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The Death of Summer

Bloomberg Niall
Thought Leader: Niall Ferguson
July 30, 2023
Source: Bloomberg
Written by: Niall Ferguson

Most of us have an idea of summer in our heads. It generally involves beaches. Americans head to their coasts — avoiding only fog-shrouded San Francisco — and Europeans to the Mediterranean or Aegean. We all strip down to near nakedness and sit around in the sun, occasionally frolicking in the ocean waves. We aim to return home tanned and toned. If you come from another planet and don’t know what I am talking about, watch the Barbie trailer.

An entire economic system has evolved to meet our needs. Airlines compete to fly us to seaside resorts where hotels provide the shelter and the food. Restaurants with sea views are thronged. Those who can afford a second home compete for waterfront locations. Owning a boat or some other aquatic toy is often part of the deal. There is also a freshwater variant, in which a lake takes the place of the sea. But the basic concept is the same.

This explains why, as Covid restrictions have been lifted over the past two years, people all over the world have flocked back to their favorite beaches. Many warm-weather holiday destinations saw record arrivals by air in 2022 — for example, the Greek island of Mykonos or the American island of Puerto Rico. This was not just because air travel in general made a comeback, as total TSA passenger volume in 2022 was only 90% of 2019 levels. The market share of sun-and-surf destinations went up.

However, rising global temperatures would appear to be killing this version of summer. None of what I have just described is enjoyable if the mercury is above 30 degrees C (86 F). Indeed, sunbathing becomes life-threatening. And who wants a week on Corfu if a large tract of the island is ablaze? This summer in southern Europe has been less Barbie, more Oppenheimer.

Even those who prefer not to think too deeply about climate change notice when their familiar summer holiday morphs into an ordeal akin to being slow roasted. Those who own the capital stock — the hotels, the houses, the boats — naturally cling to the hope that this summer is an aberration and next year will return to normal. But they have been clinging to that hope for quite a few years now. The horrible question keeps suggesting itself: What if this is the new normal?

This is not the place for deep reflection about the complexities and uncertainties of climate-change models. As John Burn-Murdoch pointed out last week, global warming no longer needs to be a theory; it’s a reality. Extreme heat is significantly more common in major cities these days (2019-23) than it was in the early 1950s.

To be precise, there are 2.7 times as many days with mid-afternoon temperatures above 30 C in Athens; 3.7 times in Barcelona; 8.1 times in Paris; and an amazing 10.4 times in London. All these cities are close to the sea, so it is not surprising that popular summer seaside destinations — such as France’s Côte d’Azur and Martha’s Vineyard — have also been notably warmer in recent years than they were in the 19th and 20th centuries.

Beach Bummer

Temperature anomaly relative to 1991-2020 average

Source: National Oceanic and Atmospheric Administration

Nor will I tax the reader’s patience with a reminder that a spate of really large volcanic eruptions — of the sort we have not seen in more than two centuries — could change the situation dramatically, ushering in a period of global cooling. Let us merely focus on the not unlikely scenario that summer as we know it is over.

Take Spain, long a favorite summer destination of British holidaymakers. So far, there have been three heat waves this summer, pushing temperatures into the low 40s C (above 104 F) and rendering the traditional Costa del Sol beach holiday a sweltering misery. Last summer was as bad, if not worse.

“About one-fifth of Spain has desertified,” according to the British journalist Simon Kuper, who has been chronicling the lack of rain in Spain for some years. “That could rise to three-quarters … If Spain were a company, the consultants would say: ‘Your business model no longer works. Either pivot or close the thing down.’” He sees tourism migrating to the country’s northern coast, and the heartland switching from olive groves to solar panels and wind turbines.

More generally, Kuper foresees a geographical shift in holiday destinations. British tourists who once forsook their seaside towns for Spain will return, reviving the likes of St Leonards-on-Sea. The New York Times distilled the thesis into two questions: Stockholm Instead of Rome? October Instead of July?

We should not be surprised if such changes occur. Summer was not always about the seaside and sunbathing. True, there is a long tradition, dating back at least to the Romans, of leaving the city for the seashore in the summer months. Baiae, on the northern tip of the Gulf of Naples, was a favorite haunt of the emperors Augustus, Nero and Caligula. (According to Seneca the Younger, it was a “harbor of vice.”) But activities such as swimming in the sea and stripping semi-naked to lie on the beach are of quite recent provenance.

Moreover, the seaside is not an appealing summer location in much of the world. No sweat-soaked imperial civil servant in British-ruled India would have chosen the Bay of Bengal as his preferred holiday destination. The only way to escape the heat of the summer was — as Rudyard Kipling described — to flee the plains and head northwards to Himalayan “hill stations” such as Simla.

Now that summer in more and more of the world is as searingly hot as India in Kipling’s time, we are all going to have to take a leaf out of his book. The hill station is coming back, and this time it’s global.

To those who already prefer to spend the summer in the Colorado Rockies or the Swiss Alps, this is not exactly breaking news. But the early adopters of the mountain vacation are in for a shock when the masses start showing up. The same goes for the hardy souls who have maintained the Victorian tradition of going to Scotland for the summer (which is like opting out of summer altogether). They, too, may soon find their favorite Highland beauty spots overrun by sunburnt refugees from Malaga. Heat exhaustion can kill you. No one ever died of drizzle.

“Short shores, long hills” sounds like a potentially huge trade. The logic is compelling: Companies that own large numbers of hotels and holiday rentals along overheating coastlines must surely be in trouble. Companies that are developing the American and European equivalents to Simla, on the other hand, are going to make money.

