Climate Economics Study Quantifies the Cost of Heat Stress to Global Labour

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The economic toll of rising temperatures depends on where people work, how physically demanding their jobs are and whether cooling is available. New research examines these differences to assess the contribution of lost labour productivity to the social cost of carbon.

As the climate warms, people are more exposed to heat stress, which depresses their productivity and the global economy. A study from the University of California, Davis, quantifies the cost of heat stress on global labor. The study, published in the journal Nature Climate Change, estimates that each ton of carbon dioxide emitted in 2025 cost $41 in lost productivity.

Highly populated areas meeting critical thresholds for heat and humidity were particularly affected, the study found. This includes India, Nigeria, China and Pakistan, as well as countries in the Middle East and sub-Saharan Africa.

“Our study contributes to the body of evidence about what the real costs of climate change are,” said lead author Frances Moore, a professor in the UC Davis Department of Environmental Science and Policy. “Based on these new numbers, labor is the second-largest contributor to the total social cost of carbon, just behind heat-related deaths.”

The Social Cost of Carbon and Its Value

The social cost of carbon, or SC-CO₂, is the quantifiable cost of one additional ton of CO₂ emissions. The measurement is highly relevant for policy decisions related to cost-benefit analyses, infrastructure planning, utility regulation and carbon taxes.

The study lends strong support for a social cost of carbon value of $200, a value similar to that estimated by the U.S. Environmental Protection Agency in 2023. Current federal guidance does not recognize the metric and discourages monetizing the impacts of greenhouse gas emissions in regulatory analysis. However, the study states “we can confidently rule out a SC-CO₂ of zero or below.”

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“We’re getting better and better at evaluating climate damages,” Moore said. “We’re getting more confident in the social cost of carbon, and it is a metric that should be used. This number is ready to help inform good climate policy analysis.”

Heat Stress Varies by Region, Job, A/C Access

To reach their findings, the authors combined projections from a heat stress metric called the “wet-bulb globe temperature” (WBGT) with job and region-specific estimates of work intensity and outdoor exposure across different economic sectors. WBGT captures the physical risks of hot temperatures by accounting for weather variables that influence the body’s ability to dissipate heat, including humidity and wind speed.

Exposure to heat stress by both indoor and outdoor workers varied across the globe depending on the local environment, strenuousness of the work and access to shade and air conditioning.

Agricultural and construction laborers are far more exposed to heat than office or service workers because they often perform strenuous, outdoor work. However, indoor workers with minimal or no air conditioning also are at risk. For example, a dataset of residential air conditioning adoption in 33 countries showed A/C penetration rates ranging from 0% in South Sudan to 90% in Japan.

In addition to air conditioning, more shade, water, breaks and shifting work to cooler hours of the day when possible can protect workers from heat stress.

“Heat is very dangerous,” Moore said. “Employers and policymakers need to be treating it as the real health hazard that it is and thinking seriously about ways to mitigate those damages because we’re going to keep seeing more frequent, more intense heat extremes.”

Original Article: New labour and agricultural damages improve climate cost estimates'; Nature Climate Change; DOI:10.1038/s41558-026-02749-z

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