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North American Linkages
Regulatory Expenditures and Compliance Costs: Verifying the Link Using US Data
Fidèle Ndayisenga, Policy Research Initiative
Doug Blair, Policy Research Initiative
May 2006 (025)

Abstract

This paper explores the nature and extent of the relationship between government regulatory expenditures and the resultant regulatory compliance costs incurred in the economy. Specifically, with the help of an econometric model, the paper investigates the strength of the causal relationship between the United States federal government regulatory expenditures and compliance costs from 1977 to 2000, taking into account such key determinants of compliance as domestic economic performance and regulatory/technological innovation.

The findings confirm a statistically significant and positive relationship between US federal government regulatory expenditures and regulatory compliance costs. Between 1977 and 2000, each dollar in US federal government regulatory expenditure was found to contribute about $21 in compliance cost burdens for business and state and local governments.

These results lend some validity to “the regulatory multiplier” (Weidenbaum, 1979) – a measure first developed in the late 1970s that estimated that every dollar in US federal government regulatory expenditure imposed another $20 in compliance cost burdens. However, the paper finds that political ideology (e.g., whether the White House is Republican or Democrat) also plays an important role in the compliance costs imposed on the economy. Furthermore, there is evidence of a negative coefficient-of-time variable, in turn suggesting that regulatory innovations and technological improvements may be reducing compliance cost burdens over time.

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North American Linkages
The Commission for Environmental Co-operation: Lessons for Canada-United States Regulatory Co-operation
John Kirton, University of Toronto
Sarah Richardson, University of Toronto
April 2006 (024)

Abstract

This study explores ways in which Canada-US regulatory co-operation, now given new impetus by the Security and Prosperity Partnership, might be strengthened in the next three to five years. It does so by examining the performance of an existing trilateral agreement and institution – the North American Agreement on Environmental Co-operation and its Commission for Environmental Co-operation. These trilateral instruments are globally pioneering trade-environment and economy-environment mechanisms designed to forward the goals of economic prosperity through liberalized trade under the North American Free Trade Agreement. Successes and shortcomings of the Commission and how these lessons could be applied to the development of a broad-based governance agreement on regulatory co-operation between Canada and the United States are examined.

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North American Linkages
The International Joint Commission and the Great Lakes Water Quality Agreement: Lessons for Canada-US Regulatory Co-operation
Rick Findlay, Pollution Probe
Peter Telford, Pollution Probe
April 2006 (023)

Abstract

The management of environmental issues is particularly challenging when two or more jurisdictions share responsibility for them. Jurisdiction for the Great Lakes is shared by two federal governments ( Canada and the United States), two Canadian provinces ( Ontario and Quebec), eight US states ( New York, Pennsylvania, Michigan, Ohio, Illinois, Indiana, Wisconsin, and Minnesota), and hundreds of municipal governments. In the Great Lakes, the difficulties are exacerbated by the need to also share responsibility across many different agencies within each country.

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North American Linkages
The Governance of Effective Regulatory Co-operation: A Framework, Case Studies, and Best Practice
G. Bruce Doern, Carleton University and University of Exeter
April 2006 (022)

Abstract

This paper critically examines issues in the effective governance of regulatory co-operation through the development of a framework for analysis, a review of several Canadian and comparative/international case studies, and through the resulting discussion of possible best practices in different regulatory contexts. In particular, the paper examines four core questions.

1. What principles or purposes are set for regulatory co-operation arrangements?
2. What governance structures do various institutions around the world use to manage regulatory co-operation between jurisdictions?
3. How are priorities set by these governance structures for regulators for each country involved including any possible challenge function with regulators to justify reasons to deviate from co-operation?
4. What do these best practices mean for Canada-US regulatory co-operation?

Also provided is a summary of nine case study co-operative agreements, including an overview of their effectiveness. Analytically, a framework is developed to help show the many different elements of co-operation and governance.