Over dinner with some hedge fund friends last week, we talked about the potential losers of the overheating Mediterranean. Marriott is the largest international hotel chain in Spain with a total of roughly 14,000 rooms, but the Spanish Meliá Hotels has more than twice that number, and has seen its stock fall by half over the last five years. How about the hills to invest in? Aspen is overbought. Try Idaho, but not Sun Valley. According to the property-sharing company Pacaso, the biggest spikes in vacation home prices in 2022 were in Valley County, Idaho, and Cumberland County, Maine.

There are, however, reasons to think twice about this trade. It is rarely a good idea to base a thesis on a) media coverage of the weather, which tends to be over-heated in itself, and b) one’s own personal experience plus “anecdata.” Yes, I felt smug two weeks ago, reading about flaming Corfu as I savored the cooling breeze that often accompanies a Montana sunset. But here are some awkward real data.

First, it’s not clear that this summer is exceptionally bad for Mediterranean and Aegean coastal resorts, though it might look that way on the internet. In a majority of European countries, the number of hectares burnt in forest fires this year is below the average of the period 2006-2022. In Greece, the damaged area is only 7% above average. The countries with exceptionally bad wildfires this summer are, in descending order: Lithuania, Estonia, Austria, Denmark, France, Germany and Ireland — nearly all in northern Europe. Forest fires are down 15% in Spain, 21% in Italy, and 85% in Cyprus.

Second, climate change is not unambiguously good news for mountain resorts. After all, most of them attract many more visitors as ski centers in the winter. But the mountains are seeing temperatures rise roughly as much as the beaches. The effects on snow cover in the Alps are all too familiar to European skiers.

Ski Bummer

Temperature anomaly relative to 1991-2020 average

Source: National Oceanic and Atmospheric Administration

Third, patterns of residence don’t indicate that people flee when temperatures regularly rise above 90 F. It might be more accurate to say they flee when there’s no air conditioning.

Obviously, people will live and work where the jobs are plentiful and/or the taxes are low, even if that means unpleasantly high outside temperatures. In the US, the two fastest-growing states are Texas and Florida, according to Brookings/Census Bureau figures; the next three are North Carolina, Georgia, and Arizona. So Americans will move to Miami, regardless of the summer heat and humidity, the rising probability of extreme weather, and the prospect of rising sea levels.

According to Zillow, the real-estate website, half a million homes in Miami could be underwater by the end of the century. We can already see a discount for low-lying Florida properties relative to homes on higher ground. Yet waterfront properties — and especially beachfront properties — remain the most coveted and expensive.

In the same way, people will relocate to Phoenix despite the unendurable temperatures in summer (27 consecutive days above 110 F as of Friday), the rising toll of heat-related deaths, and the growing water shortages.

The paradox is now familiar. To quote a recent Bloomberg report, “Americans are actually choosing to move to Zip codes with a high risk of experiencing wildfire, heat, drought and flood … The US counties with the highest risk of wildfire saw 446,000 more people move in than out over the last two years (a 51% increase from 2019 and 2020). And the counties with the highest heat risk registered a net influx of 629,000, a 17% uptick.”

In the words of the economist Noah Smith, “Increased probability of coastal flooding makes waterfront real estate a bit like a junk bond — something that will probably go up in value, but has a small to moderate chance of going to zero.” That doesn’t stop people buying junk bonds or their residential equivalents.

When you dig into this, you realize how much the US coastal real-estate market is distorted by federal subsidies, tax breaks, low-interest loans, grants and government flood insurance. In his book The Geography of RiskGilbert Gaul shows how property on the Jersey Shore tends to increase after hurricanes because the costs of rebuilding are borne by the taxpayer, while the Army Corps of Engineers builds back the beaches, improving them in the process. According to a 2021 Nature paper by Jesse Gourevitch and others, “residential properties exposed to flood risk are overvalued by $121–US$237 billion.”

A different issue is where the inhabitants of junk-bond homes will choose to spend their summers. A home is a long-term investment; a holiday is just a week or two of fun. The vacation market is therefore more fickle. One possibility is that the Sunbelters will remain loyal to the traditional vision of summer on the beach but head northwards to Maine — a less oppressively hot version of home. Another possibility is that European summer resorts will simply install or upgrade their air-con to Sunbelt standards. In Italy, retail sales of air-conditioning products have doubled over the past 12 months.

The obvious problem is that the more air conditioning we install, the harder it becomes to stop global warming. According to the International Energy Agency, global energy demand to cool buildings more than tripled since 1990. Space cooling averages 14% of peak demand across the IEA’s country sample. And the energy demand from space cooling is forecast to triple again by 2050.

I write these lines in New York City, with the temperature exceeding 90 F, before I flee the city for a coastal destination to the north. In that respect, I suppose, I am sticking to the traditional Barbie-and-Ken “beach off” summer. But I still have a gnawing sense that we are living through the twilight of an era.

In “A Tale of Two Cities,” Kipling describes the annual exodus of governing class of the Raj from “the packed and pestilential town” of Calcutta to the green and pleasant hills of Simla:

The Rulers in that City by the Sea

Turned to flee—

Fled, with each returning spring-tide from its ills

To the Hills.

From the clammy fogs of morning, from the blaze

Of old days,

From the sickness of the noontide, from the heat,

Beat retreat.

To me, New York last week felt — and smelt — a lot like Kipling’s Calcutta. I am not sure for how much longer escape to a beach will suffice as a respite from such conditions. Like one of Kipling’s long-suffering “boxwallahs,” confined to stew all summer by the Bay of Bengal, I pine for the hills.

It may not turn out to be the trade of the century. But short shores, long hills feels right.

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