Turbulent Summer and Cascading Drought Impacts on Economies

Europe is in danger of the worst drought in the last 500 years. According to the latest Combined Drought Indicator (CDI) of the European Drought Observatory (including the first ten days of August), 47% of the territory in Europe is facing a drought threat, whereas 17% is already experiencing an emergency situation. River navigation, hydropower industry, and agriculture are the focus.

Effects on economies

EU. A remarkable water and heat stress – a decline in key crop yields. Corn, soybean, and sunflower yield forecasts are taking the hardest hit, with declines (as against the average over the past 5 years) are -16%, -15%, and -12% respectively.

Italy. Po River District Basin Authority confirms the highest level of severity. Despite the recent precipitations, water resources management remains critical and poorly balanced. That being said, at least several thermal power plants have resumed their operation partially. The potential of the hydropower stored in water reserves in the north of the country is still showing a slow decline and is less than half of what it had in the last few years.

France. Over 100 town councils are facing water supply issues with drinking water being delivered by trucks. 66 departments are at the highest level of crisis warning, and at least 93 are currently in one of the top three. On top of that, the aftermath is linked to forest fires (since the beginning of the year, over 60 thousand hectares got burned, i.e. more than twice the figures for 2021 and ~4.6 times the average over the past ten years). In early August, EDF nuclear power station downsized the power generation at a station in the southwest because of the La Garonne water temperatures and issued rolling warnings for reactors along the Rhone river.

Netherlands. Adverse consequences due to the Rhine river’s low water levels include pressure on commercial shipping, stability of a dam, water distribution, and seawater intrusion issues. The decline in ship loading has an impact on coal and crude oil transportation.

Spain. The water storage available in reservoirs is about ~58% of the 10-year average. In some southern regions such as Andalusia and Extremadura, it is about 30% of the 10-year average. As confirmed by European Forest Fire Information System (EFFIS), these conditions are a major contributing factor to forest fires.

Portugal. The hydroelectric energy accumulated in water storage reservoirs is less than half the average over the past five years. The state of irrigation reservoirs is getting worse, with all reservoirs declining. Basically, there will be enough water reserves to complete the irrigation cycle of crops; however, about 25% of the water reservoirs have a major shortage and may not meet irrigation needs. The forest fire danger levels are between high and extreme in most of the country.

Let’s sum it up

1. Massive drought in Europe intensified at the beginning of August.
2. Precipitation deficit direct impact on the river flow across Europe.
3. Water depletion — severe impact on the power-generating sector, hydraulic power industry, power plant cooling systems.
4. Water temperature and thermal stress — reduction in summer-sown crops.
5. Increased risk of drought. Particularly in Italy, Spain, Portugal, France, Germany, Netherlands, Belgium, Luxembourg, Romania, Hungary, northern Serbia, Ukraine, Moldova, Ireland, and the UK where July was the driest one since 1935, with temperatures going above 40°C for the first time.
6. Drier than normal conditions — in the western Euro-Mediterranean in the coming months until November.
7. And aside from that simultaneous droughts in the United States, India, and China.