In a Policy Article, Aayushi Mishra and colleagues use Jamaica's experience with 2025's Hurricane Melissa as a case study that reveals how extreme weather and disaster spending can trap climate-vulnerable countries in a cycle of recovery borrowing and underinvestment in future climate resilience. "Jamaica's trajectory from over a decade of hard-won fiscal discipline to a sharp reversal of that progress in a matter of weeks is an urgent signal that institutional frameworks are not keeping pace with a changing climate," write the authors. Climate-vulnerable countries face a dual challenge: maintaining sustainable public debt while investing in protections against increasingly severe extreme weather. Although international financial institutions reward fiscal discipline through favorable credit ratings and lending terms, they offer fewer comparable incentives for investments in climate resilience. This imbalance can create a self-reinforcing cycle in which disasters force underprepared countries to take on additional debt, diverting resources away from future resilience measures and deepening their vulnerability to subsequent climate shocks – a pattern known as a "climate-debt doom loop." What hasn't yet been documented is how the loop unfolds in real time within a single country during a disaster.
Here, Mishra et al. examine this dynamic through Jamaica's experience with Hurricane Melissa in October 2025, which struck just weeks after the country received an upgrade to its sovereign debt rating. After reducing its public debt through years of rigid fiscal restraint, Jamaica faced an estimated US$12.2 billion in storm-related damage, losses, and costs, an amount equivalent to roughly 56.7% of its 2024 GDP. According to the authors, Jamaica's experience with Hurricane Melissa illustrates a self-reinforcing cycle in which heavy debt burdens constrain investment in climate resilience, leaving the country increasingly vulnerable to disasters and dependent on borrowing for recovery. Following Melissa, Jamaica borrowed an estimated US$3.6 billion for recovery, potentially raising its debt-to-GDP ratio to 68.5% and creating future repayment obligations that could further crowd out infrastructure investment. The authors argue that conventional sovereign credit ratings and debt sustainability frameworks inadequately account for physical climate vulnerability, reinforcing incentives to prioritize near-term fiscal targets over preventive investment. Breaking this cycle will require coordinated reforms that integrate climate resilience into financial risk assessments, expand rapid disaster financing, and mobilize private capital alongside public investment to reduce future losses without further undermining debt sustainability.
For reporters interested in research integrity topics, co-author Auroop Ganguly remarks, "when we were writing this paper, we found that a real integrity challenge in this climate-finance research domain is that much of the underlying data (loan terms, disaster-loss assessments, insurance payout mechanisms, etc.) can be behind institutional walls or, in some cases, simply not be disclosed at all. This can make verifying the data difficult; we faced this issue where things like key financing terms for Jamaica's disaster recovery package are still not fully disclosed even after a year post-Hurricane Melissa. We would like to see funders and multilateral institutions to treat disclosure of these terms as standard practice (and not a courtesy), since the public and researchers alike are left to trust conclusions that they can't necessarily check independently."
