Its impact on the economy will depend on whether it leads to drought conditions and, if so, where the drought hits and how long it lasts. A prolonged drought would lower agricultural production and reduce farm incomes. New Zealand’s last major El Nino occurred in 1997, and like the 2013 drought, reduced GDP by around ¾ percent.
Farming patterns however, have changed considerably since the 1997 El Nino event. Since 1996, the dairy herd has increased by 61 percent, while sheep and beef numbers have fallen by 37 percent and 24 percent respectively. Dairy numbers have expanded in Canterbury, Southland, Waikato and Otago with much of the growth in Canterbury facilitated by extensive investment in irrigation.