Economist: Texas faces $9.5 billion in losses if record-breaking heatwave persists
Published: Thu, 08/03/23
Economist: Texas faces $9.5 billion in losses if record-breaking heatwave persists
If the overall temperature rises one degree higher than the historical average between now and 2050, Texas stands to lose $400 billion annually.
Texas' agriculture and financial industries stand to rack up the biggest losses from the current heat wave, according to research data. Shutterstock / Ed Connor
If it persists, Texas' heat wave will put a serious chill on the Texas economy, one economist predicts.
If the record-high temperatures that baked the state in July continue, the Texas economy could lose some $9.5 billion in real gross product, according to new research by Waco-based economist M. Ray Perryman. Real gross product is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
The agriculture and financial industries stand to lose the most under the heat wave, Perryman projects. While the loses to Texas farmers are easy to understand as the sun scorches crops in the field, perhaps lesser understood is the spillover for the financial sector. That industry stands to lose $3.91 billion due to crop-insurance claims and related factors, according to the economist.
“The primary cause of losses is ultimately attributable to declines in productivity,” Perryman wrote. “The higher utility costs lead to some corresponding losses in consumer spending (retail sales is negatively affected by about $646 million).”
To arrive at the $9.5 billion figure, Perryman and his team examined the historical temperatures and economic performances across the U.S. dating back to 1900.
Researchers also looked into the potential economic impact of the overall temperature rising one degree higher than the historical average between now and 2050. If that were to play out, Texas would face a yearly loss of almost $400 billion in gross product.