Critical Infrastructure failure escalates the macroeconomic impacts of disasters

Abstract

Critical infrastructures (CIs), such as power systems, are vulnerable to disaster-induced disruptions, often resulting in industrial shutdowns and production losses. These disruptions cascade through interregional supply chains, amplifying the economic consequences. Conventional disaster impact assessments often overlook production downtimes caused by CI failures and fail to account for the spatial interdependencies between CIs and economic sectors. This study develops a spatially explicit framework to quantify the macroeconomic impacts of CI failures. Using Zuid-Holland as a case study, we simulate how flood-induced power outages reduce manufacturing output, with the shocks propagating through the wider economy. Within the assumptions of our modelling framework, results indicate that CI failures could amplify the economic impacts by approximately 50%. Sensitivity analyses further reveal that this amplification varies with the degree of interregional substitution (i.e., economic resilience) and the robustness of CI assets, with higher impacts under less resilient conditions. Our findings also underscore the importance of incorporating the systemic economic consequences of CI failures into adaptation planning, alongside physical damages. In the case study, prioritising substations serving sectors with limited interregional substitution capacity yields the largest reductions in impacts. Overall, the proposed framework advances system-level risk assessment and supports effective climate adaptation of CIs.

Published 01 Jul 2026.