The Hidden Risks of Winter Tourism: Climate Change and the Underestimated Threat to Investor Portfolios

The winter tourism sector, long a cornerstone of seasonal economies in mountainous regions, is facing an existential threat from climate change. While investors often view ski resorts and related infrastructure as stable assets, emerging research reveals a stark reality: climate-driven seasonal revenue volatility and long-term asset devaluation are being systematically underestimated. This analysis synthesizes recent studies to highlight the financial risks and the urgent need for recalibrating investment strategies in this sector.

Seasonal Revenue Volatility: A Growing Liability

Climate change is eroding the predictability of winter tourism revenue. In the United States, the ski industry has already lost $5 billion from 2000 to 2019 due to shorter ski seasons and declining snowfall, with projections indicating annual losses of up to $1.35 billion by the 2050s under high-emission scenarios. For example, Vail Resorts reported an 8% decline in visits during the 2023–24 season, directly linked to a 28% annual drop in snowfall.

European studies further underscore the crisis. A 2024 analysis by Robert Steiger found that 53% of ski resorts across 28 European countries could face "extremely high" snow supply shortages under 2°C of global warming, rising to 98% under 4°C. Artificial snowmaking, while currently a buffer, is increasingly costly and unsustainable. By the end of the century, snowmaking volume requirements could surge by 330%, rendering this adaptation economically unviable. These trends highlight a sector grappling with operational instability, where even well-capitalized resorts are vulnerable to compounding risks.

Long-Term Asset Devaluation: A Silent Crisis

Beyond revenue volatility, climate change is accelerating asset devaluation in winter tourism. In the Swiss Alps, house prices in ski resorts have depreciated by 3.6–6.0% per degree Celsius of mean winter temperature rise, with temperature proving a stronger predictor of price changes than altitude. This pattern is mirrored in the U.S., where 89% of ski areas now rely on artificial snow to maintain operations, signaling a shift from natural to engineered tourism.

The financial implications are profound. A 2024 report notes that ski resorts are increasingly diversifying into year-round activities like hiking and yoga retreats to offset winter declines. However, such adaptations cannot fully offset the erosion of property values or the rising costs of snowmaking. For instance, the U.S. ski industry's reliance on artificial snow has surged, yet this strategy is classified as "maladaptive" in regions with water insecurity or carbon-intensive energy grids. Investors who fail to account for these dynamics risk holding assets that lose value faster than projected.

Investor Underestimation: A Systemic Blind Spot

The underestimation of climate risks by investors is not merely a sector-specific issue but a systemic flaw in financial risk assessments. A 2024 study by four European universities found that financial institutions may be underestimating investor losses from physical climate risks by as much as 70% when asset-level data is omitted from risk models. This mispricing is particularly acute in winter tourism, where physical risks like snowfall variability and infrastructure vulnerability are not adequately quantified.

Compounding this issue, a Carbon Tracker analysis revealed that over half of the 52 Climate Action 100+ focus companies lack meaningful financial disclosures on climate risks. This opacity hinders investors' ability to assess the true exposure of their portfolios. For example, the projected $657 million to $1.35 billion annual losses in the U.S. ski industry by the 2050s are rarely factored into asset valuations, creating a dangerous disconnect between risk and return.

The Path Forward: Reimagining Investment Strategies

To mitigate these risks, investors must adopt a dual approach:
1. Scenario Analysis: Incorporate climate scenario analysis to quantify long-term risks for winter tourism assets. The 2024 Climate Risk Landscape Report emphasizes the need for tools that assess both physical and transition risks, enabling more resilient capital allocation.
2. Diversification and Adaptation: Prioritize investments in resorts that diversify revenue streams (e.g., year-round activities) and adopt sustainable practices. However, as snowmaking becomes increasingly untenable, investors should also consider divesting from assets reliant on high-emission adaptation strategies.

Conclusion

The winter tourism sector is at a crossroads. Climate change is not only shortening ski seasons and eroding property values but also exposing a critical gap in investor risk assessments. With losses already reaching $5 billion in the U.S. and projections of exponential growth in climate-driven financial impacts, the status quo is unsustainable. Investors who fail to integrate climate risks into their strategies risk holding devaluing assets in a sector where the snow is melting-literally and figuratively.