Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the aud Thoughts podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Jill. Why isn't thal Joe.
Speaker 2: I don't know if I've ever told you about this,
Speaker 2: but I'm a little bit of a weather.
Speaker 3: Nerd Okay, I know, maybe a little bit.
Speaker 4: I know.
Speaker 2: I just get really excited by weather. I love thunderstorms.
Speaker 3: I love a good thunderstorm so great inside.
Speaker 2: Well, this is the thing. I love thunderstorms, except when
Speaker 2: I'm on an airplane or something like that. I do
Speaker 2: not like economically damaging weather. I feel like I need
Speaker 2: to throw that caveat in there.
Speaker 3: You know what I am. I'm like a weather truther.
Speaker 5: So, for example, I don't believe that there's any accurate way,
Speaker 5: for example, to measure wind chill. It's like, oh, it's
Speaker 5: like twenty five degrees out and it feels like fifteen.
Speaker 5: It's like, how do you know what fifteen feels like?
Speaker 5: You know what I'm saying, Like, I don't believe in
Speaker 5: some of these numbers. Also, humidity, what, there's water in
Speaker 5: the air. Give me a break.
Speaker 3: There's a water in there.
Speaker 2: Now, tell me you've never been to Abu Dhabi this
Speaker 2: summer without telling me you've never been to Abudabi in this.
Speaker 5: Last week in New York, I know that one was
Speaker 5: a joke. I am a Wincheal skeptic, even though I
Speaker 5: don't think that's the topic of our conversation today.
Speaker 2: It is not the topic of our conversation is actually
Speaker 2: economically damaging whether yes, and specifically the upcoming El Nino, which,
Speaker 2: by the way, it's it's not that that often that
Speaker 2: you see a lot of cell side notes start to
Speaker 2: mention weather phenomenon, But just in the past, you know,
Speaker 2: a few days, I've had a Thailand economics note from
Speaker 2: City talking about interest rates and quoting the potential impact
Speaker 2: of El Nino potentially inflationary. I've had a Bank of
Speaker 2: England outlook from Morgan Stanley that mentioned El Nino, and
Speaker 2: also a Bank of America f outlook talking about the
Speaker 2: impact on em currency. So this is something that people
Speaker 2: are expecting to have an actual impact both on the
Speaker 2: global economy and the investment landscape.
Speaker 5: You know, I will just say, even though I'm not
Speaker 5: a weather nerd the way you are, I sort of
Speaker 5: have this thought that if you look at like the
Speaker 5: really grand sweep of history, like thousands and thousands of years,
Speaker 5: maybe even hundreds of thousands of years. I sort of
Speaker 5: think there are two things that matter in human history.
Speaker 5: One of them, as you know I'm interested in, is
Speaker 5: like basically technological evolution media technology and how it reshapes
Speaker 5: how we think. And then the other one is sort
Speaker 5: of climate change, weather and storms. And I think that
Speaker 5: when we think about history, many things are contingent either
Speaker 5: on like brief or long periods of weather change, and
Speaker 5: it can reshape society in permanent, long term, unexpected ways
Speaker 5: at the time. And have we ever even done any
Speaker 5: aninio episode in like ten years or eleven years of
Speaker 5: doing this? I don't think we have, But it sounds
Speaker 5: like this is one that we should cover if it's
Speaker 5: showing up on all these notes.
Speaker 2: If we're going to cover one, this should probably be
Speaker 2: the one because at the moment, well, you have different
Speaker 2: al Nino forecasts, and you know there's a range of
Speaker 2: probabilities involved here, but a lot of the forecasting models
Speaker 2: are currently forecasting that this is going to be a
Speaker 2: potentially record breaking al nino, something we haven't seen in decades.
Speaker 5: Do you think there are any people who are like,
Speaker 5: it's interesting you bring up the El Nino. You know,
Speaker 5: I've always thought Nino's are the more underrated one. Do
Speaker 5: you think that's the type of guy?
Speaker 2: No, I hope not. But are you going to become
Speaker 2: like an Al Nino truth or are going to be like,
Speaker 2: how do you know it's El Nino unless you're standing
Speaker 2: in the Pacific Ocean measuring the water yourself.
Speaker 5: We're going to be covering guy. He's like, you know,
Speaker 5: you really should be paying attention of coming La nin Yah.
Speaker 2: Oh good, that'll be a fun transformation for you. Okay, Well,
Speaker 2: we do, in fact have the perfect guest. We're going
Speaker 2: to be speaking to someone who not only follows the
Speaker 2: weather but also tries to measure its economic impact. We
Speaker 2: have Justin Mankin. He is professor of geography at Dartmouth
Speaker 2: and director of the Climate Modeling and Impacts Group. So Justin,
Speaker 2: thank you so much for coming on odd thoughts.
Speaker 4: Yeah, happy to be here, Thanks for having me.
Speaker 2: I feel like maybe the first thing we should do
Speaker 2: is can you convince Joe that El Nino is a
Speaker 2: real thing? Apparently he needs like a first person experience
Speaker 2: of it. What is El nine?
Speaker 4: Yeah?
Speaker 3: What is it?
Speaker 4: Yeah? Like wind chill factor is, it is in fact
Speaker 4: real and measurable, and they're both kind of actually aerodynamically related. Right,
Speaker 4: So wind chill, the feeling you get on your skin
Speaker 4: is owing to the fact that the wind is wicking
Speaker 4: away latent heat from your skin, which is the heat
Speaker 4: associated with a phase change of water from a liquid
Speaker 4: to a vapor. And so that's why when you get
Speaker 4: out of a shower, you feel cooler than before you
Speaker 4: get into it. Right, So that evaporation off your skin
Speaker 4: induced by aerodynamic resistance i e. The wind, That is
Speaker 4: the thing that's cooling you down, which is why we
Speaker 4: can measure it and why we can tell you that
Speaker 4: cold exposure is a bad thing. The Almino phenomenon is
Speaker 4: an ocean atmosphere. It's kind of part of what's called
Speaker 4: the Almino Southern oscillation, which is essentially a relationship between
Speaker 4: the tropical Pacific and the overlying tropical atmosphere, and it
Speaker 4: has a tendency to be in what we call a
Speaker 4: neutral state, which is kind of average conditions where you
Speaker 4: have these easterly trade winds. So these are winds that
Speaker 4: are blowing from east to west across the tropics. So
Speaker 4: long the equator, and what they're doing is they're dragging
Speaker 4: surface water, surface water that's been warm because it's in
Speaker 4: the tropics. The sun is just shining there all year round,
Speaker 4: and so that water heats up and then the winds
Speaker 4: kind of drag that surface water and create a literally
Speaker 4: a pile such that the sea altitude is higher in
Speaker 4: the West Pacific than in the East Pacific. And that
Speaker 4: pile of warm water is something we call the West
Speaker 4: Pacific warm Pool. And so it just sits there, parked
Speaker 4: by Indonesia and Australia, and then every once in a while,
Speaker 4: those trade winds weaken and break down, and that pile
Speaker 4: of warm water that actually penetrates quite deep into the
Speaker 4: western Tropical Pacific. That pile of warm water just spreads
Speaker 4: itself out over the vast expanse that is the Tropical Pacific.
