Extreme Weather in Europe: Determinants and Economic Impact

Marcelle Chauvet, Claudio Morana and Murilo Silva

No 547, Working Papers from University of Milano-Bicocca, Department of Economics

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, wildÂ…res, and hail. Using an innovative panel regression-based trend-cycle decomposition approach, we Â…nd 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 Â…ndings. 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 wildÂ…res.

Keywords: climate change; extreme weather events; global warming; GHG emissions; trend-cycle decomposition; Growth-at-Risk; panel quantile regressions; Europe (search for similar items in EconPapers)
JEL-codes: C21 C23 Q51 Q54 (search for similar items in EconPapers)
Pages: 38
Date: 2025-01
New Economics Papers: this item is included in nep-agr, nep-eec and nep-env
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Working Paper: Extreme Weather in Europe: Determinants and Economic Impact (2025)
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