English

Modelling Cascading Physical Climate Risk in Supply Chains with Adaptive Firms: A Spatial Agent-Based Framework

Artificial Intelligence 2026-04-08 v4 Risk Management

Abstract

We present an open-source Python framework for modelling cascading physical climate risk in a spatial supply-chain economy. The framework integrates geospatial flood hazards with an agent-based model of firms and households, enabling simulation of both direct asset losses and indirect disruptions propagated through economic networks. Firms adapt endogenously through two channels: capital hardening, which reduces direct damage, and backup-supplier search, which mitigates input disruptions. In an illustrative global network, capital hardening reduces direct losses by 26%, while backup-supplier search reduces supplier disruption by 48%, with both partially stabilizing production and consumption. Notably, firms that are never directly flooded still bear a substantial share of disruption, highlighting the importance of indirect cascade effects. The framework provides a reproducible platform for analyzing systemic physical climate risk and adaptation in economic networks.

Keywords

Cite

@article{arxiv.2509.18633,
  title  = {Modelling Cascading Physical Climate Risk in Supply Chains with Adaptive Firms: A Spatial Agent-Based Framework},
  author = {Yara Mohajerani},
  journal= {arXiv preprint arXiv:2509.18633},
  year   = {2026}
}

Comments

V1 presented at NeurIPS 2025 Tackling Climate Change with Machine Learning workshop. V4 replaces evolutionary learning with explicit firm continuity adaptation, adds stock-flow consistency, matched-seed ensembles, cascade diagnostics, and internal validations. Code: https://github.com/yaramohajerani/spatial-climate-ABM

R2 v1 2026-07-01T05:51:25.358Z