Policy Contribution

Issue n˚11/22  | June 2022

How can the European
Union adapt to climate
change while avoiding a
new fault line?
Klaas Lenaerts, Simone Tagliapietra and Guntram Wolff

Executive summary
Europe must increasingly deal with the harmful impacts of climate change, regardless
Klaas Lenaerts (klaas. of its success in reducing emissions. These impacts have significant cross-border effects and
[email protected]) is a threaten to deepen existing divisions. Cooperation on adaptation, which is mostly seen as
Research Analyst at Bruegel requiring local or regional efforts, may be useful, but the role of the European Union is
ill-defined.

Simone Tagliapietra
We give an overview of how climate change might change Europe and how it might affect
(simone.tagliapietra@
people and the economy. We also discuss what sort of adaptation policies are being pursued
bruegel.org) is a Senior
at EU level and on what grounds. We argue that a stronger adaptation governance framework
Fellow at Bruegel
would benefit adaptation efforts.

Guntram Wolff (guntram. We formulate three ideas to strengthen adaptation. First is a three-layered governance
[email protected]) is
framework based on intensive cooperation to establish binding adaptation plans. Second is
Director of Bruegel
an EU-level insurance scheme against damages from climate change, with the size of national
contributions tied to the achievement of self-chosen targets in adaptation plans. Our final
The authors thank Stavros suggestion is to increase ex-ante adaptation funding by targeting more spending under EU
Zenios and other Bruegel regional and agricultural policies specifically to adaptation in the most vulnerable regions.
colleagues for their valuable
comments and suggestions.

Recommended citation
Lenaerts, K., S. Tagliapietra and G. Wolff (2022) ‘How can the European Union adapt to
climate change while avoiding a new fault line?' Policy Contribution 11/2022, Bruegel
 1 Introduction
The European Union’s commitment to climate neutrality by 2050 is necessary and lauda-
ble, but even if it succeeds, global average temperatures may still rise to 2.4 degrees Celsius
above pre-industrial levels by 2100, according to projections that assume other economies
worldwide also achieve their official climate promises, as set out in Nationally Determined
Contributions under the Paris Agreement (Stockwell et al, 2021). Even in the increasingly
unlikely scenario that global warming is limited to 1.5°C, the EU will still need to deal with
the consequences of more frequent and intense heat waves, droughts and floods, as well as
rising sea levels. In addition to mitigating climate change, major efforts will have to be made
to adapt societies, as signalled by the call at COP26 in Glasgow to allocate more international
climate aid to adaptation and to disaster relief.
The EU is ambitious on tackling climate change, but most actions at EU level focus on
mitigation. Adaptation – efforts to avoid, limit or manage the harmful effects1 of climate
change on human and natural systems – is mostly a regional and local issue. Nevertheless,
the EU is also moving on this front, and for good reason. Science predicts that southern
(and south-eastern) EU countries could be significantly more affected than their north-
ern counterparts, which may exacerbate existing tensions within the EU. Furthermore, the
all-encompassing effects of climate change touch on various policy fields that are within EU
competences, and there are many cross-border aspects and instances of scale advantages. It
remains, however, difficult to exactly delineate where and how the EU should step in, espe-
cially since adaptation to climate change still involves learning-by-doing.
The aim of this paper is to contribute to this debate, which will become increasingly
important as climate change accelerates. To set the scene, we first give an overview of what
may be ahead for Europe in terms of physical climate change and economic loss. We then
discuss the arguments invoked to warrant EU intervention in terms of adaptation, and look at
what the EU is currently doing in practise. Finally, we propose ideas to strengthen the govern-
ance of climate adaptation efforts in Europe, and to tackle remaining shortcomings.

2 Climate change’s impact on Europe

2.1 Physical effects
Global average surface temperatures have so far risen by 1.1°C since pre-industrial times
(IPCC, 2021). Land temperatures in Europe have been rising much faster, to about 2°C above
pre-industrial levels (Figure 1). This difference exists partly because global land temperatures
are increasing faster than those above the ocean, but also because Europe is warming faster
than some other regions (EEA, 2021a). With rising average temperatures, all of Europe is
also seeing more frequent and intense extreme weather phenomena today than it did during
much of the previous century. Europe is experiencing more summer heat waves, heavy pre-
cipitation and droughts, as well as rising sea levels (IPCC, 2021).
The specific impacts of climate change differ in different regions: all regions in Europe are
seeing higher temperatures today, but the rise of mean temperatures has so far been fastest
in central and eastern Europe, and in the very south, with more than 0.4°C of warming per
decade on average since 1960 (EEA, 2021a). Unlike the rest of Europe, the south has not seen
a clear increase in heavy precipitation and river flooding. Instead, it has suffered more from
droughts, as has western Europe (IPCC, 2021).

