Keeping cool: adapting France to a hotter climate and increasing climate

The recent, and recurrent, heatwaves across France and Europe are a reminder that climate change is already affecting people’s health, businesses’ productivity and the country’s infrastructure. Strengthening prevention will be essential to limit losses, but adaptation must go hand in hand with faster emissions reductions. by Nikki Kergozou, OECD Economics Department For several weeks now, large parts of France are experiencing recurrent and intense heatwaves. Temperatures have exceeded 40°C in some areas, schools have closed, transport services have been disrupted and wildfires have broken out. For many households and businesses, climate change have ceased to be an abstract future threat and have become an immediate reality. These heatwaves are part of a broader trend. Average temperatures in France have risen steadily over recent decades (Figure 1) and are expected to continue increasing. France’s third National Adaptation Plan now uses a reference trajectory of around +4°C warming in metropolitan France by the end of the century. Preparing for a significantly hotter climate is therefore no longer optional; it is an economic necessity. The economic costs are substantial and are set to rise The impacts of rising temperatures extend far beyond discomfort during summer. Extreme heat increases mortality and puts pressure on healthcare systems. It also affects economic activity. OECD evidence shows that higher temperatures lower firm productivity, especially among smaller and less productive firms (Costa et al., 2024). Climate-related risks, including droughts or floods, also affect infrastructure, housing and natural resources. Hotter and drier conditions can disrupt electricity supply, constrain the operation of nuclear power plants and damage rail networks. During heatwaves, train cancellations increase, limiting mobility around the country. Another growing challenge is the shrinking and swelling of clay soils, which weakens building foundations. Around 60% of detached houses in France are estimated to be located in areas with medium or high exposure to this risk. Some extreme events could be particularly costly. For example, flooding in the Seine Basin similar to the 1910 flood could cause EUR 3-30 billion in direct damages alone (OECD, 2018). The economic costs can be substantial. Average annual insured damages for climate-related risks are expected to increase by 47-85% between 2023 to 2050 solely due to risk (CCR, 2023). This would cost more than EUR 3 billion per year on average. Preventing damage before it occurs will often be more effective, and less costly, than repairing it afterwards. It would also help limit the consequences on financial stability. France has already taken important steps. The third National Adaptation Plan includes 200 actions to strengthen resilience, improve information and support better anticipation. The next challenge is full implementation. Reinforcing local adaptation policies Adaptation is inherently local. A dense urban neighbourhood, a coastal municipality, a mountain community and an agricultural region face different risks and require different responses, mostly at the local level. Local authorities are therefore on the front line. However, this is where France faces an important challenge. Limited technical capacity at the local level and fragmented responsibilities across levels of government are limiting local government’s ability to design and implement adaptation strategies. The 2026 OECD Economic Survey of France recommends strengthening local adaptation capacity. Municipalities and inter-municipal bodies should have adequate resources to identify local risks and prioritise cost-effective preventive measures. Pooling expertise and cooperating across inter-municipal structures could help smaller or more remote communities access specialised skills. More broadly, reducing territorial fragmentation would improve the efficiency of local climate policies. Public funding will also need to increase. Existing instruments, including the EUR 300 million Barnier Fund, and the EUR 850 million Green Fund, support adaptation efforts. However, resources are limited and have fallen in 2025 and 2026. As information improves and technologies evolve, adaptation policies will need to remain flexible, targeted and include fiscal buffers. Incentivising private action Households and firms also have an important role to play in strengthening resilience and limiting pressures on public budgets. Better information, including detailed risk maps, can help them understand their exposure and take preventive action. Insurance arrangements could also give greater weight to prevention when establishing surcharges or compensation payments for policyholders. Financial constraints also need to be addressed. Targeted support to low-income households and access to low-interest loans can ensure that preventive investments are affordable. More research is also needed in low-ranked fields and where cost-effective solutions remain limited, such as swelling and shrinking of clay soils. France’s Natural Catastrophe regime, known as CatNat, is an important feature of climate adaption policies in France. The state guaranteed reinsurer, which can reinsure up to 50% of insurance policies, supports broad and affordable coverage against natural disasters, an important solidarity mechanism. However, as climate risks intensify, costs will rise, which might require the state’s guarantee to be called upon more frequently. To mitigate this risk, revising insurance surcharges would better encourage households and firms to invest in prevention and support the regime’s long-term sustainability. Meeting mitigation and adaptation goals Adaptation, however, is not a substitute for mitigation. Every additional degree of warming increases risks, raises adaptation costs and leaves some damages impossible to avoid. France also needs to step up mitigation policies to stay on track with its ambitious targets. To meet its 2030 climate goals, emissions will need to fall by 5% per year between 2025 and 2030, compared with a decline of only 2% in 2024. The recent heatwave offered a glimpse of what a hotter France may increasingly look like. The policy lesson is clear: invest in prevention, strengthen local capacity, while also accelerating efforts to limit future climate change. References CCR (2023), “Conséquences du changement climatique sur le coût des catastrophes naturelles en France à l’horizon 2050”, https://www.ccr.fr/consequences-du-changement-climatique-sur-le-cout-des-catastrophes naturelles-en-france-a-horizon-2050/. Costa, H. et al. (2024), “The heat is on: Heat stress, productivity and adaptation among firms”, OECD Economics Department Working Papers, No. 1828, OECD Publishing, Paris, https://doi.org/10.1787/19d94638-en. OECD (2026), OECD Economic Surveys: France 2026, OECD Publishing, Paris, https://doi.org/10.1787/e88a1716-en. OECD (2018), “Preventing the Flooding of the Seine in the Paris – Ile de France Region: Progress Made and Future Challenges”, OECD Public Governance Policy Papers, No. 54, OECD Publishing, Paris, https://doi.org/10.1787/bb9e49e6-en. Discover more from ECOSCOPE Subscribe to get the latest posts sent to your email.