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The cyclical weather phenomenon known as El Niño has returned. Wildfires in Europe. More than 300,000 people have fled their homes in France and Spain. Catastrophic flooding in India or even New York City, weather extremes in our world are becoming more frequent. So scientists are worried about this El Niño for two reasons. One is the scale of this El Niño. It's perhaps the biggest they have seen in recent history and when it is coming, which is in a world that is already 1.4 degrees Celsius hotter as a result of human-caused climate change.
El Niño doesn't roll around that often, so it's difficult to totally anticipate what the effects will be. But this has the potential to be a historic event in terms of its power. The economic toll this El Niño will take may not be known for years to come, but looking into the past gives us some ideas. In our daily lives, the oceans play a crucial role. They can drive our climate and our weather. El Niño taught us all about that. The El Niño that ended in 1998 had a major effect on global economies. The damage was about $5.7 trillion.
It rippled for five years after the event ended. Losses from the 2015, 2016 El Niño also ran into the trillions. And kind of forecasting suggests we'll see that again. El Niño is a natural phenomenon. It's to do with an oscillation that happens in the Pacific Ocean. There's this naturally occurring cycle in the Pacific Ocean where it warms up, it cools down. La Niña is the cool phase. El Niño is the hot phase. How these phases are identified is by measuring sea surface temperatures in a region of the equatorial Pacific. And when sea surface temperatures go above 0.5 degrees Celsius above normal, that's when an El Niño is declared.
You can see here sea surface temperature readings taken from this area of the Pacific known as the 3.4 region. The red line shows 2026 temperatures are higher going into the fall than the last El Niño in 2023. And when compared to the average temperatures between 1991 and 2020, it's clear the oceans are warming up. What's different with this El Niño is that we're not just looking at sea surface temperatures, we're also looking at water temperatures beneath the surface. This El Niño is predicted to warm the Pacific more than two degrees Celsius by the end of the year. And that may not sound like a lot,
but that's a lot of extra energy stored in the ocean. This will act as a battery that will not only fuel heat transport, but also evaporative potential. And that is going to fuel how strong the impact of this El Niño could be. So this climate change. It's the greatest con job ever perpetrated on the world, in my opinion. Climate change is essentially the response to the additional greenhouse gases that us humans are putting into the atmosphere by burning fossil fuels. And what that does is it increases the average temperature of the entire globe. A lot of that increase in heat is actually absorbed by the ocean.
El Niño is not caused by climate change, but it certainly is affected by it. The world is already 1.4 degrees Celsius hotter than the pre-industrial period. On top of which, when an El Niño comes, you get an increase of 0.2 or 0.3 degrees Celsius of warming. If we track global temperature variations since 1950 versus the pre-industrial era, this is what we see. The orange line is the long-term human-caused warming. El Niño years shown in red, push global temperatures up while the blue La Niña years pull it down. But the constant upward trend of global temperatures means the starting point for these variations is elevated.
And that means the extreme weather events that we are seeing around the world already, which could be a heat wave, it could be a wildfire, could be a flood, becomes just that much more extreme. Many climate scientists are saying this El Niño could be a sneak peak into our future. And if you've been traveling to Europe recently, you'll understand exactly what this means. A state of emergency in Western Europe was described as apocalyptic fire. There are fears that a temperature surge. Could make the fires worse. By 2027, which is now expected to be the hottest year ever, it might be giving us a flavor,
just a flavor of what life and current trajectory of climate change could look like in 2035. Predicting the future can be risky business, but this El Niño is already well underway. India is seeing its worst monsoon since the last El Niño. Rainfall in the region has been erratic. India had its fifth driest June on record, only to be followed up by a massive flood in July, dumping a month's worth of precipitation in a single week. India still depends hugely on agriculture for its economy, and monsoon is the main driver of that agricultural economy. Extreme versions of El Niño's wet and dry zones radiating from the equator threaten crops around the globe.
Western Africa, it's a hotspot for cocoa production. We're already seeing impacts on cocoa growth and yield. This is going to impact pricing going into 2027, and you could start to see some quality issues. This means your chocolate bar or hot cocoa this winter could cost more. The El Niño event of 23 and 2024 caused multiple spikes in cocoa costs that have only recently come down. And in Somalia, communities are bracing for the currently dry conditions to give way to the type of torrential flooding that occurred in the last El Niño.
2023, it was devastating. This bridge is connected from this village to the town, and the water rise above it. There is people who was not getting food, water, and essential. This super El Niño might be one of the biggest, the bigger than in 2023 and 1997. "Speaking foreign language".
A lot of the impacts that come from an El Niño happen within the tropics. The places where you have the most productive agricultural land typically, and the most number of people who rely on agriculture for their income and of course for their own food. The London Stock Exchange continues to shrink. Uncover more at bloomberg.com/videos. Food security and agricultural losses also ripple through supply chains, making local issues global. El Niño can lead to lower rainfall in places like Panama. We have a global interconnected supply chain, and so major weather disruptions can actually wreak a lot of havoc.
Traffic through the Panama Canal plunged in 2024 due to drought during the last El Niño. And this year, the Canal Authority is already taking measures to conserve water with cargo limits citing the same issue. El Niño is a global hydro story, which is often missed when everyone is focusing on global temperatures. Trade routes in the Panama Canal will impact flows of LNG, liquid natural gas, and in turn our energy prices. That's where we could see the impacts on our wallets the most. There's a recent study in the Journal of Science, which found that the 1982, 83 El Niño had long-term impacts of decreasing economic productivity of the world by $4.1 trillion.
A similar analysis for 97, 98 led to $5.7 trillion of economic damages to the planet. The more recent El Niños are expected to cost even more in the trillions of dollars. So while El Niño is hitting localities in different ways, the costs are sure to be widespread. El Niño doesn't care about what's going on between countries, and it doesn't care about our peace deals, and it doesn't care about the geopolitical situation or how bad inflation has already gotten. It does what it wants. It arrives on its own schedule, and it often arrives at a time that is not great given other events playing out all around the planet.
