As the climate changes, we are likely to experience more and more days with extreme temperatures. Most of the time, the impact of droughts or heatwaves will be local, but what if major waterways like the Panama Canal or the River Rhine have to shut down due to low water levels? In that case, global supply chains get disrupted and that, as we learned in recent years, can have a significant impact on inflation.
Serhan Cevik and Gyowon Gwon from the IMF tried to model the impact extreme temperatures have on supply chains and inflation in six large economies (USA, UK, Eurozone, China, Japan, and Korea). Based on the economic impact of past episodes of extreme temperatures, they showed that for most economies supply chain pressures from extreme temperatures are minimal. The chart below shows the response of the local supply chain pressure index (SCPI) to temperature shocks. The dark blue line is the median impact, while the light blue area shows a 68% confidence interval.
Temperature shocks and supply chain pressures
Source: Cevik and Gwon (2024)
Only in the US can we find some material impact on supply chains from extreme temperatures. This is likely due to the importance of inland waterways like the Mississippi and the Great Lakes as well as the importance of the Panama Canal for US supply chains. Similarly, China shows a little bit of supply chain reaction to temperature extremes due to the importance of local waterways for inland supply chains. But overall, the results are so small that we can safely ignore the influence of global temperature extremes on supply chains.
Which does not mean that we can ignore their influence on the economy overall. The second chart shows the impact of extreme temperatures on headline inflation. Here we see – and this may surprise some readers – that extreme temperatures reduce inflation.
Temperature shocks and inflation pressures
Source: Cevik and Gwon (2024)
There are several reasons why high temperatures may lead to lower inflation pressures:
Higher temperatures in winter reduce the need for energy to heat our homes. Yes, higher temperatures in summer increase our need to cool our homes, but as a rule, the reduction of energy demand in winter is stronger than the increase in energy demand in summer (partly because houses in Europe, the UK, China, and Japan don’t have air conditioning).
In areas with moderate temperatures, higher temperatures prolong the growing season and increase agricultural yield, thus increasing supply and lowering food prices. This is less the case in the US, where high temperatures lead to water scarcity in major agricultural centres like California (nuts, fruit, citrus) and Florida (fruit, citrus).
Higher temperatures reduce the output of the economy because people cannot work outside (or have to take more breaks), which affects output for construction and other sectors, plus people tend to be less productive in the heat because it is harder to concentrate. This, in turn, means economic output drops in high temperatures, and thus demand and inflation drop as well.
All of this simply shows one thing. Higher temperatures tend to be bad for the economy. And the only benefit we have from that is lower inflation pressures. But I am not sure if I want to heat the planet just to get inflation under control. That would be a little bit like undergoing chemotherapy just because you don’t want to shave in the morning.
I'm going to prove to you that my beloved bikini models are smarter than academics but first this:
The lovely thing about these climate related studies (and there are tons of them, in any scientific field for reasons that are more than understandable: funding) is that, like with sealevel rise studies, they assume that a climate changes and humans do nothing. So in case of sea levels they just stand there (Bangladesh) and in the case of agriculture they just undergo the changing climate.
1 My grandfather was a farmer: if there's one segment of society that keeps track of what is happening outside its people who depend on the weather. FGS. And if it changes they change with it. But i can fully understand how todays office dwellers who view the countryside as that part of the country where you have your second home are clueless about farming.
2 When unpredictability increases people and gov's stockpile (more).
The IMF study:
'This is less the case in the US, where high temperatures lead to water scarcity in major agricultural centres like California (nuts, fruit, citrus) and Florida (fruit, citrus)'
You can't just write this without mentioning that California's almond production alone takes up something like 30% of Calis water (of course it most comes from other states). They'll adjust when they have to.
A water scarcity problem in Florida is entirely theoretical. (Maybe i should add 'duh') Although i fully understand how two sociologists who do equations, also known as economists, can model that. You can model anything.
But this is obviously the major red flag:
'Although our empirical results do not always show a strong positive link between weather shocks and supply chain disruptions, due to, in part, the use of aggregated supply-side disruptions, 𝐭𝐡𝐢𝐬 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐢𝐦𝐩𝐥𝐲 𝐭𝐡𝐚𝐭 𝐰𝐞 𝐜𝐚𝐧 𝐛𝐞 𝐜𝐨𝐦𝐩𝐥𝐚𝐜𝐞𝐧𝐭 𝐚𝐛𝐨𝐮𝐭 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐢𝐧𝐠 𝐰𝐞𝐚𝐭𝐡𝐞𝐫 𝐚𝐧𝐨𝐦𝐚𝐥𝐢𝐞𝐬'
This is how every study that does NOT find climate alarm ends. All of them, including the new study i post below about Antarctica NOT collapsing.
