A new analysis reveals that informal workers in India’s construction and agriculture sectors lose over 22 days of income each year due to climate change-induced heat, pushing many below the poverty line.
As these workers experience income loss, they incur out-of-pocket medical expenses (OOPME) related to heat-related health issues. Women workers, often paid less than men, are particularly vulnerable to the effects of heat.
The impact of extreme heat has far-reaching consequences. According to a recent Lancet Countdown report, potential income losses from reduced working hours and productivity due to extreme heat could reach $194 billion in 2024, equivalent to about 5% of India’s GDP.
The new analysis by Adelphi global, a leading independent think tank focused on climate, environment, and development in Europe, is the first of its kind to establish a direct link between the physical health tolls of climate change and the subsequent strain on family budgets and national economies.
The study titled ‘Heat, Health and the Increasing Costs of Living – A Call for Action,’ investigates the relationship between heat, health and living costs. It focuses on two dimensions to assess the economic impact of heat – finding a decrease in income and an increase in private healthcare costs across eight different countries: Bangladesh, Brazil, France, India, Indonesia, Italy, Nigeria, and South Africa. The research seeks to bridge the gap between climate science, public health and economic analysis.
Extreme heat can have various harmful effects on our bodies. These can range from mild symptoms like dizziness or thirst to more severe conditions such as chronic kidney failure or even life-threatening heat strokes. While researchers have recently started connecting the impact of heat on health to the broader economic effects on nations, there has been limited focus on how these health issues directly affect individuals’ finances.
Heat and rising poverty
In India, daily median incomes are low, averaging $18.72 per day for women and $25.52 for men in 2025, based on an eight-hour workday. According to the report, if more than half of informal workers already earn below the median and are likely to lose significant working hours due to future heat exposure, an increasing number could fall below the World Bank’s poverty line of $4.30 per day (this poverty line is applied to India as it is classified as a lower-middle-income economy).
Currently, 23.9 per cent of the Indian population earns less than $4.20 per day, and predicted future income losses due to heat could further increase the risk of people falling below this poverty line. After experiencing reduced working hours, households may also face additional financial strain due to rising health expenses related to heat, leading to greater reliance on private out-of-pocket spending. The report cites anecdotal evidence from media sources stating that 40 pc of urban and 60 pc of rural households with a member experiencing heatstroke have to take out loans or sell assets to cover medical bills.
Need for good practices
The report highlights a few effective practices that could serve as response measures amid intensifying heat. One example is the heat insurance for women workers in the informal sector, initiated by the non-profit SEWA in 2025. From 2023 to 2025, SEWA piloted this initiative in three regions of India, where women from the informal sector paid an annual premium to receive pay-outs when temperatures exceeded 40 degree Celsius.
Another innovative practice is the heat-pregnancy insurance launched in June 2026. This parametric heat insurance specifically targets pregnant women in the informal sectors of India, Thailand, and Sierra Leone, using lower temperature thresholds than typical parametric heat insurances to mitigate exposure and associated risks.
Addressing heat-health nexus
To effectively tackle the challenges posed by the health impacts of heat, key recommendations stress the importance of integrating these concerns into UNFCCC processes, particularly through the Global Goal on Adaptation and the Belem Health Action Plan.
National adaptation plans should be linked to robust social protection measures which include compensation for lost work and state-supported insurance schemes. Furthermore, extending formal labour protections to informal workers is crucial, especially regarding gender-specific vulnerabilities. Lastly, mobilising adaptation finance with clear guidelines is essential to safeguard living standards in the face of rising temperatures.