Economic losses from weather- and climate-related extremes in Europe

Climate-related hazards, such as temperature extremes, heavy precipitation and droughts, pose risks to human health  and ecosystems and can lead to substantial economic losses. These losses equally create pressures on public finances.

The 2021 EU Adaptation Strategy aims to build resilience and ensure that the EU is well prepared to manage these risks. It also adapts to the impacts of climate change. The EU aims, to ultimately reduce the overall monetary losses from weather- and climate-related events. 

Between 1980 and 2023, climate-related extremes amounted to an estimated EUR 738 billion (2023 prices) in the EU. Hydrological hazards (floods) account for 44% and meteorological hazards (storms, including lightning and hail) for almost 29% of the total. For the climatological hazards, heat waves cause almost 19% of the total losses (but are responsible for 95% of the fatalities) while the remaining 8% are caused by droughts, forest fires and cold waves together.

Relatively few events are responsible for most of the economic losses: 5% of climate-related events with the biggest losses are responsible for 61% of losses, and 1% of the events cause 28% of losses. However, 66% of events with the smallest losses recorded total only 5% of the losses (calculations based on the original dataset). The total losses vary significantly from year to year. This interannual variability is due to the development of assets in vulnerable areas and potential reporting bias over time and because most types of weather- and climate-related extremes across the world have become more severe and frequent as a result of human-caused climate change.

The average annual (constant 2023 EUR prices) economic losses were around EUR 8.5 billion in 1980-1989, 14.0 billion in 1990-1999, 15.8 billion in 2000-2009, 17.8 billion in 2010-2019 and 44.5 billion for the period 2020-2023. A statistical analysis of a 30-year moving average reveals that economic losses increased over time. A linear trendline through these 30-year averages represent a 53% increase from 2009 to 2023, or 2.9% per year.

The five years with highest annual values are:

The Intergovernmental Panel on Climate Change predicts that climate-related extreme events will become more frequent and severe around the world. This affects multiple sectors and causes systemic failures across Europe, creating greater economic losses.

The first European Climate Risk Assessment concluded that climate risks are accelerating. Several of the 36 key climate risks are at critical levels and of high urgency. Climate-related extreme events are expected to intensify further and the adaptation pace is not following the same speed . It seems unlikely, although uncertain, that the EU will be able to mitigate the impact of these events by building resilience and the associated economic losses will reduce by 2030.

The future cost of climate-related hazards depends on the frequency and severity of events and several other factors, such as the value of the assets exposedand the effectiveness of the implemented climate adaptation measures. Studies show the benefits of adaptation measures, including nature-based solutions, to mitigate the impacts of weather- and climate-related extremes in Europe. A comprehensive, integrated approach is required to adapt to and manage the risks, and develop strategies that deal with the remaining and residual risks not mitigated by adaptation measures.

Enhancing society’s resilience to climate change through a focus to increasing adaptive capacity is key to the EU’s adaptation strategy. If fully implemented the strategy, together with national regional and local strategies and plans, can contribute to limiting the economic costs of weather- and climate-related events and close the climate protection gap. An example of such an activity coordinated by the European Commission is the Climate Resilience Dialogue.

The economic impact of climate-related extremes varies across the EU. In absolute terms, the highest economic losses in the period 1980-2023 were gauged in Germany, Italy and France. Highest losses per capita were reckoned in Slovenia, Luxembourg and Italy, and the highest losses per area (in km²) were in Slovenia, Belgium, and Germany.

According to estimates, less than 20% of total losses were (privately) insured. This varied among countries, from less than 2% in Romania, Slovenia, Cyprus and Bulgaria to over 35% in Denmark, Luxembourg, Belgium, the Netherlands and France. There were significant differences between the types of events. For meteorological events, over one-third of the losses were insured. It was less than 15% for hydrological events and slightly over 10% for all climatological events, including heatwaves, droughts and forest fires.

The EU adaptation strategy aims to promote action at national level. All countries have a national adaptation policyadopted 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 could be a key element under development as part of the implementation of the 'smarter adaptation' objective of the EU adaptation strategy.