A study of Canadian manufacturing plants demonstrates the economic damage of extreme hot or cold weather

Researchers at the Sustainable Prosperity Institute at the University of Ottawa released a Working Paper on November 24,  forecasting how manufacturing productivity will be affected by weather extremes. Based on longitudinal data from 53,000 manufacturing plants across Canada, the authors find that the productivity of the plants is reduced in extreme weather – both hot or cold. They highlight the importance of labour input as a main contributor to the productivity loss.

The authors’ summary appears in a blog, Estimating the impact of climate change on the Canadian economy,  which explains that the typical manufacturing plant in Canada currently experiences 4 extreme cold days and 14 extreme hot days per year, but under a scenario of high GHG emissions by the end of the century, that typical plant would experience one extreme cold day, but over 80 extreme hot days each year. They state: “Using medium and high greenhouse gas scenarios for 2050s and 2080s, we find that the annual losses of manufacturing output due to extreme temperature would go from 2.2% today to 2.8-3.5% in mid-century and to 3.5-7.2% in end of century.”  The authors claim to be the first to estimate the effect of extreme temperatures on establishment performance in Canada, and the first to estimate the potential economic impact of climate change in a cold environment. The full results and discussion appear in a 50-page Working Paper, “Manufacturing Output and Extreme Temperature: Evidence from Canada” by economists  Philippe Kabore and Nicholas Rivers.

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