Extreme Weather Events: How Heat, Drought, and Flooding Affect European Regions in the Long Term
Extreme weather events such as heat waves, droughts, and floods affect the economic strength of European regions not only in the short term, but often years later. This is shown by a new study conducted by economist Dr. Sehrish Usman from the University of Mannheim, co-authored with economists from the European Central Bank.
Press release from 12 August 2025
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Heat waves, droughts and floods do not only have short-term consequences. A new study published in the journal European Economic Review shows that such extreme events can significantly weaken the economic strength of entire regions in Europe, even years later. Two years after a heat wave, the regional gross domestic product is on average 1.5 percentage points lower. After four years, the regional gross domestic product is even 3 percentage points below the previous level after droughts, and 2.8 percentage points below the previous level after floods. Population figures and productivity in the regions are particularly affected.
Local differences are crucial
The study analyzed 1,160 regions in the European Union at the level of so-called NUTS 3 areas, i.e. comparable to rural districts (Landkreise) or urban districts (Stadtkreise) in Germany. The researchers used weather data and compared it with economic data from the respective regions. They used a method that makes it possible to identify causal relationships over several years. The result: Regions with low incomes or high temperatures, such as Italy and Spain, are particularly hard hit.
“Our research shows that income levels, pre-existing climate conditions, and sectoral differences significantly shape how regions are affected by extreme weather events. Wealthier regions may face greater capital losses from floods but are better equipped to adapt to heat waves. Understanding these dynamics is essential for designing effective policies to reduce climate-related damage,” says study author Usman.
Productivity suffers, people move away
In the years following an extreme event, economic strength often declines, as does the number of people of working age. A decline in labor productivity is particularly evident after droughts and floods. One reason for this could be that more investments in so-called adaptation capacities, such as air conditioning systems or flood protection, are made. Although these measures help against the direct consequences, they are economically less productive than other investments.
The study emphasizes how important it is to adapt to different regional conditions. A uniform approach to extreme weather is not sufficient. Instead, European regions need individual strategies to adapt to climate change. Without targeted measures, economic inequality within Europe could continue to worsen.
The study
Usman, S., González-Torres Fernández, G., & Parker, M. (2025). Going NUTS: The regional impact of extreme climate events over the medium term. European Economic Review.
Link to the study: https://doi.org/10.1016/j.euroecorev.2025.105081
Contact:
Dr. Sehrish Usman
Chair of Corporate Governance
University of Mannheim
E-mail: sehrish.usmanuni-mannheim.de
Fabio Kratzmaier
Research Communication
University of Mannheim
Phone: +49 (0)621 181-3268
E-mail: fabio.kratzmaieruni-mannheim.de