How people privately and collectively adapt to climate risk can affect the costs and benefits of public mitigation policy (e.g., Kyoto); an obvious point often neglected in actual policy making. Herein we use the economic theory of endogenous risk to address this optimal mix of mitigation and adaptation strategies, and examine how increased variability in climate change threats affects this mix. We stress that a better understanding of the cross-links between mitigation and adaptation would potentially make it possible to provide more risk reduction with less wealth. Policies that are formulated without considering the cross-links can unintentionally undermine the effectiveness of public sector policies and programs because of unaddressed conflicts between the strategies.