The Cyprus Institute has issued a stark warning in a new policy brief: failure to implement adequate climate change adaptation measures could cost the Cypriot economy €13.3 billion by 2050. Authored by Professor Theodoros Zachariadis, the brief outlines both the scale of the looming threat and the economic rationale for urgent, targeted investment.

The document, based on Cyprus’s revised National Adaptation Strategy, estimates that €3.4 billion in additional investments are needed by mid-century to prepare the island for intensifying climate impacts—particularly in energy efficiency, coastal protection, and public health systems. Yet less than 30% of these investments are currently budgeted, leaving a €2.5 billion funding gap that must largely be filled by public resources.

According to the brief, Cyprus—situated in the Eastern Mediterranean—is warming faster than the global average. While global mitigation efforts continue, the document stresses that adaptation is now a critical necessity. Unlike emissions reductions, which are governed by EU-wide policies, adaptation requires region-specific solutions informed by local conditions and risks.

The brief underscores that climate change is already underway and, in some respects, irreversible. Consequently, national adaptation efforts must no longer be treated as optional or secondary to mitigation but as essential pillars of economic and social planning.

The projected €3.4 billion in adaptation investments—equivalent to just 0.4% of GDP over the next 25 years—is modest when compared to the estimated €13.3 billion in climate-related economic losses if adaptation measures are not implemented. These losses stem from rising temperatures, heatwaves, wildfires, flooding, and other climate-related disruptions.

A large portion of the needed investment—63%—relates to energy-efficient building renovations, which the brief notes serve both mitigation and adaptation purposes. These projects are already supported by updated EU directives and account for the bulk of adaptation investments currently underway.

However, other high-risk areas remain underfunded. Projects to protect coastal infrastructure from sea level rise, upgrade the power grid for heat resilience, and monitor climate-linked health threats have been identified but not yet meaningfully implemented.

The brief emphasizes that over 70% of the necessary investments—about €2.5 billion—will need to come from public funds. These would cover large infrastructure upgrades and provide grants to households and businesses for adaptation actions.

The brief calls for these investments to be embedded into the national budget, fiscal risk assessments, and public debt sustainability analyses. It also warns that adaptation spending should be seen not as a cost, but as a strategic investment in national security and economic stability.

Looking beyond 2050, the report notes that climate impacts are expected to become far more severe, and failure to act now could place unsustainable pressure on public finances through disaster compensation and emergency infrastructure repairs.

In addition to fiscal risks, the brief highlights the social dimensions of unmitigated climate change. Lower-income households in Cyprus are expected to be hit hardest, as they spend a larger share of income on food, electricity, and healthcare—areas likely to become more expensive due to climate pressures. The brief also cites risks to labor productivity and potential declines in property values.

A recent European study cited in the brief ranks Cyprus among the countries where vulnerable households are expected to suffer the greatest negative impacts.

While the brief acknowledges the inherent uncertainty in long-term projections, it underscores that early adaptation yields clear macroeconomic and social benefits. It recommends that the Ministries of Environment and Finance jointly monitor and adjust adaptation planning as needed, especially for long-term infrastructure with lifespans extending to the end of the century.

Shorter-term measures—such as desalination plants, wildfire prevention tools, and health alert systems—are well understood and should be prioritized, according to the document.

The brief concludes that addressing the climate crisis requires both mitigation and adaptation measures to be implemented simultaneously. It warns that economic policymaking in Cyprus can no longer afford to treat climate change as an external issue—it must be central to fiscal and development strategies moving forward.