Trelawney Parish sits in a rural, agricultural region of Western Jamaica that borders the country’s largest contiguous rainforest. Under normal circumstances, the parish is relentlessly green — covered in lush vegetation and long rows of orange trees — but the aftermath of Hurricane Melissa has “almost completely annihilated” the area, according to firefighter Ronell Hamilton. “Everything here is brown right now. It looks like California.”

The strongest storm to strike Jamaica in recorded history, Melissa arrived on the island last week as a Category 5 storm with wind speeds of 185 miles per hour. As of press time, at least 67 people had been killed — 32 in Jamaica, 34 from flooding in Haiti, and one in the Dominican Republic — and thousands of homes have been flattened. In Black River, a coastal community south of Trelawney that is being called the storm’s epicenter, an estimated 90 percent of structures were destroyed. Thirty miles north, in Wakefield, Hamilton says that even buildings built to serve as hurricane shelters, such as the school and the fire station, were severely damaged.

Climate change is making monster storms like Melissa more powerful by supercharging the meteorological elements in which they thrive: Warming ocean waters feed hurricanes, as does warming air. Studies have shown that the atmosphere can hold 7 percent more moisture for every 1 degree Celsius of warming. Elevated wind speeds allow storms to carry more moisture as well, leaving devastating flooding in their wake. A rapid analysis from Imperial College London found that climate change made a massive storm like Melissa 4 times more likely. Another report from the research group World Weather Attribution found that it increased wind speeds by 11 percent and rainfall by 16 percent relative to a world without global warming.

Early estimates indicate the storm may have caused up to $4 billion in insured losses and about $7 billion total in Jamaica alone. Much of the country is still without electricity or cell phone service and many roads remain impassable, so the full extent of the destruction has yet to be evaluated.

As wrenching as the storm has been, Jamaica is well aware of its vulnerabilities in a warming world and has spent decades carefully planning for just this kind of a scenario. As a result, it’s in a unique position to secure many of the resources it needs for its recovery. The country has built up a multi-layered system of financial protection since Hurricane Gilbert hit in 1988 and, experts say, its response could serve as a model for other island nations looking to build secure financial infrastructure that will ensure they can respond to disasters quickly.

At the center of this system is a $150 million “catastrophe bond,” which the country first issued to investors in 2021 and renewed last year. It will now be paid out in full to help support the country’s recovery. Catastrophe bonds appeal to investors because they offer a high reward in the form of elevated interest rates, in exchange for high risk — namely, the risk that the catastrophe will occur and trigger a monster payout from the investors. The bonds are generally set to expire in three to five years. If no disaster occurs during that period, the investors recover their initial investment as well as the exorbitant interest it has accrued. But if a storm does hit, all of the money goes to the affected country.

These bonds are attractive to buyers because they’re totally disconnected from the rest of the financial market; during the Great Recession that began in 2008, for example, catastrophe bonds became a popular financial instrument because they were still producing high yields even as benchmark interest rates were nearly 0 percent. And if all goes well, they can be enormously lucrative. They’re attractive to countries like Jamaica, because they can be triggered according to parametric standards, meaning once a storm hits a predefined limit, such as central pressure at or below 900 millibars, the money is automatically released.

The catastrophe bond market has been growing since Hurricane Andrew hit Florida in 1992. At the time, it was the most expensive natural disaster in U.S. history, and insurance proved unable to cover the full cost of the storm. “The idea was to then put some of that risk into the financial markets,” said Carolyn Kousky, associate vice president for economics and policy at the Environmental Defense Fund. Jamaica is unique, said Kousky, because it has “made this really beautiful stack [of financing tools] to cover disasters.”

In addition to the catastrophe bond, the country has built up its own emergency contingency budget, taken out parametric insurance with the Caribbean Catastrophe Risk Insurance Facility, or CCRIF, and prearranged for a credit line in case of emergencies. (The CCRIF policy pays out rapidly for a range of types of hurricane damage, whereas the catastrophe bond is only triggered by the most extreme storms.) This level of planning, said Kousky, grew out of a “growing recognition that relying on disaster aid is not a great strategy, because disaster aid often takes a long time to get to countries and can sometimes be ill matched to need.” A steady stream of pre-secured cash can help vulnerable nations better navigate these kinds of horrific events.

“The question is whether this would be available again,” said Sara Jane Ahmed, the managing director and finance advisor to the V20 Ministers of Finance, which represent the world’s most climate-vulnerable economies, who warned that a payout so large could scare off financial interests. Ahmed added that rebuilding with more resilient infrastructure could help make a new bond more appealing.

Investing in catastrophe bonds is essentially playing Russian Roulette with air pressure — even a storm as strong as Hurricane Beryl, which made landfall near Jamaica last year as a Category 4, did not quite meet the threshold for a payout. And as climate change causes storms to grow stronger, investors could shy away from catastrophe bonds or insist on even higher interest rates and more stringent metrics for a payout.

“People are looking for a silver bullet for all these things and everything has a tradeoff,” said Jeff Schlegelmilch, director of Columbia University’s National Center for Disaster Preparedness.

“The biggest problem with catastrophe bonds is that they come after the disaster, not before, to prevent it from happening, [which] is where the money is needed most,” he said, pointing to infrastructure upgrades, seawalls, and other hurricane-proofing measures as areas where catastrophe bond investors could also support adaptation efforts before the storm — and reduce their own risk of a bond payout in the process. “If these same companies are investing in catastrophe bonds, and they don’t want to see the payouts, then better investment in preventing the disaster to begin with is the best way to kind of protect that investment. We need it on all sides.”

The question of how to pull investors into the adaptation market is “an ongoing challenge,” said Kousky. “When you invest in climate adaptation and risk reduction … you’re reducing future losses, but avoided losses are not really a cash flow.”

Tweaking catastrophe bonds to direct a small amount of their interest back to the issuing state or country could offer one solution. On Oak Island in North Carolina, for example, the North Carolina Insurance Underwriting Association has sponsored a catastrophe bond that includes a resilience feature. When no catastrophe strikes and investors collect their yearly returns, a portion of their profits are put towards funding home hardening upgrades, like hurricane-fortified roofs.

“We’re always going to have disasters,” said Schlegelmilch. “But they don’t have to be as bad as they are.”

How Jamaica’s recovery will play out on the ground remains to be seen. The damages look like they will exceed even the country’s carefully planned financial safety net. A week after the storm, “there’s still no electricity, still no water,” said Hamilton, the firefighter in Trelawney Parish. “Food is running out.”

Editor’s note: The Environmental Defense Fund is an advertiser with Grist. Advertisers have no role in Grist’s editorial decisions.

This story was originally published by Grist with the headline After Hurricane Melissa, Jamaica’s climate resilience plan faces its biggest test yet on Nov 7, 2025.

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