From the UNIVERSITY OF CALIFORNIA – SANTA BARBARA, and the “temperature in Chinese sweatshops may go up a degree” department.
Hot and bothered
Environmental economists studying the impact of climate change on manufacturing in China predict substantial losses by mid-21st century
To date, most empirical evidence on climate change impacts have focused on the agricultural sector. Little is known about the effects on, say, manufacturing in, say, China, which is in many ways “the factory of the world.”
In a new paper published in the Journal of Environmental Economics and Management, UC Santa Barbara researchers shows that climate change will dramatically lower output for the Chinese manufacturing sector.
Using detailed production data from a half-million Chinese manufacturing plants in the period 1998-2007, the research team estimated the effects of temperature on firm-level productivity, factor inputs and output. They predict that by the middle of the 21st century, if no additional adaptations occur, climate change will reduce Chinese manufacturing output annually by 12 percent — equivalent to a loss of nearly $40 billion in 2007 dollars.
With the Chinese manufacturing sector producing 32 percent of national gross domestic product (GDP), this effect is equivalent to a 4 percent drop in overall Chinese GDP annually. Further, given that China’s manufacturing sector supplies 12 percent of global imports, the worldwide economic consequences may be substantial.
“Previous work has largely focused on how climate change may affect economic activity by lowering the productivity of workers,” said co-author Kyle Meng, an assistant professor of environmental economics in UCSB’s Bren School of Environmental Science & Management and the Department of Economics. “It is well documented that when it’s hot, people work less productively.”
The new paper, written with Olivier Deschenes, a professor of economics at UCSB, Peng Zhang of the Hong Kong Polytechnic University (and a former Ph.D. student at UCSB) and Junjie Zhang of Duke Kunshan University in China, points to the effects of temperature on the productivity of capital as well. That is, increasing temperatures not only make workers less productive, they also make machines operate less well.
“In one particularly striking result, we separately examine temperature sensitivity between low- and high-tech industries in China,” Deschenes said. High-tech industries include those that produce medical supplies, aerospace equipment and computer equipment. “We typically think of these sectors as being capital intensive with indoor production facilities that tend to operate with air conditioning,” Deschenes continued. “We find that these industries are just as sensitive to extreme temperature as low-tech industries.”
According to Meng, the results suggest that if we are to reduce climate losses on manufacturing output, adaptation measures should not focus solely on reducing the sensitivity of workers to extreme heat, but also that of factory machines.
“More broadly, our paper introduces a new cost of climate change that hasn’t been documented before,” he said. “China is already doing a lot to reduce its emissions. These existing policies were put into place even without this new evidence on manufacturing sector losses. Given the importance of manufacturing for China, we hope our findings will help lead to more stringent Chinese climate policy.”
###
The paper: https://www.sciencedirect.com/science/article/pii/S0095069617304588
Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants
Abstract
This paper uses detailed production data from a half million Chinese manufacturing plants over 1998–2007 to estimate the effects of temperature on firm-level total factor productivity (TFP), factor inputs, and output. We detect an inverted U-shaped relationship between temperature and TFP and show that it primarily drives the temperature-output effect. Both labor- and capital- intensive firms exhibit sensitivity to high temperatures. By mid 21st century, if no additional adaptation were to occur, we project that climate change will reduce Chinese manufacturing output annually by 12%, equivalent to a loss of $39.5 billion in 2007 dollars. This implies substantial local and global economic consequences as the Chinese manufacturing sector produces 32% of national GDP and supplies 12% of global exports.
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To quote Leif, correlation is not causation.
There are so many factors that impact industrial output, even if there is a correlation to temperature, it will be impossible to tease it out.
Reminds me of sitting in a sales meeting. When sales are good, everyone gets congratulated for working hard. When sales are down, it is due to market forces outside of anyone’s control.
Negative feedback?
The more China manufactures the more warming. The more warming, the less China manufactures. Problem solved/s.
Oh, Mark, you’d be surprised what shatisticians can tease out of BS data.
Is China actually warming up or is it just that Arctic nights are raising the global average? If it is just Arctic nights getting warmer I don’t think the Chinese will be affected too much.
Well now, iffen the authors of the study, Olivier Deschenes, Peng Zhang and Junjie Zhang, are silly enough to believe the entire world will be powered 70%, 80% or 100% by “green energy”, …… by the middle of the 21st century, ….. then of course they are also 100% correct about China’s decrease in manufacturing productivity.
“DUH”, there is no way in ell that 100% “green energy” is capable of powering HVAC systems 24-7 in manufacturing facilities.
