El Ninos cause trillions in lost economic growth, study shows
WASHINGTON – Damage from El Nino-related extreme weather, in crop losses, flooding, wildfires and civil unrest, can cost tens of billions of dollars in direct impacts over a period of months or a year. New research suggests that the real cost is much higher – in the trillions – because conventional accounting fails to recognise “persistent” shortfalls in gross domestic product that unspool over several years and are harder to identify.
Mr Callahan and Dr Mankin focused on a question broader than immediate, visible weather damage: How does climate variability affect economic growth? El Nino provided them with a kind of natural experiment with which to probe it, a discrete period of change with a long tail that they could track through subsequent years of data.
El Nino “is not simply a shock from which you recover”, said Dr Mankin, assistant professor in the Department of Geography. “It is a shock that effectively, as far as we can tell, permanently alters your growth trajectory.” Mr Callahan and Dr Mankin’s new paper puts El Nino into a different category, that of the “growth effect”, in which quieter harms compound over years. GDP does not return to its baseline growth rate. That is in part because the associated damage is more subtle than razed buildings and flooded coasts.
Mr Callahan and Dr Mankin also peer ahead to a future climate scenario, one chosen because it is roughly consistent with current national policy pledges, they write. They use the most recently updated global climate models to project what accumulated El Nino damages might look like this century – potentially US$84 trillion, or a 1 per cent reduction in GDP.
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