Constitutional Crisis, the Economics of Environment, and Resource Development in Western Canada

This paper examines the assignment of functions over natural resources and environment between the federal and provincial governments using the Breton-Scott (1978) approach to the optimal assignment of functions and, alternatively, studying the actual policy outcomes under the existing assignment of powers. On theoretical grounds, provincial control over natural resources is warranted as long as the external costs imposed on other jurisdictions are small, but the theoretical approach does not unequivocally assign powers to either the provinces or Ottawa. In practice, as illustrated by examples, natural resource policies are driven not by concern over social costs and benefits, but by political considerations that impose added costs on the economy.