How the climate affects competitiveness. Confartigianato sounds the alarm

Climate change is jeopardising the competitiveness of the Italian manufacturing sector. This is the warning issued by Confartigianato following an analysis which reveals that, between 2015 and 2024, Italy has incurred €74.7 billion in economic losses caused by extreme weather events, amounting to €7.5 billion per year. This figure is 64.6 per cent higher than the European average and higher than that of Germany, Spain and France.

The consequences are particularly evident during the summer months. In 2025, the area of forest affected by major fires reached 12,306 hectares, an increase of 19.3 per cent compared with 2024. Sicily, Calabria and Campania account for 71 per cent of the areas affected by the fires.

The increasing frequency of wildfires is compounded by the water crisis, which also has a direct impact on the national energy system. Low rainfall and high temperatures have reduced water levels in Alpine reservoirs, leading to a sharp decline in hydroelectric power generation. Confartigianato’s analysis of Terna data shows that in June 2026, hydroelectric power generation fell by 23.7 per cent compared with the same month in 2025, following a 38.5 per cent drop recorded in May. Overall, in the first half of 2026, production fell by 20.3 per cent year-on-year. Although it remains 21.8 per cent higher than the lowest levels recorded during the severe water crisis of 2022, the reduction in hydroelectric power is increasing the reliance on other generation technologies at a particularly sensitive time for the security of energy supplies.

In addition to climate-related challenges, there are also infrastructure issues: 42.4 per cent of the water fed into Italy’s water mains was lost before reaching households and businesses. Water losses exceed 50 per cent in Basilicata (65.5 per cent), Abruzzo (62.5 per cent), Molise (53.9 per cent), Sardinia (52.8 per cent) and Sicily (51.6 per cent), whilst they are lower in Emilia-Romagna, Valle d’Aosta, Lombardy and Trentino-Alto Adige.

According to Confartigianato, with the PNRR funds earmarked for water management – amounting to €5.4 billion – set to be exhausted by 2027, it will be essential to secure new funding to continue investments aimed at reducing network losses, strengthening the security of supply and increasing the region’s resilience to the effects of climate change.

Water availability is, in fact, a strategic production factor for a significant proportion of the Italian manufacturing sector. The ten sectors with the highest water intensity – ranging from mining to textiles, from chemicals to pharmaceuticals, from rubber and plastics to glass, from ceramics to paper and metal products – are home to 117,000 businesses, employing 1,346,000 people, equivalent to 34.6 per cent of manufacturing employment. Within these sectors, there are 69,000 craft enterprises, employing 284,000 people, accounting for 21.1 per cent of employment in water-intensive manufacturing.

“The availability of water resources,” emphasises Confartigianato President Marco Granelli, “is now a strategic lever for the country’s competitiveness. Renewable energy production, the operational continuity of thousands of businesses and the stability of key supply chains such as agri-food and manufacturing all depend on it. Water security is not merely an environmental issue, but an economic and industrial priority. Accelerating investment in infrastructure, reducing network losses and strengthening the resilience of the region means protecting jobs, supporting the energy transition and containing the ever-increasing costs generated by extreme weather events.”