Key takeaways
- El Niño conditions have been present since June 2026 and are expected to strengthen into the 2026 to 2027 winter, with the final strength of the event still uncertain, ranging from strong to very strong.
- Reading both the traditional and the relative strength of an event gives a more realistic picture of likely impacts, a lesson underlined by the unusually weak impacts of the 2023 to 2024 event.
- Regional effects vary widely, from drought in the Philippines, the Caribbean, and Australia to flooding along parts of South America and the southern United States.
- El Niño tends to weaken Atlantic hurricane activity, but the effect on the risk any single business faces remains mild.
- The clearest economic exposures fall on agriculture, energy, tourism, public entities, and industry, where parametric cover can deliver fast, transparent, predefined protection.
El Niño is back in 2026. After a fading La Niña earlier in the year, the tropical Pacific has tipped into the warm phase of the climate cycle, and forecasters expect it to strengthen into the winter of 2026 to 2027. For weather-exposed businesses, the practical question is not whether El Niño is here, but what it means region by region, how much it really changes hurricane risk, and how to keep coverage stable when the forecasts themselves keep moving. This article walks through the science, the 2026 outlook, and the implications for risk and insurance.
What is El Niño?
El Niño is the warm phase of a recurring climate pattern called the El Niño-Southern Oscillation (ENSO). During an El Niño, the trade winds that normally push warm surface water toward the western Pacific weaken or reverse. Warm water then spreads east across the central and eastern equatorial Pacific, raising sea surface temperatures and shifting rainfall and temperature patterns around the world.
La Niña is the mirror image: the cool phase, where trade winds strengthen and the eastern Pacific turns cooler than average. Between the two sits a third state, ENSO-neutral, when conditions are close to the long-term average. Each phase typically lasts several months to a year or more, and the cycle as a whole repeats every two to seven years.
The simplest way to read where we are is the temperature of the tropical Pacific. Forecasters use a benchmark region of the ocean and call it an El Niño when the three-month average sea surface temperature there runs at least 0.5 degrees Celsius above normal, and a La Niña when it runs 0.5 degrees below.
El Niño vs. La Niña: the quick comparison
Feature | El Niño (warm phase) | La Niña (cool phase) |
Trade winds | Weaken or reverse | Strengthen |
Central and eastern Pacific sea surface temperatures | Warmer than average | Cooler than average |
Typical global signal | Drier in parts of Asia and Australia, wetter in parts of South America and the southern United States | Broadly the opposite pattern |
Atlantic hurricane activity | Tends to weaken | Tends to be enhanced |
Frequency | Part of a cycle that repeats roughly every 2 to 7 years | Part of the same cycle |
Are we in El Niño or La Niña right now?
As of mid-2026, we are in El Niño. A weak La Niña that lingered into early 2026 broke down through the spring, conditions passed through a neutral phase, and El Niño has since developed. The focus for the rest of 2026 is how strong it becomes.
How strong is El Niño in 2026, and why do forecasters disagree?
As of mid-2026, an official El Niño advisory is in place by the NOAA, El Niño conditions are present, and they are expected to strengthen heading into the Northern Hemisphere winter of 2026 to 2027. Long-range models lean toward a strong or very strong event, depending on the model. The honest answer is that confidence in the exact strength is still building, and a large part of the disagreement comes down to how El Niño is measured.
The traditional yardstick measures how warm the benchmark Pacific region is compared with a fixed historical baseline. The problem is that the world's oceans have warmed steadily over recent decades, so a fixed baseline can make an event look stronger than its real-world effect. A relative index addresses this by comparing the Pacific against the warming of the wider tropical oceans, which often gives a more realistic read on how much an event will actually shift weather patterns (see this 2024 study in Journal of Climate). While the NOAA relies on the relative measure to monitor and predict ENSO since February 2026, other agencies and forecasting systems may still use the traditional measure.
