Analysis: Economic toll of heatwaves and droughts on India amid Europe heatwave

Europe’s heatwave could lead to major economic consequences, researchers have found. However, India is already suffering from it as temperatures have been soaring and the monsoon has remained stalled for nearly two weeks. According to a study by Climate Analytics, average household incomes drop by almost 3 per cent across Europe due to heat-and-drought events. For India, where a massive informal workforce exists, and sectors like agriculture heavily rely on the climate, the effects will be amplified manifold.

Much research shows that rising temperatures directly impact the pockets of the common man. A World Bank working paper analysed subnational data and found that even a rise of 1 degree Celsius can cause a significant rise in local poverty and inequality indices.

According to a study by Emerging Investigators, there is a significant negative relationship between heat waves and household income. The researchers found that the strongest negative correlation existed between heat waves and agricultural income, meaning that the agricultural sector was severely impacted by heat waves.

Also Read: Europe's heatwaves threaten to push 127 million into poverty by 2100, study finds

“A severe heatwave is not merely a climatic event; it is an economic shock that lowers productivity, damages crops, increases expenditure on food, electricity and healthcare, and steadily erodes the financial resilience of Indian households,” Prof. (Dr.) Sanjay Kumar, Vice Chancellor, Rayat Bahra University, said.

For nearly 90 per cent of India's workforce in the informal sector, such as construction workers, street vendors, and agricultural labourers, heat stress will lead them to miss work, meaning a complete loss of daily wages.

Agricultural impact

The agricultural shock would be massive as extreme temperatures damage crop yields. Researchers from Cambridge estimate that record heatwaves put over 90 per cent of India's population at risk of losing income, going hungry, or facing severe health risks. With Super El Niño already having taken hold ot he the globe, droughts are expected. The monsoon in India was already delayed. The combined toll of heatwaves and droughts on agriculture could be immense.

Food costs

Food inflation is another fallout of extreme heat. As crops are damaged, the supply is heavily impacted. The rising prices will directly impact low-income families who spend the majority of their income on food. A 6–15 per cent spike in grain and vegetable prices directly threatens basic nutrition.

Also Read: UK records its hottest June day, beating 1957 and 1976 highs; WHO warns of risk to lives

GDP fall

India’s GDP is in direct line of attack of climate change. It is projected to see a 2.8 decline by 2050, which could severely depress the living standards of nearly half the country's population. States like Chhattisgarh, Madhya Pradesh, Rajasthan, Uttar Pradesh, and Maharashtra are at a higher risk of witnessing this fall.

Electricity and water crisis

Increasing heat leads to a rise in demand for electricity, putting pressure on the grids. In this scenario, electric companies purchase expensive emergency fuel while passing on those costs to consumers in the form of surcharges. Heatwaves cause groundwater to deplete, forcing people to buy water from private tankers, putting additional pressure on their pockets.

Health costs

Extreme temperatures lead to heat stress, heatstroke, and a surge in vector-borne diseases. Families end up spending money on medical treatments, as public health facilities are strained. So while families from the informal sector are earning less during rising heat, they are forced to spend more on health and other utilities, dealing them a double blow.