Europe drought, wildfires cause at least €3.5bn economic loss

The July drought and wildfires in Europe are likely to result in a minimum of €3.5 billion economic loss, according to the latest Aon catastrophe report.

Many countries saw a worsening in drought-related and wildfire conditions during the month, leading to hundreds of deaths and a significant financial impact globally – particularly on the agriculture, forestry, water management, and fisheries industries, Aon’s monthly Global Catastrophe Recap report said.

Preliminary aggregated estimates of economic losses entirely due to harvest reduction and impacted forestry exceeded multiple billions of US dollars, the report noted.

Northern Europe was impacted by a long-term rainfall deficit that caused one of the deepest droughts on record, contributing to combined European drought losses in excess of $4.0 billion. According to various industry estimates, German farmers alone could face economic losses of €2.5 billion ($2.9 billion).

Other severe drought events affected agriculture in Australia and Central America, and an extensive heatwave killed more than 150 people in Japan and South Korea.

In California, the Carr Fire became one of top 10 most destructive wildfires on record after being ignited near Redding, killing six people, destroying roughly 1,600 structures and damaging hundreds more. The total economic cost from the Carr Fire was anticipated to exceed $1 billion, with insurance losses also expected to approach or top that total.

Another Northern California wildfire, the Mendocino Complex Fire, destroyed 143 structures and became the largest fire in the modern record (since 1932) in California.

The deadliest wildfire event on record in Europe since 1900 had a devastating impact in the Mati, Eastern Attica region of Greece, killing at least 92 people. The fire, and others in Attica, destroyed at least 905 structures and damaged a further 740.

Elsewhere in Europe, Sweden battled the most significant wildfire outbreak in its modern history, with damage exceeding $100 million.

“The month of July was marked by record-breaking heat, deepening droughts, and destructive wildfires in areas all around the globe,” said Michal Lorinc, an analyst within Impact Forecasting’s Catastrophe Insight team. “Nearly every major continent recorded some type of peril impact that will lead to a major cost to agricultural interests. In Northern Europe alone, the cost to local farming interests is expected to result in a multi-billion-dollar loss in harvest output. All eyes are on the looming possibility of an El Nino return by the end of the year, which could exacerbate these types of impacts,” Lorinc added.

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