Indian factories are losing productivity to rising temperatures, says study

Our Bureau New Delhi | Updated on March 25, 2021

Indian factories’ revenue will drop 2 per cent with every 1°C rise in annual temperature due to climate change, according to a new study whose findings were released on Thursday.

People are less productive at work and more likely to be absent on hot days, says the study, conducted by researchers at the Indian Statistical Institute, Delhi School of Economics, University of Chicago, and University of North Carolina at Chapel Hill.

“Using microdata from selected firms in India, we estimate reduced worker productivity and increased absenteeism on hot days,” the study says. “This response appears to be driven by a reduction in the output elasticity of labour.” The multi-year study was conducted on a sample dataset of more than 60,000 factories across India.

The aggregate effects of loss of productivity are large enough to significantly reduce the output of the manufacturing sector, the study adds. The researchers estimated that the greatest declines occurred in labour-intensive plants.

Previous studies looking at the connection between climate change and productivity have reported a similar adverse impact of warming temperatures on farm labour in India.

Climate control technologies in the workplace remove productivity declines but not absenteeism, as workers remain exposed to high temperatures at home and outside, the study notes.

The average temperature of India rose by 0.7°C between 1900 and 2018, and is expected to rise by 4.4°C by 2100.

Published on March 25, 2021

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