Quantification of International Trade Network Performance Under Disruptions to Supply, Transportation, and Demand Capacity, and Exchange Rates in Disasters

Both sudden-onset and slow-onset disasters are causing disruptions to global trade, impacting the availability and affordability of commodities from agricultural to mineral ones. In this chapter, we develop a multicommodity international trade network equilibrium model under disaster scenarios with distinct probabilities of the occurrence of the disasters and their impacts on the capacities associated with production, transportation, and consumption. The disaster scenarios can also affect the exchange rates. We state the governing equilibrium conditions and derive the variational inequality formulation in commodity path flow variables and Lagrange multipliers associated with the capacity constraints. For each disaster scenario, we construct an international trade network performance measure, followed by a unified performance measure that includes all the disasters and their probabilities. Robustness is then quantified as the difference between the network performance under no disruptions and the unified performance measure. An international trade network component performance indicator is also given to assess the impacts of the complete removal of trade network supply markets, demand markets, and/or transportation routes. The modeling framework is then illustrated through a series of numerical examples, motivated by Russia’s war on Ukraine. The work is of relevance to decision-makers and policy-makers.