Study: Extreme Summer Weather Costs Europe €43 Billion in 2025

Heatwaves, droughts, and floods across Europe during the summer of 2025 inflicted economic losses of €43 billion, according to a study published on Monday by a team of economists. 

The report stresses that these direct costs represent only the beginning of the financial toll from climate-related disasters.

The research, led by Sahresh Osman of the University of Mannheim in Germany in collaboration with two economists from the European Central Bank, used meteorological data and economic models to estimate the damages caused by increasingly frequent and intense extreme weather events driven by climate change.

The study examined both direct impacts, such as damage to roads, buildings, and agricultural crops from floods, and indirect consequences, including lost production during reconstruction, human casualties, and the costs of adaptation.

Osman emphasized that the “true cost of extreme climate events extends far beyond their immediate effects.” For instance, drought-induced shortages and damage to crops could fuel long-term inflation.

Taking these broader factors into account, the researchers estimate that by 2029, the total costs from Europe’s 2025 climate disasters could reach €126 billion.

The hardest-hit countries were Spain, France, and Italy, each suffering over €10 billion in losses this year alone. On a medium-term horizon, their combined damages could exceed €30 billion, reflecting the intensifying frequency of heatwaves and droughts.

While Central and Northern Europe experienced relatively smaller direct losses, these regions have faced rising flood risks in recent years, costs expected to climb as weather disruptions worsen.

The report also cautions that actual losses may be significantly underestimated, since cumulative effects, such as simultaneous droughts and heatwaves, or secondary climate impacts like wildfires were not fully accounted for.

Moreover, traditional insurance industry estimates often cover only physical asset damages, overlooking broader productivity losses linked to extreme heat.