Climate change could mean a Mediterranean basin without a Mediterranean climate

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Year-round, millions of visitors from all over the world flock to enjoy the mild climate, wine and food, and stunning scenery. However, climate change may harshen the Mediterranean climate and disrupt vital industries such as tourism and agriculture. The mean temperature in the Mediterranean basin has increased 1.4 degrees Celsius since the late 19th century, compared with the global average of 1.1 degrees—and absent targeted decarbonization, temperatures are projected to increase by an additional 1.5 degrees by 2050. Rising temperatures are expected to raise hydrological variability, increasing the risk of drought, water stress, wildfires, and floods, and noticeably change the Mediterranean climate.

In this case study, we examine the consequences of a changing climate for Mediterranean communities and economies (see sidebar, “An overview of the case study analysis”). We focus on heat- and precipitation-related aspects of climate change, although coastal flooding will also have an impact.

How the Mediterranean climate may become harsher

The Mediterranean climate could change in multiple ways as temperatures rise, water stress increases, and precipitation becomes more volatile, in turn creating multiple knock-on effects from wildfires to the spread of disease (Exhibit 1).

Heat: Climate projections indicate that the number of days with a maximum temperature above 37 degrees will increase everywhere in the Mediterranean region, with a doubling in northern Africa, southern Spain, and Turkey from 30 to 60 by 2050.

Drought: In Italy, Portugal, Spain, and parts of Greece and Turkey, rainfall during the warm, dry season of April through September is projected to decrease by as much as 10 percent by 2030 and as much as 20 percent by 2050. By 2050, drought conditions could prevail for at least six months out of every year in these areas. ¹

An overview of the case study analysis

In Climate risk and response: Physical hazards and socioeconomic impacts, we measured the impact of climate change by the extent to which it could affect human beings, human-made physical assets, and the natural world. We explored risks today and over the next three decades and examined specific cases to understand the mechanisms through which climate change leads to increased socioeconomic risk.

In order to link physical climate risk to socioeconomic impact, we investigated cases that illustrated exposure to climate change extremes and proximity to physical thresholds. These cover a range of sectors and geographies and provide the basis of a “micro-to-macro” approach that is a characteristic of McKinsey Global Institute research. To inform our selection of cases, we considered over 30 potential combinations of climate hazards, sectors, and geographies based on a review of the literature and expert interviews on the potential direct impacts of physical climate hazards. We found these hazards affect five different key socioeconomic systems: livability and workability, food systems, physical assets, infrastructure services, and natural capital.

We ultimately chose nine cases to reflect these systems and to represent leading-edge examples of climate change risk. Each case is specific to a geography and an exposed system, and thus is not representative of an “average” environment or level of risk across the world. Our cases show that the direct risk from climate hazards is determined by the severity of the hazard and its likelihood, the exposure of various “stocks” of capital (people, physical capital, and natural capital) to these hazards, and the resilience of these stocks to the hazards (for example, the ability of physical assets to withstand flooding). We typically define the climate state today as the average conditions between 1998 and 2017, in 2030 as the average between 2021 and 2040, and in 2050 between 2041 and 2060. Through our case studies, we also assess the knock-on effects that could occur, for example to downstream sectors or consumers. We primarily rely on past examples and empirical estimates for this assessment of knock-on effects, which is likely not exhaustive given the complexities associated with socioeconomic systems. Through this “micro” approach, we offer decision makers a methodology by which to assess direct physical climate risk, its characteristics, and its potential knock-on impacts.

Climate science makes extensive use of scenarios ranging from lower (Representative Concentration Pathway 2.6) to higher (RCP 8.5) CO₂ concentrations. We have chosen to focus on RCP 8.5, because the higher-emission scenario it portrays enables us to assess physical risk in the absence of further decarbonization. (We also choose a sea level rise scenario for one of our cases that is consistent with the RCP 8.5 trajectory.) Such an “inherent risk” assessment allows us to understand the magnitude of the challenge and highlight the case for action. For a detailed description of the reason for this choice see the technical appendix of the full report.

Our case studies cover each of the five systems we assess to be directly affected by physical climate risk, across geographies and sectors. While climate change will have an economic impact across many sectors, our cases highlight the impact on construction, agriculture, finance, fishing, tourism, manufacturing, real estate, and a range of infrastructure-based sectors. The cases include the following:

For livability and workability, we look at the risk of exposure to extreme heat and humidity in India and what that could mean for that country’s urban population and outdoor-based sectors, as well as at the changing Mediterranean climate and how that could affect sectors such as wine and tourism.
For food systems, we focus on the likelihood of a multiple-breadbasket failure affecting wheat, corn, rice, and soy, as well as, specifically in Africa, the impact on wheat and coffee production in Ethiopia and cotton and corn production in Mozambique.
For physical assets, we look at the potential impact of storm surge and tidal flooding on Florida real estate and the extent to which global supply chains, including for semiconductors and rare earths, could be vulnerable to the changing climate.
For infrastructure services, we examine 17 types of infrastructure assets, including the potential impact on coastal cities such as Bristol in England and Ho Chi Minh City in Vietnam.
Finally, for natural capital, we examine the potential impacts of glacial melt and runoff in the Hindu Kush region of the Himalayas; what ocean warming and acidification could mean for global fishing and the people whose livelihoods depend on it; as well as potential disturbance to forests, which cover nearly one-third of the world’s land and are key to the way of life for 2.4 billion people.

