The climate shift which could shape New Zealand’s risk for decades
Thursday, 16 July 2026
James Knight is the head of view of risk advisory for Asia Pacific at global professional services firm Aon.
OPINION: We’ve all seen the headlines. El Niño is back.
On July 2, Earth Sciences New Zealand confirmed that El Niño conditions had developed in the tropical Pacific, with forecasts suggesting the event could become one of the strongest on record and influence New Zealand’s weather into 2027.
The questions came quickly. What will this mean for rainfall? Will drought conditions worsen? Will summers become hotter and drier? What does it mean for farms, businesses, communities and households planning for the years ahead?
Those questions matter. But another climate pattern sits behind El Niño and La Niña that receives far less attention, despite potentially having a much greater influence on long-term decision-making: the Pacific Decadal Oscillation (PDO).
Think of El Niño and La Niña as individual waves. The PDO is the slowly moving tide beneath them, shifting from cool (negative) to warm (positive) phases every 20 to 30 years.
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This distinction matters because there is a fundamental difference between asking, “what might the next season bring?” and asking, “what climate conditions are we likely to be planning for over the next decade?”.
Since around 1998, the PDO has broadly been in a La Niña-like cool (negative) phase. That background state helped reinforce the rare triple-dip La Niña we experienced between 2020 and 2023 (three consecutive years of La Niña conditions).
Analyses of past Pacific climate transitions suggest that extended La Niña periods like this often occur around the time the longer-term PDO state shifts. Both historical records and decadal prediction modelling indicate the Pacific may now be transitioning towards a more El Niño-like phase.
This does not mean every year ahead will be an El Niño year, or that we can predict climate phases with certainty. Understanding changes in the PDO remains a complex and emerging area of climate science.
However, it suggests that the underlying conditions influencing New Zealand’s weather may be changing.
If that shift occurs, the implications could be significant.
El Niño years typically bring stronger westerly winds to New Zealand. For northern and eastern parts of the country, that has historically meant drier conditions, bringing with it a heightened risk of drought, water stress and wildfire-prone conditions. For western regions, particularly the West Coast and the lower South Island, it has meant wetter conditions and an increased threat of flooding.
For households, businesses and governments, the key question is not whether next summer will be dry or wet, but whether the climate backdrop shaping long-term decisions is changing.
The choices we make today – including where we build homes, how we manage water, what infrastructure we invest in, how we protect assets and how we prepare for disruption – are shaped by our assumptions about future climate conditions.
New Zealand has already seen how quickly prolonged dry conditions can translate into real-world costs. The 2007/08 drought, one of the country’s worst on record, is estimated to have cost the New Zealand economy around $2.8 billion, with significant impacts on agricultural production, farm incomes and regional economies.
These swings highlight a key challenge: climate risk is not linear. Quiet years do not mean risk has disappeared, and extreme years can arrive with significant consequences.
The implications reach every part of society. Farmers make decisions about land use and water availability. Businesses assess supply chains, assets and continuity plans. Councils plan infrastructure with lifespans measured in generations. Energy providers consider future reliability and supply. Insurers work to understand how changing climate patterns interact with growing concentrations of risk.
The lesson is that resilience comes from understanding the forces shaping risk and preparing for a range of possible futures.
Whether or not the Pacific is entering a new longer-term climate state, organisations, communities and individuals that consider both short- and long-term climate variability, alongside future climate projections, will be better positioned to adapt to what comes next.