Health Impact Assessment
Impacts of Climate Change on Health and the Economy
What do the results tell us?
The socioeconomic impacts of the health effects were estimated under the worst climate change scenario: as if the present European economies were suddenly struck by a climatic change equal to the RCP8.5 projection for 2090, with increases in mean temperature between 2.4 °C (British Islands) and 4 °C (Southern Europe).
The results indicate that heat stress and infectious diseases will cause most of the health effects related to mortality and productivity losses. Heat stress is the most important cause of deaths. Climate change may reduce cold-related mortality, but less than the increase related to heat stress in all regions. Extreme events are only seldom mortal and do not cause large productivity losses, but are the most important cause of hospitalization in many regions.
Most of the research on health effects of climate change has been focusing on mortality. Our results indicate, however, that most of the economic impacts will be related to hospitalization and productivity losses.
Heat stress is an important driver for both loss categories, but for different reasons. The main increase in hospitalizations is among elderly, while most of the productivity losses are due to lower productivity among employees while at work. Also infections may lead to notable losses in productivity and increase in hospitalizations, but there is very little information available about these effects.
Increased hospitalization and illness as a result of climate change will lower the supply of labour and productivity at work. To what extent, depends on several factors: how strong the health effects are, how other impacts of climate change may affect the labour market, and finally how the costs of an increased demand for health services are covered; privately or by alternative tax schemes.
The results indicate that health effects in the eight regions we have divided Europe into range between 40 and 80 man years per 100 000 inhabitants in the long term and under the strongest climate change scenario (RCP8.5/SSP5). As a result, unemployment will decrease, as well as the wage differentiation. If this is covered by an employment tax paid by the employers, however, unemployment and wage differentiation might increase. In conclusion, the final social impacts will depend critically on the choice of policy.
What can we do with the results?
Integrating available knowledge on health effects in a socioeconomic tool opens for a broader analysis of adaptation strategies.
ToPDAd's study shows that the health effects of climate change go beyond mortality and increased hospitalization and are related to other economic activities. The tool that was used for this study, LAMENT, allows for estimation of the regional costs and impacts on the labour market, and further social consequences such as unemployment and wage differentiation.
How big these consequences will be will depend on the choice of policy. The tool can be used to address implications of alternative policy options, including different sorts of taxation and other labour market measures. Linked with ordinary cost-benefit analyses, these may be compared with impacts of specific measures to improve the health care system and measures aimed at improving public health. The model can also be integrated in a more general framework to enable integration of health effects with all other impacts of climate change on the European economies.
How are the results obtained?
There is substantial uncertainty about how health will be affected by climate change - both about which health effects are possible and about the magnitude of the effects. There is very little quantitative information available. Based on a literature survey, this study attempted to quantify linkages between climate indicators and selected health effects, and productivity loss under threshold temperatures. Quantifying was possible only for mortality under heat and cold stress. The remaining estimates are based on assumptions about hospitalization and productivity losses for each cause of health effects.
The estimates of social and economic consequences are based on statistical information about the economies and demography in each region. Demographic characteristics are related partly to the age structure (0 – 14 years, 15 – 64 years and above 65 years). Further socioeconomic characteristics refer to labour market participation in each region. The resulting costs of higher demand for health services reflect variations in the gross national product per capita by region, while the implications on the labour markets are estimated under the assumption that only people in the age group 15 – 64 years are potential labour suppliers.Impacts to the labour markets are based on a labour market model with unemployment, LAMENT. The model determines labour supply and demand where unemployment emerges because of frictions in the labour market. This also spurs wage differentiation between permanently employed people and recently hired people.
What are the broader applications?
This study assessed how the health effects of climate change will affect socio-economic conditions and the labour market on average, over a potentially broad range of local responses. The modelling of averages assumes that adaptation takes place continuously without major barriers. On average, for the large European regions studied here, the consequences for unemployment and wage differentiation may seem small.
In reality, climate change will affect local communities within countries and regions very differently: some districts may face only moderate consequences, other severe. Adaptation may also be delayed, especially if this would involve people moving from one region to another. Small impacts on the regional indicators for the labour markets may imply severe consequences in certain districts and communities. The regional averages produced here indicate how badly certain communities might be hit, and may help to bring attention to these exposed districts.
As a further expansion, the impacts on the labour market could also be studied in combination with other impacts of climate change, using a general macroeconomic model. Economic losses due to climate change are in many cases related to losses of natural resources and real capital. The impacts of climate change thereby imply a relative shortage of these factors, which spurs an increase in respective factor prices. Consequently, the relative cost of employing people goes down, with a resulting increase in the demand for labour.While the tool gives an indication of potential socio-economic consequences for European societies, it also revealed some knowledge gaps, which should be addressed in further research. There is, for instance, a lack of statistical data about different socio-economic groups and the quality of the health system. This information could considerably influence the analysis of different adaptation strategies.
Key Messages and Conclusions
Economic impacts will mostly be related to hospitalization and productivity losses.
Most of the research on health effects of climate change has been focusing on mortality due to heat stress. Our results indicate, however, that the economic impacts are related primarily to hospitalizations and productivity losses, which there is little knowledge about. These impacts are not only a result of higher temperatures, but also more extreme events, increased risk of infectious diseases and changes in air quality.
The socioeconomic impacts of health effects are related primarily to increasing demand for health services and declining productivity of labour above certain temperature levels. There are few estimates available, but assumptions based on the limited knowledge we have suggest that hospital admissions in Europe may increase between 300 000 and 800 000 hospital admissions per year depending on region. The decline in productivity corresponds to between 200 000 and 700 000 years depending on region, which corresponds to between 1.2 and 2.8 of total labour force. This has implications for the labour markets, and for unemployment. How much and to what extend depend critically on policies implemented to adapt.
Mortality due to different health effects of climate change in European regions if the climate changed as in RCP8.5/SSP5.
Hospitalization due to different health effects of climate change in European regions if the climate changed as in RCP8.5/SSP5.
Loss of productivity by workers because of different health effects of climate change in European regions if the climate changed as in RCP8.5/SSP5.
Impacts on unemployment of health effects of climate change by European region, with increased costs for hospitalization covered and uncovered.