Climate Risks Cost EU Agriculture €28 Billion Annually, with Losses Set to Rise

The European Union loses approximately 6.4% of its total agricultural output annually due to climate-related risks—equivalent to more than €28 billion, according to an analysis published by Morgan Stanley and cited by Greek newspaper Ekathimerini. The largest losses are attributed to drought, which accounts for more than half of all damages reported in both agriculture and livestock.

Extreme heatwaves and prolonged droughts have intensified over the past two decades, and the trend continues to worsen. In June 2025, Western Europe recorded its highest temperatures in history, and weather forecasts suggest a summer even hotter than the multi-year average. Around two-thirds of the most severe European heatwaves since 1950 have occurred after the year 2000, underscoring the growing frequency of extreme climate events.

On average, crop production loses around €17.4 billion each year, while the livestock sector accounts for €10.9 billion in losses. The most damaging events include drought, frost, hail, and excessive rainfall, which together represent 80% of the climate-related impact. Projections indicate that total losses could reach €40 billion annually by 2050, a 66% increase compared to current levels.

Despite these concerning figures, agriculture accounts for just 1.65% of the EU's GDP. However, the economic impact is disproportionately high in countries where agriculture plays a more substantial role. For instance, agriculture contributes 3.3% to Greece’s GDP, 2.5% in Spain and Portugal, and 4.1% in Latvia—the highest share in the EU. In Romania, where nearly 18% of the workforce is employed in agriculture, climate risks have a much greater socio-economic impact than the EU average.

In farming seasons severely affected by extreme weather, losses can reach dramatic levels—up to €20 billion in Spain and Italy, and over 3% of GDP in smaller economies in Central and Southern Europe. In Greece, climate-related damages already total around €3 billion annually, of which €2.6 billion are caused by severe droughts. By 2050, these annual losses are expected to increase by 43%, reaching €3.7 billion.

The rising frequency and intensity of climate risks are making agricultural yields and farmer incomes increasingly volatile. Adapting Europe’s farming systems to the new climate reality is becoming a strategic priority for all EU member states.

(Photo: Freepik)