Speaker 4: And so that's actually how we measure ELMOS. We're measuring
Speaker 4: it as a function of sea surface temperature anomaly. So
Speaker 4: how much warmer than average our ocean temperatures at the surface,
Speaker 4: you know, at this time in this location. And you know,
Speaker 4: there are different ways to kind of calculate what the
Speaker 4: regional averages, and we can get into that technical nitty gritty,
Speaker 4: but essentially, all this water slashes back eastward, and in
Speaker 4: doing so reconfigures all of weather, which is just energybution
Speaker 4: from the Sun on our fluid planet. Right. It redistributes
Speaker 4: all of that energy differently than would have been the
Speaker 4: case if all that water were piled up in the
Speaker 4: Western Pacific. I guess like a really simple analogy a
Speaker 4: listener could maybe grab onto is they've walked into a
Speaker 4: cold room where there's a little space heater plugged into
Speaker 4: the corner, right, And that little space heater, yeah, it
Speaker 4: is maybe generating some heat that's warming up the room,
Speaker 4: but it's really only warming up that corner of the room. Yeah,
Speaker 4: that is akin to neutral or what are called La
Speaker 4: Nina like conditions, which is an amplification of the neutral pattern,
Speaker 4: meaning that those winds are stronger than normal and the
Speaker 4: eastern Tropical Pacific is cooler than normal. When you slosh
Speaker 4: all of that water back across the entire expanse of
Speaker 4: the Tropical Pacific, it's a kin to walking into a
Speaker 4: room that has wall to wall radiators instead the thermodynamics
Speaker 4: of that room. That's a totally differ for an experience
Speaker 4: for you than would have been the case if it
Speaker 4: was just that space heater in the corner. And so
Speaker 4: when an alnino occurs, what it is doing it is
Speaker 4: essentially the tropics are the heat engine of global weather
Speaker 4: and climate, and it's a complete reconfiguration such that so
Speaker 4: much more of our global atmosphere is exposed to that
Speaker 4: heat energy from the ocean that would have otherwise been
Speaker 4: buried in the western tropical Pacific. Does that make sense?
Speaker 3: That was an amazing answer.
Speaker 5: Yea, and I totally I understand something that I went
Speaker 5: forty five years without having any idea of and now
Speaker 5: I get it. And as someone who used to live
Speaker 5: in a drafting New England home, I have a lot
Speaker 5: of experience with space heaters that only heat up that
Speaker 5: corner of the room. What are the conditions or what
Speaker 5: are the drivers such that these aninos are semi regular?
Speaker 5: Why do they seem to come every few years? Why
Speaker 5: are they not a permanent pattern? Why is one year
Speaker 5: or al nino year and another year isn't.
Speaker 4: Yeah, there's a lot of work on kind of the
Speaker 4: drivers of the breakdown of the winds in the eastern
Speaker 4: tropical Pacific. I think a simple answer is that we
Speaker 4: live on a sphere that's rotating and has stratified and
Speaker 4: unstratified fluids in the form of the ocean and the atmosphere,
Speaker 4: and that essentially means that energy is propagated as wave phenomena,
Speaker 4: right with peaks and troughs, and El Nino is akin
Speaker 4: to a wave phenomena, right. It is kind of a
Speaker 4: pattern what we call a mode of variability. George Filander,
Speaker 4: who's this Princeton geophysicist and major scholar of el Nino,
Speaker 4: called el Nino the trunk of the variability tree when
Speaker 4: it comes to climate variation in terms of kind of
Speaker 4: regulating these pulses of energy redistribution around our planet. And so,
Speaker 4: you know, a phenomena like Elmino being modial, meaning it
Speaker 4: has a canonical path learn temporally and spatially and then
Speaker 4: induces physical responses that we can characterize and use as
Speaker 4: a means of prediction. Right Like we know what we
Speaker 4: should expect for Peru, we know what we should expect
Speaker 4: for Australia. And we're able to do that because we've
Speaker 4: diagnosed this mode of variability and given it a name
Speaker 4: and characterized its length scales and characterized what we call
Speaker 4: its teleconnections, meaning that kind of physical bridge between Elmino
Speaker 4: as a phenomenon and what it implies for the Indian
Speaker 4: monsoon or for the southwestern United States temperature and precipitation
Speaker 4: regime for that season. And we've given these things and names,
Speaker 4: and they've come instead of being purely a source of
Speaker 4: kind of stochastic uncertainty, just kind of random variation in
Speaker 4: weather and climate, they become a means of predictability. And
Speaker 4: that's what's really powerful about investigating these type of phenomena
Speaker 4: and giving them names. Right, we have of el Amino
Speaker 4: or Almino Southern oscillation, which is the kind of teleconnection
Speaker 4: with the overlying atmosphere. We have the North Atlantic oscillation,
Speaker 4: we have the Indian Ocean dipole, we have the Matt
Speaker 4: and Julian oscillation. So we've like identified these patterns and
Speaker 4: their kind of manifestation and that in terms of like
Speaker 4: their underlying drivers, which is I think the question you're asking.
Speaker 4: I think it's just a function mostly of living on
Speaker 4: a complex planet with geophysical fluid dynamics and such that
Speaker 4: these wave phenomena just kind of emerge on these characteristic
Speaker 4: time scales. The precise mechanism of action that kind of
Speaker 4: leads the breakdown of these easterly trade winds, which like
Speaker 4: triggers what's called the Birkness feedback, which is this positive
Speaker 4: feedback loops, so an amplifying feedback that tends to reinforce itself.
Speaker 4: Can come from myriad different places, from changes in ice
Speaker 4: cover to you know, a weakening of the equator to
Speaker 4: pole temperature gradient. All kinds of different things have some
Speaker 4: culpability and potentially causing a breakdown of these winds that
Speaker 4: allow the sea surface temperatures to slosh eastward again and
Speaker 4: reconfigure all severe weather on our planet.
Speaker 2: So talk to us about what the forecast actually is
Speaker 2: for this particular al nino, because I read these things
Speaker 2: like apparently the Australian Bureau of Meteorology, which would be
Speaker 2: interested in this because Australia is particularly affected by El Nino.
Speaker 2: Apparently the relative Oceanic Nino index for Ronnie for short,
Speaker 2: apparently has never reached the three point three threshold that
Speaker 2: they currently project before, so that seems extreme. Are what
Speaker 2: exactly are we expecting here?
Speaker 4: So there's a bunch of different ways to forecast almino.
Speaker 4: All of them kind of stem from some of the
Speaker 4: original innovative work in the late seventies and early eighties
Speaker 4: by Mark Cain and Steve Zediac who built the first
Speaker 4: kind of physical model of el amino to explain it
Speaker 4: as a phenomenon and then actually make predictions of its occurrence,
Speaker 4: which is pretty remarkable. But all of these are kind
Speaker 4: of based on Some of them are statistical in nature,
Speaker 4: so kind of taking temperatures at time T and making
Speaker 4: a prediction, given kind of autocorrelation in that time series,
Speaker 4: what it should look like at time T plus one.