The 2023 to 2024 El Niño is the textbook example. It looked strong on paper with the traditional measure – sea surface temperatures made it the fourth-strongest event since 1979 – but its real-world effects didn't live up to that ranking. In the U.S., particularly Texas and the Southern Plains, the event eased a multi-year drought but didn't end it, coming in weaker than the old index suggested it would, according to this NOAA-reviewed analysis. Globally, a 2025 study in Communications Earth & Environment found the reason why: the tropical Pacific rainfall that normally drives El Niño's worldwide weather effects was only about a third as strong as during the three biggest "super" El Niños on record, largely because unusually warm water in the tropical Indian Ocean and Atlantic that year suppressed it.
The lesson for 2026 is that a single number can mislead, and reading both the traditional and the relative strength gives a clearer picture of likely impacts.
This is where a science-led approach matters. At Descartes, our scientific team models climate drivers like ENSO using multiple indices and data sources rather than a single headline figure, so that risk assessments reflect the effect an event is likely to have, not just its label. The challenge is real, and it cuts both ways. As Sébastien Piguet, co-founder of Descartes Underwriting, told Bloomberg:
"If we are too conservative that we consider only the worst case, our offer will not be compelling to our clients. But if we ignore the signal, we might also make mistakes. The fact that the conditions might be unprecedented makes this work harder."
That balance, taking the El Niño signal seriously without overreacting to a single index, is exactly what a multi-model, data-driven approach is built to strike.
El Niño effects by region in 2026
El Niño does not affect everywhere the same way. Below are a few representative examples rather than an exhaustive list, pairing the typical weather signal with what it can mean for businesses and their insurance.
California and the southern United States
El Niño often steers wetter winters into the southern tier of the United States, including California, which can bring drought relief but also flood and landslide risk. The strength of the effect depends heavily on how the event actually evolves, which is exactly where the relative-versus-traditional measurement question becomes practical.
✔ Business and insurance implication: flood and excess-rainfall exposure can rise for property, infrastructure, and agriculture, while the variability of the signal makes predefined, trigger-based protection attractive.
The Caribbean
El Niño tends to decrease Atlantic hurricane activity through stronger wind shear, which can ease one source of risk for the region. At the same time, El Niño years often bring drier conditions to parts of the Caribbean, raising drought and water-stress concerns.
✔ Business and insurance implication: tourism, hospitality, and agriculture are sensitive to both drought and storm disruption. A quieter hurricane outlook does not remove storm risk, so coverage that responds quickly to either drought or wind remains valuable.
South America
The signal flips across the continent. The Pacific coast of Peru and Ecuador often sees heavy rainfall and flooding, while parts of the Amazon, Brazil, and the north can turn drier. Fisheries off the western coast are also sensitive, as warmer water disrupts marine ecosystems.
✔ Business and insurance implication: agriculture, mining, and infrastructure face a mix of flood and drought exposure depending on location, which argues for coverage tailored to the specific peril at the specific site.
The Philippines and Southeast Asia
El Niño is closely associated with drier conditions across the Philippines and much of Southeast Asia, including a weaker monsoon, reduced rainfall, and elevated drought risk. Water stress can hit rice and other staple crops, lower hydropower output, and strain water supplies for industry.
✔ Business and insurance implication: agriculture, food production, utilities, and power generators face rainfall-deficit and drought exposure that traditional property cover often does not address well. Parametric structures tied to measured rainfall can pay out when a season falls short, providing liquidity before losses are formally quantified.
Australia
El Niño typically brings hotter, drier conditions to eastern and southern Australia, raising the risk of drought and bushfire and pressuring water-dependent sectors.
✔ Business and insurance implication: agriculture, energy, and water-intensive operations face heat and drought exposure, and elevated wildfire risk can threaten assets and supply chains.
El Niño and hurricane season: Shifting patterns across Pacific and Atlantic but risk is not removed
Here is the answer up front: El Niño tends to reduce Atlantic hurricane activity while favoring more activity in the central and eastern Pacific, but the practical impact on the storm risk a given business faces is mild.
