How extreme heat is disrupting our economy

On a rickshaw ride to work in Eskaton from Niketan, I asked the driver if his daily trips had been impacted by the burning heatwave. 

Saidur, a middle-aged capable man, informed me that his net income throughout the last seven days was "Tk200-300 less" than what he would make "on a normal day [Tk1,000-1,200 or more]."

But he also was taking fewer trips himself, so that in between every few trips he could sit under some shade and rest for a while. His bare survival, let alone well-being, came at the expense of his daily income. 

Over the last two weeks, the record-breaking heat has been wrecking the country in all sectors – daily activities, public health and the economy.   

The Mouchak Market at Siddheshwari Road in the capital is rarely ever quiet. But according to the salesmen and shop owners there though, the place has recently been seeing one such rare stint. 

"The 10 days post-Eid [Eid-ur-Fitr] was when we used to get a huge surge in customers [from the lower-middle income pool]. Not this year – we are nowhere near even 50% to what we hit in other years," said Md Al Amin at a women's clothing store. 

"I mean who would even dare shop in such hellish heat? If I could afford it, I would not show up to work at all," said Amir, another salesman, as if cynically consoling himself.  

Heatwave pounding agro-economy

People in Bangladesh are used to warm tropical weather, with occasional 35 °C, on summer days. Moreover, the weather has historically been a staple to the country's agricultural successes. But the heatwaves in recent years are unprecedented in many ways. 

Specifically, since 2023, episodic 40°C and above days in April and May have been the new normal. But more worryingly, this comes with no rain whatsoever. 

Global experts already pointed out that the 2023-24 extreme heat episodes are due to El Nino, with human-induced global warming activities exacerbating the effects. 

How is this affecting the agro-economy? M Anisul Islam, director of the Centre for Natural Resources Studies (CNRS), shares his recent experience with people associated with agriculture at greater Mymensingh. 

"The goal is to bag about 2.25 crore tonnes of Boro crop this year. Here, however, irrigation was affected due to the heat, because the groundwater level was so low that powerful irrigation pumps could not do much help. 

Harvesting may be delayed for 10-15 days, and due to this, in the plain lands, many are concerned about the quality and overall production."

Indeed, concerns grew over recent reports that 20% of Boro production may be under threat due to the ongoing heatwave. This is because Boro flowering and pollination are badly affected if the morning temperature constantly hits beyond 35°C. 

Over a decade ago, a Bangladesh Rice Journal study hinted that Boro production may reduce by 6–16% for maximum temperature increasing by 2 to 4°C.  Boro is of particular importance for us because this variety covers 55% of the total rice production.

Despite a record 3.91 crore tonnes of total rice production in FY23, it was forecast that due to excessive heat, the cultivable land may reduce by 1.7% in the following marketing year (2023-24). That means a decline of 3.64 crore tonnes of production.

Now let us take two of the local summer staples, mangoes and litchies. This year, the Department of Agricultural Extension (DAE) expected 12,19,910 tonnes of total mango production, but 30% of mango buds have reportedly fallen off due to prolonged drought along the Northwest.

Meanwhile, local growers expressed worry that the litchi production per tree too may reduce substantially.

To note, agriculture accounted for about 11% of the roughly Tk44,393 billion ($454 billion) of annual GDP, according to the Bangladesh Economic Review 2022-23, Ministry of Finance. According to the review, crops (dominantly rice) contribute more than 50%. This translates into production worth above Tk2,368 billion (about $20 billion).

Another recent victim of the heatwave is poultry. Bangladesh Poultry Association estimated a loss of Tk200 crore worth of chicken in the last two weeks – citing the death of 100,000 units of chicken every day due to extreme heat. 

Meanwhile, a recent Department of Livestock estimation indicates at least a 10% loss of dairy products (milk, eggs and meat). The Dairy Farm Owners Association suggests an even higher estimation of about 25%. Not only that, the maintenance cost is assumed to increase up to 15%. 

Animal Farming contributes about Tk73,571 crore - about 4% of the total GDP. 

