What we’re reading about climate and jobs

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Farmers working in a rice field
Climate change affects both existing and future jobs in sectors such as agriculture, construction, tourism, energy, and infrastructure. Copyright: Vincent Tremeau/World Bank

Climate change is one of the biggest risks to global development, as high temperatures, droughts, floods, and other extreme events destroy infrastructure, jobs, and livelihoods.  Already, climate change costs the world $16 million per hour.

We can respond with increased and focused climate action, with recent studies projecting that climate mitigation and adaptation policies will improve overall job outcomes. In fact, these global simulations show overwhelmingly positive jobs impacts for green scenarios compared to business as usual.

How does climate change impact jobs?

Climate change affects both existing and future jobs in multiple ways that include reduced labor productivity, outputs, and incomes across diverse sectors such as agriculture, construction, tourism, energy, and infrastructure.  The poor are the most vulnerable, often living in inadequate housing, working outside, and facing climate-related income losses with no means to adapt.

Projections of job losses under different climate change scenarios span a wide range but overall point to negative impacts. The ILO estimated the impacts of heat stress as a loss of two percent of total working hours worldwide by 2030 based on temperature projections, labor productivity measurements, and health records. Heat waves also impact tourism, leading to large decreases of often informal jobs. Agricultural yield models have projected losses of up to 10 percent per degree of global warming for certain crops, which can quickly turn into a tipping point and drive farmers out of business. 

Global models based on Keynesian aggregate demand and labor productivity growth show how climate change reduces profitability by negatively affecting investment and output in the short and long runs. These models suggest that employment falls and then recovers - but to a lower level compared to a world without climate change.

How can climate policy improve job outcomes?

Decision makers and the public often see adaptation and especially mitigation policies as endangering many existing occupations, but these policies also create opportunities for jobs and workers. For instance, the promotion of local green solutions through policies, regulations, and financing can foster innovation, create new jobs, and support local ownership. Early planning and analysis of the green transition’s potential job impacts, such as understanding the implications of structural change on current and future demand for skills, are crucial to deliver on both adaptation and mitigation goals.

One reason that global simulations indicate positive job impacts is that many sectors central to a low-carbon transition are labor-intensive and low-skilled. Construction, for instance, plays a large role in building resilient infrastructure or in the roll-out of renewable energy technologies. In 2022, globally 13.7 million people worked in manufacturing, installing, and operating renewable energy power and heat generating facilities and biofuels. 

Moreover, carbon prices can generate jobs by increasing budget resources for governments, allowing them to spend more on labor-intensive sectors such as education and health. Governments can return income from carbon taxes back to society, and several European countries have seen a double dividend of environmental benefits and payroll tax decreases.

Cleaner and more efficient energy and transport also have direct job benefits. When people have access to clean energy and electricity, they have more options to go into non-farm rural economic activities with better pay, while more efficient public transport facilitates commutes to better jobs, especially for women.

Finally, the political economy of how we achieve this low carbon transition matters. Climate policies must be combined with support for ‘left-behind’ workers to increase political acceptability. This support includes labor mobility, re-skilling and upskilling as well as transfers for workers who cannot take on new jobs. Moreover, policymakers can increase public acceptance and buy-in for decisive climate action by involving workers in transition decisions and encouraging citizen engagement.

Climate change, climate policy, and jobs

Essential readings

Broader jobs agenda

Recommended read

  • Renowned science fiction author Kim Stanley Robinson presents a unique vision of climate change in his book, "The Ministry for the Future." 

 

This blog is based on the December 2023 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.

 

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Authors

Ulrike Lehr

Senior Economist, Jobs Group

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