1 Tsebelis, George, Nested Games: Rational Choice in Comparative Politics (Berkeley: University of California Press, 1990).Google Scholar

2 See, for instance, National Task Force on Environment and Economy, Report of the National Task Force on Environment and Economy (Toronto: Canadian Council of Ministers of the Environment, 1987).Google Scholar

3 Brown, M. Paul and Siddiq, Fazley, “The Dimensions of Provincial Environmental Protection Spending,” paper presented at the annual meeting of the Canadian Political Science Association, Kingston, 1991, 20.Google Scholar

4 Physical spillovers of pollutants between jurisdictions also create a situation in which downstream provinces are dependent on their neighbours to mitigate environmental impacts. However, given the size of Canadian provinces, physical spillovers typically are not at issue, and thus will not be considered further here.

5 Breton, Albert, “Supplementary Statement,” Report of the Royal Commission on the Economic Union and Development Prospects for Canada, Vol. 3 (Ottawa: Minister of Supply and Services Canada, 1985).Google Scholar

6 Oates, Wallace E., Fiscal Federalism (New York: Harcourt Brace Jovanovich, 1972).Google Scholar

7 Baumol, William J. and Oates, Wallace E., The Theory of Environmental Policy (2nd ed.; Cambridge: Cambridge University Press, 1988)CrossRefGoogle Scholar, chap. 17; Zerbe, Richard O., “Optimal Environmental Jurisdictions,” Ecology Law Quarterly 4 (1974), 193–245Google Scholar; and Oates, Wallace E. and Schwab, Robert M., “Economic Competition among Jurisdictions: Efficiency Enhancing or Distortion Inducing?” Journal of Public Economics 35 (1988), 333–54.CrossRefGoogle Scholar

8 Zerbe, “Optimal Environmental Jurisdictions,” 202.

9 Baumol and Oates, Theory of Environmental Policy, 289.

10 Markusen, James R., Morey, Edward R. and Olewiler, Nancy, “Competition in Regional Environmental Policies when Plant Locations Are Endogenous,” Journal of Public Economics 56 (1995), 55–77.CrossRefGoogle Scholar

11 This analysis considers only process regulations, such as industrial effluent standards, rather than product regulations, such as recycling requirements or tailpipe standards. The former are opposed by local industry, since they impose costs on local producers only and thus place them at a competitive disadvantage. Political costs and benefits are very different in the case of product regulations, which do not selectively affect local producers and may even be used to create a competitive advantage for local producers (witness the debate in the early 1990s in Ontario concerning recycling requirements for beer containers). This distinction is explored in Mashaw, Jerry L. and Rose-Ackerman, Susan, “Federalism and Regulation,” in Eads, George C. and Fix, Michael, eds., The Reagan Regulatory Strategy (Washington, D.C.: Urban Institute Press, 1984).Google Scholar

12 Race-to-the-bottom scenarios are discussed in Brander, James A., “Economic Policy Formation in a Federal State: A Game Theoretic Approach,” in Simeon, Richard, ed., Intergovernmental Relations (Toronto: University of Toronto Press, 1985)Google Scholar, and Noam, Eli M., “Government Regulation of Business in a Federal State: Allocation of Power under Deregulation,” Osgoode Hall Law Journal 20 (1982), 762–79.Google Scholar

13 The order of preferences faced by competitive provinces is not a mirror image of those faced by dependent provinces, since the requirement for a reverse prisoners’ dilemma, that mutual inaction is preferred to mutual regulation, is not plausible even for a jurisdiction intent on outregulating its neighbours.

14 Wilson, James Q., “The Politics of Regulation,” in McKie, James, ed., Social Responsibility and the Business Predicament (Washington: Brookings Institution, 1975).Google Scholar

15 One exception explored by Markusen, Morey and Olewiler (“Noncooperative Equilibria”) occurs in the case of locally unwanted facilities, such as hazardous waste disposal facilities. In the “Not in My Backyard” scenario, strict environmental standards have concentrated benefits in the sense that they preclude the undesirable development, and thus provide incentives for politicians to engage in a race to the top.

