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Firm Adaptation in Production Networks: Evidence from Extreme Weather Events in Pakistan

Year: 2026

Type: article

Abstract: This paper considers how far private adaptation may reduce future vulnerability to climate risks. Using data on monthly firm-to-firm transactions from Pakistan, we find that flood-affected firms are more likely to relocate to safer ground, and shift purchases towards suppliers in less flood-prone regions and reached via less flood-prone roads. The results indicate that firms are imperfectly informed about flood risk, and update their beliefs following floods. We quantify aggregate impacts using a spatial model of endogenous production network formation. The findings suggest that firms’ learning will shape the economic impact of increasingly frequent climate-related disasters.

Source: Research Explorer (The University of Manchester)

Authors: Balboni, Clare, Boehm, Johannes, Waseem, Mazhar

Language: English

Topic: Supply Chain Resilience and Risk Management

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Climate action, Industry, innovation and infrastructure

Open Access status: green

OpenAlex ID: W7128104184

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