Extreme heat in Europe is becoming more frequent, evolving from a climate issue into an economic challenge. Persistent heatwaves are driving up the cost of keeping society running, disrupting production, and pressuring economic growth.
In the first two months of this wildfire season, nearly 500,000 hectares have burned across Europe. According to the Financial Times, economic losses in five hardest-hit countries—France, Spain, Portugal, Greece, and Romania—have reached approximately €3.1 billion, exceeding the European Commission's estimate for annual wildfire losses across the entire EU in a normal year.
Economists say several sectors will be affected. Agriculture is expected to be hit hard, with commodities like cocoa, coffee, and wheat threatened by hotter, more volatile climate, potentially raising food prices. Tourism is also affected; in France's Gironde region, wildfires have disrupted activity, and smoke may contaminate grapes, impacting the wine harvest.
Europe's insurance sector faces rising risks. In some countries, wildfire losses are borne mainly by private insurers and reinsurers, who may raise premiums, making living in high-risk areas more expensive and potentially forcing residents to move.
A study by the University of Mannheim and the European Central Bank found that last summer's heatwaves, droughts, and floods caused losses equivalent to 0.3% of European economic output, potentially rising to 0.8% by 2029. Experts warn that climate disasters could become a new source of inflation, increasing costs of goods, services, and reconstruction, while fiscal pressure on governments rises.
Source: cnbc.com
