The impacts of climate change are becoming a reality across the globe. In Europe and North America, extreme heat and drought have led to recurring wildfires, while the Panama Canal, a key global shipping route, is facing restrictions due to water shortages. Climate change has evolved from an environmental issue to one that disrupts agriculture, energy, industry, logistics, finance, and health. Amid this backdrop, a strong El Niño is re-emerging in 2026, heightening tensions in Latin America. While climate change does not create El Niño, the combination of already elevated average temperatures and sea surface temperatures with a strong El Niño increases the risks of extreme weather events such as heatwaves, heavy rainfall, and droughts.
The greater challenge lies in the unpredictability of how far-reaching these impacts will be. Disasters in specific regions can quickly translate into economic repercussions worldwide, affecting production costs, prices, shipping rates, delivery times, energy supply, and financial burdens. The climate shocks occurring in the seas and Andes of Latin America could ripple all the way to factories and dinner tables in South Korea.
Why Peru is Most Concerned
Peru is currently one of the most anxious countries in Latin America. President Keiko Fujimori, who took office on July 28, identified restoring public safety and responding to El Niño as urgent priorities in her inaugural address. The new government’s immediate focus on disaster response underscores the seriousness of the situation. For me, El Niño is not just an abstract concept learned in meteorology textbooks; it was one of the first issues I encountered when I arrived in Peru in 1998. At that time, our country's distant squid fleet paid significant fees to fish in Peruvian waters, but rapid changes in the marine environment led to disappointing catches and substantial losses.
The fleet demanded that the Peruvian government take action, and I met with local officials to discuss the issue. It became clear that El Niño is not merely a natural phenomenon but can have far-reaching effects on fisheries, agriculture, prices, national finances, and even diplomatic relations. The cold Humboldt Current and nutrient-rich upwelling off the coast of Peru create a world-renowned fishing ground. However, when El Niño occurs, upwelling weakens, altering the distribution of plankton and fish. A decline in anchovy catches, a key resource for Peru's fishing industry, can impact the production of fishmeal and fish oil, which in turn affects international feed prices and global aquaculture production costs.
Fishing at Sea, Huaico on Land
The land-based impacts of El Niño are even more direct. The Pacific coast of Peru is a desert region that typically receives little rainfall, with the Andes Mountains rising steeply behind it. Heavy rainfall can trigger huaicos, where water, mud, and rocks flow down in a torrent. During the coastal El Niño of 2017, northern regions such as Piura, Tumbes, Lambayeque, and La Libertad suffered significant damage from heavy rains, flooding, and huaicos. Roads and bridges were washed out, farmland was inundated, and the water supply in the capital, Lima, was disrupted.
When I returned to Peru in 2018, the scars from that disaster were still evident. The Peruvian government established a separate reconstruction agency and launched a national reconstruction plan worth approximately 256 billion soles (about $78 billion). One natural disaster had shifted the country’s financial and investment priorities. If damage occurs again, it could affect not only agricultural and fishery production but also logistics networks, including roads, bridges, and ports. High temperatures and flooding also increase the risk of infectious diseases such as dengue fever and leptospirosis. Large-scale damage could burden the new government's infrastructure projects financially.
WMO Issues Strong Warning
This El Niño is particularly noteworthy due to its intensity. The World Meteorological Organization (WMO) announced on September 3 that El Niño has already firmly established itself and is expected to reach a 'very strong' level by the end of the year. There is nearly a 100% chance it will persist until February 2027. The U.S. National Oceanic and Atmospheric Administration (NOAA) also predicts a greater than 90% likelihood of a very strong El Niño this fall and winter. The WMO warns that the issue is not just rising sea temperatures. One region may experience flooding and heavy rainfall, while another faces drought and extreme heat. While the scale of potential damage cannot be determined now, we must prepare for simultaneous pressures on food, water, health, and energy systems.
