Incentives for mitigation investment and more effective risk management: the need for public-private partnerships.

A key question facing both well-developed industrial countries and emerging economies is how to reduce future disaster losses while still providing financial protection to victims from these events. This paper proposes a strategy for the use of cost-effective risk mitigation measures coupled with insurance and/or new capital market instruments to achieve these objectives. The mix of these measures will depend on the governance structure and the institutional arrangements in the particular country. There will always be a need for a combination of policy tools and the interaction among key interested parties from both the private and public sectors in developing a disaster management strategy. Two examples, one from US and the other from Honduras, illustrate differences between strategies that countries can adopt.