ECB Warns Severe Water Shortages Threaten Eurozone Economic Output
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MENAFNAccording to the central bank's research, approximately 72% of businesses across the euro area rely heavily on ecosystem services, while nearly three-quarters of corporate bank lending is directed toward companies vulnerable to disruptions affecting at least one essential ecosystem service.
The ECB estimated that achieving the European Union's environmental targets will require additional annual investment in green projects equivalent to around 3% of the bloc's gross domestic product through 2030.
Public funding is expected to account for only 20% to 25% of the overall investment requirement, meaning private investors and businesses will need to provide the majority of the necessary financing.
The report also highlighted the economic consequences of physical climate-related disruptions during 2026. Low water levels along Germany's Rhine River in July reportedly reduced the country's real GDP growth in the third quarter by approximately 0.2 percentage points.
The central bank further raised concerns about insufficient insurance coverage against natural disasters, estimating that less than 25% of catastrophe-related economic losses across the European Union are insured. In several member states, the proportion falls below 5%.
Between 1981 and 2023, extreme weather events generated approximately €900 billion ($1.01 trillion) in direct economic damage across the bloc, with more than 20% of those losses concentrated in the final three years of that period.
Separately, the ECB reported progress in reducing its own environmental footprint, revealing that its carbon dioxide emissions fell by 46% in 2025 compared with 2019 levels. The institution also incorporated environmental considerations into the Eurosystem's collateral framework for marketable corporate assets this year.
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