Climate Crisis Impacts Europe Already: But How Much Does It Cost?

By Elisa Fiorini Beckhauser

Three challenges to financing climate adaptation were raised at ECCA2025 as speakers addressed ‘Upscaling adaptation finance at national and European scales: costs, economic and fiscal rationale’. The session, on Day 2 (Tuesday, June 17) focused on methodologies for estimating adaptation costs and monitoring adaptation financing.

To set the stage, the panellists noted that key challenges currently facing EU adaptation finance include inconsistent assessments of adaptation costs, the failure to integrate adaptation costs into fiscal frameworks, a lack of evidence for systematic analyses, and the absence of standardized methodologies for monitoring adaptation efforts.

Paul Watkiss warned that when discussing adaptation finance, it is important to remember that although adaptation reduces economic costs, it almost never eliminates impacts entirely. There is always a trade-off between the level of ambition and the expected results, and it also involves upfront costs for long-term benefits and high uncertainty about the future. Specifically, the difficulties of financing adaptation stem from the fact that:

i) investment lags far behind adaptation;

ii) adaptation presents barriers to public sector investment because it often involves public goods, recurring costs, and non-productive capital;

iii) adaptation has high economic (societal benefit) but not financial benefit.

Current picture of adaptation finance in Europe

Studies on the costs of climate change adaptation remain limited. There is incomplete coverage of near-term costs and climate hazards, and there are gaps in sectoral analysis. These factors result in a lack of recent, consolidated EU-level estimates of climate change adaptation. These limitations are usually related to a lack of analysis on the short- to medium-term impacts of climate risks on projects, a lack of comprehensive evidence on climate change adaptation costs, and difficulties in comparing climate adaptation costs across countries. For instance, Solène Dengler noted that national-level climate change adaptation costs can range from €3.9m to €11.6m per year, or €34 to €110 per person per year. Additionally, protection levels and the role of governments differ across countries. This is also true for disaster relief and insurance obligations, as well as the preference for types of adaptation (structural, ecosystem-based and informational).

How do we go further?

Adaptation pathways require decision-making approaches that allow us to prepare and take actions in times of uncertainty - using information on current and future climate risks. At the EU level, this requires that countries shift from piecemeal and incremental measures towards system level transformation adaptation efforts.

In this context, Vivian Depoues highlighted the importance of developing a common grammar and policy dialogue on adaptation costs to provide initial orders of magnitude, engaging in genuine discussions with sectoral experts and policy stakeholders. This ultimately requires opening the debate on the levels and types of adaptation preferred, that is: adaptation as political options!

In short, the adaptation scenarios reveal that adaptation reduces economy-wide disruption from climate impacts, and that the implementation of adaptation policies has macroeconomic effects. For this reason, Birgit Bednar-Friedl noted that public adaptation is macroeconomically viable. However, the subsequent effects on public budgets depend on risk preferences, the composition of the adaptation policy mix, and effectiveness.

Chair

Eva Preinfalk (Wegener Center for Climate and Global Change, University of Graz)

Speakers

Paul Watkiss (Paul Watkiss Associates)
Solène Dengler (World Bank)
Vivian Depoues (Institute for Climate Economics, IC4E)
Birgit Bednar-Friedl (Department of Economics & Wegener Center for Climate and Global Change, University of Graz)

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Climate Crisis Impacts Europe Already: But How Much Does It Cost?

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