Summary/Abstract
The El Niño-Southern Oscillation (ENSO) is a consequential climate phenomenon affecting global extreme weather events often with large-scale socioeconomic impacts. The extent to which this 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, this study finds a damaging impact from an El Niño which increases for a further three years after initial shock, amounting to multi-trillion US dollars in economic los. The authors attribute a loss of US$2.1 T and US$3.9 T globally to the 1997-98 and 2015-16 extreme El Niño events, far greater than that based on tangible losses. The authors further find that impacts from La Niña are asymmetric and weaker, and estimate a gain of only US$0.06 T from the 1998-99 extreme La Niña 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.