16 Brander, “Economic Policy Formation in a Federal State,” 62.

17 Mashaw and Rose-Ackerman, “Federalism and Regulation,” and Noam, “Government Regulation of Business,” 776.

18 Rose-Ackerman, Susan, “Does Federalism Matter? Political Choice in a Federal Republic,” Journal of Political Economy 89 (1981), 152–65.CrossRefGoogle Scholar

19 The case studies are based on review of documentary sources, including internal reports prepared for the Canadian Council of Ministers of the Environment, and open-ended interviews with 53 federal and provincial government officials, 6 federal and provincial ministers of the environment, 8 industry spokespersons and 6 environmentalists.

20 Marchak, M. Patricia, “For Whom the Tree Falls: Restructuring the Global Forest Industry,” BC Studies 90 (1991), 3–24.Google Scholar

21 See, for instance, Forest Sector Advisory Council, “Canada's Forest Industry: A Strategy for Growth,” July 1992.

22 Environment Canada, “Pulp and Paper Effluent Regulations,” EPS 1-WP-72–1, November 1971. Uniform federal discharge standards were developed for different types of new mills reflecting “best practicable technology.” Mills built before 1971 were covered only by informal “guidelines” rather than the formal regulations. However, because those mills remained subject to a complete prohibition of discharges under the Fisheries Act, the national guidelines were not without force, since federal officials could promise not to enforce the more stringent formal requirement in exchange for compliance with the informal guidelines.

23 Huestis, Lynne, “Policing Pollution: The Prosecution of Environmental Offenses,” Working Paper, Law Reform Commission of Canada, September 1984.Google Scholar

24 The pulp and paper industry's widespread noncompliance with federal standards received considerable attention in the press in March 1989, after a damning Environment Canada report was leaked to Greenpeace. See Sinclair, William F., “Controlling Pollution from Canadian Pulp and Paper Manufacturers: A Federal Perspective,” Environment Canada, July 1988.Google Scholar

25 “New Alberta Pulp Standards Will Be the Most Strict in Canada,” The Globe and Mail (Toronto), December 3, 1988, B12.

26 Bonsor, Norman, McCubbin, Neil and Sprague, John B., Kraft Mill Effluents in Ontario (Toronto: Queen's Printer for Ontario, 1988).Google Scholar

27 Ontario, Environment, Interim Pollution Reduction Strategy for Ontario Kraft Mills (Toronto: Queen's Printer for Ontario, April 1989).Google Scholar

28 “B.C. Rules on Toxic Chemicals to Cost Pulp Firms $800 Million,” The Globe and Mail (Toronto), May 13, 1989.

29 Confidential interview.

30 Gouvernement du Québec, Ministère de l'Environnement, “Communiqué: La Ministre de L'Environnement, Madame Lise Bacon, Annonce un Programme de Réduction des Organochlorés,” June 1, 1989.

31 “An Overview of Federal/Provincial Requirements for Pulp and Paper Mills,” draft prepared for the Canadian Council of Ministers of the Environment, February 15, 1990.

32 Personal communication, Jim Bradley.

33 “An Overview of Federal/Provincial Requirements,” 15.

34 Confidential interview.

35 Mittelstaedt, Martin, “Pulp-Making Firms Fear Ban on Chlorine,” The Globe and Mail (Toronto), August 8, 1992Google Scholar, A3.

36 Nikiforuk, Andrew and Struzik, Ed, “The Great Forest Sell-Off,” Report on Business Magazine, November 1989.Google Scholar

37 Macdonald, Doug, The Politics of Pollution (Toronto: McClelland and Stewart, 1991), 237.Google Scholar

38 Confidential interview.

39 Confidential interview.

40 See also Sinclair, “Controlling Pollution,” 282.

41 A coalition of over 50 groups, led by the West Coast Environmental Law Association, included environmentalists, fishers’ unions, pulp and paper workers’ unions and native groups.

