New labour and agricultural damages improve climate cost estimates

Abstract

Climate change increases human exposure to heat stress, reducing labour productivity, as workers take more breaks or work at a lower intensity. The global economy-wide costs of these productivity losses, though, are largely absent from policy-relevant metrics such as the social cost of carbon (SC−CO2). Here we estimate heat-related labour productivity damages at US$41 per ton CO2 in 2025 (90% confidence interval US$1–108) using bias-corrected CMIP6 heat stress projections, two labour response functions, general equilibrium modelling to capture economic adaptations and a modern integrated assessment framework. Losses are geographically heterogeneous and concentrated in South, East, and Southeast Asia and in Africa. We also update the agriculture damage function using evidence from the Intergovernmental Panel on Climate Change Sixth Assessment Report, reducing estimated agricultural damages from US$95 to US$29 per ton CO2. Together, these revisions slightly lower the expected 2025 SC−CO2 from US$204 to US$179 per ton while substantially reducing uncertainty. Heat stress reduces labour productivity, but economy-wide assessments are mostly missing. Using high-resolution projections and global economic modelling, the authors provide new cost estimates, and updated agricultural damages improve confidence in the social cost of carbon.