Economic losses from climate-related extremes

Indicator Assessment
Prod-ID: IND-182-en
Also known as: CSI 042 , CLIM 039
Created 01 Jul 2015 Published 01 Jun 2016 Last modified 17 Jun 2016, 02:49 PM
Topics: ,
The total reported economic damage caused by weather and climate-related extremes in the EEA member countries over the period 1980-2013 is almost 400 billion Euro (in 2013 Euro values). The average damage has varied between 7.6 billion Euro per year in the 1980s and 13.7 billion Euro in the 2000s. The observed differences in reported damage over time are difficult to interpret since a large share of the total deflated losses has been caused by a small number of events. Specifically, more than 70 percent of the damage was caused by only 3 percent of all registered events.

Next update is foreseen in 2017 with the data until 2015.

Key messages

  • The total reported economic damage caused by weather and climate-related extremes in the EEA member countries over the period 1980-2013 is almost 400 billion Euro (in 2013 Euro values). The average damage has varied between 7.6 billion Euro per year in the 1980s and 13.7 billion Euro in the 2000s.
  • The observed differences in reported damage over time are difficult to interpret since a large share of the total deflated losses has been caused by a small number of events. Specifically, more than 70 percent of the damage was caused by only 3 percent of all registered events.

What is the trend in the damages cost of disasters?

Economic damage caused by natural hazards by year and by hazard category

Chart
Data sources: Explore chart interactively

Natural hazards in EEA member countries

Dashboard
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Total Loss extreme weather and climate extremes damage (in 2013 Euro value)

Table
Data sources: Explore chart interactively

Relevance

Economic losses from extreme climate events have increased, but with large spatial and inter-annual variability. Reported disaster losses often reflect only structural damages to tangible physical assets, neglecting the impacts on health, integrity of ecosystems, and intangible cultural heritage. Hence the reported economic losses focus on direct losses and should therefore be understood as lower-bound estimates. The changes in recorded losses are to a large extent influenced by increased economic wealth. Determining the effect of ongoing climate change in the pattern of loss data remains elusive.

Past trends

According to data from Munich Re on natural disasters in the European Environment Agency (EEA) member countries, weather and climate-related extremes (also termed climate-related extremes) [i] accounted for 90% of total reported disaster events and around 82% of the total damages. Specifically, weather and climate related damages amounted to EUR 393 billion (at 2013 Euro values [ii]), on average EUR 11.6 billion per year, EUR 69 000 per square kilometre, or EUR 710 per capita [iii]. The damages are equal to 0.1% of the cumulative deflated GDP over the analysed period, or nearly 3% of the GDP in 2013. Around 33% of the total losses were insured. The same (MR) dataset also reports 86 281 casualties for the same countries and period. The assessment is based on the Munich Re (MR) dataset [iv], and the Eurostat collection of economic indicators [v], whereas data from earlier years not covered by Eurostat have been completed from the Annual Macro-Economic Database of the European Commission (AMECO), the International Monetary Fund’s (IMF) World Economic Outlook (WEO), the Total Economy Database (TED) and the World Bank’s database.

The distribution of weather and climate (excluding geophysical events) related damages among the thirty three EEA member countries is uneven. The highest overall losses in absolute terms were registered in Germany, Italy, and France (see Table 1). The highest losses per capita were recorded in Switzerland, Denmark, and Luxemburg. The greatest shares of total losses in terms of cumulative GDP were registered in the Czech Republic, Croatia, and Hungary. The three least affected countries in absolute terms were Liechtenstein, Iceland and Malta. In relative terms (per capita) the least affected countries include Turkey, Bulgaria and Estonia. In terms of loss as a share of cumulative GDP, the least affected countries include Liechtenstein, Iceland and Turkey. The large portion of fatalities due to climatological events is highly influenced by the heatwave of 2003, where 70 000 fatalities were reported as excess mortality (Figure 2).

The largest 26 events caused about half of the recorded losses. The costliest climate extremes were the 2002 flood in Central Europe (20 billion Euro), followed by the 2003 drought and heatwave (16 billion Euro) and 1999 winter storm Lothar (14 billion Euro).

