El Niño is a global phenomenon whose scale is difficult to imagine. It begins with an unusual shift in weather patterns: winds that normally blow from east to west weaken or stall, and the movement of ocean water slows with them. The result is that normally dry places such as Peru and Ecuador can experience heavy rainfall, while normally warm and humid places such as Thailand face drought.
Weather forecasting is difficult and fraught with uncertainty. But the US National Oceanic and Atmospheric Administration (NOAA) has recently warned of a 90% chance of a severe El Niño during the Northern Hemisphere’s autumn and winter later this year and early next year. It also estimates a 69% chance that the event will be more intense than the historic El Niño of 1950, with temperatures potentially rising by more than 2.5°C for three consecutive months.
If a major El Niño develops as forecast, Thailand will certainly face a shortage of rainfall. The Thai Meteorological Department expects rainfall this year to be around 10% below normal. People will also face harsher sun and higher temperatures, along with dry conditions that increase the risk of forest fires and haze. Crucially, we may see fewer thunderstorms than usual this year—not good news for agriculture or for storing water to use during the dry season.
These effects may not arrive all at once. They may gradually become apparent during the hot season, when water reserves begin to dwindle, long-awaited rains fail to arrive on schedule, and temperatures climb to record highs. Research published in Nature Communications found that mainland Southeast Asia can experience extreme heat in April following an El Niño event. In April 2016, for example, temperatures were around 0.6–0.7°C higher, with more than half of that increase attributable to the El Niño of late 2015.
Preparing for heatwaves is, of course, essential for Thailand. But in this article I want to focus on another critical issue: water. Its availability has significant economic consequences for agriculture, industry and energy.
El Niño and Its Impact on Agriculture
A recent Krungthai COMPASS report estimates that El Niño could cause up to THB 62 billion in agricultural losses, with rice farmers particularly exposed. Farmers’ income could fall by around 8% in 2026, while the impact could reduce gross domestic product (GDP) by roughly 0.3%. That GDP figure may not sound alarming. But agriculture supports more than 11 million Thai workers, so the consequences could spread far beyond the sector itself.
Over the past four or five years, Thai farming households—especially rice farmers—have not been hit particularly hard by drought, partly because global rice prices rose. This time is different. India, a major competitor in rice exports, has not imposed the export bans it used in the past. Vietnam has also adapted its rice-growing practices to better withstand drought. If the government hopes that higher world rice prices will once again soften the blow this year, it may be disappointed.
These farming households were already vulnerable. A 2019 survey by the Puey Ungphakorn Institute for Economic Research found that Thai farming households earned an average of THB 382,128 a year and spent an average of THB 338,886, leaving just THB 43,242. Add average debt of THB 429,989, and the picture becomes even more worrying: even a small shock could bring an already fragile household to its knees.
When a crisis strikes, the familiar response is unconditional assistance—debt-payment suspensions, agricultural price subsidies or support for the cost of farming inputs. Yet a World Bank report found that such policies either do not improve farmers’ net income or can have a negative effect, because they give farmers little incentive to increase agricultural productivity. The government should therefore design its response carefully before the El Niño crisis arrives. It should focus on helping farmers adapt to a changing climate, grow crops suited to their soil and water resources, and invest in equipment and tools that raise productivity.
The government should design its response carefully before the El Niño crisis arrives. It should focus on helping farmers adapt to a changing climate, grow crops suited to their soil and water resources, and invest in equipment and tools that raise productivity.
El Niño and Its Impact on Industry
One of Thailand’s most water-vulnerable areas is the Eastern Economic Corridor (EEC). Reservoirs and numerous other projects have been developed in an effort to meet demand, yet water use continues to rise across sectors. A new wave of approved data centre investments may bring enormous economic value—but it will also require enormous quantities of water. The eastern region, moreover, experienced drought as recently as 2020.
A study published in February 2024 projected that water demand in eastern Thailand would increase by an average of 200 million cubic metres a year across industry and households. More than half of the region’s water demand would come from industries in the EEC. What makes this projection more concerning is that the study was published before the boom in data centre investment.
In 2025, the Board of Investment (BOI) approved more than 36 data centre projects, most of them concentrated in eastern Thailand and the EEC. It is hardly surprising that local residents have voiced concerns about how the region’s water resources will be shared. Meanwhile, large-scale projects intended to increase water storage capacity, such as the Khlong Wang Tanot Reservoir, have raised questions about their effects on ecosystems.
There is one point I want to stress: water is a resource for which more supply will never feel like enough. When water becomes more plentiful, its cost falls, encouraging still more use. An irrigation system or reservoir, for instance, may prompt farmers to grow more water-intensive crops or attract another data centre. Water thus remains scarce. The government must weigh residents’ needs, environmental impacts and industrial growth against one another—while remembering that water resources will never be sufficient to meet every demand.
Water thus remains scarce. The government must weigh residents’ needs, environmental impacts and industrial growth against one another—while remembering that water resources will never be sufficient to meet every demand.
El Niño and Its Impact on Energy
At first glance, El Niño may seem to have little direct effect on energy. Look more closely, however, and hot, dry weather affects the sector in two ways.
The first is rising electricity demand. A study found that nighttime electricity demand in Thailand increases by around 300 megawatts for every 1°C rise in temperature. During exceptionally hot April and May nights, when temperatures climb by 3–4°C, electricity demand could therefore rise by close to 1,000 megawatts.
The second factor makes that increase more troubling. Thailand currently imports electricity from dams in Laos equivalent to approximately 10% of its total installed generation capacity. Government agencies often tout the lower costs and lower carbon emissions of hydropower compared with fossil fuels. Yet the last drought showed that the hottest months—when people need electricity most—are also when Lao dams generate the least, because they, too, lack sufficient water.
One study modelled a severe drought in the Mekong Basin and projected that hydropower generation in Laos would fall by 4,000 gigawatt-hours a year. Thailand would then have to use more fossil fuels, increasing carbon emissions by 2.5 million tonnes and costs by around US$120 million—approximately THB 3.95 billion—annually. For now, a drought of this kind would not threaten the security of electricity supply, because our system has more than enough reserve capacity. I am not sure whether that should make us relieved or dismayed: we pay “availability payments” through our electricity bills so that private companies can build power plants and leave them standing idle, at a cost of tens of billions of baht a year.
Equally worrying for the energy sector is Thailand’s insistence on signing contracts and pressing ahead with hydropower dams on the Mekong mainstream. Beyond ecological and environmental damage that is difficult to put a price on, these projects increase risks to Thailand’s electricity security, costs and ability to meet its greenhouse gas reduction targets. Thailand has already signed power purchase agreements for several more dams, including Pak Beng, Pak Lay and Sekong, with a combined capacity of more than 3,000 megawatts.
El Niño’s effects reach across agriculture, industry and energy. Economic development today must therefore take account of a future in which the climate is more volatile and no longer behaves as it once did. A wrong move now could leave the Thai economy more vulnerable for years to come.
