Are business industries sensitive to climate?

Alexander Fishkov

Alexander Fishkov, Ph.D. student Computer Science

The geographic properties of an area often dictate the type of businesses that can be located there. For example, you can’t have an inland naval base. Farms and agriculture in general are less likely to prosper on rocky mountains that on sunny plains. But today with all the technological advancements we have, many jobs in intellectual labor, including IT and finance, hi-tech manufacturing and other new industries seem less likely to depend on climatic features.

To summarize climate features of a territory we used the existing climate zones classification prepared by the U.S. Department of Energy. Each county is assigned to one of eight climate zones. Definitions of these zones depend not only on temperatures, but rather on accumulated heat (the unit is called “degree-days”). Zone 1 has the warmest climate, while zone 8 has the coldest – in the U.S., only some parts of Alaska belong to this climate zone. We present a map of the climate zones below; you can click to zoom in on a state of interest.

To find industries sensitive to climate we need detailed employment data. We used the County Business Patterns from the U.S. Census Bureau to get this data about 19 major industries according to the NAICS classification. Next we have to compare the different climate zones in terms of businesses present. We used a similar idea to the Location Quotient introduced by the U.S. Department of Labor for comparing states. In our case, all calculations are done by whole climate zone, hence “Climate Zone Quotient”. Here is an example for the Health Care industry in climate zone 1:

  • Zone 1 Concentration = (Health Care, Climate Zone 1 counties) / (All Industries Total, Climate zone 1 counties)
  • National Concentration = (Health care, all US) / (All Industries Total, all US)
  • Zone 1 Quotient = Zone 1 Concentration / National Concentration

Below we present a bar chart of the Climate Zone Quotients of major industries for each of the climate zones.

As you can see, industries like retail trade, mining and health care employ many more people in colder climates (zones 7 and 8). This can be partially explained by the fact that these areas are very sparsely populated, but at the same time have the usual number of shops or hospitals per geographic region. A higher value for agriculture in the 7th climate zone is rather unexpected, and may be due to the nature of crops or plants grown and the number of workers needed, since we look at employment-derived data.

Wholesale trade and administrative services clearly dominate in hot climates (zone 1) thanks to the major international ports located in the South. Mild climates represent finance, IT and professional services. Utilities fees in these areas must be compelling.

We can also see that the tourism and relocation industries experience high peaks on the extreme ends of the climate. The hottest and coldest places stand out in construction, real estate rental, transportation and accommodation and food services.

Discuss this article on our forum with over 1,900,000 registered members.

About Alexander Fishkov

Alexander Fishkov

Alexander Fishkov, Ph.D. student Computer Science

Alexander is a Ph.D. student in Computer Science. He currently holds B.S. and M.S. degrees in Applied Math. He has experience working for industry major companies performing research in the fields of machine learning, data mining and natural language processing. In his free time, Alexander enjoys hiking, Nordic skiing and traveling.

Other posts by Alexander Fishkov:

Leave a Reply

Your email address will not be published. Required fields are marked *