Fire takes no vacation: impact of fires on tourism

Many Mediterranean-type climates around the world will face increased risks of wildfires as a consequence of climate change. In this study we consider the case of Portugal and estimate the impact of the increasing risk of forest fires on tourism. Using data for 278 municipalities for the 2000-2016 period, we find a considerable negative impact of burned areas on the number of tourist arrivals, both domestic and inbound. We go beyond the traditional impact analysis and provide predictions for 2030 and 2050. The estimated annual costs to the Portuguese economy due to the impact of burned areas in 2030 range between euro17.03 and 24.18 million for domestic tourist arrivals and between euro18.26 and 38.08 million for inbound ones. In 2050, those costs will increase at least fourfold. These findings underscore the importance of taking the forest fire risks into account when planning local investments.