Spain and Italy, are the biggest climate losers. Time to change strategy

At Donnafugata’s Contessa Entellina estate, in western Sicily, 19 varieties of native grapes are cultivated. (Fabio Gambina/Donnafugata Vineyards)

Spain-Politics and Olive Oil: The winner of the July’s presidential elections in Spain, the People Party (PP) campaigned denying climate change. While campaigning in spring and summer, Spain experienced severe heatwaves when temperatures pushed toward 40 degrees Celsius (104 Fahrenheit). The PP party does not have the numbers to create a government. Not even with the Far-Right party Vox, which considers climate change the biggest fraud of the century. Spain is running out of water and is on the path to becoming a desert. April was the driest month since the records 1961. Droughts have become a regular occurrence in Spain who is technically in a mega-drought. Currently, according to Spain’s AEMET weather 27 per cent of Spanish territory is in a drought “emergency” or “alert.”

Olive Oil Inflation: Spain is the world’s biggest olive oil producer, supplying 50% of global extra virgin olive oil resulting in revenues of 3.0 billion euros ($3.3 billion) per year. In 2023 production plunged to roughly 620,000 metric tons, compared to the five-year average of around 1.3 million metric tons.  According to the AEMET weather agency, accumulated rainfall since October 2023 has been 25 percent lower than normal across Spain and 50 percent lower in most of Andalusia, where reservoirs are at 25 percent capacity.

According to the Coordinator of Farmers’ and Ranchers’ Organizations (COAG), drought has devastated crops on 3.5 million hectares (8.6 million acres) of land in Spain, which accounts for 60 per cent of the country. Climate variability and drought impacts is being transferred to consumers globally. In mid-April of 2023, olive oil was selling at 5,800 euros ($6,400) per ton, up from 5,300 euros in January, according to Baillon Intercor, a brokerage firm specializing in oils and fats. In January 2022, it was selling at 3,500 euros. While the total olive oil sector loss will be unclear until after harvest time in October and November of 2023, olive oil production is expected to decline by thirty percent.

Italy-From Drought to Floods: 2022 was a drought year in Italy, resulting in cost increases between 20 to 50% to buy Italian arborio rice (rice used to make risotto), extra virgin olive oil and tomato sauce. This drought was different as it is affected the entire country including the northern regions of Piedmont, Lombardy, and Veneto, which are considered water rich regions. The water richness in the north (the agriculture and industrial hub of Italy) has created a false sense of water security, leading to under-investment in water harvesting, management and storing. In 2022 the country experiences its worst drought in 70 years. The Po River, the longest waterway that extends for over 600 Km from the Alps to the Adriatic Sea was 10 feet (about 3 meters) below its normal level. Nearly half of the food produced in Italy comes out of the Po region which is responsible for 40 percent of Italy’s GDP.

The Italian 2022 water crisis had global implications as Italy is a large supplier of high-quality food products. Italy is the third largest producer of tomatoes after the United States and China with 13% of global production and 53% of Europe’s, with a yearly turnover of 4 billion euros. Italy is also the biggest producer of rice in the European Union, accounting for 58% of its total production. Localized drought stress in Italy, contributed to global inflation lowering the merging of food importers and reducing consumers purchasing power.

2023 was Different: This year however was different. In early 2023, Italian headlines stressed the excess rain fall that affected central and northern Italy particularly in April and May, resulting in unprecedented rain falls. In Emilia Romagna for instance, within a 36-hour period this region received about 500 mm of rain, 50 percent of the annual average. This caused approximately $10 billion in physical asset damages and economic losses. The floods were exacerbated by several months of high-water stress, drying out soils and reducing their capacity to absorb and store water.

As the Central and North Italian region experienced heavier than usual rainy seasons well into June and July, the South, particularly Sicily was battered by wildfires. On July 20th, during peak tourist season, hundreds devastating fires were ongoing across the island. Italian firefighters reported to have addressed nearly 1,400 fires in July, including 650 in Sicily and 390 in Calabria. With all the above, it is a bit surprising that the right-wing government led by Prime Minister Meloni continues to deny the relations between climate change and human activity. Prime Minister herself stated in July that “ultra-ecological fanaticism” was a threat to the Italian economy.

Conclusions: As Italian and Spanish energy, infrastructure and fashion groups lobby their political constituencies to stick to the status quo, they are delaying the rapid transition to a less costly decarbonization economy. In so doing, they are throwing billions of dollars down the toilets while missing out on the innovation and investment that decarbonization brings.  As both countries are stuck with obsolete climate denial policies, climate inflation will continue to reduce Spain and Italy welfare as all will end up pay more for food products, wine, and tourism. Decarbonization delays will stifle innovation and make these lackluster economies less competitive.