€1 billion: Catalonia's bill for this summer's heat

BarcelonaHeat waves, droughts, and floods affected a quarter of all regions in the European Union (EU) in the summer of 2025, with aggregate macroeconomic losses estimated at €43 billion this year and expected to rise to 126 billion in the medium term (until 2029). This is indicated by a joint study led by Dr. Sehrish Usman of the University of Mannheim and with the participation of economists from the European Central Bank (ECB). The research highlights the greater impact in the south of the continent and breaks down the data by geographic area.

Thus, the cost of this heat for Catalonia is estimated at €1 billion in 2025, a figure that will rise to €6 billion in 2029, equivalent to 0.3% and 2.2% of gross value added (GVA, indicator of the 2). The study includes specific data from the provinces of Lleida, Tarragona, and Girona. In Girona, the cost is 397 million this year and 2,357 million by 2029; in Lleida, more than 207 million this year and almost 1,232 million by 2029; and in Tarragona, the bill will rise to 408 million in 2025 and more than 2,422 million by 2029.

The analysis provides estimates of the macroeconomic impact of heatwaves, droughts, and floods in those geographical areas where these phenomena have occurred significantly this summer. These new estimates of the cost of climate change come at a key moment, as the environment ministers of the Twenty-Seven will debate the EU's 2040 climate target on Thursday, September 18.

The authors emphasize that "these estimates are probably conservative," given that they do not include other hazards such as forest fires, which have been very significant during July and August in many places, such as Galicia, Extremadura, Castilla y León, Asturias, and Portugal, among others.

According to the study, the macroeconomic cost to Europe of this summer's heatwaves, droughts, and floods (June, July, and August) is estimated at €43 billion in the short term (in 2025) and €126 billion in the medium term. These estimates are substantially higher than the €31 billion in direct economic losses from all natural disasters in Europe throughout 2024, according to reinsurance data, highlights the report by the University of Mannheim.

The research highlights that Spain is one of the most affected EU states (along with France and Italy), with estimated losses of €12 billion in the short term (in 2025) and €34 billion in the medium term (by 2029) due to the conditions alone. This corresponds to 0.8% and 2.4% of Spain's total GVA in 2024, respectively. In fact, Spain records the largest GVA loss among all EU countries analyzed, both in the short and medium term.

The authors are not optimistic, because they consider that Europe has been affected by extreme weather events in recent years, and continued global warming is expected to lead to more frequent and intense extreme events in the coming decades. "The true costs of extreme weather events emerge slowly because these events affect lives and livelihoods through a wide range of channels that extend beyond the initial impact," says Usman, a postdoctoral researcher at the Chair of Finance and Corporate Governance at the University of Mannheim and a researcher.

According to this researcher, official impact estimates are often delayed. Furthermore, he defends his analysis because it "uses updated meteorological data and recently published evidence of regional impacts to provide timely estimates of how the extreme events of summer 2025 have affected economic activity," he says.

North-South Differences

The study's results show how extreme weather events can hamper economies not only directly, but also over longer periods. In total, 96 European regions experienced heatwaves, 195 suffered from droughts, and 53 were affected by floods. The three types of events impede economic activity in different ways: heat reduces productivity (e.g., in construction and hospitality); drought primarily affects agriculture; and floods cause direct damage to infrastructure and buildings, as well as indirect losses, such as disrupted supply chains.

Southern Europe is particularly affected. The study concludes that European countries face distinct risk profiles due to extreme weather. Southern European countries, including Spain, Italy, Portugal, Greece, and southern France, face higher risks from heatwaves and droughts. Northern and central countries, such as Denmark, Sweden, and Germany, show relatively less damage, but the frequency and magnitude of extreme weather events, especially flooding, are increasing in these regions.