The El-Niño Phenomenon

The El-Niño Phenomenon IMG: via Shutterstock.

Every year, the threat of El Niño looms ominously over many regions in South America, where local governments and residents seek to protect themselves against the domino effect of natural disasters that can arise from it. El Niño, which is Spanish for “the boy,” is a natural phenomenon that is characterized by higher water temperatures along equatorial regions of the Pacific Ocean that triggers changes in wind and weather patterns. Some areas will receive such heavy rainfall that flooding will occur, and others will experience extreme droughts.

In recent years, El Niño has proven to be an even more destructive weather phenomenon. Global warming has been attributed as a factor that has increased the force of the storm, and El Niño has been linked as a catalyst to more horrific hurricanes in both North and South America. Despite the severity of the annual weather occurrence, which typically happens between September and December, many South American countries have invested in safeguards to prevent loss of land, resources, and lives.

Moody’s, a leading credit ratings company, recently published a report that details the financial progress that South American governments and banks have made in response to El Niño. According to The Wall Street Journal, “Flooding in some regions will increase the need for emergency spending on aid to victims and on building infrastructure damaged or destroyed by high waters,” of the additional funding natural disaster initiatives require to support the local people. “Droughts in other regions will also boost demand for transfers to help those suffering from the effect on agriculture,” according to Moody’s report.

Natural disaster relief initiatives are a significantly costly investment, but one that is necessary, especially when managing potential damage from something as powerful as El Niño. Moody’s and other credit ratings agencies have certainly noted an improved financial stability in South American countries, especially Peru and Chile. According to Moody’s group credit officer Gursan Zurita, Latin America’s governments have done much to improve their financial situations since the last time a particularly strong El Niño hit.

Learn more about El Niño by visiting the National Oceanic and Atmospheric Administration.