The costs of climate change will increase in Europe, estimates Christine Lagarde

Christine Lagarde warned on Wednesday that the economic costs of climate change would increase in Europe and called for accelerating investments in adaptation, in her first blog post since announcing her early departure from the European Central Bank. The president of the monetary institution, who will leave office on February 7, nine months before the end of her mandate, looks back on a scorching summer and a historic drought in Europe. This season was marked by heat records, more than 30,000 excess deaths, fires having ravaged some 400,000 hectares in France and Spain, as well as a drought having disrupted navigation on the Rhine and the Danube, she recalls.

If these events have so far had only a limited impact on economic activity in the euro zone, Ms. Lagarde believes that the long-term risks are largely underestimated. “The costs of climate change are increasing and future shocks may be more difficult to absorb,” she writes. “Extreme heat will return more often and with greater force, and its costs will fall heaviest on those least able to bear them,” she warns. A few days before the opening of COP31 in Turkey, in Antalya, Christine Lagarde welcomed the new European “climate resilience” framework presented at the end of October by the European Commission. It aims to better prepare Member States for extreme weather phenomena expected to become more frequent on a continent warming twice as fast as the global average.

Christine Lagarde calls in particular for more investments in electricity networks, energy storage and the electrification of the economy in order to better resist future heat waves. “Each euro invested in network modernization saves more than two euros in the rest of the energy system,” she says. “Europe has the means to limit the damage, and we owe it to the generations who will live with these summers to use them now,” she concludes. Christine Lagarde visibly intends to continue to weigh in on the climate debate, one of the themes she most defended during her mandate at the head of the ECB.