Aug. 30, 2023

Professor receives SSHRC Insight Grant

Professor David Wright's research builds a cost-benefit analysis in impact assessment

Professor David Wright has received almost $50,000 from the Government of Canada for his project "Building a Janus Perspective of Cost-Benefit Analysis in Impact Assessment." The Social Sciences and Humanities Research Council’s (SSHRC) Insight Grants support research excellence in the social sciences and humanities for established and emerging scholars. 

"I am delighted and honoured to receive this Tri-Council Insight Grant, which will support my next steps researching law and policy dimensions of impact assessment," says Wright. "The present Canadian context of ambitious decarbonization agendas and Indigenous self-determination make this area of research more important than ever. And with the Supreme Court of Canada set to release its landmark ruling on the constitutionality of the federal Impact Assessment Act in the very near future, the timing couldn’t be better for looking deeply into long-standing questions about cost-benefit analysis, decision-making, and the public interest."

About the project

Decisions to approve major natural resource and large infrastructure projects have social, economic and environmental impacts that last decades. As such, for many years governments have used impact assessment (IA) laws as a tool to understand potential impacts before issuing an approval to proceed, sometimes referred to as a "look before you leap" law. In today's Canadian context, however, federal assessment of major natural resources projects has become politically fraught, intensified by declining public confidence and intensifying calls for decarbonization. Much is at stake: major projects such as large mines, hydroelectricity dams, and pipelines are expected to attract approximately $635 billion in investment over the next decade. Implementation of the new federal Impact Assessment Act (IAA), which replaced the previous statute in 2019, will take place in this context.

While the IAA represents significant evolution over the previous federal IA regime, important implementation questions remain, particularly given the lack of specificity in key statutory provisions. New regulations, guidance and practices are needed to implement new assessment factors pertaining to climate change, sustainability, rights of Indigenous peoples, and economic changes. Critically, it remains unclear how the Impact Assessment Agency of Canada and political leaders will weigh this information and make final decisions as to whether a project is in the public interest. This amplifies a long-standing problem in Canadian impact assessment: opaque weighing of burdens and benefits leading to decision-making that lacks transparency. All of this is taking place in a context where Alberta has launched a constitutional challenge to the IAA, and the Supreme Court of Canada will issue a landmark ruling on constitutional aspects in late 2023.

Cost-benefit analysis (CBA) has roles to play in this context (regardless of the forthcoming court ruling). As an existing analytical tool for deciding whether or not to proceed with a particular course of action, and notwithstanding important critiques, it can serve as a methodology that generates more consistent and transparent decision-making. However, CBA is not well-understood in the Canadian environmental and natural resources law context. Unlike other jurisdictions, such as the United States, where CBA has prominent roles in natural resources decision-making and associated literature, CBA has had minimal deployment and limited scholarly attention in Canada. Instead, assessments have proceeded without a transparent analytical framework for examining a project's benefits and burdens. Preliminary observations indicate that neither side of the ledger has been presented clearly, and economic projections are often skewed toward benefits. Focused scrutiny of past practices and critical assessment of potential future directions are needed, as proposed in this research project.

Research Impact/Benefit

There is a pressing need to build a Janus perspective on CBA in this context to provide a sound foundation for IAA implementation. This research project will fill existing knowledge gaps in two important ways. First, it will retrospectively examine how CBA has been used in federal impact assessment decision-making to date by systematically reviewing past use of formal and informal cost-benefit analysis (CBA) in federal IA. No such analysis has been conducted previously in the Canadian context. Second, this research will look forward by examining potential uses and limitations of CBA in Canada's new federal IA regime. It will use provisions in the new IAA as starting points, and canvas legally-tenable alternatives to be used in IAA implementation. More broadly, this research will contribute to implementing the new legal framework in a manner that observed constitutional limits, and brings integrity and transparency to the process for all participants. It also has international relevance as countries update IA laws and practices.