Analysis: we may be enjoying the sunshine, but the economic effects of this fine spell are mixed

Many of us love to talk about the weather. The relatively strong sunshine may have raised people’s sense of well-being but how has the economy been effected? There is a range of both positive and negative possible impacts of the current heatwave. 

The positive effects: 

- Higher consumption of certain foods and drinks (a boom-time for ice-cream and cold drinks)

- Domestic tourism is having a boon with "stay-cations"

- Measured industrial output rises, hence GDP rises, because of increased use of electricity

The negative effects:

- Reduced consumption of certain items such as clothing etc

- Reduced numbers for certain forms of entertainment (ie cinema etc)

 - Increased commuting times (particularly due to rail delays)

- Added costs for farmers (notably for water) and some crops may be lost

- More lethargic and distracted workers means reduced productivity

- Higher death rate for people with certain conditions (e.g. more heart attacks, especially amongst elderly people)

From RTÉ Radio One's News At One, Dr Conor Murphy, Senior Lecturer in Geography at Maynooth University, compares Ireland's current heatwave to previous weather events

It is possible that the heatwave will lead to higher measured economic output in Northern Ireland, Ireland and Britain. For example, high temperatures in 2003 led to greater use of electricity and hence a spike in UK industrial output growth and growth of GDP. It might seem paradoxical that more energy is used at a time of such high temperatures, but the electricity is necessary to power air conditioning, fridges and pump water.

In Northern Ireland the water service, Northern Ireland Water, is the largest single consumer of electricity. The higher measured industrial output might be regarded as a rather notional gain to economic activity because it does not improve well-being- we are spending more simply to stand still. 

In terms of other business effects, there are winners and losers. Parts of retail will gain - more ice-cream, cold drinks and barbecues - and parts are likely to see consumption reduced. Past experience suggests people will buy less clothing and visit the cinema less often. There have been delays on railways because of over-heated track and these longer commuting times represent an economic cost. 

From RTÉ Radio One's Sean O'Rourke Show, a discussion on the heatwave with Kilkenny tillage farmer Julian Hughes, Wicklow dairy farmer Ellen O'Neill, Mayo road safety officer Noel Gibbons, Assistant Chief Fire Officer with Dublin Fire Brigade Denis Kealy, and Co Clare GP Dr. Maire Finn

There may even be some reduction in work productivity if employees get too warm. Back at the time of the 2003 heatwave, the UK economic research group Centre for Business Research produced very precise and very high estimates as to how much output might be lost: if temperatures rose above 27C, productivity would fall by eight percent and productivity would fall by 62 percent if they rose above 38C. A more recent economic study based on a heatwave in Nanjing in China in 2013 implied an output decline of three percent.

The most serious social threat from very high temperatures is undoubtedly what health statisticians call heat related excess mortality. Higher temperatures are probably associated with an increase in death rates associated with such conditions as heart attacks, influenza and pneumonia, particularly amongst those over 75. Some estimates imply about 2,000 extra deaths occurred in England and about 3,000 in France during the 2003 heatwave.

There may even be some reduction in work productivity if employees get too warm

Admittedly, it is hard to estimate excess mortality: a fraction of the deaths may have been brought forward in time (there is some evidence that death rates dipped a little in the weeks immediately following the 2003 heatwave). Also, the public health response may have improved over the last 15 years.

Unless the current hot spell continues for a very long time, the total economic effect will probably be relatively small and some of the losses may be made up later on. Perhaps the main thing is to enjoy the weather whilst we can.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