Analysis and evaluation of the economic impacts of extreme atmospheric conditions

Over the latest years, the frequency and gravity of extreme weather-induced events have dramatically increased (heat waves, floods, extreme winds), with devastating effects on communities, on the environment and on the economy. As far as these events are concerned, it is essential to use prompt tools to provide clear and easily-comparable data over time and space, on the characteristics of these extreme weather events. As a matter of fact, this information will allow either to evaluate the role these extreme weather events play and their evolution over time or to highlight, at the same time, how other forces may have had a major impact (for example, changes in the vulnerability or exposure of the affected areas).

In this regard, climate indexes are a synthetic and well-established tool that can be used by public entities, firms and policy makers to establish common and shared benchmarks to analyse, forecast and evaluate the financial damage caused by extreme climate events. 

Research starts from the analysis of already-existing indexes, used for this goal: the Actuaries Climate Index, currently operating for North America (Canada and USA) and a slightly different version of the same index for Australia. These versions are, however, configured for geographic and climatic conditions related to those specific territories. Currently, this index is not available for Europe.

Goal of the project

Defining a set of indexes for the evaluation and simulation of risks linked to extreme weather events to be used in the geographical, physical, climatic and economic context of Europe.

Results

On January 21st 2021, the international scientific community was introduced to the European Extreme Events Climate Index – E³CI, the very first climate index developed in Europe, to monitor the occurrence and impact of weather-induced hazards. This index is an indicator of the frequency and gravity of extreme weather events, which may be crucial in assessing and mitigating financial losses along with summarizing and presenting complex data. 

E³CI is an ensemble of indices, meaning that it includes five components returning information about different weather events: heat waves, cold waves, droughts, extreme precipitation, extreme winds.

Possible applications

E3CI has been developed mainly to assess financial and insurance losses linked to the occurrences of extreme weather events. Such information can be useful to adjust insurance premiums rates, improve budget and risk management, with benefits both for consumers and insurance companies. 

The index is also able to provide useful data for monitoring climate trends, facilitating the decision-making process of Public Administrations, committed to build a sustainable development system. 

Possible applications in the public sector:

  • supporting the implementation of sustainable development policies.
  • sensibilization of the manufacturing sectors about the possibility to evaluate resilience and adjustment strategies for climate change. 
  • monitoring weather-induced hazards on a regional basis. 

Further developments will include:

  • introduction of different components for impacts which are not covered by the currently-used indicators (for example, hail and fires). 
  • broadening the evaluation scale, from danger to risk, taking into account also two more components: exposure and vulnerability.
  • Using these indicators not only for backwards analysis, but also for evaluating different future scenarios (for the seasonal scale to climate projections).
  • creating a easily-accessible website for E³CI.
  • E³CI calculations on regional and provincial administrative units.
  • E³CI calculations using higher-resolution reanalysis datasets.

Head of research

  • CMCC Euro-Mediterranean Centre on Climate Change
  • Leithà

For further information, please contact: [email protected]

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