A new study from the European Central Bank and the University of Mannheim has found that extreme weather events are eating away at Europe’s economy, especially in Malta.
What is this study about?
According to the Times of Malta, research estimated that this summer’s extreme weather would slash economic activity across the EU by €43 billion ($50.6 billion). That’s equal to about 0.26% of total output.
By 2029, the long-term effects could total €126 billion, the equivalent of around $147 billion in losses.
Smaller economies like Malta, Cyprus, and Bulgaria are among the hardest hit. Malta alone is expected to lose nearly 3% of its economic output by 2029. That’s roughly €1,000 (about $1,166) per person: a significant loss for a small island nation.
Why this matters now
Extreme weather disrupts entire economic systems alongside property and land.
As Sehrish Usman, the study’s lead author, explained to the Guardian, “These events affect lives and livelihoods through a wide range of channels that extend beyond the initial impact.”
Usman also said the true cost of extreme weather often appears slowly, as it ripples through supply chains, infrastructure, and local economies.
The research team warned that these costs are likely underestimated. The analysis didn’t account for compounding disasters such as wildfires or overlapping droughts and heat waves.
“Extreme weather events are increasingly having substantial economic impacts in Europe,” the report concluded. “With continued climate change, these impacts are likely to grow in the coming decades.”
And it’s not just a European problem. In the U.S., the Climate Action Tracker recently downgraded the nation’s climate efforts from “insufficient” to “critically insufficient.”
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According to an analysis from Energy Innovation, that downgrade followed major rollbacks on clean energy incentives. It’s a shift experts warn could cost the U.S. $1.1 trillion in gross domestic product by 2034. It will also eliminate more than 830,000 jobs by 2030.
How this impacts everyday individuals
For most households, the financial fallout of extreme weather shows up in rising costs. According to a recent Climate Change in the American Mind survey, 82% of Americans believe their homeowners insurance costs are rising. Two-thirds said prices are going up “a lot.”
Economist Stéphane Hallegatte of the World Bank warned reporters at the Guardian that GDP losses alone don’t capture the human toll: “Especially when disasters affect poor communities and people, the impact on [gross value added] may be minimal because these people are poor. But it does not mean they won’t suffer.”
The real cost lies in inaction
The takeaway from the new report is clear: doing nothing will be far more expensive than investing in prevention.
Researchers emphasize that adaptation measures, from reinforcing flood defenses to expanding drought-resistant agriculture, can dramatically reduce future costs. Investing in cleaner, more affordable energy can protect both the planet and people’s pocketbooks.
And, perhaps most importantly, staying informed about critical climate issues can equip you with the knowledge to tackle the impacts these issues have on your local communities.
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