ECB’s Elderson Urges Climate Risks in Economic Forecasts

European Central Bank (ECB) Executive Board member Frank Elderson urged central banks to include climate and nature risks in economic forecasts, warning that extreme weather can affect both prices and growth.

Speaking at the Green Swan 2026 Conference in Manila on Oct. 19, Elderson pointed to the effects of heat and water shortages on Europe’s economy. High temperatures and low river levels during summer 2026 contributed to higher wholesale electricity prices in parts of the region. He did not quantify how much of the increase was due to weather.

The potential effects extend beyond electricity. Drought can interrupt agriculture, industrial activity and transport, while disruptions to food production and supply chains can spread across borders. Elderson called for climate and nature risks to be reflected in macroeconomic models and forecasting procedures so those effects are better understood.

Severe water scarcity alone could put up to 24% of euro area economic output at risk. That share describes activity exposed under the scenario. It does not mean the output has already been lost or that the model predicts a loss of that size.

He called for better water management, stronger protection against extreme weather and infrastructure able to withstand it. He also urged investment in cleaner energy to reduce Europe’s reliance on imported fossil fuels and its exposure to energy price swings.