One important question is to what extent the observed increase in overall losses during recent decades is attributable to changing climatic conditions rather than other factors. According to AR5 of the IPCC [vi], increasing exposure of people and economic assets has been the major cause of long-term increases in economic losses from weather and climate-related disasters. Long-term trends in economic disaster losses, adjusted for wealth and population increases, have not been attributed to climate change, but a role for climate change has not been excluded.

Recorded losses from climate-related extremes in Europe have varied substantially over time. The average annual damage (inflation-corrected) from climate extremes was around EUR 7.5 billion per year in the 1980s (1980-1989), EUR 13 billion in the 1990s (1990-1999), EUR 13.7 billion per year in the early 2000s (2000-2009). In the most recent decade (2004-2013), the average annual loss accounted to around EUR 11 billion (Figure 1). However, the pattern that can be found in the recorded loss is obfuscated by high variability: around 3% of events, some of which affected more than one country, account for around 70% of total deflated damage. Conversely, some three quarters of the registered events were responsible for only half a percentage point of the total losses. The increased economic wealth has a major effect on the annual losses, where the reporting bias strongly affects the number of events but not on the losses.

Between 1980 and 2013, the economic losses of all natural disasters in the EEA member countries approached EUR 480 billion in 2013 values. The largest 26 events caused about half of the recorded damage. The costliest disaster event was the earthquake in Southern Italy in 1980 (EUR 28 billion) followed by the 2002 flood in Central Europe (EUR 20 billion) and the 1999 earthquake in Turkey (EUR 17 billion). The fourth and fifth costliest disasters are the 2003 drought and heatwave (EUR 16 billion) and the 1999 winter storm, Lothar (EUR 14 billion).

Available studies for damages from river floods and storms in Europe suggest that the observed increases in losses are primarily due to increased population, economic wealth, and development in hazard-prone areas (e.g. Barredo, 2009, 2010; Maaskant et al., 2009; Bouwer et al., 2010; te Linde et al., 2011; Feyen et al., 2012; Visser et al., 2012; Rojas et al., 2013). There is evidence that improved flood protection and prevention contributed to reducing losses over time in some cases.

Currently there is no mechanism in place for reporting of damages from weather and weather and climate-related events by EU member states to the European Commission or the EEA. However activities are underway to improve national databases on disaster losses, coordinated by JRC IPSC [viii]. Once comparable national databases are available for all EU member states and EEA member countries and these data would be reported in future, this EEA indicator can be based on such data instead of data from Munich Re.  

Projections

The IPCC AR5 concludes that high temperature extremes and heavy precipitation events, and droughts will markedly increase in all or most world regions, including in Europe. Furthermore, large parts of Europe will face an increasing drought risk (IPCC, 2013).

There is medium confidence that climate change will increase the likelihood of systemic failures across European countries caused by extreme climate events affecting multiple sectors (IPCC, 2014). Increasing extremes will presumably lead to larger losses. However, the future cost of climate-related hazards in Europe will depend on several factors, including the resilience and vulnerability of society, which are variable across hazards and regions

 

 

Scientific literature

Barredo, J.I. (2009) Normalised flood losses in Europe : 1970 – 2006. Nat Hazards Earth Syst Sci 9:97–104.

Barredo, J.I. (2010) No upward trend in normalised windstorm losses in Europe: 1970-2008. Natural Hazards and Earth System Sciences, 10(1), 97-104.

Bouwer, L.M., P. Bubeck, and J.C.J.H. Aerts (2010) Changes in future flood risk due to climate and development in a Dutch polder area. Global Environmental Change, 20(3), 463-471.

Feyen, L., R. Dankers, K. Bódis et al (2012) Fluvial flood risk in Europe in present and future climates. Clim Change 112:47–62. doi: 10.1007/s10584-011-0339-7.

IPCC, 2013,Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

IPCC, 2014 ,Climate Change 2014: Impacts, Adaptation and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

Maaskant, B., S.N. Jonkman, and L.M. Bouwer (2009) Future risk of flooding: an analysis of changes in potential loss of life in South Holland (the Netherlands). Environmental Science & Policy, 12(2), 157-169.

Rojas, R., L. Feyen, and P.Watkiss (2013) Climate change and river floods in the European Union : Socio-economic consequences and the costs and benefits of adaptation. Glob Environ Chang - Press. doi: 10.1016/j.gloenvcha.2013.08.006.

te Linde,A.H., P. Bubeck, J.E.C. Dekkers, H. De Moel, and J.C.J.H.Aerts (2011) Future flood risk estimates along the river Rhine. Natural Hazards and Earth System Sciences, 11(2), 459-473.

