Resilience bonds and the financing of resilient infrastructure

Within the past 50 years, the number of catastrophic events has increased significantly. The need for resilience is fast gaining attention globally in the mitigation of risks for potential infrastructure failures and in the goal to reduce unexpected economic losses. However, as a fundamental global issue, the lack of public funding for investment in infrastructure projects has meant increased expectations for private finance involvement. As a newly emerged financial tool, resilience bonds offer a novel way to support unlocking finance, especially for investment in resilient infrastructure projects. The research conducted in this thesis offers several insights on the innovative resilience bonds and seeks to answer the following question: what are the impacts of resilience bonds in the development of resilient infrastructure? The thesis also investigates the following sub-questions: how to price resilience bonds in the emerging market based on different resilient infrastructure projects; identify the factors that influence the prices of the resilience bond; and analyse how the concept of resilience bond can be extended to global issues. The thesis begins by introducing the research background followed by a comprehensive and critical review of the existing literature on securities in the field related to infrastructure investment. Then, new methodological contributions on the valuation model of resilience bonds with different catastrophe scenarios are presented in case study chapters. Lastly, the thesis extends the concept of resilience bond in the consideration of global pandemic catastrophes and multi-hazard urban disaster risk in Istanbul. The derived results highlight the benefits of applying resilience bonds in the development of resilient infrastructure projects. In addition, the obtained findings show the performance and price of the resilience bond based on the different project mechanisms and valuation models. We anticipate that the findings from this study will lead to the expansion of resilience bonds in the financial market to help public authorities worldwide shift the finance fulcrum away from sole reliance on traditional public investment.