Economic losses from climate-related extremes

Indicator Assessment
Prod-ID: IND-182-en
Also known as: CSI 042 , CLIM 039
Created 09 Jan 2017 Published 17 Jan 2017 Last modified 19 Jan 2017
The total reported economic losses caused by weather and climate-related extremes in the EEA member countries over the period 1980-2015 amount to around EUR 433 billion (in 2015 Euro values). The average annual economic losses have varied between EUR 7.5 billion in the period 1980-1989, EUR 13.5 billion in the period 1990-1999, and EUR 14.3 billion in the period 2000-2009. In the period from 2010 to 2015 the average annual loss accounted to around EUR 13.3 billion.   The observed variations in reported economic loss 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 % of the economic losses was caused by only 3 % of all registered events.

Key messages

  • The total reported economic losses caused by weather and climate-related extremes in the EEA member countries over the period 1980-2015 amount to around EUR 433 billion (in 2015 Euro values). The average annual economic losses have varied between EUR 7.5 billion in the period 1980-1989, EUR 13.5 billion in the period 1990-1999, and EUR 14.3 billion in the period 2000-2009. In the period from 2010 to 2015 the average annual loss accounted to around EUR 13.3 billion.  
  • The observed variations in reported economic loss 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 % of the economic losses was caused by only 3 % of all registered events.

What is the trend in economic losses from climate-related extremes?

Economic losses due to extreme weather and climate events (in 2015 Euro values)

Total (million 2015 EUR value)
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Natural hazards in EEA member countries

Dashboard
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Economic losses caused by natural hazards by year and by hazard category

Chart
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Table
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Past trends

According to data from NatCatService of Munich Re [4] on natural disasters between 1980 and 2015 in the member countries of European Environment Agency (EEA), weather and climate-related extremes [1] accounted for 92% of total reported disaster events and around 83% of the total losses. Specifically, weather and climate related losses amounted to EUR 433 billion (at 2015 Euro values[2]), on average EUR 12 billion per year, EUR 75 800 per square kilometre, or EUR 780 per capita[3]. Losses are equal to 0.1% of the cumulative deflated GDP over the analysed period, or nearly 3% of the GDP in 2015. Around 35% of the total losses were insured (Figure/Table 1). There were 89 873 casualties registered over the period. The assessment is based on the Munich Re dataset[4], and the Eurostat collection of economic indicators [5], 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 related losses among the thirty three EEA member countries is uneven. The highest overall economic losses in absolute terms were registered in Germany, Italy and United Kingdom (see Figure/Table 1). The highest losses per capita were recorded in Switzerland, Denmark, and Austria. The greatest shares of total losses in terms of cumulative GDP were registered in Croatia, Czech Republic, 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, Estonia and Latvia. In terms of loss as a share of cumulative GDP, the least affected countries include Liechtenstein, Iceland and Estonia. 

The largest 34 events caused about half of the recorded losses. The costliest climate extremes were the 2002 flood in Central Europe (almost EUR 20 billion), followed by the 2003 drought and heatwave (EUR 15 billion) and 1999 winter storm, Lothar (EUR 15 billion).

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  [i], 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.

Available studies for economic losses from river floods and storms in Europe suggest that the observed increases in losses are primarily due to increases in populations, economic wealth and developments in hazard-prone areas, but the observed increase in heavy precipitation in parts of Europe may have also played a role [ii]. There is evidence that improved flood protection and prevention contributed to reducing losses over time in some cases [iii].

For the period between 1980 and 2015, the economic losses of all natural disasters in the EEA member countries amounted to EUR 520 billion and the insured losses were around EUR 154 billion (in 2015 values) (Figure 2). Around 64 % of all economic losses were due to meteorological and hydrological events, while most of fatalities were caused by heat waves. This large portion of fatalities is highly influenced by the heatwave of 2003, where around 70 000 fatalities were reported as excess mortality (Figure 2). 

Recorded economic losses from weather and climate related extremes in Europe have varied substantially over time. The average annual economic loss (inflation-corrected) was around EUR 7.5 billion per year in the 1980s (1980-1989), EUR 13.4 billion in the 1990s (1990-1999), EUR 14.3 billion per year in the 2000s (2000-2009). In the period 2010 to 2015 , the average annual economic loss accounted to around EUR 13.3 billion (Figure 3). 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 loss. 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.

Currently there is no mechanism in place for reporting the economical losses from weather and weather and climate-related events by the 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[6]. 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, 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 [iv]. There is medium confidence in the fact that climate change will increase the likelihood of systemic failures across European countries as a result of extreme climate events affecting multiple sectors [v]. Increasing extremes will presumably lead to greater 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.



[1] 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.

[2] 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.

[3] Based on average population over the entire period 1980-2015.

[4] 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, 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.