Speaker 4: There are others that are physical models that are actually
Speaker 4: stimulating the relationship between oceanic temperatures, wins, the overlying atmosphere
Speaker 4: and what it does to the kind of pressure and
Speaker 4: circulation that actually gets air moving in the first place.
Speaker 4: And so those ones are called process based models, and
Speaker 4: those are distinct from these statistical models. But all of them,
Speaker 4: regardless of how it's being modeled, are kind of converging
Speaker 4: on a record al nino at least since nineteen fifty,
Speaker 4: but arguably since much earlier, right the eighteen seventy seven
Speaker 4: eighteen seventy eight El Nino, which was associated with the
Speaker 4: Great famines, and Mike Davis has this amazing book from
Speaker 4: two thousand and two about that al Nino event. That one,
Speaker 4: I think is, you know, kind of indistinguishable in strength
Speaker 4: from almino as we've already had, such as the ones
Speaker 4: in nineteen eighty two and eighty three, the ninety seven
Speaker 4: and ninety eight Elmino, which listeners may remember as it
Speaker 4: being associated with Chris Farley's snl skit of I am
Speaker 4: the al Nino right, and you know the twenty fifteen
Speaker 4: and twenty sixteen almino, which I believe is the one
Speaker 4: on record depending on your indices. So we've had really
Speaker 4: strong alminos, but this one is looking like it's much bigger.
Speaker 4: Potentially every forecast right now I believe puts the fourth
Speaker 4: company the unfolding l NEU, because we are in an
Speaker 4: advisory and we have been since June according to the
Speaker 4: National Oceanic and Atmospheric Administration's Climate Prediction Center. Essentially you're
Speaker 4: looking at every forecast being having a warmer Almino than
Speaker 4: the twenty sixteen el Nino.
Speaker 2: How did we actually discover el nino as a weather phenomenon?
Speaker 2: Because it happens with some regularity, but it's not like
Speaker 2: it happens every three to four years, like right on time,
Speaker 2: at the same intensity as the previous you know round.
Speaker 2: So how did people identify this as an actual measurable phenomenon.
Speaker 4: You know, in terms of kind of like the modern
Speaker 4: instrumental and climate science era. I don't actually know the
Speaker 4: answer to that, but I do know something that's actually,
Speaker 4: i'd argue even more interesting. So the person who first
Speaker 4: modeled Alminho from a physics perfective Marcaine, It's amazing geophysicist
Speaker 4: at Lamondhorty Yors Observatory at Columbia University, and as colleagues
Speaker 4: John Cheng and other climate scientists there at the time,
Speaker 4: and then an anthropologist by the name of ben Orloff
Speaker 4: who's an anthropologist at Columbia, they wrote this incredible paper
Speaker 4: I believe in Nature back in the nineties or early
Speaker 4: aughts where they essentially showed that there was really good
Speaker 4: archaeological evidence that Peruvian potato farmers as long as five
Speaker 4: hundred years ago were forecasting El Nino, and they were
Speaker 4: doing it based on the visibility of the Pleatees, which
Speaker 4: is a star system you can see from the Andes,
Speaker 4: and essentially as El Nino occurs. What it's doing is
Speaker 4: it's reconfiguring the distribution of high versus low clouds in
Speaker 4: the eastern tropical Pacific. It's essentially taking convection that was
Speaker 4: happening near Australasia and moving it eastward, and in doing so,
Speaker 4: you're creating all these kind of high serious cloud shields
Speaker 4: over the Andes and that reduces the visibility of this
Speaker 4: star pattern. They were and they would alter their their
Speaker 4: their planting dates based on that. So there it is
Speaker 4: just kind of this remarkable cultural knowledge of being able
Speaker 4: to grab onto something and be able to make a
Speaker 4: forecast and inform forecast. And so I'd argue there's a
Speaker 4: lot of cultural knowledge about these innight climate phenomena around
Speaker 4: the world that we have yet to kind of appreciate
Speaker 4: and diagnosed in the in the highly industrialized world where
Speaker 4: we're so relying on instrumentation.
Speaker 5: Yeah, folk meteorology or folk whether it is like extraordinary
Speaker 5: and like how much they were able to anticipate. I
Speaker 5: was sort of I was, you know, I imagined that there
Speaker 5: were probably various civilizations that interpret and known Nina is
Speaker 5: like the king has lost the mandate of Heaven and
Speaker 5: now you know, there's a drought. Now we have to
Speaker 5: have a new political order. Also, this Mike Davis book
Speaker 5: that you mentioned looks fascinating and sort of speaks to
Speaker 5: the point of like late Victorian holocausts, el Nino famines,
Speaker 5: and the making of the Third World talk about squent
Speaker 5: famines in India, northern China, and northeastern Brazil. Definitely going to
Speaker 5: have to read that book. When we talk about a
Speaker 5: quote record el Nina, what is the measure? Is it
Speaker 5: the heat variation? Is it the expected change in rainfall
Speaker 5: or drought?
Speaker 2: Like?
Speaker 5: What are the sort of the gauges that we use
Speaker 5: to say this is a record on Nina or not
Speaker 5: or measuring that? What what are the parameters of an
Speaker 5: el Nina?
Speaker 4: My understanding is it's all benchmarked to the magnitude of
Speaker 4: the sea surface temperature and agay. An anomaly, you know,
Speaker 4: is a departure from expectation or a departure from normal,
Speaker 4: and so what constitutes normal becomes really important there for
Speaker 4: kind of setting the magnitude of how anomalous something is. Right,
Speaker 4: And that's why you know, when Tracy was talking about
Speaker 4: the relative Neino index right, the rony right, that's kind
Speaker 4: of shifting kind of a rolling baseline because we have
Speaker 4: secular warming in the tropical Pacific owing to global warming
Speaker 4: that's occurring right as you heat up the planet. The
Speaker 4: largest reservoir of heat storage just happens to be the
Speaker 4: seventy percent volume of water that constitutes our planet's surface,
Speaker 4: and it takes a lot of energy to heat up
Speaker 4: a volume of water. It's much much more energy intensive
Speaker 4: to heat up a volume of water than it is
Speaker 4: an equivalent volume of air, so that specific heat is
Speaker 4: just much higher. So it's just a great energy reservoir.
Speaker 4: And the ocean has been doing humanity and incredible solid
Speaker 4: by absorbing all this excess heat, which is the problem
Speaker 4: of global warming right that we're not allowing our atmosphere
Speaker 4: to shed heat as efficiently as it otherwise would have
Speaker 4: been if greenhouse gases were lower in our atmosphere, and
Speaker 4: in doing so, we're having to heat up to reattain
Speaker 4: equilibrium such that the energy coming in from the sun
Speaker 4: is balanced by earthlight leaving out to space that is
Speaker 4: not in balance at the moment, and a lot of
Speaker 4: that excess heat is going into the ocean, and that's
Speaker 4: how planetary temperatures increase such that in can equal out again.
