The violent weather that battered Europe this summer caused short-term economic losses of at least €43bn, according to an EU-wide estimate, with costs expected to rise to €126bn by 2029.
The immediate hit to the economy from a single brutal summer of heat, drought and flooding amounted to 0.26% of the EU’s economic output in 2024, according to the rapid analysis, which has not been submitted for peer review but is based on relationships between weather and economic data that were published in an academic study this month.
The greatest damage was done in Cyprus, Greece, Malta and Bulgaria – each of which suffered short-term losses above 1% of their 2024 “gross value added” (GVA), a measure similar to GDP. They were followed by other Mediterranean countries including Spain, Italy and Portugal.
The economists from the University of Mannheim and the European Central Bank described the results as “conservative” because they did not account for the record-breaking wildfires that torched southern Europe last month or the compounding impact of extreme weather events that strike at the same time.
Sehrish Usman, an economist at the University of Mannheim and the lead author of the study, said the study’s “timely estimates” could help policymakers target support in the absence of official data. “The true costs of extreme weather surface slowly because these events affect lives and livelihoods through a wide range of channels that extend beyond the initial impact.”
Scientists have raced to work out the extent to which global heating has worsened punishing weather extremes this summer, with studies suggesting climate breakdown made scorching fire weather 40 times more likely in Spain and Portugal, and 10 times more likely in Greece and Turkey. The death toll from the “quietly devastating” June heatwave is estimated to have tripled in 12 big cities because of planet-heating pollution.
While most research into the economic costs of climate breakdown looks at direct impacts, such as destroyed assets or insured losses, the authors of the new study used historical relationships between violent weather and economic output to account for ripple effects, such the limited hours that builders can work during heatwaves or the disruption to commute times after floods damage railways.
Stéphane Hallegatte, the chief climate economist at the World Bank, who was not involved in the study, said it confirmed that the wider economic impacts of extreme weather were larger than the direct effects and last longer than people imagine.
“I’ve been arguing for a long time to shift our focus from the direct damages from disasters to broader metrics that capture a fuller economic impact, so I’m very happy to see the study doing exactly that,” he said.
But he warned that it used “imperfect proxies” to identify extreme weather, which would likely lead to underestimating the full costs. The GVA did not capture the full cost of extreme weather on people and firms, he added, or the benefits of reducing vulnerability.
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“Especially when disasters affect poor communities and people, the impact on GVA may be minimal, because these people are poor,” said Hallegatte. “But it does not mean they won’t suffer.”
Gert Bijnens, an economist at the National Bank of Belgium, who was not involved in the study, said supply chain disruption was one of the most significant “hidden costs” that usually went uncounted. A study he coauthored on the costs of the devastating Belgian floods in 2021 found that sales at manufacturing firms far from the disaster fell sharply if they had long-standing suppliers in the flood zones.
Ignoring such effects could underestimate damages by as much as 30%, Bijnen said.
“Of course, such estimates come with uncertainty as they rely on historical averages and can’t yet fully capture compounding events,” he added. “But the big message is clear: extreme weather is already leaving a sizeable economic footprint, and the indirect effects can be just as damaging as the direct destruction.”