Chile, Colombia, and Panama Also Affected
The impacts of El Niño are not confined to Peru. The same climate changes are manifesting as different economic risks in various countries due to their industrial structures. In Chile, recent heavy snowfall and rainfall in the Andes mining region have affected actual mining operations. The Caserones copper and molybdenum mine temporarily halted operations due to heavy snow and power supply disruptions. Chile and Peru are key countries in global copper supply, which is essential for electric vehicles, power grids, data centers, and AI infrastructure.
Conversely, Colombia is grappling with drought. Given its reliance on hydropower, reduced rainfall and reservoir inflows can lead to water shortages, which in turn threaten electricity production and energy security. In Panama, water shortages pose a global logistics problem. The Panama Canal uses freshwater to allow ships to pass, so when reservoir levels drop, transit capacity and cargo loads must be restricted. During past severe droughts, ships transporting LPG from the U.S. to South Korea have paid millions of dollars in additional costs to secure expedited canal passage.
Peru's fisheries and agriculture, Chile's minerals, Colombia's electricity, and Panama's logistics may seem like separate issues. However, they represent a complex economic risk where a single climate shock can cascade through food, energy, industry, logistics, finance, and health.
South Korea is Not Immune
Our dinner tables are already connected to Peru. Squid and shrimp from Peru are imported into South Korea, along with agricultural products like avocados, grapes, and mangoes. Notably, the major agricultural regions in northern Peru are often hit hard by flooding during El Niño. We should pay particular attention to fishmeal. Peru is a leading producer of fishmeal and fish oil. A decline in anchovy catches due to El Niño could drive up international fishmeal prices, impacting our aquaculture production costs. Changes in sea temperatures off the coast of Peru could affect feed costs in South Korean aquaculture.
The ripple effects of minerals are even greater. If copper production in Chile and Peru is disrupted, it could impact electric vehicles, batteries, power grids, and AI infrastructure. If disruptions at the Panama Canal are added to the mix, it could increase not only raw material prices but also transportation costs and delivery times. However, the repercussions may not end there. If climate disasters persist, reduced agricultural and fishery production and logistics disruptions could drive up prices, while increased recovery costs could strain local government finances, and energy shortages could affect manufacturing output. If infectious diseases spread, the impacts could extend to labor, tourism, and local economies.
Therefore, our government and businesses should not view the climate anomalies in Latin America as mere overseas disaster news. We need to monitor weather and production trends in key agricultural and mineral-producing regions, as well as critical logistics hubs like the Panama Canal. For high-risk items, we should assess the potential for diversifying supply sources and stockpiling. We must also strengthen systems to quickly relay information about production and logistics disruptions to our businesses through overseas networks like embassies and KOTRA. Food, feed, key minerals, energy, and logistics should not be treated as separate issues but managed as interconnected complex risks.
Lessons from Peru 30 Years Ago
Nearly 30 years have passed since I first realized the economic power of El Niño while discussing our squid fleet issues in Peru in 1998. In that time, the world has become interconnected in ways that are incomparable. El Niño is a natural phenomenon that has recurred for a long time. We cannot stop nature. However, we can learn from past experiences and anticipate how risks approach our industries and dinner tables to mitigate shocks.
Changes in sea temperatures off the coast of Peru can shake our aquaculture feed costs, heavy rains and snow in the Andes can affect the costs of advanced industries, droughts in Colombia can threaten electricity production, and water shortages in the Panama Canal can raise shipping costs for vessels heading to South Korea. The next shock could emerge from anywhere, and no one can predict it with certainty.
This year's Super El Niño warning should not be viewed as merely a weather issue in Latin America or a simple supply chain problem. Climate shocks can cascade through food, energy, industry, logistics, finance, and health, creating complex economic impacts. Given the uncertainty of how far-reaching these effects may be, the most practical response is to read the signals of risk early and prepare accordingly. This is the lesson that the El Niño I experienced in Peru 30 years ago teaches us today.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.