Climate Losses Worth Billions of Euros Prompt Economic Warnings from Central Bank

The European Central Bank warned today that an acute crisis in water scarcity could expose up to 24% of the Eurozone's economic output to the risk of losses.

Research by the bank showed that 72% of companies in the Eurozone rely heavily on ecosystem services, while approximately 75% of bank loans directed to companies go to institutions exposed to risks associated with those services.

The bank noted that achieving the EU's environmental goals requires additional green investments equivalent to about 3% of GDP annually until 2030, with the public sector bearing between 20 and 25% of this burden, while the private sector is expected to provide the majority of the financing.

The report highlighted that the drop in the Rhine River's water level in July 2026 reduced Germany's real GDP growth during the third quarter by approximately 0.2 percentage points.

Widening Gap

It also warned of a widening insurance gap against natural disasters, as insurance policies cover less than a quarter of losses caused by natural disasters in the EU, with coverage dropping to below 5% in several member states.

According to estimates, extreme climate disasters between 1981 and 2023 caused direct economic losses totaling around 900 billion euros ("1.01 trillion dollars") in the EU, with more than one-fifth occurring in the last three years.

In the context of its environmental efforts, the European Central Bank announced a 46% reduction in its carbon dioxide emissions in 2025 compared to 2019 levels.