Central Asia's Cat Bond Debut, Shutdown's End Replenishes FEMA Disaster Fund, AI Weather Models Lag Physics-Based Peers, and More

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The Asian Development Bank (ADB) priced two US$80mn catastrophe bonds for the Kyrgyz Republic and Tajikistan, designed to pay out in the event of a major flood or earthquake event.

The three-year debt instruments represent the first sovereign disaster relief bonds arranged by the ADB as part of its Risk-Layered Disaster Relief Finance Program, which structures financing across different disaster severities. Each carries a coupon more than 600 basis points greater than a benchmark interest rate and matures in May 2029.

If a qualifying flood or earthquake disaster takes place during the bonds’ terms, proceeds will flow to national social protection systems to reach affected populations

Aon Securities acted as dealer and bookrunner for the bonds, while Munich Re structured the deals. The transactions introduce Central Asian sovereign disaster risk to global capital markets for the first time.

“When a major earthquake or flood strikes, it can set back development by years,” said ADB Vice-President for Finance and Risk Management Roberta Casali. “With this inaugural sovereign catastrophe bond, our developing member countries in Central Asia gain rapid, committed financing when disaster hits, so they can build back faster. This bond will pave the way for future issuances, and over time deepen investor engagement in this dynamic region.”

Parties to the Global Environment Facility (GEF) have reached consensus on a new programming strategy for its Least Developed Countries Fund and Special Climate Change Fund — each of which distributes financing for climate adaptation to the world’s poorest countries. The strategy prioritizes locally-led adaptation, expanded access for Indigenous Peoples and local communities, and faster, more predictable disbursements. It will govern the two funds’ activities through to 2030. (Global Environment Facility) 

The Bloomberg Agriculture Spot Index — which tracks 10 of the world’s most popular crops — hit its highest level since November 2023, as the closure of the Strait of Hormuz and extreme weather impacts caused prices for fertilizer, freight, and food to surge. Wheat futures are up 12% since conflict erupted in late February, while corn has gained 6% in two months to reach its highest level for a year. Persistent drought in the US Great Plains is compounding wheat price pressure, and El Niño forecasts threaten palm oil, soybean, and corn yields. (Bloomberg)

New research finds that climate finance — money rich countries send to developing nations to cope with climate change — also helps prevent violent conflict. Studying 85 countries over two decades, researchers found that more climate funding meant fewer wars and resource disputes. The effect was strongest when money went to basic services like water access and clean energy. Better water infrastructure reduced fights over scarce resources, while cleaner energy reduced dependence on oil and gas, which often fuels instability. (Climate Policy)

The UK is committing £14mn (US$19mn) in new climate adaptation funding for Pacific Island nations. The financing will support community-led resilience, early warning systems, and ecosystem protection across Fiji, Papua New Guinea, Solomon Islands, Tonga, and Tuvalu. It will also pay for climate finance advisors to be embedded within Pacific governments to improve their access to external funding — a capacity gap that has long constrained the region. (British High Commission Suva)

Urban areas in England contain 839,000 homes facing high surface-water flood risk — three times the number estimated in 2018. The analysis, by the National Housing Federation, also finds that social housing estates are disproportionately at risk. In the 10 worst-affected urban constituencies, one in four households is social housing. (The Guardian)

Jamaica is returning to the catastrophe bond market for the third time, targeting US$150mn in parametric hurricane protection through a new issuance, Artemis reports. The new bond would replace coverage triggered by Hurricane Melissa in October 2025, which delivered a full US$150mn payout within weeks of the storm’s landfall. The World Bank-backed deal aims to cover four hurricane seasons through May 2030, with payouts scaling linearly from 30% to 100% based on storm pressure and track through the island. (Artemis)

South Africa’s government wants members of the Southern African Development Community to step up their support of the Great Green Wall Initiative, which is targeting US$27bn in financing by 2030 to restore degraded landscapes, protect biodiversity, and build climate resilience across the region. Speaking at a workshop in Johannesburg last week, Deputy Minister Bernice Swarts urged partners to develop “bankable, investment-ready projects and programmes” to implement the strategy. (South African Government)

The Federal Emergency Management Agency (FEMA) had its disaster relief fund replenished to US$26.4bn after President Trump on Thursday signed legislation ending a 76-day Department of Homeland Security shutdown — the longest in the agency's history. The bill funds all DHS operations through September 30, excluding Immigration and Customs Enforcement and parts of Customs and Border Protection, which had already received separate appropriations.

The funding arrived one day after the agency activated Immediate Needs Funding (INF), which limits disbursement of disaster recovery finance to “lifesaving, life-sustaining and critical ongoing disaster obligations” and freezes all Hazard Mitigation grants and funds earmarked for the Building Resilient Infrastructure and Communities (BRIC) program. Prior to the passage of the shutdown-ending bill, the disaster relief fund held less than US$3bn — with multiple major disaster declarations still active.

Also last week, FEMA reinstated 14 employees suspended in August for signing a public dissent letter warning about the agency’s readiness to deal with a major disaster amidst the Trump administration’s cuts. It also announced contract extensions for some of its 10,000 term-limited disaster workers — roughly half the agency’s staff — after months of abrupt non-renewals that drew a legal challenge.

