Modeling the risks to complex industrial networks due to loss of natural capital

Several recent events in the U.S. have highlighted the criticality and vulnerability of infrastructure systems to sudden shocks such as natural disasters, terrorist attacks, and food shortages. Proper understanding of such disruptive scenarios and their impact using holistic and integrated systems modeling techniques is crucial for effective resource allocation and disaster management. An input-output (IO) based framework is presented for studying the effect of sudden shocks and quantifying the associated risks on complex industrial networks. We are specifically using the IO model to understand the impact of changes in the availability of natural resources including natural capital on industrial systems. This includes understanding the potential impact of loss of services such as pollination, water scarcities, and soil fertility. The utility of the framework is highlighted using two case studies involving loss of pollination services provided by managed honeybees and reduction in the availability of crude oil. The approach is suitable for modeling the effect of sudden perturbations such as resource shortage on the complex industrial systems and identifying industrial sectors with greatest sensitivity to a given perturbation. This work is expected to complement the traditional biophysical models and methods by including the behavior of complex industrial networks under sudden shocks, quantifying the associated risks and support a decision-making framework for risk management.