El Niño could eat away $3 trillion from the global economy

El Niño is on its way, and when the warm weather pattern arrives, it could cost the global economy $3 trillion, according to new research. This estimate is based on damage inflicted by El Niño in previous years, as well as forecasts indicating a potentially supercharged event this year.

El Niño influences weather patterns around the world when it forms, potentially fueling more severe flooding in some places while worsening drought in others. In the United States, for example, this can trigger a wetter winter in the southern half of the country, but warmer, drier weather further north. Earlier this week, a warning came from the World Meteorological Organization that this year’s El Niño, combined with climate change, could “push global temperatures into uncharted territory”.

Typically returning every two to seven years, El Niño is expected to develop between May and July this year. If this forecast materializes, this year’s El Niño could cost the global economy up to $3 trillion in damages through 2029 compared to a scenario with no climate change, according to the study published this week in review Science.

The authors of the Dartmouth study found that El Niño tends to stunt countries’ economic growth for years after the event ends. They analyzed the economic fallout from the El Niño of 1982-1983 and found that it resulted in a loss of global income of $4.1 trillion over five years. Another El Niño that occurred between 1997 and 1998 cost the world $5.7 trillion in lost income.

The stress of these events was felt unevenly across the world. The United States has seen its GDP fall by 3% even five years after each El Niño episode, compared to a scenario without climate change. Tropical countries, including Peru and Indonesia, which are more vulnerable to the effects of El Niño, saw their GDP fall by more than 10%.

“We can say with certainty that societies and economies don’t just take a hit and recover,” Christopher Callahan, a Dartmouth doctoral student and lead author of the research, said in a press release.

There are already signs that the next El Niño could be particularly intense. The event is only part of a recurring climate pattern that includes a colder counterpart, La Niña. The world has just emerged from a rare three-year La Niña, which could influence El Niño and make it particularly strong this year. On top of that, El Niño is altering the flow of warm water in the Pacific Ocean and sea surface temperatures have reached record highs.

“The game is potentially stacked for a really big El Niño,” Callahan says. “Our results suggest that there will likely be a heavy economic toll that will depress economic growth in tropical countries for potentially up to a decade.”