Ökonomie der Anpassung an den Klimawandel

Ökonomie der Anpassung an den Klimawandel

Discussion Paper: Do extreme weather events damage the German economy?

Climate change in Germany primarily becomes visible through a rising number of extreme weather event. A recent discussion paper of the gws (Gesellschaft für Wirtschaftliche Strukturforschung) demonstrates the economic costs of these extreme weather events. Thomas Drosdowski presented the results at the European Climate Change Adaption Conference (ECCA) 2015 in Copenhagen.

By implementing extreme weather events in economic model’s functions this paper quantifies economic damages. This approach does not focus on single events but estimates impacts of recurring events. To model extreme weather events and their potential impact the authors estimate economic effects with a macro-economic model called PANTA RHEI. By analyzing all useful information from literature according to heatwaves, river floods and their damages a scenario analysis has been undertaken. Furthermore, responses of the economy to such a shock are demonstrated. To estimate the impacts eleven important economic indicators were chosen: Consumption of private households, production, capital stock, investments, exports, imports, available income and employment, price indices of production and private consumption and finally gross domestic product (GDP).

Little damage yet

Two scenarios present the economic development with and without considering extreme weather events. A comparison of the two scenarios shows the impact of flood events and heat waves in Germany. To summarize, extreme weather events have only a small effect on German economy yet. But they have the potential to have a certain impact on the economic performance in the future. Manufacturing, mining and quarrying might become the most heavily affected sectors whereas the transport sector benefits from extreme weather events.

More data needed

Besides industries also regions in Germany differ in their vulnerability to extreme weather events. Less agricultural production, for example, will have more impact on the economy of Schleswig-Holstein than on North Rhine-Westphalia because agricultural production plays a more important role in Schleswig-Holstein than in North Rhine-Westphalia. Regional approach is needed to gain a more comprehensive insight into the impacts of extreme weather events in Germany. In addition, effects of climate change in other countries have to be taken into account to improve data on damages in Germany. For example, if the cultivation of fruits and vegetables in Southern Europe is no longer possible due to the climate change, this would have impacts on Germany’s international trade flows. Manufacturing industry may suffer from supply shortages and higher prices.


Nieters, Anne; Drosdowski, Thomas; Lehr, Ulrike (2015): Do extreme weather events damage the German economy? GWS Discussion Paper 2015/2, Osnabrück

 ECCA 2015: http://www.ecca2015.eu/