A blow to the service industry

The way the heatwave impacts growth in wholesale and retail is both subtle and obvious. Nonetheless, the overall impact may be grimmer than we think - more so, since about 50% of the national GDP depends on service industries as a whole. 

A small example would be the stationery and printing shops at the alley right by Dilu Road in New Eskaton. 

On a normal weekday, this alley is filled to the brim with schoolchildren – there are at least four renowned high schools within a half-mile radius – and guardians. As I walked past here last week at the busiest hours, barely any customers could be seen. 

Just to note – last week there was a nationwide school closure thanks to the extreme heat.  

One salesman at a stationery shop smiled, full of worry and concern, saying "You can see the business is open, but we are getting very few customers."

Dr Atonu Rabbani, professor of Economics at the University of Dhaka, elaborated on the heatwave impact of a labour-intensive economy, "the bigger share of the workforce in this city cannot afford to stay under shades for too long [rickshaw pullers or contract-based labour workers]. 

For them, utilising some of the peak hours [11 am – 3 pm] is challenging amid the extreme heat. Many of them suffer from heat-related illness – [which] means money spent on healthcare. And that also means loss of personal income and valuable working hours too."

He points out that low-income people are essentially trapped in their suffering, as they are not safe in their houses because "the places they live don't have properly insulated metal-built roofs." This is a recipe for chronic heat-related non-communicable diseases.   

In fact, numbers paint a grim picture. An Arsht-Rockfeller Foundation study estimated that labour-intensive sectors suffer an annual output loss of more than Tk50,000 crore (> $5 billion) in Dhaka city alone.

That is about 8-9% of the annual national income in these sectors. As of current estimation, an annual total of 7 billion working hours of labour is lost. 

The study noted that this was the highest share of annual loss in service industries of a city. 

Even if Abu Dhabi and Bangkok suffer from a similar heatwave problem, the sensitivity of Dhaka is particularly notable because of its exclusive labour-dependent economy – i.e. people working in transportation, construction work, wholesale and RMG stand to be directly affected by the extreme heat the most. 

If measures to counter extreme heat are not put in place timely, by 2050, the percentage may rise to 10-12%. That is worth a loss of more than Tk100,000 crores. 

A 2015 working paper co-authored by Professor Rabbani and a UK-based research group showed that the negative effect of temperature rise > 5 °C on the RMG supply chain may be similar to long-lasting political strikes (five days or more). 

Then, consider our agriculture and animal farming's dependence on human labour to this day – the loss is only going to shoot higher. 

Anisul Islam explained the scenario, again from his recent experience, "the labourers are coming to the field deep in the night, working until the temperature rises to beyond tolerable. 

They come back again in the late afternoon. While this is a coping mechanism, it also eats a part of the productive working hours."

Consequences go much deeper

Between 1970 and 2021, disasters related to extreme heat (drought and heatwave) caused 8% of $4.3 trillion of economic loss – with an increasing trend every decade.

For Bangladesh, the Asian Development Bank warned a decade ago that climate change (natural and human-made) may push the number beyond 9% of the annual GDP "by the end of this century."

But what these numbers suggest is that the struggle goes way beyond economic setbacks.

In 2023, a group of authors from the University of Rajshahi and BSMMU detailed how the heatwave-induced public disarrays work as a 'Nexus.' Published in Elsevier's journal Environmental Challenges, the authors pointed out how heatwaves, the food economy and public health are all interconnected. 

These numbers only convey the threat scenario only in terms of economic output. But looking at it in depth, the ill effects surely are more widespread among the public and their quality of life. 

These numbers give subtle hints that hundreds of jobs would be lost, and strict cost-cutting would become the norm at a personal level. And we are not even covering the vicious public health stresses that extreme heat causes. 

Imagine the degree of socio-political public disorder and instability that would emerge should the stakeholders take the extreme heat problem lightly. Climate and health experts have been pushing the government to declare heatwaves as a national disaster. 

How the government responds will decide whether the economy efficiently absorbs the shock, or further declines under pressure.