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OECD's review of rural policy in Quebec. It finds that in rural Québec, both population and personal income are growing, on average, and the province’s economic base continues to diversify. Land occupancy is more homogenous than in the rest of Canada, due to the presence of denser networks of small and medium-sized communities. However, mirroring the situation at the national level, the province displays large regional disparities. The sustainability of some rural communities, especially if remote and resource-based, is challenged by demographic and economic decline. In this context, Québec has developed one of the most advanced rural policy approaches in the OECD, closely in line with the framework suggested in the OECD’s New Rural Paradigm. The province’s rural policy does not have a sectoral focus, and aims at community empowerment and land occupancy. To maximize returns on its rural policy investments, Québec needs to integrate social development more strongly with economic and entrepreneurial development, and further strengthen the supra-local level of government as the centre for rural and territorial development strategies. This should be combined with stabilisation measures in lagging areas, through the accumulation of human capital and enhanced access to land in predominantly rural territories. To address environmental challenges, natural resources should be protected both in the outskirts of metropolitan zones and in remote areas.
OECD Rural Policy Reviews Québec, Canada OECD RURAL POLICY REVIEWS Québec, Canada ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. ISBN 978-92-64-08214-4 (print) ISBN 978-92-64-08215-1 (PDF) Series: OECD Rural Policy Reviews ISSN 1990-9276 (print) ISSN 1990-9284 (online) Photo credits: top right and bottom left © Government of Québec top left © Monty Rakusen/Digital Vision/Getty Images bottom right © Chemistry/Digital Vision/Getty Images Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2010 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to email@example.com. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at firstname.lastname@example.org or the Centre français d’exploitation du droit de copie (CFC) at email@example.com. FOREWORD – 3 Foreword With gains in agricultural productivity leading to a dramatic reduction in farm employment, rural regions across the OECD now depend on a wide range of economic engines for growth. Increasing globalisation, improved communications and reduced transportation costs are additional drivers of economic change in rural areas. Traditional policies to subsidise farming have not been able to harness the potential of these economic engines. In 2006, the OECD published a thematic report The New Rural Paradigm: Policies and Governance, which seeks to explain the shift in rural development policies to account for these important economic changes and the need for a new approach to governance. Policies to develop rural places are beginning to take into account the diversity of economic engines as well as the diverse types of rural regions. On the aggregate level, rural regions face problems of decline with out- migration, ageing, a lower skill base and lower average labour productivity which then reduce the critical mass needed for effective public services, infrastructure, and business development, thereby creating a vicious circle. However, there are many rural regions which have seized opportunities and built on their existing assets, such as location, natural and cultural amenities and social capital. The success of such dynamic rural regions is evident in regional statistics. Promoting rural development poses numerous policy and governance challenges because it requires co-ordination across sectors, across levels of government and between public and private actors. OECD countries have therefore been undergoing a paradigm shift in their approaches to accommodate such important challenges. The most defining characteristics of this shift are a focus on places rather than sectors and an emphasis on investments rather than subsidies. The multi-disciplinary nature of rural development has contributed to the lack of comprehensive analytical frameworks to analyse and evaluate multisectoral, place-based approaches. To fill this knowledge gap, the OECD co-operates with stakeholders worldwide. Its work on rural development was intensified with the creation in 1999 of the Territorial OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4 – FOREWORD Development Policy Committee (TDPC) and its Working Party on Territorial Policy in Rural Areas. These bodies provide governments with a forum for discussing regional and rural development. In early 2006, under TDPC’s guidance the Directorate of Public Governance and Territorial Development (GOV) launched a series of national rural policy reviews, such as this one on Québec, Canada, to deepen international knowledge in this field. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ACKNOWLEDGEMENTS – 5 Acknowledgements This review was prepared by the OECD Directorate for Public Governance and Territorial Development (GOV) in collaboration with the federal government of Canada and the provincial government of Québec. The Secretariat would like to thank in particular Donna Mitchell (Executive Director, Rural and Co-operative Secretariats, Government of Canada) and Robert Sauvé (Deputy Minister, Ministry of Natural Resources and Wildlife MRNF, Government of Québec), for their strong support for this project. A team of peer reviewers participated in the research process and offered advice during the production of the review: • Australia: Marcus James, General Manager, Department of Infrastructure, Transport, Regional Development and Local Government, Australian Delegate to the Territorial Development Policy Committee (TDPC); • France: Max Barbier, Representative in charge of Local Development, DATAR, Ministry of Rural Space and Territorial Development, Office of the Prime Minister, French Delegate to the TDPC Working Party on Territorial Policy in Rural Areas; • Switzerland: Thomas Maier, Scientific Officer, Federal Office for Agriculture, State Secretariat for Economic Affairs (SECO), Swiss Delegate to the TDPC Working Party on Territorial Policy in Rural Areas. Special thanks go to Yannick Routhier (MAMROT, Québec), Lawrence Desrosiers (MAMROT, Québec), Christine Gosselin (MAMROT, Québec), René Tessier (MAMROT, Québec), Jacques Defoy (MAMROT, Québec), Bruno Jean (Université du Québec à Rimouski), Stève Dionne (Université du Québec à Rimouski), Christine Burton (Rural Secretariat, Canada), Christian Fortin (Rural Secretariat, Canada), Renée Fortin (Rural Secretariat, Canada), Clément Côté (Rural Secretariat, Canada), OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 6 – ACKNOWLEDGEMENTS François Gauvin (Canada Economic Development for Quebec Regions) and Ray Bollman (Statistics Canada). The review benefited from substantive inputs by external experts. Policy information and data were provided by: Yancy Vaillant (Professor, Department of Business Economics, Universitat Autònoma de Barcelona), and Peter V. Schaeffer (Professor, Division of Resource Management, West Virginia University). The review was directed by Joaquim Oliveira Martins (Head, Regional Competitiveness and Governance Division), and co-ordinated and drafted by Markus Berger (Administrator) and Raffaele Trapasso (Administrator) under the supervision of David Freshwater (Head, Rural Development Programme). Erin Byrne prepared the review for publication. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 TABLE OF CONTENTS – 7 Table of contents Acronyms and abbreviations ...........................................................................15 Executive summary ...........................................................................................17 Assessment and recommendations ..................................................................19 Chapter 1. Trends, perspectives and policies for rural Canada ....................41 Key points .......................................................................................................42 Introduction .....................................................................................................43 1.1 Demographic trends in rural areas.............................................................53 1.2 Rural-urban linkages .................................................................................59 1.3 Social well-being .......................................................................................64 1.4 Economic profile .......................................................................................73 1.5 Environmental sustainability .....................................................................86 1.6 Challenges and federal policy responses ...................................................94 Notes………….…………………………………………………………….….104 Bibliography ....................................................................................................111 Chapter 2. Economic profile of rural Québec ...............................................117 Key points .....................................................................................................118 Introduction ...................................................................................................119 2.1 “Rural” in Québec ...................................................................................120 2.2 Levels and sources of income .................................................................128 2.3 Level of well-being of rural Québécois...................................................157 2.4 Challenges and opportunities ..................................................................164 Notes…………………………………………………………………………..174 Bibliography ....................................................................................................179 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 8 – TABLE OF CONTENTS Chapter 3. Assessment of rural policy in Québec .........................................183 Key points .....................................................................................................184 Introduction ...................................................................................................185 3.1 Evolution of rural policy .........................................................................186 3.2 Rural policy measures and governance ...................................................188 3.3 Multi-level governance ...........................................................................212 3.4 Sectoral policies ......................................................................................217 Notes…………………………………………………………………………..238 Bibliography………………………………………………………………….240 Annex 3.A1………………………………………………………………….....245 Chapter 4. Policy recommendations ..............................................................247 Key points .....................................................................................................248 Introduction ...................................................................................................249 4.1 Inclusive governance ...............................................................................250 4.2 Development of lagging areas .................................................................264 4.3 Environment and sustainable development .............................................290 Notes…………………………………………………………………………..297 Bibliography………………………………………………………………….298 Tables Table 1.1 Population change in rural and small town areas, Canada, provinces, and territories.............................................................55 