This report contributes to a better understanding of the economic implications of climate change adaptation across the European Union. Its central objective is to analyse three key dimensions: the costs of adapting to climate change, the costs of inaction, and current levels of adaptation funding. The analysis focuses on three climate-sensitive sectors of strategic importance for the EU economy and society: transport, energy, and agriculture.

The costs of inaction are assessed using existing estimates from previous research projects, reflecting expected climate-related damages under different warming pathways. To estimate the costs of adaptation, the project applies a bottom-up approach, drawing on available national studies that quantify sector-specific adaptation finance needs. Rather than relying on highly aggregated modelling, this method compiles and analyses detailed country-level evidence, allowing local conditions, practices, and policy contexts to be reflected more accurately. 

At the same time, the approach faces limitations due to uneven data availability and differences in scope, quality, and assumptions across national studies. To address these challenges, national findings are calibrated to a set of standardised scenarios and assumptions to enhance comparability. For countries lacking dedicated studies, average sector-specific unit costs are derived and extrapolated using relevant exposure indicators.

Current adaptation funding levels are assessed using a complementary top-down approach, combining multiple data sources and assumptions to estimate public and private spending.

The study provides the EU-wide, sector-specific comparison of adaptation costs, inaction costs, and actual funding levels. Its findings confirm the economic case for early and decisive adaptation action: annual adaptation needs across the three sectors reach at least €50 billion under moderate warming and could double under high-emissions scenarios, while current funding covers only a fraction of these needs. At the same time, the analysis highlights major knowledge and governance gaps, underlining the need for more consistent costing frameworks and improved tracking of adaptation finance at EU level.