The 1930s US heatwaves, that still trump anything we've seen in recent decades, helped produce significant improvements in US agriculture.
US grain production vs total acreage vs CO2:
The population almost tripled since the late 1920s, grain harvests explode while total acreage declines...
https://www.linkedin.com/posts/joseph-fournier-7077087_there-are-so-many-factors-at-play-in-this-activity-7238553207906385920-R2Cr/?utm_source=share&utm_medium=member_android
The 20th Century Transformation of U.S. Agriculture and Farm Policy
Page 8: Longrun Forces Behind the Changes (in US agri prod); page 11: exports:
https://www.ers.usda.gov/webdocs/publications/44197/13566_eib3_1_.pdf
PS. Note how the IMF paper in its exec summary speaks of 'the highest levels of inflation since the 1970s' without even just once referring to Biden's fiscal policies...(of course to what degree one can say Delaware Joe had anyhing to do with it is another matter).
And look at this tripe from the IMF study:
'As human-induced climate change accelerates over the coming decades'
This is not science (the IPCC can't back it up with data) this is activism. So they're probably just working in the spirit of 'the planet is boiling' A Guterres. (Btw: what to say next after such hyperbole?).
Side note: after last year's powerful La Nina saw record ocean temps, they are now declining fast.
Have you read anything about it n your newspapers? No. Weather = climate when temps go up, when temps go down weather = weather.
And then there was this aug 2024 study that showed that the Antarctic doomsday glacier (Twaites), which supposedly would trigger the collapse of an entire Antarctic ice sheet, when modelled better would not 'retreat further in the 21st century. In another set of simulations, we force the grounding line to retreat into Thwaites’ deeper basin to expose a taller cliff. In these simulations, rapid thinning and velocity increase reduce the calving rate, stabilizing the cliff. These experiments show that Thwaites may be less vulnerable to MICI than previously thought, and model projections that include this process should be re-evaluated'.
https://www.science.org/doi/10.1126/sciadv.ado7794
Models...
Hey, now that were at it, Utrecht UN 2021:
Current climate model simulations overestimate future sea-level rise
https://bit.ly/3H3JsSp
When using a high res model - a first - 'the projected sea-level rise in 100 years is about 25% lower than expected from the current simulations'.
And just wait until they run Antarctic data through a couple of bikini models, who are still the best models around, especially high res. Although they are being retired by the woke clique. Just now Verstappen has become the king of F1...
You may giggle about bikini models doing climate science but ask yourself: would a bikini model have produced 'scientific' comedy like this:
Glaciers, gender, and science: A feminist glaciology framework for global environmental change research
https://bit.ly/3JvopKi
Abstract
Glaciers are key icons of climate change and global environmental change. However, the relationships among gender, science, and glaciers – particularly related to epistemological questions about the production of glaciological knowledge – remain understudied. This paper thus proposes a feminist glaciology framework with four key components: 1) knowledge producers; (2) gendered science and knowledge; (3) systems of scientific domination; and (4) alternative representations of glaciers.
Merging feminist postcolonial science studies and feminist political ecology, the feminist glaciology framework generates robust analysis of gender, power, and epistemologies in dynamic social-ecological systems, thereby leading to more just and equitable science and human-ice interactions'.
No. Any bikini model will immediately grasp that the above is nonsense.
Only academics produce this idiocy.
I'd estimate that something like 75% of todays academics are a mere luxury that our wealthy societies can afford. (Maybe Tim Waltz should call them weirdos although i think allowing abortions up til the 9 month - no questions asked - like in his home state is also pretty weird. And he'd insult his voter base of course).
To round off: since academics make more money because of their diploma's they problably produce inflation.
Klement makes a very interesting point on the energy required for cooling versus heating.
In Germany and most of Europe, only 10% of houses have air conditioning versus 90% in the US. But air conditioning accounts for approximately 6-12% of total energy consumption in U.S. homes annually, with regional variations (higher in warmer climates), versus heating typically accounting for a much larger portion, about 25-30% of residential energy consumption, though this can also vary widely depending on the type of heating system and local climate conditions.
So what happens when Europe has to ramp up air conditioning as the climate warms? As Klement says, there may actually be a (perverse?) near-term net benefit to society.
I've found that the best way to address skeptics is to not ask "do you believe in climate change?", and instead ask "what do you understand about climate change?" Farmers and fellow outdoorsmen already see it, so now it's all about adaptation.