What is the Disaster Financial Assistance Arrangements program (DFAA)? Q&A

By the HazNet team

As the saying goes, recovery is the least understood and is often neglected phase of emergency when it comes to policies, practices, and research. As outlined in the Emergency Management Framework for Canada, emergency management is considered a shared responsibility across all of society (Public Safety Canada, 2017). Nowhere is this more evident than how we pay for the costs of disasters.

When people and communities experience a disaster, the cost to pick up the pieces and get back to a regular state of functioning come from a myriad of places: government funding, insurance, personal savings, family and friends, donations or support from charitable organizations, employer benefit programs, private sector, loans, and so on. For any given disaster, people may experience more or less support from this patchwork system. Major headline-grabbing disasters tend to mobilize the most resources while personal disasters such as a single home fire or flooded basement have the least.

In an era of extremes where we see rising disaster frequency and impacts, this patchwork system of disaster financing has taken on a more prominent role. More Canadians experience losses from disasters each year, while communities in higher-risk areas face year after year of impacts with little time in between to recover.

The largest funding program in Canada for significant natural hazard disasters is the Disaster Financial Assistance Arrangements (DFAA) Program, run by Public Safety Canada. On April 1, 2025, Public Safety Canada launched an updated version of the program. The HazNet team put together the following article as an introduction to this program and some of the key changes to it.

Lytton 2021-2025: From home, to evacuation, to displacement, recovery starts (a fence), heirloom recovery, decontamination, archaeology, and a new foundation. Move-in date – to be determined. To learn more, watch BBC’s “The town that burned down in a day.” Image credit: Patrick Michell

What is the Disaster Financial Assistance Arrangements (DFAA) program?

The DFAA Program is a federal funding program that provides financial assistance to provinces and territories for the costs of large-scale natural hazard disasters. It is a reactive program, meaning that funding is only available after a province or territory has experienced a disaster. The program helps to fund disaster response, relief, and reconstruction costs.

Some key concepts for how the program works are listed below, which can help provide context when reading the DFAA Program Guidelines.

Authority: The DFAA Program gets its authority from the Emergency Management Act (EMA), which describes how it works. The main elements of the program are outlined in the EMA, including:

• Funding is available to provinces and territories only, not to municipalities, Indigenous governments, or individuals (Section 4(1)(j) “providing financial assistance to a province”)
• Funding is only available once a disaster has reached a certain scale (Section 4(1)(j)(i) “the provincial emergency has been declared to be of concern to the federal government”). The DFAA Program uses a per capita funding formula to define large-scale disasters.
• A province or territory initiates a request for financial assistance (Section 4(1)(j)(iii) “if the province has requested the assistance”), meaning the federal government cannot offer funding through this program unless a province or territory requests it.
• Each disaster requires a decision from the Governor in Council to provide funding under the DFAA Program (Section 7 “The Governor in Council may…declare a provincial emergency to be of concern to the federal government and authorize the Minister to provide financial assistance”). This means that the program does not have a set budget like most funding programs, but seeks approval for each disaster on a case by case basis. There is no maximum amount that can be paid for a disaster.

Cost Share: The DFAA Program is a cost-sharing program, which means that for every dollar spent, a portion of it is paid by the federal government and a portion is paid by the provincial or territorial government. In the DFAA Program, the federal cost-share levels range from 70-100%, depending on the activity.

Eligibility: The DFAA Program uses the term ‘eligibility’ to describe activities that can be cost-shared as part of the program. Not everything that a province or territory spends money on during a disaster is eligible for the program. Similarly, there may be costs paid by other sectors of society (e.g., insurance, municipalities, businesses, individuals) that are not eligible for the program either.

Ice chunks along a river during river break up. Ice jams are a common cause of flooding in northern parts of Canada. Reproduced with permission.

Why was the DFAA program modernized?

The DFAA Program was created in 1970 to provide federal funding to provinces and territories for disasters. Over the years, some updates have been made to the program (e.g., in 2008, a provision was made to allow for some mitigation funding instead of just rebuilding to pre-disaster conditions); however, the program has remained fundamentally the same in its 50-year history.

The societal and risk landscape has changed dramatically during that time. Canada’s total population has almost doubled (from 21.3 million to 41.6 million), its urban population has increased from just over 16 million to almost 35 million (Statistics Canada), and its average temperature is approximately 2 degrees warmer (Environment and Climate Change Canada, 2024). In addition, since the late 1990s, Canada has seen a significant increase in the frequency, impact, and cost of natural hazard disasters.

This chart shows the trendline of disaster losses in the United States (adjusted for population) versus Canada over the past forty years. Canada is where the United States was approximately 20 years ago (approximately $9 billion per year) but is following a similar trendline. Image credit: Institute for Catastrophic Loss Reduction, reproduced with permission.

