La Nina: The $1 Trillion Weather Menace
Amidst a surge in extreme weather events driven by La Nina and amplified by climate change, the world faces a $1 trillion weather disaster problem, straining the global economy and exacerbating inflationary pressures.
Image by Denniz Futalan
Amidst a surge in extreme weather events worldwide, driven by the La Nina atmospheric phenomenon since mid-2020, the planet faces an unprecedented $1 trillion weather disaster problem. Deadly floods in Pakistan, scorching heatwaves and wildfires in the US West, torrential rains in Australia and Indonesia, and a megadrought in Brazil and Argentina all stem from the effects of La Nina. This atmospheric pattern has intensified its calamities due to the magnifying impact of climate change. As La Nina persists for a third consecutive year, weather-related damages are expected to skyrocket, resulting in more destroyed homes, ruined crops, disrupted shipping, and impaired energy supplies. The cascading effects will further strain the global economy, drive up energy and food prices, and add to inflationary pressures, posing challenges to central banks like the Federal Reserve.
The cooling of the equatorial Pacific Ocean, bringing about La Nina, appears poised to continue through October, with odds reaching 97%. The chances of La Nina's influence persisting until January stand at 80%. The current cycle's potential for devastation is heightened due to climate change's impact, making weather extremes more frequent and intense. The financial toll from La Nina-related disasters, including droughts, winter storms, and hurricanes, is challenging to quantify accurately but has already led to losses in the tens of billions.
Insurance firms have tabulated weather catastrophes that cost the world $268 billion in 2020 and an additional $329 billion in 2021. If the coming period resembles the chaos of previous La Nina episodes, the total losses during the three-year span could reach or exceed $1 trillion by the end of 2023. Beyond direct property and crop damage, La Nina's far-reaching effects influence commodities, prices, and inflation worldwide. As researchers investigate the possible link between climate change and La Nina's occurrence, the global impact of these atmospheric cycles remains a significant concern, affecting markets, industries, and economies alike.
SOURCE: Read the full Bloomberg article
