Nonlinear El Niño impacts on the global economy under climate change

The El Nino-Southern Oscillation (ENSO) is a consequential climate phenomenon affecting global extreme weather events often with largescale socioeconomic impacts. To what extent the impact affects the macroeconomy, how long the impact lasts, and how the impact may change in a warming climate are important questions for the field. Using a smooth nonlinear climate-economy model fitted with historical data, here we find a damaging impact from an El Nino which increases for a further three years after initial shock, amounting to multi-trillion US dollars in economic loss; we attribute a loss of US$2.1 T and US$3.9 T globally to the 1997-98 and 2015-16 extreme El Nino events, far greater than that based on tangible losses. We find impacts from La Nina are asymmetric and weaker, and estimate a gain of only US$0.06 T from the 1998-99 extreme La Nina event. Under climate change, economic loss grows exponentially with increased ENSO variability. Under a high-emission scenario, increased ENSO variability causes an additional median loss of US$33 T to the global economy at a 3% discount rate aggregated over the remainder of the 21st century. Thus, exacerbated economic damage from changing ENSO in a warming climate should be considered in assessments of mitigation strategies. Here the authors find economic damage from El Nino far greater than benefits from La Nina on the global economy, leading to an increased economic loss as ENSO variability intensifies under greenhouse warming.

Automated summary

The El Nino-Southern Oscillation (ENSO) is a consequential climate phenomenon affecting global extreme weather events often with largescale socioeconomic impacts. Research has found that the economic damage from El Nino is far greater than the benefits from La Nina, and under greenhouse warming, increased ENSO variability leads to increased economic loss.