Tag Archives: GDP

City sunset.

Urban heat island effect could almost triple the cost of climate change in cities, burn economies to a crisp

Cities might feel the heat of climate change almost twice as worse as the rest of the world due to the urban heat island effect, a new paper reports. Unless cities adapt to ensure more incoming energy is reflected or absorbed, this effect will put a huge dent in the economy, it further reads.


Tokyo, one of the densest urban centers in the world. Not a place you want to be in on a warm day.

It’s a hot day, your apartment is stiffing, and the AC just doesn’t cut it — so you decide to take a stroll in the park by the water to cool down. Or maybe go on that long overdue hike and get a break from the city altogether. Congratulations! You’ve unknowingly felt the effects of and then counteracted the urban heat island effect.

There are millions more who, just like you, are feeling the heat. And that’s actually part of the problem. The ‘urban heat island effect’ is just what it sounds like. These areas of higher ambient temperatures form when natural surfaces like vegetation or water that tend to reflect or use incoming energy are replaced by artificial surfaces such as concrete or asphalt, that trap incoming natural heat (sunlight). The high concentration of cars, air conditioning heat sinks, people, and so on in cities also means there’s a lot of anthropic heat which further drives up ambient temperatures.

Throw climate change in the mix, and it’s only going to get worse. Worse enough, in fact, that it’s going to tank the economy.

Paying the cooling bills

Published by an international team of economists, the study is the first to look at how major cities will fare under global as well as local changes in climate — and it’s not at all encouraging. This analysis included 1,692 cities around the world to quantify the effects of rising temperatures throughout climate zones (and across countries and cultures) on urban GDP, the backbone of modern economies, and found that the costs of climate change for cities this century could be 2.6 higher than we’ve believed once you factor in the heat island effect.

Overall, the team reports that we’re likely looking at a decrease of 5.6% of Gross World Product product by the end of the century, but the effects won’t be distributed uniformly. In the worst-affected cities, for example, climate change-induced losses could shave off as much as 10.9% of GDP by the end of the century.

City sunset.

You could say the profits will melt away.
Image credits Rogerio Rogeriomda.

Particularly bad news since cities, although they cover only around 1% of Earth’s surface, churn out about 80% of Gross World Product, consume about 78% of the world’s energy, and house more than half of the world’s population.

So how do the two tie together?

Well, on the one hand, mean temperatures exceeding 13 degrees Celsius (or 55 Fahrenheit) seem to reduce human productivity, and unstable climate will also eat away at entrepreneurship, meaning that there’s less going into the lump sum we call GDP. On the other hand, higher temperatures mean higher expenses. We’ll use up more energy (which translates to costs) for cooling, there will be higher medical care costs due to falling air quality, lower productivity, even rioting, and healthcare costs associated with social unrest over lack of food and higher levels of aggression — all very nice stuff.

As a side-note, a lot of very important cities might not be viable anymore — no city, no city’s GDP.

The research puts the issue of climate change into perspective. The discussion today revolves around tackling this change — as it well should be. But at the same time, it’s easy to lose sight of the fact that local interventions to mitigate the effects of warming climate are equally important for our economies and quality of life.

“Any hard-won victories over climate change on a global scale could be wiped out by the effects of uncontrolled urban heat islands,” said Professor Richard S.J. Tol MAE, Professor of Economics at the University of Sussex, in a statement.

“We show that city-level adaptation strategies to limit local warming have important economic net benefits for almost all cities around the world.”

The paper further looks at the measures which could limit the costs of this effect, and whose implementation should, therefore, be a top priority for ruling bodies.


To find the most desirable solution, the team performed a cost-benefit analysis for a number of local policies including ‘cool’ pavements and roofs, which are designed to reflect sunlight and thus absorb less heat, increasing vegetation cover including green roofs, and so on.

One Central Park facades.

One Central Park, Sydney — because you can do good for the climate, bring down temperature, and look awesome while doing it.