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North American Linkages
Trans-Tasman Regulatory Co-operation: Lessons for Canada and the United States
Kaili Lévesque, Policy Research Initiative
April 2006 (021)

Abstract

This paper focuses on the history of the agreements that exist between Australia and New Zealand, the aspects that make them unique, and how they can offer helpful guidance in expanding Canada-US regulatory co-operation. The Trans-Tasman model is of particular relevance to Canada over other governance arrangements such as the European Union, or the United States and the European Union. It is important to the North American reality due, in large part, to the role played by geography in driving co-operation between the two countries, but also due to other fundamental similarities, such as those on the economic social, cultural, and demographic fronts. The Trans-Tasman example also illustrates how important a role can be played by a smaller country, New Zealand, when entering into increased co-operation with its nearest neighbour and largest trading partner, Australia, while also protecting core national political and sovereign interests. Finally, it also illustrates that a strong foundation based on an economic partnership is fundamental to the health and vitality of a co-operative relationship. Put simply, this is a case of two countries with similar demographics, cultures, languages and laws, but with one economy clearly dominant over the other, and yet they were able to achieve success through an incremental and clearly structured approach to co-operation.

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North American Linkages
Successes and Failure of Regulatory Co-operation in the European Union: Lessons for Canada-US Regulatory Co-operation
Joelle Anne Schmitz, Ashburn Institute
April 2006 (020)

Abstract

The year 2005 presents Canada with an unusual event horizon. The country faces a window of opportunity analogous to that which birthed the European Union. How Canada responds to the juncture of contemporary opportunity and historical legacy will determine its influence in the new world order, the strength and competitiveness of its economies and, to some degree, the very future of the concept of Canada. Yet, several factors impede the universal application of the European example. This paper compares and contrasts that supremely significant period in European history to the current Canada-United States relationship and seeks to clarify universalities of policy relevance.

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North American Linkages
Leader Survey on Canada-US Cross-Border Regions
Emmanuel Brunet-Jailly, University of Victoria
Susan E. Clarke, University of Colorado
Debora L. VanNijnatten, Wilfrid Laurier University
Derek Jansen, EKOS Research Associates Inc.
Christian Boucher, Policy Research Initiative
André Downs, Policy Research Initiative
February 2006 (012)

Abstract

The project findings to date, which are detailed in the PRI interim report, The Emergence of Cross-Border Regions, were based mostly on quantitative indicators, and have been supplemented by survey evidence and executive interviews involving key individuals from business, various levels of government, academia, think-tanks, cross-border organizations, and associations.

This working paper presents both a descriptive and an analytical assessment of the survey results. In Part I, three academics who have previously examined this issue of cross-border regional co-operation present their assessment of the information provided by this survey. As they mention, this unique dataset confirms some of their expectations, but also challenges many of their assumptions.

Part II provides a detailed descriptive analysis of the survey results. Charts are included to assist the reader in understanding the results. The questionnaire and the list of respondents can be found in the appendices.

Findings and conclusions reached in the analysis include the following.

• Survey results reveal a high level of self-rated familiarity with cross-border regions (CBRs) among the leaders surveyed. Two thirds (65%) of respondents said they were familiar with CBRs, and a further one in four (22%) said they were moderately familiar.

• The survey documents that cross-border interaction at the sub-national level is widespread, well established, perceived as worthwhile, and frequently successful.

• These interactions are seen as distinct from, but complementary to, formal federal government ties. They are goal-oriented, problem-focused networks working across varied spatial scales, from local to cross-continental, and including both private and public sector organizations.

• The survey demonstrates that these networks have distinct regional identities that vary more east-west than north-south. With few exceptions, the gap between Canadian and US respondents is smaller than the gaps across regions. But there is considerable agreement on what seems to work, namely strategies and instruments that facilitate regular, face-to-face interaction oriented toward project-specific tasks.

• Locational factors and economic exchanges were deemed most important in defining CBRs: nine in ten respondents assigned importance to these factors (89% and 88%, respectively). In addition, seven in ten (70%) believed that shared ecosystems are important characteristics in defining CBRs, and six in ten (59%) felt that shared institutions or organizations also play an important role. Historical links and cultural similarities were deemed least important among the issues tested.

