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Compound dry-and-hot extremes are exacerbating income inequality and pushing millions more people into poverty across Europe, according to a new Climate Analytics study.
Researchers led by Jessie Ruth Schleypen and colleagues combined European household level survey data from 2004 to 2022 with high resolution temperature and drought data in a fixed effects econometric regression - to investigate how household income and the risk of poverty changed due to heat waves, droughts, and compound dry-and-hot extremes.
The study, published in Global Environmental Change in May 2026, finds that on average from 2004 to 2022, annual household income was reduced by an additional 0.8 percentage points when heat waves coincided with a drought month, compared to when heat waves occurred alone.
In the same period, the estimated reduction in average household income was 3.6 percentage points greater for the poorest income quintile compared to the richest income quintile.
The study’s release coincides with an intense and fatal heat wave gripping Europe, driven by an ‘Omega block’ weather pattern pulling hot air from North Africa.
Households in the poorest income quintile experienced a reduction in average household income from the combined impacts of heat wave and drought that was 2.7 percentage points larger than the reduction experienced by households in the richest income quintile.
Researchers estimated that heat waves and droughts increased the at-risk-of-poverty (AROP) rate in Europe by 1.1 percentage points or an additional 5.6 million persons, on average between 2004 and 2022.
Projections show that if the 1.5°C warming limit by 2100 is not met, annual household income will further reduce by 21.6 percentage points, and the AROP rate will increase by 15.8 percentage points.
Factors driving the decline in incomes include worsening health conditions, reduced labour productivity, decreased food production, and critical water-related services such as transport and energy generation.
Regions that experienced significantly more heat waves and droughts between 2004 and 2022 were estimated to have much greater reductions in household income. Madrid peaked at an almost 10 per cent drop, central Hungary saw a 9.4 per cent drop and central Spain experienced an 8.8 per cent drop.
The impacts would also be distributed unevenly, with Greece, Spain, Romania, Bulgaria and Cyprus likely among the most affected countries. At 2.7°C of global warming, Spanish household incomes would fall by more than one-third, and Greek household incomes by more than one-half.
Thus, limiting global warming to 1.5 °C by 2100 minimises the negative impacts on income and limits the increase in income inequality and at-risk-of-poverty rates. Limiting warming also allows for more time to adapt to the adverse effects of heat waves and droughts.
To reduce poverty by at least 15 million by 2030, the European Union must scale up its protection of vulnerable populations through climate mitigation and adaptation.
“Where extreme heat coincides with drought, the damage can be much greater. Our research shows that these compound events amplify economic losses experienced directly by European households, and they will become more frequent as global warming increases,” said Jessie Schleypen, Senior Climate Change and Development Economist at Climate Analytics and lead author.
Climate projections indicate that as global warming levels increase, the frequency of compound dry-and-hot events and drought months is expected to rise, while single heat wave events will decrease.
The study highlights that Europe faces a rapid, unprecedented increase in the frequency and exposure of sub-national regions to droughts and extreme heat in the recent past, with climate conditions expected to worsen in the future.
Estimating the change in the AROP rate due to heat waves and droughts has a direct implication for achieving the European Pillar of Social Rights target of reducing poverty by 15 million by 2030 compared to 2019.
