El Niño Could Cost the World $84 Trillion as the Climate Warms

The Pacific Ocean weather pattern known as El Niño packs a mighty wallop when it comes to the global economy, researchers said Thursday.

Individual El Niño events, which tend to last a year or two, have cost the world trillions of dollars in lost income from increases in damaging storms and flooding, along with the potential for extreme heat and drought in some regions. And with climate change altering the shape of those events, the world may be on the hook for more than $80 trillion in losses from El Niño through the end of this century.

“I was definitely surprised by the size of the effects,” said Christopher Callahan, a PhD candidate at Dartmouth University who led the research, published in the journal Science. “But given all the different local extremes driven by El Niño, like wildfires in Indonesia and extreme rainfall in South America, it's ultimately quite plausible that its economic effects are so devastating.”

The study arrives at a relevant moment: Experts say the next El Niño is likely to arrive within the next few months.

Global weather patterns

El Niño is characterized by warm water in the Pacific being pushed back toward the west coast of North and South America. This generally warms the planet; by contrast, the opposite weather pattern, La Niña, slightly lowes global average temperatures.

There are some regional differences when El Niño arrives: the northern part of the U.S. and Canada get dryer and warmer than usual, while the Gulf Coast region tends to be wetter and experience more flooding. The varied effects spread out across the entire globe, with altered jet streams and global air circulation drying out some places like India and southern Africa while supercharging rainfall in others like the southern U.S. and the Horn of Africa. All this creates flooding, crop losses, and other impacts that apparently can dramatically slow economic growth.

Callahan and his co-author, Dartmouth assistant professor of geography Justin Mankin, examined details of prior El Niño events, and found that some of the most severe had truly staggering price tags in terms of lost economic growth. The 1982-1983 event caused $4.1 trillion in such losses; the 1997-1998 El Niño beat even that lofty figure, at $5.7 trillion.

“These large magnitudes are primarily because these effects are persistent,” Callahan told The Messenger. “They accumulate over five or even ten years, rather than being immediately recovered.”

Amir Jina, an assistant professor at the University of Chicago’s Harris School of Public Policy who was not involved with the research, praised the study for examining effects over a longer period than previous work had done.

“I think the fact that there appears to be persistence across years here… should lead to a lot of deep thought about whether we are missing an important channel through which climate affects society,” he said.

Looking ahead to a warmer world 

If an El Niño can do that kind of damage historically, climate change makes it even more of a threat. Research has suggested that warming is making El Niño events more severe, and possibly more frequent, so potential future losses from these events is truly staggering.

The new study found that under the climate change pledges countries have currently made to try and reduce emissions, the world will lose $84 trillion from El Niño events through the end of this century. Though that number is jaw-dropping, the authors note that it represents about a one percent reduction in global economic output over that period.

“In our view, the key takeaway is that society needs to devote more resources to El Niño prediction and adaptation in the present day,” Callahan said. “We are poorly adapted to the climate we have right now, not just global warming, and investments in things like infrastructure hardening and wildfire management will deliver economic benefits at present.”

Change is coming

The globe has been in the midst of an extended La Niña over the last few years, only recently shifting to a middle ground status known as ENSO-neutral. Recent projections have suggested a new El Niño is on its way, by later this summer or by the end of the year at the latest. With extremes from warming already wreaking havoc, that’s bad news for the next couple of years of heat waves, flooding, and other impacts. 

Jina told The Messenger that the paper highlights the ways and degree to which the environment impacts society. 

“With the exception of major disasters, like hurricanes or typhoons, we can often fall into this trap of thinking that climate might only affect people in the far-off future, or only affect the poorest of the poor globally,” he said. “Well-being is inextricably tied to the climate and the environment today, and this helps us understand not just how vulnerable we are right now, but also how vulnerable we might be in future as the climate gets more variable and extremes are more likely.”