A Historic El Niño Is Coming That Could Cost the World Trillions
Climate scientist Justin Mankin explains that a record-breaking El Niño is unfolding with potentially $10-14 trillion in global economic losses over five years. Unlike previously understood, El Niño doesn't just cause temporary shocks but systematically depresses economic growth trajectories, with impacts that may be permanent rather than cyclical.
Summary
The episode features Bloomberg Audio's Traci Allaway and Joe Weisenthal interviewing Justin Mankin, a climate scientist at Dartmouth University, about the incoming El Niño phenomenon. Mankin explains that El Niño occurs when trade winds weaken in the tropical Pacific, causing warm surface water to spread eastward across the ocean, fundamentally reconfiguring global weather patterns. He uses an analogy comparing the shift from a space heater in one corner (neutral conditions) to wall-to-wall radiators (El Niño conditions) to illustrate how the phenomenon redistributes atmospheric energy globally.
The conversation establishes that El Niño is predictable through various indices measuring sea surface temperature anomalies. Current forecasts suggest this El Niño will potentially be the strongest since instrumental record-keeping began in 1950, possibly rivaling the 1877-1878 event documented in Mike Davis's book about historic famines. Mankin notes that Peruvian potato farmers 500 years ago forecasted El Niño by observing the Pleiades star visibility, demonstrating ancient cultural knowledge of the phenomenon.
The most significant finding discussed is Mankin's published research showing that El Niño's economic impacts are not merely temporary disruptions but systematically depress long-term economic growth. The 1997-1998 El Niño, initially estimated at $36 billion in direct losses, actually resulted in approximately $5.7 trillion in cumulative global economic losses by 2003 due to permanent shifts in growth trajectories. This challenges conventional wisdom about weather-related economic shocks being cyclical with recovery. Mankin estimates the upcoming El Niño could cost $10-14 trillion over five years, with about 70% of that figure supported by historical data patterns and 30% representing extrapolation beyond previous experience.
The mechanism behind these lasting impacts involves simultaneous disruptions across multiple sectors and regions—droughts in some areas, floods in others, disrupted supply chains, altered agricultural yields—creating cascading market effects that reduce overall economic efficiency and alter capital investment patterns. Countries most climatically sensitive to El Niño experience the largest impacts, with examples including Peru's mining disruptions from road washouts and India's agricultural challenges from delayed monsoon onset. Mankin emphasizes that despite humanity's 500+ years of documented experience with El Niño, there is limited evidence of successful widespread adaptation or resilience building, suggesting current infrastructure and economic systems remain vulnerable.
About this episode
<p>Every few years, weather nerds and agriculture analysts will talk about an upcoming El Niño, and then they mostly pass by with relatively few headlines. But sometimes El Niños end up being massively destabilizing -- leading to devastating droughts, flooding, and other catastrophes. And this year's emerging El Niño could end up being one of the big ones, with forecasters predicting record-breaking intensity. But what exactly is an El Niño, and what does it mean that this year's could be so big? On this episode, we speak with Justin Mankin, professor of geography at Dartmouth and director of the Climate Modeling and Impacts Group. We discuss the forecasting of El Niños, and why they can lead to large and long-lasting economic damage.</p> <p>Read more:<br /><a href="https://www.bloomberg.com/news/articles/2026-07-09/super-el-nino-will-give-us-a-glimpse-of-life-in-2035?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article">Super El Niño Will Give Us a Glimpse of Life in 2035</a><br /><a href="https://www.bloomberg.com/news/articles/2026-08-13/uk-economy-weathers-early-months-of-iran-war-with-0-4-growth?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article">Heat Wave and World Cup Hand UK Economy a Surprise Boost</a></p> <p>Only <a href="http://Bloomberg.com">http://Bloomberg.com</a> subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at <a href="https://www.bloomberg.com/subscriptions/oddlots?in_source=oddlotspodcast">bloomberg.com/subscriptions/oddlots</a></p> <p><a href="http://bloomberg.com/subscriptions/oddlots">Subscribe to the Odd Lots Newsletter</a><br /><strong>Join the conversation:</strong> <a href="https://discord.gg/oddlots">discord.gg/oddlots</a></p><p>See <a href="https://omnystudio.com/listener">omnystudio.com/listener</a> for privacy information.</p>
Key Insights
- El Niño occurs when trade winds weaken in the tropical Pacific, allowing warm surface water to spread eastward and reconfigure global weather patterns, fundamentally altering where atmospheric heat energy is distributed around the planet.
- Current forecasts predict this El Niño will be potentially the strongest since instrumental records began in 1950, possibly matching the strength of the 1877-1878 event associated with major historical famines.
- Mankin's research demonstrates that El Niño impacts are not temporary shocks followed by recovery, but instead systematically depress long-term economic growth trajectories, with the 1997-1998 event resulting in $5.7 trillion in cumulative losses by 2003 rather than the initially estimated $36 billion.
- The economic damage from El Niño stems from simultaneous disruptions across multiple global regions and sectors occurring at the same time, creating cascading market effects and reduced economic efficiency that persist beyond immediate recovery.
- Despite having documented evidence of El Niño forecasting by Peruvian farmers 500 years ago using astronomical observations, modern economies show limited evidence of successful widespread adaptation or resilience strategies to El Niño impacts.
- The upcoming El Niño could cost between $10-14 trillion globally over five years, with only 70% of that estimate supported by historical data patterns and 30% representing extrapolation beyond previous recorded experiences.
- El Niño functions as a 'natural experiment' for understanding climate impacts on economics because, despite its cyclical nature, it is randomly distributed enough to allow causal inference between climate phenomena and economic outcomes.
- The South Asian monsoon delay caused by the current El Niño advisory already illustrates the cascading geopolitical and economic effects through diesel price spikes and farmer irrigation crises, showing impacts manifest before the peak winter season.
Topics
Transcript
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