Climate change has placed a much stronger focus on the role of the environment in disasters than ever before. Previously only a very small portion of DRM had been oriented toward the environment. For example, a major study of the benefits of 10 years of U.S. FEMA hazard mitigation grants (MMC 2005; Rose et al. 2007b) indicated that, while significant portion of the grants yielded environmental benefits, especially those associated with flood mitigation, less than 1% of the total dollar benefits were environmental. The small fraction resulted despite the broad range of benefits, which included improved water quality (for recreational and commercial fishing, drinking water), reduction of hazardous wastes, and enhancement of wetlands, aesthetic, and health and safety benefits. In hardly any of the cases were environmental benefits cited as a major concern, but they were factored into the FEMA grant applications as co‐benefits. At the same time, it should be mentioned that environmental benefits in this study and others could very well be significantly under‐estimated because of measurement difficulties in this realm.

In case of climate change, the environment is not only the medium through which the disaster is transmitted, but aspects of it are also among the major receptors of damage. Threatened on a much broader scale than ever before are delicate eco‐systems, biodiversity, and soils, among others. Projected economic losses from climate change are in the hundreds of billions of dollars per year, with the sizable portion being environmental (IPCC 2014). Abatement of greenhouse gas emissions is being justified on the basis of all of these losses, and adaptation to climate change the manifestations can further reduce losses. Most of the improved environmental areas are public goods or common property resources, but even still many of them are utilized by the private sector (e.g., river water for cooling, pristine areas for recreation). Many environmental goods and services have private goods characteristics as well and are of course directly related to private sector interests. These include timber, soils, and biodiversity, which are threatened more than ever by surface temperature warming, drought, and increased wind and flood damage. In these cases, environmental services are direct benefits rather than co‐benefits.

# 7. Incentivizing Policies

# **7.1. Financial Instruments**

Paying for DRM is a critical consideration. Many businesses, especially those in developing countries, do not have the necessary internal resources at their disposal. Several means of private financing for DRM have been developed and have been shown to be effective, though they are not without their limitations. Still, “disaster financing” often refers to risk spreading and government or philanthropic transfer payments rather than outright risk reduction, though the risk reduction can be incorporated into the former with innovative policy design.

Innovative financing instruments include: land leases, land exchanges, ‘bonusing’ incentives, and value capture. These are in addition to standard private sources such as grants, insurance/re‐insurance, securitization, performance contracts, custom debt instruments, equity, guarantees, and loans (Brugmann 2012; pp. 224‐5).

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