Speaker 4: That's essentially a very simple global warming one oh one.
Speaker 4: But the way we're measuring al Nino as a phenomenon
Speaker 4: is by taking a regional average to choosing an area
Speaker 4: in the tropical Pacific that is canonically associated with the
Speaker 4: manifestation of Almino, and you can choose different regions and
Speaker 4: then benchmarking those average temperatures in this month to expectation
Speaker 4: what a average has been over the time over time,
Speaker 4: and so you can choose different regions. So there's a
Speaker 4: Ninio three region which is kind of shifted towards the
Speaker 4: central Pacific. There's a Nino four region which is shifted
Speaker 4: a bit more eastward. There's a Ninio three four region,
Speaker 4: which is kind of the typical region that's now used,
Speaker 4: which characterizes al Nino over something in between those two regions.
Speaker 4: Then there's the E index, which is taking a dimension
Speaker 4: reduction technique on a spatial field and collapsing it to
Speaker 4: say these are kind of the dominant directions of variability
Speaker 4: in that field, and that E index would kind of
Speaker 4: represent something differently in the sense that al Nino, while
Speaker 4: we think of it as a singular phenomenon, it has
Speaker 4: a geography associated with it, and that geography means that
Speaker 4: it has flavors associated with it, and so these flavors
Speaker 4: mean that different parts of the tropical Pacific warm differently
Speaker 4: and look anomalously different. And so not every al nino
Speaker 4: is the same, and so it's consequences in terms of
Speaker 4: the hazard it brings for the United States or for
Speaker 4: hurricane occurrence in the Atlantic basin or whatever. It's not
Speaker 4: the same for every al nino event. This spatial pattern
Speaker 4: of those sea surface temperature anomalies also seems to matter,
Speaker 4: and so there's been a lot of work and kind
Speaker 4: of diagnosing these different flavors of almino, and the E
Speaker 4: index is intended to try to capture some of that.
Speaker 4: So there are lots of different ways for measuring it,
Speaker 4: but it's always a sea surface temperature, normally in degree
Speaker 4: celsius benchmark to some expectation or average or normal.
Speaker 2: So one of the things that Joe and I have
Speaker 2: learned in doing various agricultural episodes over the years is
Speaker 2: that when you have a supply shock, the timing matters right,
Speaker 2: So you generally don't want to declare war in the
Speaker 2: spring planting season when all your soldiers might be off
Speaker 2: planting stuff instead. Does the timing of this particular all
Speaker 2: Nino matter. I keep reading that the peak of this
Speaker 2: el Nino is expected to be in the fall in
Speaker 2: the Northern hemisphere. Is that particularly unfortunate timing?
Speaker 4: You know, there's been a lot of work that looks
Speaker 4: you know, the planting and harvest of crops tends to
Speaker 4: be something that is highly calendar dependent, and there's a
Speaker 4: bit of flexibility that I think farmers have to be
Speaker 4: responsive to their expectations for weather variability, and certainly ad
Speaker 4: forecasts have become important, and agriculture where large has become
Speaker 4: really dependent on al nino forecasts. The thing about al
Speaker 4: Ninho is that it does typically peak in December, January
Speaker 4: and February. So this is kind of the boreal meaning
Speaker 4: the Northern Hemisphere winter, and that is implications for the
Speaker 4: austral summer right for the Southern Hemisphere summer, which is
Speaker 4: in the opposite season. It also there's also kind of
Speaker 4: a time dependency associated with the impact. So let me
Speaker 4: just comcatize this with an example. We've been in an
Speaker 4: al nino advisory since June that's also coincident with the
Speaker 4: typical onset of the South Asian monsoon, which is a
Speaker 4: determinant of feast or famine for billions of people. Right,
Speaker 4: you can link monsoon onset to you know, farmer well
Speaker 4: being in farmer suicides. You can link the timing of
Speaker 4: monsoon onset to diesel prices within India and the political
Speaker 4: fates of people around diesel sung cities, because if the
Speaker 4: monsoon onset is delayed, you have a bunch of farmers
Speaker 4: suddenly needing to irrigate crops where they otherwise wouldn't have
Speaker 4: had to, and that irrigation is dependent on the generators
Speaker 4: that rely on diesel fuel, and so you can see
Speaker 4: price spikes around those types of things, and the political
Speaker 4: fortunes of like municipal and the kind of local politicians
Speaker 4: kind of surviving or not surviving in elections based on
Speaker 4: those kinds of things. So there's like lots of cascading
Speaker 4: ways in which an el nino, even at this early
Speaker 4: stage and its life cycle, which tends to kind of
Speaker 4: start after what we call the spring prediction barrier, which
Speaker 4: is kind of this period in time where it's difficult
Speaker 4: to make a prediction about whether or not an El
Speaker 4: Nino is going to occur to next February, so we're
Speaker 4: looking at kind of a wind down of this event
Speaker 4: in February March of twenty twenty seven. What's interesting about
Speaker 4: it is that it's going to lock in all sorts
Speaker 4: of phenomena. You know, twenty twenty six has a non
Speaker 4: trivial chance of being the warmest year on record, not
Speaker 4: simply because of global warming, but because of this emergent
Speaker 4: al nino. So it is already kind of just increasing
Speaker 4: global temperatures over what they would have been an absence
Speaker 4: of this event, and it's nearly locked in a virtually
Speaker 4: guaranteed record temperature for twenty twenty seven, even though we
Speaker 4: haven't actually had that year unfold yet. It's no coincidence
Speaker 4: that the hottest years on record have almost always been
Speaker 4: El Nino years. Right when you take a warming trend
Speaker 4: and then you impose an anomaly on top of that,
Speaker 4: you're just going to get these outliers. And so these
Speaker 4: impacts are arguably already manifesting. So the South Asian monsoon
Speaker 4: was delayed, that onset was delayed by this al nino,
Speaker 4: and so while the kind of major tel connections and
Speaker 4: the peak strength associated with this event is anticipated to
Speaker 4: be in the winter, which is typically the case associated
Speaker 4: with alminus, and just kind of the life cycle associated
Speaker 4: with them. It's impacts are manifesting now and we'll continue
Speaker 4: to manifest into twenty twenty seven.
Speaker 5: Let's talk a little bit about the economic costs that
Speaker 5: we associate with an el nino. Like I said, up
Speaker 5: until your first answer in this interview, I didn't know
Speaker 5: what an el nino really was. But that certainly doesn't
Speaker 5: mean I've never said it or read it before. You know,
Speaker 5: I used to be on TV you have a guest,
Speaker 5: it was like, oh, the upcoming al nino, ptificating about
Speaker 5: the al nino. Yes, but it always seems like a
Speaker 5: sort of cyclical thing. It's like, Okay, it hits every
Speaker 5: few years and there's some costs, and then it goes
Speaker 5: back to normal. But if their whole books about the
Speaker 5: long term consequence of any given hel ninho, it sounds like,
Speaker 5: at least in some serious ones, there can be quite
Speaker 5: a tale, quite a you know, ripple effects.