Table 1.2 Distribution of new immigrants (having arrived during the previous five years), Canada.......................................................57 Table 1.3 Distribution of commuters by place of residence and place of work ............................................................................................61 Table 1.4 Social progress: average of CSDs by urban and rural type.........69 Table 1.5 Distribution of physicians and total population across Canada, 2004 ..............................................................................71 Table 1.6 RST employment by industry sector, 2008…………………….74 Table 2.1 Québec in figures ......................................................................122 Table 2.2 Rural and urban population in Québec, 2006 ...........................126 Table 2.3 Income distribution in Québec and gap with the national average, 2005 ............................................................................129 Table 2.4 Areas protected by the law on agricultural land, 2009 .............143 Table 2.5 Soil fertility and altitude ...........................................................145 Table 2.6 Number of public health-care and social-service facilities in rural Québec..............................................................................160 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 TABLE OF CONTENTS – 9 Table 2.7 Number of education facilities in rural Québec ........................161 Table 2.8 Annual rate of graduates and dropouts in secondary schools in rural Québec .........................................................................162 Table 3.1 The New Rural Paradigm .........................................................190 Table 3.2 Total budget of the second Politique nationale de la ruralité, 2007-2014 .................................................................................209 Table 3.3 Impact of approved CLD projects ............................................223 Table 3.A1.1Ministerial expenditures targeting rural residents and territories, in million CAD ........................................................245 Figures Figure 0.1 Urbanisation trends in OECD, Canada and Québec between 1996 and 2005………………………………………………….20 Figure 0.2 Increase in household income in Québec's predominantly urban, intermediate and predominantly rural areas.....................20 Figure 0.3 Employment and unemployment in Québec's rural and urban regions ........................................................................................21 Figure 0.4 Change in number of jobs in predominantly rural MRCs………22 Figure 0.5 Regional disparities among rural areas within selected OECD countries (GDP per capita)..............................................23 Figure 0.6 Distance (X) and income level (Y) in Québec’s predominantly rural MRCs .................................................................................24 Figure 0.7 Implementation of Québec's Politique nationale de la ruralité (PNR)……………………………………………………………27 Figure 1.1 Provinces and territories of Canada ............................................44 Figure 1.2 OECD regional typology ............................................................47 Figure 1.3 Employment (Y) and population (X) trends in Canada’s rural economic regions and OECD predominantly rural regions ........49 Figure 1.4 Employment (Y) and population (X) trends in Canada’s intermediate economic regions and OECD predominantly rural regions ................................................................................50 Figure 1.5 Metropolitan Influenced Zones in rural and small town areas, 2006 ............................................................................................52 Figure 1.6 Community population gains and losses.....................................54 Figure 1.7 Aged dependency ratios in rural and urban areas .......................56 Figure 1.8 Immigrants as a percentage of the total population within larger urban centres and rural areas ............................................59 Figure 1.9 Demographic trends in accessible and remote rural communities in Canada...............................................................60 Figure 1.10 Evolution of urban land in Canada between 1971 and 2001 ......62 Figure 1.11 Urban developments and consumption of dependable agricultural land ..........................................................................63 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 10 – TABLE OF CONTENTS Figure 1.12 Km2 of class 1 dependable agricultural land in Canada's provinces, 2001 ...........................................................................64 Figure 1.13 Household income levels in urban, rural, and MIZ areas in 2005 ............................................................................................66 Figure 1.14 Trends of income in RST and LUC, 1984-2004 .........................67 Figure 1.15 Percentage of individuals in households with income from all sources below the low income cut-off (LICO) ...........................68 Figure 1.16 Labour force participation rates in rural and urban areas in Canada, 2006 ..............................................................................72 Figure 1.17 Contribution of agriculture to national GDP in OECD countries .....................................................................................75 Figure 1.18 Contribution of agriculture to national employment in OECD countries......................................................................................76 Figure 1.19 Net farm income and other sources of family income to farm families in Canada ......................................................................77 Figure 1.20 Percent of Canada's manufacturing workers residing in rural Canada, 1976-2008 .....................................................................79 Figure 1.21 Contribution of natural resources to Canada's total GDP and employment ................................................................................80 Figure 1.22 Percentage of census subdivisions in rural and small town areas that are resource-dependent by sector and province/territory, 2006 ..............................................................81 Figure 1.23 Tonnes of lumber produced in Canada .......................................85 Figure 1.24 Employment trends in forestry and logging in Canada...............86 Figure 1.25 Long-term increase of average temperature in Canada ..............87 Figure 1.26 Canada's per capita GHG emissions compared to selected countries......................................................................................89 Figure 1.27 GHG emissions by province in 2005 ..........................................90 Figure 1.28 Installed hydroelectric capacity by province ..............................91 Figure 1.29 Installed wind power capacity in the top five countries and Canada ........................................................................................93 Figure 2.1 The écoumène in Québec ..........................................................123 Figure 2.2 Rural classification in Québec ..................................................125 Figure 2.3 Distribution of the population in Québec's predominantly rural MRCs ...............................................................................126 Figure 2.4 Urbanisation trends in OECD, Canada, and Québec between 1996 and 2005...........................................................................127 Figure 2.5 Demographic trends in rural and urban areas ...........................128 Figure 2.6 Distance (X) and income levels (Y) in intermediate rural areas ..........................................................................................130 Figure 2.7 Distance (X) and income level (Y) in predominantly rural MRCs . ..................................................................................................131 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 TABLE OF CONTENTS – 11 Figure 2.8 Median income in rural, intermediate and urban areas between 2000 and 2005 ............................................................132 Figure 2.9 Level of disposable income and percentage of secondary and tertiary activities in intermediate MRCs ............................134 Figure 2.10 Sectoral breakdown of the labour market in accessible and remote rural MRCs ...................................................................135 Figure 2.11 Sectoral breakdown of the labour market in intermediate and peri-metropolitan rural MRCs ..................................................136 Figure 2.12 Evolution of the share of GDP by sector in rural Québec ........137 Figure 2.13 Increase in jobs in predominantly rural MRCs, by macro-sector .............................................................................138 Figure 2.14 Difference between jobs at place of work and place of residence in rural Québec .........................................................139 Figure 2.15 Variation in (sectoral) employment by predominantly and intermediate rural MRCs ..........................................................140 Figure 2.16 Agricultural zone in Québec as defined by the law on the protection of agricultural land...................................................144 Figure 2.17 Number of farms in predominantly rural MRCs, 2006.............145 Figure 2.18 Different types of forests in Québec .........................................148 Figure 2.19 Location of forestry firms within Québec’s écoumène, 2008 ...149 Figure 2.20 Location of manufacturing firms in predominantly rural areas - absolute number (left hand) and per capita (right hand) ...........154 Figure 2.21 Distance and increase in firm numbers according to size .........155 Figure 2.22 Variation of the number of tertiary firms in rural Québec ........156 Figure 2.23 Number of health-care facilities in predominantly rural MRCs (X) and distance from major metropolitan areas (Y) ....159 Figure 2.24 Percentage of Canadians using a credit-union or caisse populaire as their primary financial institution ..............163 Figure 2.25 Regional disparities among predominantly rural areas in selected OECD countries ..........................................................167 Figure 2.26 Aggregate GDP growth rate in rural Québec, 1991-2006 ........168 Figure 2.27. Population of Québec by age group……………………..