Natural Resource Constraint on Fiscal Capacity: Evidence from Canadian Municipalities

Nya Fest Session 5: There ain’t no mountain high enough, ain’t no valley low enough: Ownership, redistribution, and extraction of natural resources, 1800-2000 organized by Kasper Hage Stjern


Clara Dallaire-Fortier, Giacomo Rella


In Canada, the provision of public services is intrinsically linked to the capacity of the state to mobilize revenues and to the ways responsibilities are distributed between federal, provincial, and municipal governments. The provision of public services thus depends on economic conditions at the macro and micro levels, and therefore on economic shocks at these different scales. Resource-dependent municipalities provide a rare opportunity to better understand the resilience of public services to shocks. The mining industry follows mineral price cycle is highly volatile. This article studies the link between fiscal capacity of municipalities and the wave of mine closures that affected Canada after 1980. Using a novel database on mineral production, we investigate how spending for social services changes after mine closures in at municipal level, and study if mine closures constraint the capacity of local government in providing relief and support with consequential implications for socio-economic precarity These questions echo broader concerns about how much municipalities depend on extractive activities to provide for services to their citizens, and inform current debates on the implications of the ecological transition for local governments.


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