Extreme heat waves and severe droughts reduce a nation's gross domestic product by approximately 0.2 percent.

While average temperatures show gradual rises, the true economic damage is driven by extreme events. Recent macroeconomic analysis covering forty years of weather observations shows that sudden climate shocks, like intense heat waves and prolonged droughts, directly shave 0.2 percent off a country's GDP. Additionally, the loss of mild, temperate days hurts economic activity by a similar margin. These seemingly small fractions translate into billions of dollars lost across the global economy every single year.