The drought will cost the Balearic Islands' economy €464 million in 2025.

PalmA study by the University of Mannheim, conducted by Dr. Sehrish Usman—with two members of the European Central Bank—estimates that the drought will represent a loss of €464 million to the Balearic Islands' economy in 2025. Looking ahead to 2029, the document predicts a loss of €1.195 billion. Per capita, €372 million will be lost this year and €958 million in 2029.

Spain is one of the most affected countries—along with France and Italy—with estimated losses of €12 billion in the short term (in 2025) and €34 billion in 2020. This corresponds to 0.8% and 2.4% of Spain's total Gross Value Added (GVA) in 2024, respectively. In fact, Spain has recorded the largest loss of GVA among all the EU countries analyzed, both in the short and medium term.

The cost to Europe of this summer's heatwaves, droughts, and floods (June, July, and August) is estimated at €43 billion in the short term (in 2025) and €126 billion in the medium term (by 2029). However, the authors emphasize that "these estimates are likely conservative," as they do not include other hazards such as wildfires, which were very significant during July and August. The estimates are substantially higher than the €31 billion in direct economic losses from all natural disasters in Europe during 2024 (according to reinsurance data).

The report's authors consider that the estimates of the "cost of inaction on climate change come at a crucial time," as European Union environment ministers will discuss the 2040 climate target this week. The analysis provides estimates of the macroeconomic impact of heat waves, droughts, and floods in geographic areas where these events occurred significantly this summer.