The effects of the weather phenomenon known as El Niño/La Niña have substantial and profound effects on the economies of the countries of Latin America. Some regions are helped by the increased rainfall, others are damaged. Some areas experience a boon in fish production, others a bust. To truly assess the impact of the phenomenon of El Nino/La Nina, Latin America must be viewed as a whole. We will look at the 1997/98 cycle of El Nina/La Nina, commonly referred to as the El Nino Oscillation.
For decades scientists have noted the dramatic changes in ocean temperatures which appear every three to seven years in the Pacific Ocean around Christmas. El Niño means "The Child" and is named after the warmer waters that first appear at that time. This unusually warm water pattern can last for months; it is followed by a large, unusually cold-water mass off the coast of Peru. This second phenomenon is known as La Nina, and it creates its own benefits and problems for the economies of Latin America.
El Niño became one of the century’s major climatic events when it appeared in 1997/98, affecting anomalous weather patterns all over the globe. La Niña quickly followed. The near record high ocean temperatures in 1997 abated over the first four months of 1998 as ocean temperatures cooled. The cooling was atypical, however, in that water off the coast of Ecuador and Peru did not cool proportionally to the rest of the pacific waters. Offshore temperatures were cooler than usual, setting up a greater temperature oscillation then had previously been experienced. With the cool water came an easing of flood and drought conditions in some places on the continent, but also more intense storm activity in the Atlantic. The unusual intensity of Hurricane Mitch is attributed to the La Niña phenomenon.
While El Nino/La Nina affected the whole of Latin American, it did not do so universally. In some cases, one region's gain was another's loss. Some regions were hit hard by flooding, others welcomed the increased rainfall as it ended drought conditions and increased crop production. Roads washed out, disrupting trade and communication. Fish migrated out of their customary fishing grounds into neighboring waters. Malaria increased in some areas as flooded waters bred mosquitoes. By examining various industries in Latin America, patterns are seen that cross political boundaries and become ecological zones showing El Nino/La Nina's effects. We will see El Nino/La Nina as an agent of economic change.
Drought in Mexico return to top
El Nino has gripped Mexico in a drought for four consecutive years. The major agricultural states of Chihuahua, Queretaro, Sonora, Sinaloa, and Zacatecas have all suffered. These areas run from the Northwest region of Mexico down the Pacific Coast to Valle de Mexico. Traditionally farmers in this part of Mexico have relied on rainfall to nourish their crops. Irrigation has not been practical economically. Even where irrigationcan be practiced, reservoirs are at near record lows. Storage in reservoirs is as low as 15% of capacity in some locations.
The extended drought has also damaged corn and wheat crops. Corn is particularly sensitive to drought, as it needs rain at the right time of its growing cycle. Since most farmers do not irrigate their crops, corn is vulnerable. Because of the NAFTA agreement with the United States, Mexico imports all of its corn from the U.S. Imported yellow corn is used for feed, and while imports may fluctuate from year to year, it is predicted that Mexico will increasingly rely on the United States for its corn requirements.
Corn and Wheat in trouble
3.4 million metric tons (MMT) of wheat are predicted to be produced in 1999/00 through increased acreage devoted to wheat and an expected increased yield. 1998 produced less wheat than expected at 3.2 MMT because of dry conditions in Sonora, the major wheat producing state. If predictions hold for an increased yield, imports may drop slightly, to 1.6 MMT.
The Corn Market (1000MT) 1997 1998 1999e
Total Market Size 20836 21610 22870
Total Market Production 16934 18085 18500
Total exports 308 80 80
Total imports 4210 4500 3900
Imports from the US 4210 4500 3900
The above statistics are unofficial estimates from U.S. Dept. of State FY 2000 Country Commercial Guide: Mexico.
The Wheat Market (1000MT) 1997 1998 1999e
Total Market Size 4330 4851 4900
Total Local Production 3639 3220 3365
Total exports 541 100 100
Total imports 1232 1625 1600
Imports from the US 1000 1300 1300
The above statistics are unofficial estimates from U.S. Dept. of State FY 2000 Country Commercial Guide: Mexico
Disaster in Honduras return to top
In late October 1998 Honduras was struck by the catastrophic wind, rain, and flooding of Hurricane Mitch. The unusually cold waters of the 1998 La Niña in the Pacific contributed to the power of Mitch, which dealt a blow to the economy of Honduras. While the destruction caused by Hurricane Mitch is serious, Hondurans are recovering, albeit with difficulty. The direct cost of the hurricane in per capita income to the Honduran people, just in the waning days of 1998, was over US$150 million. Damage estimates ran to US$3 billion, or 50% of the Gross Domestic Product (GDP).
