Economic losses from climate-related extremes

Assessment versions

Published (reviewed and quality assured)

• No published assessments

Rationale

Justification for indicator selection

Economic losses from weather and climate- related disasters have increased, but with large spatial and inter-annual variability. Global weather and climate-related disaster losses reported over the last few decades mainly reflect monetised direct damages to assets, and are unequally distributed. Damages estimates are lower-bound because many impacts, such as loss of human lives, cultural heritage and ecosystems services, are difficult to value and monetise, and are therefore poorly reflected in estimates of damages. Economic disaster damage associated with weather, climate and geophysical events, including insured damages, are higher in developed countries. Fatality rates and economic losses expressed as a proportion of GDP are higher in developing countries.

Europe is experiencing an increasing number of hydro-meteorological, geophysical and technological disasters that are caused by a combination of changes in its physical, technological and human/social systems. The potential for a hazard to cause a disaster mainly depends on how vulnerable an exposed community is to such hazards. Actions and measures, if well implemented, can reduce the human health and economic impact of a hazardous event. In recent years, policies for disaster risk reduction and management have shifted to a comprehensive, integrated risk approach. The full disaster cycle - prevention, preparedness, response and recovery - should be taken into consideration. Adaptation to climate change and disaster risk management provide a range of complementary approaches for managing the risks of climate extremes and disasters.

The terms “disaster damages”, “disaster losses” and “costs of disasters” are not always clearly distinguished. In this report, the term “damage” is used to refer to physical damage (e.g. destroyed infrastructure) whereas the term loss is used to refer to economic losses. Economic losses can be further distinguished into directlosses (which largely correspond with the costs of physical damage) and indirect losses (such as the economic impacts of business interruption) (OECD, 2014; JRC, 2015; IRDR, 2015). The disaster loss data included in the global databases underlying this section focus on direct economic losses as well as on human impacts.

Scientific references

• EEA (2011): Mapping the impacts of natural hazards and technological accidents in Europe EEA Technical report No 13/2010. European Environment Agency, Copenhagen
• Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. 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.
• OECD, 2014 OECD, 2014,Improving the evidence base on the costs of disasters: Towards an OECD framework for accounting risk management expenditures and losses of disasters. 4th meeting of the OECD High Level Risk Forum, GOV/PGC/HLRF(2014)8, OECD.
• JRC, 2015 JRC, 2015,Guidance for Recording and Sharing Disaster Damage and Loss Data: Towards the development of operational indicators to translate the Sendai Framework into action, JRC Science and Policy Reports, Joint Research Centre, Institute for the Protection and Security of the Citizen and the EU expert working group on disaster damage and loss data, Ispra.
• IRDR, 2015 IRDR, 2015,Guidelines on Measuring Losses from Disasters: Human and Economic Impact Indicators, DATA Project Report No. 2, Integrated Research on Disaster Risk Programme, Beijing.

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: 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

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

• NatCatSERVICE (2011) NatCatSERVICE Natural catastrophe know-how for risk management and research NatCatSERVICE (2011) Munich Re NatCatSERVICE.NATHAN Risk Suite.

Data specifications

EEA data references

• No datasets have been specified here.

External data references

• NatCatSERVICE (Dataset URL is not available)

Data sources in latest figures

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