• Survey results revealed that among the instruments tested, conferences/roundtables were seen as most effective. A strong majority also believed that bi-national committees/working groups/task forces (65%), and official visits (61%) are effective.

• Information sharing, co-operation, consultation, and advocacy/lobbying are perceived as key outcomes of cross-border linkages. Harmonization and integration were seen as the least important outcomes.

• The capacity of cross-border organizations is considered to be the greatest barrier to cross-border collaboration, followed by border crossing conditions, political factors, underfunding, and security measures. At the bottom of this list were infrastructure conditions, and differences in regulatory or legal systems.

• Cross-border organizations and associations were thought to be the most effective in supporting CBR linkages, with over three quarters of respondents (76%) saying they were effective in this area. Six in ten (61%) also felt their provincial or state governments were effective in promoting cross-border linkages. Substantially fewer, although still the plurality, considered research communities/think-tanks, non-governmental organizations (NGOs), and the federal government to be effective in promoting CBR linkages.

• The two most important actions that government could take in promoting cross-border co-operation (among the options tested) were political support and financial contributions. Inter-regional forums and scientific/technical support were considered to be second-tier actions for government.

• An overwhelming majority of the leaders surveyed (92%) believed that CBRs facilitate the involvement of regional stakeholders in Canada-US issues. Six in ten agreed that CBRs have a strong influence on the Canada-US relationship, and roughly the same proportion believed that CBRs are useful in avoiding or resolving bi-national disputes. A further 81% agreed that CBRs facilitate further economic integration between Canada and the United States, and a majority (54%) felt cross-border organizations could serve as a model for North American institutions.

• Survey results also revealed that potential concerns about CBRs are relatively minor. A strong majority of Canadian leaders (84%) disagreed that the emergence of CBRs could threaten Canadian identity, and roughly the same proportion disagreed with the idea that CBRs are a temporary phenomenon.

• Generally, Canadian leaders were more likely to believe linkages will increase over the next five years across virtually all the sectors tested, particularly energy, infrastructure, security, water, and transportation.

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North American Linkages
A Survey of Major Cross-Border Organizations Between Canada and the United States
Jean-François Abgrall, Policy Research Initiative
October 2005 (009)

Abstract

Cross-border co-operation between Canada and the United States is blooming but it takes different forms depending on the regions. This paper surveys the four major areas along the border and describes the main organizations. Many of these involve the provinces and the border states; others are organizations of business people or think-tanks interested in better co-operation between sub-central partners across the border.

The intensity of the co-operation varies considerably depending on the regions and it is reflected in the organizations. The Pacific Northwest Economic Region in the West and the New England Governors/Eastern Canadian Premiers Conference in the East are two of the major organizations but there are others. The degree of involvement of the provinces is also quite striking; some like Quebec or Alberta are very active and have a number of agreements with their US neighbour states. But there appears to be an ongoing tendency toward more co-operation.

Most of the co-operation develops around the same themes: economic development, security, and the environment. To date, co-operation on specific issues seems to be quite beneficial for all involved and one would expect this trend to persist in the long term with increasing policy implications for the Government of Canada.

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North American Linkages
Economic Impacts of Regulatory Convergence Between Canada and the United States
Fidèle Ndayisenga and André Downs, Policy Research Initiative
October 2005 (008)

Abstract

This working paper's objectives are threefold. First, we provide a characterization of regulatory trends in Canada and the United States using a regulatory indicator recently developed by the OECD with a view to assessing the extent of regulatory convergence in the economic restrictiveness of regulations between Canada and the United States. Second, we review the literature that purports to evaluate the quantitative impact of regulatory regimes on economic performance as measured by macro-economic variables such as investment, productivity, research and development, and trade. Third, we provide estimates of the impact of Canada's regulations on its standard of living measured as per capita income. We then derive the gains from regulatory convergence between Canada and the United States. We calculate that if Canada had the US level of regulatory restrictiveness as measured by the OECD regulatory index, Canada's per capita income would have been, on average, 1.9 percent higher.

