Investment in climate change adaptation in Europe is still insufficient

Agriculture, energy and transportation are three economic sectors that stand to lose billions of euros due to climate change. However, the European Environment Agency points out that risks can be turned into opportunities – investments in climate adaptation made well in advance can significantly increase Europe’s competitiveness on the global stage.

The need for action – clear and urgent

A report published on January 13 this year by German insurance group Munich RE shows that global losses from natural disasters amount to $224 billion in 2025. – Extreme weather events are responsible for 92 percent of this total. The past 12 years have been among the warmest ever measured. Warning signals are appearing constantly. What’s more, under current conditions, climate change could continue to worsen – Tobias Grimm, chief climatologist at Munich RE, commented on the facts.

Awareness of the growing climate threat is widespread in Europe. A survey conducted by the European Investment Bank (EIB) in 2024 found that 94 percent of respondents consider climate change adaptation important, and 50 percent believe it should be a priority task. According to experts from the European Environment Agency (EEA), early and proactive action is key to reducing risks and limiting damage in the future.

Climate change adaptation costs

The January 12 EEA report summarizes the expected costs and benefits of adaptation measures in the three most climate-sensitive sectors of the European economy: agriculture, energy and transport. The estimates were prepared for two different scenarios: moderate and high emissions in the long term to 2050 and 2100.

The total costs of climate change adaptation for all three sectors, according to EEA estimates, are expected to range from 53 to 137 billion euros a year by 2050, and from 59 to 173 billion euros a year over the next five decades. The most costly investments will be in the energy sector (39 to 127 billion euros per year), while agriculture and transportation will require an average of 7 to 20 billion euros per year by 2050.

Is it a lot? As part of the answer, EEA experts recall that economic losses from extreme weather events averaged 40-50 billion euros a year in the EU between 2021 and 2024. In total, since 1980, Europe has lost €822 billion due to these events, with record damage in recent years. The intensity of climate disasters is expected to increase further in the near future.

EEA analysts stress that the real cost of adapting to climate change depends on the effectiveness of global mitigation efforts. If emissions can be reduced and warming kept in check, spending on adapting to the new reality will be lower. But the reverse relationship is also true – investment in adaptation measures brings a so-called double dividend, reducing the cost of mitigation efforts.

Why does building climate resilience pay off?

The aforementioned double dividend concept means that the benefits of climate change adaptation investments tend to be comprehensive, increasing the cost-effectiveness of expenditures. As good examples, EEA experts point to, among others:

• restoration of wetlands, which protect against floods and further increase the accumulation of carbon in nature;
• Climate-resilient buildings cope better with heat and storms, and reduce emissions through energy efficiency;
• Smart renewable energy storage and distribution systems that combine disaster resilience with emissions reduction.

The EEA report also features the concept of the triple dividend, which identifies immediate benefits (protection of life and property), economic potential (higher productivity, new jobs, reduced capital costs associated with climate risk mitigation and preservation of land values) and co-benefits (e.g., ecosystem services, increased biodiversity, improved air quality, etc.) as expected outcomes from climate change adaptation.

The report’s authors emphasize that the benefits of adaptation investments are inherently long-term and difficult to estimate precisely. However, the results of a study conducted by the EC’s Joint Research Center indicate that €1 spent on adaptation to the risk of coastal flooding in the EU yields an average of €6 in profits. Globally, by contrast, an investment of $1 is believed to yield a benefit of $10.5 over 10 years. The average value of second and third dividends is often estimated as twice the avoided losses.

Investment in climate change adaptation still insufficient

Climate change adaptation is being implemented through various sources, primarily the public sector at the EU, national and local levels. Private investment is still a distinct minority and occurs mainly in the form of public-private partnerships.

In 2025. total investment in climate change adaptation in the three sectors under discussion in the EU amounted to 15-16.1 billion euros. The lion’s share of this capital, as much as €9.3-9.8 billion each, went to the agricultural sector. Transportation and energy received €3.35-3.85 and €2.36-2.47 billion, respectively, with EU funds always being the dominant source of capital.

Despite such a serious financial commitment, EEA experts believe that the investment gap for all three sectors by 2050 will be 39 billion euros in the case of moderate levels of emissions and 120 billion euros assuming their growth. Looking ahead to 2100, the figures increase to 44 and 157 billion euros.

Three reports published in 2024 (Draghi, Letta, Niinistö), meanwhile, emphasize in unison that climate change poses a serious threat to Europe’s security and prosperity. Investing in adaptation not only avoids serious damage, but also strengthens the EU’s competitiveness on the international stage, especially vis-à-vis China and the United States.

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In the article, I used:

EEA Briefing 18/2025, Making agriculture, energy and transport climate resilient: how much money is required and what will it deliver? ISBN: 978-92-9480-749-6 – ISSN: 2467-3196 – doi: 10.2800/8374479

https://www.munichre.com/en/company/media-relations/media-information-and-corporate-news/media-information/2026/natural-disaster-figures-2025.html