Extreme Weather Events in Summer 2025: Europe Faces Long-Term Losses of 126 Billion Euros

Press release from 15 September 2025
Print version (pdf)

Extreme weather events not only affect daily life – they also leave deep economic scars. A new study, published in the journal European Economic Review, uses current weather data and historical comparative values to show for the first time how severely individual regions in the European Union are already affected by the consequences of climate change. Usman, a post-doctoral student at the Chair of Corporate Governance at the University of Mannheim, played a key role in the study.

The aim of the study “Dry-roasted NUTS: early estimates of the regional impact of 2025 extreme weather” was to quantify the overall economic losses caused by heat, drought and flooding as quickly as possible – an important tool for political decision-makers. Today, Dr. Sehrish Usman and her co-authors are presenting the results of the study to members of the European Parliament, representatives of the EU Commission, and leading climate researchers in Brussels. They show how strongly weather extremes can affect economies not only directly, but also over longer periods of time. “The true costs of extreme weather surface slowly because these events affect lives and livelihoods through a wide range of channels that extend beyond the initial impact. Official estimates of the impact are often delayed. Our framework uses up-to-date weather data and newly published evidence of regional impacts from our previous study to provide timely estimates of how extreme events in the summer of 2025 affected economic activity”, says Usman.

Southern Europe is particularly affected 
The study is based on weather data for the period from June to August 2025. This data was used to analyze 1160 European regions (“NUTS3”, comparable to administrative districts in Germany). Regions in southern Europe, e.g. in Spain, Italy, Portugal, Greece and southern France, were particularly badly affected. Northern countries such as Denmark, Sweden and Germany suffer less damage, but the frequency and extent of extreme weather events, especially flooding, is increasing in these regions. Smaller economies such as Bulgaria, Malta and Cyprus are particularly vulnerable and suffer large losses in relation to gross value added.

In total, 96 regions experienced heat waves, 195 suffered drought, and 53 were affected by floods. All three types of events impede economic activity in different ways: Heat leads to productivity losses, for example in the construction and hospitality industries, while droughts mainly affect agriculture. Floods cause direct damage to infrastructure and buildings – as well as indirect losses, such as from disrupted supply chains.

These economic losses are clearly measurable: In Italy, for example, the estimated losses were 11.9 billion euros for 2025 and will amount to 34.2 billion euros by 2029. This corresponds to 0.6 or 1.75 percent of Italy's economic output in 2024. In France, the losses amounted to 10.1 billion euros (2025) and are estimated at 33.9 billion euros in 2029. 

Why the actual damage could be even higher
The researchers stress that these estimates are rather conservative: Wildfires, hail and storms were not included in the analysis. So-called “compound events”, i.e. the simultaneous occurrence of heat waves and droughts, were also evaluated individually– although they often cause more severe damage when they occur together.

Climate adaptation costs – but doing nothing costs more
The study shows that extreme weather events are no longer a distant threat – they are already shaping Europe’s economic development. “Having timely impact estimates helps policymakers target support and adapt strategies while the effects of extreme events are still unfolding,” emphasizes Usman. The researchers call for increased investment in climate adaptation, such as heat protection in cities and improved water management.

At the same time, they point out that adaptation measures themselves are costly and not always the most productive use of public funds. More precise economic analyses are therefore needed to design policies that are both effective and socially equitable.

The study
Usman, S., Parker, M. & Vallat, M. (2025). Dry-roasted NUTS: early estimates of the regional impact of 2025 extreme weather. 
Link to the study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5484206

Contact:
Dr. Sehrish Usman
Chair of Corporate Governance
University of Mannheim
E-mail: sehrish.usmanmail-uni-mannheim.de

Fabio Kratzmaier
Research Communication
University of Mannheim
Phone: +49 621 181-3268
E-mail: fabio.kratzmaiermail-uni-mannheim.de