The mechanism is wind shear. El Niño strengthens upper-level winds across the tropical Atlantic, and that shear tends to tear apart developing storms before they can organize. NOAA's 2026 outlook leans toward a below-normal Atlantic season for this reason. In the Pacific, the same warm pattern can support more frequent or stronger storms.
So why call the impact mild? Because a seasonal outlook shifts the odds across a whole basin, not the path of any single storm. Warm Atlantic sea surface temperatures can partly offset El Niño's suppressing effect, as happened in 2023 when an active season unfolded despite an emerging El Niño. And it only takes one landfall to make a damaging year for a specific business or community. In short, El Niño nudges the seasonal totals but does not meaningfully lower the storm risk any individual asset should plan for.
Economic impacts of El Niño: agriculture, energy, tourism, and more
The economic effects of El Niño concentrate in weather-sensitive sectors. Each maps to a distinct exposure and a coverage angle.
Sector | Typical El Niño exposure | How parametric can respond |
Agriculture | Drought, rainfall deficits, excess rainfall, and crop-yield shortfalls depending on region | Triggers tied to rainfall, temperature, or measured yield restore liquidity when a season disappoints |
Energy and renewables | Lower hydropower output in drought-hit regions, plus wind and solar variability | Production-linked structures cover revenue shortfalls driven by adverse weather |
Tourism and hospitality | Drought, heatwaves, and storm disruption that depress visitor numbers | Cover tied to measured conditions protects revenue without a damage claim |
Public entities and infrastructure | Flood, drought, and heat stress on assets and services | Fast, predefined payouts fund emergency response and recovery |
Manufacturing and construction | Supply-chain disruption and non-damage business interruption | Coverage responds to the triggering event rather than only to physical damage |
The common thread is that much of this exposure is non-damage business interruption: real financial loss without a physical claim to file. That is a recognized blind spot in many traditional programs and a natural fit for parametric solutions.
How to manage weather risk when El Niño forecasts are uncertain
El Niño forecasts bring volatility and uncertainty into natural catastrophe risk: the event's timing, strength, and regional effects can all shift between updates. Parametric insurance is built for exactly that uncertainty. Because payouts are tied to objective, predefined triggers such as rainfall depth, wind speed, or temperature, clients gain certainty over what they will receive and how fast, regardless of how the season ultimately plays out. That stability is especially valuable across the weather-sensitive verticals above, from agriculture and energy to tourism, public entities, and infrastructure.
Parametric works well alongside an existing program: topping up sub-limits on key perils, buying down high deductibles, covering non-damage business interruption, and delivering fast liquidity in the days after an event rather than the months a traditional settlement can take.
If your business has meaningful exposure to El Niño-related weather, now is the time to review your current program against the specific perils this cycle is likely to bring to your region. To discuss your exposure and explore coverage options, contact the Descartes team.
Frequently asked questions
Are we in El Niño or La Niña in 2026? El Niño. A weak La Niña faded in early 2026, conditions passed through neutral, and El Niño has developed, with strengthening expected into the winter.
Does El Niño cause more hurricanes? Not in the Atlantic. El Niño tends to weaken Atlantic activity through stronger wind shear, while favoring more activity in the central and eastern Pacific. The effect on any single location's risk is mild, since outlooks describe basin-wide odds, not individual storms.
When will El Niño 2026 peak? Current forecasts point to strengthening through late 2026, and remain strong into the 2026 to 2027 winter, though the exact timing and peak strength remain uncertain.
Can parametric cover be set up mid-season once an El Niño is confirmed? Yes, though earlier is better. Once a strong El Niño is well established, some of the expected regional effects are already priced into the market. Businesses that put coverage in place earlier in the cycle, before the event's strength is fully confirmed, typically have more options and more competitive terms.
Does Descartes only cover catastrophic events? No. One of the advantages of parametric design is that triggers can be calibrated to moderate-severity events that cause real financial loss without reaching catastrophe thresholds. A rainfall deficit of 30 percent over a growing season may not make headlines, but it can be the difference between a profitable harvest and a significant shortfall. Structures can be designed to respond at exactly that level.
