“These estimates are likely conservative,” stated the study’s authors, Sehrish Usman from the University of Mannheim, along with Miles Parker and Mathilde Vallat, economists at the European Central Bank.
Extreme weather events are becoming more frequent due to the warming effects of greenhouse gases.
In 2024, natural disasters, including severe flooding in Spain, led to the destruction of $31 billion worth of assets in Europe, as reported by the insurance company MunichRe.
“Climate change has increased the frequency and intensity of extreme weather events like floods, droughts, heat waves, wildfires, and all of this is contributing to the rising economic cost for the European regions,” Usman remarked during an event in Brussels on Monday.
The study considered physical damage to buildings and infrastructure, impacts on worker productivity and efficiency, and spillover effects on other economic sectors. It excluded damage from wildfires that ravaged more than 1 million hectares in Europe this year.
“These events are not just temporary shocks,” Usman asserted. “They manifest their impacts over time.” For instance, floods can disrupt supply chains, and droughts can severely affect agricultural yields.
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