The Coming El Niño Could Cost the World Trillions of Dollars

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Although the effects of El Niño are more concentrated in the tropics, other regions will also feel the heat. Southwestern United States it tends to rain more, while the northern parts of the country warm up. One plus: El Niño generally reduces hurricane activity in the Atlantic Ocean.

Tropical countries tend to be the most economically vulnerable due to their proximity to El Niño and because they often have lower GDP than nations in Europe and other northern regions. For example, the countries indicated in red on the map above show large drops in GDP per capita during the 1997-98 El Niño.

Generally speaking, agriculture that is vulnerable to changes in rainfall constitutes a larger share of GDP in low-income nations, so they have relatively more to lose if the climate changes. Subsistence farmers, in particular, risk not only losing their livelihood, but also not being able to feed their families. Things are especially precarious for farmers without irrigation systems, as the impact of drought is more immediate.

Economically more developed countries tend to have stronger safety nets for their agricultural industries. “Let’s say there’s a major drought in the US that will have a negative effect on a farmer in Indiana: that crop is assured,” says University of Sydney agricultural economist David Ubilava, who studies the economic effects of El Niño, but was not involved in the new paper. “There is this huge policy complex that is there to ensure that farmers are not affected too much during climate shocks. That is not the case in most low- and middle-income countries.”

Previous estimates of economic losses from El Niño were likely underestimates, Callahan says, because they only considered damage in years when the phenomenon was active. But this new research finds that the effects can last up to a decade after the warm waters dissipate. Government funds have to go to infrastructure reconstruction, for example, instead of technological innovation. “So you get this kind of legacy El Niño in depressed economic growth,” Callahan says. When his team factored in losses after the event, he continues, “we found these costs much larger than those previously considered.”

Still, this model is more complicated because it combines two already complicated realms: the economy and the climate. Scientists still can’t say when El Niño will start and how severe it will end up being. There is no way to know exactly how precipitation might change in any given country a year from now. Therefore, it is impossible to predict with certainty how, for example, an El Niño-induced drought might affect rice crop yields in Asia.

That uncertainty is one more reason to start planning international aid to low-income countries now, says Ubilava. “There is a greater chance that people will suffer in these countries,” she says. “Getting a little head start, even these few months, can have big positive effects down the road.”

Callahan sees El Niño as a stress test for a warming planet, as climate change makes Heat waves, forest fires, droughtsand rain more intense. But it is also an opportunity for governments to step up their preparations for extreme weather. “These things, like strengthening their infrastructure and investing in wildfire management, will be necessary,” Callahan says. “So we think there really is kind of a win-win here.”