The social and economic impact of climate change in Europe’s mountain regions

It not only slows GNP growth, it also has the potential to threaten our quality of life: the backlash from climate change isn’t just about macro-economic indicators. It reverberates much further - and we must understand its broader impact onlocal communities and on society as a whole. This is particularly relevant for mountain areas where winter sports are vital drivers of economic activity.

Even if we hit the targets set down in the Paris Accords, the average temperature in Europe will rise more than two degrees higher than the pre-industrial era. This in turn may have a major effect on precipitation levels -including snowfall - a trend which would have serious repercussions for many winter tourist destinations in the mountains. It could even reach the point that in some of these places, skiing and other snow sports might become completely impossible, with negative fallout not only on winter tourism operators but also more generally on the vast array of businesses that are indirectly involved in the industry.

To secure the overall sustainability of the current economic and social ecosystems in mountain communities, a pressing priority is to fully grasp the impact of higher temperatures and the possible decrease in snowfall that may result. Only by doing so can we come up with strategies aimed at ensuring acceptable economic performance for local companies, even if that necessitates redesigned business models.

Extant research on the relationship between climate change and winter tourism underscores the negative impact of rising temperatures, not only on the supply side but on the demand for tourism as well . All it seems to take is an increase in temperatures in cities to discourage some potential skiers from heading to the mountains. One of the key challenges here may be a shorter ski season. It remains to be seen whether snowmaking is a solution, and if sothe extent to which artificial snow can compensate for the lack of natural snowfall.

Figure 1 - Impacts of extraordinary warm winters on demand- and supply-side indicatorsin tourism

On the other hand, industry stakeholders often tend to deny that the existence of any threat linked to climate change. The most common perception is that instead of a wide-ranging, long-term trend of rising temperatures, the risk is climate variability (for instance, snow coming late in the season). So companies directly involved in winter sports seem to prefer short-term strategies oriented at shoring up immediate profits, instead of attempting anoverall reboot of long-term business models. Specifically, many see snowmaking as aviable solution for meeting tourism demand, regardless of seasonal weather patterns.

To dig deeper and move beyond perceptions alone, we carried out a study on the real impact of climate change on alpine ski areas, investigating various viewpoints. First of all, we analyzed the performance of a sample of 54,016 companies that work directly in the winter tourism industry (ski lifts, hotels, and sport stores) and 89,923 companies with indirect business interests (primarily B2B suppliers). All these companies are located in the Alpine regions spanning four countries (Austria, France, Italy and Switzerland). From 2009 to 2017, both types of companies saw a noticeable upswing in annual growth, with appreciable divergences depending on altitude. Companies with the best growth were those situated above an elevation of 2,000 meters, while the worst performance was recorded by companies located between 1,500 and 2,000 meters. The reason for this may be the perception among tourists that they are more likely to find snow at higher altitudes; by the same token, however, companies located at lower elevations have more opportunities to diversity their tourist offerings (for example, expanding into hiking trails or city tours).

Figure 2 - Average operating turnover from 2009 to 2017 of companies doing business in winter tourism either directly (left) or indirectly (right)

Our analysis centers more squarely on the relationship between trends in temperatures, snowfall, and business performance in 715 ski resorts in Italy, France, Switzerland, and Austria in the same period. On one hand, we didnot record a significant decrease in the amount of snow; on the contrary, we actually found an appreciable increase. At the same time, with the exception of resorts located from 1,500 to 2,000 meters in elevation, we recorded higher average winter temperatures, in particular at higher altitudes (around 4 degrees higher in ski resorts located above 2,000 meters).

Based on these data, we unpacked the relationship between economic performance of companies that do business directly or indirectly in the winter tourism industry. For both categories of companies, the higher the snowfallthe better the economic results, while a temperature rise triggereda negative impact on performance indicators. In any case, in the period in question the positive effect of more snow was greater than the negative effect of a temperature rise, a finding that may reflect the fact that more tourists are going to the mountains in spring and autumn.

Yet the presence of ski resorts in a given region can affect more than just economics. In exploringthis further, we analyzed 10 different indicators of well-being,based on OECD parameters (as defined in the relevant OECD framework), in areas with or without ski resorts. We divided Europe into Southern Regions (countries in the southern part of the continent with skiing areas) and Northern Regions (countries in the northern part of the continent with skiing areas). We found higher levels of well-being among people who live in ski areas, but not with regard to environmental factors asmuch as quality of life (including things such as education, the job market, and personal safety). Overall, we can conclude that there appears to be a link between living in areas that offer winter sports facilities and a higher level of well-being.

Figure 3 - Overall Average Well-being Score (1-10)

Winter tourism and ski resorts represent not only revenue streams, but are also more generally sources of well-being for local communities. Yet rising temperatures and the possible decrease in snowfall that may result could threaten the long-term survival of these socio-economic ecosystems. This makes it more urgent than ever to adopt measures that can keep unrestrainedtemperature rise in check.

Future research streams can contribute to emerging the salience of this issue, for example:

1. a study delving into well-being linked to the presence of ski resorts, with a deep dive into smaller areas in a single country; this would ensure greater granularity in the resulting data;
2. an analysis that extends the number and variety of well-being indicators measured at a local level.