When a Day’s Heat Steals a Day’s Wage
Making climate-linked income loss visible, insurable, and solvable
Across India, climate volatility is no longer a distant risk - it is a daily operational reality for millions of people, especially informal workers. Street vendors, construction labourers, sanitation workers, delivery riders, agricultural labourers, and fishers depend on daily earnings with no paid leave or savings buffer. When extreme heat, heavy rainfall, or cyclones halt work, income stops immediately.
A 42-year-old street vendor in Ahmedabad, a city in Western India, was unable to work during a severe June heatwave in 2024. For six consecutive days, temperatures exceeded 45°C - conditions classified as an extreme heatwave. With no earnings and a sick child at home, financial stress escalated quickly. Fortunately, she was enrolled in a parametric insurance scheme designed to cover income loss during high-temperature events. A ₹600 payout was triggered based on official weather data and credited directly to her phone wallet. The result – she could provide timely medical care for her son without drowning in an infinite debt trap. This is just one of many stories which illustrate that fast, objective financial relief can prevent climate shocks from cascading into poverty.
“In 2022, India lost an estimated 191 billion labour hours due to heat exposure. This translated to a $219 billion potential associated income loss, equivalent to 6.3 per cent of the country’s GDP”
~ Lancet Countdown on Health and Climate Change, 2023
For households earning ₹400–₹700 per day, missing even one workday can mean skipped meals, delayed treatment, or debt. Climate risk is now an income risk, and traditional social protection mechanisms do not address its immediacy.
When the Heat Hits Without Warning: A New Climate Reality
Across India, rising temperatures are no longer following a steady, predictable pattern. Instead, extreme heat now arrives in erratic bursts, wreaking havoc lives and livelihoods.
Average number of hot days per year in India (2000–2025)
(Source: IMD)
National data shows a jagged trend: some years bring record-breaking heat days, while others dip unexpectedly. This volatility means workers, planners, and even public health systems are consistently caught off-guard. The challenge is no longer just rising temperatures-it’s the unpredictability of when and how the heat will strike.
This pattern plays out even more sharply in local contexts. For example, in 2024, the eastern State of West Bengal announced early school closures as heatwaves intensified. Capital city Kolkata and neighbouring districts have since been classified as high-risk zones.
Number of extremely hot days in Kolkata, West Bengal (2000–2025)
(Source: IMD)
Kolkata’s heat data echoes the national story-with an added edge of instability. Some years record no dangerous days; others spike sharply, with 10 to 17 days of temperatures breaching 39°C. There is no rhythm, no reliable “seasonality.” For those on the margins of the workforce, this randomness is what makes climate risk so devastating-there’s no time to adapt, no way to plan ahead.
This is precisely where climate-linked income protection programs fit in - not as a silver bullet, but as a tool built for this new climate reality.
Quantifying the Crisis: Data Reveals the Scale and Urgency
The magnitude of vulnerability becomes clearer when we consider India’s informal workforce. Figure 2 (informal employment trends, 2018-2024) shows that majority of India’s workforce remains informal, with women forming a rapidly growing share of this climate-exposed segment. These workers have little to no savings, social protection, or employer-backed benefits. For them, even a single climate shock can wipe out a week’s income – potentially spiralling them into a long and weary debt cycle.
(Source: ILO)
But this is only the visible part of the story. These numbers reflect those who are counted - those captured by labour records or population surveys. Still missing from the data are India’s unregistered and undocumented workers: rag pickers, bidi rollers, seasonal migrants, nomadic workers – to name a few. These people are invisible; and so are their losses.
To protect these groups and improve their resilience to climate shocks, we need a toolbox of adaptable solutions - not a single answer. Here are some of the possible interventions:
A Broader Toolkit for Climate Resilience
Workplace adaptation infrastructure
Simple but effective physical measures-such as elevated vending platforms in flood – prone areas, umbrella shades for street vendors, and easy access to clean drinking water – can help workers safely continue their work during extreme heat or wet spells.
Climate-linked loans
These are specially designed loan products that offer more favourable terms – like lower interest rates or flexible repayment schedules – when a borrower’s area experiences a climate shock, providing easier access to funds when they are needed the most.
