Climate change and nature loss are affecting all aspects of our lives, including our economies. What is the latest research telling us, and what is the cost to the economy? Stefania Secola talks to Executive Board member Frank Elderson and Deputy Director General and researcher Livio Stracca about how rising physical risks will affect our economies.

The views expressed are those of the speakers and not necessarily those of the European Central Bank.

This episode was recorded before the tragic floods in Spain.

Published on 1 November.

In this episode:

01:42 Floods, wildfires and droughtsHow do climate change and nature degradation affect our economies? And how high was the economic loss caused by recent extreme weather events ?

05:52 Catastrophe insuranceWhat is it? How many people have it? And what does it mean for our preparedness if disaster were to strike?

06:57 Adapting to a changing economyIt’s clear that our environment is changing. How can we adapt our activities in the face of these changes?

10:05 The Network for Greening the Financial SystemWhat is it, and what does it do? And what does it have to do with central banks and supervisors?

12:32 How do climate change and nature loss affect our economies?How much higher are the expected losses than we previously thought? What’s the latest scientific research telling us?

14:58 Climate messages during the Conference of the Parties (COP) meetingsWhich topics need more attention? And what can we do about it?

19:19 Our guests’ hot tips

Further reading:
The impact of climate change and policies on productivity
https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op340~0173592e52.en.pdf

Policy options to reduce the climate insurance protection gap
https://www.ecb.europa.eu/pub/pdf/other/ecb.policyoptions_EIOPA~c0adae58b7.en.pdf

Managing climate-related risks
https://www.ecb.europa.eu/ecb/climate/managing_mitigating_climatel_risk/html/index.en.html

Living in a world of disappearing nature: physical risk and the implications for financial stability
https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op333~1b97e436be.en.pdf

What to do about Europe’s climate insurance gap
https://www.ecb.europa.eu/press/blog/date/2023/html/ecb.blog.230424~4cdc3a38ba.en.html

Failing to plan is planning to fail – why transition planning is essential for banks
https://www.bankingsupervision.europa.eu/press/blog/2024/html/ssm.blog240123~5471c5f63e.en.html

The climate insurance protection gap
https://www.ecb.europa.eu/ecb/climate/climate/html/index.en.html

The Network for Greening the Financial System
https://www.ngfs.net/en

Measuring economic losses caused by climate change
https://cepr.org/voxeu/columns/measuring-economic-losses-caused-climate-change

“Know thyself” – avoiding policy mistakes in light of the prevailing climate science
https://www.bankingsupervision.europa.eu/press/speeches/date/2024/html/ssm.sp240412~c256dc168c.en.html

Hothouse Earth by Gill McGuire
https://www.google.com/search?safe=active&sca_esv=0d2d5197637c41d9&rlz=1C1GCEA_enDE1060DE1060&q=hothouse+earth+bill+mcguire&udm=3&fbs=AEQNm0Aa4sjWe7Rqy32pFwRj0UkWd8nbOJfsBGGB5IQQO6L3J_86uWOeqwdnV0yaSF-x2jqw-AzvpDFRWNmLZKilfTrfO0pl9dtT9e2t2elzSdzPviJlaPtdkm_zev73LcACj_Zt3WoLu1loKbhUBQ0BvD6_OC9OERnpW26hAPVqw_fTJrjRkQgEJf5SXlzvVj2JhcxyIvER&sa=X&ved=2ahUKEwi2yfiVobGJAxX6_7sIHZckMjAQs6gLegQIExAB&biw=1280&bih=665&dpr=1.5

Climate Change 2023 Synthesis Report
https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_LongerReport.pdf

Headline statements of the Synthesis Report
https://www.ipcc.ch/report/ar6/syr/resources/spm-headline-statements

Climate Change 2023: Synthesis Trailer
https://www.youtube.com/watch?v=T9CeECpxtx8

European Central Bank
https://www.ecb.europa.eu

European Banking Supervision
https://www.bankingsupervision.europa.eu/home/html/index.en.html