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Severe weather costs the global economy billions of dollars a year, highlighting the costs of climate change and the value of mitigating extreme weather, according to a new analysis of weather and economic data.

"This research gives guidance to policymakers to consider what kind of extreme events we should adapt to," said Berkay Akyapi, Ph.D., co-author of the new study and a professor of business at the University of Florida. "If we don't do anything to respond to these climate shocks, we are hurting the economy."

An increase in extreme heat and severe droughts lops off about 0.2% of a country's GDP. Climate change is also decreasing the number of days that have mild temperatures, which the economists found also hurts economic activity by a similar amount. Although a small percentage, it is a larger weather-driven effect than many economists had previously calculated and adds up to billions of dollars at risk across the global economy.

Akyapi, a professor in the UF Warrington College of Business, collaborated with Matthieu Bellon, Ph.D., at the European Stability Mechanism and Emanuel Massetti, Ph.D., at the International Monetary Fund to perform the analysis, which included billions of weather observations across hundreds of countries over a 40-year stretch. Their findings are forthcoming in the American Economic Journal: Macroeconomics.

Previous studies had primarily looked at average temperatures, which are increasing over time but were not correlated very strongly with economic growth. Average temperatures hide a lot of events that can hurt the economy.

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