Economic losses from climate-related extremes in Europe

Past trends

According to data on natural disasters in the member countries of the European Environment Agency (EEA) between 1980 and 2017 — from the NatCatSERVICE of Munich Re (1) — weather and climate-related extremes (2) accounted for around 81 % of total losses caused by natural hazards.

Specifically, weather and climate related losses amounted to EUR 453 billion (at 2017 Euro values (3)), at an average of EUR 12 billion per year, EUR 79 200 per square kilometre or EUR 811 per capita (4). The cumulative defalted losses over the period analysed are equal to nearly 3 % of the GDP of all EEA member countries in 2017. Overall, around 35 % of the  total losses were insured, although  the proportion of the insured losses ranged from 1 % in Romania and Lithuania to 70 % in the UK (Figure 1). There were 90 325 casualties registered over the period. 

Reported economic losses mainly reflect monetised direct damages to certain assets. The loss of human life, cultural heritage or ecosystem services is not part of the estimation.

The distribution of weather and climate related losses among the 33 EEA member countries is uneven. The highest overall economic losses in absolute terms (in order of rank) were registered in Germany, Italy and France (see Figure 1). The highest losses per capita were recorded in Switzerland, Denmark and Austria, while those per square kilometre were recorded in Switzerland, Luxembourg and Germany. 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, Malta and Iceland. In relative terms (per capita) the least affected countries were Turkey, Estonia and Malta. In terms of loss as a share of cumulative GDP, the least affected countries were Liechtenstein, Iceland and Estonia.

The largest 39 events caused about half of the recorded losses.

It is important to understand 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], the increasing exposure of people and economic assets to weather and climate-related disasters has been the major cause of long-term increases in economic losses from them. Available studies for economic losses from river floods and storms in Europe suggest that the observed increases in losses are primarily because of 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 has contributed to reducing losses over time in some cases [iii].

Globally, the 'attribution science' has made significant progress in recent years in assessing whether global climate change has affected the odds of a specific observed extreme weather event. A recent review of these studies shows that, globally, the large majority of the analysed heat waves, and a majority of droughts and heavy rain and flooding events were found to have become more likely and/or severe as a result of global climate change [iv]. The attribution of storms and (other) small-scale events to global climate change is much more difficult, mainly because of their poor representation in climate models 

For the period 1980-2017, the economic losses from all natural disasters in the EEA member countries amounted to EUR 557 billion and the insured losses were approximately EUR 162 billion (in 2017 values) (Figure 2). Around 63 % of all economic losses were a result of meteorological and hydrological events, while most fatalities were caused by heatwaves. This large portion of fatalities is highly influenced by the heatwave of 2003, where around 68 000 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 7.4 billion per year in the 1980s, EUR 13.4 billion in the 1990s and EUR 14.0 billion per year in the 2000s (2000-2009). In the period 2010-2017, the average annual economic loss amounted to around EUR 13.0 billion (Figure 3). However, the pattern that can be found in the recorded loss is obscured by high variability: around 3 % of events — some of which affected more than one country — account for around 75 % of total deflated losses. Conversely, some three quarters of the registered events were responsible for only 0.7 % of total losses. The increased economic wealth has a major effect on annual losses.

Currently there is no mechanism in place for EU Member States to report the economic losses from weather and climate-related events to the European Commission or the EEA. However, activities coordinated by the JRC (6) are underway to improve national databases on disaster losses. The Organisation for Economic Co-operation and Development (OECD) has conducted a review of the countries’ efforts to collect information on the economic impacts of disasters and the level of public resources invested in the management of risk [v]. The UN Sendai Framework for Disaster Risk Reduction 2015-2030 (SFDRR) [vi] laid down priorities for action and policy targets. Progress in achieving these targets is monitored and assessed by means of 38 indicators, some of which are also used to report on the Sustainable Development Goals. The Sendai Framework Monitor was launched in March 2018 to facilitate the reporting. The Centre for Research on the Epidemiology of Disasters (CRED) and the UN Office for Disaster Risk Reduction have published a global review of disaster impacts over the period 1998-2017 [vii], building on the EMDAT database. The summarised losses are not complete, since the majority (63 %) of disaster reports to EMDAT contains no economic estimates of losses. Once comparable national databases are available for all EU Member States and EEA member countries, and the data are reported, this EEA indicator will be based on such country data. 

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 [i]. 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 [viii]. 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.

Notes

[1] NatCatSERVICE [www.munichre.com/natcatservice] is one of the most comprehensive natural catastrophe loss databases managed by the 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.

[2] The analysed hazards are split into four categories by Munich Re: 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 NatCatSERVICE.

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

[4] Based on average population over the entire period 1980-2016.

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

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

[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] Quirin Schiermeier, "Droughts, heatwaves and floods: How to tell when climate change is to blame - Weather forecasters will soon provide instant assessments of global warming's influence on extreme events", Nature 560, 20-22 (2018), doi: 10.1038/d41586-018-05849-9.

[v] OECD, 2018, Assessing the Real Cost of Disasters: The Need for Better Evidence, OECD Reviews of Risk Management Policies, OECD Publishing, Paris, https://doi.org/10.1787/9789264298798-en.

[vi] UN, 2015, Sendai Framework for Disaster Risk Reduction 2015–2030, A/CONF.224/CRP.1, 18 March 2015, available at: https:// www.unisdr.org/files/43291_sendaiframeworkfordrren.pdf.

[vii] CRED and UNISDR, 2018, Economic Losses, Poverty & Disasters 1998-2017, The Centre for Research on the Epidemiology of Disasters (CRED) and the UN Office for Disaster Risk Reduction, https://www.unisdr.org/2016/iddr/IDDR2018_Economic%20Losses.pdf

[viii] 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.