Tropospheric ozone - hidden cost for the financial performance of French wineries

The paper investigates how tropospheric ozone affects the financial performance of French wine companies by influencing their operating income, using the Structural Equation Modeling (SEM) methodology. The study encompasses 487 active French wine industry companies from 2010 to 2022, considering various market, climate, and financial factors. The main findings show that high concentrations of tropospheric ozone negatively affect both the quality and quantity of grapes, thereby reducing the operating income of French wine companies and, consequently, their financial performance. More precisely, within the current market conditions and climate context, a 1% rise in tropospheric ozone levels leads to a 10.4% decrease in the operating income of French wine companies, which translates to a 0.7-0.8% decline in their financial performance. A strong market position enables French wine companies to achieve higher revenues, increased profit margins, and sustainable growth. Additionally, lower soil wetness, humidity, and temperature under higher atmospheric pressure improve grapevine growth and grape quality, further boosting revenue. Policy implications for wine producers include adopting site selection, irrigation, and canopy management strategies to enhance grape quality and financial health. Public authorities can address tropospheric ozone pollution through air quality standards, monitoring systems, financial incentives, and educational programs to mitigate its adverse effects.