Rainy days could harm the economy, study finds

The analysis of data from more than 1,500 regions over the past four decades demonstrates a clear correlation and suggests that intensified daily rainfall caused by climate change resulting from the burning of oil and coal will have negative effects on the global economy.

"This is about prosperity, and ultimately about people's jobs. Economies across the world are slowed down by more wet days and extreme daily rainfall — an important insight that adds to our growing understanding of the true costs of climate change," says Leonie Wenz from the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC) who led the study.

Rainy days could harm the economy, study finds.

"Macro-economic assessments of climate impacts have so far focused mostly on temperature and considered — if at all — changes in rainfall only across longer time scales such as years or months, thus missing the complete picture," explains Wenz. "While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year. Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the US, Japan, or Germany."

A first-of-its-kind global analysis of the effects of subnational rainfall

"We identify a number of distinct effects on economic production, yet the most important one really is from extreme daily rainfall," says Maximilian Kotz, first author of the study and also at the Potsdam Institute. "This is because rainfall extremes are where we can already see the influence of climate change most clearly, and because they are intensifying almost everywhere across the world."

The statistical evaluation uses data on sub-national economic output for 1554 regions worldwide from 1979 to 2019 that were gathered and made available to the public by MCC and PIK. These are combined by the researchers with high resolution data on rainfall. In the context of rain, a highly local phenomenon, the combination of ever-increasing detail in climatic and economic data is of particular importance and revealed the new insights.

"It's the daily rainfall that poses the threat"

Humanity is warming the planet by releasing greenhouse gases into the atmosphere from fossil fuel power plants and automobiles. More water vapor can be held by warming air, which eventually turns into rain. Although atmospheric dynamics complicate regional changes in annual averages, the water vapour effect is increasing daily rainfall extremes globally.

According to co-author Anders Levermann, head of the Potsdam Institute's Complexity Science domain, professor at Potsdam University, and researcher at Columbia University's Lamont Doherty Earth Observatory, New York, "Our study reveals that it's precisely the fingerprint of global warming in daily rainfall which have hefty economic effects that have not yet been accounted for but are highly relevant," "Taking a closer look at short time scales instead of annual averages helps to understand what is going on: it's the daily rainfall which poses the threat. It's rather the climate shocks from weather extremes that threaten our way of life than the gradual changes. Our economy suffers when our climate becomes unstable. We have to make sure that our burning of fossil fuels does not destabilize our societies, too."

Maximilian Kotz, Anders Levermann, Leonie Wenz. The effect of rainfall changes on economic production. Nature, 2022; 601 (7892): 223 DOI: 10.1038/s41586-021-04283-8