Once every so often, I think this site is hosting a Comic-Con event. There just seems to be so many absolutely ridiculous GloBull Warming alarmist ‘studies’ that befit the exceedingly humorous Titles appearing in WUWT.
Good humor (hey, that was an ice cream bar).
My dad always laughed that the ‘Good Humor man’ who worked the Kirkwood MO route was the grouchiest old coot ever.
I remember the guy. I Grew up there.
I keep a fork handy next to the keyboard so I can jam it in my leg when logging on and reading the parade of ‘academic’ alarmist insanity – just to make sure I actually am awake.
“climate change will reduce Chinese manufacturing output annually by 12 percent”
Anyone getting tired of winning yet?
LOL….perfect……nope not me!
And this reply from the “You Need Reliable Power To Run Air Conditioners” department: The Chinese are more than technologically astute enough to walk over to the wall and turn down the thermostat one degree.
You don’t even have to touch the thermostat. It will look after external temperature variations itself. That’s what thermostats are for.
Yes, well, there is that.
True.
Is no one concerned that these researchers didn’t think of that?
This is completely backward. Fighting climate change will stunt Chineses manufacturing.
There is a wonderful modern invention the researchers may not have considered. It’s air conditioning. Air conditioning controls the interior temperature and humidity of structures to any desired level. Some say it is the savior of the south (of the US anyways) where many heavy industries are located. I recommend Professor Deschenes and his colleagues reconsider their findings in view of this evidently new information.
“In one particularly striking result, we separately examine temperature sensitivity between low- and high-tech industries in China,” Deschenes said. High-tech industries include those that produce medical supplies, aerospace equipment and computer equipment. “We typically think of these sectors as being capital intensive with indoor production facilities that tend to operate with air conditioning,” Deschenes continued. “We find that these industries are just as sensitive to extreme temperature as low-tech industries.”
Apparently they know about air conditioning. But I’m not interested enough to read the study to find out why the authors conclude it doesn’t matter.
Air conditioning does indeed increase productivity. link
Some Chinese plants will not have air conditioning because they don’t even have heating. One of my buddies reports that his Chinese suppliers had a problem with cracked and even entirely missing cable insulation. A visit to the factory found that it was so cold that the insulation became brittle and broke when they tried to bend it.
I couldn’t agree more. I work in the auto industry. Most new auto assembly and auto parts manufacturing plants are now located in the warm South rather than in the cold Midwest. Perhaps the professors need to visit these plants rather than simply looking at their computer screens.
What, leave their air-conditioned offices?
That would kill their productivity.
You need proper temperature control for quality control. The expansion and contraction of material is a good example. Two parts that fit together on a cool night may not once the factory warms up in the daytime. I have seen this happen.
You have to have A.C. for parts with close tolerances, +/- .0002
Chinese productivity will not drop with a one or two degree temperature change, they will just add A.C. to the factories that they were getting away without having it. That will actually increase productivity, The cost is not likely to be disruptive. Manpower costs are normally the biggest costs. As the wealth in china increases workers will want a bigger slice of the pie, and with china’s population policy’s at some point they too may start to feel a labor shortage.
michael
Apparently the Chinese never heard of thermostats. Or air conditioning.
I was thinking the same thing. How very Western condescending pratts.
Next week the article will be the woks will be 1 degree warmer and will burn the dim sims. They clearly are incapable of being able to turn the heat down.
No, dim sum is a chinese dumpling. Dim sim is a climate model.
How many manufacturing plants do you think have air conditioning on the production floor? Assembling computer parts in a static-free environment, but assembling something like a car, nope. Every one I’ve been in is heated in the winter, however, because people and machines wouldn’t work at all below certain temperatures.
re: RWturner’s question “How many manufacturing plants do you think have air conditioning on the production floor?”
The answer (in the US) is pretty much all of them. More than just controlling temperature, air conditioning controls humidity and dust – two contaminants that are vital to manage in even a medium-tech production process. About the only plants I know that are not routinely air conditioned are those that for operational reasons are open to the environment generally. That includes foundries (because even the hottest summer day is a blast of cold air compared to the heat from the molten metal) and some older chemical production facilities (because of the safety factor of venting). Of the dozen or so auto assembly plants I’ve worked at or toured, all of them were air conditioned.
I worked for a company that built grocery store check out stands for a couple of years back when I lived in Tampa, FL.
No AC and no heat.
In the winter you just wore your coat all day.
In the summer you set up one of those 24 inch hurricane fans about three feet from your desk. The only problem was remembering to make sure small parts didn’t blow away when you weren’t watching them.
