Icelandic minister flags El Niño supply-chain risks

Indirect effects of El Niño could affect Iceland’s society and economy, although their scale and form remain highly uncertain, mbl.is reports. Environment, Energy and Climate Minister Jóhann Páll Jóhannsson presented a memo on the issue at a cabinet meeting on Friday.

The memo examines possible indirect effects in Iceland of extreme weather linked to El Niño in the Pacific. Jóhannsson proposed gathering information on how the phenomenon could affect supply chains, prices and the security of supplies to Iceland.

El Niño is a weather and climate phenomenon that occurs every few years, when warmer surface waters in the Pacific increase weather extremes around the world. It is part of a natural fluctuation in sea temperatures, but is now occurring in a climate that has already warmed significantly because of human activity.

The effects are expected to be felt mainly in southern Africa, South America, Australia and parts of Asia. Risks are expected to be particularly high in the Southern Hemisphere as its hottest season begins in early 2027.

El Niño can increase the chances of several kinds of natural disasters at once, including floods, wildfires, droughts and other heat-related damage. Such events, and the resulting crop failures, can push up prices for imported food, raw materials and other essential goods. Disruptions can also increase delivery times and transport costs.

Research has also pointed to possible negative effects on insurance and financial markets, higher global inflation and slower economic growth. The memo says Iceland’s direct impacts are expected to be small, but the country is vulnerable to supply-chain disruptions and could face significant indirect effects through international financial markets.

The memo says the seriousness of climate change should be reflected in the government’s action plan, and that action can still influence how severe and widespread its consequences become.