Economic losses from climate-related extremes in Europe (8th EAP)

Between 1980 and 2021, weather- and climate-related extremes caused economic losses estimated at EUR 560 billion in the EU Member States, of which EUR 56.6 billion from 2021. Analysing trends in economic losses is difficult, partly because of high variability from year to year. Some statistical analysis has revealed, however, that economic losses increase over time. As severe weather- and climate-related extreme events are expected to intensify further, it seems unlikely that the associated economic losses will reduce by 2030.

Published: ‒ 25min read

Weather- and climate-related hazards, such as temperature extremes, heavy precipitation and droughts, pose risks to human health and the environment and can lead to substantial economic losses. The 2021 EU Adaptation Strategy aims to build resilience and ensure that the EU is well prepared to manage these risks and adapts to the impacts of climate change. The EU aims, among other things, to ultimately reduce the overall monetary losses from weather- and climate-related events .

Between 1980 and 2021, weather- and climate-related extremes amounted to an estimated EUR 560 billion (2021 values). Hydrological events (floods) account for over 45% and meteorological events (storms including lightning and hail, together with mass movements) for almost one-third of the total. When it comes to climatological events, heat waves are responsible for over 13% of the total losses while the remaining +/-8% are caused by droughts, forest fires and cold waves together. The most expensive hazards during the period 1980-2021 include the 2021 flooding in Germany and Belgium (almost EUR 50 billion), the 2002 flood in central Europe (over EUR 22 billion), the 2003 drought and heatwave across the EU (around EUR 16 billion), the 1999 storm Lothar in Western Europe and the 2000 flood in France and Italy (both over EUR 13 billion), all at 2021 values.

A relatively small number of events is responsible for a large proportion of the economic losses: 5% of the weather- and climate-related events with the biggest losses is responsible for 57% of losses and 1% of the events causes 26% of losses (EEA’s own calculations based on the original dataset). This results in high variability from year to year and makes it difficult to identify trends. Nevertheless, the average annual (constant prices, 2021 euros) losses were around EUR 9.7 billion in 1981-1990, 11.2 billion in 1991-2000, 13.5 billion in 2001-2010 and 15.3 billion in 2011-2020. With EUR 56.5 billion, 2021 has the highest annual value for the whole time series. Furthermore, a statistical analysis of a 30-year moving average reveals that economic losses increased over the years. A linear trendline through these 30-year averages represent a 32% increase over the 2009 to 2021 period, or 2.15% per year. Reasons for this are multiple, including the development of assets in vulnerable areas and a potential reporting bias over time, but also because weather- and climate related extremes across the world (and possibly also in the EU) have become more severe and frequent as a result of climate change.

The Intergovernmental Panel on Climate Change predicts that climate-related extreme events will become more frequent and severe around the world. This could affect multiple sectors and cause systemic failures across Europe, leading to greater economic losses. Therefore, although this is uncertain, it, looks unlikely that the associated economic losses will reduce by 2030.

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 value of the assets exposed and the envisaged climate adaptation measures. Some studies show the benefits of adaptation measures, including nature-based solutions, to mitigate the impacts of weather- and climate-related extremes in Europe. Therefore, a comprehensive, integrated approach is required to adapt to and manage the risks. Enhancing society’s resilience to climate change through a focus to increasing adaptive capacity is key to the EU’s adaptation strategy which was adopted on 24 February 2021. If fully implemented the EU adaptation strategy can contribute to limiting the economic costs of the weather- and climate-related events and to closing the climate protection gap .

The economic impact of climate-related extremes varies considerably across countries. In absolute terms, the highest economic losses in the period 1980-2021 in the EU were registered in Germany followed by France then Italy. The highest losses per capita were recorded in Slovenia, Germany and Luxembourg, and the highest losses per area (in km2) were in Belgium, Germany and Luxembourg.

Only 30% of the total losses were insured, although this varied considerably among countries, from less than 2% in Hungary, Lithuania and Romania to over 75% in Slovenia and the Netherlands. There were also significant differences between the types of events: for meteorological events, almost half of the losses were insured, while this was only 20% for hydrological events and less than 15% for heatwaves. For other climatological events, including droughts and forest fires, just over one third were insured.

The EU adaptation strategy aims to promote action at national level, and all countries have already adopted a national adaptation policy (EEA, 2020, 2022). 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 is a key element under development as part of the implementation of the 'smarter adaptation' objective of the EU adaptation strategy.

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