Propagation of climate extremes across global value chains

This paper presents a theoretical frame relying on the graph theory for assessing extreme weather events relative damage to global value chains. 
The approach is defined in three steps: the first part of the paper presents the intuition inspiring the defined model and associated theory , the second part is focused on a scenario analysis declining extreme events relative severity by countries, the third part leverages on the graph theory to translate the damages associated to these events into macro-sectorial value chains disruptions. A numerical application is then run by estimating drought global damages.
We consider damage as a score based on extreme events occurrence, calibrated in this article with historical data. Using the graph theory, we incorporate these damages to a network of countries moving from a stationary state of constant flows before a distribution of extreme events, to a modified state considering the extreme events occurrence. The spread of these production damages is modeled as a contagion applied to a network representing intermediate consumption financial flows, to assess the cumulative effect of a damage to value chains.