Climate change seen reducing outdoor work, dampening growth

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EXTREME heat caused by climate change puts the Philippines at risk of losing many hours of outdoor work in industries like construction or farming, dampening economic growth, the McKinsey Global Institute said.

The report, Climate risk and response: Physical hazards and socioeconomic impacts, said that hot and humid countries, stand to lose an average of 8 percentage points in the annual share of effective outdoor working hours due to extreme heat and humidity until 2050.

Unlike significantly hotter and more humid countries like Bangladesh and India, however, heat and humidity in the Philippines does not exceed liveability thresholds, it said.

Globally, the annual outdoor working hours potentially lost to extreme heat and humidity could double to 15-20% of the total by 2050 from 10% currently. The effect of these losses on Gross Domestic Product (GDP) was estimated as 2-3.5% by 2050 from 1.5% today, averaging $4 trillion and $6 trillion in GDP at risk annually.

Countries with lower per-capita GDP encounter more risk to their outdoor work, it said.

“Poorer regions often have climates that are closer to physical thresholds. They rely more on outdoor work and natural capital and have less financial means to adapt quickly,” the report said.

In contrast, northern European countries stand to benefit as tourism shifts in their direction.

The report said adaptation from companies and communities is coming at too slow a pace, as heat stress decreases individuals’ ability to work outdoors, sometimes putting their health and lives at risk.

“Heat reduces labor capacity because workers must take breaks to avoid heatstroke and because the body naturally limits its efforts to prevent overexertion. Increased temperatures could also shift disease vectors and thus affect human health.”

According to preliminary data, the Philippine Statistics Authority (PSA) estimates that 22.9% of the 42.4 million employed Filipinos in 2019 work in agriculture. Construction workers make up 9.8% of the total, while mining and quarrying make up 0.4% of the total.

To protect people and assets, the report said companies can build cooling shelters and adjust work hours for outdoor workers.

Companies adapting to shifts in climate can also harden infrastructure, including raising the elevation level of buildings in flood-prone areas and develop mangrove plantations to protect from storms.

The report released on Thursday was a year-long research effort focusing on the physical risks of climate change.

“Much as thinking about information systems and cyber-risks has become integrated into corporate and public-sector decision making, climate change and its resulting risks will also need to feature as a major factor in decisions,” McKinsey Global Institute Director and Senior Partner of McKinsey Shanghai Jonathan Woetzel said in a statement.

“The intent of this report is to clarify and quantify the level of systemic physical risk that is currently accumulating, so that it can be taken into account by insurers, investors, lenders, governments, regulators, non-financial corporations and individuals as they make strategic decisions.” — Jenina P. Ibañez