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40-year study reveals ‘unaccounted’ threat to global economy

·3-min read
computer generated image of wave of international currency. Climate change concept.
Rainy days triggered by climate change are denting the economy. (Source: Getty)

Economic growth slides as the number of rainy days, and the intensity of rain a region experiences increases, a new 40-year study has revealed.

The analysis of more than 1,500 regions around the world by the Potsdam Institute for Climate Impact Research (PIK) found that burning oil and coal in turn triggered greater rainfall and dented economies.

"Macro-economic assessments of climate impacts have so far focused mostly on temperature and considered - if at all - changes in rainfall only across longer time scales, such as years or months, thus missing the complete picture," research lead Leonie Wenz from PIK said.

"While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year.

“Intensified daily rainfall turns out to be bad, especially for wealthy, industrialised countries like the US, Japan, or Germany."

As the Earth’s atmosphere heats up, the warming air has the ability to hold more water vapour, which in turn becomes rain.

The researchers analysed rainfall data for 1,554 regions between 1979 and 2019 and the sub-national economic output for the same regions.

They found that overall, daily rainfall extremes were increasing due to the warming air.

From there, the rainy days have a disruptive effect on manufacturing, transport, service and business sectors, with rich countries experiencing a harsher economic blow.

"Our study reveals that it's precisely the fingerprint of global warming in daily rainfall which have hefty economic effects that have not yet been accounted for but are highly relevant," co-author Anders Levermann said.

"Taking a closer look at short time scales instead of annual averages helps to understand what is going on: it's the daily rainfall which poses the threat.”

First study author Maximilian Kotz agreed, noting that rainfall extremes were the clearest indicator of the impact of climate change, adding that rainfall was intensifying nearly everywhere around the world.

“It's rather the climate shocks from weather extremes that threaten our way of life than the gradual changes. By destabilising our climate we harm our economies,” Levermann said.

The study follows another analysis released by PIK in November 2021, which warned that extreme weather events were also causing “economic ripples” along supply chains.

That research found that when extreme weather events in different regions occurred at the same time, the economic damage was amplified by up to 20 per cent.

"The phenomenon of economic ripple resonance means that two separate incidents send shock waves through the world economy, and those waves build up - like a tidal wave," Levermann explained in November.

“Supply shortages increase the demand and that increases the prices. Firms have to pay more for their production goods.

“In most cases, this will get passed down to the consumer.”

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