Invest now or pay more later: can the EU climate resilience framework break the disaster-relief cycle?

An anticipatory framework for the European Union to manage climate risks should lead to better preparation but needs dedicated prevention funding.

Amid political greenlash against climate action, a European Commission proposal issued on 27 October for a European Union ‘Framework for Climate Resilience’ (European Commission, 2026a) might look premature. But increasing climate disasters and the latest science indicate that it comes not a moment too soon. The centrepiece is a proposal for an EU law that would require member governments to prepare national strategic plans on climate resilience, with an EU strategic plan due in 2028 (European Commission, 2026b).

The legislative proposal will face political headwinds. Some EU governments dislike the prospect of a legal requirement for them to prepare for climate change. However, the choice facing governments is not whether to pay for climate risks, but whether to invest before disasters strike, or to pay more subsequently.

European governments already spend unprecedented amounts on disaster relief, often to make up for low insurance coverage (Grabbe et al, 2026). But investments in prevention and risk mitigation are small and fragmented, storing up bigger losses in the future. Governments currently deal with each disaster as it occurs, rather than planning for how to deal with increasingly frequent extreme weather events. For example, hazard planning that relied on short records and ignored past extremes contributed to the death toll in the 2021 Ahr Valley flood (Landtag Rheinland-Pfalz, 2024; Rhein and Kreibich, 2025). In Valencia, Spain, the 2024 flood caused record losses that might have been mitigated if flood-protection works approved in 2011 had gone ahead – the works were never funded after austerity-era cuts reduced hydraulic investment in the province by 75 percent (Ivie, 2025).

The Commission’s proposed new framework aims to change the culture of risk awareness. The EU should be in a good position to manage such large-scale and long-term risks, given its governance and coordination capacities through its common institutions and budget. But these capabilities are not joined up in a strategy that predicts hazards accurately and acts on them before disaster strikes.

Why the EU needs to coordinate climate risk management across borders

There is a solid case for EU coordination of climate risk management, based on the cross-border spillovers of national systems and approaches. One set of spillovers is financial. Countries with low take-up of natural catastrophe insurance (such as Romania and Germany) or capped insurer liability (such as Belgium) end up leaning on EU-wide solidarity instruments funded by all member states (Grabbe et al, 2026). Meanwhile, the whole EU economy is affected by governments taking on too much risk as the effective insurer of last resort – reducing their creditworthiness as sovereign issuers of debt.

Another spillover is physical. Take the example of major river systems such as the Rhine, Meuse, Danube and Oder. When upstream states or regions reinforce dykes and straighten river channels, they effectively push peak flows faster and higher downstream, exporting flood risk to their neighbours. Conversely, when water is stored upriver to be used for electricity generation, it may deny supply to farmers and other water users downriver during droughts. EU coordination of physical adaptation would reduce the costs of interventions, but also prevent the pass-through of risks and problems across borders.

A third spillover is economic. A severe disaster within 100 kilometres of a region has been found to further reduce that region’s GDP by 0.5 percent; such spillovers account for around half of the total output losses from extreme weather (Costa and Hooley, 2025). In a Europe of closely-integrated border regions, many of these spillovers cross national frontiers.

The proposed EU climate resilience law would start to address this problem: when preparing their national plans, governments will have to consult the member states likely to be significantly affected, including at least their neighbours, on transboundary risks and planned measures (European Commission 2026b). But this is a duty to consult, not to plan jointly. The Council of the EU and European Parliament should strengthen this provision.

Four triggers to change the culture of risk awareness

The proposed new framework could shift the policy focus from recovery to anticipation in four main ways:

Reference trajectory for the likely scale and timeline of climate change

The new law would commit the Commission to use a reference warming trajectory to guide policy, of global warming of 1.5 degrees Celsius by 2030, 2°C by 2050 and 3°C by 2100, drawing on advice from the European Scientific Advisory Board on Climate Change (European Commission, 2026b). However, Europe is already far warmer than the global average, at about 2.5°C above pre-industrial levels.

The proposed law would only require governments to “encourage” public authorities to take this trajectory into account in budgeting, spatial planning and environmental impact assessments: no legal duty on public authorities would be established. A specific process duty to include the likely climate impacts in public planning, taking into account the costs and damages of action, would have helped to future-proof against climate denial by those in public office.

Still, a shared baseline assumption will help policymakers across Europe to plan on a common basis. The rate of global warming should also encourage governments to consider the trade-off of lower investments now against larger future costs.

Risk ownership

The proposed EU climate resilience law (European Commission 2026b) would require governments to identify “risk owners” – the public authorities responsible for managing each major climate risk identified in their national climate risk assessments. National plans will also have to set out, for each resilience measure, the authority responsible, a timeframe and indicators to monitor progress. This will make climate preparedness the responsibility of all ministries, including agriculture, industry, trade and infrastructure, as well as regional and local governments.

This would be a significant step in addressing the currently fragmented responsibility for climate risks, which has caused under-investment in prevention. Governments step in to cover losses after events, often without coordination or consistent rules. This repeats the cycle, because firms and households then expect the state to pay for damages in all future events, so they fail to take out adequate insurance (Monasterolo et al, 2025). Disaster recovery eats up the money that should go into making the infrastructure climate-resilient in the first place.

