Severe weather made worse by climate change is an invisible cause of inflation, threatening to drive up already high prices for everything from food and clothing to electronics.
why does it matter: Heavy rains, floods, heat waves, and droughts are eroding agriculture, infrastructure, and workers’ ability to stay in business – all leading to supply chain disruptions and worker shortages.
News leadership: Chip and solar panel factories only in one of China’s major manufacturing regions closeas the country attempts to ration energy within 60 years of a record heat wave.
- Dairy and meat prices in Europe are rising with drought zap land Intended for grazing and the cultivation of grain for feeding.
- in the United States, wheat fields In Kansas, Oklahoma, Nebraska and cotton crops in Texas It also withers due to drought.
- And in California, . was produced Processed tomato products Suffering due to lack of rain as workers start to leave work at Amazon delivery center partly protest from heat exhaustion.
- Damage caused by historical rains and floods in the NortheastAnd the North CarolinaAnd the Europe And the South Korea Shows how poorly equipped Infrastructure It is withstanding the effects of climate change – and how difficult it is to rebuild societies, let alone get back to work.
Between the lines: Severe weather affects both the supply and demand sides of the economy, Tama Carlton, professor of environmental economics at the University of California, Santa Barbara, told Axios.
- Research has not yet determined the exact effect of weather extremes on inflation. Some changes, such as the price of agriculture, are easy to spot, while others – such as worker productivity – are hard to detect.
- Carlton said that when people take longer breaks to recover from heat exhaustion, or leave 15 minutes early, for example, it builds up day in and day out.
The Big Picture: As the pandemic has shown, disruption to supply chains and worker productivity increases the cost of doing business. One way or another, companies pass on these costs to consumers.
- Solomon Hsiang, a professor of public policy at the University of California, Berkeley, says workers who face more difficult conditions tend to be paid higher.
- And if companies have to pay more to protect it or install new equipment like air conditioners in warehouses, “someone has to pay and at the end of the day there is someone who is usually the consumer.”
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