The GDP for 1999 is expected to contract 3% as a direct consequence of Mitch. The 1997 GDP showed a 4.5% increase, while the 1998 GDP managed a 3% increase. The 1998 figure was reached in spite of crop losses attributable to Hurricane Mitch.
Infrastructure Damage(US$ in millions)
Road network $463.3
Ports $92.2
Airports $13.2
Water and sewage systems $358.2
Energy $74.1
Communications $9.1
No definitive breakout numbers are available for crop damage in Honduras, but the agricultural sector, which accounted for 24% of GDP in 1997 sustained losses of more than US$800 million. The major agricultural crops of corn, coffee, melons, shrimp, sugar, and beans suffered losses ranging from 25% to 80% as a result of Hurricane Mitch.
Employment has been disrupted as many Hondurans were left homeless after the devastating flooding.
Mixed Aftermath in Panama return to top
After suffering some agricultural decline in 1997 due to El Niño, as well as some water shortages, Panama is experiencing a quick rebound with the return of normal precipitation. The most recent figures available show mixed but generally favorable improvement in the economy.
Industry 1998 % increase over 1997
Fisheries +13.6%
Sugar +9.0%
Rice +40.0%
Corn +36.0%
Beef +5.4%
Poultry +9.0%
Bananas -24.0%
The decrease in the banana harvest was attributed to a major strike at the Chiquita Banana plantation rather than El Niño. The workers were locked out during the strike, and the trees allowed to die off. Chiquita plans to replant.
Cocaine in Colombia return to top
The only notable effect from the El Niño/La Niña weather pattern in Colombia is on the vast cocaine operations. It is assumed that the El Niño related flooding in Southern Colombia has disrupted some percentage of cocaine production, but an exact figure is unknown.
Fire and Drought in Brazil return to top
In northern Brazil, the state of Roraima is recovering from El Niño induced drought and fire, which destroyed over 21% of its cultivated land. Damages are estimated at US$40 million in lost crops of cassava, maize, and beans. Mosquito populations exploded in stagnant water sources, and by the end of 1998, some small villages had malaria rates of 80% of the population. A water resource specialist was provided by Oxfam and helped to direct water resource projects for indigenous people. US$60,000 was donated by Action by Churches Together (ACT) to begin assistance projects which include a goal of building 22 artesian wells and 22 water tanks in 21 locations including: Raposa Serra do sol, Taiano, Amajari, Serra da Lua, and So Marcos. The total price tag for the mission is expected to reach US$1.2 million.
Fishing Industry in Ecuador return to top
The El Niño/La Niña weather pattern affected the Ecuadorian economy in a wide variety of ways. As a result, Ecuador experienced wide fluctuations in its agriculture, fishing, and textile industries, as well as damage to its infrastructure.
In 1998 the fishing industry collapsed under the effects of El Nino. Shrimp production and tuna fisheries were down substantially. With the onset of La Nina, they made a remarkable recovery. In the first half of 1999, 90,000 tons of tuna were harvested off the coast of Ecuador, compared with 50,000 tons during the entire year of 1998.
The increase in fish catch volumes have sparked an interest among local fleets to update their fishing equipment and sales are expected to increase by 30% over the next two years to accommodate the demand.
Fishing Equipment (in US$ millions)
1997 1998 1999
Total Market Size 29.0 77.3 89.8
Total Market Production 2.5 7.0 8.0
Total exports 1.3 2.8 4.0
Total imports 25.2 67.5 77.8
Imports from the US 5.0 13.5 15.5
The above statistics are unofficial estimates from U.S. Dept. of State FY 2000 Country Commercial Guide: Ecuador
The textile industry is recovering from a disastrous 1998 cotton crop. Production declined by more than 50% as a result of the 1998 El Niño. Ecuador has turned its attention to increasing exports of textiles and so has imported more cotton in recent years.
