High fiscal impact from heatwaves and forest fires
[Reuters]
Moody’s on Wednesday issued a warning on the fiscal effects of climate change, arguing that fires and droughts will boost inflation and government spending, hurt tourism and slow growth, developments that are credit-negative for more exposed countries, such as Greece.
The recent weeks of high temperatures and droughts in Europe have led to forest fires and severe water shortages.
Higher energy and food prices put further pressure on inflation and erode consumer spending, which in turn will slow growth.
Governments also incur additional costs for firefighting and reforestation, while last year’s fires in Greece, Moody’s said, cost Athens 500 million euros, or 0.3% of GDP.
