Extreme heat: the drivers making it so costly and dangerous

Of all the natural disasters that hit the U.S. each year, extreme heat waves are by far the deadliest. Extreme heat also slows workers down and reduces agricultural productivity.

Extreme heat: the drivers making it so costly and dangerous
Photo by Thomas Layland / Unsplash
PART I: This is part one in a two-part briefing on extreme heat. Part two of this series focuses on the levers that exist to reduce these impacts.

The path of destruction after 2-3 days of extreme heat looks far different from the path of destruction after a hurricane or a tornado—no destroyed buildings, no downed power lines. Yet, extreme heat killed over 2,000 people in the U.S. in 2023, and could cost the U.S. economy $100 billion annually in the future. 

Extreme heat is an invisible killer. Of all the natural disasters that hit the U.S. each year, extreme heat waves are by far the deadliest. Unlike other disasters, the majority of costs from extreme heat are related to human health and productivity, and federal funding is rarely deployed in response to periods of extreme heat.

What is extreme heat?

In most parts of the U.S., extreme heat is defined as a period of 2-3 days of high heat and humidity with temperatures above 90°F, though this temperature threshold varies by location. A mapping tool from Probable Futures demonstrates how, as mean global temperatures rise, local climates will experience extreme temperatures differently.

In 2021, the Pacific Northwest experienced a “heat dome,” a persistent heat wave that lasts over a longer time period and larger geographic area. In a heat dome, hot air far up in the atmosphere prevents warm air near the earth’s surface from rising, creating conditions where that air can’t escape.

Extreme heat can take place anywhere, though nearly 50% of all heat-related deaths occur in just four states: Arizona, California, Nevada, and Texas. However, some of the most dangerous heat waves occur in ill-prepared parts of the country, which aren’t usually as hot, so infrastructure hasn’t been designed for extreme heat. It is the people and places that are least prepared who often suffer the most.

The most frequent extreme heat occurs in the consistently hottest, and therefore most predictable, areas. Source: Fortune from First Street Foundation.

The impacts of extreme heat

Extreme heat is deadly. Last year, extreme heat killed 2,325 people across the country though experts believe this is vastly undercounted because heat is often not listed as a cause of death. For comparison, Hurricane Helene killed 103 people. Mortality rates in the U.S. from extreme heat have more than doubled from 1999 to 2023, and the heatwave season has climbed from 40 to 70 days per year. During the 2021 heat dome in the Pacific Northwest, an investigation of the 54 deaths in the Portland, Oregon area found that none of those who died had central air conditioning. Extreme heat strains our body’s natural ability to cool itself and regulate temperature. For the elderly, young children, the unhoused, and people who work outside, this added strain can overwhelm a body’s healthy functioning, leading to exhaustion, dehydration, and heat stroke. People over the age of 65 are 20x more likely to die from heat-related events compared to people younger than 44 years. Extreme heat also increases hospitalizations, drives up healthcare costs, and is correlated with an increase in violent crime

Extreme heat slows workers down. The hotter the temperature, the less productive the worker. Research has found that as temperatures reach 90°F, productivity slumps by about 25% and when it goes past 100 degrees, productivity drops off by 70%. A 2021 report by the Atlantic Council estimated that the U.S. could lose around $100 billion annually from heat-induced lost labor productivity (for reference, that figure is equivalent to the combined budgets of the Department of Homeland Security ($51.7 billion) and the Department of Housing and Urban Development ($44.1 billion)). Another report found that more than 2.5 billion hours of labor in the U.S. agriculture, construction, manufacturing, and service sectors were lost to heat exposure in 2021 alone. Meanwhile, researchers in 2021 found that hotter temperatures increase workplace injuries significantly, causing more than 20,000 injuries every year.

Extreme heat reduces agricultural productivity. Extreme heat conditions can negatively impact both agricultural productivity (through decreased commodity yields and increased livestock deaths) and farm profitability, according to a 2024 report by the Congressional Research Service. Different from just warmer temperatures, which also impact agriculture, extreme heat can cause “heatflation,” a phenomenon where extremely hot temperatures cause smaller harvests and rising food prices.

