El Niño Isn't a Short-Term Shock, It's a Permanent Loss of Growth
El Niño is not just a passing weather shock: research shows it permanently depresses the path of economic growth, a single strong event can cost trillions of dollars within five years, and we have not adapted to it.
The video won't play here. Listen to the audio instead:
The argument · tap a timestamp to hear it
El Niño isn't the world getting hotter, it's the heat moving
El Niño is an ocean-atmosphere interaction in the tropical Pacific, one half of the El Niño-Southern Oscillation (ENSO). Normally the trade winds blow from east to west, piling warm surface water up in the western Pacific and forming a warm pool. When those winds weaken, the warm water spreads eastward and redistributes the energy that drives weather worldwide. Think of the difference between a room with a single space heater in one corner (La Niña or neutral conditions) and a room where an entire wall is a radiator (El Niño): the total heat the atmosphere is exposed to is a completely different thing.
— Justin MankinThis one may be the strongest since 1950
Every forecast model points to the strongest El Niño since at least 1950, and possibly stronger than the historic events of 1877-78 and 1882-83, 1997-98, and 2015-16. The Australian Bureau of Meteorology's Relative Oceanic Niño Index (RONI) forecast reaches 3.3, which is unprecedented. Conditions are already at El Niño alert status, and every single forecast shows this event running warmer than the 2016 one.
— Justin MankinPeruvian potato farmers were forecasting El Niño five hundred years ago
The modern scientific understanding of El Niño dates to the twentieth century, but archaeological evidence shows that Peruvian potato farmers five hundred years ago could already forecast it from the visibility of the Pleiades. El Niño changes the distribution of high cloud over the eastern Pacific, which affects how clearly the Pleiades can be seen, and farmers adjusted their planting dates accordingly. It is a demonstration of the value of folk meteorological knowledge, and it also means humanity's history of adapting to El Niño is in fact a long one.
— Justin MankinThe peak is still ahead and the South Asian monsoon is already late
El Niño typically peaks between December and February, but the effects have already begun. Since alert conditions were reached in June, the South Asian monsoon has been delayed, directly affecting food security for billions of people. A late monsoon forces farmers to irrigate, which pushes up diesel demand and from there feeds into prices and politics. There is a non-trivial probability that 2026 becomes the hottest year on record, and 2027 is all but locked in for record heat.
— Justin MankinThe five-year loss is $5.7 trillion, not $36 billion
A 2023 paper in Science shows that El Niño is not a simple level effect, where output takes a hit and then recovers. It systematically depresses the rate of growth, so the losses accumulate indefinitely over time. Take the 1997-98 El Niño: five years on, global losses came to roughly $5.7 trillion, far above the $36 billion estimated at the time. This permanence comes from the fact that the whole world is hit at once, supply chains break in multiple places, and the efficiency of capital allocation falls.
— Justin MankinAfter all this exposure, humans still haven't learned to adapt
Humanity has been exposed to El Niño for a very long time, and yet the research shows we have not adapted to it effectively. The evidence is that the economic losses remain enormous, which means we have not learned from the feedback. Adaptation strategies include early warning systems, emergency management and insurance products, but coordination at the global level is missing. El Niño can serve as a testing ground for adaptation strategies, providing a reference point for dealing with global warming.
— Justin MankinEl Niño is a randomized controlled trial run by nature
El Niño recurs cyclically, but the timing and the intensity of any given event are random, which makes it behave like a randomly assigned treatment. Using that natural experiment, you can compare economic growth in El Niño years against non-El Niño years and identify the causal effect. It is analogous to a randomized controlled trial in medicine: the cycle exists, but the randomness is enough to isolate the effect.
— Justin MankinIn their own words · checked verbatim
The Almino phenomenon is an ocean atmosphere. It's kind of part of what's called the Almino Southern oscillation, which is essentially a relationship between the tropical Pacific and the overlying tropical atmosphere.
Justin Mankin5:09
there was really good archaeological evidence that Peruvian potato farmers as long as five hundred years ago were forecasting El Nino, and they were doing it based on the visibility of the Pleatees
Justin Mankin15:30
over a five year period that amounts to about five point seven trillion dollars in global economic losses instead by the year two thousand and three
Justin Mankin35:53
I estimate somewhere around ten trillion dollars of global economic losses conservatively over the next five years
Justin Mankin41:03
we are not well adapted, and there isn't widespread evidence of adaptation to either El Nino as a form of climate variability or wider global warming.
Justin Mankin43:04
Figures
| Global economic loss five years after the 1997-98 El Niño | $5.7 trillion | 35:53 |
| Estimated global economic loss from this El Niño over the next five years | $10-14 trillion | 41:03 |
| Loss from the 1997-98 El Niño as estimated at the time | $36 billion | 34:50 |
| Australian Bureau of Meteorology Relative Oceanic Niño Index forecast | 3.3 | 12:22 |
Glossary
- ENSO / El Niño-Southern Oscillation
- The cyclical ocean-atmosphere interaction in the tropical Pacific, comprising both El Niño and La Niña.
- Teleconnection
- The physical link between a climate phenomenon such as El Niño and the weather and climate of distant regions.
- RONI / Relative Oceanic Niño Index
- A sea-surface temperature anomaly index built on a rolling baseline, used to measure El Niño intensity.
- Level effect
- A shock that temporarily pushes output away from its level, after which it returns to the original trend.
How to listen
Economists, investors and policymakers who follow climate risk, and anyone trying to understand El Niño's long-run effects.