Rain is bad for the economy – How the weather affects the economy

Weather forecasts are important for the economy

The weather can affect more than just individuals’ moods and daily plans. As two press releases from the Potsdam Institute For Climate Impact Research (PIK) show, the weather also has an impact on the economy. The German Weather Service (DWD) also explains that the daily weather forecast is not only important for individual citizens. Many professional users from various sectors such as agriculture, aviation, shipping or the construction industry rely on specially tailored and detailed forecasts and severe weather warnings.

Extreme weather poses ever greater challenges for the economy

It is the weather extremes in particular that put the economy under pressure, as they usually primarily affect the supply chains. “Weather extremes can cause economic ripples along our supply chains. When they occur around the same time, the waves begin to interact and can become stronger, even if they occur in completely different places around the world, a new study shows.” the PIK press release. As a computer simulation of the global economic network showed, richer economies are more affected by the losses than poorer ones. Since such weather extremes are occurring more and more frequently due to the climate crisis, sometimes even at the same time or in quick succession in different parts of the world, their economic impact may become much greater than previously assumed. When such extreme weather events overlap, the total damage is greater than the sum of the damage from two individual events.

“What we call wave resonance could play a key role in assessing economic climate impacts in the future. The impact of weather extremes in our globalized economy is leading to losses in some regions facing supply shortages and gains in others facing increased “We are seeing higher demand and therefore higher prices. But when the extremes overlap, economic losses across the global supply network are on average 20 percent higher. That’s what our simulations of heat stress, river flooding and tropical cyclones show, and it’s a very disturbing finding.” says Kilian Kuhla from the Potsdam Institute for Climate Impact Research, lead author of the study.

Rain hurts the economy

Another study by PIK shows that rain also has a negative impact on the economy. Accordingly, economic growth decreases as the number of wet days and days with extreme precipitation increases. Here too, the richer countries and their production and service sectors are particularly affected. Data from the last 40 years from 1,500 different regions were analyzed to clearly show that increased daily rainfall caused by climate change due to the burning of oil and coal will harm the global economy.

“While more annual rainfall is generally good for economies, particularly those dependent on agriculture, there is also the question of how rain is distributed across the days of the year. Increased daily rainfall is proving bad, particularly for wealthy industrialized countries like the USA, Japan or Germany,” explains Leonie Wenz from PIK.

E. Schmal / editorial team finanzen.net