ECLAC Warns that an Extreme El Niño Event Could Cause a 2% Loss in Regional GDP and Place 4.8 Million More People in Poverty in Latin America and the Caribbean

Today the Economic Commission for Latin America and the Caribbean (ECLAC) published its Special Report No. 3, titled Los efectos del fenómeno El Niño en América Latina y el Caribe y recomendaciones para enfrentarlo (The Effects of the El Niño Phenomenon in Latin America and the Caribbean and Recommendations for Addressing It, in Spanish). The study, led by the Commission's Executive Secretary, José Manuel Salazar-Xirinachs, warns of serious economic and social repercussions, as well as for various productive sectors, given the imminence of a high-intensity episode.

According to the regional commission's estimates, an extreme El Niño phenomenon will cause a cumulative loss of at least 2% in regional Gross Domestic Product (GDP) in a three-year period, of which half will be concentrated in the first year after the event. In addition, the negative impact on household income could increase poverty by up to 4.8 million people toward the end of the decade, compared to a scenario without El Niño.

The report warns of a phenomenon of historic magnitude and the economic consequences:

The United States National Oceanic and Atmospheric Administration's (NOAA) projections indicate a more than 90% probability that El Niño will reach a very high intensity during the northern hemisphere's fall and winter 2026-2027 and a 69% probability of the phenomenon reaching historic magnitude ("Super El Niño"), with anomalies in ocean surface temperatures greater than +2.5°C or +3.0°C in the Niño 3.4 region. ECLAC highlights the fact that this phenomenon is occurring in a context in which anthropogenic climate change amplifies natural variability, with an average global temperature of 1.55ºC above preindustrial levels recorded in 2024.

The economic impacts will be deeply heterogeneous and persistent: contraction of real GDP, inflationary pressures, poverty, and critical vulnerability in key sectors, such as energy, fishing, agriculture, and some infrastructures.

According to the report, the region has greater structural vulnerability in the energy sector given that in several countries, hydroelectric generation makes up more than 70% of the electric grid, and more than 50% of installed capacity is over 30 years old. By the 2026 October-December trimester, the probability of a precipitation deficit climbs to 60%, with 31.1% of the regional territory on high alert. High temperatures will cause a sharp increase in electricity demand for climate control in large cities like Lima, Sao Paulo, and Mexico City when less water is available, increasing the risk of power failures and operative cost overruns.

Severe impacts are also expected for fishing and marine resources: weakened upwelling of cold water in the Pacific reduces the availability of phytoplankton, altering the trophic network and causing sinking and migration of key species like anchovies, sardines, and hake. In previous Super El Niño events, regional fishery capture dropped by 52.7% (1972-1973) and 26.9% (1997-1998), in addition to the proliferation of harmful algal blooms (red tide) and mass coral reef bleaching throughout the region.

The report also warns of danger to the agricultural sector and food security: based on the FAO's analysis, there is over a 70% probability of droughts that will affect the agricultural sector in the coming months in the Dry Corridor of Central America, Colombia, Venezuela, and Caribbean Nations such as Cuba, the Dominican Republic, and Haiti, threatening staple crops, feed availability, and rural incomes.

To keep climate impacts from becoming prolonged socioeconomic crises, ECLAC urges governments to adopt ten strategic public policy measures:

1. Planning with the prospect of climate change: Assuming climate risk as a permanent criterion in national policy and regulatory frameworks.
2. Resilient infrastructure and early alerts: Allocating resources to the physical protection of strategic assets and infrastructures and implementing early alert systems.
3. Incidental financial mechanisms and climate insurance: Maintaining reserve funds, catastrophe bonds, and insurance to provide immediate liquidity.
4. Resilience in production chains and settlements: Protecting the means of living in critical areas like the Dry Corridor and fishing communities, among others.
5. Resilient ecosystems and sustainability: Restoring natural barriers (reefs and mangrove forests) and applying dynamic fishing quotas and closures.
6. Regional cooperation and energy integration: Coordinating management of cross-border watersheds and other shared resources and sharing energy reserves among countries.
7. Diversification of the electric grid: Promoting renewable complementarity (hydrosolar and wind) to reduce dependence on rains.
8. Comprehensive water management by watershed: Monitoring flow rate and reservoirs at the local level to prioritize human consumption and generation.
9. Focused social protection networks: Granting direct monetary transfers to vulnerable households to curb the increase in poverty and food insecurity.
10. Energy efficiency and management of urban demand: Applying temporary savings programs and managing consumption peaks during heatwaves.

"Responses adopted once the emergency has been declared are considerably more expensive than preventive measures based on adequate anticipation. It is imperative that we shift from a response after losses to anticipatory management of climate risk," stated José Manuel Salazar-Xirinachs, Executive Secretary of ECLAC.