For the purpose of this paper, two regulatory regimes of two different countries are said to converge when they impose a similar economic burden on the respective economies.

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North American Linkages
Toward North American or Regional Cross-Border Communities
Christian Boucher, Policy Research Initiative
June 2005 (002)

Abstract

Following the 10th year anniversary of NAFTA's implementation, this paper set out to review an important source of data on Canadian and American values for the years 1981, 1990 and 2000. 

The paper suggests that neither the position of pro-free traders earlier in the 1980s nor of the opponents is completely accurate. On one hand, the pro-free traders argued that a free trade agreement with the United States would not jeopardize Canadian values that successfully survived the forces of Americanization for generations. On the other hand, free trade opponents argued that the Canadian way of life depended on the ability to keep the United States at arm's length.

This paper concludes that we are witnessing a complex process in which the two societies are increasingly transforming along broadly distinct paths, although some Canadian regions are more strongly linked, in terms of values, with the United States than with domestic regions. 

The footprints of these homogenous bi-national regions in social values are concentrated along the Atlantic and Pacific coasts.

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North American Linkages
Economic Relations and Cross-Border Organizations Along the 49th Parallel
Jean-François Abgrall, Policy Research Initiative
May 2005 (001)

Abstract

The ties between border states and provinces have been multiplying for some time. However, this phenomenon remains poorly evaluated and it is therefore difficult to anticipate what consequences it might hold for the Government of Canada. In order to contribute to an evaluation, this article examines one of the possible foundations of these ties. The premise is that the deeper the foundations of these ties become, the longer they are likely to last and potentially intensify, and accordingly the consequences of these ties could be increasingly dangerous to ignore.

The conclusion is not surprising – it confirms that the border states and provinces tend to establish tight relations where commercial relations are more intense, implying that cross-border organizations are the reflection of a combination of factors. It confirms at the same time, that along the length of the border the organizations and the economic relations layout a patchwork of relatively homogenous sub-units that one may class as cross-border regions.

For each pair of states-provinces, an indicator of economic interrelations was established, based on the level of interest that each of the partners has in each other, be it as a client or a supplier.

Only by taking into consideration this dual reality can we fully apprehend the extent and the consequences of this new dynamic.

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Social Capital as a Public Policy Tool
What Impact Does Social Capital Have on the Health of Canadians?
Louise Bouchard, University of Ottawa
Jean-François Roy, University of Ottawa
Solange van Kemenade, Public Health Agency of Canada
November 2005 (010)

Abstract

Meaningful information can be gleaned from the growing number of social capital studies being conducted. In the field of health, a number of studies show that social capital level has a positive impact on health promotion (e.g., decrease in infectious diseases, prevention of risk behaviours, improved maternal and infant health), taking charge of health (e.g., social justice, community involvement), and psychosocial mechanisms (e.g., social support, social inclusion).

The Public Health Agency of Canada decided to analyze information gleaned from the 2003 General Social Survey, Cycle 17, on social engagement in Canada. It is the first cycle to gather detailed information on this issue in Canada. The following conclusions were drawn from this research.

• The size of a respondent's network of strong ties has a positive impact on his or her self-reported state of health. Individuals with a medium to large network of strong ties (12 or more ties) are more likely to report being in good health than individuals with only a small network. However, it does not seem beneficial to an individual's health to have an extensive rather than medium-sized network of strong ties.

• The size of network of ties to organizations also has a positive impact on respondents' self-reported state of health. Based on the ratio of scores, individuals with ties with two or more organizations are 1.45 times more likely than those without such ties to report being in good health.

• As opposed to what happens with the size of networks of strong ties, the link between health and the size of the network of ties to organizations tends to increase. This means the larger the number of ties to organizations the more positive the impact.

• Reciprocity among members of a social network is linked to good health. Individuals who have both provided and received assistance from the same group of ties (family, neighbours, friends) are more likely to report being in good health than those who have not experienced reciprocal assistance relationship in their network of social ties.

