Investing in Climate Adaptation Enhances European Competitiveness

Strengthening agriculture, energy, and transport sectors against climate impacts can reduce billions in losses from extreme weather events due to climate change, while also boosting Europe’s competitiveness, according to a briefing by the European Environment Agency (EEA).

The EEA briefing, “Making agriculture, energy and transport climate resilient: how much money is required and what will it deliver?”, highlights the vulnerability of these sectors to climate change.

Being the fastest-warming continent, Europe faces increasing extreme weather events like floods, droughts, heatwaves, and wildfires, costing EUR 40-50 billion annually.

Making agriculture, energy and transport climate resilient: how much money is required and what will it deliver?

Investment gap of more than EUR 100 billion per year

Investment needs range from EUR 53bn to 137bn yearly by 2050 and EUR 59-173bn yearly by 2100, depending on temperature rises between 1.5°C to 3°C above pre-industrial levels. Current funding commitments are just EUR 15-16bn annually, mostly from the public sector at EU, national, and regional levels.

The EU experienced annual economic losses of approximately EUR 40-50 bn between 2021 and 2024 due to extreme weather, amounting to EUR 822 bn from 1980–2024. Loss costs are rising, with the highest annual losses recorded between 2021 and 2024. These figures reflect direct losses only, suggesting higher total costs.

Return on investment for climate-proofing

Climate adaptation investments yield benefits beyond avoiding losses: adapting to coastal flood risks in the EU could return EUR 6 for every euro invested, per the European Commission’s Joint Research Centre.

The World Resources Institute found globally that every US dollar invested in adaptation could bring USD 10.50 in benefits over a decade, with average returns of 27% per project.

Double and triple dividend of adaptation investments

Two relevant concepts in climate adaptation benefits:

• The double dividend concept: reducing climate risks not only shields people, infrastructure, and economies from climate impacts (adaptation dividend) but also reduces greenhouse gas emissions or enhances sustainability (mitigation dividend). For instance, restoring wetlands offers flood protection and CO₂ storage.
• The triple dividend concept: encompasses avoiding losses, unlocking economic potential, and generating development co-benefits, as shown in Figures 1 and 2.

Figure 1. The ‘Triple Dividend’ concept

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Figure 2. Examples of the ‘triple dividends’ in adaptation measures in the EU

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The argument is