Visser, H., A. Bouwman, A. Petersen, and W. Ligtvoet (2012) Weather-related disasters: past, present and future PBL publication (Netherlands Environmental Assessment Agency, 2012), http://www.pbl.nl/sites/default/files/cms/publicaties/PBL_2012_Weather%20Disasters_555076001.pdf

 

[i] The analysed hazards are classified by Munich Re in four categories: geophysical, meteorological, hydrological and climatological. For the purpose of this indicator ‘weather and climate-related events’ are defined as the combination of ‘meteorological, hydrological and climatological’ events in the Munich Re database.

[ii] The exact estimate differ by several percentage points depending on choices made, including the price indices chosen for accounting for inflation, reference base (annual, monthly) for the conversion between losses expressed in USD and EUR, etc.

[iii] Based on average population over the entire period 1980-2013.

[iv] NatCatSERVICE [www.munichre.com/natcatservice] is one of the most comprehensive natural catastrophe loss database, managed by Munich Reinsurance Company (German: Münchener Rück; Münchener Rückversicherungs-Gesellschaft), based in Munich, Germany. As a proprietary database, it is not publicly accessible. The Munich Re dataset was provided to the EEA under institutional agreement (June 2014), including that the data may only be analysed and used for evaluations in connection with the project, and that the dataset may not be forwarded to third parties.

[v] The Eurostat indicators used for the analysis include mainly nama_gdp_c, nama_gdp_p, ert_bil_eur.

[vi] IPCC, 2014: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Barros, V.R., C.B. Field, D.J. Dokken, M.D. Mastrandrea, K.J. Mach, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 688.

[viii] see See: http://drr.jrc.ec.europa.eu/Loss-Data online

Indicator specification and metadata

Indicator definition

This indicator considers the number of natural disasters and the overall and insured losses from natural disasters.

Units

  • Number of events
  • Euro (2013 Euro value)

Policy context and targets

Context description

In April 2013, the European Commission presented the EU Adaptation Strategy Package (http://ec.europa.eu/clima/policies/adaptation/what/documentation_en.htm). This package consists of the EU Strategy on adaptation to climate change (COM/2013/0216 final) and a number of supporting documents. One of the objectives of the EU Adaptation Strategy is better informed decision-making, which should occur through bridging the knowledge gap and further developing Climate-ADAPT as the ‘one-stop shop’ for adaptation information in Europe. Further objectives include promoting action by Member States and climate-proofing EU action, i.e. promoting adaptation in key vulnerable sectors. Many EU Member States have already taken action, such as by adopting national adaptation strategies, and several have also prepared action plans on climate change adaptation.

The European Commission and the European Environment Agency have developed the European Climate Adaptation Platform (Climate-ADAPT, http://climate-adapt.eea.europa.eu/) to share knowledge on observed and projected climate change and its impacts on environmental and social systems and human health; on relevant research; on EU, national and sub-national adaptation strategies and plans; and on adaptation case studies.

Article 6 of Decision No. 1313/2013/EU of the European Parliament and the Council of 17 December 2013 on a Union Civil Protection Mechanism obliges the EU Member States to develop risk assessments at national or appropriate sub-national level and make  a summary of the relevant elements thereof available to the Commission by 22 December 2015 and every three years thereafter.

The Sendai Framework for Disaster Risk Reduction (UN, Sendai Framework for Disaster Risk Reduction 2015-2030 A/CONF.224/CRP.1. 18 March 2015, 2015) under Priority 1 (Understanding disaster risk) requires that the signatory countries systematically evaluate, record, share and publicly account for disaster losses and understand the economic impacts at national and sub-national levels.

Targets

No targets have been specified.

However, the Sendai Framework for Disaster Risk Reduction (SFDRR) entails a target of reducing direct disaster economic loss in relation to global gross domestic product (GDP) by 2030, compared to 2005-2015 baselines. The European Union and all member countries of the EEA have endorsed the SFDRR.

