Journal of Climate Change and Pollution

ABSTRACT

Background

Extended electricity blackouts cripple digital payment systems, yet small and medium enterprises (SMEs) rarely maintain cash‑based contingency plans. Prior studies lack behavioral realism, empirical calibration, and comparative benchmarks. 

Methods

We develop a discrete‑event simulation calibrated to World Bank Enterprise Survey data (Nigeria and India, n=2,400 SMEs) and structured expert elicitation (n=3). Four business continuity models are compared: (1) digital‑dependent, (2) cash‑first (pre‑positioned cash + manual ledgers), (3) hybrid (small generator + cash buffer), (4) mobile money offline mode. The model incorporates: stochastic buffer‑stock inventory theory for cash, M/M/1 queueing for manual transactions, Markov outage process, adaptive customer cash preference (increasing with blackout duration), theft risk, inflation‑adjusted holding costs, and banking withdrawal limits. Sobol sensitivity indices and scenario dominance ranking quantify uncertainty. 

Results

Under a 7‑day blackout, revenue retention (median, 95% CI) is: digital‑dependent 11% (7–16%), mobile money offline 34% (27–41%), cash‑first 63% (55–70%), hybrid 71% (64–77%). Cash‑first requires a reserve of 4.2× daily revenue (calibrated optimum). The hybrid model dominates for blackouts 3–10 days but requires generator fuel availability. Sobol analysis shows cash reserve level and customer cash preference explain 68% of variance. 

Conclusion

Cash‑first and hybrid models substantially improve SME continuity during extended blackouts. Policy recommendations include: threshold‑activated liquidity subsidies (≥72h blackout), central bank emergency cash schemes, and insurance‑linked cash reserve instruments.

Keywords: Business Continuity; Electricity Blackout; Cash‑Based Operations; SME Resilience; Simulation; Sobol Sensitivity