With an El Niño expected to develop in coming months, new research shows the naturally occurring climate pattern could cost the global economy trillions of dollars as its effects linger over years — a figure much higher than previous estimates that only considered immediate economic tolls.
“The fact that these events are so costly was definitely a surprise,” said Chris Callahan, lead author and doctoral candidate in geography at Dartmouth College. “There are these persistent depressions in economic growth that lasts for five or even ten years after these events because of the strength of those extreme events. ”
About every three to five years, ocean temperatures in the eastern and central Pacific Ocean heat up — telltale signs of an El Niño — and create a domino effect of extreme weather across the globe, sometimes lasting for a year. Along the eastern Pacific, regions like the southern United States can experience above-average rain and even damaging landslides. On the opposite side of the ocean, places like Indonesia and southeast Asia experience drought, which can lead to devastating wildfires. Effects in other regions include devastating floods, dying crops, a surge of tropical diseases and plunging fish populations — all of which can affect local and global economies.
Forecasters at the National Oceanic and Atmospheric Administration are anticipating a strong El Nino event later in 2023, as ocean temperatures have already hit record highs this year. The last El Niño, which arrived in 2016, coincided with the hottest global temperatures on record, wildfires, polar ice melt and more. The authors of the new study estimate the 2023 El Nino event could hold back the global economy by $3 trillion over the next five years, a figure not included in the published research.
“If you have weather and climate hazards impacting your energy and transport sectors, that’s just going to ripple through the economy in a bunch of different ways,” said Justin Mankin, co-author and assistant professor of geography at Dartmouth College. “We are much more poorly adapted to climate variability as it stands now than we understood previously.”
Callahan and Mankin analyzed the growth in national gross domestic product per capita from 1960 to 2019, focusing on the years following El Niño events and its counterpart La Niña, which is characterized by a cooling of ocean waters in the same Pacific region. They found around 56 percent of countries experienced significant decreases in growth even five years after an El Niño event.
La Niña events sometimes showed benefits in the global economy, likely shifting tropical rainfall to more continental areas, boosting agriculture and reducing wildfire risk in such areas. But those increases were heavily outweighed by losses from El Niño events.
The two largest El Niño events over the last 60 years occurred in 1982-83 and 1997-98 and racked up losses of $4.1 trillion and $5.7 trillion, respectively, more than five years later. Those years also coincided with large financial crises that contributed to the losses, but the team still found significant declines in longer-term global GDP if those were excluded from the analysis as well.
Most of the losses were felt by nations in closer proximity to the phenomenon, which are often developing or lower income. The team calculated income for the average resident in Peru, for example, would have been $1,246 greater (19 percent higher) in 2004, if the 1998 El Niño had not occurred. Tropical countries including Ecuador, Brazil and Indonesia lost between 5 to 19 percent GDP per capita.
“We know El Niño is costly. We are showing that these costs are far greater than we understood them to be previously,” said Mankin.
The study’s loss estimate for the 1997-98 El Niño, for example, was sometimes 100 times higher than previous estimates that did not account for cumulative losses in following years..
Callahan said that places like the United States also feel a “discernible” economic toll, experiencing about a 3 percent loss in income growth following the 1982-83 and 1997-98 events.
The team also projected what the economic toll of future El Niño events could look like under various global warming scenarios. Using a middle-of-the-road climate model (depicting not the worst case scenario but not the best either), they calculated about an $84 trillion loss from 2020 to 2099 even if current greenhouse gas pledges are met. That amount is estimated to be about a 1 percent reduction in global economic output over the 21st century, but certain countries could experience higher costs and losses.
“There are places like Peru, Ecuador and Indonesia that are experiencing losses that are far larger than the global number,” said Callahan. “This includes some of the most vulnerable people on the planet, some of the people that don’t have the kind of adaptive capacity that places like the United States and Europe have.”
Of course, the projection leaves a lot of wiggle room since it is highly dependent on how much or little nations reduce their greenhouse gas emissions.
Callahan also acknowledges that climate models depicting the future intensity and frequency of El Niño events are “still flawed in a lot of ways.” He said “it remains to be seen whether or not global warming will actually intensify El Niño in the way that science is debating right now.”
“I found it interesting that even under the most optimistic emissions scenarios, this study still projects major economic losses under predicted future El Niño change,” said Madison Shankle, a paleoclimatology doctoral candidate at who was not involved in the research and published research on El Niño dynamics under warm climate states in Earth’s past. “This signals that, in addition to climate and emission mitigation efforts, it will be imperative to invest in adaptation and resilience initiatives as well.”
Mike McPhaden, a senior scientist at NOAA and who was not involved in the research, said the study was “very insightful and provocative.” He said looking at economic repercussions years down the line leads to a radical revision of some previous estimates of economic losses.
Others, however, are slightly more skeptical of the estimates. Climate economist Gary Yohe told the Associated Press “the enormous estimates cannot be explained simply by forward-looking accounting.”
McPhaden said he isn’t sure what will happen for this upcoming El Niño. If it’s a big one like 1982-83 or 1997-98, then he expects lingering damage and effects over many years. If the event is more subdued, then the consequences may be more muted with a shorter recovery time.
“Either way, prepare for the worst and hope for the best,” he said.