1 This includes effects from both slow and fast-onset events.

2 Policy Contribution | Issue n˚11/22 | June 2022

 Figure 1: Global and European average near-surface temperatures relative to
pre-industrial period (°C)
2.5
European annual
2

1.5

0.5
Global annual
0

-0.5

-1
1850
1854
1858
1862
1866
1870
1874
1878
1882
1886
1890
1894
1898
1902
1906
1910
1914
1918
1922
1926
1930
1934
1938
1942
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
2018
Source: Bruegel based on HadCRUT4 (mean) estimates reported by the European Environmental Agency (2021a).

Projections of different global warming scenarios for Europe teach us three main things
about the future: that it matters greatly how successful efforts are to reduce greenhouse
gas emissions, that all of Europe will be affected, and that in most scenarios, southern and
south-eastern Europe will face the biggest impacts of climate change on multiple fronts.
Average temperatures will increase in all regions throughout this century, but patterns
vary depending on the season. Winters will become warmer particularly in central and east-
ern Europe. Mountainous areas and the northern and southern edges of Europe will experi-
ence the largest temperature increases overall, especially in the summer, with mean temper-
atures that will be between 2°C and 2.5°C warmer than today by the end of this century, even

Figure 2: Annual number of health-affecting heatwave days between 1981-2010 (left) and between 2070-2099
under 3°C global warming scenario (middle) and a >4°C global warming scenario (right)

0 5 10 20 30 40 50 60 70 80 90

Source: Climate-ADAPT (2022b), based on Copernicus Climate Change Service data.

3 Policy Contribution | Issue n˚11/22 | June 2022

 in a scenario in which global warming stays below 2°C2 (Feyen et al, 2020; Climate-ADAPT,
2022a). Since southern Europe already has a warmer climate, it will be particularly affected by
more frequent heatwaves that are harmful to human health (Figure2).
Precipitation will change too. In an optimistic emissions scenario compliant with the Paris
Agreement (global warming stays below 2°C), most regions in Europe will see an increase
in annual average precipitation, mostly in winter (roughly 5 percent to 10 percent more
than today). Summer months may become dryer in the south however, particularly on the
Iberian Peninsula. In a high-emission scenario (global warming >4°C) the contrasts will be
much starker (Figure 3). The whole south will be much dryer throughout the year, with up to
20 percent less rainfall than today by the middle of the century and 30 percent less by 2100.
Wildfires and droughts may therefore become increasingly frequent and serious problems for
the Mediterranean region. Northern Europe on the other hand will become significantly more
wet on average, even though in the summer many north-western regions, including France,
Benelux, Britain and Ireland, will see less rainfall than today (Climate-ADAPT, 2022c). Rainfall
that is more concentrated in time is expected to result more often in river flooding in these
regions (EEA, 2021b).

Figure 3: Projected percentage change in annual precipitation by mid-century

(2041-2070) by region, in a high global warming scenario (> 4°C)

Source: Climate-ADAPT (2022c). Note: refers to NUTS 2 regions; see https://ec.europa.eu/eurostat/web/nuts/background.

Even the frequency of extreme sea levels and coastal floods is expected to increase much
more in the south than in the north. By 2100, sea-level surges that historically would occur once
every century may return as much as several times a year along the Mediterranean and Black
Sea coasts in a high emission scenario (>4°C), while they may happen once every one or two
years along northern shorelines. In an intermediate scenario (3°C) the probabilities decline to
around once a year and a few times each decade, respectively (EEA, 2021c).

2  For simplicity we use likely upper bounds of global average temperature increases by 2100 to refer to global
warming scenarios that were presented in the Fifth Assessment Report of the IPCC (2014a). 2°C refers to RCP 2.6,
a pathway in which CO2 emissions start to decline by 2020 and reach zero in the second half of this century. 3°C
refers to RCP 4.5, in which CO2 emissions remain at current levels until 2050, after which they start declining. > 4°C
refers to RCP 8.5, in which emissions continue to rise as before.

4 Policy Contribution | Issue n˚11/22 | June 2022

 2.2 Damages and economic impacts
The fact that climate change is already underway is reflected in a clear upward trend in global
estimated losses from climate-related disasters. There is, by contrast, not yet such a trend
in the EU (Figure 4). The high variability in Europe over time arises from the fact that most
historical damages in Europe were caused by a small set of big single events, such as storm
Lothar in 1999 or the heatwave of 2003 (EEA, 2022). However, the yearly number of reported
climate-related disasters in Europe is increasing. It is reasonable to assume that as both the
frequency and intensity of extreme weather events grow, so will the material damages from
such single disasters, especially as the value of exposed assets grows because of continued
building on flood plains, for example.

Figure 4: Historic damages from climate-related natural events worldwide and in

the EU, 5-year moving averages
Global climate-related damages EU27 climate-related damages
(5-year moving average, $ millions) (5-year moving average, € millions)
250000 25000
Global Swiss Re
200000 20000 EU27 RiskLayer
150000 15000

100000 10000
Global EM-DAT EU27 Munich Re
50000 5000

0 0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020

1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Source: Bruegel based on EM-DAT, CRED/UCLouvain (2021), Swiss Re Institute (2022), EEA (2022).

