El Niño events cost the global economy trillions of dollars

The global phenomenon of El Niño events – a warm band of ocean water stretching from South America to Asia – periodically disrupts worldwide climate patterns. 

When it occurs, it often brings severe floods, destroys crops through drought, decimates fish populations, and increases the frequency of tropical diseases. This year, El Niño is expected to return. 

A new study by Dartmouth researchers, published in the journal Science, suggests that the economic impact of this recurring climatic pattern extends well beyond the event itself. It could cause a lingering financial aftermath that lasts for years, potentially amounting to trillions of dollars in lost income worldwide.

El Niño impacts more than the weather

The Dartmouth study is a pioneering work in the field, offering an evaluation of El Niño’s long-term costs. The projected losses it outlines far surpass previous estimations.

El Niño is part of the El Niño-Southern Oscillation – a natural fluctuation between warm and cold temperatures in the tropical Pacific Ocean. This cycle also includes the cooler La Niña phase. 

El Niño events alter global weather patterns, generally resulting in a wetter, warmer winter for the West Coast of the US and a milder Atlantic hurricane season.

How the study was conducted

Over two years, the researchers scrutinized worldwide economic activity in the decades following the significant El Niño events of 1982-83 and 1997-98. They detected a “persistent signature” of slowed economic growth extending for over five years. 

These two events led to global economic losses of $4.1 trillion and $5.7 trillion, respectively, in the subsequent half-decade. Most of this burden fell upon the world’s poorest nations located in the tropics.

Looking to the future, the researchers anticipate that global economic losses during the 21st century could reach a staggering $84 trillion. This figure takes into account the potential amplification of El Niño’s frequency and strength due to climate change. 

What the researchers learned

Even if world leaders fulfill their current pledges to reduce carbon emissions, these predictions will remain the same. For instance, they estimate that the upcoming 2023 El Niño could constrain the global economy by up to $3 trillion by 2029.

Christopher Callahan, the lead author of the study and a doctoral candidate in geography at Dartmouth, shared that this research contributes to an ongoing discussion about society’s resilience in the face of major climatic events like El Niño.

“We can say with certainty that societies and economies absolutely do not just take a hit and recover,” said Callahan, explaining that the negative economic impact following an El Niño event could linger for up to 14 years, if not longer.

“In the tropics and places that experience the effects of El Niño, you get a persistent signature during which growth is delayed for at least five years.” He emphasized the need to account for this prolonged impact when quantifying the financial cost of such events.

Seeking to determine the economic toll of climate change

Study senior author Professor Justin Mankin highlighted the significance of year-to-year climate variations in determining the economic toll of global warming. Even though these climate swings largely operate independently from global warming, they can either intensify or reduce its effects.

El Niño events, which Mankin calls the “trunk of the tree of climate variability,” is the most significant source of year-to-year climate variation. It alters weather globally and leaves a substantial imprint on national economies.

Mankin argues that while world leaders and the public rightly focus on the consistent rise in global average temperature when discussing climate change, they must also consider El Niño. 

“If you’re estimating the costs of global warming without considering El Niño, then you are dramatically underestimating the costs of global warming,” said Professor Mankin.

“Our welfare is affected by our global economy, and our global economy is tied to the climate.” His research demonstrates that El Niño’s effect on climate variation is incredibly costly, stagnating growth for years. This finding has led to cost estimates much larger than previous ones.

Analysis of past El Niño events

According to Mankin and Callahan’s analysis, the 1982-83 and 1997-98 El Niño events resulted in the gross domestic product (GDP) of the United States being approximately 3% lower in 1988 and 2003, respectively, than it would have been otherwise. In contrast, the GDPs of tropical coastal nations like Peru and Indonesia were more than 10% lower in the same years.

“The global pattern of El Niño’s effect on the climate and the prosperity of different countries reflects the unequal distribution of wealth and climate risk – not to mention the responsibility for climate change – worldwide,” Mankin said. He pointed out that El Niño magnifies existing climate change inequities, disproportionately affecting the least resilient and prepared among us.

According to Professor Mankin, the prolonged and substantial financial repercussions revealed by their research suggest that we are currently maladapted to our existing climate. 

“Our accounting dramatically raises the cost estimate of doing nothing. We need to both mitigate climate change and invest more in El Niño prediction and adaptation because these events will only amplify the future costs of global warming.”

Concerns about the 2023 El Niño impact

The El Niño predicted for 2023 is slated to arrive at a time of record-high sea-surface temperatures. Callahan noted that the last major El Niño event, which occurred in 2016, contributed to making that year the hottest in recorded history.

Since then, global warming has only intensified. Moreover, the world is now emerging from a prolonged La Niña phase, and these two phases can intensify each other. The National Oceanic and Atmospheric Administration predicts a higher than 80% chance of El Niño setting in by late summer.

“The deck is potentially stacked for a really big El Niño,” said Callahan. He suggests that there is likely to be a significant economic toll that depresses economic growth in tropical countries for potentially up to a decade. This could result in a global loss of trillions of dollars in productivity compared to a world without this El Niño.

More about El Niño

El Niño is a naturally occurring climate pattern that involves changes in the temperature of waters in the central and eastern part of the tropical belt of the Pacific Ocean. Its full name, “El Niño Southern Oscillation” (ENSO), refers to the cycle of warm (El Niño) and cool (La Niña) phases this area undergoes.

During El Niño events, the ocean surface temperatures in the central and eastern Pacific become significantly warmer than usual. This heating affects the atmospheric pressure patterns, leading to a reversal of the usual trade winds. 

Normally, these winds blow east to west, pushing warm water toward the western Pacific (near Asia). However, during El Niño, these winds weaken or even reverse, causing warm water to spread eastward toward South America.

The effects of El Niño are wide-ranging and global. Here are some of its potential impacts:

Rainfall 

Regions that are normally dry might receive heavy rainfall, leading to flooding. On the flip side, areas that typically have a wet climate may experience drought. For example, during El Niño events, countries like Peru and Ecuador often face heavy rain and flooding, while Australia and parts of Southeast Asia may experience drought.

Temperature 

El Niño often causes above-average winter temperatures over western and northern Canada and over the western and northern United States. Simultaneously, it can lead to cooler than normal temperatures in the southeastern states of the U.S.

Agriculture

Changes in rainfall and temperature can significantly affect agricultural productivity. This can lead to food shortages, increased food prices, and economic problems, especially in countries heavily reliant on agriculture.

Fisheries 

El Niño can disrupt marine ecosystems. The warmer water temperature leads to a decline in nutrients, which causes a reduction in the marine food chain’s productivity. This has a direct impact on the fishing industry, especially in South American countries where economies can be significantly affected.

Health

There can be health implications too. Increased rainfall in certain regions can create breeding grounds for mosquitoes, potentially leading to outbreaks of mosquito-borne diseases like malaria, dengue fever, and Zika virus.

Wildlife

Shifts in ocean temperatures and rainfall can also disrupt terrestrial and aquatic wildlife, impacting species distribution and behavior.

El Niño events typically occur every two to seven years and can last for up to a year or sometimes longer. They are part of a natural cycle and have been occurring for thousands of years. However, scientists are researching how climate change might impact the frequency and severity of El Niño events.

El Niño is followed by a phase called La Niña, characterized by cooler than average sea surface temperatures in the central and eastern Pacific. This phase also has its own set of global impacts, often opposite to those of El Niño.

Predicting El Niño events and their intensity is an active area of scientific research. Improved prediction models can help countries better prepare for the potential environmental and socio-economic impacts.

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