Everybody are told El Niņo messes the weather up, but clear understanding of the actual phenomena is a different question. Truth defeats guess work or rumors; let begin first discussing the definition of El Niņo and its history.
El Niņo refers to the "warm phase" of the El Niņo - Southern Oscillation (ENSO). In order to understand El Niņo, one must first know what is the Walker Circulation.
Most people probably know ocean water is colder in the poles and warmer in the tropics, but there is also an east-west difference in ocean temperature. On the east coast of major continents, warm ocean water moves away from the tropics toward the pole (the Gulf Stream, Kuroshio Current, etc.). On the west coast of continents, a combination of upwelling of cold ocean water from the deep ocean and transportation of colder polar ocean water to the tropics makes ocean water along the west coast of continents to be colder. Ocean water along the coast of China and Japan, or North Carolina and Virginia, are warmer than ocean water off the coast of Portugal or California. Ocean water is warmer near Indonesia than the ocean water off the cast of Peru, Chile and Ecuador. The east-west difference of ocean water temperature leads to a difference of sea level air pressure between eastern and western edge of major oceans.
The pole-equator and east-west difference in temperature/pressure difference cause surface easterly wind (the Trades) in the tropical oceans. 30000 feet above sea level (where jet aircrafts fly), westerly wind dominates to compensate the surface easterly. Associated with the surface easterly wind is a "piling up" of ocean water on the west side of major oceans. The ocean water level in Indonesia is higher than in the coast of Peru. We call this east-west wind in the tropics to be the Walker Circulation. An illustration of this east-west wind in tropics are shown in the figure below.
The Trades exists only in the Pacific and the Atlantic. In the Indian Ocean, the Asian monsoon governs the wind direction seasonally. Instead of a constant easterly wind, wind is either southerly during boreal summer (April-October) and northerly during boreal winter (November-March). This is caused by seasonally oscillation of the temperature in the Tibet and Australia.

The difference in sea surface temperature/ocean sea level across the major ocean is not constant, nor the easterly Trades has the same strength all the time... This is where El Niņo (and its reversal - La Niņa) kicks in.
We will first start with from the historical aspect of El Niņo... Sir Gilbert Walker (who the Walker Circulation is named after) works for the British Empire in India during early 20th century notices the rainfall during Indian summer monsoon varies from year to year, so he decide to determine the reason behind it. Ability to predict Indian rainfall is critical for the crops in India. At Sir Walker's time, statisticians just discovered the idea of a "correlation". A correlation is a way to show how the changes/variability of two variables can be linked together (if such a link exists). Sir Walker found that the temperature of ocean water off the coast of Peru is "negatively correlated" with Indian rainfall; in other words, when ever ocean water is colder than normal there is more rain in India, vice versa...
Fishermen in Peru notices that there is a oscillation of ocean water temperature in a cycle of every 2-6 years (which affects fishery, as certain fish species prefer certain range of sea surface temperature. Since both warm and cool sea surface temperature extremes peak around Christmas, the cycle is called "The Child" (El Niņo (warm) and La Niņa (cold)).
When the ocean water is warmer than normal in the tropical East Pacific, the difference of temperature and pressure across the Pacific Ocean is decreased. This weakens the Easterly Trade. Rainfall is less than normal in the West Pacific, and rainfall in Central and Eastern Pacific increases. Forest fire in Southeast Asia in the last decade has been associated with droughts brought by El Niņo. Sea level in East Pacific will also be higher than normal, and sea level in West Pacific is lower than normal.
La Niņa is the opposite. The Easterly Trades are stronger than normal, and the East Pacific experiences drier weather.
It is now thought that El Niņo and La Niņa are not strictly as an ocean or atmosphere phenomena, but they are combination of both. Ocean modulates the atmosphere, and the atmosphere changes the ocean. Such large scale ocean-air interaction can also be seen in the Arctic and the North Atlantic; they are known to be the Arctic Oscillation (AO), and North Atlantic Oscillation (NAO).
El Niņo / La Niņa effects weather and climate in the tropical Pacific directly. I will split the discussion into 2 sections; one is general atmosphere effects (wind, temperature), and two is effects in extreme weather/climate events.
General Atmosphere effects during El Niņo (ENSO warm phase)
1) Generally weaker easterly wind in the Trade Wind areas (eastward from 160E).
2) Wetter-than-average (more rainfall) conditions are observed in the Eastern Pacific and the west coastal of the tropical South America.
3) Warmer-than average conditions (positive temperature anomalies) are observed in the Eastern Pacific and the west coastal of the tropical South America.
4) Drier-than-average and cooler-than-average conditions are observed in the Western Pacific and Southeast Asia.
Changes in extreme weather/climate events during ENSO warm phase
1) Drier-than-average conditions may lead to drought in Southeast Asia may lead to crop failures and increase chance major forest fires in the tropical rainforest in the area. Further information about this can be found in the Indonesian government's Integrated Forest Fire Management Project.
2) Area of peak tropical cyclone activity moves eastward away from Asia (Evans and Allan 1992, Chan 1985). Conditions for tropical cyclone genesis may become more favorable (Gray 1968) eastward due to increase of SST (sea surface temperatures) in Central and East Pacific.
Chan, J., 1985: Tropical cyclone activity in the northwest Pacific in relation to the El Niņo/Southern Oscillation phenomenon. Mon. Wea. Rev., 113, 599-606.
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