Estimates based on a static model by the European Commission’s Joint Research Centre
(Feyen et al, 2020) showed how much welfare loss the current EU economy could suffer if
it were subject to different global warming scenarios, compared to today’s climate (Figure
5). Feyen et al (2020) considered general equilibrium effects of damages from river floods,
coastal floods, droughts, windstorms and human mortality from extreme heat, as well as
declining agricultural yields and the impact of water scarcity on energy supply. Total EU28
(including the United Kingdom) welfare losses per year would be at least €175 billion with a
temperature rise of 3°C, €83 billion with 2°C and €42 billion with 1.5°C.
Regions that are more affected by climate change are also likely to suffer greater material
losses, particularly if these places are less prepared, as data from, for example, ND-GAIN
(2022) suggests. The Commission’s results confirm that southern Europe would be affected
the most, with a yearly loss of 1.3 percent of GDP with 2°C of global warming compared to
an average for the EU28 of only 0.7 percent3. The results are mostly driven by mortality from
extreme heat, without which losses are more similar across different regions. Strikingly,
Scandinavian countries could enjoy net economic gains, as increased energy output and
agricultural production outweigh the impact of more floods. No region has net gains in a 3°C
warming scenario, but the net losses for countries north of the Alps (0.2 percent to 0.6 percent
of GDP) are clearly less than those incurred by southern and south-eastern countries, which
would reach up to 2.8 percent of GDP.

3 Note that these are not projections of damages to assets, but losses in GDP. Estimates of future damages from the
same study are higher, eg €111 billion per year from coastal flooding alone (EU-wide) in a moderate emission
scenario without adaptation.

5 Policy Contribution | Issue n˚11/22 | June 2022

 Figure 5: Estimated welfare loss from different future climate impacts if applied to
today’s economy, by region and level of global warming, as % of GDP

Northern UK and Central Europe Central Europe Southern EU

Europe Ireland North South Europe and UK
1.5°C 2°C 3°C 1.5°C 2°C 3°C 1.5°C 2°C 3°C 1.5°C 2°C 3°C 1.5°C 2°C 3°C 1.5°C 2°C 3°C
0.5

-0.5

-1

-1.5

-2 River floods Droughts

Coastal floods Energy
-2.5 Agriculture Mortality
-3

Source: Bruegel based on Feyen et al (2020).

These impact estimates are conservative according to Feyen et al (2020). They do not
account for all possible climate impacts or tipping points (eg loss of labour productivity), and
they only apply estimated climate change effects to today’s economic output. Such a static
approach does not take into account long-term effects that climate change may have on the
growth rate of GDP, for example through reduced aggregate investment and political insta-
bility. Dell et al (2012) found robust evidence in historical data that temperature increases
reduce short-term economic growth in poor countries, as well as evidence suggesting persis-
tent effects on growth rates. Wealthy countries are not affected. Burke et al (2015) predicted
that due to cooler baseline temperatures, northern countries may see long-term growth
benefits in a high emission scenario, while countries that are on average already warmer may
suffer from permanently lower growth, resulting in very big GDP per capita gaps (relative to a
constant-temperature baseline) by 2100.
The debate on the existence of long-term growth effects from higher temperatures is
still open, whereas negative short-term impacts on GDP (sometimes non-linear) are well
established. Models that do not feature permanent growth impacts (but still permanent GDP
effects) usually predict much smaller effects than those that do. For example, Kalkuhl and
Wenz (2020) found output losses of ‘only’ 20 percent compared to the baseline in tropical
regions by 2100. In general, numbers depend greatly on assumptions and specifications and
precise estimates are clearly not possible (see Kahn et al, 2021). But most studies suggest
that climate change is set to exacerbate international inequalities, including within Europe.
Adaptation has not yet been sufficient to play a significant role in mitigating damages (Kahn
et al, 2021; Burke et al, 2015), but will become increasingly important in the long run (Dell et
al, 2012).

2.3 Sectoral impacts

The estimates above do not necessarily encapsulate the society-wide nature of the challenges
arising from climate change. Increasing temperatures and drought will, for example, force
farmers in most of Europe to switch to different crops or to irrigate their fields. International
crop prices rising on the back of worsening climate impacts elsewhere may in fact have a pos-
itive effect on the production of certain crops in southern Europe in case of successful adapta-
tion (Feyen et al, 2020). However, if adaptation fails, for example because there is not enough
water for irrigation, yields and the value of agricultural land all across southern Europe could
decline by more than half over this century (Van Passel et al, 2017).

