Imminent El Niño could cost the world billions of dollars

by The Insights

While the effects of El Niño are more concentrated in the tropics, other regions will also feel the heat. The southwestern United States tends to receive more rain, while the northern part of the country warms up. A benefit: El Niño generally reduces hurricane activity in the Atlantic Ocean.

Courtesy of Christopher Callahan

Tropical countries tend to be the most vulnerable economically both because of their proximity to El Niño and because they often have lower GDPs than countries in Europe and other northern regions. For example, the countries shown in red on the map above showed huge drops in GDP per capita during the 1997-98 El Niño.

Generally speaking, agriculture vulnerable to changes in rainfall accounts for a larger share of GDP in low-income countries, so they have relatively more to lose if the weather turns. Subsistence farmers in particular risk not only losing their livelihoods, but also not being able to feed their families. Things are particularly precarious for farmers who lack irrigation systems, as the shock 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 bad drought in the United States that will have a negative effect on a farmer in Indiana – that crop has been secured,” 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’s this huge political complex that’s there to make sure farmers aren’t hit too hard by climate shocks. This is hardly the case in most low- and middle-income countries.

Previous calculations of El Niño economic losses were likely underestimated, Callahan says, because they only considered damage in years when the phenomenon was active. But this new research reveals that the effects can last for up to a decade after the warm waters dissipate. Public funds should go to rebuilding infrastructure, for example, rather than technological innovation. “So you get that kind of El Niño legacy in depressed economic growth,” Callahan says. When his team took losses into account After event, he continues, “we are seeing these costs much larger than previously thought.”

However, this modeling is even more delicate because it combines two already complicated areas: the economy and the climate. Scientists cannot yet say when El Niño will set in and how severe it will be. There’s no way to know exactly how rainfall might change in any given country a year from now. It is therefore impossible to predict with certainty how, say, an El Niño-induced drought might affect the yield of rice crops in Asia.

This uncertainty is all the more reason to start planning international assistance to low-income countries now, says Ubilava. “There is a greater chance that people will suffer in these countries,” he says. “Having a little head start, even those few months, can have big positive effects down the road.”

Callahan sees this El Niño as a stress test for a warming planet, as climate change makes heat waves, wildfires, droughts and rainfall more intense. But it is also an opportunity for governments to step up their preparations for extreme weather events. “These things like strengthening your infrastructure and investing in wildfire management are going to be necessary,” Callahan says. “And so we think there’s really kind of a win-win here.”

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