Climate change and its impact on the economy – EESC opinion

Zmiana klimatu

The European Economic and Social Committee (EESC) has prepared an opinion on climate change and its impact on the economy. In the document, it recalls that climate change, which is primarily the result of human activity, has led to rising sea levels, higher temperatures, forest fires and frequent, violent storms and thus widespread flooding. In short, it poses an existential threat to economic and social development in EU member states and has a very negative impact on macro- and micro-economic development, business, financial and social stability, infrastructure and human health.

Climate change and its impact on the economy

Climate change has a direct impact on macroeconomic indicators, financial and social stability, the real economy, international trade, infrastructure and agriculture, as well as the health of the population. The EESC notes that at the macroeconomic level in the monetary field, climate change will lead to higher inflation rates and thus higher interest rates, worsening labor conditions and a more difficult employment market, a decline in productivity, and consequently a slowdown in economic growth. From a fiscal perspective, climate change will result in increased spending related to natural disasters, floods, forest fires and damaged infrastructure.

Climate change – corrective action

In the EESC’s view, as part of the ongoing transition to a green and digital economy, it is necessary to undertake comprehensive and far-reaching structural changes that can have a significant impact not only on the shape of economic and social systems, but also on the way they function. As part of its planning for further action on climate change, the EC held a dialogue on resilience in 2024, as we reported in a previous article: EC concludes climate resilience dialogue.

The European Economic and Social Committee stresses that the consequences and costs of inaction will, over time, increasingly lead to irreversibly disrupted climatic conditions, deterioration in the health of the population, and a consequent decline in the productivity of the individual and the economy as a whole.

According to the prepared opinion, the costs of investment related to climate change will be very high. The additional average annual investment needs for achieving the 2030 climate and energy targets were estimated at about 480 billion euros. Taking into account the link to the digital transformation process and the provision of open strategic autonomy, these costs will amount to about €3.2 trillion.

Climate change affects every country that is part of the global economy. Therefore, the EESC believes that all actions must be coordinated and aligned at the international level. In this context, it strongly supports the EU’s efforts to prioritize the fight against climate change. This will require commitment at local, regional, national, EU and global levels in all areas – including the economy and the social sphere.

Climate change and its impact on people’s lives

According to the published opinion, climate change will be very harmful to people’s health and will have a direct impact on their lives and the risk of environmentally and animal-borne diseases. The biggest threat in this context will be infectious diseases resulting from higher temperatures, drought and water scarcity, heavy rains, flooding and warming oceans. Climate change is expected to exacerbate the course and increase the incidence of some 58 percent of infectious diseases affecting humans. In this context, the EESC recommends that the European Commission develop a strategic plan to protect the population from the effects of the climate crisis and its impact on infectious diseases

The European Economic and Social Committee also points out that the ongoing rise in temperature could lead to persistent droughts, causing so-called climate migration, with negative economic consequences. It is therefore necessary to focus on the main factors that have a significant impact on climate change, such as waste volumes, as well as excessive consumption of energy and food and clothing. All of this will lead to unsustainable production and, consequently, further pollution, endangering lives. In addition, the EESC stresses that climate change will have a negative impact on societies and could exacerbate income inequality and increase the extent and level of poverty.

Climate change and water risks

In its opinion, the European Economic and Social Committee also points out that climate change is leading to water scarcity. In addition, its quality and availability for agricultural production, tourism (limited snow in the winter and water scarcity in the summer months), and energy may decrease. The entire agricultural sector is at risk, as is maritime transportation.

Climate change is expected to lead to major disruptions in water availability across Europe, mainly due to less predictable precipitation and more intense storms. As a result, greater water shortages can be expected, especially in southern and southeastern Europe, and an increased risk of flooding across much of the continent. The changes will affect many land and sea regions, as well as a wide variety of habitats and species.


pic. main: Jenik, CC BY-SA 3.0 / Wikimedia Commons

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