Bloomberg Línea — As the UN’s World Meteorological Organization (WMO) declared the onset of El Niño, it urged governments around the world to “mobilize preparations” to face and limit the impacts on health, ecosystems and economies due to the “likelihood of breaking temperature records.”
“The onset of El Niño will greatly increase the likelihood of breaking temperature records and triggering more extreme heat in many parts of the world and in the ocean,” said WMO Secretary-General Petteri Taalas.
“Early warnings and anticipatory action of extreme weather events associated with this major climate phenomenon are vital to save lives and livelihoods,” said Taalas, in a communique released by the WMO.
Also known as ENOS (El Niño–Southern Oscillation) El Niño is a periodic and natural climatic event that occurs in the tropical Pacific Ocean, generating unusual warming of ocean surface waters in the central and eastern equatorial Pacific region. This warming alters normal weather patterns and has significant effects on the global climate, which directly impacts the economy.
What climate changes does El Niño generate?
- Changes in rainfall patterns and droughts: El Niño may lead to heavy rainfall in some regions where droughts are usually experienced; and droughts in areas that usually receive a lot of rain.
- Rising atmospheric temperatures in some parts of the world.
- Environmental impact on marine life, given that ocean circulation patterns are altered, which affects species distribution and may lead to a decrease in fishery yields in certain areas.
- El Niño can influence the occurrence and intensity of hurricanes and tropical storms in the Atlantic Ocean and other regions.
El Niño onsets are generally associated with increased precipitation in parts of southern South America, the southern U.S., the Greater Horn of Africa, and Central Asia. In contrast, El Niño can also cause severe droughts in Australia, Indonesia, parts of South Asia, Central America and the north of South America.
During the Northern Hemisphere summer, warm El Niño water may generate hurricanes in the eastern central Pacific Ocean, while it could hinder hurricane formation in the Atlantic basin.
White heat days
Global temperatures have smashed through records this week, underscoring the dangers of ever-increasing greenhouse gas emissions generated from burning fossil fuels, Bloomberg News reported.
The average worldwide temperature reached 17C (63F) on Monday, just above the previous record of 16.9C in August 2016, according to data from the National Centers for Environmental Prediction. The threshold only lasted a day. On Tuesday, the average temperature hit 17.2C.
The new highs illustrate the extremity of 2023′s summer in the northern hemisphere, and bring into focus the slow pace of global progress on curbing emissions. As per Bloomberg, “it’s likely the world will exceed 1.5C of warming ‘in the near term,’ with efforts on climate action still insufficient, the Intergovernmental Panel on Climate Change said in March in a report summarizing five years of its own research. Global greenhouse gas emissions need to be cut to 60% below 2019 levels by 2035, according to the report, and climate-related risks are rising with every increment of warming.”
What will the economic consequences be?
According to Schroders, an investments manager firm, El Niño poses a stagflationary risk for emerging markets because of its potentially large impact on food prices.
In a note to clients, Schroders said there are reports that “low rainfall has caused the level of the Panama Canal to fall, forcing ships to carry lighter loads to avoid running aground. At the margin that could cause some disruption to supply chains, which caused goods price inflation to balloon during the Covid-19 pandemic.”
El Niño, the firm analysts said, is also expected to impact the supply side of the global commodities market as there are already reports of heavy rain disrupting copper mining in Chile.
With the notion that El Niño has a direct impact on commodities and food production, Schroders surmises that, even if oil prices remain stable, a strong El Niño the S&P GSCI Agriculture and livestock indices “might be around 40% higher from current levels around the turn of the year, while a very strong El Niño could lift prices by more than 50%,” the firm said.
El Niño persistently reduces economic growth at the country level, according to the journal Science. In hindsight, $4.1 trillion and $5.7 trillion in global income losses were attributed to the 1982-83 and 1997-98 El Niño events, respectively.
“In an emissions scenario consistent with current mitigation pledges, increased ENSO amplitude and teleconnections from warming are projected to cause $84 trillion in 21st-century economic losses”, Science says.
As for the United States, its economic growth could be affected, from food prices to winter clothing sales.
While the effects may vary depending on geographic location, some common economic consequences associated with El Niño include the following:
- Agriculture: Irregular or heavy rains, droughts and extreme temperatures can damage crops and reduce productivity. This can result in crop failures, decreased food production, and increased prices for agricultural commodities.
- Fisheries: In some regions, fish populations may decline or move to colder waters, disrupting the catch and the local fishing industry.
- Energy: Droughts associated with El Niño can reduce river levels, which in turn affects hydroelectric power production capacity. This can lead to increased dependence on more expensive energy sources, such as fossil fuels.
- Tourism: El Niño’s effects may alter normal weather patterns and affect tourist spots, as well as related sectors, such as hotels, restaurants and transportation.
- Infrastructure and insurance: Consequences such as floods and landslides can damage roads, bridges and homes. This can generate significant repair and reconstruction costs, as well as insurance claims.