By Lorenza Campagnolo, research coordinator, and the CMCC team involved in this study

The study on The cost of climate change on households and families in the EU was a great opportunity to shed some light on how the costs associated with adaptation measures, mitigation policies and the impact of climate change affect households in the EU depending on which region they are in and their socio-economic characteristics. The study acknowledges that there is a gap in the literature, with no broad assessment of the costs of climate change focusing on EU households.

It also proposes new methodology and results combining Eurostat’s household income and expenditure information, climate-related hazards and modelling tools. Our study considers both household income losses and climate-induced expenditure as a direct consequence of the impacts of climate change or adaptation needs.

Climate change will have a different impact on different EU regions and socio-economic groups in 2050. In a moderate climate change scenario, there will likely be increases in household health expenditure in northern and southern parts of the EU, in food expenditure in eastern, western and southern areas, in electricity expenditure across all regions and in insurance, especially in the north. This rise in expenditure will place a heavy burden on poorer households, which will be less able to diversify consumption and will have limited ability to adapt. At the same time, labour income losses will emerge in the south of the EU and overall income losses will be widespread across all regions.

There will be negative and regressive (weighing more on poorer households than on richer ones) impacts on a wide range of expenditures on goods/services and income sources, especially in the south of the EU (health, electricity and insurance expenditure, and total labour income), but also marginally in eastern (food expenditure) and northern regions (electricity and insurance expenditure). Climate change will likely increase the number of people at risk of poverty across the EU; climate change mitigation scenarios will likely reduce this, favouring faster wage growth in low-skilled labour compared to high-skilled labour.

The main recommendations for policymakers are to prioritise regions, as in the case of southern parts of the EU, which are experiencing negative impacts on households and regressivity at the same time, and to strengthen income support measures and tailor them to the most vulnerable segments of the population in these regions. Furthermore, the multi-sectoral nature of climate change costs calls for horizontal policy integration to make policymaking more effective.

The study, which was carried out by the CMCC at the request of its Civil Society Organisations Group and the executive summary can be downloaded from the EESC website.