Economic exposure to wildfires: a firm-level analysis based on innovative hazard mapping in Italy

This paper provides a comprehensive assessment of the exposure of Italian businesses to wildfire risk, leveraging an innovative set of high-resolution wildfire hazard maps that are integrated with georeferenced firm-level data for assessing local exposure, as proxied by employment. The analysis offers a precise spatial matching between economic activity and wildfire susceptibility, thereby revealing pronounced geographical and sectoral heterogeneity: while only 1.4 per cent of Italian firms are currently exposed to wildfire hazard, the incidence is higher in southern regions and in sectors such as agriculture and construction. Moreover, nearly one third of wildfire-exposed establishments is also exposed to landslides. Turning to the economic consequences of wildfire events, the study finds that establishments affected by wildfires exhibit a similar probability of survival compared to their unaffected peers. Based on climate projections, the number of business sites exposed to wildfires can be estimated to increase by 3 per cent under the most conservative +1.5°C scenario and by 11 per cent under the +3°C scenario, with the largest increases in Puglia, Campania, and Lazio. This underscores the non-linear amplification of climate-related risks in the absence of effective adaptation strategies. These findings highlight the importance of integrating high-resolution physical risk data into economic and policy frameworks, both to improve the monitoring of climate-related vulnerabilities and to inform targeted adaptation and mitigation measures at the regional and sectoral level.