Heat Waves Could Cause Up to €180 Billion in EU GDP Losses — Triodos Estimate
This summer’s heat waves could result in a loss of up to €180 billion in the European Union’s GDP, according to estimates by economists at the Dutch bank Triodos. High temperatures are affecting electricity production in France, freight transport in Germany, and labor productivity in several European countries, according to The Guardian.
Studies show that labor productivity typically declines when temperatures exceed 30°C. Triodos analysts took into account the number of abnormally hot days and other factors, so their calculations are approximate.
According to the bank’s estimates, France could suffer the greatest losses: the heat could cost the country 1.4 percentage points of GDP. More than two-thirds of France’s electricity is generated by nuclear power plants. When the water temperature in rivers near these facilities becomes too high, the plants cannot discharge heat into the water and are forced to shut down. Low water levels and water heating also put pressure on nuclear power generation. On Friday, up to 15% of France’s nuclear generating capacity was expected to be unavailable.
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In Germany, low water levels in the Rhine—a key route for domestic freight transport, particularly coal, crude oil, gas, and petroleum products—have become a major problem. Near Kaub, west of Frankfurt, barges were forced to reduce their loads, and shipping has nearly come to a standstill. Wolfgang Grosse-Entrup, president of the German Chemical Industry Association (VCI), told Reuters that low water levels are placing an increasing strain on logistics and supply chains. Triodos forecasts a loss of less than one percentage point of GDP for Germany.
In Spain, fires have damaged nearly 275,000 hectares, according to the EU’s Copernicus monitoring system. Oxford Economics has not identified a significant long-term decline in spending by foreign tourists in the affected regions. At the same time, Triodos expects the heatwave to reduce Spain’s GDP growth—forecast by the European Commission at 2.8%—by nearly one percentage point.
Italy, which depends on tourism and the agricultural sector more than many other European countries, is also vulnerable to the heatwave. Triodos estimates the country’s potential losses at 1.1 percentage points of GDP. The agricultural association Coldiretti stated that the climate impacts over the past four years have cost tomato, olive oil, and wine producers approximately €20 billion. Poland experienced fewer abnormally hot days, although low water levels in the Vistula River also caused power plant shutdowns, and the power grid operator had to invoke emergency powers.
