The Scope agency estimates that the drought could cost Spain 4.6 trillion until 2050

2023-08-10 19:58:10

The resurgence of heat waves in the summer, a climate month extremely and, for all this, the aggravation of the droughts persistent can mean a big bill for a Spain i Italy, two of the European nations most exposed to the effect of climate change. the agency Scope Ratings has put numbers to the costs that these two nations Mediterranean they will have to face up to 2050 taking into account the climate scenarios predicted by Network for Greening the Financial Systemnetwork formed by 83 central banks and supervisors seeking to promote sustainable finance. Spain could face 4.6 million in losses while in the case of Italy this figure amounts to 10 trillion. For the whole of the European union estimated losses could reach 32.7 billion euros.

These numbers represent the 8,3% of the GDP per capita ofSpain and until 5,8% of theItaly fins a 2050. The document of Scope Ratings notes that the consecutive heat waves in Europe, along with the changes in the precipitation regime, are already exposing regions europees a fortes droughts. This circumstance is already causing serious damage to economic, human and natural systems. Spain is one of the nations of the European union more exposed to the consequences of water scarcity. “We have seven of the ten most water-stressed watersheds in the world Europa“, indicates Gonzalo Delacámara, researcher and director of the Center for a IE University’s Water and Climate Adaptation. Although Spain is one of the countries most affected by the lack of water, other European countries are also experiencing more intense periods of drought each year. A study by Water Risk Filter predicts that in Europe in 2050 the 15% of the European population is at high risk dwater shortage.

The Scope Ràtings study points out that drought episodes are among the multiple adverse effects of the climate changewhich is why they recommend that investors subject economies to stress tests to detect exposure to drought and thus be aware of possible risks in their portfolios.

even kamchatka

He 70% of the losses which can cause the even in between 2020 i 2050 will occur in the five largest economies of the European Union. Of these countries, Germany, France i Netherlands are the least exposed to the risk of drought, but Spain and Italy, the largest economies in the southern EU, may come to represent the 45% of the total losses. The agency’s paper indicates that the drought could pose additional economic challenges and financial burdens from public spending that would be financed with debt, which would raise these countries’ debt-to-GDP ratios and increase the cost of refinancing in long term.

Agriculture, the most exposed sector

Scope Ràtings points out that agriculture is the sector with the greatest exposure to drought and could suffer economic losses of1.8 billion euros, equivalents al 9,8% of the sector’s income. “EU countries can adapt by investing in improving agricultural techniques to make crops more resistant to the scarcity of water. They can also replace water-intensive crops, such as corn, by crops less dependent on water. If these adaptation strategies are applied, the countries of the UE can remain competitive in the agricultural sector globally,” explains Hazem Krichene, Senior Director of ESG Analysis at Scope.

Other economic sectors present relative losses related to the even that range between the 4% and the 7% of the total expected loss in the EU. In the case of Spain, the areas with greater water stress are currently Andalusia, Murciapart of Valencian Community i Castilla-La Manchatogether with the Balearic islands i canaries. “If there is already a problem of water stress today, in 20 years it will be bigger, for sure. When companies make long-term investments, they have to take this very much into account,” says Charles Kirby, partner of Sustainability at EY Spain

One of the forests affected by the drought, with brown trees.

“Industries are likely to avoid locating in extremely hot areas due to two main factors: the ddecrease in labor productivity by a persistent and intense heat and exposure to the risk of water scarcity“, concludes Hazem Krichene, Senior Director of ESG Analysis at Scope.