(Bloomberg) -- Extreme heat is set to stifle the US economy by limiting construction workers’ productivity and reducing capital investment, according to a study from the Federal Reserve Bank of San Francisco.

The construction sector is likely to determine the overall vulnerability of US production to extreme heat, because of the industry’s significant contribution to economic output and its substantial share of outdoor workers, said the paper, which examined the impact on capital stock, or the value of accumulated investment. 

“Our findings suggest that, under a scenario with no largescale efforts to reduce carbon emissions, future increases in extreme heat would reduce the capital stock by 5.4% and annual consumption by 1.8% by the year 2200,” economists Gregory Casey, Stephie Fried, and Matthew Gibson wrote in the working paper published Tuesday on the bank’s website.

The study projects outdoor workers’ future vulnerability to heat stress, measured in days per year above safety thresholds for what is considered “heavy work.” That figure is set to rise substantially by the end of the century, from 22 days in 2020 to about 80 by 2100, according to the authors’ projections.

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The authors divided economic output from 1950 to 2019 among five sectors to examine how labor productivity losses from extreme heat could affect the economy. While services and manufacturing play the largest role, most work is done indoors with climate control. Construction makes up the largest share of US output of the remaining outdoor sectors that include agriculture and mining.

The authors built a model to study productivity by sector and its impact on macroeconomic outcomes. Because the construction industry is an important component of overall US investment, the paper said, a decrease in productivity would have a long-lasting impact on the economy by slowing capital accumulation.

The researchers compared the size of capital stock in two scenarios. In one, there is no increase in extreme heat exposure after 2019, and in the other, the number of extreme heat days increases to 80 by 2100. 

“We find that future increases in extreme heat would lower the capital stock by about 1.4% in 2100 and by 5.4% in 2200,” Casey, Fried and Gibson said. “The lower capital stock reduces the economy’s ability to produce output, which in turn reduces consumption. Thus, we find that extreme heat reduces annual consumption by 0.5% in 2100 and 1.8% in 2200.” 

The authors did have some caveats. Companies and employees could find ways to adapt, by relocating some production to cooler parts of the country or working during cooler parts of the day, for example. 

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