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The recent flooding in Valencia and Malaga, Spain, has caused widespread disruption, affecting communities, infrastructure, and local economies. This extreme weather event is part of a broader pattern of increased heavy rainfall and flooding across Europe, particularly in the Mediterranean region, where traditionally dry summers and mild winters are giving way to more intense storms.
Climate change and increased rainfall intensity
Climate change is a primary factor behind these floods. As global temperatures rise, the atmosphere can retain more moisture, which results in more intense rainfall when conditions align. Higher temperatures accelerate evaporation from oceans, seas, and other bodies of water, fuelling moisture-rich clouds. When these clouds release their moisture, they often do so in concentrated downpours, overwhelming local drainage systems and triggering flash floods.
Unique weather patterns - The Mediterranean region
The Mediterranean region is particularly susceptible to these weather extremes. Warm air masses from North Africa frequently meet cooler air from northern Europe over the Mediterranean Sea, creating conditions for storms, especially when there is significant humidity in the atmosphere. In certain situations, high-pressure systems can trap these storms over a region, resulting in prolonged rainfall over a specific area, as recently observed in Valencia and Malaga.
Rising ocean sea surface temperatures
Sea surface temperatures in the Mediterranean have been rising, with record highs reported in recent years. Warmer sea ocean temperatures increase evaporation, leading to more moisture in the air, which intensifies rainfall and increases the risk of flooding. This accumulation of heat in the Mediterranean Sea is largely attributed to climate change, creating a feedback loop of warmer seas, increased evaporation, and heavier storms.
Drainage challenges
Urbanisation in Valencia and Malaga has exacerbated the impact of these floods. Both cities have seen substantial development in recent decades, with more paved surfaces and infrastructure replacing natural land. This urbanisation reduces the ground’s ability to absorb water, causing rainwater to flow over paved areas instead. As a result, drainage systems, often designed for moderate rainfall levels, can quickly become overwhelmed.
Significant shift to rainfall patterns
Recent studies suggest that rainfall patterns in Spain are changing, with intense rain becoming more frequent and severe. Climate models indicate that while the Mediterranean may experience longer dry spells, periods of rain are likely to be more intense. This shift is linked to climate change, which is altering established weather patterns and increasing the likelihood of extreme weather events, including flooding, across Europe.
Accounting Impact - Message from our CEO
Flooding events have significant implications for businesses, impacting both operations and financial reporting.
Physical risks from floods may damage property, disrupt supply chains, and interrupt business operations, leading to potential losses and increased costs.
For industries reliant on physical assets, such as real estate, manufacturing, and logistics, these risks are particularly acute.
In terms of accounting impact, companies may need to assess and disclose physical risk exposure in financial statements, in line with standards like the IFRS S2 Climate-related Disclosures. This may involve revaluating asset impairment, particularly if properties or equipment have been damaged or face an increased risk of future damage. Insurance costs may rise due to the heightened risk of extreme weather, adding pressure to profit margins and potentially affecting cash flow forecasts.
Further, under frameworks such as the UK- CFD (UK Climate-related Financial Disclosures), companies should consider disclosing these climate-related risks and any mitigation plans. These disclosures may include qualitative assessments of risks, the anticipated impact on financial performance, and strategies to enhance resilience.
Accountants need to ensure the financial impact of climate-related risks is accurately captured in financial statements, meeting both regulatory requirements and investor expectations.
Conclusion
Climate change integration isn’t just about compliance, it’s about creating a stable, resilient business that’s better prepared for future challenges. For those who embrace it, the rewards go beyond meeting regulations: they extend to better health, a stronger workforce, and long-term business stability. So, rather than seeing it as just another requirement, consider the real-world benefits this integration can bring to your team and your bottom line.
If you’re ready to turn climate action into a strategic advantage, contact us at help@simplifyclimate.co.uk.
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