Contingent credit lines
This model offers organisational lines of credit to self-help groups, unions, or informal worker collectives, which activate automatically based on weather alerts or disaster declarations – ensuring that localised meso-level interventions can be made without excessive bureaucratic red tape.
Climate-linked savings or CAT bonds
Individuals or communities invest in savings-linked instruments that offer high returns under stable conditions, but in case of a major disaster (like a cyclone or regional flood), a portion of the principal may be redirected towards relief. At regional levels, these instruments function on a high-risk, high-return model, but when diversified nationally, the returns far outshine the risks.
Parametric insurance
This is a fast and transparent insurance model that pays automatically when predefined weather thresholds are met-like temperature exceeding 39°C for three days-removing the need for paperwork, inspections, or proof of loss, and providing quick financial relief to affected workers.
A Detailed Look into Parametric Insurance: A Fast, Transparent Safety Net
Parametric insurance provides rapid, rule-based payouts without the need to prove individual losses. Instead of filing claims, beneficiaries receive support as soon as a trusted weather threshold is crossed.
Because it’s based on trusted public data sources, like Indian Meteorological Department (IMD) or European Centre for Medium-Range Weather Forecast (ECMWF) and likes, the process is:
- Fast: No paperwork or inspection – not even during a claim event
- Transparent: Thresholds are known upfront and can be monitored independently
- Scalable: One trigger can serve thousands
- Customisable: Tailored to local risks and occupational realities
This model is especially relevant for climate-exposed workers – construction labourers, delivery workers, farmers, vendors, sanitation staff, and many others – who lose income when climate strikes.
Sample Product Structure: Heatwave Income Protection
| Parameter | Details |
|---|---|
| Peril Covered | Heatwave |
| Trigger | Max Temperature ≥ 39°C (IMD data) |
| Payout | ₹500 per day (for each trigger day) |
| Max Days Covered | 20 days per year |
| Annual Sum Insured | ₹10,000 (₹500 x 20 days) |
| Location (Example) | Kolkata, Kolkata District, West Bengal |
Case Study: India’s First Large-Scale Heatwave Insurance for Women Workers
One of India’s largest trade unions representing informal women workers, spanning over 3 million members across the country – launched a pioneering heatwave parametric insurance pilot to safeguard daily wages during extreme summer conditions. The initiative focused on highly climate-vulnerable sectors including agriculture, construction, domestic work, waste recycling, and street vending.
Starting in 2023, the pilot program enrolled over 20,000 members. Gradually scaling up, in its third year of implementation, the program insured over 200,000 women across seven States, making it one of India’s largest gender-focused parametric insurance rollouts. The product was intentionally simple: modest payouts triggered by high temperatures, with no paperwork, no inspections, and full reliance on official IMD data. Triggers were calibrated to local heat trends, ensuring fair protection tailored to each district’s climate profile.
The policy offered fast, paperless relief for wage losses on extreme heat days-an especially critical gap for workers with no paid leave or social security. Beyond financial coverage, the programme prioritised accessibility: awareness was driven through SHGs, Anganwadi networks, and local committees using multilingual explainers, voice notes, and WhatsApp updates.
To build trust and transparency, the rollout included real-time payout dashboards, grievance redressal channels through local networks, and community-approved trigger designs.
The success of this pilot offers a blueprint for scaling climate-linked safety nets: start small, co-design with communities, pay quickly, and communicate clearly. In doing so, even a modest cover can bring meaningful resilience to the workers most exposed to climate volatility.
Conclusion: Turning Climate Risk into Financial Resilience
Climate change is already reshaping labour markets in India. When heat rises, incomes fall-especially for informal workers. Businesses face reduced productivity, operational delays, and rising costs. The economic consequences are immediate, widespread, and accelerating.
Parametric insurance offers a new kind of social protection-fast, objective, and scalable. It enables India’s workers and businesses to convert climate unpredictability into financial resilience. As extreme weather intensifies, solutions like these will be essential in protecting livelihoods, stabilising productivity, and building a more climate-resilient economy.
