Economic losses from weather- and climate-related extremes in Europe
Published 06 Oct 2023
Between 1980 and 2022, weather- and climate-related extremes caused economic losses of assets estimated at EUR 650 billion in the EU Member States, of which EUR 59.4 billion in 2021 and EUR 52.3 billion in 2022. 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.
Figure 1. Annual economic losses caused by weather - and climate - related extreme events in the EU Member States
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 goals, to ultimately reduce the overall monetary losses from weather- and climate-related events .
Between 1980 and 2022, climate-related extremes amounted to an estimated EUR 650 billion (2022 prices) in the EU. Hydrological hazards (floods) account for almost 43% and meteorological hazards (storms,including lightning and hail, together with mass movements) for around 29% of the total. For the climatological hazards, heat waves cause around 20% 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 1980-2022 include the 2021 flooding in Germany and Belgium (EUR 44 billion), the 2022 compound drought and heat events over the whole continent (EUR 40 billion), the 2002 flood in central Europe (EUR 34 billion), the 1999 storm Lothar in Western Europe (EUR 17 billion), the 2003 drought and heatwave across the EU (EUR 17 billion), and the 2000 flood in France and Italy (EUR 14 billion), all at 2022 prices.
A relatively small number of events is responsible for a large proportion of the economic losses: 5% of the climate-related events with the biggest losses are responsible for 59% of losses and 1% of the events causes 28% of losses (EEA’s own calculations based on the original dataset). This results in high variability from year to year. Reasons for this are multiple, including the development of assets in vulnerable areas and a potential reporting bias over time, but also because most weather- and climate-related extremes across the world and in Europe, have become more severe and frequent as a result of human-caused climate change .
Nevertheless, the average annual (constant prices, 2022 euros) losses were around EUR 10.4 billion in 1981-1990, 12.2 billion in 1991-2000, 14.7 billion in 2001-2010 and 15.9 billion in 2011-2020. With EUR 59.4 billion and EUR 52.3 billion, 2021 and 2022 have the highest annual values for the whole time series (followed by 2002, 1999 and 1990). 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 41% increase over the 2009 to 2022 period, or 2.5% per year.
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 seems 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 . An example of such an activity coordinated by the European Commission is the Climate Resilience Dialogue .
Figure 2. Economic losses and fatalities caused by weather - and climate - related extreme events (1980-2022) - per country, read here
The economic impact of climate-related extremes varies considerably across countries. In absolute terms, the highest economic losses in the period 1980-2022 in the EU were gauged in Germany followed by France then Italy. The highest losses per capita were reckoned in Slovenia, Luxembourg and Germany, and the highest losses per area (in km2) were in Belgium, Luxembourg and Germany.
According to the estimates, less than 20% of the total losses were insured, although this varied considerably among countries, from less than 2% in Lithuania, Romania, Cyprus and Bulgaria to over 35% in Denmark, Luxembourg, Belgium and the Netherlands. There were also significant differences between the types of events: for meteorological events, over one-third of the losses were insured, while this was less than 15% for hydrological events and little more than 10% for heatwaves and all other climatological events, including droughts and forest fires.
The EU adaptation strategy aims to promote action at national level. All countries have a national adaptation policy adopted using different instruments such as strategies and national, regional and sectoral plans, also laws with adaptation relevance reflecting differences in governance in between countries. 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.
