Leveraging insurance-linked securities to address fiscal constraints in transport infrastructure

Climate-related catastrophes are increasingly disrupting global transport infrastructure and leading to escalating stress on public budgets. This study explores Insurance-Linked Securities (ILS), specifically resilience bonds as an innovative financing tool to strengthen transport resilience. Applying a China intermodal transport hub case supported by empirical claims data, the study models bond pricing and develop the associated investment mechanism. The findings show that applying resilience bond to enhance a critical hub can effectively attract private finance, reduce pressure on public budgets and incentivise bond-funded Public-Private Partnerships (PPP). This study provides valuable insights for policymakers, investors and business leaders seeking to understand innovative financing mechanisms, addressing critical gaps in resilience financing, and contributes to advancing global infrastructure resilience strategies in alignment with the UN Sustainable Development Goals (SDGs) for infrastructure and urban resilience.This study demonstrates how the emerging resilience bonds can mobilise private capital to stengthen transport infratruture resilience and easing fiscal pressure on governments. By applying empirical transport network disruption data from China, the research quantifies resilience benefits, connect them directly to the bond valuation model. It shows how infrastructure enhancement can mitigate risk and generate additional upfront financing. The findings provide policymakers and investors with a practical framework for integrating resilience into financial decision making, offering a mechanism to fund climate resilient transport systems in alignment with global sustainability and adaptation goals.