Water stress: Many basins could see a decline of approximately 10 percent in water supplies by 2030 and of up to 25 percent by 2050. Water stress is already high in most countries in the Mediterranean and extremely high in Morocco and Libya. The decline in supply is projected to heighten water stress in all Mediterranean countries between now and 2050, with the greatest increases in Greece, Morocco, and Spain.

Wildfires: Increased levels of heat and dryness are projected to cause larger areas—up to double the current areas on the Iberian Peninsula—to burn from wildfires.

Disease: High summer temperatures have also been linked with the increasing incidence of West Nile fever in Europe. The summer of 2019 saw the first reported case of West Nile virus infection as far north as Germany. Researchers have already projected that the West Nile virus is likely to spread by 2025 and to spread further by 2050.

How would a harsher climate affect agriculture?

Nearly half of the Mediterranean region’s agricultural production value comes from four crops: grapes (14 percent), wheat, tomatoes, and olives (9 percent each) (Exhibit 2). Of the last three, Mediterranean countries produce about 90 percent of the total global supply. We focus on how climate change is likely to alter the production of grapes and wine in the period to 2050.

Production from traditional winemaking regions could diminish as the Mediterranean climate changes, since grapevines are highly sensitive to fluctuations in temperature and precipitation and can also be impacted by water stress and hail damage. Researchers have forecast a wide range of possible effects of climate change on grape yields. Some studies project that the Mediterranean area suitable for viticulture could fall by up to 70 percent at the high end of their range, though considerable debate surrounds these predictions, as others do not see negative impacts at all. As the Mediterranean region becomes warmer, it is also likely that specific grape varieties will no longer grow where they do now (for example, Merlot in Bordeaux), while at the same time the opportunity to plant new varieties may rise. Certain growing areas in Italy, Portugal, and Spain could experience large declines in production or even collapse.

Some researchers anticipate that the warming projected to occur throughout Europe could make it possible to grow wine grapes in regions farther to the north. In effect, Europe’s grape growing belt would shift. But the characteristics of Mediterranean vineyards and wineries cannot be replicated instantaneously. Indeed, they might never be matched, because gaining similar levels of experience in new winemaking regions may take generations.

What impact could a harsher climate have on travel and tourism?

Travel and tourism, including indirect and induced impacts, generate about 15 percent of the GDP of Mediterranean countries on average. In certain areas, the local economy depends much more on tourism and we analyze several of these cities. For example: Antalya, a beach and resort city of two million people on Turkey’s southern coast, attracts more than ten million visitors each year, some 30 percent of all tourists who visit the country. The city is projected to experience a significant increase in the number of summer (June to August) days above 37 degrees: about 15 days each summer by 2030, and approximately 30 days (10 days per month) in 2050. These months are crucial to the tourism industry. They generate 40 percent of each year’s visits and account for tourist spending of some $4.5 billion, as well as about 20 percent of Antalya’s GDP and about 2 percent of Turkey’s.

How can tourism and agricultural industries adapt?

Mediterranean destinations could adapt to climate change in a number of ways. Tourist destinations could extend their shoulder seasons as the Mediterranean climate changes. However, this may not be as simple as offering discounts. Large discounts already give tourists an incentive to travel outside the summer months, yet the summer tourist visit peaks have remained stable over the past ten years. One reason for this is that many tourists are restricted to traveling during school or work holiday periods. Tourist destinations may also offer year-round activities to increase the flow of tourists during the months now considered shoulder or off-season or target different markets such as those convening for meetings and conferences.

Wine growers already take measures to manage variations in production quantity and quality; these actions include cultivating grape varieties that ripen more slowly or require less water. Various hardening measures can help them cope with increased heat and drought. These include: harvesting earlier, reducing sunlight on grapes, irrigating vineyards. Wine growers can increase their resilience by planting different crops or moving to new locations, including higher altitudes and slopes other than the conventional south-facing ones.

Most regions in the Mediterranean will need to invest in adaptation. For example, forests can be made more resilient to wildfire risk by planting fire-resistant trees, reducing the amount of easily burning fuel available (such as leaf litter and brush), and even prescribed and controlled burning. These adaptation costs will likely need to be borne across the continent but will be particularly intense in the Mediterranean basin.

For additional details, download the case study, A Mediterranean basin without a Mediterranean climate? (PDF–2MB).

About this case study:

In January 2020, the McKinsey Global Institute published Climate risk and response: Physical hazards and socioeconomic impacts. In that report, we measured the impact of climate change by the extent to which it could affect human beings, human-made physical assets, and the natural world over the next three decades. In order to link physical climate risk to socioeconomic impact, we investigated nine specific cases that illustrated exposure to climate change extremes and proximity to physical thresholds.