Incentive problems in Canada's land markets: Emphasis on Ontario

Abstract

The specific issue addressed in this paper is urban encroachment on agricultural lands, and the problems it poses for both analysis and the conservation of the land resource. The purpose of our discussion is two-fold: (1) to identify where and why traditional analytical and regulatory approaches fail to resolve land use conflicts, and (2) to explore ways and means of resolving some of the dilemmas which society faces in making land use decisions. This paper's contribution is in the spirit of “Getting Incentives Right” for the inter-temporal transfer of wealth, as represented in trade-offs between environmental and resource endowments and human and physical capital. Efforts are placed on identifying what the appropriate price, levy, taxes, and grant ratios “ought” to be in order to encourage individuals in the marketplace to act in society's interest. We have also explored ways of efficiently transmitting those incentives through the market mechanism, without unduly relying on bureaucratic methods or suasion. Emphasis is placed on mechanisms that have little scope for preferential access and are subject to public scrutiny; emphasis on such self-disciplining approaches should result in less effort expended on (unproductive) lobbying activities and bureaucratic administration.