The drivers making extreme heat more costly and dangerous

Three main drivers are making extreme heat more costly, both in terms of financial costs and costs of human lives and livelihoods:

  1. More people live in areas exposed to extreme heat.
  2. Existing infrastructure is vulnerable to extreme heat.
  3. Cooling is expensive and not universally accessible.

Driver #1: More people live in areas exposed to extreme heat.

Americans are flocking to warmer parts of the country, which is putting them at greater risk of extreme heat. From 2021 to 2022, the U.S. Census found that 11 of the 15 fastest growing urban areas were in Texas, Florida, or Arizona—states vulnerable to extreme heat and other weather events like hurricanes. The population growth across the Sun Belt has been attributed to lower costs of living, economic growth, and warmer weather, but it has also situated more people in areas susceptible to extreme heat.

Source: United States Census Bureau and New America.

One of the fastest growing counties in the nation is Maricopa County in Arizona, home to Phoenix. The county has grown by 14% over the last decade and averages more than 110 days with highs of at least 100°F. Daytime temperatures across Phoenix are now approximately 2.5-degrees warmer than they were from the 1940s to the 1970s.

Driver #2: Existing infrastructure is vulnerable to extreme heat.

Extreme heat puts more strain on the energy grid. Extreme heat increases the likelihood of power outages, as the energy grid faces two compounding challenges during a heat wave: 1) there is greater energy demand as people turn up their air conditioners to stay cool, and 2) the grid, during times of extreme heat, is less efficient at transmitting electricity. For example, natural gas turbines become about 25% less efficient in hot weather. 

Poor city planning makes extreme heat even worse. Vivek Shandas, a scientist from Portland State University who studies climate adaptation and “heat islands” (urban areas that are significantly hotter than surrounding areas), has found that poor city planning and historical redlining can lead to hotter temperatures for a city’s most vulnerable people. Concrete, asphalt, and brick absorb heat quickly, but fail to fully release all that absorbed heat, leading to a compounding of hot temperatures over multiple days. Reporting (including great interactive graphics) from The New York Times in 2020 also underscored how decades of racist housing policy have left Black neighborhoods to be far hotter than their white counterparts.

Our built environment isn’t fortified for extreme heat. Extreme heat is changing when students go back to school because many of the nation’s public schools are unable to keep students cool. An estimated 36,000 public schools in the U.S. don’t have adequate HVAC systems, and the Center for American Progress estimates that upgrading or installing necessary systems would cost $4.4 billion. Schools are not the only buildings that are ill-prepared: owners of single-family homes, commercial buildings, factories, and warehouses face similar challenges of ensuring their inhabitants and workers are protected. Few states have policies that protect workers from extreme heat on the job, meaning that worker safety is often left up to companies.

Driver #3: Cooling is expensive and not universally accessible.

The ability to stay cool during a heat wave is expensive. According to Mark Wolfe, the Executive Director of the National Energy Assistance Directors Association, the dangers from extreme heat leave low-income families at heightened risk. The average cost of electricity bills in the summer has increased by 51% in the last 10 years (and 8% in the last year alone), from $476 in 2014 to an estimated $719 in 2024. 

Conclusion

While the factors above contribute to extreme heat becoming more frequent and more dangerous, there is still one x-factor: how prepared people are for heat in a given year. FEMA found that more people died from heat waves earlier in the year than from heat waves later in the summer, suggesting that an early-summer heat wave might catch people off-guard. Furthermore, mortality rates were highest in areas where you might least expect it: the northeast and the midwest. In places least accustomed to extreme heat, communities and existing infrastructure might be the most ill-prepared, leading to greater danger. In Part II of this briefing, we explore the opportunities for investors and private capital to reduce the impacts and costs of extreme heat.

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