El Nino warming has far more costly and long-lasting expenses than previously thought. New research indicates an average El Nino costs the global economy about $3.4tn, with the strong 1997-98 event costing $5.7tn. The World Bank estimated the 1997-98 El Nino cost $45bn. This is the first study to total global damage with an emphasis on lasting economic scars. It runs counter to previous research that found that El Ninos overall aren’t too costly and can even be beneficial. El Nino is a natural, temporary warming of parts of the equatorial Pacific, causing droughts, floods and heatwaves around the world. It also adds extra momentum to manmade climate change.
Callahan and Mankin’s study simulated the cost of global recovery and rebuilding efforts as a result of El Nino, diverting attention from technology and innovation. “Economies bear the scars of El Nino for a decade or more and potentially forever,” warns Justin Mankin, a Dartmouth climate scientist. As the impacts of El Nino look very similar to the impacts of global warming, the researchers encourage careful examination of the economic damage to fully understand the greater effects of climate change.
Economists who looked at the study reported scepticism at its damage estimates, but other climate scientists give weight to the findings. Marshall Burke, an economist and environmental policy professor at Stanford University, said the Dartmouth scientists “make a compelling case that this has really slowed growth in severely affected countries like Peru and resulted in trillions of dollars of lost economic output around the world”.
El Ninos occur every three to five years and are becoming more powerful as a result of climate change. Scientists report a strong El Nino is brewing in the Pacific, suggesting “we will continue to see effects from this event for years to come”, said Christopher Callahan from Dartmouth College. El Nino is expected to bring in a period of drought and low crop yields across Southeast Asia, Australia and some eastern African nations. Other regions, including the US West, will experience flash flooding and landslides.
Callahan observed that “Our economies are poorly adjusted and poorly adapted to the climate variability that we have right now”. The study could raise questions about the priority given to forward-looking environmental policies such as those that encourage businesses to report their climate risk, also known as climate risk disclosure. As natural disasters of this nature become more frequent and costly, insurance costs and human displacement will increase, adding stress to already stretched economic systems.
