This article is part of a Fortune Special Report: Business Faces the Climate Crisis.
The world’s five warmest years on record have been its past five, according to the National Oceanic and Atmospheric Administration, part of the U.S. Department of Commerce. And as the planet continues to heat up, a growing body of academic research shows that rising temperatures will have profound effects on the global economy. While some countries may actually prosper, one study projects average global incomes will fall 23% by the end of the century.
There is an optimal temperature, believe it or not, at which economic performance peaks: 55° F. That’s according to researchers at Stanford and UC-Berkeley who examined long-term economic data from 166 countries to project the impact of changing climate on the global economy. New York City and Palo Alto, it’s worth noting, both have average annual temperatures near 55°. For cooler countries, rising to the mid-50s can boost output. But the hotter it gets above that, the more productivity slides, thanks to factors such as increased energy demand, lower crop yields, and even declines in cognitive function. (It’s hard for humans to concentrate when it’s scorching.) The same trend applies to the U.S. economy: Places where it’s already relatively hot are likely to be hit harder as temperatures rise. A separate study by researchers from UC-Berkeley, Princeton, and other institutions found that counties in the West, Midwest, and Southeast would be disproportionately hurt by unmitigated warming, with some losing up to 20% of GDP by 2100.
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If warming continues to be unmitigated, Southern states will have to contend with huge increases in energy costs, rising damage from coastal storms, lower crop yields, and even higher mortality rates owing to extreme heat.
A version of this article appears in the April 2020 issue of Fortune with the headline “Projecting the Cost of Climate Change.”
More from Fortune’s Special Report on the Climate Crisis
—Big Oil’s Hail Mary
—Plastic that travels 8,000 miles: The global crisis in recycling
—Wall Street’s pressure on the fossil fuel industry is not aggressive enough
—Sci-fi tech tackles climate change with fake trees
—Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power
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