However, the proposed EU framework will not in itself cause risk identification to trickle down so that the burden of investing in climate resilience is spread across society. Private actors are not designated as risk owners; they are reached instead through guidance on asset valuation and accounting, corporate transition and resilience plans, and insurance. Action from national authorities will be needed to bring the private sector in, and to move the focus from protecting individual assets to a systemic approach to hardening infrastructure.

Access to reliable information on local climate risks

The Commission launched with the proposed framework a public digital tool for exploring the climate hazards facing a particular location over a chosen time horizon. The aim is to give public access to how the reference global warming trajectory will affect different parts of Europe.

The new “European Climate Viewer” tool builds on existing hazard data and modelling from the Copernicus Climate Change Service (C3S) to provide map-based information by hazard, timeframe and sector, derived from the reference trajectory. It also includes Destination Earth ‘storylines’ that replay real extreme events in today’s climate and in a world that is 2°C warmer than pre-industrial levels – the level the reference trajectory expects by 2050. Exposure and vulnerability data are to follow, moving from hazard to risk information, but no dates are given.

This open-access digital tool adds value by showing how hazards will evolve as warming increases, and showing the changes in the same way across the whole EU, so that risk is understood as a systemic issue rather than local ‘bad luck’, with comparability across locations. Once the likely climate hazards for a particular location have been seen by businesses and property-owners, it is harder to ignore them. 

There is a political economy benefit too: by making high-quality data and modelling publicly available, the tool will help policymakers show who benefits from avoiding damage and costs. Hitherto, those who suffer from climate-related problems know about both the benefits and costs, whereas those who have avoided damages thanks to preventative action are often unaware of the benefits.

Improving risk pricing and insurance coverage

The Commission also proposes to launch a Climate Insurance Alliance to bring together insurers, reinsurers, risk modellers, investors, the European Insurance and Occupational Pensions Authority (EIOPA) and public authorities. By the end of 2027, the Alliance is supposed to deliver a first set of measures to increase insurance uptake, incentivise prevention – including through build-back-better policies and impact underwriting – and assess the capacity to cover natural catastrophe risks, including through reinsurance and catastrophe bonds. It will also explore possible public-private partnerships at national, regional and European levels.

These measures are important to fill the climate-insurance protection gap. Better risk awareness is vital to trigger more accurate pricing of climate risks and to avoid abrupt repricing after climate disasters. Moreover, there is little forward pricing of climate risks because insurance contracts are renewed annually, so financial markets are not guided by transparent shifts in risk pricing. Even worse, reports of delayed disclosure within the industry suggest that current insurance premiums may not be playing an accurate pricing role. Reportedly, analysts are pressured to play down climate risks to keep premiums lower in the short term. If there is a sudden wake-up call – for example because insurance in a region becomes unaffordable or unavailable – a sudden repricing of assets could be triggered. Mortgages and small business loans depend on having insurance, so insurance unavailability could have major effects on credit, housing and commercial property markets.

Money, nature and recovery: three limitations of the proposed climate resilience framework

The proposed framework should help to shift policy towards anticipation, but the old cycle of paying after disasters will not be broken without dedicated funds for investments in prevention. The framework assumes this money can come from general EU programmes, the European Investment Bank, national budgets and private finance, largely under the next long-term EU budget (2028–2034), which is still being negotiated. Climate resilience will therefore compete with other priorities.

Yet resilience could be a growth market for the EU, not just a cost. Global annual revenues from adaptation solutions could reach some $4 trillion (about €3.5 trillion) by 2050 (De Rui and Kim, 2025). The Commission estimates that adaptation spending of around €70 billion a year can usually generate returns of two to ten times that value in avoided damages and losses (European Commission, 2026a). But the EU will only become a global market and technology leader for climate resilience if public authorities fund the demand for collective solutions, such as district shading and cooling.

The EU Solidarity Fund, a special instrument that sits outside the main EU budget, is not mentioned in the proposed framework. It is a pure solidarity tool, focused on emergency relief and limited in size, with no mechanism to ensure that member states reduce disaster risk before it strikes (EIOPA and ECB, 2024). The EU’s own scientific advisers have found that it does not sufficiently incentivise prevention or building back better (ESABCC, 2026). There is a strong case for this Fund to be dedicated to the anticipatory approach set out in the proposed framework, making payouts conditional on prevention and risk mitigation.

The second gap is nature, which appears in the framework, but with no money and little governance attached to it. This is a missed opportunity because nature-based resilience can be a cost-effective way to reduce floods, droughts and wildfires (Bassi et al, 2021; Keesstra et al, 2018). Examples include restoring floodplains and wetlands, and healthy soils and ecosystems that act as natural sponges. The framework would include a duty to promote nature-based solutions in both the EU and national plans, but without a definition or criteria.

The third gap is recovery. The proposed law says nothing about reconstruction: there is no requirement to rebuild to meet the likely impacts of the global warming reference trajectory. Yet post-disaster rebuilding is when damaged infrastructure gets replaced anyway. In the Ahr Valley, temporary bridges, some not designed to withstand floods, are still part of the infrastructure (Burghardt et al, 2025). Without reconstruction rules, the next disaster will hit the same vulnerabilities.

Source : Bruegel