LOVE summer. Hot weather just feels like Australia.
It’s as if the essence of this nation hibernates all winter and comes out in late spring, with a hard-earned thirst.
But here’s the thing. Hot weather is bad for business. You might think demand for SPF 30+, Golden Gaytimes and last minute air conditioning installations is enough to keep the economy ticking over.
But the word is in. The economy is more like a salad than a snag. It doesn’t perform well when the heat is on.
And the heat is on. The Bureau of Meteorology says our last three springs have been our warmest on record. This El Niño is a strong one and it is at its peak. The next three months are going to be roasting.
Experts have studied the way economies wilt in the heat. Dr Paul Burke from the Australian National University says heat can damage our willingness to work, and how much we get done when we are there.
“There is international evidence that very hot weather is bad news for economic growth. Labour supply, labour productivity and agricultural output are among the indicators that can take a hit,” he says, before offering a consolation.
“A hot summer is a good time to sell ice creams, though.”
Heat stress cost the economy $7 billion in 2013-14 according to one report. The places we go to escape heat stress do well.
The winners of a summer heatwave will be pubs and hotels, according to the CEO of Celsius Pro, a company that lets businesses hedge against bad weather.
Jonathan Barratt says the hospitality industry thrives on sunny days.
“It’s very critical in this period – the Christmas holiday period – that it is good weather.”
The losers, he explains will be construction industries – they can’t work in hot weather – and also broad acre farmers.
“We are talking about wheat, we are talking about barley, sorghum, canola, soybean,” he says.
“It is coming off the back of an already dry period and what subsoil moisture we’ve had for a lot of crops aren’t there any more. “
Goldman Sachs is also very worried about drought – the investment bank reckons it could take 0.75 percentage points off Australia’s economic growth next year.
“This represents the most easily identifiable risk to economic growth in the new year,” said Head of Macro Research Tim Toohey in a note to clients.
“Early warning indicators suggest Australia could be facing one of its most severe droughts in the 50 years.”
The only good news for farmers standing in their sweltering paddocks, is that because of demand from Asia, prices for farm goods are rising.
Now, the BOM is not predicting drought across the whole of Australia. They expect higher than normal rainfall around Brisbane and in Tasmania. But northern WA and the top of the continent will be much drier over summer.
Picture: Supplied.Source:Supplied
Summer comes round every year, so obviously getting a bit hotter is not the problem. The problem is how the economy reacts when it gets super hot.
The following graph shows that above a certain point, the hotter your country is to start with, the worse you cope with a few extra degrees of warmth.
Picture: Supplied.Source:Supplied
Researchers have found a tipping point in the relationship between climate and economic growth.
The mild places grow fast. This means some countries – Canada and Russia for example – could benefit from higher temperatures after climate change.
But most countries would do worse if it were warmer, if their research holds true. (Australia’s shade of pink in this map reminds of me of how I look when I don’t put on sunscreen.)
Picture: Supplied.Source:Supplied
So hotter temperatures might not just give our economy some sizzle, but actually burn it. That’s a shame. I love summer – but not enough to have it around all twelve months of the year.
[Source:-news.com.au]