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Indicator Assessment

Economic losses from climate-related extremes in Europe

Indicator Assessment
Prod-ID: IND-182-en
  Also known as: CSI 042 , CLIM 039
Published 20 Dec 2020 Last modified 11 May 2021
9 min read

Between 1980 and 2019, climate-related extremes caused economic losses totalling an estimated EUR 446 billion in the EEA member countries. Although analysing trends in economic losses is difficult, partly as a result of high variability from year to year, climate-related extremes are becoming more common and, without mitigating action, could result in even greater losses in the coming years. The EU adaptation strategy aims to build resilience and ensure that Europe is well prepared to manage the risks and adapt to the impacts of climate change, thus minimising economic losses and other harms.

Economic damage caused by weather and climate-related extreme events in Europe (1980-2019)

EEA-32
Table

Climate-related hazards, such as temperature extremes, heavy precipitation and droughts, pose risks to human health and can lead to substantial economic losses. Monitoring the impact of such hazards is important for informing policy and ensuring that appropriate actions are taken to minimise damage.

The EU adaptation strategy aims to ‘climate proof’ the EU by supporting informed decision-making and climate change adaptation, particularly in key vulnerable sectors (EC, undated). The EU is party to the UN Sendai Framework for Disaster Risk Reduction (SFDRR) (UN, 2015), which requires the evaluation of disaster-related losses and economic impacts, and sets a target to reduce such losses by 2030. 

Between 1980 and 2019, weather and climate-related extremes accounted for around 81 % of total economic losses caused by natural hazards in the EEA member countries, amounting to EUR 446 billion. This is equivalent to EUR 11.1 billion per year and the cumulative deflated losses are equal to nearly 3 % of the GDP of the countries analysed.

However, because a relatively small number (3 %) of unique events was responsible for a large proportion (> 60 %) of the economic losses, resulting in high variability from year to year, it is difficult to identify trends: the average annual (inflation-corrected) losses were around EUR 6.6 billion in 1980-1989, 12.3 billion in 1990-1999, 13.2 billion in 2000-2009 and 12.5 billion in 2010-2019.

The Intergovernmental Panel on Climate Change predicts that climate-related extreme events will become even more frequent around the world (IPCC, 2013). This could affect multiple sectors and cause systemic failures across Europe, leading to greater economic losses (IPCC, 2014). However, the future cost of climate-related hazards depends not only on the frequency and severity of events but also on several other factors, such as the size of the populations and the value of the assets exposed (IPCC, 2014). Therefore, a comprehensive, integrated approach is required to adapt to and manage the risks. Enhancing society’s resilience to climate change through a focus on prevention, preparedness, response and recovery will be key to the EU’s revised adaptation strategy, currently under development (EC, 2018b, 2020).

 

Impacts of extreme weather and climate related events in the EEA member countries and the UK (1980-2019)

Table

The economic impact of climate-related extremes varies considerably across countries. In absolute terms, the highest economic losses in the period 1980-2019 were registered in Germany followed by Italy then France. The highest losses per capita were recorded in Switzerland, Luxemburg and Denmark, and the highest losses per area were in Malta, Switzerland and Luxembourg. Around 27 % of total losses were insured, although this also varied considerably among countries, from 1 % in Romania and Lithuania to 60 % in Belgium and Liechtenstein.

The EU adaptation strategy aims to promote action at national level, and all countries have already adopted a national adaptation policy. The Climate-ADAPT platform — developed by the European Commission and the EEA — supports action by sharing knowledge on climate change and its impacts, adaptation strategies and plans, and case studies (Climate-ADAPT, undated).

No coherent mechanism is currently in place for countries to report losses to the European Commission or the EEA. This will be a key element of the revised EU adaptation strategy, in line with the priorities for action and policy targets of the SFDRR (UN, 2015).

Supporting information

Indicator definition

This indicator considers the number of fatalities, and the overall and insured economic losses from weather and climate-related events in EEA member countries since 1980. Hazards considered are those classified as meteorological hazards, hydrological hazards and climatological hazards as used by Munich Re and based on the classification by the International Council for Science (ICSU).

Integrated Research on Disaster Risk. (2014). Peril Classification and Hazard Glossary (IRDR DATA Publication No. 1). Beijing: Integrated Research on Disaster Risk.

Units

The units used in this indicator are the number of events, and damages in euros (2019 euro value).


 

Policy context and targets

Context description

In April 2013, the European Commission presented the EU Strategy on adaptation to climate change (COM/2013/0216). One of the objectives is better informed decision-making, by further developing Climate-ADAPT as the 'first-stop shop' for adaptation information in Europe. In 2018, the European Commission published an evaluation of the EU Adaptation Strategy (COM(2018) 738) and a revised version is foreseen to be published in 2021.

Article 6 of Decision No. 1313/2013/EU of the European Parliament and the Council on a Union Civil Protection Mechanism obliges the EU Member States to develop risk assessments at national or appropriate sub-national levels and to make a summary of the relevant elements thereof. It is summarised in an Overview of natural and man-made disaster risks the European Union may face (SWD/2020/0330).

The Sendai Framework for Disaster Risk Reduction (UN, Sendai Framework for Disaster Risk Reduction 2015-2030), including ‘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 has been identified for this indicator

Related policy documents

  • Climate-ADAPT: Adaptation in EU policy sectors
    Overview of EU sector policies in which mainstreaming of adaptation to climate change is ongoing or explored
  • Climate-ADAPT: Country profiles
    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

This assessment is based on the Munich Re NatCatSERVICE dataset and the Eurostat collection of economic indicators, whereas data from earlier years not covered by Eurostat have been completed using data 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 database.

Data are received from the Munich Re NatCatSERVICE under institutional agreement and have been adjusted to account for inflation. They are presented in 2019 euro values.

Definition of a loss event: the event can occur in several countries; events are counted by country and by year and type of natural hazard.

The European Commission is working with Member States, the ISDR and other international organisations to improve data on disaster losses. The 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 disaster losses. Once comparable national databases on disaster losses are available for all EU Member States and EEA member countries and these data are reported, this EEA indicator can possibly be based on such data. 

The analysis reported here includes all EEA member countries and the United Kingdom and Turkey, including that 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 to data reported by Munich Re itself.

Methodology for gap filling

Data gap filling is not necessary

Methodology references

No methodology references available.

 

Uncertainties

Methodology uncertainty

Not applicable

Data sets uncertainty

Information for Europe can in theory be extracted from different global disaster databases, including the EMDAT database maintained by CRED 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:

  • EMDAT: 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.

Over recent years, these global databases have been harmonised, although some differences remain. During recent decades, these 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.

Further information on uncertainties is provided in the EEA report on Climate change, impacts and vulnerability in Europe 2016 (http://www.eea.europa.eu/publications/climate-impacts-and-vulnerability-2016/).

Rationale uncertainty

Not applicable.

Data sources

Other info

DPSIR: Impact
Typology: Descriptive indicator (Type A - What is happening to the environment and to humans?)
Indicator codes
  • CSI 042
  • CLIM 039
Frequency of updates
Updates are scheduled once per year
EEA Contact Info info@eea.europa.eu

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Geographic coverage

Temporal coverage

Dates