Disasters and debt. Escaping the 'climate-debt doom loop'

Disasters and debt. Escaping the 'climate-debt doom loop' Gaby Clark Scientific Editor Andrew Zinin Chief Editor It took around 480,000 trucks to haul away 4.8 million metric tons (5.3 million tons) of rubble across western Jamaica after Hurricane Melissa tore through the Caribbean in 2025, United Nations satellites showed. The strongest hurricane on record in Jamaica, the Category 5 storm flooded plantain farms, blew the roofs off 120,000 homes and knocked out power across much of the island. The Planning Institute of Jamaica put the cost of damage and losses at up to $12.2 billion—56.7% of the country's 2024 gross domestic product, or GDP. But disaster insurance and catastrophe bond payouts covered only around 2%, according to a recent Science analysis by Northeastern civil and environmental engineering professor Auroop R. Ganguly, Northeastern College of Engineering graduate student Aayushi Mishra and their colleagues. Jamaica became a poster child for financial responsibility after spending a decade digging its way out of debt, but the reputation meant nothing when the storm left it in desperate need of more funds—and a brand-new mountain of loans to repay, the analysis found. Countries along the Atlantic coast from the Caribbean to the Middle Americas are facing the same problem. So are parts of Asia. "It could be wildfires, could be floods, could be any kind of impact that would need debt for its recovery," Mishra said. Even earthquakes or cyberattacks count, since they have similar implications for infrastructure, Ganguly said. The researchers suggest a four-pronged solution for escaping from this vicious cycle, known as the climate debt doom loop. It calls for tweaking current financing, repayment and insurance policies to allow countries to invest in their own resilience. Ultimately, "the point isn't to just keep getting bigger and bigger insurance coverage," Mishra said. "It's to rethink the system that keeps countries trapped." Just over a month before Melissa struck, the credit rating company Standard and Poor's upgraded Jamaica's rating, recognizing the years it kept spending in check while consistently chipping away at its debt bills. "They cut their debt down in half in just 10 years, which is unheard of," Mishra said. It took mere hours for that progress to get swept away. Three mechanisms drive the doom loop, the researchers argue. First, countries feel pressured to pay off debt instead of building drainage systems, coastal barriers and other defenses. Nations that keep up with repayments stay in good standing with lenders, such as the International Monetary Fund (IMF), which supports countries around the world. To preserve access to affordable loans, governments feel pressure to put debt payments first. As a result, storm protection takes a back seat, the researchers found. In 2024–2025, Jamaica set aside around $3.15 billion for debt payments—roughly six times the $510 million devoted to construction and infrastructure upgrades, according to the Science analysis. The obstacles aren't just financial, said Daniel Clarke, executive director of the Centre for Disaster Protection, a political advisory organization that helps governments around the world. Preparation can be a tough sell to voters, he said. "Politicians get credit for responding to disasters, but rarely win votes for spending on ones that haven't happened," Clarke explained, adding that as risks rise, the costs of disasters do, too. "You can pay up front, by reducing risk and preparing financially, or gamble that disaster won't strike. Pay now or pay later, but you will pay," he said. Moreover, insurance payouts barely scratch the surface of recovery costs. Countries borrow to cover the rest. As new debt payments loom large, countries are left cash-strapped as they try to prepare for the next storm. "The experience of Hurricane Melissa reinforces the need to look at resilience more broadly," Theresa Rodriguez-Moodie, chief executive officer of the Jamaica Environment Trust, an environmental nonprofit based in Kingston, told Northeastern Global News. Instead of simply rebuilding, the goal should be making the country less vulnerable to future disasters. So, how can countries break out of the cycle? The first reform Ganguly and his colleagues propose goes straight to the root—how the IMF decides whether a country can manage its debt. Accounting for the money for disaster preparation would get the ball rolling while setting an example for credit agencies that treat the IMF's assessments as the gold standard, Mishra said. In fact, experts mentioned that this change is already underway, with the IMF now including adaptation and resilience in its calculations of how much a country can borrow. The IMF began rolling out new debt assessment models that gave disaster preparation more credit back in 2022. Its updated 2025 guidance reinforced that approach for countries seeking resilience loans. More changes are in the pipeline—tools approved by the IMF and World Bank in September 2026 will potentially give low-income countries more room to invest in protection against storms. Next, the team wants countries to be allowed to tap an expanded but unused IMF trust that frees up money for food and water after disasters, Mishra said. The researchers' third proposed reform would write debt pauses into loan agreements, stopping the clock on payments if a disaster strikes. Finally, Ganguly and his colleagues want disaster insurance to account for how vulnerable people are to damage. Some policies base payments on measurements such as wind speed and rainfall, but the same storm can hit communities differently. Homes below sea level, for example, face greater danger from flooding, Ganguly said. Straight-up debt cancellation is another option, according to several experts, including Teresa Anderson, global lead on climate justice at ActionAid International, an international federation focused on fighting poverty. "Debt cancellation could go a long way in at least letting climate-hit countries use their own resources to cope with climate impacts," Anderson said, meaning that money earmarked for loan repayments could instead fund storm defenses and disaster recovery. "It really could be the secret ingredient for climate justice." All in all, it's clear that these financial systems haven't evolved with the times. "These debt frameworks are increasingly outdated," Mishra said. "They didn't anticipate having such frequent and intensified disasters happening every year." The elephant in the room is climate change—part of the reason why these disasters have become so frequent in the first place, experts noted. As Anderson mentioned, 93.5% of the countries most vulnerable to climate change are also in the financial hot seat, having to spend as much as two-thirds of their revenue on repaying debts despite desperately wanting to invest in climate action. "So the climate crisis is pushing countries into debt, but the debt crisis is leaving them more exposed to climate change," she said. "It's a toxic relationship in which the two crises are supercharging each other." Rodriguez-Moodie supported the measures suggested by Ganguly's team but suggested expanding the idea of resilience beyond concrete and steel to include protection for the natural environment. "Jamaica's natural ecosystems, including forests, wetlands, coral reefs and coastal ecosystems, provide important protection against extreme weather," she said. Publication details Aayushi Mishra et al., Fiscal discipline without physical resilience, Science (2026). DOI: 10.1126/science.aeh3608 Journal information: Science Provided by Northeastern University This story is republished courtesy of Northeastern Global News news.northeastern.edu.