As the chart above shows, Canada’s losses from disasters are following a similar trajectory to the United States, only twenty years behind. If we continue at this rate, by 2044, annual disaster losses could triple from $9 billion to $27 billion.

In recognition of this trend, Public Safety Canada conducted a comprehensive review of the DFAA Program (from 2020-2023) with the intent of modernizing it for the future we face. The purpose was to look at how the program might spend money differently to better address not only the rising costs of disasters, but also the increasing impact on people, communities, and well-being (Public Safety Canada, 2024).

As part of the review, the federal Minister of Emergency Preparedness convened an expert advisory panel to provide strategic recommendation for the DFAA Program. The panel report Building Forward Together outlined ten strategic recommendations for not only modernizing the DFAA Program, but also for updating other elements of Canada’s overall approach to disaster risk management to increase alignment across all federal funding programs.

On January 29, 2025, Minister Sajjan announced the modernized DFAA Program.

What key changes were made to the DFAA?

Let’s start with what didn’t change. The Government of Canada did not update the Emergency Management Act, which means the parts of the DFAA Program defined in legislation remain the same. This includes that it is a reactive program only available after a disaster, that DFAA funding can only be provided to provinces and territories, and that provinces and territories must first request financial assistance. If you think of it in terms of a home renovation project, this means the foundation, structure, and getting into the front door all remain the same.

However, once inside the front door, things look significantly different. The program has shifted to an objectives-based approach, so the types of activities that are eligible are now based on set objectives intended to achieve certain outcomes, rather than on a prescriptive list of do’s and don’ts. There are five objectives in the program, organized into five specific funding streams. Each funding stream has a specific objective, a cost-sharing amount, and a timeframe for eligible activities.

Overview of the five funding streams in the new DFAA Program. Reproduced with permission.

For each funding stream, let’s take a look at the key changes.

Response (Stream 1): Many of the response activities in the new program are similar to the previous one (evacuation, emergency support services, response coordination, etc.), although the language has changed to mirror common response terminology that will be familiar to emergency managers versed in the incident command system. This includes terms such as ‘protecting life safety’ and ‘incident stabilization’.

Of note, the new program makes explicit reference to volunteer coordination and deployment, and talks about activities such as setting up volunteer registration centres, providing stipends or covering travel expenses for volunteers, etc. This shows recognition for how important volunteers and voluntary organizations are to disaster response in Canada.

Temporary medical facilities set up in Fort McMurray while the region was evacuated from due to wildfires. Temporary measures to protect people during a response are covered under Stream 1 of the DFAA Program. Reproduced with permission.

Homes and Small Businesses (Stream 2): Each province and territory has its own disaster financial assistance (DFA) program to provide financial support to people and small businesses for uninsurable disaster losses. Most provinces and territories closely align their programs to the federal DFAA so they can receive federal funding, but there are distinctions between them.

Some of the key changes for homes and small businesses in the new DFAA include:

• A broader definition of ‘home’ to explicitly include renters, tenants, and non-traditional living arrangements, recognizing that a large and growing number of Canadians do not live in or own a detached, single-family house.
• The inclusion of people who are unhoused, precariously housed, or transient who lose their belongings during a disaster, who can now receive financial assistance for those losses.
• A much broader definition of a small business, which can now include businesses earning up to $15 million per year (instead of $2 million), harvesters of natural resources and other types of businesses that didn’t fit the previous program, and landlords providing permanent housing (not short-term and vacation rentals).

Neither the federal or provincial/territorial disaster assistance programs are meant to be a substitute for insurance. As taxpayer-funded programs, they are designed to cover uninsurable losses and to replace the essential items that people and small businesses need to get back on their feet. This means they don’t cover everything a person may lose in a disaster, and they don’t necessarily put back essential items the way they were (for example, if someone had a high-end refrigerator, they might receive assistance to replace it with a standard model instead).

While the previous program set a national definition for ‘essential items’ for homes and small businesses, the new program leaves that definition up to provinces and territories. This allows for more regional definitions of ‘essential’ based on the unique contexts across this large and diverse country.

Apartments in Vancouver, BC. The updated DFAA Program includes more types of housing. Image credit: Taylor Legere.

Restoring Resilient Infrastructure (Stream 3): The most important change for public sector reconstruction costs is the removal of the term ‘pre-disaster conditions’ from the previous program. Instead, the new program uses the term ‘standard replacement value’ which means bringing damaged infrastructure up to current codes, standards, and bylaws. In addition, there is a ‘build back better’ provision (called ‘disaster resilience enhancements’) for every damaged structure to receive additional funding for risk reduction measures at the site level that go beyond current codes and standards.

This change fundamentally shifts the focus of the DFAA Program from ‘put back what was there before’ to ‘rebuild more resilient structures’. As our collective codes and standards improve throughout Canada as communities adapt to growing risks, the DFAA Program is set to keep pace with those improvements while continuing to offer funding to go beyond.