One winter they were applying apoxy to some part, they had to curtain off one corner of the building and bring in one of those big propane heaters for a week. Without the heater it was too cold for the epoxy to set up.
re: RWturner’s question “How many manufacturing plants do you think have air conditioning on the production floor? Assembling computer parts in a static-free environment, but assembling something like a car, nope. Every one I’ve been in is heated in the winter, however, because people and machines wouldn’t work at all below certain temperatures.”
That is my experience too, even in the south in Guangzhou Province. No air conditioning. And employees wear jackets whenever the temp is below 80°F in the southern provinces. In the northern provinces of course employees are more used to cold temps. Xi’an, for example, where Mao shipped all of the high-tech manufacturing (such as it was) to keep it out of the range of US bombers, gets pretty damn cold, with a high temp of <35°C even in Jun/Jul/Aug and a low temp of <0°C in the winter.
No place in Communist China was outside the range of B-50 (B-29 upgrade) or B-47 (jet) bombers, flying from Asian bases. After 1955, scarcely anywhere on Earth was, given B-52 refueling, flying from the US.
To say nothing of these guys, who used to fly over our ranch house frequently when I was a kid:
https://en.wikipedia.org/wiki/Convair_B-36_Peacemaker#Specifications_.28B-36J-III.29
The deep, droning sound, felt as much as heard, was unforgettable. As were the impressive contrails.
They could reach Xi’an from Guam, unrefueled.
I didn’t say it was effective. But that’s exactly what he did:
You don’t understand.
Clearly turning the thermostat dial is considered “an additional adaptation”.
Why would you need to turn the thermostat dial? Thermostats keep temperature constant already, by definition.
That is the ‘BIG IF’ assumption. Of course there will be adaptation, either install AC, or move north.
I agree with John Smith: why would you need to turn the thermostat dial? Set it and forget it.
My mother used to turn the thermostat down at night “to save gas”. It didn’t lower the gas bill at all. My father would go ballistic if we didn’t turn off the lights in when leaving a room. You had to ‘save electricity’. Somehow it didn’t change the electric bill, because the fridge still required electricity, the air conditioner and furnace still used it, and the meter ran for the entire house, not room by room.
Dumb ideas exist in every generation.
Sara – you obviously weren’t the one paying the gas or electric bill.
Sara, that comment is baffling.
You are aware that stuff adds up, are you not?
Even my warmista friends and family members who feel so virtuous for their condemnation of deniers, but who leave their huge mansions’ AC cranked up all the way even while out of the house, even while on vacation, and who would never think of spending the money for a programmable thermostat or LED lighting or motion sensor light switches or timed ceiling fans, or any of the other stuff I do myself despite my belief that CO2 is not a bit harmful…hell, even those irresponsible spendthrifts and wastrels know that turning stuff off and using less heat and less AC saves money because it uses less power…they just do not care because it is not a significant amount of money for them.
Just because it didn’t save much compared to the other users of electricity is not proof that it didn’t save anything.
…if no additional adaptations occur…
Static analysis is almost always wrong in it’s predictions. Systems do not stand still; they constantly adjust to inputs.
Exactly so Gary.
Just like predictions that sea level rise of a millimeter or two a year will flood people out of their homes in Miami ignores that long before such a slow rise floods anyone, hurricanes and wear and tear and a hundred other things will occur.
It is like worrying that your footsteps will cause your floors to get ruts and worn spots in them.
They will, in a few hundred years.
Exactly, which is a reason not to worry about.
“if no additional adaptations occur” And of course, IF there will be warming until then, there will be additional adaptations, so the claim is non falsifiable, as too many claims from pseudo sciences. Even if there would be no adaptations, there would be other changes that could make troubles to economy, so there is no way to tell how much is due of warming and how much due something else.
There’s a website of funny exploded leftist alarm stories – something count – I forget – getting senile – but there were 833 of them, then the compiler just gave up under the torrent. Best was “more UFO visitations, they are concerned about what we are doing to the planet”. ‘Narwhals Drowning’ etc.
Here you go.
http://www.numberwatch.co.uk/warmlist.htm
And there are a number of sites that link to this one, and some funny things to say…like this one:
“For those members in good standing, this list is something you can use to defeat those especially nasty people called skeptic. No argument that they can make can disprove your cause because you can show that global warming causes everything.”
https://cbdakota.wordpress.com/2015/12/01/a-complete-list-of-things-caused-by-global-warming/
YASBOFP
Yet another study based on false premises.