42 Personal interview, John Reynolds.

43 Canada, House of Commons, Special Committee to Pre-Study Bill C-78, Minutes of Proceedings and Evidence, December 4, 1990, 13:22Google Scholar.

44 Confidential interview.

45 Special Committee, Minutes of Proceedings and Evidence, 13:23.

46 Confidential interview.

47 Bohn, Glenn, “Phone Calls to Premier Reverse Tough Dioxin Law,” The Vancouver Sun, December 11, 1990Google Scholar, A1.

48 Columbia, British, “Pulp Mill and Pulp and Paper Mill Liquid Effluent Control Regulation,” BC Reg. 470/90, December 13, 1990.Google Scholar

49 Confidential interview.

50 BC Reg. 470/90, as amended March 2, 1992. Williamson, Robert, “B.C. to Take a Second Look at Tough Pulp Mill Standards,” The Globe and Mail (Toronto), October 1, 1992Google Scholar, B1.

51 “An Overview of Federal/Provincial Requirements,” 16.

52 Ibid., 6, 13.

53 The September 27 letter stated, “Je vous demande de prendre les mesures appropriées afin de surseoir à l'application du règlement fédéral au Québec.”

54 Québec, “Règlement sur les fabriques de pâtes et papiers,” c. [Q-2, R.12.1], October 22, 1992.

55 Confidential interview.

56 Confidential interview.

57 Confidential interview.

58 Canada, “Pulp and Paper Mill Chlorinated Dioxins and Furans Regulations,” SOR/92–267; “Pulp and Paper Mill Defoamer and Wood Chip Regulations,” SOR/92–268; and “Pulp and Paper Effluent Regulations,” SOR/92–269, all in Canada Gazette, Part II 126 (1992), 1940–2007.

59 The industry also succeeded in obtaining a conditional water use credit in the toxicity test, and the standards for dissolving sulphite mills, which already were weaker than those for other mills, were further weakened.

60 See, for instance, Forest Sector Advisory Council, “Canada's Forest Industry.”

61 On the role of uncertain science in regulatory decision making, see Salter, Liora, Mandated Science (Boston: Kluwer, 1988)CrossRefGoogle Scholar; Shrecker, Ted, The Political Economy of Environmental Hazards (Ottawa: Law Reform Commission of Canada, 1984)Google Scholar; and Harrison, Kathryn and Hoberg, George, Risk, Science, and Politics: Regulating Toxic Substances in Canada and the United States (Montreal: McGill-Queen's University Press, 1994).Google Scholar

62 Environment Canada, Health and Welfare Canada, “Priority Substances List Assessment Report No. 2: Effluents from Pulp Mills Using Bleaching,” 1991, and Department of the Environment, Department of National Health and Welfare, “Assessment of the Priority Substance ‘Effluents from Pulp Mills Using Bleaching’ and Amendment of the Priority Substances List,” Canada Gazette, Part I, December 14, 1991Google Scholar, 4053.

63 Confidential interview.

64 Williamson, Robert, “Pulp Cleanup May Be Waste of Money,” The Globe and Mail (Toronto), December 23, 1992Google Scholar, A1.

65 Confidential interviews.

66 Confidential interview.

67 Harrison, Kathryn, “Passing the Buck: Federalism and Canadian Environmental Policy” (unpublished doctoral dissertation, University of British Columbia, 1993)Google Scholar, chap. 7.

68 Victor, Peter A. and Burrell, Terrence N., Environmental Protection Regulation: Water Pollution, and the Pulp and Paper Industry (Ottawa: Economic Council of Canada, 1981)Google Scholar; Huestis, “Policing Pollution”; and Harrison, Kathryn, “Is Cooperation the Answer? Canadian Environmental Enforcement in Comparative Context,” Journal of Policy Analysis and Management 14 (1995), 221–44.sCrossRefGoogle Scholar

69 Winsor, Hugh, “Canadians Have Turned a Lighter Shade of Green,” The Globe and Mail (Toronto), April 24, 1991Google Scholar, A6.

70 Harrison, “Passing the Buck,” chap. 7.