Governance of PPPs under Climate-Induced Flood Risk: A Bayesian and Bargaining-Based Approach

Shahrzad Tayaran^1*Amin Khoshnoud²Mohammad Ehsanifar²Hossein Mazaheri²

• ¹Islamic Azad University Central Tehran Branch, Tehran, Iran
• ²Islamic Azad University Arak Branch, Arak, Iran

Public–private partnerships (PPPs) are increasingly adopted as mechanisms for financing and delivering critical infrastructure. However, their resilience under climate-induced hazards, particularly floods, remains underexplored. This study develops a hybrid framework that integrates Bayesian network (BN) modeling, Monte Carlo (MC) simulation, and Nash bargaining (NB) to evaluate flood losses and negotiate risk-sharing arrangements in PPP contracts. Using Gonbad-e Kavus, Iran, as a case study, four flood scenarios were analyzed: the 2019 historical flood, and 100- , 1,000-, and 10,000-year return periods. The BN–MC module quantified probabilistic losses across sectors (buildings, agriculture, and infrastructure), capturing both expected damages and associated uncertainties. These results were then embedded in a NB framework, where public and private stakeholders negotiated risk allocations under varying utility preferences. The findings reveal that catastrophic flood scenarios shift a greater share of risks toward the private sector, while sensitivity analysis confirms the robustness of negotiated outcomes against changes in stakeholder utility weights. Validation against the 2019 flood demonstrated close alignment between simulated and observed damages, with error margins below 5%. By linking probabilistic hazard modeling with governance-oriented bargaining, this research provides a novel contribution to PPP resilience studies and offers actionable insights for designing adaptive contracts in flood-prone regions.