The Mediterranean region has been experiencing a severe drought, driven by a complex interplay of meteorological and hydrological factors. Northern Africa has been enduring these conditions for over six years, as have southern Italy, Spain, and Portugal for approximately two years. In Cataluña, in the northeast of Spain, the drought persisted for more than 1,300 consecutive days.
Precipitation shortfalls
The Mediterranean climate is characterized by hot, dry summers and mild, wet winters; but, since 2021, winter rainfall has significantly decreased, especially in the Iberian Peninsula and the Maghreb in Northern Africa. The Standardized Precipitation Index (SPI) has consistently shown negative anomalies across southeastern Spain and northern Africa, indicating a substantial lack of rainfall.
In March 2024, reservoirs in Cataluña were at just 15% of their capacity, though some relief came with late April and early May 2024 rainfall, raising levels to nearly 30% capacity.
Snow cover in the Alps and Apennines has also been well below average. Snow cover in Italy, for example, has decreased by 63% compared with the 2011–2022 average, resulting in reduced snowmelt and low river and reservoir levels. Furthermore, in 2023 and early 2024, Mediterranean temperatures were often more than 2°C above average, exacerbating the drought and increasing water demand.
Much-needed rainfall during the summer of 2024 has helped alleviate some of the drought conditions. As a result, since July, much of the region has shifted from a drought alert to a drought warning, reflecting the gradual improvement while underscoring the continuing risks.
See also: Parametric Insurance Can Tackle Climate Risks
Agricultural impacts and economic losses
Drought has affected everything from municipal water supplies to the integrity of infrastructure. A significant consequence is the availability of water for agriculture. Spain, one of the largest European producers and exporters of fruit and vegetables, has been hit particularly hard.
The olive, a cornerstone of Mediterranean culture and cuisine, exemplifies the drought’s severity. To meet growing demand, global olive production has tripled since the early 1960s. Spain leads the olive market, contributing 45% to the annual U.S. $15 billion global market; Italy and Greece each contribute around 10%.
However, warmer winters coupled with a prolonged drought have significantly reduced olive yields. In Spain, production fell to half of its usual volume in 2022–2023.
The loss in olive production for Italian and Spanish growers during the 2022–2023 season was estimated at €4.15 billion (U.S. $4.45 billion). Retail prices for olive oil rose more than 2.5 times, making it one of the most shoplifted items in Spain.
Recently, the situation has begun to improve, with production nearing the five-year average, indicating that prices are expected to start normalizing.
While this story highlights losses to olive growers, many other Spanish farmers have suffered drought-related losses as well. With around 40% of Europe’s fruit production concentrated in Spain, concerns about global food security are mounting as the climate warms.
Government response and challenges
The Spanish government has responded by approving €2.2 billion (U.S. $2.36 billion) in aid for the agricultural sector, including €40.5 million (U.S. $43.5 million) in insurance subsidies; however, most of Spain’s olive farmers will not benefit, as only 4.5% of the country’s olive grove area is insured.
Around 80% of Spain’s olive groves are rain-fed and highly vulnerable to changes in precipitation, with the remainder using irrigation systems. Increasing irrigation might boost olive production, but in recent decades it has caused environmental issues. In areas such as La Loma, Spain, the over-extraction of groundwater for irrigation has depleted aquifers, leading to long-term unsustainability.
See also: Climate and Catastrophe Risk Strategies
Climate change and future drought risk
Climate change is expected to exacerbate drought in the Mediterranean by causing higher temperatures and shifting precipitation patterns. These changes will lead to faster soil moisture depletion and reduced water retention, affecting water availability for agriculture and other uses.
WTW’s Global Climate Hazard Indices show that areas already under water stress, such as mid- and northern Cataluña, are likely to experience more frequent droughts (up to 1.5 times) in the next decade even under a "middle of the road" climate scenario. Conditions could worsen if we fail to shift to a lower-carbon economy and instead follow a high-emissions trajectory. For instance, drought frequency could significantly increase in the coming decades, not just to northern Cataluña but also to most of the Spanish Mediterranean coast under a fossil fuel economy.
Other Mediterranean regions, such as southern France, Italy, and northern Africa, may also see more damaging drought, with frequency increasing on average 1.4 to 1.6 times in most areas by the next decade.
Addressing drought risks and opportunities
Companies can benefit from risk screening their portfolio of assets, operations, and supply chain to identify exposure now and under different future climate scenarios. This may lead to deeper dives on the most at-risk sites, to inform decisions about how best to avoid, reduce, or transfer risk. This type of work assists with risk management directly and informs disclosure and reporting on climate-related risks and opportunities, including the Corporate Sustainability Reporting Directive, International Financial Reporting Standards, and the Securities and Exchange Commission climate rule.