Speaker 3: When you go back and look.
Speaker 5: At maybe some of the more recent big el nino's
Speaker 5: that we had, I think you mentioned there was one
Speaker 5: in the early eighties. How do you think about like
Speaker 5: tallying up. I don't know what the the what the
Speaker 5: global economy, the price the global economy paid for it.
Speaker 4: Yeah, such a good question. I want to call out
Speaker 4: a key collaborator that I've had in this work, Chris Callahan,
Speaker 4: who's a professor at Indiana University and just a stellar, stellar, stellar.
Speaker 4: I couldn't have asked for a better PhD student to
Speaker 4: get to think about these hard things with. So Chris
Speaker 4: had been thinking about al Ninho and it's kind of
Speaker 4: projection uncertainty and other contact, meaning what does the future
Speaker 4: of al nino look like in a world with global warming?
Speaker 4: And how to understand that just be given that it's
Speaker 4: such an important and part of year to year variation,
Speaker 4: whether in climate globally, and it's essentially unknowable, right, It's
Speaker 4: very hard to know what al nino is going to
Speaker 4: look like in twenty fifty, what it's going to look
Speaker 4: like in twenty one hundred, and how that picture changes
Speaker 4: as a function of what your background warming happens to be.
Speaker 4: One of the things we've been investigating is just well,
Speaker 4: we kind of had pivoted from thinking about future to saying, well,
Speaker 4: we live in a world where global warming has already occurred,
Speaker 4: we can simply document what has happened. And so much
Speaker 4: of what my lab group does here at Dartmouth is
Speaker 4: investigate retrospectively kind of build that documentary evidence of here
Speaker 4: are the cost of climate change to date. And in
Speaker 4: thinking about the cost of climate change to date, one
Speaker 4: of the things you have to do is isolate those
Speaker 4: costs from the costs that would have happened anyway, such
Speaker 4: as the cost from al Nino, which is an innate
Speaker 4: form of climate variability, right. Almino occurs in absence of
Speaker 4: people and their greenhouse gas emissions. So isolating that cost
Speaker 4: and kind of partitioning it from the cost accounting of
Speaker 4: global warming to date became a pretty important exercise. So
Speaker 4: we're always in kind of detection and attribution science trying
Speaker 4: to say, well, what is consistent with the world as
Speaker 4: it has been versus the world as it would have
Speaker 4: been absent global warming, And that means having a really
Speaker 4: clear picture of what we call internal climate variabilities, such
Speaker 4: as the variability from Elmina. And so we were interested
Speaker 4: in this cost accounting of Almino just to clarify the
Speaker 4: cost of global warming to date. And when we went
Speaker 4: back and did this exercise using these causal inference techniques.
Speaker 4: So this is all observationally built. Right. We can take
Speaker 4: data of variation in almina, which is essentially a random treatment, right,
Speaker 4: it is stochastically generated while it has a life cycle
Speaker 4: against it. Our global economies aren't necessary shaping sea surface
Speaker 4: temperature anomaly patterns in places like the tropical Pacific, right,
Speaker 4: So it's effectively exogenous tour from our economy, right, And
Speaker 4: so that's really crucial in this empirical setting of trying
Speaker 4: to identify, well, what's the effective in al Nino on
Speaker 4: an economy and how does that upward aggregate to a
Speaker 4: macroeconomic toll. What you can do is just take a
Speaker 4: bunch of data of something like gross domestic product, which
Speaker 4: is summarizing all economic productivity, goods and services produced by
Speaker 4: an economy. We have pretty good data on that at
Speaker 4: the country scale for a pretty long amount of time,
Speaker 4: and you can look at differences in that economic growth.
Speaker 4: So how did economic growth vary from year to year?
Speaker 4: So you're not looking at absolute levels of GDP, You're
Speaker 4: looking at changes in economic growth as embedded in changes
Speaker 4: in GDP. And then you can look at something like
Speaker 4: al nino as a treatment. And then you have another
Speaker 4: source of variation, which is that not every country is
Speaker 4: equally linked to al Nino physically. Al Nino is kind
Speaker 4: of remarkable in that it generates many different kinds of
Speaker 4: physical hazards, from heat waves to droughts, to floods, to
Speaker 4: landslideses to wildfires. Right, and so in that sense, like
Speaker 4: its impacts interestingly look a lot like the wider impacts
Speaker 4: from global warming, which is a worthy discussion and of itself,
Speaker 4: but we'll put that to the side for a second.
Speaker 4: And what you can do is you can exploit the
Speaker 4: kind of random variation we've observed in the real world
Speaker 4: of al nino occurrence and alninio magnitude, how that relates
Speaker 4: to the teleconnection, how tightly coupled locations weather and climate
Speaker 4: is to al nino as a phenomenon, and then see
Speaker 4: what accounts for the variation in economic productivity as measured
Speaker 4: in changes in GDP. And so that's what we did
Speaker 4: back in twenty twenty three and published in a paper
Speaker 4: in Science where we showed that actually we can detect
Speaker 4: very sizable deviations in economic growth from Elmino as a
Speaker 4: phenomena and that scales in teleconnection strength, meaning countries that
Speaker 4: are most influenced climatically and from a meteorological standpoint by
Speaker 4: the phenomenon of El Amino are most impacted and negatively
Speaker 4: still so Peru with road washouts disrupting commodities from mind
Speaker 4: sights in the mountains to port induces a shock, and
Speaker 4: that shock doesn't seem to be what an economist might
Speaker 4: call a level effect, meaning a simple deviation that you
Speaker 4: then recover from in a subsequent year. What we find
Speaker 4: in this empirical research is that observationally, Almino seems to
Speaker 4: systematically depress growth, meaning your country is growing at a
Speaker 4: race and then an al Nino occurs, and then you
Speaker 4: are growing on a different trajectory, and so those losses
Speaker 4: just accrue add infinitum in time. And that is a
Speaker 4: distinct finding that what was previously understood about al nino.
Speaker 2: Right, So this is really important. I think most people
Speaker 2: are used to thinking about whether related shocks as this
Speaker 2: sort of short term thing that, as Justin just said,
Speaker 2: impacts the price level. But what the paper actually found
Speaker 2: was that there's this longer term impact on essentially output
Speaker 2: like growth in the longer term. Why is that, like,
Speaker 2: what exactly is happening here, Because again you would expect, like, Okay,
Speaker 2: a road gets washed out, it's probably inconvenient, it's probably
Speaker 2: expensive to replace, but it does get You would think
Speaker 2: it does get replaced relatively quickly, and a lot of
Speaker 2: these negative effects would subside relatively fast.
