Increased climate risks pose challenges of combining climate mitigation and adaptation goals into building designs. These two goals are often misaligned, as adaptation measures use additional materials and equipment that are sources of carbon emissions. This phenomenon causes building design to involve tradeoffs between enhancing structural resilience and reducing emissions. This dissertation addresses the need to identify the optimal investment mechanisms for the design of buildings in hurricane-prone regions. Dynamic decision-making models are developed for individual investors to characterize emission trading and risk mitigation behaviors over a building’s lifecycle. The models enable the following outcomes: (i) evaluation and selection of baseline rules for sectoral emission trading, (ii) ability to reflect resilience goals in the building design, construction and maintenance, and to balance between climate mitigation and adaptation goals for a wide range of building examples, and (iii) policy implications for improving emission trading efficiencies and achieving environmental and economic sustainability at community level.

Modeling results indicate that the trouble of voluntary emission trading is mainly attributed to imperfect market information and future climate risks. The uncertainty in predicting emissions and potential baseline manipulation leads to the production of non-additional carbon offsets and an extension of sectoral emission caps. This situation is even bleaker when emission trading are implemented in the areas that exposure to significant risks of catastrophic events such as hurricanes. The results reveal a trend of a transition from long-advocated low-carbon investment to a risk-oriented portfolio for building retrofits in hurricane-prone regions. The risk mitigation efforts should be pursued with discretion on the accuracy of insurance premium discounts. Meanwhile, subsidies for emission abatements are recommended to accommodate existing emission trading schemes and building property values.