Europe’s fire costs this year mount to beyond €3bn

{"text":[[{"start":10.36,"text":"Wildfires and heatwaves sweeping France and Spain and other parts of Europe have already cost more than €3bn this year, according to FT analysis, highlighting the mounting toll of blazes driven by climate change."}],[{"start":23.28,"text":"Almost half a million hectares have burnt in the first two months of the fire season at an economic cost of €3.1bn to the five worst-hit Eurozone countries alone, including Portugal, Greece and Romania. This far outstrips European Commission estimates of a €2.5bn average annual impact for the whole EU."}],[{"start":43.54,"text":"The FT estimates are based on methodology underpinning the Commission’s figures and matching calculations by the French government, and represent the so-called “restoration” cost of returning burnt areas to their previous state — a way of capturing their economic value."}],[{"start":58.6,"text":"The average cost per hectare for replanting and maintenance varies by country, reflecting the types of land cover and the age of the forest."}],[{"start":66.76,"text":"The overall impact will eventually be far higher. Insurers, households and businesses are still counting the cost of damage to property and crops and disruption to tourism at the peak of summer."}],[{"start":79.32,"text":"Other costs in the form of increased insurance premiums or uninsurable property, lower visitor numbers and the need to spend heavily on firefighting equipment will materialise over time."}],[{"start":null,"text":"

"}],[{"start":90.48,"text":"The calculations also do not fully reflect the latest blazes in Greece, where the prime minister said teams would swiftly step in to record damages for the provision of state support for those who lost property."}],[{"start":101.48,"text":"Separately the costs of drought have yet to emerge, as a drop in water levels on the Rhine and Danube rivers causes disruption to the flow of goods and production cuts. German chemical companies such as BASF, Covestro and Evonik have plants concentrated along the Rhine."}],[{"start":118.48,"text":"Record lows in the Danube are set to cause the shutdown of Hungary’s nuclear power plant, which supplies nearly half the country’s electricity. Romania has also been forced to shut one of the two reactors of the Cernavodă nuclear power plant. Both draw cooling water from the river."}],[{"start":133.32,"text":"Sarah Meier, an expert in climate economics at ETH Zurich, said the true economic toll of the fires alone could be more than triple the annual average of €2.1bn in lost GDP that she calculated wildfires cost regional economies in Portugal, Spain, Italy and Greece from 2011 to 2018."}],[{"start":153.56,"text":"“If the fires end up reaching cities, it’s going to be far, far above that,” Meier said."}],[{"start":null,"text":""}],[{"start":159.84,"text":"France’s Gironde department is a hub for defence and aerospace industries. Fires forced companies including jet engine maker Safran, fighter jet manufacturer Dassault Aviation and rocket maker ArianeGroup to pause production and evacuate staff."}],[{"start":175.6,"text":"The region is also renowned for its wine production. Bordeaux’s famous vineyards have largely escaped so far but it is unclear if smoke taint will ruin the harvest. Oyster farming in the Arcachon basin has also taken a hit and tourism, which accounts for 7 per cent of the department’s GDP, faces ongoing disruption."}],[{"start":null,"text":""}],[{"start":194.52,"text":"Gironde’s Chamber of Commerce and Industry said at least 40,000 businesses had been directly affected by the fires, with 19,500 completely shut as of July 30, while between 120,000 and 150,000 employees were on state-subsidised short-time work as of July 27."}],[{"start":null,"text":""}],[{"start":214.4,"text":"The Spanish wildfires struck as close as 50km to the Spanish capital, burning houses, businesses and vehicles in rural towns. The Unión de Pequeños Agricultores y Ganaderos, which represents small-scale operators, measured preliminary losses of 18,500 hectares of “useful” land, mostly pasture."}],[{"start":null,"text":""}],[{"start":235.28,"text":"Despite all this, the damage is unlikely to make a significant dent in national GDP."}],[{"start":240.96,"text":"Ioannis Kountouris, associate professor at Imperial College, said some of the most important costs of fires — such as extra hospitalisations of people suffering from air pollution — were not monetised and rarely counted."}],[{"start":254.36,"text":"Andrew Kenningham, chief Europe economist at the consultancy Capital Economics — who noted the Gironde accounts for only 2.5 per cent of France’s output — said natural disasters can have “some paradoxical positive effects on GDP” that could offset the initial hit, as government aid and insurance payouts boost spending on reconstruction."}],[{"start":273.88,"text":"But as Meier pointed out, “this is not economic growth we like — it’s just replacing destroyed capital.”"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":279.96,"text":"Where climate change meets business, markets and politics. Explore the FT’s coverage here."}],[{"start":285.6,"text":"Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here"}],[{"start":299,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785736304_9482.mp3"}