Speaker 4: I think a one off shock might look that way, Right,
Speaker 4: You loss owing to a heat wave or drought in
Speaker 4: one part of the Upper Midwest says nothing about major
Speaker 4: grain producing regions in Russia or cotton prices given growth
Speaker 4: in the Furghana Valley in Uzbekistan, Right, Like, these things
Speaker 4: are are disparate enough in space that maybe they're not
Speaker 4: experiencing simultaneous shock. What I think is kind of interesting
Speaker 4: about Alminho and why Almino is an interesting analog for
Speaker 4: the impacts of wider global warming, which is a kind
Speaker 4: of a universally experienced You know, there's a high degree
Speaker 4: of correlation in the impacts of global warming. Right, It's
Speaker 4: not simply a heat wave here. It's a heat wave here, here, here,
Speaker 4: and here all at the same time, all experiencing loss
Speaker 4: at the same time, Which is one of the reasons
Speaker 4: why I think it's this simultaneity of disparate regions experiencing
Speaker 4: hazards and experiencing losses that then can lead to these
Speaker 4: up aggregating market forces that systematically depressed growth and alter
Speaker 4: where capital investment can go. You know, the efficiency with
Speaker 4: which you're able to take labor and capital and mobilize
Speaker 4: it into productive parts of the economy. It is hard
Speaker 4: to do that when there are lots of hazards being
Speaker 4: experienced around the world, right, so it's not one thing
Speaker 4: disrupting your supply chain, it's maybe a dozen things. And
Speaker 4: I think that's the distinction. Why. You know, the ninety
Speaker 4: seven ninety eight Almino was about thirty six billion in
Speaker 4: economic losses asked as estimated at the time as a
Speaker 4: level effect, a shock and then a recovery. What we
Speaker 4: actually found is that there was empirical evidence for a
Speaker 4: systematic depression of economic growth and over a five year
Speaker 4: period that amounts to about five point seven trillion dollars
Speaker 4: in global economic losses instead by the year two thousand
Speaker 4: and three, right five years after the ninety seven ninety
Speaker 4: eight event. What's really fascinating is we played this game
Speaker 4: where we use what's called a perfect model framework, where
Speaker 4: we simply ask the question, if we know that the
Speaker 4: impact of El Nino is permanent and of this magnitude,
Speaker 4: given the observational data we have, could we prove that
Speaker 4: it's permanent. So these kinds of statistics rely on the
Speaker 4: ability to pull a signal from noise, which requires a
Speaker 4: certain amount of data, and that amount of data affects
Speaker 4: the claims you can make robustly. And so what we
Speaker 4: were trying to do there is say, even if we
Speaker 4: had a known effect, can we recover that known effect
Speaker 4: perfectly given our data record? And what we found is
Speaker 4: that we couldn't, which means that we cannot rule out
Speaker 4: the possibility that the economic impacts of al Nino at
Speaker 4: the global scale are permanent, meaning that every time in
Speaker 4: al Nino occurs, we're just knocked off our growth trajectory
Speaker 4: that would have been absent that event, which is kind
Speaker 4: of remarkable, which implies that these costs kind of a
Speaker 4: crue ad infinitum in time. In our paper, we only
Speaker 4: went out to five and eight and ten years of
Speaker 4: growth accounting, but it just says that the economic losses
Speaker 4: associated with these events are much higher than we understood before,
Speaker 4: which means, you know, is just another kind of piece
Speaker 4: of evidence that shows that weather and climate matter for
Speaker 4: our economy, and our climate system is indogenous to that
Speaker 4: economic growth, right. It is greenhouse gas emissions induced by
Speaker 4: economic growth that is altering our trajectory of climate, and
Speaker 4: our climate also has a finger on the scale of
Speaker 4: what constitutes our economy. And so that indogen eighty, I
Speaker 4: think is something really important to understand and represent, particularly
Speaker 4: around policies related to climate variability and climate change.
Speaker 3: That was a fantastic answer. When you think about the.
Speaker 5: Impacts of this Elenino or theo in the year twenty fifty,
Speaker 5: or the Elnino in the year twenty one hundred, you know,
Speaker 5: so obviously like one, you know, presumably take a country
Speaker 5: like Peru. It's probably going to be richer in the
Speaker 5: year twenty fifty, so it'll probably have more economic activity.
Speaker 5: It may also have better infrastructure in the year twenty fifty,
Speaker 5: such that road washouts are less likely. Countries after you know,
Speaker 5: you experience I presume even since eighty two or ninety seven,
Speaker 5: there's been you know, hardening against weather related shocks and
Speaker 5: so forth. As countries learn about these patterns, how do
Speaker 5: you model that aspect? Both the fact that, okay, there
Speaker 5: is more economic activity in this sort of temporarily connected areas,
Speaker 5: and also presumably governments and companies get better about anticipating
Speaker 5: the al ninos and strengthening their infrastructure such that they're
Speaker 5: not as vulnerable.
Speaker 4: It turns out it's really hard, right. The predictions of
Speaker 4: future are not falsifiable scientifically, and so.
Speaker 5: I hope perused wealthare in twenty fifty and twenty one hundred.
Speaker 4: But yeah, I mean, yeah, we didn't even talk about
Speaker 4: the fisheries implications.
Speaker 3: Yeah.
Speaker 4: One thing that's really I think what you're kind of
Speaker 4: raising is this question of adaptation and resiliency, and the
Speaker 4: way I've been thinking about that is evolving. Right, there's
Speaker 4: a story we can tell that says, Okay, if there
Speaker 4: are market and efficiencies, or we're shown to be vulnerable
Speaker 4: societally in these particular ways, we're going to develop strategies
Speaker 4: to ensure resilience. Right. Those Peruvian potato farmers noticed they
Speaker 4: were losing crops, you know, and they altered their sewing
Speaker 4: dates based on the visibility of the ple eighties overhead.
Speaker 4: Like that is an adaptation. And you can imagine autonomous atatotations,
Speaker 4: meaning individual level adaptations. You can also imagine society wide
Speaker 4: or planned adaptations such as shoring up kind of resilience,
Speaker 4: and these things are linked to alnino forecasts, right like
Speaker 4: one of the things you're seeing, you know, you said
Speaker 4: at the outset tracy of all these financial planners thinking
Speaker 4: about the implications of al Nino for markets around the
Speaker 4: world and supply chains. That is a form of kind
Speaker 4: of resilience strategy building that's occurring that is indelibly linked
Speaker 4: to the science of enso forecasting, and why al nino
Speaker 4: forecasts are so important, Right that nineteen eighty two eighty
Speaker 4: three al Nino, we didn't have the benefit of a
Speaker 4: tremendous amount of lead time in planning for its impacts.