Medium-scale implementation of cool pavements and roofs came out on top, echoing finds regarding climate change in general that mitigation is the best policy. Turning 20% of a city’s roofs and pavement surface to the cool variety would save up to 12 times their installation and maintenance costs and reduce ambient temperatures by 0.8 degrees Celsius over the following century — not a bad result. The 20% point is just the peak — implementing this policy on a wider scale will provide even more benefits but at a lower cost-efficiency. Another thing to keep in mind is that successful global climate change mitigation efforts, in general, will compound the effects of these local policies, so we should really be working on both fronts here. As Professor Tol concludes:

“It is clear that we have until now underestimated the dramatic impact that local policies could make in reducing urban warming. However, this doesn’t have to be an either/or scenario. In fact, the largest benefits for reducing the impacts of climate change are attained when both global and local measures are implemented together.”

“And even when global efforts fail, we show that local policies can still have a positive impact, making them at least a useful insurance for bad climate outcomes on the international stage.”

The full paper “A global economic assessment of city policies to reduce climate change impacts” has been published in the journal Nature Climate Change.

Rich but not happier — why economic growth doesn’t always translate to happiness

It’s easy to assume that with economic gain comes happiness — we live in capitalism, after all. But science comes to prove us all wrong yet again, and shows that the link between economics and happiness is much more complicated that we thought. Research shows that getting a promotion or a salary raise can increase a person’s satisfaction and give an emotional boost, but only for a short while. Not even something as huge as winning the lottery doesn’t make a permanent change to people’s overall life satisfaction. Money can’t buy happiness, it seems.

And just as a person’s happiness is a result of more than just money, a country’s economic growth doesn’t directly translate into happier citizens — this is known as the Easterlin paradox, after economist Richard Easterlin, the one who observed and documented the phenomena in 1974.

So money can’t buy happiness for countries either, ok, cool. Only that for some…It totally does.

Image via davidruyet.wordpress

What gives!?

Critics have pointed out that in several countries — Italy, Denmark, Luxembourg for example — citizens’ happiness has increased in tandem with the local economy. But for the United States it hasn’t — the Easterlin paradox still applies here: major economic gains over the past 40 years have not led to an overall increase in national happiness. So why does that happen?

Well, psychological scientists Shigehiro Oishi from the University of Virginia and Selin Kesebir from London’s Business School think they may have found the reason why some countries show the paradox and others don’t: income inequality.

“Economic growth is typically not shared equally across segments of society and often results in increased income inequality,” the researchers explain. So, although a country’s GDP may be rapidly expanding, only relatively few people are actually benefiting from this economic prosperity.

The two tested their hypothesis, and their findings were published in the journal Psychological Science.

“Our analyses demonstrate that once one considers income inequality, the Easterlin paradox is not so paradoxical anymore,” the researchers write.

Drawing on data pertaining to economic growth, income inequality and reported happiness levels from 34 countries, Oishi and Kesebir found “support for the idea that the Easterlin paradox can be explained by the toxic effects of income inequality.” They started by mining data from the World Database of Happiness, looking at 16 developed countries in Europe and Asia that had at least 10 years of data available between 1959-2006. They correlated this with the countries’ GDP, taken from the World Development Indicators online database, and calculated income inequality for each, using the Gini index.

“For a nation’s life satisfaction to increase, producing more wealth is not sufficient. The fair distribution of the added wealth may critically determine whether life satisfaction will rise on the whole,” they write.

They found that changes in income equality was a better explanation for happiness better than GDP per capita alone. In years with high income equality, economic growth entailed an increase in general life satisfaction. In years with economic prosperity but large gaps in income equality there was no increase in a population’s happiness.

“What was surprising was that happiness levels did not change from 1947 when GDP per capita was $13,407 (in current dollars) to 1970 when GDP per capita rose to $22,996,” the authors explain. “On the basis of our findings, it is safe to say that if income and happiness go together, it is when income is distributed evenly.”

A second set of data was collected from the Latinobarómetro, a representative public opinion survey conducted annually in 18 Latin American countries and Spain. In both sets of analyses, the researchers found a significant interaction between GDP per capita and the Gini coefficient; citizens’ life satisfaction, on average, was lower in years of greater income inequality.

“Considering the recent trend of growing income inequality in many parts of the world, our findings suggest that more instances of the Easterlin paradox will be observed, with economic growth not necessarily increasing the happiness of a country’s citizens,” Oishi and Kesebir conclude.