The Global Economy is at Risk of Losing $3 Trillion Due to El Niño.

New research shows that the El Niño event currently underway could cost the global economy up to $3 trillion. This estimate is based on projections that the El Niño event may intensify this year, in addition to the damage it has caused in recent years. During an El Niño, weather patterns around the world can be affected, leading to more severe flooding in some places and worsening droughts in others. In the US, for example, the southern half of the country may experience wetter winters, while further north may experience hot, dry weather. The World Meteorological Organization has warned that this year’s El Niño and climate change could “push global temperatures into uncharted territory.”

El Niño events return cyclically every two to seven years and are expected to occur between May and July of this year, with possible immense economic ramifications by 2029. Research published in the journal Science has shown that El Niño tends to hold back economic growth in countries for years after the event has passed. The study authors analyzed the economic impact of two past El Niño events and found a global decrease of $4.1 trillion in income over five years in 1982-1983 and $5.7 trillion in lost income during the 1997-1998 event. These events had non-uniform impacts worldwide, with GDP in the United States falling by 3% even five years after the phenomenon passed. Meanwhile, tropical countries such as Peru and Indonesia saw GDP decline by over 10%.

Christopher Callahan, a Dartmouth PhD student and lead author of the study, believes that this year’s El Niño could be particularly intense, with the potential for long-lasting negative economic impacts on tropical countries. The circulation of warm water in the Pacific Ocean during El Niño events can cause sea surface temperatures to reach record highs, potentially leading to widespread flooding and other climate-related crises. The world also just emerged from a rare three-year run of cooler La Niña events, which could interact with this year’s El Niño, making it especially strong. “Our results suggest that significant economic damage is likely to occur that will constrain economic growth in tropical countries for up to a decade,” says Callahan.

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