New joint-outcome markets: El Niño-Southern Oscillation & Indian Ocean Dipole

As the UK experiences its hottest-ever day in May, CRUCIAL announces markets for the joint outcome between the El Niño-Southern Oscillation and the Indian Ocean Dipole for the coming Sep–Nov, Dec–Feb, Mar–May, and Jun–Aug periods.

The Indian Ocean Dipole (IOD) is one of the most consequential and underappreciated climate phenomena on Earth. The IOD is a periodic oscillation in sea-surface temperature between the western Indian Ocean (near East Africa/Arabia) and the eastern Indian Ocean (near Indonesia). It has two phases: a positive phase (warmer west, cooler east) and a negative phase (the reverse). Each phase triggers radically different regional weather patterns.

The IOD is a structural driver of crop yields, hunger, poverty, disease, displacement, and macroeconomic instability across a region home to billions of people. Its interactions with El Niño/La Niña make forecasting complex, and this is why CRUCIAL brings IOD together with ENSO in a single joint-outcome market.

Positive IOD is associated with increases in rainfall in East Africa and parts of India which can improve food security. But in Southeast Asia it is associated with decreases in rainfall, leading to crop failure, water scarcity, and economic losses.

Meanwhile negative IOD is associated with reduced rainfall in the western Indian Ocean, leading to droughts and crop failures, while increased rainfall in Southeast Asia can benefit agriculture (with the caveat that though excessive precipitation also floods and damages crops). Water resources including river flows and reservoir levels are affected, impacting hydropower generation and irrigation systems.

When a positive IOD and El Niño occur simultaneously, their combined effects amplify extreme weather, leading to severe droughts in regions like the Indo-Pacific and altering global carbon cycles.