I dont know why Anthony gives these space: If IPCC projections are well wide of the mark, these studies are meaningless.
In an era when government is grossly in debt the continued funding of such studies by the taxpayers must be publicly debated. If we continue funding “scientific research” at all we must have a better way to prioritize what is funded. Knowing what is being funded now I would hope ultimately convince the public to demand change. This one rates right in there with shrimp on a treadmill.
To show how stupid the climate alarmist are.
I like it that I can read what people are saying, even if I strongly disagree with their conclusions. I appreciate BIGLY that I have access to not only the articles, but the varied perspectives of this group.
From reading these things, the articles and the commentary, I have learned to see the ‘spin on the language’ that is continually used. Phrases like ‘all other factors being constant’, or ‘if no changes are made’ are the giveaway to me that there is a forced relationship between the independent and the dependent variables.
Long ago, a good friend of mine pointed out that ‘There is no “IF” in Philosophy.’ What that means to me in practice is that an “IF” indicates that I should test the validity of the condition proposed. Adaptation is what smart people, smart companies, and smart nations DO.
Just for fun, I’d like to see a paper test the assumption of Adaptation in Climate Change studies ‘IF’ the US Federal Govt were to completely suspend all Research funds. I bet we would see adaptation bigtime.
Leo, if for no other reason, so we can all ponder and muse about how idiotic the warmista jackassery is, and yet remains and continues to suck tens of billions of dollars in funding for such nonsensical and farcically ignorant hogswallop.
I recall studies that show that the 30-year trend in temperatures in China was declining. I haven’t checked the paper to be sure, but I suspect that they don’t include long-term plots of temperature with real data as part of their analysis. I find it hard to believe that someone can pull a number out of a hat (i.e. 1 degree) and write a paper.
“I find it hard to believe…”
You must be somewhat new to the practice of carefully examining warmistas and all of their jackass shenanigans.
And about what will happen in 120 years time.
Bilge. Clearly, the “researchers” have no idea what the real world is like. My brother runs a company that imports goods from Asia (or anywhere else that labor is $1/day or less). The truth is that production is leaving China.
Why is that? Easy. The surplus labor supply is evaporating as the surplus labor in rural areas has completed its move to the cities and the number of children reaching working age has dropped due to anti-natal policies, and rising prosperity. That has caused wages to climb. In order to pay those wages., Chinese manufacture has changed its focus from the bottom of the value chain — T-shirts and plastic spoons — to the higher reaches — Televisions and cell phones.
The cheapest goods are now made in places like Cambodia, Bangladesh, and Sri Lanka. Note those are all places where it is plenty hot without “climate change”.
What does the future hold? Who knows? But, the sweatshop business has left China forever. It won’t be coming back.
Just another example of the whacko academics escaping CA and spreading the alarmist virus into other states and countries.
Tell that to the
slavesworleThe same thing happened for every other “low cost” manufacturing country, and it will happen to Cambodia, Bangladesh, Sri Lanka, etc.
One more reason to fight climate change……….
They are all really grasping at straws now.
I’m pretty sure they’ve been grasping at straws the whole time! They haven’t got anything else…
Attacks by space aliens will also stunt Chinese manufacturing. Poor Chinese, can’t catch a break.
From the “Couldn’t possibly be dumber but our leftard handlers are too stupid to care department:”
Are they really claiming that machines in an air conditioned room will be affected by outside temperature? Holy BS Batman!
So, what happens to industry if the climate changes the other way and they are pulling their rickshaws through 8″ of snow and ice?
This is just another angle on a computer-created fantasy which has grown legs and become a ‘living’ entity in present day society. Predictions of run-away global warming by any other name are still wrong so far. The correlation between CO2 rise and temperature gets weaker and weaker as time passes. All that powers the meme anymore is religious zeal that we must ‘turn or burn’ and dismantle our corrupt industrial civilizations.
Methinks the basic premise (loss of manufacturing) may have much validity, but the mechanism for the premise is their cure.
Amazing that this escaped detection when US manufacturing jobs left the US for Mexico.
Oooh…SNAP!
+++++
Having been an industrial engineer that worked in manufacturing (before we exported so much of it, along with the pollution, to the 3rd world) I especially liked the comment that a 1 degree increase will somehow affect the machines. I don’t think these people spent any time in the factories or with the actual machines to be able to make such an absurd statement.
I wonder if anyone has done any studies to determine how much the temperature of a space must change in order for an average person to even become aware of it?
In other words…can a person even detect a 1 degree change without any device to measure it? Just by how they feel?
