New study decodes how intensified rainfall will harm global economy

“Rain stops gain” – our study is this week’s @Nature cover story! There’s a lot of focus on temperature impacts but much less is known about the macroeconomic costs of precipitation changes. Well, here’s some evidence from the past 40 years and more than 1500 regions worldwide: pic.twitter.com/XMgilbE3cf

— Leonie Wenz (@Leonie_Climate) January 12, 2022

The paper published last week in Nature came up with three key takeaways.

One, negative rainfall shocks, which means less rainfall on a monthly basis causes strong and significant losses. When an economy is already adapted to a certain precipitation profile, a negative deviation towards drought-like conditions can be damaging. Also, while greater annual rainfall does benefit economic growth initially, these benefits decrease with even higher rainfall.

Two, an increase in the number of wet days (i.e. days with rainfall greater than 1 mm) correspond to suboptimal economic conditions.

Three, increases in extreme daily rainfall lead to reductions in the growth rate; or, in other words, “increase in both the number and severity of extreme rainfall days within a given year reduce economic productivity.”

The impact, however, is not uniform across regions of the globe. Key industrial regions, such as the US, central Europe, China, Korea and Japan have been worst affected in such a scenario.

Economic impacts of climate change come from *extremes* not just *averages*

Extreme rainfall hits economic growth. Rich countries take the brunt. @KotzMaximilian @ALevermann @Leonie_Climate Nature https://t.co/drg5bsyG66 #j

— Dr. Kelly Hereid (@KellyHereid) January 13, 2022

Furthermore, poorer countries are the most susceptible, showing a 62 per cent higher sensitivity to total annual rainfall than rich countries. Rich countries, on the other hand, are more vulnerable to changes in the ‘number of wet days,’ showing a 47 per cent higher susceptibility than poorer countries. This is explained by the fact that changes in annual/monthly/daily precipitation do not affect all sectors of the economy either.

The team notes that the service (tertiary) and manufacturing (secondary) sectors are the worst hit, while the agriculture (primary) sector shows little to no response to extreme daily rainfall and the number of wet days.

As rich countries are the least dependent on agriculture, and more on the secondary and tertiary sector, they tend to be more vulnerable to the parameters for daily rainfall.

“Our study reveals that it’s precisely the fingerprint of global warming in daily rainfall which has hefty economic effects that have not yet been accounted for but are highly relevant”, says co-author Anders Levermann, head of the Potsdam Institute’s Complexity Science domain, Germany in a release. “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…By destabilising our climate we harm our economies.”

Quantifying the impact of availability and variability of water on the economy has long been under the academic and policy-making scanner.

A 2020 paper recognised “that water scarcity can result in terms-of-trade losses for countries that produce water-intensive goods” and a study on Latin American cities in 2019 showed that water scarcity can “decrease the probability of being employed, hourly wages, hours worked, and labour incomes,” especially for the informal workforce. An earlier 2020 study, also projected that an increase in the global mean surface temperature by 3.5 degrees Celsius by 2100 would reduce the global output by 7 to 14 per cent.

– The author is a freelance science communicator. (mail[at]ritvikc[dot]com)