Relief and Recovery Supports (Stream 4): This stream is new to the DFAA program. While some of the activities included were eligible under the previous program as response costs (such as mental health support and temporary housing), the new program dedicates an entire funding stream to supporting people. Some key changes include:

• Increasing the timeline for disaster relief from six months to three years.
• Focusing on activities that reduce barriers to receiving support, recognizing that while everyone may be eligible for disaster assistance, some people face additional obstacles to accessing it (e.g., language or literacy barriers, transportation or access barriers, requiring child care, etc.).
• Providing additional support and services to people who are more likely to experience further challenges with recovery (such as women fleeing domestic violence or low-income households).

This stream also includes support for community recovery and resilience planning after a disaster, something that is not commonly done across Canada or where it is, the costs to do it are primarily borne by the local governments closest to the disaster and its recovery efforts.

Disaster Mitigation (Stream 5): This stream is also new to the DFAA Program, although elements of it existed in the previous one, and is the most forward-looking aspect of the program. Unlike the other funding streams that support activities to respond to and recover from the disaster, Stream 5 establishes a pot of money (called a ‘funding envelope’) to strategically reduce future disaster risk. The pot of money increases with the size of the disaster, and is based on a percentage of the total amount of money spent on response and recovery.

Projects can include structural mitigation and nature-based solutions (e.g., building berms, retrofitting buildings, establishing wetlands, etc.), non-structural mitigation (e.g., risk assessments, relocation programs, updating land use bylaws, etc.), or community-level programs (e.g., a community-level FireSmart assessment and grants for people to implement risk reduction measures).

While the funding can be used for almost any type of mitigation, there is a strong incentive for risk-based mitigation projects because there is a much higher federal cost-share level for projects that protect high-risk areas (90% instead of 50%). High-risk areas may be designated by the local, regional, Indigenous, provincial/territorial, or federal governments. According to the DFAA Guidelines, a high-risk area is a geographic area with “an enduring, elevated risk of severe consequences stemming from the impact of a specific or multiple natural hazard(s)” (Public Safety Canada, 2025).

Seasonal wetlands at Charleson Park, Vancouver, BC. When wetlands are designed and maintained as natural protective infrastructure, they can be created or expanded as strategic mitigation in Stream 5. Image credit: Taylor Legere

How does this help with rising disaster costs?

The changes in the DFAA Program increase the total federal funding available to provinces and territories after a disaster. The design shifts the focus of recovery efforts from putting back what was there before to supporting people and reducing disaster risk. The shift better aligns Canada’s disaster financial assistance with recommendations from Priority 4 of the Sendai Framework for Disaster Risk Reduction, which encourages national governments to use opportunities during recovery to reduce disaster risk, to improve structural standards and land use during reconstruction, and to support people (pp. 22-23). Over time, the collective investments made in risk reduction should bend that upward trend of disaster losses and ultimately reduce relative disaster costs for Canadian society.

Unfortunately, as a reactive program, the DFAA Program does not provide funding for mitigation, adaptation, or preparedness measures before a disaster. Without more emphasis and funding for pre-disaster risk reduction activities in Canada, we will continue to have to learn by painful experience and make risk reduction investments only after suffering losses.

What happens next?

While the federal program launched on April 1, 2025, most provinces and territories are still in the process of updating their disaster financial assistance programs. It is up to provinces and territories to determine how many of the federal changes they plan to incorporate into their programs, which establishes what type of disaster financial assistance is available to municipalities, people, and small businesses.

To learn more about the federal program changes, visit the DFAA webpage.

References

Environment and Climate Change Canada (2024). Adjusted and homogenized Canadian climate data. https://www.canada.ca/en/environment-climate-change/services/climate-change/science-research-data/climate-trends-variability/adjusted-homogenized-canadian-data.html

Public Safety Canada (2017). Emergency Management Framework for Canada. https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/2017-mrgnc-mngmnt-frmwrk/index-en.aspx

Public Safety Canada (2024). Modernizing the DFAA. https://www.publicsafety.gc.ca/cnt/mrgnc-mngmnt/rcvr-dsstrs/dsstr-fnncl-ssstnc-rrngmnts/dfaa-mdrnzng-en.aspx

Public Safety Canada (2025). Guidelines for the Disaster Financial Assistance Arrangements. https://www.publicsafety.gc.ca/cnt/mrgnc-mngmnt/rcvr-dsstrs/dsstr-fnncl-ssstnc-rrngmnts/2025/dfaa-gdlns-en.aspx#a1

Statistics Canada (2025). Annual demographic estimates. https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2021030-eng.htm

Statistics Canada (1971). 1971 Census of Canada : population : vol. I – part 1. Accessed online at https://publications.gc.ca/collections/collection_2017/statcan/CS92-709-1971.pdf