Portugal launched a €22.6bn (US$26.5bn) nine-year resilience program last Tuesday, following winter storms that caused €5.3bn (US$6.3bn) in damage and a grid collapse that cost Portuguese businesses an estimated €2bn (US$2.4bn). The Portugal Transformation, Recovery and Resilience plan targets climate, seismic, energy security, and cyber risks across public infrastructure, homes, and businesses. Funding of the initiative will be spread across the state budget, private capital, and EU sources. The program aims to increase the engagement of insurers and capital markets instruments in the management and transfer of climate-related risks. (Reuters)

Boston’s Mayor Michelle Wu released the city’s 2030 Climate Action Plan last Wednesday, establishing quantitative resilience targets across heat, stormwater, and coastal flooding for the first time. The plan sets a goal of protecting at least 10,000 residents from coastal flood pathways by 2030, scaling to 20,000 by 2040. On heat, the city is targeting a 25% reduction in heat-related emergency department visits by 2030, rising to 60% by 2050, backed by urban greening investments. The plan also sets a target of 300 greened acres for stormwater management by 2030. Underpinning all three hazards, Boston's newly established Office of Climate Resilience will screen 100% of capital projects for future climate risk. (City of Boston)

China is making disaster resilience a national strategic priority. President Xi, speaking at a meeting of top government leaders on April 28, called for stronger early warning systems, worst-case-scenario planning, and technological innovation in emergency management. He also pressed for safety and resilience requirements to be integrated into territorial spatial planning and construction plans. Natural disasters affected 750,800 people in China in the first quarter of this year, causing US$152mn in direct losses. (China Daily)

Four sustainability organizations — SCS Global Services, WRI, WWF, and the CEO Water Mandate — have launched an initiative to build the first standardized framework for assessing corporate water risk across value chains. The “Water Scopes” guidance will give companies a common methodology to identify water impacts from suppliers through to end customers — a gap that has left firms unable to satisfy growing investor and regulatory disclosure demands. Final guidance is targeted for Q4 2027. (World Resources Institute)

Physics-based weather models still outperform AI systems when it matters most. A study published Wednesday in Science Advances found that the ‘gold standard’ HRES model hosted by the European Centre for Medium-Range Weather Forecasts (ECMWF) consistently bested AI-powered rivals GraphCast, Pangu-Weather, and Fuxi in forecasting record-breaking heat, cold, and wind events across nearly all lead times.

The researchers found that AI models systematically underestimate both the intensity and frequency of record-breaking events, and behave as though they have an implicit ceiling near the most extreme value in their training data. However, the AI models tested do not draw on knowledge of physical principles or explicitly enforce physical constraints in their projections — likely explaining at least some of the underperformance.

The finding carries direct consequences for early warning systems and disaster management. As climate change pushes extremes further beyond historical bounds, the events AI models handle worst will become more common.

The researchers call for parallel operation of physics-based and AI systems, along with rigorous performance evaluation on high-impact events to ensure quality extreme event forecasts going forward.

Climate risk data firm First Street has introduced two new modules that tell investors how climate-related hazards could impact company profits and critical infrastructure. The first traces how climate disruptions cascade through a company’s finances and quantifies what impacts at specific sites could impact performance. The second maps climate vulnerability across entire infrastructure systems, like power grids or transport networks, pinpointing exactly which sections are most exposed. (First Street)

Europe's Destination Earth initiative has published the first operational framework for a climate adaptation digital twin, capable of producing global climate projections at 5–10 km resolution with hourly outputs on multi-decadal timescales. The Climate Digital Twin, developed by over 100 scientists across 12 institutions and built on EuroHPC supercomputing infrastructure, offers continuous, sector-specific climate information for energy, water, forestry, and urban planning. Simulations covering projections to 2050 and extreme-event storylines from 2017–2025 will shortly be available via the DestinE platform. (Destination Earth)

Greece has launched the world’s first national satellite constellation for hunting down wildfires. The Hellenic Fire System is made up of four thermal infrared satellites, and was developed with the European Space Agency and Munich-based OroraTech. It is capable of detecting hotspots as small as 4x4 meters and relaying warnings directly to Greek emergency services. The project is funded through the EU’s NextGenerationEU recovery facility under Greece's ‘Greece 2.0’ resilience plan. (Ororatech)

Large and projected increases in compound heatwaves-extreme precipitation events driven by anthropogenic emissions (Weather and Climate Extremes)

Heatwaves constrain the future persistence of mosquito vectors in Europe (Global Change Biology)

Warming climate amplifies vapor pressure deficit limits on gross primary productivity (Nature Communications)

Valuing climate information in context (npj Urban Sustainability)

Climate-driven depopulation and adaptation realities in America’s coastal ground zero (Nature Sustainability)

Future humidex extremes over North America: projections and uncertainties from the CanESM5 large ensemble (Climate Dynamics)

Climate change and cardiovascular risk factors management: Emerging challenges and strategies for prevention and adaptation (Preventive Cardiology)

Behavioral responses to wildfire smoke: Insights from smartphone location data (PNAS)

Planetary solvency: Tipping into the wild unknown (Institute and Faculty of Actuaries)

Climate and socioeconomic factors drive heterogeneous dengue risk escalation in the Chinese population (Communications Medicine)

Thanks for reading!

Louie Woodall
Editor