Europe’s Farm Sector Loses €28 Billion a Year From Climate Risks

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The European Union’s agriculture industry is losing €28 billion ($31.5 billion) a year due to increasing climate risks, such as droughts and flooding, according to a new study.

Those losses from adverse weather equate to about 6% of production, according to a report published Tuesday by the European Investment Bank and the European Commission. Climate-related damages, which are mostly uninsured, could climb to €40 billion by mid-century, it said.

Extreme weather in recent years has led to wash-out harvests and threatened food security at a time when European nations are seeking to shore up supply chains against shocks. Following protests by farmers, the 27-nation bloc set out a new vision for agricultural policy and simpler financing.

“Climate change and its consequences could restrict farmers’ access to finance, as banks could become even more reluctant to take risks than they are today,” Christophe Hansen, the EU’s commissioner for agriculture and food, said in a statement, urging action to counter climate risks in the sector.

Europe can do more to mitigate losses, including through the use of catastrophe bonds and public-private reinsurance arrangements, according to the study. It also proposed a rapid response fund and improved climate insurance coverage.

Photograph: A water mark from floods on pear trees at a farm in Italy. Photo credit: Francesca Volpi/Bloomberg