Speaker 4: Right a tropical cyclone often the ocean, right, being able
Speaker 4: to track it and have sufficient time to get resources
Speaker 4: injected into the places you need and people lot of
Speaker 4: harm's weigh right Like, that requires lead time, which is
Speaker 4: why these types of forecasts are so essential, because they
Speaker 4: allow us to pursue resilience strategies that we otherwise wouldn't
Speaker 4: have been able to. But this wider question of like
Speaker 4: are we well adapted to climate variability? We have and
Speaker 4: shouldn't we expect that will be even better adapted to
Speaker 4: climate variability in the future. I would say the evidence
Speaker 4: is pretty mixed. There isn't a whole lot of evidence
Speaker 4: that we're well adapted to the climate we have. We
Speaker 4: are finding documenting observationally that the costs of almino are astounding,
Speaker 4: despite the fact that we've been exposed to it for
Speaker 4: hundreds and hundreds of years. Right, this is not something
Speaker 4: that is novel. Right, while the coming al nino is
Speaker 4: like seems to be out of sample and the costs
Speaker 4: associated with it are really hard to anticipate because it
Speaker 4: is so out of sample. Right, Like, when I think
Speaker 4: about the cost of this forthcoming al nino, I estimate
Speaker 4: somewhere around ten trillion dollars of global economic losses conservatively
Speaker 4: over the next five years, right up to fourteen trillion
Speaker 4: dollars of economic losses if you take some of these
Speaker 4: tailed But I could only seventy percent of that only
Speaker 4: you know about ten trillion dollars. So that is in sample,
Speaker 4: meaning supported by existing data we have on alminios and
Speaker 4: economic responses. Our global economy is larger, and so these
Speaker 4: losses are associated not just with the magnitude of the Alnino,
Speaker 4: but the size of our global economy, there's just more
Speaker 4: stuff to be impacted, right. But what that tells me
Speaker 4: is that we are not optimally adapted to the climate
Speaker 4: we have, and so there isn't much evidence that we
Speaker 4: have that we are taking on board the feedback we're
Speaker 4: getting from the climate system about how things are going
Speaker 4: and pursuing strategies that really offset or mitigate losses in
Speaker 4: a coherent way. I think that's, you know, pretty pretty telling,
Speaker 4: just given the documentary exercise. That's not to say that
Speaker 4: we couldn't be better adapted. I just think that we
Speaker 4: are not well adapted, and there isn't widespread evidence of
Speaker 4: adaptation to either El Nino as a form of climate
Speaker 4: variability or wider global warming. Since the impacts of global
Speaker 4: warming look a lot like the impacts of Almino, and
Speaker 4: so I think there's like a bunch to kind of
Speaker 4: disentangle there. But when we're thinking about these future growth
Speaker 4: impacts on fromenso we need a counterfactual world of what
Speaker 4: economic growth trajectory would have been absent Almino, but given
Speaker 4: global warming, and that is a picture of future that
Speaker 4: I think is really hard to envision, but there are
Speaker 4: economic tools that people use to create those counterfactual worlds,
Speaker 4: and then you can measure deviations as could be the
Speaker 4: case given what we know to be observationally true about
Speaker 4: the relationship between Al Nino and an economy.
Speaker 2: I know you just said there aren't a lot of
Speaker 2: examples of successful adaptation for El Nino, other than perhaps
Speaker 2: Peruvian potato farmers sowing their crops early. But give us
Speaker 2: some hope here, or some idea of what a successful
Speaker 2: adaptation could look like in an ideal scenario where this
Speaker 2: is an endogenous phenomenon as you just described, where you
Speaker 2: have it basically happening all around the world simultaneously, what
Speaker 2: could we do to try to offset some of the
Speaker 2: economic impact.
Speaker 4: Gosh, that's you know, it's such a great question. One
Speaker 4: of the ways I think about this is there's improving
Speaker 4: resiliency in global markets such that these weather and climate
Speaker 4: shocks don't alter prices and interest rates and all these
Speaker 4: things that are huge determinants of human well being. Then
Speaker 4: there is also, like the direct hazards themselves, right, a
Speaker 4: stronger than average atmospheric river event that triggers a landslide
Speaker 4: along route one in California creating a road wash out
Speaker 4: that is a massive disruption to communities. They're a wildfire,
Speaker 4: you know that rages through the bush in Australia, killing
Speaker 4: trillions of animals and raising insurance premiums on kind of
Speaker 4: wildfire protection for homes there right, There are all these
Speaker 4: kind of ways you can process trace how Elmino hurts
Speaker 4: an individual or a community, And so I think that
Speaker 4: protection of human well being from approximate sense of like
Speaker 4: are you okay given these hazards, that to me is
Speaker 4: a different question than how do you shore up international
Speaker 4: markets such that they are resilient to the impacts of almino?
Speaker 4: And I think just separating them is really really valuable.
Speaker 4: I think the fact that people are aware of almino
Speaker 4: as a phenomenon and that it can induce these cascading
Speaker 4: shocks through agriculture or through mining, or through the transport sector,
Speaker 4: and that all those things all around the world can
Speaker 4: up aggregate to a macroeconomic toll I think is important
Speaker 4: to know. And I don't know enough about how people
Speaker 4: think about these portfolios, but I know that risk diversification
Speaker 4: is a strategy to ensure returns, and I imagine that's
Speaker 4: something that people are embracing given modern portfolio theory or whatever.
Speaker 4: But I think this question of like how do you
Speaker 4: protect people from hazard that is a different question and
Speaker 4: requires different sets of warnings about the local manifestation of
Speaker 4: the hazards associated with Almino. And to me, that means
Speaker 4: early morning systems. That means emergency management and response teams
Speaker 4: that are well placed and understand these consequences. That means
Speaker 4: we have insurance markets that recognize the hazards, the unique
Speaker 4: geophyscal hazards associated with something like El Nino and its
Speaker 4: regional dependencies, and what it should imply for the types
Speaker 4: of products those people need to protect the most capital
Speaker 4: intensive asset they have, which is their home. It's many
Speaker 4: different kinds of things, and so none of this is
Speaker 4: out of the realm of possibility. There are a lot
Speaker 4: of these things we do anyway, right we build reservoirs
Speaker 4: to mitigate drought risk already. Never mind the fact that
Speaker 4: Lake Powell the central bank of the American West Water.
Speaker 2: He knows his audience anyway.
Speaker 4: I guess the point is is that you know, I
Speaker 4: think there are lots of there's lots of evidence that
Speaker 4: we these adaptations are within the realm of possibility, but
Speaker 4: the constellation and configuration they take is kind of regionally dependent.
Speaker 4: And so I think kind of a coherent global strategy
Speaker 4: about managing the impacts of El Nino is an interesting
Speaker 4: test bed for adaptation strategies that would lend itself to
Speaker 4: wider global warming. And that's something that I'm really intrigued by.
Speaker 5: So you talk about this idea that what you've discovered
Speaker 5: through your research is that al Nino's are not these
Speaker 5: sort of cycles that you bounce back from and then
Speaker 5: you're resumed to trend growth, right, that they change their trajectory.
Speaker 5: But if al Nino's are something that are very consistent
Speaker 5: and predictable throughout history, such that we've been you know,
Speaker 5: there's evidence of farmers having tried to anticipate them going
Speaker 5: back over five hundred years, why should we not assume that,
Speaker 5: you know, it's seasonal, Like you could say, for example,
Speaker 5: that cold winter months depress economic growth, which they probably do.
