EU states spend less than half the amount needed to withstand climate damage

The arithmetic is unambiguous. European governments need to spend roughly €70 billion a year preparing for the consequences of a warming climate, according to European Commission estimates published in January. They are currently managing about €29 billion. That €41 billion annual shortfall is not an abstract accounting gap: it represents flood defences unbuilt, urban cooling schemes undelivered, and infrastructure left exposed to the fires, droughts and heatwaves that have defined the summer of 2026.

A summer that erased growth

Successive heatwaves across southern and central Europe, deepening drought in the Mediterranean, and wildfires that have torn through forests from Greece to Sweden have caused damage that some economists believe could wipe out the EU's already modest GDP growth for 2026. The European Commission's own modelling suggests climate-related disasters are already stripping 1 per cent from the bloc's GDP each year. On current trajectories, that figure rises to 2.3 per cent by 2050 and 7 per cent by the end of the century. For the countries most exposed, insurers have warned that cumulative GDP losses between now and 2030 could approach 7 per cent.

Those numbers carry a particular sting at a moment when several European economies are barely expanding. Germany's industrial sector has been flatlining. Italy's public finances are under renewed scrutiny from the European Central Bank. France is grappling with a deficit that has already breached EU rules. The idea of diverting tens of billions more towards climate-proofing, rather than towards existing spending commitments or tax cuts, is politically fraught.

Hoekstra's case for spending now

Wopke Hoekstra, the European Commission's Climate Commissioner, has spent recent weeks making the argument that adaptation investment is not discretionary spending but a form of future-cost avoidance. In an interview, he was blunt: the succession of climate disasters this summer should put an end to the idea that adaptation is a luxury.

"I think we've now had enough reality checks that adaptation spending is not a luxury," Hoekstra said. "It's a crystal-clear necessity. Let's get into action mode, and that has ramifications for the European budget, for national budgets... but the reality is that if you don't, you will be paying more."

His pitch rests on a straightforward cost-benefit logic. A study by the World Resources Institute found that every dollar invested in adaptation measures generates $10 in benefits over a decade. The United Nations has estimated that $1 billion spent on coastal protection can prevent $14 billion in economic damage. Against that backdrop, the current pattern of European spending, roughly €29 billion a year on adaptation versus roughly €45 billion a year in damage to infrastructure and material assets, looks less like thrift than negligence.

"None of us has a money tree in his or her backyard," Hoekstra acknowledged. "But in the end, a budget is a reflection of your policy priorities. And what the wildfires and floodings are telling us is, you better make this into a priority because otherwise you're going to pay even more dearly, in terms of health effects, economic effects, societal effects."

The uninsurable future

One consequence of under-investment in adaptation is already visible in insurance markets. As damage claims mount, insurers are pulling back from regions they deem too risky. Hoekstra issued a direct warning on this point: governments that choose not to invest in resilience should "not be surprised if you have more areas that you will not be able to insure. And don't be surprised if the economic damage goes up and up and up."

The dynamic is familiar to anyone who has followed the Australian or Californian insurance markets, where insurers have withdrawn from entire regions after consecutive years of catastrophic losses. In Europe, the same pattern is beginning to emerge in coastal zones prone to flooding and in Mediterranean areas vulnerable to wildfire. When private insurers retreat, the costs fall either on households that cannot obtain cover or on governments that end up as insurers of last resort. Both outcomes are expensive. Neither is sustainable without deliberate investment in reducing the underlying risk.

What the Commission's resilience framework will contain

The Commission is drafting an EU-wide adaptation package, formally titled the Integrated Framework for European Climate Resilience, and expects to publish it in October or November 2026. Hoekstra outlined three structural elements.

The first is a common scenario that all member states would use as a baseline for adaptation planning. This follows a recommendation from the Commission's scientific advisers earlier in the year. The purpose is to prevent a situation where each government works from its own assumptions about future warming and its consequences, leading to fragmented and inconsistent preparation across the continent.

The second element addresses a question that has long muddled European climate policy: who is actually responsible. "Who is responsible for the firefighting? Who is responsible for the financing? Who is responsible for planting trees in cities? Who is responsible for health care measures for the elderly?" Hoekstra asked, listing the kinds of practical questions the framework must answer. Climate resilience touches municipal planning, regional infrastructure, national budgets and EU-level coordination, and without clear assignments of responsibility, spending tends to fall between the cracks.

The third pillar is what Hoekstra called "mainstreaming": embedding climate resilience into every stage of policymaking, from infrastructure investment decisions to legislative drafting, rather than treating it as a separate portfolio. The idea is that a road project, a housing development or a hospital design should account for future climate conditions as a matter of course, not as an afterthought.

Emergency response is not the same as readiness

Europe has improved its capacity to respond when disaster strikes. Under Commission coordination, nearly 800 firefighters from across the EU can now be deployed rapidly to areas facing acute threats. The EU's firefighting fleet is being expanded. Hoekstra pointed to these developments as evidence of progress: "We have dramatically stepped this up. We now have almost 800 men and women from firefighter brigades that can be flexibly employed in the places where the proverbial shit hits the fan."

But emergency response and long-term adaptation are fundamentally different tasks. One puts out fires; the other ensures fewer fires start and that fewer homes lie in their path. Hoekstra conceded the point. "I don't think any one of us can be complacent," he said. "We need to do significantly more, at regional, national and European level."

The distinction matters because political systems reward visible crisis management more readily than invisible prevention. A fire crew deployed on television looks like action. A flood barrier that prevents a disaster that never happens is harder to claim credit for. This is one reason why adaptation spending has lagged behind the Commission's own estimates of what is required.

The fiscal bind

The central tension in Hoekstra's argument is that the governments most in need of adaptation investment are often those with the least fiscal room to make it. Southern European countries face the greatest exposure to heat, drought and wildfire, and several carry debt loads that already stretch European Central Bank tolerance. Germany and the Netherlands may have more capacity to spend, but their immediate climate vulnerability is, for now, less acute.

Hoekstra acknowledged the constraint but argued that the cost of inaction compounds. Deferring adaptation spending does not preserve fiscal space; it increases the eventual bill. Damage to infrastructure, lost agricultural output, strain on healthcare systems during heatwaves, and reduced labour productivity all erode the tax base that governments rely on to service debt. The Commission's own figures suggest that by mid-century, the annual GDP hit from climate damage could be more than double what it is today.

The question of how to finance adaptation at scale is likely to dominate the next EU budget cycle. The current multiannual financial framework runs to 2027. Discussions about its successor will have to grapple with whether the EU creates dedicated funding instruments for resilience, whether it allows member states more flexibility in how they use existing structural funds, or whether it pursues some form of common borrowing, an option that remains contentious in several capitals.

Emissions cuts alone will not prevent the damage

Hoekstra also made a point that is sometimes lost in European climate debates, which have historically prioritised emissions reduction over physical preparation. Even if all greenhouse gas emissions ceased tomorrow, the warming already locked into the system means Europe faces years of severe summers ahead. Adaptation and mitigation are not alternatives; they are parallel obligations.

"Even if we would be able to kill all emissions tomorrow, we still would be having a number of very rough summers ahead," he said. "We cannot afford to see the summer of 2027 or the summer of 2028 as another reality check. We've had enough of these. We know what is happening. We know what's coming. There can be no hope in just keeping doing the same and then hoping that the results will be better. That will be naïve and in my view unacceptable."