[5] The Eurostat indicators used for the analysis include mainly nama_10_gdp, nama_gdp and ert_bil_eur_m


[i] IPCC,Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (Cambridge; New York: Cambridge University Press, 2013), http://www.climatechange2013.org/.

[ii] e.g. J.I. Barredo, “Normalised Flood Losses in Europe: 1970–2006,”Natural Hazards and Earth System Sciences 9 (February 9, 2009): 97–104, doi:10.5194/nhess-9-97-2009;

J. I. Barredo, “No Upward Trend in Normalised Windstorm Losses in Europe: 1970–2008,”Natural Hazards and Earth System Science 10, no. 1 (January 15, 2010): 97–104, doi:10.5194/nhess-10-97-2010;

Bob Maaskant, Sebastiaan N. Jonkman, and Laurens M. Bouwer, “Future Risk of Flooding: An Analysis of Changes in Potential Loss of Life in South Holland (The Netherlands),”Environmental Science & Policy 12, no. 2 (April 2009): 157–69, doi:10.1016/j.envsci.2008.11.004;

Laurens M. Bouwer, Philip Bubeck, and Jeroen C.J.H. Aerts, “Changes in Future Flood Risk due to Climate and Development in a Dutch Polder Area,”Global Environmental Change 20, no. 3 (August 2010): 463–71, doi:10.1016/j.gloenvcha.2010.04.002;

A. H. te Linde et al., “Future Flood Risk Estimates along the River Rhine,”Natural Hazards and Earth System Science 11, no. 2 (February 15, 2011): 459–73, doi:10.5194/nhess-11-459-2011;

Luc Feyen et al., “Fluvial Flood Risk in Europe in Present and Future Climates,”Climatic Change 112, no. 1 (2012): 47–62, doi:10.1007/s10584-011-0339-7;

Hans Visser et al., “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; Rodrigo Rojas, Luc Feyen, and Paul Watkiss, “Climate Change and River Floods in the European Union: Socio-Economic Consequences and the Costs and Benefits of Adaptation,”Global Environmental Change 23, no. 6 (December 2013): 1737–51, doi:10.1016/j.gloenvcha.2013.08.006.

[iii] e.g. Annegret H. Thieken et al., “Review of the Flood Risk Management System in Germany after the Major Flood in 2013,”Ecology and Society 21, no. 2 (2016): 51, doi:10.5751/ES-08547-210251.

[iv] IPCC,Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.

[v] IPCC,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, ed. Vicente R. Barros et al. (Cambridge; New York: Cambridge University Press, 2014), https://ipcc-wg2.gov/AR5/report/; R. S. Kovats et al., “Europe,” inClimate 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, ed. V. R. Barros et al. (Cambridge; New York: Cambridge University Press, 2014), 1267–1326, http://www.ipcc.ch/pdf/assessment-report/ar5/wg2/WGIIAR5-Chap23_FINAL.pdf.

Indicator specification and metadata

Indicator definition

This indicator considers the number of fatalities, overall and insured economic losses from climate-related disaster.

Units

  • Number of events
  • Euro (2015 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.

In September 2016, the EC presented an indicative road map for the evaluation of the EU Adaptation Strategy by 2018.

In November 2013, the European Parliament and the European Council adopted the 7th EU Environment Action Programme (7th EAP) to 2020, ‘Living well, within the limits of our planet’. The 7th EAP is intended to help guide EU action on environment and climate change up to and beyond 2020. It highlights that ‘Action to mitigate and adapt to climate change will increase the resilience of the Union’s economy and society, while stimulating innovation and protecting the Union’s natural resources.’ Consequently, several priority objectives of the 7th EAP refer to climate change adaptation.

Targets

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 received from the Munich Re (MR) NatCatSERVICE under institutional agreement and have been adjusted for accounting for inflation and are presented in 2015 EUR value.

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. 

 The analysis reported here includes all EEA member states and for Turkey, also the part of the country that is classified by NatCatService as not belonging to Europe. This is why the results reported here may be slightly different than data reported by MunichRe itself.

 

Methodology for gap filling

The value of economic loss 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 (used in this indicator). 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 EEA report on Climate change, impacts, and vulnerability in Europe 2016 (http://www.eea.europa.eu/publications/climate-impacts-and-vulnerability-2016/)

 


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

Rationale uncertainty

not applicable

Data sources

Generic metadata

Topics:

DPSIR: Impact
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
Indicator codes
  • CSI 042
  • CLIM 039
Temporal coverage:

Contacts and ownership

EEA Contact Info

Blaz Kurnik

EEA Management Plan

2016 1.4.2 (note: EEA internal system)

Dates

Frequency of updates

Updates are scheduled once per year
European Environment Agency (EEA)
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Phone: +45 3336 7100