A new report reveals that climate change is causing direct and escalating damage to Europe’s agriculture, with annual losses averaging €28.3 billion roughly six per cent of the continent’s total agricultural and livestock output. Startlingly, nearly 70 per cent of these climate-related losses are uninsured or uncompensated, leaving farmers financially exposed to disasters like droughts, floods, and hailstorms.
Published jointly by the European Investment Bank (EIB) and the European Commission the report marks the first comprehensive review of agricultural insurance systems across all 27 EU member states. It paints a grim picture: unless rapid reforms are enacted, uninsured losses in European agriculture could rise from 42 per cent to as high as 66 per cent by 2050.
Insurance and risk-reduction schemes are now essential to enable farmers to invest and adopt sustainable agricultural practices.
Despite Europe economic strength, its farmers are increasingly left to weather climate shocks alone. The study highlights that only 20 to 30 per cent of agricultural damages from climate events are currently covered by insurance, in stark contrast to the scale of the losses.
The financial impact is not just limited to farms. Rising climate risks are spooking banks as well. European Agriculture Commissioner Christophe Hansen warned that banks may hesitate to provide credit if most agricultural losses remain uninsured. He urged EU member states to include climate risk provisions in their Common Agricultural Policy (CAP) strategic plans to safeguard rural finance.
The EIB-commissioned study calls for urgent structural changes, including:
- Development of catastrophe bonds and public-private insurance partnerships.
- Fast-disbursing relief funds to respond to disasters.
- A shift from reactive insurance-based protection to proactive adaptation.
To build resilience, the report advocates for climate-smart strategies such as drought-resistant crop varieties, advanced irrigation systems, and diversification of farming practices.
The EIB has already contributed to Europe’s agricultural resilience by extending direct loans, backing rural infrastructure projects, and guiding CAP-based investments. But the message is clear: insurance, while vital, is only one piece of the puzzle. Europe’s agriculture must evolve into a climate-resilient sector backed by robust policy, financial mechanisms and adaptive technology. Without it, the cost of inaction could multiply, deepening both economic and food security crises across the continent.