6 Policy Contribution | Issue n˚11/22 | June 2022

 Electricity production and distribution will have to adjust to the changing availability of
water for hydropower and for cooling in thermoelectric power plants (eg see Behrens et al,
2017) as the north will become wetter and the south dryer, while more energy will be needed
to cool houses in the south. Building renewable capacity and interconnections can reduce the
risk of energy shortages (Feyen et al, 2020).
Another obvious impact will be on physical infrastructure. While droughts may reduce
the traffic capacity of inland waterways, transport infrastructure including bridges, airports
and seaports are vulnerable to inundations (Ciscar et al, 2018), as are of course buildings in
flood-prone areas. Drainage systems and dykes will have to be upgraded to withstand larger
amounts of water. Windstorms are not projected to inflict more damage on infrastructure, but
in mountainous areas, higher temperatures will increasingly destabilise the soil, with conse-
quences for infrastructure and dwellings (EEA, 2010).
Tourism will also be affected, as high seasons in the south will increasingly have to shift to
spring and autumn. In the mountains, communities relying on winter tourism will increas-
ingly have to turn to other sources of revenue, especially as the disappearance of glaciers will
also make agriculture relying on melting water more difficult.
While not addressed in this paper, the damage done to forests and other ecosystems by,
for example, more frequent fires and insect outbreaks, should not be underestimated (Feyen
et al, 2020), not only because nature areas create opportunities for tourism, but also because
they are important to human health and wellbeing, and because they serve as carbon sinks.
Finally, climate change will have direct impacts on human health and mortality, through
excessive heat and vector-borne diseases (Feyen et al, 2020) as well as on labour productivity,
with potentially far-reaching economic consequences (Chavaillaz et al, 2019).
Overall, climate change is likely to worsen social inequality (IPCC, 2014b), since poorer
people are often more exposed and vulnerable to its effects because they work in more
exposed sectors such as agriculture and tourism, because they have to perform physical
labour outside, or because their houses are poorly ventilated or located in areas vulnerable to
floods. Moreover, as risks rise, private insurance will become increasingly necessary yet more
expensive, leaving those who may need it the most without coverage. The elderly are particu-
larly vulnerable to extreme heat. There could also be an indirect gender impact, as women
may be overrepresented in some affected groups. Globally, the people who will suffer most
from climate change are most likely those who will be forced by loss of livelihood to migrate
within their countries of origin, and are unable to move to less-affected countries (Lenaerts
and Tagliapietra, 2022). Many empirical studies (see Mari-Dell’Olmo et al, 2018) suggest that
climate adaptation plans should therefore consider vulnerabilities of different subgroups.

3 Why should the EU act?

As the basis for action on climate change adaptation, the European Commission invokes the
EU treaties4. These state that the EU’s environmental policy should, apart from protecting the
environment, contribute to the protection of human health and the prudent and rational use
of natural resources. Environment policy should be based on the precautionary principle and
on preventive action. Given the significant effects of climate change on health and mortal-
ity, adaptation as a preventive policy can fall under this scope. The 2021 European Climate
Law (Regulation (EU) 2021/1119) also calls explicitly for the EU and member states to make
progress on adaptation, and contains provisions about mandatory adaptation strategies,
assessments of progress, consistency of adaptation measures and adaptation mainstreaming5

4 Articles 191 and 192(1) TFEU.

5 Articles 5, 6 and 7.

7 Policy Contribution | Issue n˚11/22 | June 2022

 The responsibility for adapting to climate change is thus shared by member states and the EU.
According to the subsidiarity principle, the EU should therefore intervene where member state
action is not sufficient to achieve the desired objectives, while leaving other decisions as close as
possible to citizens. This is typically a question of scale advantages and cross-border spillovers, as
well as of how other EU competences are involved.
An important example where scale plays a role is in the sharing of scientific knowledge.
While local and regional governments have the best insight into local environmental, social
and economic circumstances, they often lack the scientific capacity to identify vulnerabilities
in the face of climate change, or to develop adequate policy responses. There is a clear benefit
in pooling capacities at EU level to expand scientific knowledge on current and future climate
impacts through, for example, satellite-based earth observation programmes, which are beyond
the capacity of national governments. Knowledge generated at EU level can then be used as a
public good by all and applied to local situations (top-down). As adaptation interventions are still
about learning-by-doing, there is also an interest in sharing local experiences at European level,
in order to accelerate the learning process (bottom-up).
The EU can also use its administrative capacity to develop standardised methods that can
be used by local or regional governments to carry out cost-benefit analyses of interventions and
ex-post evaluations of policies, and to track adaptation progress. This would facilitate deci-
sion-making and enable cross-country comparisons for research and policy purposes.
Emergency response to major climate-related disasters is a very practical example where
scale can make a difference. National response capacities can easily be overwhelmed by large-
scale floods or forest fires. Since time is often of the essence, pooling resources for fast and deci-
sive interventions can avoid substantial damages and loss of life.
Adapting to climate change requires cooperation across jurisdictions when effects are
not limited to a single area. River management for irrigation, navigation and energy purposes
during droughts is best done in cooperation with countries upstream and downstream, as is the
management of floods. Vulnerable ecosystems do not stop at borders, and neither do infectious
diseases or invasive species.
Finally, some climate impacts are specifically relevant for EU policymakers as they affect
the functioning of the single market or the EU budget, for example when essential transport
infrastructure is damaged (ports, bridges, etc) or supply chains are disrupted. Moreover, different
policy fields already within the EU’s competences can play an essential role in supporting climate
change adaptation, such as regional and agricultural policy, insurance and financial regulations,
and even fiscal rules.
One might add to the arguments above that without EU intervention, it is very likely that
climate change will lead to increasing economic divergence between member states, as we
noted above. Solidarity could therefore be invoked as a political argument to preserve cohesion
in Europe, especially to redistribute gains some member states may incur from the same natural
phenomenon that harms other countries.