• Total social support, measured by the assistance received (instrumental or emotional) has a negative impact on good health in the final regression model.

• There is a relatively positive impact on self-reported health when the emotional support variable is removed from the social support index. Studies show that emotional support is not always conducive to improving health (Berkman and Glass, 2000).

• Assistance received to perform or facilitate daily activities (housework, transportation, child care) has a positive impact on health. Instrumental support would probably have a greater impact on health than emotional support.

• Volunteering at least once in the year preceding the Survey has a positive impact on the respondents' self-reported state of health. However, caution must be exercised when establishing a causal relationship between volunteering and being in good health.

• In some circumstances, certain types of networks are more useful than others. For example, weak ties are important for professional or social advancement in life, while strong ties are important for obtaining daily support.

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Abstract

Freshwater is no longer taken for granted in Canada. In the wake of the evacuation of Kasheschewan and the tragedies at Walkerton and North Battleford, the safety of our drinking water has become an issue. In the face of recurring droughts in the prairies and protracted legal battles for access to water in eastern Ontario, water supplies for agriculture and industry are no longer a given. Add to these the flooding in the Red River, possible cross-border contamination from the Devil’s Lake diversion, the spectre of bulk water exports to the United States, and a wide array of other freshwater issues capturing the public’s imagination and policy-makers’ attention, and the time is right for new thinking on freshwater policies for Canada.

Freshwater for the Future: Policies for Sustainable Water Management in Canada, a conference held May 8-10, 2006, brought together more than 300 participants to examine a number of different aspects of water policy of relevance to the federal government. Participants included policy-makers from all levels of government, including First Nations, researchers in the social as well as the natural and physical sciences from Canada, the United States, Europe and Australia, and representatives of a variety of non-governmental organizations.

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Abstract

The Policy Research Initiative (PRI) Sustainable Development Team began working on the Canadian Water Sustainability Index (CWSI) in the summer of 2005 as part of a broader project on freshwater. Inspired by the Water Poverty Index, the PRI developed a draft framework for a composite water index that could be used to assess various elements of water well-being in Canadian communities. This draft CWSI framework provided the basis for a data review and an expert workshop. Outcomes from the data review and the workshop, as well as additional consultation and information sources, were used to further refine the index framework and develop an evaluation methodology that could be tested in the field. This working paper presents the results of the field testing exercise. Despite a number of data gaps, several indicator scores were determined for the six participating communities. Overall the index was well received and the communities felt that, with some improvement, a tool like the CWSI would be useful.

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Sustainable Development
Water Quality Trading to Address Pollution from Agricultural Activities in Canada: A Legislative Revie

Tri-Star Environmental Consulting
April 2006 (019)

Abstract 

This study reviews provincial and federal water policies and regulations in Canada to evaluate the extent to which they affect the potential for water quality trading. In reviewing the Acts and regulations, the study examines if the Statutes:

• reference pollution credits;
  have some general provisions that might allow a water quality trading program to be easily initiated;
  establish the use of assimilative capacity and give the jurisdiction the legislative authority to develop ambient water quality guidelines or objectives; and, 
  
• provide a means such as a watershed management plan to implement water quality trading.

Among conclusions the study finds that all jurisdictions, including the federal government, have a legislative means to establish ambient water quality guidelines, objectives or standards. This is a crucial element in using the assimilative capacity of water bodies, which in turn is one of the cornerstones for implementing water quality trading. All jurisdictions seem to have the means to initiate a trading program, through either a watershed management planning process, a nutrient management plan, or some other planning process. The major detriment to water quality trading encountered is the current approach to agricultural operations, which provides limited incentives for agricultural operators to treat runoff from their operations.

