Puerto Rico’s business community is confronting escalating financial losses as drought conditions and rolling power outages disrupt daily operations across the island.
Ramón Barquín, president of the Centro Unido de Detallistas (CUD), warned this week that the combined impact on commerce, industry, hospitality and households has reached up to $80 million per day, a figure he says reflects the compounding strain on the island’s economic base.
“It’s between $36 million and $44 million currently. We are probably looking at an impact of about $80 million on the entire daily economy,” he said, noting that losses have doubled since the early stages of the crisis, when CUD first estimated the toll to small and midsize businesses at roughly $20 million a day.
Barquín emphasized that micro, small and mid-sized businesses, the backbone of Puerto Rico’s commercial ecosystem and CUD’s core membership, are suffering the most severe disruptions. Water shortages and power instability have forced closures, damaged inventory, interrupted supply chains and increased operating costs.
A drought that broke a 120-year record
The numbers behind Barquín’s warning are grounded in a drought that officials describe as historic. July 2026 was San Juan’s driest July in more than 120 years of recordkeeping, and roughly a quarter of the island was under severe drought conditions by late summer, with more than a third more classified as moderate.
Gov. Jenniffer González declared a state of emergency in late July and activated the National Guard to distribute water as the Carraízo reservoir, one of the main sources for the San Juan metro area, fell to critically low levels.
Water rationing began Aug. 7 for more than 180,000 customers, who have been placed on alternating schedules that cut service for 48 hours at a time across San Juan, Carolina, Juncos, Gurabo, Trujillo Alto, Canóvanas and Loíza, among other municipalities. Some business owners have reported paying up to $700 a day for trucked-in water just to keep operating.
While he acknowledged that drought conditions are not the government’s fault, Barquín questioned whether mitigation efforts have been sufficient to protect the island’s economic stability at a moment when global conditions are poised to worsen.
His skepticism has a documented basis: Puerto Rico’s water authority has said roughly 65% of the water it produces is lost or goes unbilled, largely through leaks in aging pipes, meaning the current shortage is compounding an infrastructure problem that predates this year’s drought rather than one the drought created on its own.
A historic El Niño taking shape
The local crisis is unfolding amid a projected “Super El Niño,” which global analysts warn could reshape supply chains and intensify economic volatility through 2027.
NOAA’s Climate Prediction Center forecasts a greater than 90% chance of a very strong El Niño this year, with a 69% likelihood that it will exceed every event on record dating back to 1950.
Past events have caused trillions of dollars in damage, and the upcoming cycle is expected to strain energy markets, agricultural production and maritime logistics worldwide.
Morgan Stanley Research has warned that El Niño’s reach will extend across asset classes globally. Copper production could face significant disruptions, with Chile’s mining infrastructure vulnerable to flooding and Zambia’s hydropower-dependent output threatened by drought. In sovereign credit markets, the firm expects uneven impacts across Latin America and Africa, where droughts could damage agriculture and hydropower while heavy rain threatens infrastructure.
Higher food prices add inflationary risk, leaving countries with weaker fiscal buffers, such as Ecuador, Mozambique, Zambia, Colombia, Costa Rica and Peru, more exposed, while Chile, Uruguay and Argentina could benefit from improved harvest conditions.
Local interest rates in Brazil, Colombia and Peru may face upward pressure as food-price shocks ripple through inflation, potentially delaying monetary easing cycles. Currency markets across Latin America could become more volatile as higher inflation and interest rates support local currencies, even as weaker growth and uncertainty weigh on them.
Equity impacts will vary widely: sugar producers and agricultural-input suppliers may benefit from higher soft-commodity prices, as could the Latin American power sector and large U.S. food retailers. But companies dependent on higher-priced crops, including Brazilian chicken and protein producers, could face margin pressure.
Compounding pressures
These global dynamics compound Puerto Rico’s vulnerabilities. El Niño-driven weather shifts are expected to disrupt global shipping routes, increase fuel costs, and force vessels to navigate more storms in the Pacific.
The Panama Canal, already strained by drought during the 2023-24 cycle, remains susceptible to reduced water levels, which could again trigger weight limits and surcharges. Energy markets, already destabilized since February by the U.S.-Israel military conflict with Iran and Iran’s subsequent closure of the Strait of Hormuz, the chokepoint for roughly a fifth of the world’s oil trade, may face further price spikes if weather-related disruptions hit production or transport routes on top of an already-tight market.
Food commodities such as rice, maize and wheat are projected to face additional pressure as drought and extreme heat intensify across Asia, Australia and parts of Europe.
For Puerto Rico, these global pressures arrive at a moment of domestic fragility. Barquín’s estimate of $80 million in daily losses underscores how climate-driven disruptions, whether local or global, can rapidly destabilize small economies.
His remarks reflect a broader concern that Puerto Rico’s infrastructure, regulatory environment and supply chains are not prepared for the scale of shocks forecasted for the coming year.
As businesses worldwide brace for the Super El Niño’s impact, Puerto Rico’s experience offers an early warning: local instability is no longer a contained problem but part of a larger pattern of climate-driven economic strain.
The challenge for the island’s private sector and policymakers is to stabilize essential services before global conditions tighten further. The convergence of local drought, power instability and global El Niño-related disruptions suggests that resilience planning is no longer optional. It is the only path forward as Puerto Rico enters a year defined by cascading climate and economic risks.