4 EU adaptation policies
Adapting to climate change is a society-wide challenge. This is reflected in the multitude of pol-
icies and initiatives that play a role at every level of governance. The EU’s adaptation policies are
guided by the 2021 strategy on adaptation to climate change (European Commission, 2021b).
We discuss this together with some of the most notable policies through which the strategy is
pursued, as well as the EU initiatives in place to react to climate-related disasters when they
occur.

8 Policy Contribution | Issue n˚11/22 | June 2022

 4.1 The EU strategy on adaptation to climate change
The first adaptation strategy was issued in 2013 and addressed three priority areas: encourag-
ing national action, informing decision-making and promoting adaptation in key vulnerable
sectors (European Commission, 2013). Progress was made in these areas through the adop-
tion of strategies or plans by all EU members, the establishing of the Climate-ADAPT platform
as a central source for adaptation-related information, and the integration of adaptation
considerations into other EU policies.
The strategy was, however, judged to be only partly successful (European Commission,
2018). For instance, knowledge gaps were deemed to have been closed only partly while
new questions arose in the meantime. Climate change risks and adaptation received more
political attention, but participants in an EU consultation still noted a lack of commitment by
governments (European Commission, 2021a). Moreover, the monitoring of actual progress
remained elusive, and planning at local level progressed more slowly than hoped. More had
to be done to integrate climate change adaptation into the EU’s external policies, given the
mounting evidence of the risk of international spillover effects through political instability,
trade and migration.
The 2021 strategy seeks to fill these gaps (European Commission, 2021b). The European
Commission aims to make adaptation in Europe “smarter, faster and more systemic” while
trying to minimise the risk of negative spillovers from climate impacts outside of Europe.
Smarter adaptation refers to further expanding the knowledge and data necessary to
make informed adaptation choices. This concerns on the one hand the promotion of further
research into climate impacts and modelling, and into assessment tools for adaptation pro-
jects. On the other hand, it is about generating harmonised and granular data on climate risks
and damages and making them publicly available, a longstanding recommendation (Lopez
Piqueres et al, 2020). Such data may be useful for local cost-benefit analyses and could raise
awareness and interest, which are still lacking among citizens and policymakers (European
Commission, 2021a).
Faster adaptation is necessary because adaptation continues to be a secondary priority
for some governments according to observers, resulting in weak subnational policy action
(European Commission, 2021a). There is also a lack of public and private sector investment
in concrete adaptation solutions. The Commission therefore wants to speed up the rollout of
innovative initiatives, including with EU funding, to improve and monitor insurance cover-
age, and notably to improve the management of fresh water and reduce water use. Overall
however, the proposed actions rest mainly on developing guidance, standards and best prac-
tices, supporting (sub)national policy development, and integrating adaptation into a few reg-
ulations, such as the EU’s classification of what constitutes ‘green’ investment6. The strategy
therefore does not make clear how the Commission intends to create concrete progress more
quickly.
More systemic adaptation means, among other things, supporting the improvement of
adaptation plans by stimulating cooperation between regions and countries and creating a
harmonised framework for monitoring, reporting and evaluating progress on adaptation. It
also means taking into consideration social aspects of adaptation, such as reskilling workers
and protecting them from climate impacts. Climate change resilience is to be integrated into
national fiscal frameworks and EU fiscal governance. Finally, systemic adaptation entails the
Commission encouraging the use of nature-based adaptation solutions, such as urban green
spaces or green roofs.
The last aim of the new strategy is to boost international climate adaptation. The focus
here will be mostly on Africa, small island states and the European neighbourhood, which
may reflect the primary spillover channels the Commission is worried about. Support will be
given to administrative capacity and policy planning and assessment, in much the same way

6 As set out in the EU taxonomy for sustainable activities; see https://ec.europa.eu/info/business-economy-euro/

banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en.

9 Policy Contribution | Issue n˚11/22 | June 2022

 as the Commission intends to help regional and local governments in Europe. In addition,
the need for scaling up adaptation finance is featured much more prominently, by using EU
instruments for external action and by leveraging private sector investments. A third element
is to boost adaptation diplomacy.

