“Climate change and its consequences could restrict farmers’ access to finance, as banks could become even more reluctant to take risks than they are today,” Christophe Hansen, the EU’s commissioner for agriculture and food, said in a statement, urging action to counter climate risks in the sector
The European Union’s agriculture industry is losing €28 billion ($31.5 billion) a year due to increasing climate risks, such as droughts and flooding, according to a new study.
Those losses from adverse weather equate to about 6% crop and livestock production, according to a report by the European Investment Bank and the European Commission produced by insurance broker Howden said in Tuesday.
Climate-related damages, which are mostly uninsured, could climb to €40 billion by mid-century, it said.
Extreme weather in recent years has led to wash-out harvests and threatened food security at a time when European nations are seeking to shore up supply chains against shocks. Following protests by farmers, the 27-nation bloc set out a new vision for agricultural policy and simpler financing.
“Climate change and its consequences could restrict farmers’ access to finance, as banks could become even more reluctant to take risks than they are today,” Christophe Hansen, the EU’s commissioner for agriculture and food, said in a statement, urging action to counter climate risks in the sector.
Farmers’ average crop losses are expected to increase by up to 66% by 2050 without stronger action to address climate change, the analysis said. Currently, drought causes more than half of total agricultural losses.
With southern Europe hit particularly hard by drought, the analysis said that by 2050, in a “catastrophic” year, annual losses in Spain and Italy alone could hit 20 billion euros.
The European Investment Bank, the EU’s lending arm, said the analysis would guide its efforts to support farmers, which include financing investments like irrigation, and providing loans and guarantees.
Europe can do more to mitigate losses, including through the use of catastrophe bonds and public-private reinsurance arrangements, according to the study. It also proposed a rapid response fund and improved climate insurance coverage.
Agencies