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Energy demand will be affected by warming, but the direction and strength of the impact are unclear. Air conditioning (cooling) is a relatively new but growing source of energy demand in northern Europe, and warmer summers would increase this demand. Such a tendency would enhance the urban heat island effect and thereby heat stress. Increased demand for irrigation water also would augment the demand for energy. On the other hand, warmer winters would reduce the demand for heating energy.
In the United Kingdom, peak demand for heating fuels might decline less than total annual demand (as a result of a shortened heating season), leading to a reduced demand load factor. On aggregate, UK demand for fossil fuels may decline by 5-10% and electricity demand by 1-3% for a 2.2�C temperature rise by 2050; Finnish electricity demand would fall by 7-23% for a temperature increase of 1.2-4.6�C; Russian fossil fuel demand would fall by 5% and electricity demand by 1% for a 2.0�C temperature increase (IPCC 1996, WG II, Chapter 11).
As discussed in Section 5.3.3, GCM-based analyses project a range of possible runoff trends-from slightly drier to slightly moister conditions in Europe in the future. Many European rivers are likely to have less flow in dry periods of summer, aggravating problems of water supply to major cities. Numerous public supplies depend on groundwater (e.g., 94% of Portuguese supplies); any decrease in winter recharge could have serious implications. Reduced runoff also would negatively affect cooling of electric-power and industrial plants, particularly if there are environmental constraints on waste-heat production. For example, several French nuclear power stations were forced to close down or operate well below design capacity during the 1991 drought (IPCC 1996, WG II, Chapter 14).
Anticipated climatic changes in Greece are likely to dramatically increase the risk of summer water shortages. Significant increases in storage capacity would be needed to maintain existing water and energy supplies. The Netherlands could face the desiccation of most of its wetland areas or be forced increasingly to rely on the Rhine to maintain present water levels. Groundwater aquifers could be affected by increased saltwater intrusion as sea level rises. Given a possible 4�C temperature increase and a rise in the Alpine snow line of 700 m in summer, the summer flow of the Rhine could decline by 10%. A temperature increase of only 0.5�C and a daily rainfall decrease of 0.08 mm would decrease runoff in Hungary by 25-30%. Despite projected wetter winters, drier summers and increased evaporation in southeastern England may reduce yields in impounding reservoirs by 8-15%. Aquifer yields (which are very important to the London area) may fall by 8%. Supplies of water during warmer, possibly drier, summers would need to be maintained through larger storages or transfers from wetter regions. Water quality may deteriorate because there would be less river flow to dilute contaminants (IPCC 1996, WG II, Chapter 10).
Increasing temperatures intensify water demand-particularly for agriculture, human consumption (e.g., watering of gardens and lawns), cooling water for electric-power and industrial plants, and natural ecosystems (IPCC 1996, WG II, Chapter 14). Changing precipitation also modifies demands for irrigation, particularly in regions with soils of low water-storage capacity (e.g., northern Germany, Denmark, Poland).
More stable anticyclonic conditions in the summer would provide increased opportunities for ground-level ozone to build up and lead to deteriorating urban air quality. Existing problems in Mediterranean cities such as Athens will increase if conditions become drier. Summertime smog (largely ground-level ozone) has become a significant problem in many parts of Europe (IPCC 1996, WG II, Chapter 12). The extent of these problems in the future will very much depend on future transport policies in affected areas.
In general, risks to construction and infrastructure are caused by extreme events (e.g., droughts, high winds) rather than average conditions. In northern Europe, the greatest negative impacts on construction are likely to arise from river floods. Studies by Kwadijk and Middelkoop (1994) and Penning-Rowsell et al. (1996) show that small increases in winter precipitation could lead to drastic increases in flood depths. Unless adaptive measures are installed in time, flood damage also would increase dramatically. Increased summer drought would aggravate land subsidence induced by clay-shrinkage, affecting dwellings particularly in England and Poland (Brignall et al., 1996). Increased summer drought also would heighten fire danger, especially in the Mediterranean area. In temperate and northern climates, higher temperatures will result in lower road maintenance costs, particularly if snowfall and the number of freeze-thaw cycles decrease (IPCC 1996, WG II, Chapter 11).
Insurance companies are vulnerable to climate change through changes in windstorms, droughts, and floods that could affect covered property (IPCC 1996, WG II, Chapter 17). Flood insurance can be bought on the free market only in the United Kingdom; other European countries have government-backed insurance or none at all (Albala-Bertrand, 1993). Thus, possible increases in flood magnitudes and frequencies are unlikely to seriously affect the insurance sector. Droughts affect insurance only through the impact of land subsidence on buildings. Damage to buildings from windstorms is widely covered by insurance in Europe. Dorland et al. (1996) show that an increase of a few percent in storm intensity (not inconsistent with GCM results) could double or triple storm damages, most of which are insured. This effect occasionally could lead to troubles in the insurance sector-witness the total insured losses of $10 billion (compared with $15 million total losses) during the first months of 1990. Storm damage insurance, however, accounts for only a tiny fraction of total property insurance (Tol, 1996).
Europe is home to the largest reinsurance companies in the world. Reinsurers insure other insurance companies from all over the world for large losses-for instance, losses resulting from natural disasters. Thus, increases in floods or tropical cyclones in highly developed areas may affect Europe's financial sector. Experience in the early 1990s shows that the reinsurance market is capable of rapid reform under stress-which indicates that climate change could well lead to incidental turmoil but is unlikely to cause structural problems (Tol, 1996).
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