4.2 EU funding for climate adaptation

EU funding for adaptation is not provided through any specific instrument but is spread over
many different policies. The European Agricultural Fund for Rural Development, which falls
under the Common Agricultural Policy, has a sizeable portion of its resources dedicated to
adaptation. Also important is the EU’s regional policy. The Cohesion Fund and the Euro-
pean Regional Development Fund respectively have at least 37 percent and 30 percent of
funds earmarked to broad climate-related measures in the 2021-2027 Multiannual Financial
Framework (MFF). Because there is not always a clear separation between mitigation and
adaptation measures, and because official tracking estimates tend to overstate contributions
to climate targets (Nesbit et al, 2020), it is difficult to say exactly how much funding is dedi-
cated to adaptation, but numbers from Olesen et al (2017) and European Commission (2018)
suggest that from 2014 to 2020, between €14 billion and €62 billion was allocated by the EU
Structural and Investment Funds, which comprise the three mentioned funds, the European
Maritime and Fisheries Fund and the European Social Fund.
Money also goes to innovative adaptation projects under the Horizon Europe programme,
and through the €5.4 billion LIFE programme, which unlike other funds is dedicated entirely
to the environment and climate action. Most recently, EU countries allocated around €16
billion in grants and loans from the Recovery and Resilience Facility to climate adaptation
projects for the period from 2021 to 2026 (Lenaerts and Tagliapietra, 2021). Finally, the Euro-
pean Investment Bank is expected to significantly increase its financing for climate change
adaptation worldwide, under its new adaptation plan.
Given the estimated annual investment needs in Europe, which are poorly understood
but could be anywhere between €35 billion to more than €500 billion (EIB, 2021), it should be
clear that EU funding alone will not suffice to make Europe resilient to global warming. Num-
bers on overall adaptation spending in Europe are also hard to come by, but member states
and the private sector7 both have large roles to play.

4.3 Disaster response as part of adaptation

Adaptation policies in the strict sense are preventive, meant to reduce the exposure and vul-
nerability of people, assets and ecosystems to the consequences of climate change. But not all
damages can be avoided, especially those of severe fast-onset events, so adaptation to climate
change must entail strengthened capacities to respond to more frequent and severe natural
calamities.
The EU Civil Protection Mechanism (ECPM)8 was established to help European countries
deal with large catastrophes (including non-climate related) both before, during and after
events. For example, data from the Copernicus satellite is used to complement member-state
information systems, something that might otherwise be beyond the means of individual
countries. Countries can also call upon the European Civil Protection Pool, via which they can
provide teams and equipment at short notice (the EU budget bears 75 percent of the costs).
An additional ‘rescEU reserve’ of firefighting aircrafts (among other things) was created in
2019 to add to the capacity of the ECPM when several member states are hit by disasters
simultaneously, which would stretch the capacity of the Pool.
Funding is also available for post-disaster assistance. Since 2002, the European Solidarity
Fund can make available grants of up to €500 million (2011 prices) per year in case of major or
regional natural and health disasters, such as the earthquakes in Italy in 2016-2017 or during

7 The private sector is almost invisible in adaptation spending statistics (Buchner et al, 2021).
8 For more information, see https://civil-protection-humanitarian-aid.ec.europa.eu/what/civil-protection_en.

10 Policy Contribution | Issue n˚11/22 | June 2022

 the early weeks of the COVID-19 pandemic. This fund, which falls under regional policy, is only
intended for non-insurable damage and not to compensate private losses or long-term redevel-
opment. Furthermore, it is meant for mid-term relief; grants are awarded after a lengthy process
involving approval by both the Council of the EU and the European Parliament.

5 Proposals for stronger adaptation

governance
More must be done to prepare Europe for a warmer climate. There is a notable absence of
binding, precise and measurable targets for both EU-level adaptation policies and for the
framework governing national and sub-national adaptation action. Targets are needed to
accelerate adaptation efforts by reluctant governments, according civil society organisations,
which point to similar demands by the European Parliament and the Commission’s own as-
sessment that progress is too slow (EEB, 2021). It is also not clear how the EU will address the
pressure that climate change could put on existing fault lines between northern and south-
ern/south-eastern member states. In this section we therefore set out some ideas to strength-
en European adaptation governance.

