A high resolution input–output model to assess the economic impact of floods

Abstract

The frequency and intensity of extreme weather events are rising due to global warming. Beyond damaging physical assets, these events can cause substantial economic losses through business interruptions and cascading shocks across production networks. The paper introduces a computational inter-regional input–output framework to assess the economic impacts of river floods in Italy. The model leverages a georeferenced database of productive plants built from the ASIA-local units database. By aligning plant coordinates with inundation maps, it enhances the identification of affected units, their associated water depth, and the shock caused to sectors’ productive capacity. To demonstrate the utility of this approach, we apply it to the major flood event that struck Emilia-Romagna in May 2023, quantifying both direct and indirect economic losses from business interruptions across sectoral, regional, and national levels.