Cascading failures of index insurance, cooperation, and levees in coastal Bangladesh: agent-based modeling and global sensitivity analysis for stochastic models

Physical infrastructure and institution safeguard farmers from flooding in coastal Bangladesh in a interconnected way. In this region, crops are protected from flooding by levees, a form of physical infrastructure. These levees are maintained by self-organized cooperations, an informal institution. We also test counterfactual dynamics of index insurance, a formal institution. With interconnections of multiple components, it is difficult to understand the complex landscape of sustainability for successful policymaking. To address the gap, we develop a spatially-explicit agent-based model with interconnected components in the coastal Bangladesh to capture how farmer's strategic decisions on insurance participation and cooperation evolve. In the model, we define "sustainable" cases when (i) most farmers participate in index insurance and cooperate for levee maintenance, (ii) levee is kept nearly at the targeted level, and (iii) insurance agencies do not fall into debts. Our model shows that the coupled system is sustainable in a restricted combination of target levee and insurance index levels. More interestingly, we find a diverse versions of cascading failures between index insurance, cooperation, and levees. We then use global sensitivity analysis modified for stochastic models to capture both deterministic and stochastic contributions of inputs on uncertainties of system being sustainable. Ultimately, this study establishes a novel framework of capturing and analyzing cascading failures to fully understand complex human-water interplays, supporting a better design of climate adaptation policies against climate change.