5.1 A multi-layered governance framework to structure cooperation

Under the EU Energy Union governance regulation (Regulation (EU) 2018/1999) EU countries
are required every decade to submit 10-year integrated national energy and climate plans
(NECPs), which should also be updated halfway through each cycle. The regulation also
requires progress reports from member states every two years. The European Commission
assesses progress and issues recommendations. The regulation contains a requirement to
describe adaptation goals, but only insofar as they apply to emission reduction commitments.
Adaptation therefore seems to play only a secondary role in the NECPs.
The European Climate Law requires EU countries to adopt and implement national adap-
tation strategies and plans. These must be regularly updated and communicated every two
years in reports dedicated to national adaptation actions. Every five years starting in 2023, the
European Commission will then assess collective progress by member states.
Looking at the legal requirements, one can conclude that in none of these reports are
member states asked to set binding, measurable adaptation targets for which they can be held
accountable.
A lack of action can also arise because governments at every level must play a role in adap-
tation. Without a clear division of tasks, governments can avoid responsibility, shifting the
burden onto each other. This also happens when local governments are expected to imple-
ment adaptation plans without adequate funding, for example local building moratoriums
that require compensation to be paid to landowners. Matters are made even more complex as
horizontal cooperation across neighbouring jurisdictions is often needed to ensure consist-
ency and to avoid maladaptation (for example when building flood defences creates prob-
lems further downstream). Finally, better top-down and bottom-up information flows are
needed to make sure that scientific knowledge can be used at local levels, while local experi-
ences can feed back to policymakers higher up or can be shared with other jurisdictions.
A governance framework for adaptation action based on three levels could clarify tasks. It
could facilitate and structure cooperation and the exchange of information between juris-
dictions and different governance levels and allow for the introduction of binding, verifiable
targets.
At the highest level, the European Commission and other relevant EU bodies such as the
European Environment Agency should remain mostly responsible for helping to generate,

11 Policy Contribution | Issue n˚11/22 | June 2022

 collect and spread scientific knowledge (such as satellite imagery and model simulations).
They should provide a platform through which national and sub-national governments can
share ideas, experiences and adaptation practises in a structured way, so that, for example,
local governments can find out easily what similar places (in terms of urbanisation, climate,
vegetation, geography etc) are doing. The sharing of information and its use for governance
purposes would benefit from uniform measurement of damages and risks, and from meth-
ods to perform cost-benefit analyses, ex-post evaluations and assessments of progress. These
should therefore also be developed at European level, best in consultation with member
states. Disclosure requirements on governments could then be put into place accordingly.
The EU should also expand its emergency intervention capabilities and continue to main-
stream adaptation into other policy areas.
As the guardian of the general adaptation governance framework, the European Commis-
sion should engage with member states, using its expertise to help them establish binding
ten-year national adaptation plans with clear and public targets, which are consistent with
the plans of neighbouring countries. This would be a step further than what is demanded by
the European Climate Law9. The Commission has a coordinating and informing role: it is up
to countries themselves to decide on the level of ambition and to propose overall targets, such
as the degree of private insurance coverage, depending on how they see priorities. This should
not mean, however, that no incentives should be put in place to push for more ambition. The
Commission should also be allowed to require the inclusion of strategic interventions that
have EU-wide relevance, such as for the protection of key infrastructure.
National adaptation plans should serve as a guide for local government action and should
set the ambition level. Detailed knowledge of local circumstances and national/European
expertise needs to be combined to formulate very concrete interventions, while avoiding
maladaptation because of an excessive focus on single impacts.
This framework is meant to be flexible and cooperative rather than overly rigid and
hierarchical. However, agreed adaptation plans should be formal and we propose a link to an
insurance instrument.

5.2 An EU insurance and solidarity fund to incentivise and help member

states
The framework from the previous section would impose binding targets to enhance account-
ability but would allow member states to choose their own ambition levels. To push lagging
member states and regions towards more decisive action than currently, we propose an
incentive scheme, while accepting that EU countries are unlikely to be willing to accept large
and structural fiscal transfers to compensate for long-term climate-induced damages.
To reduce the threat of a climate divide, the fiscal risk of damages after climate-related
disasters could be shared. The European Commission estimates that without adaptation,
annual damages in Europe from floods alone could reach up to €144 billion by 2100 (from
€9.2 billion today), even with only 2°C of warming (Feyen et al, 2020). Damages will be
partly covered by private insurance, but it often falls to governments (sometimes by law) to
contribute significantly to compensation spending, even in countries with extensive and
mandatory coverage.
Expected government payments exceed the yearly capacity of the current European
Solidarity Fund for post-disaster assistance (see section 4.3), which compensates only a small
share of total damages (European Commission, 2022). Significantly enlarging the fund’s
capacity to cover an agreed set of public costs can soften the fiscal blow for affected countries.
EU member states are all exposed to various extreme impacts, creating a rationale for all to

9 We do not propose to integrate them into NECPs because adaptation is not secondary to mitigation but should be
consistent with it. We therefore think the revising and reporting schedule (five- and two-yearly) should be aligned
with that of the NECPs, while the Commission should publish individual progress assessments every five years,
rather than the current EU-wide assessment mandated by the regulations.

