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This chapter features the functions of green infrastructure and gray infrastructure in a hydro-economic model and integrates them into a hybrid infrastructure. We show that adding green infrastructure to an existing gray infrastructure generates a new benefit, which is referred to as absorption effects. Using the model, we investigate the optimal hybrid infrastructure by maximizing the social net benefits, in which disaster risk reduction is defined. We then discuss how green infrastructure can be used to augment existing gray infrastructure from the perspective of economic optimality. We derive some conditions to determine whether both or either of gray and green infrastructures should be introduced to implement disaster risk reduction.

An Economic Analysis of Optimal Hybrid Infrastructure: A Theoretical Approach in a Hydro-Economic Model