Mineral Rights Regimes in Canada and the United States

April 25, 2014

Differences in mineral property rights in the United States and Canada yield very different regulatory regimes, says John Dobra, founding director of the Natural Resource Industry Institute.

While Canada and the United States began with similar laws concerning mineral and mining rights, the two countries' legal systems subsequently diverged. Dobra looks at some of the key differences between the two:

  • Mining is much more important to Canada's economy. 2.1 percent of Canada's 15.4 million person workforce is directly employed in mining, while just 0.14 percent of the United States' 155.8 million person labor force is employed in mining jobs.
  • Canadian mineral rights are owned by the provinces. When land is sold or granted to private parties, provinces reserve those minerals. This is not the case in the United States, where mineral rights are privately owned.
  • Canadian provinces receive tax revenue directly from mining development, which gives them an incentive to create a favorable policy environment, unlike the U.S. federal government, which has little incentive to exercise regulatory restraint. Surveys by the Fraser Institute of mining industry managers and executives indicate that this is so, with respondents declaring much higher favorability toward the Canadian regulatory regime than the American one.
  • The strong system of private property rights in the United States, however, means that potential land disputes are less of a deterrent to mining investment in the United States than in Canada.

Surveys also indicated that respondents found U.S. tax policy to be much more hostile to mining investment than Canada's tax system. Dobra encourages American policymakers to look at this issue and harmonize their tax treatment of mining with the Canadian regime.

Source: John Dobra, "Divergent Mineral Rights Regimes A Natural Experiment in Canada and the United States Yields Lessons," Fraser Institute, April 2014.

 

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