12 Policy Contribution | Issue n˚11/22 | June 2022

 be insured against catastrophic impacts. The returns on repairing infrastructure and provid-
ing emergency housing and aid are also much more obvious to voters than those on climate
adaptation investments, even if the latter may in fact be quite significant (Global Commission
on Adaptation, 2019). Committing more funds here might therefore be much more feasible
politically.
The fund should be financed by national contributions, based on a conditional mecha-
nism which incentivises adaptation investments ex ante. Countries that do not implement
adaptation measures would pay more into the fund than countries that implement strong
adaptation measures. When a disaster occurs, money can be reimbursed to the affected
member state.
An exact recommendation for the fund’s capacity is hard to give as it would depend on the
agreed scope of eligible damages, but one might imagine an annual capacity of several billion
euros by 2030, growing with nominal GDP (which means more exposed value). However, it
does not need to be large enough to compensate for all damages in particularly bad years,
and a certain percentage of self-payment should always be required.
If compensated damages in a certain year (as legally defined) exceed the fund’s basic
capacity, the EU could issue bonds to cater for such systemic shocks. The interest and repay-
ment burden can be distributed between member states in the same way as the financing of
the fund itself.
The advantage of combining a fund with a borrowing capacity for systemic shocks is that
markets will only be called upon for insurance against massive climate risks. If climate risks
become more frequent, the fund will become increasingly important and intertemporal
insurance will be less important relative to constant payments from the fund for incurred and
repeated damages.
The mechanism to divide contributions to the fund and interest payments among member
states serves the second purpose of this proposal, which is to incentivise countries to invest in
climate change adaptation, by making contributions depend on the achievement of targets as
set out in the proposed national plans.
Adaptation plans must contain binding and verifiable targets. These could be proposed by
countries at the beginning of a ten-year cycle, for five-year periods. The Commission could
then be asked to give an objective assessment of their level of ambition, after which the plan is
approved by the Council. Depending on whether the targets achieve a certain reference level,
to be agreed in advance (for example in terms of estimated damages prevented), the Council
decision could then also tie reductions of a country’s contributions to the achievement of the
targets. National contributions would initially include a risk premium to reflect countries’
actual risk, which would decline as countries take steps to reduce climate vulnerability to a
feasible extent. The system could thus evolve from risk-driven to solidarity-driven (eg based
on GDP).

5.3 Financial resources for disadvantaged regions and key interventions

The proposals above may still not be sufficient to ensure adequate adaptation action in the
most disadvantaged regions, particularly those in the south, which will suffer disproportion-
ately from climate change. Yet, as explained above, political support for sharing the invest-
ment burden for ex-ante adaptation seems unlikely.
For the next EU budgetary cycle, we recommend more resources targeted to adaptation
through the EU’s regional and agricultural policies. One could for example decide to increase
the minimal share of climate-related spending, and within that category decide to focus
mostly on mitigation in north-eastern regions, while focussing on adaptation in southern
regions, including in the Balkan region. This would not undermine economic convergence or
rural income support, given the supposedly high returns on investment of adaptation and the
vulnerability of agriculture. Communicating the two numbers separately would also increase
transparency. Better still would of course be to pursue to the maximum synergies between
mitigation and adaptation, for example through nature-based adaptation solutions.

13 Policy Contribution | Issue n˚11/22 | June 2022

 Another solution could be to propose an EU financial instrument for the protection of a
limited list of infrastructure, supply chains, ecosystems and perhaps heritage sites that are of
EU-wide relevance, such as seaports, energy linkages or corridors for migrating species. The
Commission would then be able to require the inclusion of these elements in national adap-
tation plans, as suggested in section 5.1, and would provide the necessary funding in return.

6 Conclusion
As the first effects of climate change are becoming apparent, it is already clear that they can
become severe, depending on how far temperatures rise, and that not all EU countries will
be hit to the same degree. The drought that hit Portugal and Spain in the winter of 2022 is an
ominous example of what could be in store for most countries south of the Alps. Impacts will
also differ between economic sectors and social groups, and will be counted in percentages of
GDP and lives lost.
Adapting to climate change is mostly a matter of regional and local action, but there are
several reasons why the EU should also play a role. These involve scale advantages, territorial
spillovers and impacts that relate specifically to the EU’s other competences, such as ensur-
ing the functioning of the single market. This is reflected by the two adaptation strategies the
European Commission has adopted so far, and by its efforts to create an EU disaster-response
capacity.
These strategies have driven progress at EU level. However, a lack of knowledge, aware-
ness, political priority and funding among some (sub)national policymakers continues to lead
to weak policy implementation. The current EU strategy does not address this sufficiently,
as binding, measurable targets are absent and not demanded from member states. More
cooperation among governments is needed to strengthen policymaking and define tasks. The
threat of climate-driven divergence between member states remains unaddressed.
We make three suggestions in response to these problems:

1. Create a three-layered governance framework based on intensive cooperation and infor-

mation-sharing to establish binding adaptation plans;
2. Set up EU-level insurance against damages from climate change, with national contribu-
tions tied to the achievement of self-chosen targets in adaptation plans;
3. Increase ex-ante adaptation funding by targeting more spending under EU regional and
agricultural policies specifically at adaptation in the most vulnerable regions, and by
setting up an EU financial instrument for the protection of infrastructure and value chains
that are of EU-wide relevance.

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