The Impact if Climate Variability on the Economies of Mediterranean Coastal Countries
Sanan Babayev
Abstract. This paper explains how climate variability affects Mediterranean coastal economies through real-sector shocks, public finances, and the financial system. Heatwaves reduce labour productivity and service quality, raise cooling demand and peak loads, while droughts increase the cost of water supply and push up input prices in irrigated agriculture. At the same time, floods, storms, and coastal erosion damage ports, roads, tourism assets, and real estate, generating capital losses; reconstruction spending grows and risk pricing tightens via higher insurance premiums and stricter credit terms. Tourism becomes less predictable as the season shifts and wildfire risk rises, and changes in marine ecosystems put pressure on fisheries and coastal livelihoods. Climate shocks also feed into food and energy prices, amplifying inflation volatility and fiscal stress. An effective response combines risk-based zoning, water-efficiency investments, heat-health action plans, resilience audits for critical infrastructure, early-warning systems, and systematic integration of climate risk into investment decisions.
Keywords: climate variability, Mediterranean, water scarcity, tourism, agriculture, coastal erosion, fiscal risk, adaptation