Related policy documents

  • Climate-ADAPT: Mainstreaming adaptation in EU sector policies
    Overview of EU sector policies in which mainstreaming of adaptation to climate change is ongoing or explored
  • Climate-ADAPT: National adaptation strategies
    Overview of activities of EEA member countries in preparing, developing and implementing adaptation strategies
  • Decision No 1313/2013/EU of the European Parliament and of the Council on a Union Civil Protection Mechanism
    The EU Civil Protection Mechanism was set up to enable coordinated assistance from the participating states to victims of natural and man-made disasters in Europe and elsewhere. The European Commission supports and complements the prevention and preparedness efforts of participating states, focusing on areas where a joint European approach is more effective than separate national actions. These include improving the quality of and accessibility to disaster information, encouraging research to promote disaster resilience, and reinforcing early warning tools.
  • DG CLIMA: Adaptation to climate change
    Adaptation means anticipating the adverse effects of climate change and taking appropriate action to prevent or minimise the damage they can cause, or taking advantage of opportunities that may arise. It has been shown that well planned, early adaptation action saves money and lives in the future. This web portal provides information on all adaptation activities of the European Commission.
  • EU Adaptation Strategy Package
    In April 2013, the European Commission adopted an EU strategy on adaptation to climate change, which has been welcomed by the EU Member States. The strategy aims to make Europe more climate-resilient. By taking a coherent approach and providing for improved coordination, it enhances the preparedness and capacity of all governance levels to respond to the impacts of climate change.

Methodology

Methodology for indicator calculation

Data is taken from the Munich Re (MR) NatCatSERVICE.

Definition of loss events: Events can occur in several countries; events are counted by country and by category of natural hazard.

The European Commission is working with Member States, ISDR and other international organisations to improve data on disaster losses. JRC has prepared guidance for recording and sharing disaster damage and loss data; status and best practices for disaster loss data recording in EU Member States and recommendations for a European approach for recording of disaster losses. Once comparable national databases on disaster losses are available for all EU member states and EEA member countries and these data would be reported in future, this EEA indicator can possibly be based on such data. 

 

Methodology for gap filling

The damage data has not been corrected, if not for the relatively small inconsistencies that have been removed in concord with Munich Re. The economic data for damage normalisation was taken from Eurostat, and where the Eurostat data series did not cover the entire period, the gaps were filled with the data from AMECO (Annual macro-economic database of the European Commission), the International Monetary Fund, the World Bank or by reasoned expert opinion. 

Methodology references

Uncertainties

Methodology uncertainty

Not applicable

Data sets uncertainty

Information for Europe can be extracted from two global disaster databases, namely the EM-DAT database maintained by CRED ([1]) that places a particular focus on human fatalities and displaced and affected people, and the NatCatSERVICE database maintained by Munich Re that provides data on insured and overall losses. The ‘disaster thresholds’ for an event to be included in these global databases are as follows:

  • EM-DAT: 10 or more people killed and/or 100 or more people affected and/or declaration of a state of emergency and/or call for international assistance;
  • NatCatSERVICE: Small-scale property damage and/or one fatality. Additionally, Munich Re uses different classes to classify the events.

Over recent years these global databases have been harmonised, although some differences remain. During recent decades both databases have improved their reporting, which means that caution is needed in formulating conclusions about trends. In addition, both databases are less suitable for analysing the impacts of smaller events or for analysis at the sub-national level. However, despite these considerations, both databases serve as a good starting point for getting an overview of the impact and damage costs of disasters in Europe.

Further information on uncertainties is provided in Section 1.7 of the EEA report on Climate change, impacts, and vulnerability in Europe 2012(http://www.eea.europa.eu/publications/climate-impacts-and-vulnerability-2012/)

 


[1] See http://www.emdat.be/ online.

Rationale uncertainty

not applicable

Data sources

Generic metadata

Topics:

Climate change Climate change (Primary topic)

Tags:
natural hazards in eea | weather and climate extremes damage | climate change | natural catastrophes statistics | natural disasters | climate damage | weather damage
DPSIR: Impact
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
Indicator codes
  • CSI 042
  • CLIM 039
Dynamic
Temporal coverage:
1980-2013
Geographic coverage:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom

Contacts and ownership

EEA Contact Info

Blaz Kurnik

EEA Management Plan

2015 1.4.2 (note: EEA internal system)

Dates

Frequency of updates

Updates are scheduled once per year
European Environment Agency (EEA)
Kongens Nytorv 6
1050 Copenhagen K
Denmark
Phone: +45 3336 7100