Emerging economies ‘at risk from rising temperatures’

West Africa is the most vulnerable region in the world from rising temperatures, with a projected 10.8% of export values at risk by 2050, according to Verisk Maplecroft’s Heat Stress and Cooling Days risk indices. 

Besides West Africa, the report projects that central Africa (7.9%), Middle East and North Africa (6.1%), and south-east Asia (5.2%), are the other regions where more than 5% of export values could be at risk from rising temperatures.

The report concludes that as a result of higher temperatures, worker productivity is likely to decline, leading to an overall drop in exports, especially in labour-intensive industries, such as agriculture and mining. “In export markets, labour capacity losses could mean price rises for importers if product availability drops or production costs increase,” says Alice Newman, environment and climate change analyst at Verisk Maplecroft.

At the same time, increased demand for air conditioning in the worst-affected regions, such as Africa, will hamper existing power grids. “Supply chain disruption may also drive businesses to consider sourcing from lower risk locations, which would have a major knock-on effect on regional economies,” says Ms Newman. In terms of cost, rising temperatures could result in the “estimated loss of $78bn per year for south-east Asia and almost $10bn per year in West Africa,” according to the report.

Despite abnormally high temperatures this summer, countries in northern Europe, such as the UK, Finland and Norway, are among the lowest risk countries for heat stress, the report finds. Overall, it predicts that only 0.1% of Europe’s future export value is considered at risk due to rising temperatures.

In the face of rising temperatures, cities and urban areas are vulnerable, according to the report. “It’s pretty much established that energy demand for cooling will rise, but the real question for investors is whether ageing power systems will be able to handle peak demand,” Ms Newman says. As global urbanisation continues to take shape around the world, cities with outdated electricity infrastructure will be forced to confront an increase demand.