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New study reveals alarming economic impact of El Niño: '[We] absolutely do not just take a hit and recover'

"You are dramatically underestimating the costs."

Economic impact of El Niño

Photo Credit: iStock

El Niño brings warm, dry weather to northern climates and wetter conditions closer to the tropics. But the weather isn't the only thing affected by El Niño. A new study shows that when El Niño arrives, the global economy takes a hit.

What's happening?

El Niño is one half of the El Niño/Southern Oscillation (ENSO), a climate phenomenon that describes the periodic rise and fall of sea surface and air temperature in the equatorial Pacific Ocean. El Niño is the "warm phase" of ENSO, while La Niña is the "cool phase." 

These fluctuations occur naturally every two to seven years. During El Niño, trade winds weaken, pushing warm water toward the west coast of the Americas. In response to these warmer waters, the jet stream shifts to the south, blowing warm weather to the Americas and bringing greater rainfall to the tropics while causing droughts in northern climates. Climate change is likely to strengthen the effects of El Niño.

In addition to changes in the weather, El Niño alters the global economy. A new study by Dartmouth College researchers reports that the global economy suffers losses of trillions of dollars in the years following El Niño events. The study reports that the global economy lost $4.1 trillion and $5.7 trillion in the years following the 1982-83 and 1997-98 El Niño events, respectively. 

Based on past losses and forecasts for 2023's expected El Niño, the study estimates a $3 trillion hit to the global economy in the wake of this year's El Niño.

Why is this important?

Not only is the economic impact of El Niño severe, but long-lasting, too. The study projects that economic losses following El Niño could last as long as 14 years.

"We can say with certainty that societies and economies absolutely do not just take a hit and recover," said lead author of the study Christopher Callahan in a press release.

The economic burden is mostly shouldered by poorer nations — many of the same countries that bear the brunt of the climate crisis while contributing the least to its causes. 

"El Niño amplifies the wider inequities in climate change, disproportionately impacting the least resilient and prepared among us," said Justin Mankin, an assistant professor of geography at Dartmouth.

What's being done?

The study's authors urge researchers to take ENSO into greater consideration when making climate projections.

"We need to both mitigate climate change and invest more in El Niño prediction and adaptation because these events will only amplify the future costs of global warming," said Mankin. "If you're estimating the costs of global warming without considering El Niño, then you are dramatically underestimating the costs of global warming."

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