Eurozone economies could face €1.3 trillion in potential losses due to drought

The European Central Bank has warned that eurozone economies could suffer significant losses due to droughts, potentially depriving up to 15% of the region’s economic output.

Research conducted by the ECB revealed that €1.3 trillion in extended loans have been allocated to sectors most at risk from potential water shortages, particularly agriculture, manufacturing, mining, and construction.

ECB Executive Board Member Frank Elderson said in a speech that “losses related to water scarcity, poor water quality, and flood protection have emerged as the most critical issues from a value-added perspective.”

He added that this year “carries a particular warning, as it is likely to exceed the previous record level of nearly 50 years ago.”

ECB research revealed that agriculture is the sector most at risk from water shortages, with more than 30% of agricultural output at risk in southern European countries. This risk is declining in northern countries.