Drought Magnifying Europe’s Economic Struggles
A severe drought is magnifying Europe’s economic risks by disrupting crop yields, energy production and trade flows at a time when the continent is already facing soaring food and fuel prices, along with a possible energy crunch this winter. Several regions in Europe are facing severe droughts this summer, caused by the combination of a lack of precipitation and high temperatures since May.
The European Commission estimated in July that nearly half of the European Union and large parts of the United Kingdom were experiencing “warning” levels of drought, with unusually dry conditions set to persist through September across most of Europe. Water shortages are particularly severe in the northern Italian lowlands, central Germany, eastern Hungary and northern Spain, as well as the southern, central and western regions of France, Portugal and the Netherlands. Scarce rain is affecting river discharge and depleting stored water volumes, impacting the energy sector for both hydropower generation and cooling systems of power plants. Low water supplies and high heat are also reducing crop yields, while dangerously low levels in river channels are hurting trade flows by forcing cargo vessels to sail with reduced loads.
European sunflower production is down, compounding a global cooking oil shortage, and grain mills along the Rhine will likely close soon. Cows are producing less and lower-quality milk, and the impacts could get worse as the production of corn dips way below last year’s yield.
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