As Europe comes to grips with its fifth heat wave of the year, the research arm of Swiss Re AG is warning of far-reaching consequences.
“Record heat underscores Europe’s chronic heat risk,” the authors of the Swiss Re Institute report said on Tuesday.
Record-breaking temperatures are battering a continent that’s less equipped to deal with the shock than other parts of the world. Only about 20% of European households have air conditioning, for example, compared w
ith 76% in North America, Swiss Re Institute notes. That has implications for everything from human health to economic productivity, it said.
Read more: Heat Deaths Top 25,000 in Europe as Scorching Weather Persists
Europe is now struggling to cope with temperatures that “reduce agricultural productivity, strain water and energy systems, damage infrastructure, and lower labor productivity,” the report’s authors said.
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The continent is heating up almost twice as fast as the rest of the world, a development that Swiss Re Institute warns can have “severe” consequences. The comments follow a report last month by Munich Re AG, in which it warned of the “dangerous mix” posed by El Niño and global warming.
The two firms’ analyses fit into a developing picture in which the insurance industry finds itself bracing for a new era of risk brought on by relentless temperature rises that are disrupting weather patterns.
Extreme heat has now left most of England gripped by drought conditions that are impacting harvests. Elsewhere in Europe, rivers crucial to transporting key commodities are drying up.
Oxford Economics said in a note on Tuesday that low water levels in Germany’s Rhine River hav
e left chemical, metal and construction firms most at risk as supplies are disrupted. The development also implies higher inflation, while nuclear and hydro power are now being “adversely affected by hot rivers, leading natural gas to set electricity prices,” Oliver Rakau, chief Germany economist at the researcher, said in the note.
Though Europe’s wildfire risk “is still considered moderate, the increase in fire activity warrants closer attention,” Swiss Re Institute said. “As heat in Europe increases, wildfire-conducive conditions are likely to become more frequent.”
Fires in France, Spain and Greece have caused as much as €19.1 billion ($22 billion) in total damage and economic loss this summer, according to a preliminary estimate by AccuWeather. Heat and drought will continue to keep Europe’s wildfire risk elevated into the fall, the weather-tracking firm said.