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Extreme Weather in Europe: Determinants and Economic Impact

Author

Listed:
  • Marcelle Chauvet

    (University of California Riverside, USA; Rimini Centre for Economic Analysis)

  • Claudio Morana

    (Center for European Studies, University of Milano-Bicocca, Italy; Center for Research on Pensions and Welfare Policies; Rimini Centre for Economic Analysis)

  • Murilo Silva

    (University of California Riverside, USA)

Abstract

This paper investigates the linkage between deteriorating extreme weather conditions and anthropogenic GHG emissions and their economic impact on 40 European countries. The analysis employs the European Extreme Events Climate Index (E3CI) and its seven subcomponents, i.e., extreme maximum and minimum temperatures, wind speed, precipitation, droughts, wildfires, and hail. Using an innovative panel regression-based trend-cycle decomposition approach, we find support for the contribution of human-made GHG emissions to the deterioration of underlying extreme weather conditions and their highly nonlinear pattern. We then conduct a Growth-at-Risk analysis within a quantile panel regression framework to assess the economic implications of our findings. We show that deteriorating extreme weather conditions, as measured by the E3CI index, negatively impact the entire GDP growth rate distribution. Yet the impact on the downside risk to growth is much more substantial than the upside risk. This result holds for various E3CI components, such as rising extreme maximum temperature, wind speed, drought, and wildfires.

Suggested Citation

  • Marcelle Chauvet & Claudio Morana & Murilo Silva, 2025. "Extreme Weather in Europe: Determinants and Economic Impact," Working Paper series 25-01, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:25-01
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    More about this item

    Keywords

    climate change; extreme weather events; global warming; GHG emissions; trend-cycle decomposition; Growth-at-Risk; panel quantile regressions; Europe;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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