Italian firms' wildfire exposure mapped, set to increase
A Banca d'Italia paper quantifies Italian businesses' exposure to wildfire risk, revealing significant geographical and sectoral heterogeneity. Climate projections indicate a substantial increase in exposed business sites under future warming scenarios.
Mapping Italy's wildfire vulnerabilities
A Banca d'Italia paper quantifies Italian firms' exposure to wildfire risk, leveraging innovative high-resolution hazard maps and georeferenced firm-level data.
The analysis, using employment as a proxy, reveals pronounced geographical and sectoral heterogeneity.
Only 1.4 percent of Italian firms are currently exposed to wildfire hazard, with higher incidence in southern regions and sectors like agriculture and construction.
Nearly one-third of these exposed establishments also face landslide risk.
While affected firms show a similar survival probability to unaffected peers, climate projections indicate a significant future increase in exposure.
Exposed business sites are estimated to rise by 3 percent under a +1.5°C scenario and by 11 percent under a +3°C scenario.
The largest increases are projected for Puglia, Campania, and Lazio.
This underscores the non-linear amplification of climate risks without effective adaptation strategies, highlighting the importance of integrating high-resolution physical risk data into economic and policy frameworks for improved monitoring and targeted measures.
A growing risk, a regulatory gap
Wildfires are a growing physical risk, now integrated into central bank stress-testing.
The ECB's climate stress test found 22 percent of euro area bank exposures were to firms with high physical risk, over half from wildfires.
Recent ECB indicators show 15 percent of the euro-area financial portfolio currently exposed, rising to 17 percent under the RCP-8.5 scenario.
The NGFS's May 2025 scenarios include a 'Disasters and Policy Stagnation' event for 2026-2027, potentially reducing euro-area GDP by 2030.
Despite this, Italy lacks a specific regulatory framework for wildfire risk near industrial sites, unlike flood-risk.
This regulatory void highlights the urgent need for detailed economic exposure analyses.
Data fills a policy gap
The study provides crucial granular data, exposing significant regional and sectoral vulnerabilities to wildfires.
While firms' immediate survival appears unaffected, the projected increase in exposed sites under climate change demands proactive policy responses.
Integrating this high-resolution risk data is essential for effective adaptation and mitigation strategies, closing a critical regulatory gap.