This post summarizes a new study from the University of Mannheim and the European Central Bank that quantifies the near-term economic cost of extreme weather across the European Union.
I explain the headline figures, which countries will be hardest hit, the mechanisms driving losses, and why policymakers must accelerate climate adaptation to avoid even greater damage to growth and livelihoods.
The scale of the problem: a €126 billion bill by 2029
The study estimates that extreme weather events will cost the EU about €126 billion between now and 2029.
Roughly a third — around €43 billion — is expected this year alone.
These totals include both immediate damage and cascading economic effects.
Climate shocks are now a structural cost for European economies.
Regional concentration of losses
The distribution of losses is uneven: southern Europe faces the heaviest burden while some northern countries see more modest impacts today, though risks are rising.
Smaller economies suffer disproportionately when losses are measured relative to economic size.
How extreme weather damages growth and livelihoods
Understanding the channels of damage explains why aggregate numbers understate the true human and economic toll.
The study combines direct physical damage with broader economic disruptions to provide a fuller picture.
Direct and indirect impacts: sectors and supply chains
Direct costs include destroyed infrastructure, damaged housing, and ruined crops.
Indirect costs arise from lost productivity, migration away from affected areas, and interruptions to trade and supply chains.
GDP hits and undercounted risks
Researchers find that regional GDP can fall by about 1.5 percentage points two years after a severe heat wave.
GDP can drop by up to 3 percentage points following droughts or floods.
The analysis excludes events such as wildfires, hail, and storms.
This means the true cost of climate extremes is likely higher.
Practical steps include strengthened urban heat protection and better water management.
Resilient infrastructure design and targeted support for vulnerable communities and small economies are also recommended.
Here is the source article for this story: Extreme weather costs economies many billions