Schedule 4: Disaster Risk Reduction Incentive
Disaster Financial Assistance Arrangements Guidelines

On this page:

• Purpose
• Policy intent
• Implementation
  • Priority areas for high-impact disaster risk reduction activities
  • Financial incentive
  • Process
• High-impact disaster risk reduction activities
  • Priority Area: Understanding Risk
  • Priority Area: Mitigation Planning
  • Priority Area: Pre-Disaster Recovery Planning
• Advancing Disaster Risk Reduction in Canada

Purpose

The purpose of this Schedule is to expand on the Disaster Risk Reduction (DRR) Incentive introduced in Section 14 of the Disaster Financial Assistance Arrangements (DFAA) Guidelines, and to describe in detail how this element works. This Schedule outlines the types of activities that receive 'credits' towards the DRR Incentive, the levels of financial incentive available, the application process, and the frequency of updates to the Schedule so it continues to support the advancement of disaster risk reduction in Canada.

Policy intent

The DFAA Program is designed to provide financial support to provinces/territories after a large-scale eligible disaster to assist with the financial impact. However, decades of research and experiences within Canada and internationally have shown that proactive and sustained investments in disaster risk reduction substantially reduce the impact of disasters on people, communities, and economies; help improve post-disaster recovery outcomes; and result in lower costs for disaster response and recovery.

Reducing the impacts of disasters on people, communities, and governments is the goal of disaster risk reduction. The DRR Incentive is designed to offer a financial incentive for sustained investments made by provinces/territories to reduce risk in their jurisdictions, recognizing that continual progress is required to meet the challenges of Canada's changing risk landscape. This incentive is forward-looking and intended to help accelerate provincial/territorial efforts to strategically and systemically reduce disaster risk in their jurisdictions. The DRR Incentive also increases the alignment between pre- and post-disaster work to reduce risk.

Implementation

Priority areas for high-impact disaster risk reduction activities

The DRR Incentive focuses on high-impact disaster risk reduction activities across three priority areas:

• Understanding risk
• Mitigation planning
• Pre-disaster recovery planning

Each priority area includes a number of different activities that contribute to reducing disaster risk and improving recovery outcomes, which will be updated over time to incentivize continuous improvement in disaster risk reduction. Provinces/territories can receive credits for different activities completed in each priority area. The total number of credits then translates into the financial incentive in the DFAA.

Financial incentive

As outlined in DFAA Guidelines Section 7.1, the financial threshold for the DFAA Program is the point at which a province/territory's eligible expenses exceed a per capita amount^{Footnote 1}, adjusted annually for inflation. As a baseline, there is no federal cost-share for eligible costs up to this threshold.

The DRR Incentive provides an opportunity for provinces/territories to receive a financial incentive valued at up to 40% of the their pre-threshold costs in a DFAA claim, based on high-impact pre-disaster risk reduction activities undertaken proactively by the province/territory.

Note: This does not reduce the threshold itself; eligibility for DFAA still requires that eligible disaster costs exceed the provincial/territorial financial threshold.

The DRR Incentive includes four levels, each of which adds an additional 10% to the financial incentive:

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In this example calculation of the DRR incentive, a province/territory's DFAA financial threshold, calculated using the per capita basis, is $15 million.

The total cost of eligible expenses for a disaster is $60 million, of which $45 million is cost-shareable under the DFAA.

The province/territory is at Level 2 for the DRR Incentive, and therefore it receives an additional $3 million (20% of pre-threshold costs) in federal funding during its DFAA claim.

Process

The DRR Incentive is an optional component of the DFAA Program, and provinces/territories can choose to participate or not. For provinces/territories participating in the DRR Incentive, the process can be undertaken at any time. Provinces/territories are encouraged to complete the DRR Incentive self-assessment outside of hazard seasons or ongoing disasters, and to update it regularly to receive credits for disaster risk reduction work in their jurisdictions.

Once the DRR Incentive level is confirmed through the process described below, it is in place for four years following the confirmation date. The incentive is applied to all eligible DFAA disasters that occur within that four-year period.

1. The province/territory completes a self-assessment of disaster risk reduction activities in each priority area using the self-assessment tool. The self-assessment includes a section for a brief rationale and evidence to support the assessment
2. The province/territory submits the self-assessment to Public Safety Canada. Public Safety Canada reviews the self-assessment and follows up with the province/territory if there are questions until an agreement is reached on the results of the self-assessment
3. The DRR Incentive level is applied to all eligible disasters that occur after the date^{Footnote 2} of the agreement on the self-assessment results. The DRR Incentive level expires after four years
4. The DRR incentive can be added to any payment request (including an advance payment)
5. Optional Step: Provinces/territories can update their self-assessments as often as they choose and are encouraged to do so as they implement disaster risk reduction initiatives to receive additional credits. The DRR Incentive is not retroactive and cannot be applied to previous disasters or to disasters that pre-date the completion of the qualifying disaster risk reduction activities

High-impact disaster risk reduction activities

This section provides an overview of the high-impact disaster risk reduction activities for the three priority areas. Each activity has a scale of actions that earn an increasing number of credits. The self-assessment is designed to recognize that the greatest impact for risk reduction is in consistent, predictable activities with committed funding, resources, and continuous improvement.

The "Possible Credits" column in the tables below indicates the range of credits that can be earned for that activity, based on the actions undertaken. If the action has not been undertaken, no credits will be applied.

Priority Area: Understanding Risk

Understanding risk provides the foundation for effective disaster risk reduction and is a prerequisite for strategic efforts to reduce risk. It guides the prioritization and allocation of resources, unlocks the potential for whole-of-society risk reduction and preparedness when risk is well understood and communicated, and enables risk-informed decision-making.

Priority Area: Mitigation Planning

Mitigation planning is a crucial component of disaster risk reduction because it requires proactively identifying potential hazards and vulnerabilities, developing strategies to minimize hazard impacts, and prioritizing risk reduction activities. When done strategically at a system-wide scale that recognizes the interconnectivity of hazards across boundaries, mitigation planning optimizes resource allocation, enables more informed decision-making to limit the creation of new risks and reduce existing risks, and supports risk-informed planning of long-term capital projects.

Priority Area: Pre-Disaster Recovery Planning

Pre-disaster recovery planning is essential for improving recovery outcomes and reducing disaster risk over the long-term. It facilitates a proactive and strategic approach to recovery; allows jurisdictions to identify priorities, roles, and partnerships in advance to enable a more organized and efficient recovery process; integrates risk reduction and long-term sustainable goals so that mitigation and resilience can be incorporated into the reconstruction process; and expedites recovery decision-making. Jurisdictions that engage in recovery planning in advance, especially where those plans effectively identify partners, communication strategies, funding strategies, and decision-making mechanisms, have been shown to better maximize available funding and recover more quickly than when recovery planning occurs in the midst of responding to a disaster.

Advancing Disaster Risk Reduction in Canada

In consultation with provinces/territories, Public Safety Canada will review and update the list of high-impact disaster risk reduction activities and priorities over time to ensure this Schedule continues to:

• reflect the best available evidence for reducing risk
• improve the alignment between pre- and post-disaster efforts in disaster risk reduction; and
• incentivize continual and ongoing improvement of recovery outcomes and reduction of disaster risk on the basis of where progress is being made and where gaps may still remain in disaster risk reduction in Canada

Updates to this Schedule will not impact self-assessments during the four years for which they are in effect, unless provinces/territories choose to update their assessments. Restrictions may be placed on updates to DRR Incentive self-assessments during the update cycle of the list of activities/priorities; however, advance notice will be provided.

Date modified:

2025-04-30