Case Study: Creating a Canadian-based Property Rights Index
Apr 5, 2012
The following is cross-posted from www.internationalpropertyrightsindex.org
Background
The Frontier Centre for Public Policy is an independent, Western Canada-based think tank. Our mission is to develop and popularize policy choices that will help Canada’s prairie region live up to its vast but unrealized economic potential. Part of that mission is the protection of an enforceable and predictable property rights regime. For the last few years, the Frontier Centre has partnered with the Washington, D.C.-based Property Rights Alliance in its release of the International Property Rights Index (IPRI). In 2010 the Frontier Centre contributed a study about how expropriation powers in the Canadian province of Manitoba were being abused. In one rural community, a local municipality was attempting to expropriate large tracts of ranch land to develop a historic site. Expropriation in several Canadian provinces is allowed for vaguely defined reasons of economic development. The following year the Frontier Centre contributed a case study on the Nisga’a Nation, an indigenous community in the province of British Columbia where the government was attempting to create the first system of fee simple property ownership on an indigenous community in Canada.
For the 2011 IPRI release, the Frontier Centre unveiled the Canadian rankings in Lethbridge, Alberta. Joseph Quesnel, the Frontier Centre’s lead researcher on property rights, noticed that local media were very interested in how the rankings were broken down provincially and territorially. Unable to provide an adequate answer at the present time, the idea for a Canadian-style Property Rights Index was born. At the time, the province of Alberta was engaged in an important debate about property rights when a series of bills in the Alberta Legislature — known collectively as the “Land bills” – were being generating controversy. Many believed the bills adversely affected rights to compensation, unduly centralized land use planning in the provincial Cabinet, and limited access to courts. These interpretations of the bills are contested, but it was noted that Alberta was interested in property rights. Before these debates, a politician in Canada’s federal House of Commons and another in Ontario’s provincial legislature unveiled private members’ bills to amend Canada’s Constitution to include a right to compensation. Canada at present does not have constitutional protection for property rights, and constitutional scholars tell us that was the original intention. In Canada, property rights are very much part of the unwritten tradition and common law, although they do not flow from written documents.
Thus, the idea of a property rights index for Canada took shape. After receiving funding from donors, research for the project pressed forward. This will be the first comprehensive measure of property rights protection in Canada.
In Canada, provinces and territories have constitutional authority over property rights. So, it was decided that the Index would focus on property rights regimes across provinces and territories. Although the Canadian index takes inspiration from the IPRI, it was decided to exclude intellectual property. Intellectual property in Canada is a federal concern. Also, many within Canada who advocate for property rights are divided on how to place intellectual property rights, with some even asserting they do not exist. This project, however, does not take that position, but avoids wading into it altogether.
Indicators
Much of the thinking involved in creating this Index has concentrated on what indicators to used to “measure” property rights protection. The intention is to use indicators that were distinct enough between Canadian provinces and territories to actually capture differences that could be ranked, but also to use indicators that are universal and could be comparable with jurisdictions outside Canada. These indicators are expropriation, civil forfeiture, as well as other areas yet to be finalized including cultural/heritage property laws, endangered species, and land use planning. The area of transfer of estates is also being considered as an indicator.
Expropriation
The right of expropriation – called eminent domain in the United States – is probably the most direct way governments seize property legally that they cannot acquire easily from a willing seller. Expropriation is also comparable across most national jurisdictions because most nation-states have expropriation laws. In Canadian provinces and territories, the procedural and substantive powers of expropriation are defined in statutes. Our development of this indicator has involved contracting legal experts in expropriations to assist us in the evaluation of procedures across all 13 provinces and territories and to identify how procedures and grounds for expropriation differ, how they offer protection to property owners.
Civil Forfeiture
The power of the government to acquire title to property used – or believed to be used – in criminal activity is a major way to affect property rights. In many Canadian provinces, the forfeiture procedure is handled through civil courts where the legal burden of proof is lower than in criminal cases. Here too we have benefitted from the assistance of legal experts on civil forfeiture. Although forfeiture regimes are broadly similar, there are subtle nuances and procedural differences between the various provincial and territorial statutes.
Other areas to be explored
Our lead property rights researcher is finalizing the last criteria. Here are the areas:
1) Heritage/Cultural Property laws- Many Canadian provinces and territories have statutes that affect designation of some properties as cultural landmarks. The issue of whether property owners are compensated is crucial.
2) Endangered Species- Canadian provinces and territories have well-intentioned laws designed to protect endangered species. However, often these laws adversely affect the property rights of private land owners, including their rights to compensation.
3) Land use planning- This is a very wide area in Canadian provincial and territorial law. There are many ways in which land use designations affect property rights. This indicator would need to be developed. Exactly which aspect of land use planning would be measured is yet to be determined.
4) Transfer of estates- This pertains to provincial/territorial laws on estates and inheritance where the concern is to what extent the state takes control over a deceased person’s estate where a will does not exist.
Rankings and Output
Each province and territory will be ranked on an ordinal scale in each indicator area. How each province and territory performs in each indicator area will then determine how they perform overall in the broad area of property rights protection, which will be measured in the form of a raw numerical score.
From this, it will be possible to determine which provinces and territories have better property rights protection. It would also be possible to cluster different provinces and territories into different levels of property rights protection from high protection to moderate to low.
Finally, a useful venture would be to correlate how each province performs on the property rights index with measures such as provincial/territorial GDP, economic growth, and rates of investment. This would allow us to test the hypothesis about the positive economic effects of strong property rights protection. This idea originated with the IPRI and its useful correlation graphs.
Output for the project is a final report with all the rankings and the statistical graphs. We would expect extensive media reporting across the country as the rankings would be relevant to all regions in Canada.
Goals
The main goal of the Index is to elevate public consciousness and fister discussion about property rights across all regions of Canada. Ordinary citizens are often unaware of how precarious property rights could be in the country. Although the common law protects rights to compensation for expropriation, these rights can be taken away by legislatures given that Canada lacks national constitutional property rights protection. Many Canadians are not directly affected by topics like expropriation, civil forfeiture, endangered species, or land use planning, so they do not look into these areas. So, the intention is educate Canadians about the levels of protection enjoyed in their particular province or territory. Ideally, our Index will help to change public perceptions and influence the public policy debate and property legislation.