Speaker 5: People don't go out as much and shop and travel
Speaker 5: as much in the middle of December, and so we
Speaker 5: could say, oh, if there were no Decembers, if it
Speaker 5: never got cold, then in the counterfactual. You know, we
Speaker 5: would have had much higher growth, which is true but
Speaker 5: also absurd because the premise of not having a winter
Speaker 5: is absurd. If al Nino is something that will always
Speaker 5: and has always been with us, why do we even
Speaker 5: imagine that they are being a counter factual trend rate
Speaker 5: of growth in a world without aninos.
Speaker 4: Yeah, I think you know that comes back to the
Speaker 4: kind of empirical identification strategy. Okay, like we don't have
Speaker 4: the benefit of resimulating the world as it has been
Speaker 4: and kind of the emergence of global society and the
Speaker 4: global economy absent Alnino, and so we rely on models
Speaker 4: to create those counterfactuals. We know that al nino, while
Speaker 4: being cyclic in nature, it is not perfectly so it
Speaker 4: is as good as a random treatment, and so we
Speaker 4: can separate the experience of the world into those associated
Speaker 4: with almino and those not, and we can examine the
Speaker 4: differences in economic productivity under those two regimes. So that's
Speaker 4: essentially what we're doing. Empirically. It's akin to a medical
Speaker 4: control trial, right where you randomize a population into a
Speaker 4: treatment group that gets drug and control group that doesn't
Speaker 4: write or receives a placebo and you compare medical outcomes. Right,
Speaker 4: there are a year, there are people that may look
Speaker 4: the same in the treatment and control group, and there
Speaker 4: are people that may look different in the treatment and
Speaker 4: control group. But if you randomize effectively, those differences among
Speaker 4: individuals cancel out, and the kind of efficacy of the
Speaker 4: drug itself is just the difference between those two groups.
Speaker 4: El nino is as good as randomly assigned despite the
Speaker 4: fact that it is cyclic in nature, and so you
Speaker 4: can treat it as this natural experiment, this treatment and
Speaker 4: compare it to the control of non al nino years.
Speaker 4: And that's effectively what we're doing here when we're kind
Speaker 4: of talking about this counterfactual. We know what economic productivity
Speaker 4: looks like, and so you're right to say that, you know,
Speaker 4: economic productivity looks different in winter than in summer or
Speaker 4: in spring, right, And it looks different in the face
Speaker 4: of a tropical cyclone than it does in the face
Speaker 4: of you know, a civil conflict or something else. Right, Like,
Speaker 4: these these things have impacts. But what we're doing here
Speaker 4: is kind of exploiting natural stochastic variation in it despite
Speaker 4: its cyclic nature. And what I think is remarkable and
Speaker 4: what I what I'm kind of suggesting here is that
Speaker 4: despite the fact that al nino is not a novel phenomenon, right,
Speaker 4: it is not something that we have never experienced before,
Speaker 4: which global warming is right. Global warming is something humanity
Speaker 4: has never experienced, and it is out of sample, and
Speaker 4: it is arguably making this El Nino that's unfolding given
Speaker 4: the background warming, truly out of sample, truly out of
Speaker 4: sample event, right, something humanity has never experienced before. And
Speaker 4: I'm saying, despite the fact that we should be inured
Speaker 4: to experiencing almino, we have limited evidence of widespread adaptation
Speaker 4: and resilience too.
Speaker 2: All Right, Justin Mann can thank you so much for
Speaker 2: coming on having.
Speaker 5: Joe.
Speaker 2: I found that conversation fascinating. Love talking about the weather
Speaker 2: in always. But I think the point about this idea
Speaker 2: that like, okay, el nino is something that we have experienced,
Speaker 2: it does come with some regularity, and yet there seems
Speaker 2: to be some proof that it has this lasting impact
Speaker 2: not just on like the immediate economy, but on economic
Speaker 2: growth itself. Is a very important one when you can
Speaker 2: consider that, like again, we're about to experience a potentially
Speaker 2: record breaking in a nino and with the wider backdrop
Speaker 2: of climate change.
Speaker 5: Right, super interesting. I learned so much in that conversation
Speaker 5: that I didn't know this term that I just heard
Speaker 5: throughout my life that I really gets warmer or something
Speaker 5: like that. I didn't really know what it was, or
Speaker 5: why it was or what direction. I thought it was
Speaker 5: really interesting. Okay, what makes an El Nino different from
Speaker 5: another random weather event. The global simultaneity of it is
Speaker 5: being key, Like, Okay, other events you just bounce back from.
Speaker 5: I mean everything must have some effect. You never like
Speaker 5: bounce back from anything that perfectly back to trend. But
Speaker 5: this simultaneity, of course, we saw that during COVID and
Speaker 5: the ripple effects from that. And so when you have
Speaker 5: this weather pattern that is truly global in nature and
Speaker 5: sort of very I guess, predictable in the sense that
Speaker 5: you know what regions they're all going to get hit,
Speaker 5: it sort of makes sense to think about it in
Speaker 5: these terms of like, oh, there are real long term costs,
Speaker 5: especially if they're intensifying during a trend of global warming.
Speaker 2: Yeah, nowhere to run, nowhere to hide kind of idea.
Speaker 2: The other thing I was thinking, of course, back to
Speaker 2: some of our early agricultural episodes, from this year. All
Speaker 2: of this is happening against a backdrop of higher fertilizer
Speaker 2: prices and lower supply. You still, I think I can't
Speaker 2: remember the exact numbers of global fertilizer supply, stuck in
Speaker 2: the strait of horror moves, and that can't be helpful either,
Speaker 2: when you're talking about the biggest El Nino on record.
Speaker 3: Yeah, no, it's gonna be a Well. Now, we are
Speaker 3: well armed.
Speaker 5: Maybe we're not well adapted for the nino, but at
Speaker 5: least you're a least well armed to understand news stories
Speaker 5: that will be emerging over the weeks and months side
Speaker 5: analysts and the sell side analyst notes in the in
Speaker 5: the months ahead.
Speaker 2: All right, shall we leave it there.
Speaker 3: Let's leave it there.
Speaker 2: This has been another episode of the Odd Thoughts podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 5: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 5: Follow our producers Carmen Rodriguez at Carman Arman, dash Ol
Speaker 5: Bennett at Dashbot, kel Brooks at Keil Brooks and Kevin
Speaker 5: Lozano at Kevin Lloyd Lozano. And for more Odd Lots content,
Speaker 5: go to Bloomberg dot com, slash odd Lots or the
Speaker 5: daily newsletter and all of our episodes, and you can
Speaker 5: shed about all of these topics twenty four to seven
Speaker 5: in our discord discord dot ggashlines.
Speaker 2: And if you enjoy odd Lots, if you like it
Speaker 2: when we talk about the weather, then please leave us
Speaker 2: a positive review on your favorite podcast platform. And remember,
Speaker 2: if you are a Bloomberg subscriber, you can listen to
Speaker 2: all of our episodes absolutely ad free. All you need
Speaker 2: to do is find the Bloomberg channel on Apple Podcasts
Speaker 2: and then follow the instructions there. Thanks for listening.