ATHENS — Despite the scale and scope of wildfires that seared 208,804 acres across Greece, destroying hundreds of thousands of trees and forests, homes and property, the financial toll should be manageable, said Moody's Ratings agency.
But the fires showed how susceptible Greece is to climate change, with 208,804 acres burned, 300 homes razed and another 1,000 damaged, also cutting into tourism hopes as the images went around the world.
The credit rating agency said the wildfires were the worst in decades although not as large or deadly as those in 2007 – some 3000 – that killed 67 and burned more than twice as much land and two million olive trees.
As the government in 2020 alone doled out 17.5 billion euros ($20.54 billion) in relief aid to workers and businesses during COVID-19 lockdowns, Prime Minister Kyriakos Mitsotakis also promised aid to wildfire victims.
But the European Union also had sent 32 billion euros ($37.56 billion) in pandemic aid – no word where it's gone – and Moody's said EU emergency funding will pay for most of the costs of the fires reconstruction.
The government had pledged 500 million euros ($586.83 million) for compensation, restoration and reconstruction, on top of the cost of the disaster response including the lease of special aircraft, and will need to upgrade other firefighting equipment and also civil protection structures.
That will be about 0.3 percent of the annual Gross Domestic Product (GDP) Kathimerini said of Moody's report, less than the 1.3 percent in costs from the widespread 2007 fires.
“Aside from direct fiscal support, disruption triggered by wildfires, including power and water outages, poor air quality and road closures is also likely to weigh on tourism, a credit negative for the country’s local governments. Emergency support from the EU and funds available under the NextGen EU package will limit the wildfires’ immediate negative fiscal impact,” Moody’s said.
But it warned that, a “further increase in the frequency and severity of these events could weaken its tourism industry. In addition, environmental damage and a potential decrease in property tax bases pose longer-term credit challenges for local governments.”
“We believe the wildfires are indicative of the credit risks from climate change, which we capture in Greece’s ‘moderately negative’ environmental issuer profile score,” the report concluded.