Bank of Italy, heat affects GDP: warms -9.5% at the end of the century

“Based on analyzes using Panel and Ardl methodologies, an emissions scenario with temperature increases of +1.5°C in 2100 could limit per capita GDP growth by reducing the annual increase in a range of 0.04 to 0.13 percentage points, until setting a level between 2.8 and 9.5 percent lower at the end of the century than would have prevailed if it had grown in its historical trend,” the Bank of Italy study states.

In addition to average temperatures, the study looked at the impact of ever-rising temperatures. The analysis shows that the increase in the frequency of daily temperatures above 28 °C had a negative impact on economic activity, particularly in the last twenty years of the twentieth century when this frequency increased dramatically. The sector most punished is agriculture, but negative impacts are also recorded in industry and services. “An increase in temperatures can have direct negative effects on national production through a wide variety of channels – as stated in the study – such as shrinking agricultural output, lower labor productivity and lower investments in sectors most vulnerable to the consequences of global warming.”