Economist estimates $9.5 billion loss in Texas due to heat

Thursday, August 17, 2023
Economist estimates $9.5 billion loss in Texas due to heat
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13 Investigates is learning billions of dollars may be evaporating from our local economy as businesses deal with side effects of consecutive 100-degree days.

HOUSTON, Texas (KTRK) -- Covered nearly head to toe in protective gear, crews as Nature Springs Landscaping spend hours outside perfecting residents' lawns.

"It's pretty tough. Obviously it's hard, intensive labor, having to put up with the heat and everything - the moisture, the humidity, just the vapor of the ground," Isaac Artavia, owner of Nature Springs Landscaping, told 13 Investigates. "That kind of stuff basically suffocates you."

Despite offering hydration packets, water and a work schedule that ensures his employees are off the clock by 3 p.m., Artavia said this year's 100-degree temperatures have cost him workers and business.

He said he's had two employees leave the job due to the hot temperatures, and he's had to furlough some employees for a few weeks since business is down 30% to 40%.

"I do enjoy it because this is what I love doing, but I'm not going to say, 'Hey, it's the best thing in the world to be able to (work in) the heat,'" he said. "I've been in business for seven years and I even have symptoms of heat strokes sometimes because of how bad this can get."

The economic loss to Artavia' business mirrors what industries across the state are experiencing.

Ray Perryman, of the Perryman Group, says his analysts looked at over 400 industries to see how the economy responds to temperature changes and other factors and found Texas is expected to see a $9.5 billion economic loss due to the heat.

"The Houston area, generally speaking, is 25% or more of the Texas economy in just about any category you want to name. It's a very, very big metropolitan area, one of the largest in the country," Perryman said. "So you're definitely looking at something on the order of probably around $2.5 billion dollars in impact there in the Houston area."

SEE ALSO: The intensifying extreme heat crisis will threaten your health, your home and your wallet

Barbara Stewart, a University of Houston professor, said the heatwave is also impacting brick and mortar retail establishments, which combined with entertainment, such as bars and restaurants, are seeing about a 10% decrease in revenue.

"It's affecting consumers. It's always a trade off with consumers - how they spend their money and when we have to pay higher electric bills to keep our homes cool, or perhaps we have to repair the refrigeration unit in our home or our car, that means less money for other things that we might want to or really need to spend on," Stewart said. "We're changing our behaviors. ... If it's just too hot to go out, we're more likely to buy something we need online or we're just too lethargic to buy it."

The website "OpenTable" reports there has been an 8% drop in restaurant reservations in Houston this month.

Jonathan Horowitz, Chief Revenue and Strategy Officer at Buffalo Bayou Brewing Company, he's had to start investing in equipment to keep employees and customers cool.

"Houstonians love to eat outside, even when it's hot, but there's a limit to that. You can't do it when it's 115 'feels like temperature.' You just can't do it," Horowitz said.

According to an article in the International Journal of Biometeorology, productivity is also down 70% when temperatures reach 100.

"The human body is built for a finite spectrum of heat and the longer that takes place, the harder it is on an individual," Stewart said. "Companies then have to compensate that, so increased cost to that company would include different working conditions, changes in air conditioning, changes in break schedule, sometimes changes in dress codes - all of that increases the cost of goods of doing business, which ultimately get, from my vantage point passed on to the consumer."

Horowitz said at Buffalo Bayou Brewing Company, the cost for new equipment to deal with the heat is in the thousands.

"There's always things that you can try. There's always more cooling units you can try, more fans. You can invest to provide more shade for our outdoor patio downstairs because we want people to continue to come and bring their dogs and all the things they love to do on the first floor, but we had to be able to find a way to keep them out of the sun," Horowitz said. "Unfortunately, all of those things involve spending more money and that's just the cost of doing business right now. We don't want to have to change our hours. We don't want to have to lay people off. We don't wanna have to change schedules, so we're gonna do everything we possibly can to keep people comfortable so they can feel good coming and eating and drinking and experiencing the great view."

It's not just businesses feeling the economic impact of the heat.

The Texas Department of Transportation told 13 Investigates so far this year, it has spent more than $500,000 fixing roads buckled and damaged from the extreme heat.

SEE ALSO: How much hotter will it get where you live?

Stewart said if this summer's heat "isn't just a blip in the temperature scale," there will be impacts to all industries.

"We will need to adjust," Stewart said. "Retailers will build in costs, which will then be passed on to the consumer, which accelerates that whole chain of higher prices, higher cost of doing business, and we pay for it as a consumer so long-term we'll hit consumers in the pocketbooks."

The long-term impacts could also affect housing.

"Traditionally sunbelt states have been a gathering population because people want to move away from the colder climates, but if we're too hot to be comfortable, just like other states might be too cold to be comfortable, we may find that housing and migration in terms of living will change and that certainly will impact Houston," Stewart said.

Even if the 100-degree temperatures continue, Artavia said his landscaping company will keep providing services for residents and looking for ways to keep business alive.

"For every problem there's always going to be a solution," he said.

For updates on this story, follow Kevin Ozebek on Facebook, Twitter and Instagram.

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