Spain's agri-food and tourism industries — worth over €100bn combined — are facing mounting losses from wildfires, drought, and extreme weather that have intensified sharply in recent years. Around 300,000 hectares of land have burned across Spain this year, according to the European Forest Fire Information System, representing half the total affected in the entire European Union. The economic toll is severe: Agroseguro estimated that 16,000 hectares of crops had been destroyed by mid-August, a major blow for Spain's agri-food industry, which contributes 9% of the country's GDP.
In the Gredos mountains west of Madrid, Juan Ángel Izquierdo saw a wildfire in late July merge with two others and burn around 80,000 hectares — the biggest blaze Spain has ever registered. It consumed more than two-thirds of Izquierdo's land, killed 12 of his 85 cows, forced another eight animals to be put down because of their injuries, and burned all the hay he had gathered for winter feed. "It was immense, I've never seen anything like it," Izquierdo said. His family has farmed there for 200 years. Local authorities in Castilla y León are offering compensation between €5,500 and €25,000 to each farmer depending on the damage suffered, but Izquierdo estimated that this would cover less than half of his losses.
The Farming Frontline
Izquierdo said, "For us farmers, the summers are becoming more and more worrying, because they are getting hotter." He added, "It rains less, the wet season ends earlier and the autumn starts much later." World Weather Attribution, an international research organisation, found that the extreme conditions that drove record-breaking fires in Spain and Portugal 1 year ago were 40 times more likely to happen because of the warming climate. In the last 40 years, damage caused by Spanish fires each year has exceeded 200,000 hectares on eight occasions, three of them since 2022.
Ernesto Rodríguez Camino, president of the Spanish Meteorology Association, said, "The ultimate reason for the greater frequency and intensity of these kinds of fires has to be attributed to the increase in greenhouse gases caused mainly by the generalised use of fossil fuels." Socialist Prime Minister Pedro Sánchez said in July, during a visit to the southern province of Almería where a wildfire claimed 15 lives, "The climate emergency kills."
Tourism Under Pressure
Spain's warm climate has long helped tourism, with sun-drenched resorts along the Mediterranean coast and in the Balearic and Canary Islands driving growth as a tourist hub. This year, close to 100 million foreigners are expected to come to Spain, making it the second most-visited country in the world, just behind France. But a study by researchers at Madrid's Rey Juan Carlos University found that heat can deter potential visitors. María Dolores Sánchez, an economist who co-authored the report, said, "When there is a heatwave, the number of overnight stays drops in the destinations that we've studied, and there is also a drop in arrivals from some of Spain's biggest markets." She added, "Tourism represents 13% of Spain's GDP, so this could have repercussions in the medium term when it comes to Spain's competitivity."
In Toledo, guide Diego Esteban of Visit Toledo said, "It's quite difficult to do the tours in the summer." He now makes frequent stops, provides drinking water and includes plenty of shade on summer tours, but would like to see more shade and drinking fountains available. He said the heat has started to shift the timing of the tourist season, bringing more visitors in the cooler months of spring and autumn. Warmer summers have also encouraged the so-called "coolcation" trend, with Spanish travellers seeking cooler areas, typically in the north of the country.
Drought and Flood Damage
Spain also faced drought. 2 years ago, after three years of minimal rainfall, Catalonia temporarily introduced stringent restrictions on water use, including a 25% reduction for industry and an 80% reduction for crop farming. Heavy rainfall since then has lifted the restrictions, but the drought had a major impact on the local economy.
The most dramatic and tragic natural phenomenon in recent years was flash floods that killed 237 people in eastern Spain 2 years ago, centred on the Valencia region. Spanish meteorological research group Climatoc-Lab described it as "a manifestation of how global warming alters the hydrological cycle." The Valencia Chamber of Commerce estimated that the floods caused €4.5bn in direct damage. Thousands of businesses were affected, some washed away by floodwater and others able to resume operations only after a lengthy recovery. Laura Llácer Álvarez, manager of the Fepeval federation of industrial parks in the Valencia region, said, "It was a disaster, both in terms of the lives lost and the impact on businesses, on workers, employers and ordinary people."
Competitiveness at Risk
Spain's geographical position, along with its climate and topography, make it unusually vulnerable as global temperatures increase. Germanwatch, an independent environmental organisation, ranked Spain the world's 20th most affected country in its climate risk index for 2024, just behind Nigeria and Mali. Julián Cubero, head of economics of climate change at BBVA Research, said, "Climate change affects how we produce, how we invest and how we consume." He added, "We all work worse when it's hot." He said a greener economy can create new jobs with greater productivity, and added, "The key is to realise that if we don't act, growth will slow down, and if it's handled right it can become an opportunity."
Why This Matters:
Spain's climate vulnerability isn't just an environmental issue — it's a direct threat to the country's economic competitiveness and fiscal sustainability. With tourism and agriculture representing over a fifth of GDP, repeated shocks from wildfires, drought, and floods are eroding productivity and forcing costly public compensation schemes that strain national budgets. The €4.5bn flood damage in Valencia alone shows the scale of fiscal exposure. If Spain's summers continue to intensify, the country risks losing its competitive advantage in tourism to cooler northern destinations, while farmers face mounting losses that public funds can't fully cover. The transition to a greener economy must be managed carefully to avoid regulatory overreach that undermines Spanish businesses further. The challenge is balancing climate adaptation with the fiscal discipline and economic growth that Spain needs to remain competitive within Europe.