10 February, 2026

Compound dry-and-hot extremes exacerbate income inequality and poverty in Europe

When heatwaves hit parts of Europe already experiencing drought, average household incomes fall by almost 3% according to a new study by Climate Analytics published in Global Environmental Change. The research, produced as part of the ACCREU project, analysed historic data across Europe from 2004-2022.

The combined impact of heatwaves and drought is much greater than the sum of the individual events: on average a heatwave in Europe will reduce household incomes by 0.7% and droughts by 1.8%. When they occur together– particularly in drought-stricken regions – the average income loss rises to nearly 3%.

These effects are not felt evenly – the poorest 20% will be affected the most, with incomes dropping 2% more than the rest of the population (4% vs 1.1-1.8%), further widening income inequality.

As heat and drought conditions worsen with climate change, so too will the economic impact on Europe’s most vulnerable.

In a 1.5°C world, household income in Europe is likely to drop around 7.5% from the combined impact of heatwaves and drought. The most affected regions are Greece, Romania, Bulgaria and Cyprus.

If climate change warms the world to 2.0°C, European household incomes could drop almost 12% from heatwaves and drought, escalating to a whopping 27% drop if we reach 2.7°C (the path we are on based on current policies and actions).

This could mean 60 million people in Europe at risk of poverty in a 1.5°C world, rising to 127 million in a 2.7°C world, from the impacts of heatwaves and droughts.

Press release

As a powerful heatwave grips Europe this week, new research underscores the economic costs incurred when extreme heat strikes regions already affected by drought, and shows how climate change is increasing those costs.

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