“These estimates are likely conservative,” said the authors of the study, Sehrish Usman of the University of Mannheim, and Miles Parker and Mathilde Vallat, economists at the European Central Bank.
Extreme weather events are becoming more frequent as greenhouse gases warm the world.
In 2024, natural disasters, including catastrophic flooding in Spain, destroyed assets worth $31 billion in Europe, according to 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 said at an event in Brussels on Monday.
The study included physical damage to buildings and infrastructure as well as impact on worker productivity and efficiency, and spillover effects on other parts of the economy. It did not include damage from wildfires that burned more than 1 million hectares in Europe this year.
“These events are not just temporary shocks,” said Usman. “They manifest their impacts over time.” Floods can disrupt supply chains. Droughts can cripple agricultural yields.