Estimation of cascading hydroclimatic hazard impacts on supply systems and associated economic shocks

This study combined hydroclimatic hazard impact and supply-driven input-output models to develop an integrated approach for estimating the cascading impacts on food, electricity, and water supplies associated with drought, flood, and heatwave hazards. This is of concern as emerging systemic risk, driven by climate extremes and societal vulnerabilities, are causing considerable damage to supply systems and overall economies. The use of impact modelling can thus estimate the adverse effects of hydrocliamtic hazards, and identify key sectors with the greatest losses.

The case study chosen was Sweden. The national-level results for Sweden indicate moderate to strong associations between annual supply variables and monthly climate indices (0.39 ≤ R² ≤ 0.62) at municipal units. Economic modeling revealed losses in key sectors, such as agriculture, energy, and insurance. In total, hydroclimatic hazards between 2005 and 2022 cost Sweden €8.4 billion in agriculture, electricity, and insurance damages. Of this total, flood-related damage represented the largest share, totalling €4.1 billion, followed by drought-induced supply shortages (€2.9 billion), and heatwave impacts (€2.3 billion).