Spain's Climate Crisis Is Burning Through Its Economy

Spain has lost around 300,000 hectares of land to wildfires this year — approximately half the total area burned across the entire European Union, according to the European Forest Fire Information System (EFFIS).

The figure marks the sharpest edge of a climate crisis that is now hitting several pillars of the Spanish economy at once: agriculture, which contributes 9% of GDP; tourism, which accounts for 13%; and regional industry still recovering from last year's catastrophic flooding.

In the Gredos mountains west of Madrid, farmer Juan Ángel Izquierdo is counting his losses. His family has farmed the land for 200 years. A wildfire in late July merged with two others and burned roughly 80,000 hectares in total — the biggest blaze Spain has ever registered.

"It was immense, I've never seen anything like it," Izquierdo says.

The fire consumed more than two-thirds of his land and killed 12 of his 85 cows. Eight more animals had to be put down because of their injuries. All the hay he had gathered for winter feed burned too.

"For us farmers, the summers are becoming more and more worrying, because they are getting hotter," he says. "It rains less, the wet season ends earlier and the autumn starts much later."

A worsening pattern

The data supports his impression. Over the last 40 years, annual fire damage in Spain has exceeded 200,000 hectares on eight occasions — three of those since 2022. World Weather Attribution, an international research organisation, found that the extreme conditions driving record-breaking fires in Spain and Portugal in 2025 were 40 times more likely due to the warming climate.

"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," said Ernesto Rodríguez Camino, president of the Spanish Meteorology Association.

Prime Minister Pedro Sánchez has framed the stakes in blunt terms. "The climate emergency kills," he said in July during a visit to Almería, the southern province where a wildfire claimed 15 lives.

The cost to farming is mounting. Agroseguro, the farming insurance association, estimated that 16,000 hectares of crops had been destroyed by mid-August this year. Castilla y León, the region hit hardest by the huge fire near Madrid, is offering each farmer compensation of between €5,500 ($6,300) and €25,000 ($29,000), depending on the damage. Izquierdo estimates that will cover less than half of his losses.

Tourism tests its tolerance

Spain's heat built its tourist industry. Close to 100 million foreigners are expected to visit this year, making Spain the second most-visited country in the world, just behind France. But researchers at Madrid's Rey Juan Carlos University found that extreme heat can act as a deterrent to potential visitors.

"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," says María Dolores Sánchez, an economist who co-authored the report.

"Tourism represents 13% of Spain's GDP, so this could have repercussions in the medium term when it comes to Spain's competitivity."

Spain registered a record-breaking 61 days of heatwaves this summer, stretching into early September. In Toledo, the inland medieval city far from the coast, temperatures repeatedly exceeded 40C.

"It's quite difficult to do the tours in the summer," says Diego Esteban, a guide with Visit Toledo. "We need to adapt, whether it is those of us who work in the tourism industry or the locals."

Esteban now builds frequent stops, drinking water and shaded routes into summer itineraries. He says the heat has shifted the tourist season, drawing more visitors to the cooler months of spring and autumn. Warmer summers have also fuelled the "coolcation" trend, with Spanish holidaymakers heading north to cooler regions.

Drought and floods

Water stress compounds the problem. In 2024, after three years of minimal rainfall, Catalonia temporarily imposed stringent restrictions, including a 25% reduction in water use for industry and 80% for crop farming. Heavy rainfall has since lifted the limits, but the drought dealt a major blow to the local economy.

The most tragic manifestation came in October 2024, when flash floods in eastern Spain, centred on the Valencia region, killed 237 people. Spanish meteorological research group Climatoc-Lab described it as "a manifestation of how global warming alters the hydrological cycle". The Valencia Chamber of Commerce put direct damage at €4.5bn. Thousands of businesses were affected; some were literally washed away.

"It was a disaster, both in terms of the lives lost and the impact on businesses, on workers, employers and ordinary people," says Laura Llácer Álvarez, manager of the Fepeval federation of industrial parks in the Valencia region.

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.

The economic argument

Not every economist sees only downside. Julián Cubero, head of economics of climate change at BBVA Research, notes that heat drags on productivity — "We all work worse when it's hot" — but argues a greener economy can create new, more productive jobs.

"Climate change affects how we produce, how we invest and how we consume," Cubero says. "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."

With two of Spain's largest industries already absorbing measurable climate losses, that choice between slowdown and adaptation is no longer theoretical — it is priced in hectares, heatwave days and billions of euros.