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Sustainable Development
Water Quality to Address Water Pollution from Agriculture Activities: Assessing the Adequacy of the Canadian Legislative and Policy Contexts
Claude Sauvé, Jean Nolet, Clara Whyte, Richard Sanchez,
April 2006 (018), ÉcoRessources Consultant

Abstract

Water quality trading applies the concept of pollution trading to address issues of water pollution. It is based on the creation of a market where the quantity of emissions of a negative environmental externality, such as pollution, is limited. Those who are authorized to pollute – through permits or otherwise – are then allowed to trade, usually at the watershed or sub-watershed level, to meet their environmental obligations. This study:

1. reviews the international experiences in water quality trading in order to identify key characteristics of these programs that would be favourable to the development of similar systems in Canada, particularly in the agricultural sector;
   examines the federal and provincial environmental regulations that impact on agricultural producers, to determine whether the regulations would foster or hamper the use of water quality trading; and,
   
2. makes some recommendations regarding the role of the federal government in supporting the development of these instruments in Canada. 

The analysis tends to show that the legislative frameworks of the provinces offer the basic features of, and the necessary flexibility for, the implementation of water quality trading to address water pollution form agriculture activities. The main barriers may be institutional and linked to the fact that water quality trading departs significantly from traditional regulatory approaches in Canada.

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Sustainable Development
Market Regulation and Environmental Policies: The Dutch Manure Production Quota System
Francisca Hubeek, Agricultural Economics Research Institute, (LEI) Wageningen, University Research Centre, The Hague, the Netherlands
April 2006 (017)

Abstract

Manure is a major source of nutrients such as phosphate and nitrogen as well as other contaminants in surface and groundwater in the Netherlands, the country with the highest livestock density in Europe. In 1987, the system of ‘manure production quotas’ was introduced as part of the three-phased Fertilisers Act (Meststoffenwet) to stabilize and reduce manure production in the intensive livestock industry, especially the pig and poultry sector in the southern and eastern part of the Netherlands. This policy measure is still in place but has undergone several changes in response to lessons learned and demands from regulated farms. A system of manure production quotas was chosen because existing regulatory practices, such as the registration of all livestock, allowed more precise and cheaper measurement and monitoring of manure production than the continuous monitoring of emissions, thus making it relatively easy to enforce. Another important motive behind the adoption of this system was to meet European policy requirements to cap phosphate production.The system has four main characteristics:

1. Quotas were allocated on the basis of historical rights, i.e. past levels of production, because this was considered equitable and fair to all farmers. Anticipating behaviour from farmers resulted in allocating more quotas than the volume of production required and the possibility of an increased instead of a decreased level of manure production.
2. Quotas eventually became tradable. When introduced, quotas were non-tradable, but experience showed farmers needed more flexibility to respond to market changes. Introducing tradability quotas improved competitiveness but also resulted in fewer and larger farms.
3. The division between land-based and non-land-based quotas, the third characteristic, was intended to increase extensive livestock production and decrease intensive livestock farming, especially in the pig and poultry sector. While this division resulted in a decrease in the maximum level of intensive livestock production it also increased the average level of livestock intensity.
4. Geographical restriction on manure quota trading, was imposed to decrease the level of production in manure surplus regions located in the south and east of the Netherlands. During the years 2002 and 2004, livestock volumes declined, after an increase in the preceding years.

The system of manure production quotas has had both socio-economic and environmental impacts. From a socio-economic standpoint, the movement of pig farmers from a manure surplus to a manure deficit area, where land and quota prices are lower, was expected to equalize rents. However, non-acceptance by local communities and cultural roots in the surplus region limited the number of farmers that actually moved. Innovation in farming operations and environmental improvement were stimulated by the introduction of additional incentives into the quota system. Knowledge programs were developed to support farmers in complying with a Mineral Accounting System (MINAS) introduced in 1998 and to assist them in adopting new methods and processes considered friendlier to the environment.

Environmental improvements in both soil and surface waters were initially mainly a result of the Soil Protection Act, which aims to improve the efficiency of manure application. Further improvements after 1998 are directly associated with the introduction of MINAS. Finally, the quota system prevented an increase of 5-10% in manure production, which could have been realized had no such system been in place at all. Furthermore, by setting a cap and reducing it in time, it decreased the actual volume of manure production by 15%. A better result would have been expected had the system been introduced during the 1970s.