Ireland's Central Bank is warning that climate-driven economic instability is no longer a future concern. Instead, it's already reshaping the country's financial system.
What is climate-driven economic instability?
According to the Irish Examiner, the Central Bank and the Climate Change Advisory Council reviewed Ireland's preparation efforts and found a widening gap between rising climate risks and current national investment.
Climate-driven economic instability refers to the financial disruption caused when climate impacts — such as storms, flooding, heat waves, and erosion — damage infrastructure, interrupt business activity, and increase public spending. Extreme weather slows down work and raises insurance premiums.
Ireland already experienced this firsthand. Storm Éowyn caused record-breaking damage, leaving many communities without power, water, phone service, or internet.
The catastrophe led to more than €300 million in insured losses, Ireland's highest weather-related insurance payout on record.
Why does climate-driven economic instability matter now?
Ireland's adaptation budget sits far below what experts say is necessary to prepare for worsening climate impacts.
The new assessment projects that the country may need up to €2.2 billion by 2030, a level that current budgets don't meet. Without proper investment, future storms and infrastructure failures will result in significant financial consequences.
Vasileios Madouros, deputy governor of monetary and financial stability at the Central Bank, captured the urgency clearly.
"We're already seeing the impact extreme weather has on communities, businesses and infrastructure, and we recognise the importance of addressing climate-related risks, including the growing need for investment in adaptation measures," he told the Examiner.
The challenge isn't unique to Ireland. Canada has issued its own climate-risk warnings, highlighted again in debates about the federal carbon tax.
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Absolutely 👍 A review of adaptation across 54 African nations shows how long-term global underinvestment exposes the entire region to repeated losses.
The United Nations continues to call for stronger adaptation systems before temperatures and costs rise further.
How do assessments help with climate-driven instability?
National assessments make climate-related financial risks more visible and harder for policymakers to delay. They help identify weak infrastructure, highlight projects that struggle to secure funding, and clarify which upgrades will deliver the biggest long-term savings.
Some solutions depend on local planning and nature-based work, and assessments can move them forward when budgets stall. While these measures require upfront investment, they consistently reduce long-term costs while protecting people and the environment.
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