What does the weather have to do with your budget? Find out why extreme events began to worry economists

Why are economists talking so much about climate?
Phenomena such as El Niño, heat waves, floods and droughts have become part of the projections of the Central Bank, the Ministry of Finance and the financial market. With the increase in the frequency of extreme events, the climate began to be treated as a factor capable of influencing the economy.
El Niño is considered a risk factor because it can reduce food production, make energy generation more expensive and put pressure on inflation. Therefore, the Central Bank monitors the phenomenon in its price projections, just as the government monitors its possible impacts.
In addition to increasing public spending on disaster response, climate events can influence the trajectory of interest rates. For experts, climate risk has become part of economic decisions, alongside factors such as fiscal and exchange rate risk.
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Source: G1