I doubt it.
I think two degrees is getting closer to the lower limit, which may be why that number was pulled from a hat as the dangerous amount that must be avoided no matter the cost or consequences/
The manufacturing plant in Tampa that I mentioned in an earlier post, bought a high tech milling machine from Germany.
One winter they were having trouble getting it to start up. After a visit from a company rep, the floor manager went down to Wal-Mart, bought an electric blanket, and used it to wrap the pump every night.
That was the entire problem, the pump on this $1 million dollar piece of equipment had gotten too cold over night. A $15 dollar low tech solution.
Interesting that this was more of a problem in Tampa than in Germany.
Probably in Germany they know they need to turn on the heat when it starts getting chilly at night.
In Tampa, I am guessing that few warehouses or production facilities even have a heater.
The production facility for the company I work for is in Pompano Beach, and it is mightily hot in Summer, like crazy hot in there. My warehouse in Sanford is even worse…like an oven in Summer.
But since one entire wall is bay doors that would hinder production to shut, it is fans or nothing.
Another failure of a study that presumes that a theoretical “global average temperature increase” will show up equally, everywhere on Earth, and that it will manifest as higher daily high temperatures rather than warmer nighttime and Winter temperatures. Global warming may actually increase production and decrease use of fossil fuels to run heating units, depending on how much freezing cold is diminished.
I simply don’t believe that they have the data to make these claims. For a start, China’s temperatures simply have not increased by enough to give you sufficient data. Then Chinese manufacturing has been changing in hugely significant ways over the last couple of decades – I would be amazed if there was one single large factory that was producing the same item in the same way today an it was even ten years ago, let alone twenty.
Finally, all economics is trade-offs. For the moment, the Chinese have not done much about any temperature-induced losses because the losses are small and the costs of making changes large. But if the losses become large, they will do stuff.
Who pays for this utter nonsense?
It’s half baked science. It’s certainly true that when temperatures reach above a certain threshold, human labor productivity drops. But to pretend that daily fluctuation in productivity determines the annual productivity goes beyond stupid, it’s enough to think that the conclusions were determined and a paper was written around said conclusions.
RW, I think it goes without saying that such conclusions are reached by brainstorming before funding is even sought.
Beyond that, you have to take any industrial figures out of China with a block of salt.
So productivity is higher in winter than in summer.
Of course its is. Fewer beach days. I thought everybody knew that. 🙂
Not to mention that there seems to be some event that occurs every 4Q that really drives all manufacturing up. It’s surely a mystery on what causes this annual spike in economic indices. I need a grant to get to the bottom of this.
Speaking of which, it’s almost time for Black Friday again.
And, once again, extrapolating average global temperatures, to implicitly forecast high temperatures for a mid-latitude country, when most of the warming is happening in the Arctic, at night, and in the Winter. If the so-called “sweat shops” have no temperature control, they might be more productive with warmer Winters! Whenever I read science fiction like this I have a mental image of Chicken Little running around yelling, “The sky is falling!”
So, if warming decreases productivity, obviously cooling increases productivity!
So if anyone who takes global warming seriously gets a blast from a CO2 fire extinguisher, they might start to think?
Warming is primarily defined by increasing night time minimum temperatures particularly in winter, not increased absolute temperatures, so why are they worried? If not an artifact of the collection method, it would lead to fewer people dying on cold winter nights around the world and longer growing seasons because of fewer frosts. I have never understood a rational reason to fear global warming even as presented by the IPCC!
Some real reasons behind all this claptrap nonsense are ‘fear of change’ and ‘no control of it’. ‘Change’ is something that no one can control, especially if it is change in the natural world.
We’re the most adaptable species on the planet, but these Warmians and Greenbeans and alarmists don’t want to have to adapt, especially to anything new or naturally occurring, like seasonal changes. How many commuters do you see dressed improperly for bad winter weather? I see lots of them on the TV news. And they really hate winter, but they’re stuck where they are because their jobs aren’t in warm climates. Meantime, the rest of us just adapt and mosey on.
To push their lies, they actively promote the fiction that all change is harmful, suppress any talk of adaptivity or homeostasis, and pretend that the earth and everything in it exists in a narrow and stable state that everything and everyone is exquisitely well adapted to and unable to intolere or any change therein.
Oops
“…and unable to tolerate any change therein.”
The photo on the index page shows a Chinese garment factory. That certainly looks better organized and productive than photos of the same thing from other countries and eras. Looks like the Chinese manufacturers pretty well have their act together and don’t need the interference of some self-important climate zombie annoying them.