Extreme Heat, Local Economic Performance, and Water Stress in the MENA Region

This study examines the association between extreme heat and local economic performance in nine countries in the Middle East and North Africa (MENA): Algeria, Djibouti, Egypt, Jordan, Libya, Mauritania, Morocco, Tunisia, and Türkiye. This study combines microestimates from the Relative Wealth Index (RWI) and gridded total GDP with high-resolution ERA5-Land temperature data. Cross-sectional models relate chronic heat exposure to within-country differences in relative wealth, while panel models examine annual heat exposure and local GDP. Water stress is also investigated as a potential mechanism using skin reservoir content and topsoil moisture. Ten additional days at or above 90 °F and 100 °F in long-run mean annual exposure are associated with RWI values 0.018 and 0.022 points lower, respectively. In the annual GDP models, ten additional days at these thresholds are associated with 7.6 and 4.8 percent lower output, respectively. The mechanism analysis links the same increases in annual heat exposure to 5.5 and 7.0 percent lower skin reservoir content (SRC), respectively, alongside lower topsoil moisture, consistent with a water-stress channel. Heterogeneity analysis shows steeper negative heat–wealth gradients and more negative SRC associations in relatively export-linked agricultural economies, where the negative GDP association at 100 °F is concentrated. Overall, the findings link extreme heat to both spatial disparities in relative wealth and lower annual output in MENA, with water stress as a potential transmission mechanism.