Across Latin America and the Caribbean, early 2024 laid bare the chaotic, uneven damage a single climate phenomenon can unleash. In Bogotá, Colombia, the Chingaza system — which supplies 70% of the capital’s drinking water — dropped to just 16% of its total capacity in April 2024, forcing city officials to implement strict water rationing for residents. Just one month later, Grenada declared a national water emergency after prolonged drought pushed reservoir levels to historic lows, prompting nationwide water use restrictions. Further north, Panama’s ongoing dry conditions forced authorities to cut daily shipping transits through the Panama Canal, one of the world’s most critical global trade arteries, from 36 to just 22 vessels a day.
In stark contrast, Ecuador faced the opposite extreme between December 2023 and March 2024: El Niño-fueled extreme rainfall flooded communities, displacing roughly 160,000 people and destroying more than 35,000 homes. Four nations, one climate driver, drastically divergent outcomes — a pattern that defies the common public misconception that El Niño only brings drought. While some regions face extreme dryness, others face catastrophic flooding, making uniform, one-size-fits-all disaster response strategies obsolete, argues Sergio Díaz-Granados, Executive President of CAF – Development Bank of Latin America and the Caribbean.
This urgent lesson comes as a new, particularly intense El Niño event builds strength across the Pacific Ocean. The World Meteorological Organization projects the event will peak in December, with the potential to rank as the strongest El Niño recorded in the last century. For millions of vulnerable communities already grappling with chronic climate challenges, this event poses a direct threat to public health, livelihoods and long-term development. The impacts stretch far beyond immediate emergency conditions: water scarcity and flooding disrupt access to basic services including clean drinking water and electricity, while amplifying risks to public health and global food security.
Secondary effects compound these risks, including widespread losses in agriculture, livestock and fisheries, critical infrastructure damage, broken global supply chains, and potential consumer price hikes. A climate shock of this scale can quickly escalate into a cascading economic, social and fiscal crisis for small and mid-sized nations across the region.
Against this backdrop, Díaz-Granados emphasizes that Latin America and the Caribbean must shift from a reactive cycle of disaster response to proactive preparedness. To support this transition, CAF has launched an initial $1 billion financing package to help regional nations strengthen their pre-emptive planning and response capacity for the 2026–2027 El Niño event. These funds will address both immediate urgent needs and long-term climate resilience priorities, breaking the long-standing pattern that has dominated regional disaster management: respond to the crisis, rebuild what was destroyed, recover what is salvageable, and wait for the next disaster to strike.
CAF’s approach combines targeted financing, institutional capacity building, and cross-regional coordination to supplement national government efforts, turning commitment into tangible action. As part of the third International Economic Forum for Latin America and the Caribbean, scheduled for January 27–28, 2027 in Panama, CAF will convene the first ever Meeting of Ministers of Economy of Latin America and the Caribbean. The gathering will focus explicitly on disaster risk financing and strengthening national fiscal institutions to withstand climate shocks. Attendees will collaborate to address the unique challenges El Niño presents, share cross-border adaptation experiences, and advance policy instruments that help nations anticipate, manage and transfer climate risk, protect public budgets, and respond to emergencies more effectively.
In addition to the meeting, CAF will develop a regional white paper outlining customized recommendations and proven good practices tailored to the diverse geographic and socioeconomic realities across Latin America and the Caribbean. This work will be paired with the development of practical climate risk management tools, targeted technical assistance programs, and shared knowledge exchange platforms that connect governments and institutions across the region.
While recent devastating events across the region highlight that not all natural disasters can be predicted with perfect accuracy, advances in climate science and data analysis have created unprecedented opportunities to identify emerging threats, model potential impacts, and reduce community vulnerability. The core challenge now is translating that scientific knowledge into actionable policy, and turning policy into effective protective capacity for people, national economies and vulnerable territories.
El Niño will manifest in countless ways across the region, so climate action must be equally diverse. The ultimate goal is to stop predictable climate threats from repeatedly erasing hard-won development gains for nations across Latin America and the Caribbean. CAF is backing this regional effort with targeted financing, specialized knowledge and concrete, actionable initiatives to build a more resilient future.