Extreme heatwaves, especially when combined with drought, can significantly reduce average household incomes in Europe by nearly three percent, according to a new study published in Global Environmental Change.
The research from Climate Analytics analyzed the economic impact of extreme weather events, finding that heatwaves alone can decrease incomes by 0.7 percent, while droughts cause a 1.8 percent reduction. However, when these events occur simultaneously, the combined effect amplifies the income loss to almost three percent.
These economic repercussions stem from several factors, including deteriorating health, reduced labor productivity, declines in agricultural output, and disruptions to essential water-dependent services like transportation and energy generation. The study utilized European household survey data from 2004 to 2022, correlated with high-resolution temperature and drought data to assess these impacts.
Uneven Economic Impacts and Future Projections
The study highlights that the economic effects of heatwaves and droughts are not evenly distributed. The poorest 20 percent of the population are most vulnerable, experiencing income drops that are 2 percent greater than the rest of the population. This disparity is projected to widen income inequality.
Regional variations are also significant. During heatwave and drought periods between 2004 and 2022, household incomes in Madrid saw a 10 percent decrease, followed by Central Hungary at 9.4 percent and Central Spain at 8.8 percent.
Looking ahead, the study models the future economic consequences under different global warming scenarios. If global temperatures rise by 1.5°C by 2100, an estimated 60 million people in Europe could face poverty. This number is projected to increase to 127 million if warming reaches 2.7°C.
Countries such as Greece, Spain, Romania, Bulgaria, and Cyprus are identified as being among the most affected. At a 2.7°C warming level, Spanish household incomes could fall by more than a third, and Greek household incomes by half.
"As heat and drought conditions worsen with climate change, so too will the economic impact on Europe's most vulnerable," stated Jessie Schleypen, lead author of the study. The findings come as parts of Europe, including the UK, brace for record-breaking high temperatures.
The Paris Agreement, signed in 2015, aims to limit global average temperature increases to well below 2°C above pre-industrial levels, while pursuing efforts to limit the increase to 1.5°C. The study underscores the importance of the more ambitious 1.5°C goal, as exceeding this threshold significantly increases the risks and impacts of climate change, including drier conditions for a quarter of the world's population.