Heavy Rains Have Major Impact on Economies

February 19, 2022

Dana Nuccitelli for Yale Climate Connections:

When estimating costs that climate change will impose on societies, climate economists face a difficult barrier: They can only incorporate into models well-understood and quantified climate damages. Authors of a recent study published in Nature have identified previously unknown economic impacts associated with changes in rainfall.

While an increase in worldwide rainfall is a known consequence of global warming and of a hotter atmosphere’s holding more water vapor, most prior climate-economics modeling had concluded that this change will have an insignificant impact on economic growth. But by examining daily regional rainfall data, the researchers of the Naturepaper found that these previous studies, with their lower-resolution global perspectives, have glossed over some important nuances in how local precipitation patterns will change.

One significant and previously overlooked effect lies in the increase of extreme daily rainfall totals that can disrupt economies by causing local flooding. Precipitation “shocks” like particularly dry months also tend to significantly reduce productivity in a number of sectors. And most subtly, the researchers found that even a seemingly benign effect like an increase in the number of wet days in a particular region can create a drag on that region’s economic growth.

As a result, they concluded, “recent findings are unlikely to realistically capture future costs” associated with climate-changed rainfall. Their paper serves as an important reminder that climate-economics models incorporating only well-understood climate impact likely significantly underestimate costs that climate change will impose on human society.

Despite the importance of reliable water availability, the authors noted, “most macro-economic assessments of the costs of climate change have found precipitation changes to affect economic growth rates insignificantly.” They investigated this apparent contradiction in more detail by examining daily local rainfall measurements and comparing them to regional economic output data.

Consistent with previous macro-level research, the study authors found that higher overall annual rainfall levels modestly benefit the economy, particularly in drier regions. The authors also concluded that monthly precipitation “shocks” are bad for economies. While relatively wet months were found to have only small negative impacts, dry months have been particularly harmful for economic growth. “Drought away from these [rainfall] norms is inherently damaging,” they concluded.

The study authors then identified two additional economic effects of changes in rainfall they feel have not been adequately accounted for. The first involves the increase in the number of wet days in a given year resulting in slowed economic growth in the affected region. By its nature, that assessment may seem counter-intuitive, given the finding that higher annual rainfall benefits the economy, but the devil is in the details. Contacted via email, study co-author Leonie Wenz explained:

The implication is that the ‘optimum’ amount of rainfall occurs when the rain is concentrated in the middle of the distribution – enough to provide ample [precipitation] in the annual total, but distributed over a few of the more intense (but not extreme) days such that there is a minimum number of both wet and extreme days. Seen in this way, it’s quite subtle.

The study authors did not investigate why an increase in the number of wet days would hamper the economy, but Wenz suggested, “It seems plausible that the mere presence of a rainy day can have a disruptive effect on businesses, construction, transportation etc.”

The second novel finding in the study was more intuitive: An increase in the frequency of extreme rainfall events causes further reductions in economic growth rates. That finding makes sense because of the disruptive effect that flooding can have on daily activities. On that subject, another new paper, published in Nature Climate Change, found that flooding currently costs the U.S. about $32 billion per year and that this amount is likely to grow to more than $40 billion per year by 2050 as a result of climate change.

The Nature Climate Change study authors found that these flood risks are distributed in a highly inequitable way. Present-day flood risks are heavily concentrated in the poorest and most predominantly White communities, for example in the Appalachians. Conversely, the increase in flood risks over the coming decades will disproportionately be borne by Black communities, for example along the Gulf Coast, as rising sea levels and more powerful hurricanes combine with intensifying rainfall to amplify flooding in this region.

The second novel finding in the study was more intuitive: An increase in the frequency of extreme rainfall events causes further reductions in economic growth rates. That finding makes sense because of the disruptive effect that flooding can have on daily activities. On that subject, another new paper, published in Nature Climate Change, found that flooding currently costs the U.S. about $32 billion per year and that this amount is likely to grow to more than $40 billion per year by 2050 as a result of climate change.

The Nature Climate Change study authors found that these flood risks are distributed in a highly inequitable way. Present-day flood risks are heavily concentrated in the poorest and most predominantly White communities, for example in the Appalachians. Conversely, the increase in flood risks over the coming decades will disproportionately be borne by Black communities, for example along the Gulf Coast, as rising sea levels and more powerful hurricanes combine with intensifying rainfall to amplify flooding in this region.

These studies are indicative of the perils posed by continued climate change. As previous research has concluded, increasingly extreme weather like floods and droughts and hurricanes will adversely impact society in inequitable ways, particularly affecting the most vulnerable communities. On top of that, climate change will drag economies in more subtle ways. Seemingly benign changes like an increase in the number of wet days or particularly dry months can reduce overall productivity and thus slow economic growth. As Pacific Institute water expert Peter Gleick, not involved in the study, put it:

The more we learn about how climate change will affect us, the worse it gets. This study highlights how even possible positive effects are likely to be overwhelmed by the negative ones that result from more frequent and widespread extreme events.

The Earth’s climate and weather patterns have remained relatively stable over the past 10,000 years, allowing human civilization to develop. The ongoing destabilization of the climate is causing weather patterns to shift in ways that pose a variety of challenges to all species, including humanity and its built infrastructure. This new research on shifting rainfall patterns supports the view that the more humans disrupt Earth’s climate, the more likely it is that larger drags on regional and global economies will result in ways climate-economics models currently are unable to capture.

2 Responses to “Heavy Rains Have Major Impact on Economies”

  1. indy222 Says:

    Anyone have a comment on the inadequacy of the EN-ROADS software in their built-in economics of climate change, and of Nordhaus’ claims of very mild climate costs going forward?

    • rhymeswithgoalie Says:

      In a 2018 paper published after he was awarded the prize, Nordhaus claimed that 3°C of warming would reduce global GDP by just 2.1%, compared to what it would be in the total absence of climate change. Even a 6°C increase in global temperature, he claimed, would reduce GDP by just 8.5%.

      In the first place, I’m chary of economists who still measure things in terms of GDP, which does not take into account median income or radically uneven wealth distribution or unpaid domestic (read “women’s”) work.

      During the pandemic, for example, my equities-based income grew substantially while I sat on my butt at home, while relatives who still work for a living got hit hard, whether from lost business, lost work opportunities, or childcare requirements.

      Secondly, the pandemic showed the vulnerability in resources and supply chains even without the accelerating collapse of physical infrastructure.

      Thirdly, while Nordhaus’ paper was published in 2018, the work was done with data from before 2017, or he might have adjusted his model in the face of very costly weather events.


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