Wildfires and Heatwaves Pose Fiscal Risk to Greece's Tourism Economy
Fiscal and Economic Impacts of Climate Change on Greek Tourism
By Johann M Cherian
Rising Climate Risks and Government Response
Aug 12 (Reuters) - Wildfires and heatwaves pose a growing medium- and long-term fiscal risk for Greece and the wider region, a senior adviser to Prime Minister Kyriakos Mitsotakis said, as the government boosts investment to shore up its tourism-dependent economy.
Michael Arghyrou, the prime minister's chief economic adviser, said Athens was pursuing investments in water and energy infrastructure in tourism hotspots while examining measures to improve insurance coverage against climate-related losses.
Increasing Frequency and Severity of Climate Events
• "These events are becoming a more significant and, in many respects, more frequent and severe risk phenomenon," Arghyrou told Reuters. "This is a medium, long-term fiscal risk, not just for Greece, but the whole of the Mediterranean area."
Investment Strategies for Tourism Hotspots
• To address those risks, the government is pursuing an investment strategy aimed at strengthening water and energy infrastructure in tourism hotspots from Mykonos to Santorini, while also seeking to attract private capital, Arghyrou told Reuters.
Targeted Regions and Expanding Tourism Season
• The strategy also targets Epirus, the North Aegean islands, Thessaloniki, Crete, Rhodes and the Peloponnese, where the release of Christopher Nolan's film "The Odyssey" has fueled growing tourist interest.
• Hotter summers are extending the tourism season, drawing visitors from as early as April through October and November, a trend Arghyrou said was helping support tourism revenues.
Funding and Insurance Initiatives
• Arghyrou declined to say how much public funding would be allocated to the strategy, but said additional investment would be financed largely through higher tax revenues generated by a crackdown on Greece's informal economy.
• Greece has no plans to issue catastrophe bonds, which provide funding after major disasters, though Arghyrou said the idea merited consideration.
• The government is exploring incentives to boost insurance coverage among households and businesses while encouraging insurers to offer affordable policies.
Upcoming Tax Incentives and Fiscal Discipline
• Prime Minister Mitsotakis is expected to unveil tax incentives for businesses, workers and the self-employed next month ahead of a general election next year. Arghyrou said the measures would not come at the expense of fiscal discipline.
(Reporting by Johann M Cherian in Bengaluru, additional reporting by Renee Maltezou in Athens; Editing by Karin Strohecker)
