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Rajat Mehrotra,
financial and economic experts

The rising temperature of the earth is no longer a matter of concern only for environmentalists. Today it has become the biggest global risk affecting the world economy, food security, energy system, health services and livelihoods of millions of people. If earlier climate change was considered a problem of the future, it is now an economic reality of the present. The continuously breaking temperature records from Europe to India are indicating that if concrete steps are not taken in time, not only the environment but the entire economy will have to pay the price in the coming years.

According to the State of the Global Climate 2024 report of the World Meteorological Organization (WMO), the year 2024 was the hottest year in human history. The global average temperature was recorded 1.55±0.13 °C higher than the pre-Industrial Revolution (1850–1900) level. With this, the decade from 2015 to 2025 has become the hottest decade in the history of the Earth. Scientists believe that rising temperatures in the oceans, record levels of greenhouse gases and frequent extreme weather events are deepening the crisis.

Europe is the clearest example of this change. Europe is the world’s fastest warming continent, with temperatures rising almost twice as fast as the global average. In 2022, 61,672 heat- deaths were recorded in Europe. After this, record heatwaves, forest fires, droughts and floods in 2024 and 2025 caused economic losses worth billions of euros. Experts estimate that if adaptation measures are not accelerated, Europe could have to spend around 70 billion euros every year by 2050 on climate adaptation alone.

India also stands at the center of this crisis. According to the India Meteorological Department and various climate studies, the country’s average temperature has increased by about 0.7 degrees Celsius in the last century. A total of 536 heatwave days were recorded across various meteorological subdivisions of India between April and June in 2024, the highest in recent years. Also, according to the Council on Energy, Environment and Water (CEEW), about 57 percent of India’s districts, home to about 76 percent of the country’s population, fall in high or extreme heat risk areas.

The first and most profound impact of increasing heat is on agriculture. About half of India’s population is directly or indirectly dependent on agriculture. The productivity of wheat, paddy, maize, pulses and horticultural crops is affected by extreme temperatures and lack of moisture. As heat increases, the need for irrigation increases, groundwater exploitation intensifies and farmers’ costs increase. This results in reduction in food grain production and food inflation. If this trend continues, there could be increased long-term pressure on India’s food security.

The energy sector is also bearing the biggest economic burden of this crisis. India has recorded record power demand of more than 250 GW several times in recent years due to increasing demand for air conditioners, coolers and other cooling appliances. Increasing demand for electricity increases production costs, coal consumption and financial pressure on distribution companies. If timely investment is not made in power infrastructure, power cuts, higher tariffs and energy security challenges may become more serious in the future. One of the least discussed, but largest economic impacts of heat is on labor productivity.

Farmers, construction workers, street vendors, delivery agents, transport workers and millions of people doing other outdoor work directly face the heat. The International Labor Organization (ILO) estimates that about 2.2 percent of working hours could be lost globally due to extreme heat by 2030, equivalent to about 80 million full-time jobs. India is among the countries where it is expected to have the greatest impact on labor productivity.

Its impact on the health sector is also very serious. An increase in cases of heat stroke, dehydration, heart disease, kidney problems and respiratory diseases is being seen. According to the World Health Organization, extreme heat is becoming one of the deadliest natural risks globally. In a country like India, where a large population works in open environments, increase in health expenditure directly affects the savings and consumption capacity of households.