European agriculture loses over €28 billion annually due to extreme weather events like droughts, and these losses could rise by up to 66% by 2050 if climate change continues unchecked, according to a new joint report from the European Investment Bank (EIB) and the European Commission.
The study calls for stronger EU-level risk management in farming, highlighting the need to expand insurance options to better protect producers. Currently, just 20% to 30% of climate-related losses are insured across the EU — whether through public, private, or mutual systems, including those under the Common Agricultural Policy (CAP), according to a press release. The analysis also finds that publicly supported insurance is generally more effective than post-disaster compensation programs.
“Climate-related risks are an increasing source of uncertainty for food production. Mitigating these risks through insurance and de-risking mechanisms is essential to support the investments of European farmers,” said EIB Vice-President Gelsomina Vigliotti. “The findings of this analysis will guide our future action as we step up support to bolster the resilience of the EU’s agricultural system.”
Commissioner for agriculture and food, Christophe Hansen, said that 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.
“The study we are publishing today with the EIB shows that only 20% to 30% of climate-related losses are insured by public, private or mutual systems,” Hansen said.
“We need to do something to cover the remaining losses. I encourage all Member States to assess and launch new financial instruments under their CAP Strategic Plans, to better prevent climate risks in the agricultural sector. I also welcome the work of the EIB Group, which is playing a key role in mobilising capital to ensure the long-term resilience of the EU’s agri-food sector.”
The new study is the first-of-its-kind analysis of agriculture-insurance schemes across the EU. It was commissioned by the Commission’s Directorate-General for Agriculture and carried out by EIB Advisory, under the fi-compass platform, with the support of the global insurance intermediary group Howden.
Publication of the report coincides with an EIB-Commission conference in Brussels on Insurance and access to finance for farm resilience and adaptation in the EU.
Across the 27 EU member states, agriculture suffers an average of €28.3 billion in climate-related losses each year—equivalent to about 6% of the bloc’s annual crop and livestock output, according to the new study.
The report warns that global warming could further destabilize EU farm incomes by increasing the volatility of agricultural yields, with projected annual losses rising between 42% and 66% by 2050.
It offers a wide-ranging analysis of how weather extremes impact European agriculture and outlines potential strategies to expand farm insurance and promote climate adaptation to reduce future risks.
Main recommendations in the report include:
- To limit economic shocks for farmers, the EU should pursue risk-transfer measures including catastrophe bonds and public-private reinsurance arrangements
- The EU should provide rapid-response funding when disasters occur
- The sector as a whole should take more adaptation steps because, even with improved insurance coverage, they are critical for countering future climate risks.
