“There’s still the open question of will we feel anything of climate change, anything significant, in the industrialized world,” said lead author Anders Levermann, a professor of climate systems dynamics at Germany’s Potsdam Institute for Climate Impact Research. “What we find is that we are living in a globalized world, and that production failure in poor countries can affect richer countries — and that is relevant information that needs to be investigated much more.”
The study focuses on the global supply chain network, which includes all the trade links between countries around the world. This network involves many complex interconnections — nation A might depend on nation B to supply it with a certain product, for example, while nation B depends on nation C to supply it with the materials it needs to make that product.
Levermann and co-author Leonie Wenz, also of the Potsdam Institute, were interested in investigating the way certain climate-induced disturbances in the supply chain might radiate through the network, given that nations all over the world are so closely linked to one another.
For this study, they decided to focus on the effects of heat stress — although, as Levermann pointed out, any type of climate disturbance, such as storms or floods, would be likely to work in this study and produce similar results. Previous research has found that temperature spikes — even short-term ones — can harm the productivity of laborers, particularly when they get above about 77 degrees Fahrenheit. This can cause production losses in the countries that experience these temperature shocks — and the researchers postulated that these losses could then radiate through the supply chain, causing problems in other nations that depend on those countries for supply, and so on down the line.
So the researchers constructed a model of the planet’s economic network, supplying it with data on both global trade and daily temperatures for 186 countries between the years 1991 and 2011. They focused their analysis on heat stress in countries located mostly in the tropics — largely because previous research on heat stress and labor has focused on this region of the world, Levermann noted, although this is also the hottest part of the world to begin with.
When they ran the model, they examined two different types of production losses: first-order losses, which were the direct result of heat stress and its effects on laborers in any given country; and higher-order losses, which included the cascading effects of losses throughout the supply chain.
The researchers found that both first-order and higher-order production losses increased between 1991 and 2011, but particularly in the last decade, from 2001 on. These results are somewhat at odds with the temperature record, Levermann pointed out, which saw substantial changes in the 1990s — in other words, although heat stress was causing the first-order production losses to begin with, the overall increase in global temperatures over the past few decades did not seem to be the driving factor behind the increase in the cascading economic effects the researchers observed.
On the other hand, an analysis of changes in the global network during the study period showed a particular increase in global connectivity between 2001 and 2011. As a result, the researchers concluded that the biggest factor in the rise of climate-related production losses wasn’t even the climate, itself — it was the recent rapid increase in globalization, which has made countries throughout the world so much more dependent on one another.
“There are more links now,” Levermann said. “China, India — they’re all more connected to the rest of the world. And that’s actually something that is not surprising, that is found in the economic literature.”
So while climate-related disturbances are the root cause of the losses described in this study — and, of course, an increase in these disturbances will cause an increase in losses in the future — the biggest factor in their cascading effect throughout the world is the rise of globalization.
As an added experiment, the researchers used their model to gain some insights into how this effect might continue on into the future. They assumed a business-as-usual climate scenario, one in which warming is allowed to continue unabated through the year 2100. Then they ran several simulations, each one assuming that a different economic structure would remain constant through the end of the century. For instance, they ran one simulation assuming the network observed in 1991, and another in which they assumed the conditions in 2011 would remain constant.
Under the 2011 economic network — which assumes the greatest level of global connectivity — the model suggested the greatest amount of production losses. These results indicate that as warming continues into the future, globalization will continue to play a primary role in its cascading economic effects.
The researchers concluded that these kinds of production losses will only continue growing in both a warming and increasingly globalized world unless societies put some adaptation measures in place to prevent them. While the paper doesn’t delve into what the best forms of adaptation might be — that’s an area for future investigation, Levermann said — there are some ideas floating around.
For instance, production sites around the world tend to favor small amounts of product storage “because whatever’s lying in storage just doesn’t do anything,” Levermann said. But engaging in greater storage could help safeguard against potential future losses that might occur as a result of unexpected disturbances.
Or, he said, countries might restructure their supply chains so they can obtain the same types of products from several different countries. That way, if one supply is disrupted, there are others to help make up for it.
There are some basic adaptation measures that countries might consider at the beginning of the supply chain as well, said Peter Howard, the economics director at the New York University School of Law’s Institute for Policy Integrity (who was not involved with the study). These could include increases in air conditioning or other technological advances designed to help laborers cope with changes in the climate.
One important point to consider, he added, is that under future warming scenarios, some parts of the world may reach a threshold in which outdoor labor actually becomes physically impossible. Some past research has suggested that under extreme future warming conditions, some temperature spikes could actually exceed the limits of the human respiratory system — an idea that underscores the importance of thinking about adaptation strategies now.
But the biggest takeaway from the paper, according to both Howard and Levermann, is that none of us are in it alone when it comes to climate change. All nations around the world will feel its effects in some way.
“I think this is a really important paper because one of the things that it’s really demonstrating is in an increasingly globalized system — which is not going to change any time soon — that we really cannot think of countries responding to climate change alone,” Howard said. “What happens to another country that we are connected to by trade really does affect us.”
These effects can present an argument for collective climate action, he noted — countries around the world working together to address the problem. “We need to think of this all together,” he said. “The costs do not respect boundaries that human beings make.”