Europe's wildfires cost over 3 billion euros amid severe drought

This year's devastating wildfires across Europe are projected to cost more than 3 billion euros, a figure that does not fully account for the most recent blazes in Greece. Prime Minister Kyriakos Mitsotakis announced that special teams would immediately assess damages to provide state support for those who lost their properties.

Simultaneously, the persistent drought is creating widespread economic disruption. The dramatic drop in water levels on the Rhine and Danube rivers is hindering freight transport and forcing industries to curtail production. Major German chemical companies like BASF, Covestro, and Evonik, with significant facilities along the Rhine, are directly affected by the reduced navigability.

The crisis also impacts energy generation. Critically low levels on the Danube threaten the operation of Hungary's Paks nuclear power plant, which supplies nearly half of the country's electricity. In Romania, authorities have already shut down one of the two reactors at the Cernavodă nuclear plant, as both facilities rely on the Danube for cooling water.

Sarah Myer, a climate economy expert at ETH Zurich, estimates that the economic cost of fires alone could significantly exceed the average annual GDP loss of 2.1 billion euros previously calculated for Portugal, Spain, Italy, and Greece between 2011 and 2018. She warned that costs would multiply if fires spread to urban areas.

In France, the Gironde region, a hub for defense and aerospace industries, has been particularly hard-hit. Fires forced companies like Safran, Dassault Aviation, and ArianeGroup to temporarily suspend production and evacuate staff. The Bordeaux wine harvest is threatened by smoke, and oyster farming in the Arcachon basin has also suffered. Tourism, representing about 7% of Gironde's GDP, faces severe losses.

The Gironde Chamber of Commerce and Industry reported that at least 40,000 businesses were directly impacted, with 19,500 fully suspending operations by July 30. An estimated 120,000 to 150,000 workers were placed on subsidized part-time employment programs. In Spain, fires approached within 50 kilometers of Madrid, destroying homes, businesses, and vehicles in rural areas. The Union of Small Farmers and Ranchers (UPA) estimates that 18,500 hectares of productive land, primarily pastures, have already been lost.

Despite the scale of these disasters, economists believe the overall impact may not lead to a significant reduction in the national GDP of the affected countries. Ioannis Koutounis, an associate professor at Imperial College London, notes that many crucial...