The 1997-98 El Niño cost the world $5.7 trillion, not the $36 billion long cited

The standard estimate for the economic damage caused by the 1997-98 El Niño has been $36 billion. Christopher Callahan, a climate scientist whose research has examined the long-run income effects of major climate events, says that figure is wrong by a factor of roughly 158.

Callahan’s finding is that the event did not simply destroy property and disrupt harvests in the immediate term. It suppressed economic growth across affected countries for years afterward, and when that suppression is measured cumulatively, the losses reach $5.7 trillion by 2003. That is not a revision of the earlier estimate. It is a finding built on an entirely different method, one that looks at what growth trajectories looked like before the event and compares them to what actually happened in the years that followed.

The research was published in Science in May 2023, co-authored with Justin Mankin of Dartmouth College. According to coverage by ScienceDaily, Phys.org, and reporting supported by the National Science Foundation, the study used empirical methods to identify the persistent drag on gross domestic product that major El Niño events have historically produced. The 1997-98 event, one of the strongest on record, served as a central case. The $5.7 trillion figure Callahan describes matches the published study precisely.

What we actually found is that there was empirical evidence for a systematic depression of economic growth and 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 Christopher Callahan

What the earlier $36 billion estimate captured was the acute phase: the floods, the droughts, the crop failures, the infrastructure damage tallied in the months surrounding the event’s peak. What it did not capture was the slower economic injury, the kind that does not show up in disaster accounting but does show up when you compare a country’s actual output over several subsequent years to the output it would plausibly have achieved in the event’s absence. That gap, compounded across the many economies the 1997-98 El Niño touched, is where the $5.7 trillion figure comes from.

The methodological point matters beyond this single event. If standard disaster accounting systematically undercounts the economic cost of major climate disruptions by treating them as acute shocks rather than as events with multi-year growth consequences, then the full cost of climate variability has been underpriced in policy discussions for decades. The Callahan and Mankin study also examined other El Niño events across history and found consistent evidence that the income losses extend well past the event itself. The 1997-98 case is the sharpest example in their dataset, but the pattern is not unique to it.

For those working on climate risk, infrastructure resilience, or development finance in regions exposed to El Niño cycles, the gap between $36 billion and $5.7 trillion carries real weight. Insurance models, sovereign debt assessments, and adaptation funding calculations that rely on the older figure are working with a number that the best available empirical evidence has now placed in serious doubt. Callahan’s work does not merely adjust the estimate upward. It reframes where the costs actually live and how long they persist after the event recedes from the headlines.

The broader implication, one the study’s authors make clear in their published work, is that climate events should be evaluated not only on what they visibly destroy but on the growth they silently foreclose. A more complete accounting changes what preparedness and response are worth, and it changes who bears the burden of underinvestment when the next major event arrives.