El Niño could take a $3 trillion bite out of the global economy

El Niño is on the way, and when the pattern of warm weather arrives, it could cost $3 trillion to the global economy, according to a new investigation. That estimate is based on damage from El Niño in previous years, plus forecasts pointing to a potentially supercharged event this year.

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

Usually returns every two to seven years, El Niño is expected take place sometime between May and July of this year. If that forecast holds true, this year’s El Niño could cost the global economy up to $3 trillion in damage through 2029 compared to a scenario without the weather pattern unfolding, according to the study published this week in the journal. Science.

The authors of the Dartmouth study found that El Niño tends to slow economic growth in countries for years after the event has passed. They analyzed the economic consequences of the 1982-1983 El Niño and found that it caused a global revenue loss of $4.1 trillion over five years. Another El Niño that took place between 1997 and 1998 cost the world $5.7 trillion in lost revenue.

The stress of these events was felt unevenly around the world. The US saw its GDP fall by 3 percent even five years after each El Niño, compared to a scenario without the development of the weather pattern. Tropical countries, including Peru and Indonesia, which are most vulnerable to the effects of El Niño, saw their GDP fall by more than 10 percent.

“We can say with certainty that societies and economies absolutely do not just take a hit and bounce back,” Christopher Callahan, a Dartmouth doctoral student and lead author of the research, said in a statement. Press release.

There are already signs that the next El Niño could be particularly intense. The event is just one part of a recurring weather pattern that includes a cooler counterpart, La Niña. The world just came out of a rare three year old girl, which could influence El Niño and make it especially strong this year. On top of that, El Niño changes the flow of warm water in the Pacific Ocean, and sea surface temperatures have reached record levels.

“The platform is potentially stacked for a really big El Niño,” Callahan says. “Our results suggest that there is likely to be a significant economic cost depressing economic growth in tropical countries for potentially up to a decade.”