ENSO Economic Propagation Model

Causal‑loop propagation map

Driver → direct → indirect → macro · link width ∝ magnitude
signs & loops follow the CLD

+ same direction − opposite direction R reinforcing loop B balancing loop exogenous mitigator

Direct‑wave damage

Indirect‑wave damage

second‑wave losses & pressures

Damage decomposition

Macroeconomic impacts

deviation from baseline (pp)

Transmission over time

Quarterly path through the event window and recovery

Hazard intensity (index) Food price (Δ%) Headline inflation (%) GDP gap (pp)

Methodology, parameters & sources

The simulation implements the uploaded causal‑loop diagram as a parameterised cascade. An El Niño signal (ONI) is mapped to physical hazards, then to direct losses in five exposed sectors, propagated through seven second‑wave variables, and aggregated into five macro outcomes. Three exogenous mitigators from the CLD are exposed as levers (food‑import buffer, fire suppression & peat restoration, fiscal headroom), and three feedback loops are represented: R1 demand–employment (reinforcing), R2 fiscal strain (reinforcing) and B1 safety net (balancing). Calibrated to Indonesia and to published anchors for recent very‑strong events; every coefficient is an illustrative estimate for scenario exploration, not a forecast.

Two measures are reported separately. Total economic damage is a welfare/cost concept comparable to the World Bank's accounting of the 2015 fires (1.9% of GDP). The GDP growth‑rate impact is a smaller flow concept, because most haze cost is asset and health loss rather than measured output contraction.

Feedback loops

R1 · demand–employment. Weaker household demand reduces employment, which lowers income, which further weakens demand — applied as a closed‑form reinforcing amplification of the demand drag.
R2 · fiscal strain. Relief and lost revenue widen the deficit, drawing down fiscal headroom.
B1 · safety net. Relief and subsidies cushion demand and pull the poverty headcount back down.

Key parameters

Parameter	Value	Basis
Nominal GDP base	≈ IDR 22,000 tn / USD 1.37 tn	2024 nominal, BPS
CPI food & beverage weight	25%	BPS CPI basket (2022 base)
BI inflation target	2.5% ± 1%	PMK 31/2024
Food‑crop damage @ ONI 2.0	≈ 10% of GVA	ISEAS 2023; USDA‑FAS
Fire & haze damage @ ONI 2.4	≈ 1.9% of GDP	World Bank 2016 ($16.1 bn)
Food demand elasticity	0.45	inelastic staple
R1 demand–employment gain	0.30	illustrative
Output multipliers (type II)	1.5 – 1.8	IO‑table range

Selected sources

Cashin, P., K. Mohaddes, and M. Raissi, 2017, "Fair weather or foul? The macroeconomic effects of El Niño," Journal of International Economics, 106, pp. 37–54.
Callahan, C.W. and J.S. Mankin, 2023, "Persistent effect of El Niño on global economic growth," Science, 380 (6649), pp. 1064–1069.
Glauber, A. and I. Gunawan et al., 2016, The Cost of Fire: An Economic Analysis of Indonesia's 2015 Fire Crisis, World Bank, Jakarta.
Ludher, E. and P. Teng, 2023, "Rice production and food security in Southeast Asia under threat from El Niño," ISEAS Perspective, 2023/53.
Bank Indonesia, 2025, "Inflation target and CPI disaggregation," bi.go.id; BPS‑Statistics Indonesia.

For research and scenario discussion only. Coefficients are illustrative and should be recalibrated against an input–output table and event‑level data before use in published work. Not investment, fiscal or policy advice.