El Niño climate events cost tropical countries trillions of dollars

The arrival of an El Niño climate pattern – which is expected this year – can trigger devastating storms, droughts, floods and wildfires that have a far-reaching economic impact.

El Niño occurs when sea surface temperatures in the tropical eastern Pacific rise at least 0.5°C above the long-term average, a state that triggers shifts in weather patterns around the world, particularly in some places.

For example, it will often bring stronger storms and more floods to Peru and Ecuador, while in Indonesia and Australia, it tends to unleash drought, wildfires and coral reef bleaching.

The financial impacts on the hardest-hit nations can be severe and long-lived, according to a new analysis.

Christopher Callahan at Dartmouth College in New Hampshire and his colleagues analysed GDP data from 1960 to 2019 for 147 countries to identify the economic impact of an El Niño.

They found it leads to a significant drag for up to five years after the event. For example, the 1982-83 El Niño cost the global economy $4.1 trillion and the 1997-98 one cost $5.7 trillion. Most of this was borne by poorer nations in the tropics, where the impacts of El Niño tend to be felt most keenly.

“El Niño is really costly and has economic implications that are a lot larger than previously understood,” says Callahan. “[These events] produce persistent reductions in economic growth that go beyond a simple blip that countries recover from immediately.”

The study is the first to suggest such a long-term and severe financial impact from El Niño. In 2017, research by Kamiar Mohaddes at the University of Cambridge and his colleagues suggested El Niño patterns can deal a short-lived economic blow to some countries, but can have a positive economic impact elsewhere.

In the US, for example, additional rainfall in California can stimulate hydroelectricity generation and boost agricultural yields, while on the east coast of the US, milder temperatures can lead to lower household heating bills, stimulating retail and leisure spending.

Mohaddes is sceptical that El Niño events have as much of a long-lasting and severe global economic impact as this latest study suggests. “Actually, on net, an El Niño is positive for the global economy,” he says.

“Absolutely, there are some countries that are negatively impacted by an El Niño event. But there are also a bunch of countries that are not impacted by an El Niño effect. And then there are countries that are positively impacted by El Niño,” says Mohaddes.

Callahan says his results aren’t inconsistent with previous findings, but stresses that the new research assessed country data rather than regions and assessed impacts over a long period. “Our numbers are larger and are arguably a more accurate accounting of [El Niño’s] costs than theirs,” he says.

Justin Mankin, who also worked on the study at Dartmouth College, says: “I think it’s quite clear, from a purely geophysical standpoint, that El Niño represents disaster for a lot of regions around the world, particularly the regions in the tropics that also are low-income and least resilient to climate hazards.”

Meteorologists expect El Niño conditions to return by the end of this year, with fears growing that the event could prove to be a strong one with especially high sea surface temperatures in the Pacific. This would have a significant impact on both global average temperatures and weather patterns around the world.

Better forecasting and preparation for an El Niño would increase countries’ capacity to cope, says Mankin. But climate change is amplifying the impacts of El Niño by pushing up the background rate of warming in the atmosphere, he adds, making emissions reductions a priority.

“What these results reveal is that we are really poorly adapted to the climate we have and when it is the case that El Niño and global warming align, their tendency is to just amplify the impacts of one another,” he says.  “Any preparations we can do on the adaptive side are absolutely essential, but it in no way discounts the importance of climate mitigation as the primary means to prevent additional damages.”