A new study highlights the economic impact of the heatwaves, droughts, and floods hitting Europe during the summer of 2025. The costs are likely to rise to €126 billion by 2029.
The study, published on 15 September 2025 and written by Dr Sehrish Usman from the University of Mannheim in collaboration with European Central Bank (ECB) economists, looks at the short-term economic impact of severe weather events in Europe – in particular floods, droughts, and heatwaves.
According to the research, no less than a quarter of all EU regions were hit by such meteorological events during the summer of 2025. Using weather data and estimates of average historical impact from Usman et al. (2025), the researchers calculated that the short-term losses within Europe will amount to €43 billion in 2025, or 0.26% of the total European Union output. However, these estimates are conservative and are expected to grow over the coming years.
“Beyond these short-term losses, the regional impact of extreme events historically increases over time, with substantial impact in the following years. Based on the average historical experience, we estimate that the annual Gross Value Added in the affected regions will be €126 billion lower by 2029 than had these events not occurred”, the authors write.
Larger impact
In order to calculate the losses, the researchers did not solely base themselves on the cost of destroyed infrastructure or buildings. Instead, they also looked at the impact of the extreme weather events in terms of loss of tourism revenue, impacts on productivity, and supply chain disruption.
“Summer heatwaves, for example, cause little by way of physical destruction but can substantially reduce hours worked and output in the construction and hospitality sectors”, the study explains.
Overall, 96 regions within Europe have experienced heatwaves, while 195 suffered from droughts and 53 were impacted by floods. While heatwaves mainly concern countries located in areas categorised as ‘hot regions’, 17 temperate regions and 5 colder regions were affected as well. Droughts hit Southern European countries the hardest, and Italy was particularly hit by floods.
During the summer of 2025, Spain was hit the hardest by the economic losses caused by extreme weather events. The scientists estimate the losses to amount to €12.2 billion in 2025 and €34.8 billion by 2029. However, Italy and France were close contestants, respectively experiencing €11.9 billion in 2025 (€34.2 billion by 2029) and €10.1 billion in 2025 (€33.9 billion by 2029) in short-term losses.
“Extreme weather events are increasingly having substantial economic impacts in Europe. With continued climate change, these impacts are likely to grow in the coming decades. Estimates of such losses often come with large delays, which can hamper the response by policymakers. We propose an approach to estimate regional impacts of extreme events in real time, using up-to-date weather data and existing estimated historical impacts derived by Usman et al. (2025)”, Dr Sehrish Usman and his co-authors conclude.
The scientists also indicate that their estimates should be considered conservative. Some factors, such as spillovers, the impact of adaptation following extreme events, and the full impact of wildfires, remain difficult to take into account.
