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Facing the Heat




Financial Express, Delhi, 9th July 2014


A new report from ICRIER, on how temperature affects manufacturing productivity, shows that per degree change in average annual temperature, manufacturing output fell by 2.8%, with the reduction attributable to the investment made in adapting the work place to the rising temperature and reduced labour-efficiency. The report also drew from case studies by the researchers. For instance, weavers in Surat wove lesser amount of cloth on high temperature days. The researchers also note that the reduced manufacturing output figure nearly mirrors the fall in economy-wide output in developing countries per degree change in surface temperature—2.4%—as reported by an earlier study (Hsiang, 2010), while being slightly higher than the 1.8% decline in labour supply as reported by Zivin and Neidell (2010).

Given that climate change claims and supposed implications remain clouded in uncertainty, pre-empting possible economic risks and drawing appropriate policy responses are indeed advisable. In fact, a bi-partisan group of politicians, business-leaders and scientists in the US suggests that businesses need to compute the risks—arising from high-impact, short-period effects such as floods, droughts and drastic weather phenomena such as cyclones, storm surges, etc—and prepare accordingly. While this, and most of other studies on climate change impact so far, sound out the agriculture and allied sectors primarily, the ICRIER study does so for the manufacturing sector. Putting a numeric value to the economic vulnerability from environmental changes would help—for example, given how the costs of adapting the workplace to climate change are a drag on manufacturing output, a likely policy response would be developing low-cost cooling solutions or better plant-design. Similarly, for labour, say, shifting work-hours to the cooler part of the day could help.