Economic losses from climate-related extremes in Europe

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.

Published: ‒ 25min read

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. The EU is party to the UN Sendai Framework for Disaster Risk Reduction (SFDRR), 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. This could affect multiple sectors and cause systemic failures across Europe, leading to greater economic losses. 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. 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.

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.

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.

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