The El Niño phenomenon caused flooding, bridge washouts, and road closures all over Ecuador. Many of these conditions have not been repaired. While it is difficult to derive the economic effects of such extended transportation disruption, it is safe to say it will have a negative effect on commerce.
Losses in Peru return to top
In 1997, anchovy fishermen found that the usual schools of anchovy had moved out of their normal waters and the industry suffered accordingly. Even after the La Niña effect cooled ocean temperatures, local waters off the coast of Peru inexplicably stayed warm, and the fish stayed away in 1998 as well. The anchovy migration also directly led to the death of 125,000 sea lions who starved when their food source disappeared. The FY2000 country guide for Peru has not been issued as of this date, but should contain useful information for following up on Peru's handling of its infrastructure problems, as well as the recovery of its agricultural and fishing industries.
Peru was inundated with rain and flooding in the l998 El Niño, and the infrastructure of the country suffered upwards of US$1 billion in damage, washing out roads and bridges, and even leveling whole villages. Machu Pichu evidenced damage too, as for the first time since the Incas built it, stones from the ruin became loose as the increased rainfall overwhelmed the surrounding earth. 250,000 people were left homeless in 1998, and more than 800 lost their lives in the floods. Some of the runoff from the floods settled in the Sechura Desert and created a vast lake, 90 miles long, 20 miles wide, and about ten feet deep. Approximately 25,000 hectares of agricultural land has been ruined. The Gross Domestic Product of Peru shrank from a 7.2% increase in 1997 to a dismal 0.2% increase in 1998, directly as a result of El Nino. Loss in one area can be gain for another as the damage to the infrastructure gave the construction industry a boost, and imports of heavy machinery and construction equipment are expected to rise as Peru digs out and prepares to cope with the effects of El Niño.
Construction Equipment (In US$ millions)
1997 1998 1999
Total Market Size 352 475.1 642.0
Total Market Production 1.8 1.9 2.0
Total exports 3.1 3.7 3.8
Total imports 353.3 476.9 643.8
Imports from the US 175.1 227.6 295.9
Exchange rate 2.66 2.93 3.11
The above statistics are unofficial estimates from U.S. Dept. of State FY 1999 Country Commercial Guide: Peru.
Conclusion return to top
To accurately assess the consequences of El Nino/La Nina, we must be prepared to look beyond its affect on one industry, or one country. We can see that even within one region, increased rainfall will be damaging to one crop, beneficial to another. Likewise, a loss for one country's economy can benefit another's. More than anything else, we can see that the most profound effects of El Nino/La Nina are the redistribution of economic problems and benefits. El Nino/La Nina is an agent of economic change in the entire region of Latin America.
Bibliography return to top
Baer, Warner & Coes, Donald, United States Policies and the Latin American Economies, Praeger, 1990
MacDonald, Scott & Fauriol, George, Fast Forward, Transaction Publishers, 1997
Purcell, Susan & Simon, Francoise, Europe and Latin America in the World Economy, Americas Society, 1995
Ritter, Archibald, Latin America to the Year 2000, Praeger, 1982
Thorp, Rosemary, Progress, Poverty and Exclusion, The Johns Hopkins University Press, 1998
United States Department of State, Country Commercial Guide FY1999: Chile, Washington, D.C., 1998
United States Department of State, Country Commercial Guide FY1999: Columbia, Washington, D.C., 1998
United States Department of State, Country Commercial Guide FY1999: Mexico, Washington, D.C., 1998
United States Department of State, Country Commercial Guide FY1999: Peru, Washington, D.C., 1998
United States Department of State, Country Commercial Guide FY2000:Argentina, Washington, D.C., 1999
United States Department of State, Country Commercial Guide FY2000: Brazil, Washington, D.C., 1999
United States Department of State, Country Commercial Guide FY2000: Ecuador, Washington, D.C., 1999
United States Department of State, Country Commercial Guide FY2000: Honduras, Washington, D.C., 1999
United States Department of State, Country Commercial Guide FY2000: Mexico, Washington, D.C., 1999
United States Department of State, Country Commercial Guide FY2000: Panama, Washington, D.C., 1999
Weeks, John, Structural Adjustment and the Agricultural Sector in Latin America and the Caribbean, St. Martin's Press,
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