…….169 Figure 2.28 Projection of ageing trends in Abitibi-Témiscamingue and Québec ......................................................................................169 Figure 2.29 Percentage change in the number of firms in rural Québec between 2001 and 2008 ............................................................171 Figure 3.1 Causal model of rural development: the function of rural pacts .........................................................................................203 Figure 3.2 Implementation of Québec's Politique nationale de la ruralité (PNR) ........................................................................................205 Figure 3.3 Sources of rural pact funding since 2007..................................210 Figure 3.4 Large farms in Québec by type and receipts (CAD 250 000 and over) ..........................................................221 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 12 – TABLE OF CONTENTS Boxes Box 1.1 Geography and administrative structure of Canada ....................44 Box 1.2 OECD regional typology and rural classification .......................45 Box 1.3 Different measures of poverty in Canada's rural areas and provincial performance ...............................................................68 Box 1.4 How does the credit crunch affect rural areas in OECD countries? ....................................................................................................84 Box 1.5 Community Futures in rural Québec: SADC ..............................98 Box 2.1 Indian reserves in Canada and Québec .....................................121 Box 2.2 Regional County Municipality (MRC) .....................................124 Box 2.3 Structural changes in Québec’s farm society ............................147 Box 2.4 Forest protection and participatory resource management: the experience of Québec ...............................................................151 Box 2.5 Structural differences between rural and urban economies ......165 Box 3.1 Territorial administrative divisions of Québec .........................189 Box 3.2 A development index to determine devitalised rural communities ..............................................................................192 Box 3.3 Policies for the north of Québec ...............................................193 Box 3.4 The scope of rural policy ..........................................................194 Box 3.5 The four partner associations for rural policy ...........................196 Box 3.6 Jurisdiction over local governments in the Canadian Constitution ..............................................................................197 Box 3.7 Experience with community development through place-based local partnerships ..................................................201 Box 3.8 Sectoral commitments to contribute to rural policy ..................213 Box 3.9 Community initiative to improve quality of life: Villes et Villages en santé .........................................................231 Box 3.10 Facing demographic decline in rural schools: Ecole éloignée en réseau ..........................................................232 Box 3.11 Countering out-migration of youth: Place aux Jeunes .............236 Box 4.1 The place of rural policy ...........................................................251 Box 4.2 Policy mainstreaming and modulation in OECD countries ......254 Box 4.3 Rejection of a supralocal level of elected governance: north-eastern England, United Kingdom ..................................258 Box 4.4 Local capacity building in Mexico ...........................................260 Box 4.5 Federal-provincial collaboration at the MRC level...................263 Box 4.6 Managing community transition: experience from Canada ......267 Box 4.7 The marketing of non-timber forest products in Québec ..........270 Box 4.8 Opportunities for local renewable energies: Totara Valley, New Zealand .............................................................................274 Box 4.9 Forest biomass and rural development: experience from Sweden and Austria ..................................................................275 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 TABLE OF CONTENTS – 13 Box 4.10 Policies to create traditions: the Telluride Film Festival in Colorado, United States ............................................................276 Box 4.11 Longevity as an opportunity: experience from Ristijärvi, Finland ......................................................................................278 Box 4.12 Broadband connections in sparsely populated rural areas, Germany ...................................................................................280 Box 4.13 Protecting skilled labour in a rural territory: the student loans centre in Gaspé, Québec ...........................................................281 Box 4.14 Active labour market policies (ALMPs) as a means to create jobs .................................................................................282 Box 4.15 In-migration to rural regions in OECD countries .....................284 Box 4.16 Becoming a “host community” in Québec ...............................285 Box 4.17 Service delivery in rural areas: experience from Australia and the United Kingdom...........................................................287 Box 4.18 British Columbia (Canada)’s Intergovernmental Relations and Planning Division...............................................................292 Box 4.19 Examples of protected peri-urban agriculture in OECD countries....................................................................................293 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ACRONYMS AND ABBREVIATIONS – 15 Acronyms and abbreviations AAFC Agriculture and Agri-Food Canada ACLDQ Association of Québec's Local Development Centres (Association des centres locaux de développement du Québec) ASRA Farm income stabilisation programme in Québec (Programme d'assurance stabilisation des revenues agricoles) CA Census Area CAD Canadian dollar CAR Regional Administrative Conference (Conférence administrative régionale) CD Census Division CED-Q Canada Economic Development for Quebec Regions CFP Community Futures Programme of the Canadian government CLD Local Development Centre (Centre local de développement) CMA Census Metropolitan Area CPTAQ Commission for the Protection of Québec's Agricultural Land (Commission de protection du territoire agricole du Québec) CRÉ Regional Conference of Elected Officials (Conférence régionale des élus) CRP Canada's Rural Partnership CRRNT Regional Commission on Natural Resources and the Territory (Commission régionale sur les resources naturelles et le territoire) CSD Census Subdivision CSSS Health and Social Services Centre (Centre de santé et de services sociaux) FQM Québec Federation of Municipalities (Féderation québécoise des municipalités) IN Intermediate areas (OECD regional typology) LPTAA Law on the protection of agricultural land and activities (Loi sur la protection du territoire et des activités agricoles) LUC Large urban centre MAMROT Québec Ministry of Municipal Affairs, Regions, and Land Occupancy (Ministère des Affaires municipales, des Régions et de l'Occupation du territoire du Québec) OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 16 – ACRONYMS AND ABBREVIATIONS MAPAQ Québec Ministry of Agriculture, Fishery, and Food (Ministère de l'Agriculture, des Pêcheries et de l'Alimentation du Québec) MDEIE Québec Ministry of Economic Development (Ministère du Développement économique, de l'Innovation et de l'Exportation du Québec) MELS Québec Ministry of Education (Ministère de l'Éducation, du Loisir et du Sport du Québec) MESS Québec Ministry of Employment (Ministère de l'Emploi et de la Solidarité sociale du Québec) MIZ Metropolitan Area and Census Agglomeration Influenced Zones MRC Regional County Municipality (Municipalité régionale de comté) MRIF Municipal Rural Infrastructure Fund of the Canadian government MRNF Québec Ministry of Natural Resources and Wildlife (Ministère des Ressources naturelles et de la Faune du Québec) MSSS Québec Ministry of Health and Social Services (Ministère de la Santé et des Services sociaux du Québec) MTO Québec Ministry of Tourism (Ministère du Tourisme) OACFDC Ontario Association of Community Futures Development Corporations PNR Québec's national policy on rurality (Politique nationale de la ruralité) PR Predominantly rural areas (OECD regional typology) PU Predominantly urban areas (OECD regional typology) RS Rural Secretariat of the Canadian government RST Rural and small town SADC Canadian corporation for the development of communities in Québec (Société d'aide au développement des collectivités) SRQ Solidarité rurale du Québec UMQ Union of Québec's Municipalities (Union des municipalités du Québec) UPA Union of Agricultural Producers in Québec (Union des producteurs agricoles) OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 EXECUTIVE SUMMARY – 17 Executive summary Canada has the OECD’s largest rural area. More than 90% of its territory is predominantly rural. However, only 29% of the national population lives in predominantly rural territories. The geographic concentration of population contributes to a large and widening rural-urban split and increasing regional disparities. Although the strategy of reducing rural-urban disparities by supporting primary activities is no longer effective, given the large reductions in jobs in this sector and ongoing structural and cyclical crises, Canada and most of its provinces continue to invest heavily in the primary sector, with a view to saving rural areas. The federal government has a long-standing Community Futures programme which mainly targets rural areas; it is place-based and invests in local projects and governance systems. This bottom-up initiative in rural areas, which operates through a network of business and community development centres managed by local constituencies, should be augmented to stimulate endogenous rural development. Currently, in the name of rural development, too many resources are allocated to sectoral policies (especially agriculture, forestry and fisheries). While the federal government should discharge its responsibilities under the Canadian Constitution, rural development would benefit from improved collaboration with provincial initiatives. To some extent, Québec mirrors the general situation in Canada, but there are also significant differences. For instance, despite the geographic concentration of the population, Québec evidences networks of small and medium-sized communities (over 1 100 municipalities) mostly located in rural areas.1 These territorial networks feed into the historic social priority of occupying the land as a way to protect Québec’s cultural heritage. In this context, the provincial government has developed a strong vision for its rural areas that stimulates ownership both among levels of government and within society. It has developed a specific rural policy (PNR) which is separate from agricultural and economic policy to promote rural development. The policy focuses on building local social capital, and its main aim is to build community capacity and ensure that rural land is occupied in a dynamic and sustainable way. The PNR is one of the most OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 18 – EXECUTIVE SUMMARY advanced policy approaches to promote rural development in the OECD area. There is room to enhance the PNR's performance. In particular, it would be pertinent to improve the integration of territorial, community, economic and entrepreneurial development targets, and to further strengthen the role of the supralocal level (MRCs) in territorial governance. Québec has a lower rural-urban demographic split than the rest of Canada, yet there are widening disparities among rural areas. While rural territories located near urban centres attract population and businesses, most predominantly rural areas are undergoing structural change, especially if they are remote and dependent on natural resources. Unless these communities can successfully restructure and find new employment opportunities, their population levels will decline. For these areas, a rural policy focused largely on territorial social development may not be enough. There is a need to optimise existing instruments to promote regional and rural development and to integrate them into a common framework. In the same vein, policies linked to agriculture, natural resources and economic development should evolve towards an approach that promotes diversification of the economic base, gives access to the benefits of natural resources, and reduces land use constraints in predominantly rural areas. Finally, environmental challenges need to be properly managed. While “urbanisation” in territories close to cities or in metropolitan areas has to avoid the negative aspects of gentrification and protect valuable land and landscape, it is equally important in predominantly rural areas to guarantee sustainable use of land and natural resources and involve local communities in strategic decisions. Note 1. For this report, only a portion of Québec's rural territory is considered. Rural policy in Québec applies to rural territory in the southern part of the province. The majority of northern rural Québec has such low population density and such unique circumstances that policy is managed through a different process. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 19 Assessment and recommendations On average, rural Québec is gaining population, has increasing personal incomes, and continues to diversify its economic base On average, rural Québec is attracting new residents.1 In the rest of Canada the rural population decreases and population in urban regions increases at twice the OECD average, but in Québec the trend is closer to the international average (Figure 0.1). The spatial distribution of population in Québec is different from that of Canada. It is based on relatively large networks of small cities located in rural regions, while Canada overall displays a high concentration of population in larger urban areas. Thus, the province does not display the large rural-urban split that characterises the rest of Canada. Rural Québec as a whole has actually gained population since the end of the 1990s, owing to the concentration of people in accessible rural areas close to urban nodes and metropolitan regions. As in other Canadian provinces, these territories display the highest growth rates in terms of population within Québec. Demographic growth has gone hand in hand with an increase in personal income. Because of the spatial concentration of population and economic activity, some rural regions have developed an autonomous productive framework and experienced a rise in local personal incomes. Between 2000 and 2005, median household income increased more rapidly in rural than in urban areas. In particular, household income increased by more than 5% in predominantly rural (PR) areas, while both intermediate (IN) territories and urban (PU) poles registered an increase of 3.8% (Figure 0.2). The main factors behind this positive trend are the increase in employment rates (decrease of unemployment) in predominantly rural areas, and the diversification that has taken place in many rural economies. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 20 – ASSESSMENT AND RECOMMENDATIONS Figure 0.1. Urbanisation trends in OECD, Canada and Québec between 1996 and 2005 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Population growth in OECD urban regions (excluding Canada) Population growth in OECD intermediate regions (excluding Canada) Population growth in OECD rural regions (excluding Canada) Population growth in Canada's urban regions (excluding Québec) Population growth in Canada's intermediate regions (excluding Québec) Population growth in Canada's rural regions (excluding Québec) Population growth in Québec's urban regions Population growth in Québec's intermediate regions Population growth in Québec's rural regions Percentage change in population between 1995 and 2005 Source: OECD Regional Database (2009), internal database. Figure 0.2. Increase in household income in Québec's predominantly urban, intermediate and predominantly rural areas 2000-05 Predominantly urban - Income per household growth rate Intermediate rural - Income per household growth rate Predominantly rural - Income per household growth rate 0 1 2 3 4 5 6 Percent change in average household income (constant CAD 2000) Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. On average, since the end of the 1980s, there have been more workers and fewer unemployed living in rural Québec. Between 1986 and 2006, rural areas (predominantly rural areas, intermediate areas and peri- metropolitan rural areas located on the fringes of Montréal and Québec City) experienced an increase in employment and a decrease in unemployment at a pace almost twice that of urban regions (Figure 0.3). Moreover, in OECD OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 21 regions there is evidence that employment (and unemployment) trends are often related to regional growth, especially in rural areas (OECD, 2009). Figure 0.3. Employment and unemployment in Québec's rural and urban regions 1986-2006 Rural Urban -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 8.4% Employment 4.8% -8.4% Unemployment -5.3% % change in number of workers, between 1986 and 2006 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Québec’s rural economy is also increasingly diversified. Data on sectoral employment at the level of regional county municipalities (MRCs, the French acronym) show that many rural and, in particular, predominantly rural areas increased the number of jobs in tertiary activities between 1991 and 2006 (Figure 0.4). Positive trends, although less robust, were also observed for manufacturing and construction activities. Owing to the diversification of their economic base, rural areas were able to retain and attract workers and reduce their exposure to external economic shocks. Accordingly, although data for measuring short-term trends in the last two years are limited, it is possible that predominantly rural areas with a diversified economic base and a “residential economy” 2 have been more resilient during the current financial crisis. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 22 – ASSESSMENT AND RECOMMENDATIONS Figure 0.4. Change in number of jobs in predominantly rural MRCs 1991-2006 Wholesale and retail Services Manufacturing Constructions Primary activities -1 -0.5 0 0.5 1 1.5 Percent change in the number of employed Note: Jobs at place of residence. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. There are however important disparities, as rural areas display contrasting performances Despite good average performance, rural Québec, and predominantly rural areas in particular, reveal diverging trends and important disparities. In fact, while the average performance of rural Québec is in line with that of OECD rural regions, GDP per capita varies significantly across rural areas. For instance, in spite of a relatively small and geographically concentrated population (some 2.5 million inhabitants living in rural areas within the so- called écoumène3), the standard deviation of GDP per capita in rural Québec from the provincial average is larger than that in the rural part of Scandinavian countries, Spain, France or Japan (Figure 0.5). Hence, a large part of the economic success of rural Québec as a whole may depend on the performance of intermediate rural areas and, above all, peri-metropolitan rural areas. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 23 Figure 0.5. Regional disparities among rural areas within selected OECD countries (GDP per capita) Standard deviation, 2006 or latest available year United Kingdom Portugal Ireland Korea Austria Italy Hungary Greece Germany Québec Spain Japan Finland France Norway Denmark Slovak Republic Sweden 0 5 10 15 20 25 30 % Note: The graph displays the standard deviation of GDP per capita within predominantly rural regions within the OECD area. A higher value indicates larger regional disparities. For Québec, predominantly rural MRCs have been taken into account. Source: OECD Regional Database (2009); Le Conference Board du Canada (2009), Les communautés rurales: l'autre moteur économique du Québec, prepared for the Groupe de travail sur la complémentarité rurale urbaine, June. In Québec, disparities in personal income in predominantly rural areas are mainly related not to distance from main urban centres but to internal factors, including outmigration, ageing and dependence on natural resources. Although accessibility is often considered an independent variable shaping rural performance, Québec's predominantly rural territories display a non-linear relation between distance and local income (Figure 0.6). The share of predominantly rural areas in which residents’ personal income is lower than the average in rural Québec is actually higher in areas that can OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 24 – ASSESSMENT AND RECOMMENDATIONS be considered relatively close to a large urban area (regions within 300 kilometres of Montréal and Québec City, and thus in accessible territories in the centre of the province).4 The economic base of less affluent territories often focuses on primary activities, such as forestry, mining or agriculture. Figure 0.6. Distance1 (X) and income level (Y) in Québec’s predominantly rural MRCs Disposable income 2007, current prices Central and affluent Remote and affluent Disposable income per capita (current prices 40 000 Caniapiscau 35 000 CAD) 30 000 Les Pays-d'en-Haut Québec (disposable) income per capita CAD 24 455 25 000 La Nouvelle-Beauce Les Collines-de-l'Outaouais Abitibi Minganie Bécancour Bellechasse Le Domaine-du-Roy La Côte-de-Gaspé Les Îles-de-la-Madeleine Nicolet-Yamaska Charlevoix Témiscamingue Mékinac Matane Abitibi-Ouest 20 000 Montcalm Bonaventure Papineau Les Basques La Matapédia Le Haut-Saint-François Le Rocher-Percé Rural Québec (disposable) Antoine-Labelle Le Haut-Saint-Laurent La Haute-Gaspésie Pontiac income per capita CAD 21 165 15 000 0 200 400 600 800 1 000 Central and less affluent Remote and less affluent Linear average distance (kms) from major metro-areas Note: 1. Distance is the average linear distance (in kilometres) between the geographical centre of the MRC and the centre of the metropolitan areas of Montréal and Québec City. Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. The global economic downturn and structural challenges reinforce the vulnerability of resource-based and single-industry communities in rural Québec. Although not a negative feature per se, specialisation of a local economy in resource-based industries makes it more difficult to absorb international crises because of rural labour markets' smaller size and lesser diversity. In Québec, many communities dependent on commercial forestry are currently affected by two crises: i) a cyclical crisis which is due to the sharp reduction in demand for forest commodities, especially in the United OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 25 States; and ii) a structural crisis related to stronger international competition, an increasing currency exchange rate relative to the United States, and high energy and input costs. International competition has contributed to the loss of comparative advantages in rural manufacturing, causing a decline in jobs and reducing the number of secondary firms. Communities specialised in agriculture face similar challenges, and if improving the size of farms was initially an effective answer, it also reduced job opportunities and later the local population. This in turn challenged the capacity of regional and local economies to diversify their economic base or to produce services at the local level. Persistent regional disparities affect the competitiveness of rural Québec Divergent regional trends pose specific challenges for rural development. In the successful intermediate and peri-metropolitan rural areas, urban sprawl and the inflow of new people, often former urban residents, cause gentrification, put pressure on the environment (through intense commuting to urban nodes but also to other rural communities), and threaten the province's best agricultural land, which is located on the urban fringe of Montréal. Conversely, in predominantly rural areas that are losing working-age population and economic activities, the challenges are the high cost of delivering key public services, such as schooling and health care, finding another use for abandoned agricultural land, and the protection of a minimum endowment of human and social capital necessary to guarantee the development, or even the continuity of the community. Rural Québec is confronted with three key governance and policy challenges Considering trends in the development of rural areas, Québec faces three key policy and governance challenges. First, an inclusive governance arrangement needs to combine social and community development with economic development. Second, policy has to address community transition in lagging rural areas through economic stabilisation, access to land and accumulation of human capital. Third, environmental pressures have to be faced in intermediate and peri-metropolitan rural areas as well as in remote predominantly rural territories. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 26 – ASSESSMENT AND RECOMMENDATIONS 1) Inclusive governance for rural areas With its Politique nationale de la ruralité (PNR), Québec has opted for an innovative territorial and multisectoral policy approach to rural development which applies to all rural areas in the écoumène. The policy contributes to changing the perception of inevitable rural decline and is largely in line with what the OECD has defined as the New Rural Paradigm. As a continuation of the first rural policy (2002-07), the second PNR (2007-14) has been widely accepted in the province as part of a strong societal vision of “rurality” in the province. The public endorsement of the PNR has in turn stimulated local ownership and cohesion around policy objectives. To establish the preconditions for economic development in rural areas, policy measures aim at strengthening social and human capital as well as community capacity and favour the dynamic occupancy of rural land. Many local and supralocal projects undertaken with funds from the PNR can create the social conditions in local communities that make it possible to avoid spending large amounts of money on unsuccessful sectoral economic development programmes (as is done in many OECD countries). The principle of dynamic land occupancy represents a political and societal commitment to maintain the current settlement structure in Québec's vast and sparsely populated rural territories, even if the delivery of many public services is increasingly costly. The policy is led by a nonsectoral ministry (department) in charge of municipal affairs, regions and land occupancy (MAMROT is its French acronym). It complements sectoral agricultural and economic development policies, by targeting the empowerment of local administrative levels, particularly the supralocal MRCs. MAMROT is at the top of an effective vertical co-ordination scheme involving the provincial, regional, supralocal and local levels of government. Besides local stakeholders, four non-profit partner associations contribute to policy implementation and monitoring, adding parallel vertical co-ordination mechanisms (Figure 0.7). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 27 Figure 0.7. Implementation of Québec's Politique nationale de la ruralité (PNR) Territorial Government Representative/ division consultant body Committee of rural Premier partners Council of Ministers Provincial MAMROT SRQ Interministerial FMQ, UMQ, rural committee ACLDQ Regional Admin. CAR CRÉ board region (MAMROT/other ministries) President MRC council Training (SRQ) MRC CLD Supra-local Prefect Rural development Local development committee: agent Civil society, business, officials… Other development agents Local Municipal council Municipality Mayor Citizens and organised civil society + political + operational Note: In administrative regions, the CAR (Regional Administrative Conferences) brings together the regional directors of provincial ministries, while a CRÉ (Regional Conferences of Elected Officials) is a consultation body for municipal elected officials. Boxes in light blue indicate key actors for PNR implementation. Source: OECD, based on Government of Québec, MAMROT. Equitable social and local community development is stimulated through contractual place-based partnerships (“rural pacts”) between the government of Québec and 91 MRCs. Rural pacts represent a bottom-up approach to mobilisation and investment in rural communities, and their impact has been significant. MAMROT plays a strong role in assisting and monitoring commitments made by MRCs. Although the main local horizontal co-ordination process is delegated to municipal elected officials, the participatory planning process occurs in local development committees, which bring together civil society representatives, institutional and business actors, and elected officials. Moreover, 136 rural development agents in the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 28 – ASSESSMENT AND RECOMMENDATIONS MRCs, financed by the provincial government, are key actors. They assist the local committees, support the emergence of rural pact projects, and monitor their implementation. Specific measures target innovation and the development of expertise in rural areas. Even if programmes, such as the rural laboratories, often feature an experimental approach, their knowledge-sharing element can have structuring value for communities, particularly over a longer period of time. The specific rural policy budget for PNR measures is limited in its scope, but its long-term approach gives communities financial security for their local plans and investment commitments. Moreover, Québec's provincial budget seems to increasingly consider the spatial dimension of policies; targeted funding by ministries to rural areas has increased more than the overall level of expenditures by these ministries. There is a need to integrate the governance of social and economic development in rural areas… Québec invests significantly more in community capacity building than other Canadian provinces, but returns on these investments can be improved. At the provincial level, government responsibilities for social capital should be more strongly integrated with local economic and entrepreneurial development. Once significant experience with the rural pact has been acquired over two PNRs, the increased level of social and human capital in communities should be strong enough to re-integrate the two streams of development. A single, integrated institutional counterpart for MRCs, with responsibilities for both rural social development and local economic development, was already in place before 2003. This institutional arrangement would facilitate the integration of the support measures of local development centres (CLDs, the French acronym) with the PNR, avoid duplication and favour holistic governance of rural policy. Although focused on economic development, CLDs contribute to PNR objectives, measures and structures. Integration would also facilitate the evaluation of rural policy, as social impacts may be difficult to detect and are often related to economic impact. To make use of new capacities in rural communities, policy may need to become more inclusive of the private sector and its organisations which are currently excluded from direct rural pact financing. The PNR already goes a long way by including multisectoral participation at the design stage of the policy. Moreover, the government shares responsibility with leading civil organisations in the committee of rural partners. However, beyond private OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 29 initiatives in rural laboratories and speciality products, efforts should be made to commit the private sector and its institutional actors from business and agriculture to PNR objectives. The policy may include relevant sectoral actors to assist empowered rural communities more proactively in transforming their new capacities and promising PNR projects into market- oriented commercial and other entrepreneurial opportunities. …and enhance the modulation of policy interventions in rural areas. Modulation of policies from other ministries can be made more effective. Through the clause de modulation, horizontal co-ordination has been introduced and puts MAMROT in charge of monitoring the adaptation of sectoral programmes to the specific characteristics of rural areas. With its interministerial rural committee, which brings together 18 government bodies, the PNR tries to strike a balance between integrating policies directed to rural areas through commitments from sectoral ministries and targeting specifically defined rural regions with relatively limited financial resources. However, although there has been significant collaboration by several ministries, efforts to co-ordinate their policy frameworks can meet with resistance. When presenting new policies and programmes, ministries should commit to discussing implications for rural territories. A strong minister or an organisation with “moral authority” over each government body would probably be more successful in implementing the modulation tasks set by the PNR. It is important to further strengthen the supralocal level … To alleviate the risk of over-using participatory local strategic planning exercises and tiring out participants, the functional responsibilities of Québec's MRCs should be strengthened, while bearing in mind the role of regional conferences of elected officials (CRÉs, the French acronym). MRCs may become the centre of rural and territorial development strategies, including their implementation and evaluation. As an existing administrative structure, MRCs have a broader view of the rural policy programmes implemented in their territory than individual municipalities. Given the difficulties of merging municipalities, MRCs are the lowest administrative unit with “competence” to resolve rural and territorial policies across municipalities. Allocating the implementation of local development policy to MRCs is an effective way to mesh the many sector-specific policies and programmes into one holistic delivery system. Also, the sectoral OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 30 – ASSESSMENT AND RECOMMENDATIONS responsibilities that are currently co-ordinated at higher levels could benefit from a strengthened territorial approach if MRCs obtain more competences and receive stronger incentives to collaborate with sectoral actors. In this respect, it is important to balance MRCs’ competences with those of CRÉs. As they have a critical mass of population, larger administrative regions can be a more appropriate level for the design and implementation of some regional development policies. In this respect, CRÉs would have to become proper regional governments or enlarged MRCs would have to become the single regional level of government. Empowering the supralocal level does not necessarily mean introducing direct elections of MRC prefects, as this may be questionable from a rural perspective. So far, the fact that Québec's municipal governance is non- partisan in nature has avoided political conflicts about rural policy. An electoral process risks leading to a short-term mentality in decision making. Moreover, whereas currently (in the absence of a single dominant population centre), each municipality has equal representation and voice on the MRC council, direct elections would concentrate electoral power in the MRCs' most populated municipalities at the expense of smaller rural communities. To avoid the potential of urban electoral weight vetoing rural development policies, consideration should be given to revoking the current veto right of dominant population centres in MRCs’ decision-making process for rural issues. …enhance external monitoring and evaluation and small communities' capacities… Within this framework, civil society's role is to balance the dominant role of elected officials. Although the power of municipal elected officials at the different levels of government makes vertical co-ordination very effective, there is a risk that elected officials may lose sight of the local population's concerns, diluting citizens' influence on the system. In the spirit of the New Rural Paradigm, greater external monitoring and policy evaluation would help ensure that such threats do not materialise. In particular, a comprehensive evaluation, comparable to that undertaken for the first PNR, should be carried out by an external body regularly or over the whole rural pact implementation period before the end of the second iteration in 2014. It could include a restatement of objectives, an evaluation of progress towards the strategic objectives, and a review of the flow of funds. Concrete indicators for success that measure the long-term benefits for the community could avoid the potential perception of rural pacts as a mere mechanism for the distribution of funds. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 31 To help municipalities accept responsibilities prudently, small rural communities should be provided with the capacity to establish a local development agenda and implement PNR measures. This would help ensure that territory-specific government objectives are addressed. In many cases, small rural municipalities refuse to accept further responsibilities, as they lack the technical competences and political support to implement innovative measures in their communities. Before strengthening local decision making, local capacities would have to be enhanced through more substantial and specific training to form, motivate and link rural development agents. It is important to monitor whether the high turnover of agents observed during the first PNR diminishes following stronger recognition by MRCs and recent salary increases. …diversify local governments' sources of revenue… Beyond the current reliance on property taxes, local and supralocal levels should have access to more diversified and autonomous sources of fiscal revenue. This would allow municipalities to enhance the services provided to new and established residents in light of the changing social and demographic composition of rural communities. To react to new service needs and reduce property tax pressures on poorer, long-established residents affected by rural gentrification, the local taxation system should include more taxes and municipal user fees that are directly linked to individuals' income and expenditures and depend less on fiscal transfers. More diversified revenue sources could result in increased resources for PNR measures, which usually require local co-financing. With enhanced capacity building at the municipal level, a de-concentration of revenue generating capacities in favour of local or supralocal institutions might be decided. This would however require greater accountability on the part of local administrations than what the PNR and its governance structure currently call for. Local and supralocal administrations’ freedom to bring policy design and implementation closer to rural residents should be counterbalanced by strong external evaluation of objectives and financial management. …and facilitate local-level collaboration of provincial and federal policies. Vertical co-ordination of rural policy between administrative levels is strong in Québec, while the Canadian federal level acts mainly in parallel. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 32 – ASSESSMENT AND RECOMMENDATIONS Owing to a constitutional arrangement, provincial governments deal directly with local governments. The federal government does not have an official rural policy, but the strategic directions of its rural development approach, co-ordinated through the Rural Secretariat (RS), essentially parallel those of Québec. With Canada’s Rural Partnership, the RS links various federal and local activities in rural areas. However, its effectiveness on the local level suffers from an unfavourable institutional setting within the Department of Agriculture and Agri-Food and limited resources. The Community Futures Programme (CFP) is a successful nation-wide federal-level local development initiative with a mainly rural focus. Its key strength is the combination of incentives for business development and local governance which contributes to local capacity building. CFP offices in Québec (called SADCs) have a role similar to that of the CLDs and are under the responsibility of the federal regional development agency for Québec regions. Their mandate is to exploit local competitive advantages. Local actors should be encouraged in their efforts to enhance coherence between federal and provincial rural development measures, given that a transfer of the federal government's rural and community development programmes to the provincial level is unlikely. These two levels of government are therefore left with the option of greater local-level collaboration between both rural development programmes to achieve further complementarities and synergies. As is already happening in a few localities, MRCs and municipalities would benefit from even implicit encouragement to make better use of both sets of measures as long as the same activities are not funded twice. 2) Development in lagging areas Stabilisation of the local economy can improve resilience to exogenous shocks … Given Québec's exposure to international competition and the global economic downturn, rural policy should have strategies able to foster economic development and tackle specific challenges in lagging areas. There is evidence that fostering growth in all areas, even lagging ones, is in the interest of national and provincial governments as it contributes to overall output without affecting the opportunities for development in other regions (OECD, 2009). Lagging areas in rural Québec are exposed to specific challenges, given their specialisation in traditional manufacturing and natural resources. A holistic rural policy, including existing sectoral OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 33 measures as well as programmes targeted to single-industry communities and devitalised MRCs, should help alleviate the critical situation in many resource-based and single-industry regions, which are currently among the most vulnerable economic entities. Complementary financial support from MAMROT and the ministry in charge of economic development encourages communities to think about and implement revitalisation plans for industrial diversification, but there is room for strengthening the management of community transition. Stabilising the local economy is an important policy goal for lagging resource-based and single-industry communities, but it requires a long-term approach that also addresses demographic change. For larger rural areas, a more diversified economy can help ensure the vitality of single-industry towns. Measures that have proved helpful, and are already partly implemented in rural Québec, aim at optimising framework conditions for entrepreneurship, ensuring a competitive business environment, and providing incentives to invest in non-resource sectors. Given rural Québec's manufacturing tradition and related entrepreneurial skills, incubator services are important as they can provide an environment in which entrepreneurs and small businesses can validate their ideas and transform them into viable products and services. However, as diversification strategies are often difficult to implement in small local labour markets, policy makers have to consider other options to deal with the risks inherent in lagging areas. It is crucial for these approaches to take account of the fact that the workforce size in many rural areas will shrink, making diversification all the more challenging (although in small rural areas, re-specialisation through a single successful project may induce other projects or attract new residents). The stabilisation of a lagging area's economy should be part of a process of community transition which plans for industrial closure as a normal event in a non-renewable resource-based industry's life cycle. Stakeholders, including all levels of government, the departing industry and civil organisations, should collaborate on the effective restructuring of communities in transition. This requires a complex and lengthy process involving a variety of interrelated actions, ranging from diversification strategies, labour market adaptation and incentives for possible new industries and residents to public service delivery adjustments and municipal financial stabilisation. Community transition has to be accompanied by time-limited financial support from all stakeholders. This is relevant in Québec where communities dependent on property taxes are strongly affected by falling property values and lost employment income. Short-term investments could take the form of a stabilisation fund. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 34 – ASSESSMENT AND RECOMMENDATIONS …both in traditional primary industries… While diversification focuses on the development of competences in promising industries, comparative advantages and new knowledge-based developments in traditional sectors should still be valued. Although declining, Québec's agriculture, forestry and mining sectors remain a vital part of the rural economy and generate additional employment indirectly through their demand for local goods and services, the marketing of non- timber forest products and new extraction technologies. However, as in the case of parts of manufacturing, primary industries will not contribute strongly to the future economic growth of rural regions, which will necessarily come largely from the tertiary sector. Québec’s agricultural support system should tie support to farm income, independently of the type of agricultural business and production. This could promote the development of agriculture and other sectors of the rural economy. All over Canada, the OECD estimate of government support to agriculture has been declining, and a decoupled system of support focused on business risk management has been introduced in much of Canadian agriculture. However, the situation varies: the output of certain commodities prevalent in Québec still receives strong support. Although support also goes to some smaller producers, many of the sectors supported have particularly high incomes and large-scale farms, in part reflecting higher consumer prices than those prevailing on world markets. A system decoupled from production objectives that gives producers incentives to diversify their operations would be in line with policies in many OECD countries, where support has shifted from commodity output towards different types of support, often linked to land-use objectives. This would facilitate taking advantage of emerging market opportunities in higher value-added sectors such as organic and other certified food and forest (timber and non-timber) production. There is room to enhance the involvement of local governments in the management of natural resources. Regarding the decision-making framework for natural resource management, the government is right to seek an increasing role for regional and local actors. However, MRCs and aboriginal communities still have little legal decision-making power regarding the use and management of natural resources on their territory. Stronger involvement of rural communities and MRCs could enhance opportunities for local development. Putting MRCs and aboriginal communities in charge of so-called proximity forests is a promising step towards enlarging their role and giving them a greater say in how forestry planning and management affects their communities. In this regard, local OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 35 governments (municipalities) may need support from provincial authorities in the form of transfer of management expertise and monitoring capacity. …and in emerging sectors. The stabilisation strategy should use the crisis as an opportunity to put in place a framework for a new rural economy, improve local availability of valuable jobs, and increase the overall endowment of human capital. As an example, many OECD countries have been developing new sectors that can supplant departing industries, particularly in renewable energy production, rural tourism and retirement living. Development of the renewable energy industry offers very high potential for socioeconomic development in rural areas. Despite low costs for electricity, Québec's abundance of wind, water and forest resources provides a foundation for a strong renewable energy industry. Further developing this potential as part of rural policy will increase the opportunities available to local communities. Hydroelectricity and wind energy are the major focus of Québec's current energy strategy. Besides the important hydro-projects, particularly in the north, the Gaspésie wind energy project is a promising linking of opportunities in renewable energies with rural and regional industrial development. Likewise, resources in forestry and agriculture can increasingly contribute to the production of renewable energy, although policy should avoid locking in specific technologies. To fully benefit from opportunities in forestry-based biomass and biofuels necessitates stronger investments in innovation and transformation of resources. Other OECD countries have gained experience in these fields which may also be valuable for Québec. Rural tourism and retirement living are important growth industries. Tourism can help to replace lost economic activity in resource-based sectors and give new dynamism to communities although it is not a solution for all rural communities in Québec (particularly given climate constraints). To develop rural tourism, MRCs may need better incentives to co-operate on designing and implementing strategies. There have been some initiatives to promote specific regional tourism strategies, but a better response to specific rural tourism challenges and integration of strategies with supralocal rural activities may be required. Finally more effort should be made to benefit from population ageing and the settling of the elderly in rural communities. Contrary to practices in other OECD countries, Québec has not yet sufficiently considered the opportunities of longevity and an important resident elderly population for local development in health and health- related services, housing and education. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 36 – ASSESSMENT AND RECOMMENDATIONS The accumulation of human capital can be enhanced by retaining, attracting and creating pools of skilled labour in rural areas… A pool of skilled labour gives rural areas the possibility to focus on innovation and develop emerging sectors at lower cost. The existing pact in Québec between different labour market partners is an important instrument for responding to specific regional labour force needs. Beyond that, concentration of skilled workers can be increased through support for entrepreneurship, self-employment, business expansion and intergenerational transfer of firms. Investments in innovation and entrepreneurial approaches have a stronger long-term impact on employment creation than the more common policy of attraction and relocation of businesses through financial incentives. Even if it is difficult to demonstrate that new knowledge and networks result in creating or maintaining businesses, policy should support these approaches rather than the more visible approach of recruitment of new employees. As part of an integrated regional rural approach focused on skilled labour, investments in ICT and transport infrastructure as well as educational and health services are also critical for economic success. Business and non-profit organisations can be partners in promoting rural entrepreneurship and innovation, as they face fewer legal and regulatory constraints. CLD support and promotion of co-operatives can be crucial for sustaining skilled labour in rural areas. Co-operatives are a key opportunity for sustainable rural development as they are mostly based on social capital and community mobilisation. They are active in delivering essential services to rural areas where private sector provision, with its different targets, is decreasing. They can thus help achieve the main objectives of Québec's rural policy. Another way to enlarge rural local labour markets (LLMs) is through the in-migration of workers, although integrating foreign migrants poses challenges for rural areas. Québec already seeks to renew its population by attracting youth and immigrants and helping them find labour market opportunities and better living conditions in rural areas. Since most migrants of foreign origin live in large urban centres, efforts of non-profit actors to establish a presence among immigrant communities should be strengthened. It is also important to assist rural communities in strategically planning to attract and integrate immigrants and become a “host community”. This requires a multisectoral approach and strong involvement of the local OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 37 population, which may have problems integrating new residents and cultures. However, the government and each rural community should also be aware that the creation of an environment for economic opportunities and jobs is more important for a successful inflow of immigrants than advertising the desirability of immigration. The main reason for migrants to settle in a rural area is not government effort but perceived social and economic opportunities. Finally, policy makers may need to prepare for a new situation in parts of rural Québec where the economy will be smaller and service delivery more difficult to sustain than in the past. The policy debate should attach more importance to challenges linked to adjusting infrastructure and public service delivery in regions where the transition to a new equilibrium is taking place. Despite Québec's rural policy efforts to ensure the continued existence of communities, demographic change will lead to even more strongly declining and aging populations than at present. Innovative delivery of health or education services can delay this trend but will not reverse it. …while access to land in predominantly rural areas should be enhanced. Québec's current system for protecting agricultural land does not differentiate local situations and is applied uniformly across all designated agricultural land. The system does not consider agriculture as a spatially specific activity with varying returns and opportunity costs. A law adopted in 1978 ensures that land valuable for agriculture is not urbanised or used for other activities. This law and a related commission that monitors compliance with the law are biased towards intensive farming, which was the agricultural model viewed as most sustainable when the legislation was designed. However, new agricultural trends such as more on-farm multiactivity, off-farm complementary income and part-time farming have reduced the need for scale in agriculture. As the situation of protected agricultural land in predominantly rural areas contrasts with that in peri-metropolitan and intermediate agriculture, the legislation should distinguish among different types of areas. The current case-by-case evaluation of requests for development on protected agricultural land should be replaced by a multiannual plan for agricultural land incorporating updated land use and development schemes and elaborated by the MRCs in public consultation. This plan should be managed in connection with the PNR's rural development measures and other strategic planning carried out at the MRC level. Once agricultural land is divided into different categories, the law should be modified for OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 38 – ASSESSMENT AND RECOMMENDATIONS predominantly rural areas that are not functionally connected to urban centres to promote on-farm economic diversification beyond the activities currently judged acceptable. Changing the law would also have a significant impact on off-farm activities and promote economic diversification. In remote rural areas where farming is a marginally profitable activity even with high support, off-farm diversification can help slow loss of farmland by increasing the income of farm families. In fact, in line with a trend in the OECD area, Québec farm families have multiple sources of income. While higher incomes may lead to more part-time farming, they enhance the likelihood of preserving land that is farmed. 3) Environmental challenges in different rural territories Demographic growth and pressure on rural land should be addressed by protecting land and environmental activities on the urban fringe… Unlike predominantly rural areas, intermediate and peri-metropolitan rural areas should be the target of a specific policy to enhance the protection of agricultural land, ensure the implementation of pro-environmental activities and preserve the natural heritage. While urban expansion should not be entirely prevented, it is necessary not to waste valuable agricultural land, the natural heritage and the landscape for urban sprawl, which has been intense in parts of Québec. As many peri-urban areas, particularly in the metropolitan region of Montréal, have particularly high-quality farmland, co-ordination of urban, agricultural and environmental policy is necessary to achieve a defensible trade-off between the protection of agricultural land, the natural and cultural heritage, and the consolidation and continued development of urban areas. To be able to set an adequate strategy for their urban and peri-urban agriculture, the Montréal and Québec City metropolitan regions must understand the value and functions of agricultural areas. The value comes from commodity production, but also from their ecological and cultural roles. Their functions are economic, social and environmental, and they benefit society as a whole. As in the case of predominantly rural areas, the evaluations by the commission that monitors compliance with the law have to be more effective. The current case-by-case evaluation process tends to OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 ASSESSMENT AND RECOMMENDATIONS – 39 become judicially bogged down, favouring the rapid marginalisation of peri- urban agriculture in Québec. The current land protection legislation should be reformed or replaced in Québec's main metropolitan regions by a stricter policy to control urban sprawl. This policy objective can only be achieved once urban and peri- urban residents and institutions are convinced of the value of protecting farmland and green spaces as a collective asset for all citizens. Then, the provincial and metropolitan authorities, together with local farmers and representatives of environmental and local civic groups, should develop a new plan for urban and peri-urban agricultural land. Different OECD countries have gained experience that the authorities in Québec may want to take into account. …while policy in remote rural areas should target the protection of local environmental amenities. Rural policy should guarantee that the environmental quality of remote rural areas, which is now strained by the exploitation of natural resources, is included in the government's sustainable development approach. In light of strong relative population decline, there is a risk that remote rural areas are seen as territories to be exploited rather than an integrated part of Québec's “rurality”. A perception that favours imprudent handling of environmental protection and the exploitation of natural resources could threaten the quality of amenities and create problems relating to the emission of greenhouse gases (GHG) and other pollutants. Both Canada and Québec have started to consider the environmental sustainability of rural and particularly resource-based communities later than other countries. Only in 2005 did Québec introduce legislation to ensure that forestry management will maintain biodiversity and that ecosystems will remain viable while meeting socioeconomic needs. In 2006, a sustainable development law was adopted. In the spirit of the efforts made by the government of Québec, rural policy and its local-level implementation should be more strongly involved in strategic decisions regarding the management of natural resources. This could give rural communities a role as watchdog to protect local amenities and facilitate their access to the benefits they can generate. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 40 – ASSESSMENT AND RECOMMENDATIONS Notes 1. For this assessment, the OECD and the Ministère des Affaires municipales des Régions et de l’Occupation du Territoire (MAMROT) created a regional typology which classifies rural Québec into four categories: i) peri-metropolitan rural areas, that are outside large urban areas; ii) intermediate rural areas, which are rural areas close to an urban centre; iii) central predominantly rural areas; and iv) remote predominantly rural areas. The rest of the province, northern Québec, is not considered owing to the extremely low population density and the existence of agreements with native populations. 2. “Residential economy covers all the activities generated on the local level by the consumption of the population living on the territory considered.” In: Cohesion Serving the Regions (press kit), Informal Meeting of Ministers for Spatial Planning and Cohesion Policy, 26 November 2008, Marseille, France, www.eu2008.fr. The term is usually used as the opposite of “productive economy”. 3. An écoumène is a continuously inhabited territory. In Québec this includes 1 100 municipalities mainly in the southern part of Québec (south, northwest and along a small strip northeast of the St. Lawrence River basin), where the large majority of the provincial population resides. This écoumène alone covers an area as large as New England in the United States. 4. To assess the impact of distance on regional performance in predominantly rural areas, the OECD calculated the average linear distance of MRCs from Montréal and Québec City. The distance is expressed in kilometres. All rural areas with an average value of less than 300 kilometres are considered close to metropolitan centres. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 41 Chapter 1 Trends, perspectives and policies for rural Canada This chapter broadly discusses socioeconomic conditions in rural Canada and briefly introduces the national strategy to promote rural development.1 After introducing a regional typology, it benchmarks Canadian rural areas against other OECD rural regions in terms of economic competitiveness. Section 1.1 focuses on demographic trends, and sections 1.2 and 1.3 discuss rural-urban linkages and social well-being in the country. Sections 1.4 and 1.5 describe the economic framework and environmental challenges in rural Canada. Finally, section 1.6 presents the main challenges for rural development, introduces the national strategy to promote rural development, and discusses some of the limitations of the Canadian approach. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 42 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Key points • Canada is the country with the largest rural area within the OECD area. More than 95% of the national territory is classified as rural. The rural area ranges from the Arctic territories to the temperate prairies at the border with the United States. Despite its vastness, only 29% of Canadians live in predominantly rural areas (according to the OECD regional typology) owing to strong geographic concentration in metropolitan centres. • Canada’s rural regions have large disparities in terms of economic performance. Taking into account employment rates and demographic trends, some Canadian rural regions are among the richest in the OECD area, while others rank very low and are among the lagging regions. • Economic disparities mostly depend on the type of economic base that characterises specific rural regions. The poorest regions are often mono-industrial and specialised in the primary activities of agriculture, forestry and fishing, while the richest are specialised in primary sectors (oil and natural gas), or tertiary activities. • Resource-based industries are exposed to international shocks and put strain on the environment. Canada’s economy is relatively specialised in resource-based industries, which represented 13% of national GDP in 2006. These industries are mostly located in rural communities. Employment in many rural communities is largely in primary production. This specialisation exposes them to international shocks such as the credit crunch and to the fluctuation of the international demand for commodities. Finally, some resource-based industries put pressure on the environment because of high greenhouse gas (GHG) emissions. • Agriculture, is still an important sector in the Prairie provinces, but absorbs a small share of local employment and represents a relatively small share of GDP. In all provinces, agriculture is growing in terms of GDP and volume of production. However, as a share of total provincial GDP, agriculture is declining. Labour- saving technology allows agricultural production to grow with few workers. Thus employment in this sector is declining. • In spite of its multifaceted challenges, Canada does not have an integrated approach to rural development. As in other OECD countries, agriculture, social welfare and infrastructure policies have OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 43 a strong impact on Canadian rural development. Moreover, specific support to rural communities is provided through a series of instruments that aim at strengthening business, local networks, and community attachment. Introduction Canada is the second largest country in the world and displays great diversity, encompassing large cities and vast, barely inhabited areas in the northern territories (Box 1.1). Owing to its size, the country has diversified landscapes, cultures and regional economies. This report focuses in particular on the territories that, because of their population density and distance from large urban centres/central areas, can be classified as rural. The aim is twofold: to show the opportunity for rural areas to contribute to Canadian competitiveness and to highlight the challenges that threaten the durability of such communities. It is widely recognised that in Canada demographic, social, economic and environmental trends are creating an increasing rural-urban split. Such trends endanger the sustainability of rural communities and even the “rural character” of Canada. Many rural regions, especially remote ones, are “emptying out” as young people leave these areas, which also have little capacity to attract migrants (especially immigrants). The economy of rural Canada is still strongly dependent on primary activities and manufacturing. While some analysts argue that Canada is moving towards a post-industrial economy with more diversification and growth in the services sector, resources and resource-based activities continue to generate a substantial proportion of Canadian GDP (Hessing et al., 2005). Although there has been a move in the Canadian rural economy away from complete dependence on resources, this has not taken place at the speed or to the extent that it has in other OECD countries. Resource-based communities do not receive the full benefits of their specialisations since ownership of resources, main competences and strategic management are often located in urban areas.2 The resource-based economy also puts a strain on the environment. In part because of the natural resource sector, Canada is one of the world’s largest producers of greenhouse gases on a per capita basis. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 44 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Box 1.1. Geography and administrative structure of Canada Canada is a federal state, subdivided into ten provinces and three territories (Figure 1.1). Canada occupies roughly two-fifths of the North American continent. It encompasses vast Arctic and sub-Arctic territories and is often considered a country of the far north. However, even if large tracts of land within the country’s borders are located in the Arctic, Canada extends far south and the peninsula of southern Ontario goes deep into the US heartland. Its vast size leads to an important climatic contrast between different territories. Figure 1.1. Provinces and territories of Canada Source: OECD (2002), OECD Territorial Reviews: Canada, OECD Publishing, Paris. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 45 There are several definitions of rural Canada Several definitions of “rural” are available for national and provincial analysis in Canada. This report will use more than one definition to assess Canada and its provinces. In the first section, rural Canada is defined in terms of the OECD regional typology (Box 1.2). This definition makes it possible to compare the performance of rural Canada with that of other OECD countries. The second section presents a definition of rural areas that is based on Canada's Census Metropolitan Areas (CMA) and Census Agglomerations (CA) and takes commuting data into account. Box 1.2. OECD regional typology and rural classification The OECD has classified the regions within each member country. The classifications are based on two territorial levels (TLs). Across the OECD, the higher level (Territorial Level 2) consists of about 300 sub-national macro- regions, and the lower level (Territorial Level 3) is composed of more than 2 300 micro-regions. In Canada, the provinces and territories are Territorial Level 2 geographic units and the census divisions (MRCs in Québec) are the Territorial Level 3 geographic units. This classification – which for European countries is largely consistent with the Eurostat classification – facilitates comparability of regions at the same territorial level. Indeed, the two levels, which are officially established and relatively stable in all member countries, are used by many as a framework for implementing regional policies. A second important issue for the analysis of regional economies concerns the different “geography” of each region. To take account of these differences and establish meaningful comparisons of regions belonging to the same type and level, the OECD has established a regional typology according to which regions are classified as predominantly urban (PU), predominantly rural (PR), and intermediate (IN) on the basis of three criteria: 1. Population density of communities within each region. A community is defined as rural if its population density is below 150 inhabitants per km2 (500 inhabitants for Japan to account for the fact that its national population density exceeds 300 inhabitants per km2). 2. Settlement pattern of the population across communities within a region. A region is classified as predominantly rural if more than 50% of its population lives in rural communities, predominantly urban if less than 15% of the population lives in rural communities and intermediate if the share of the population living in rural communities is between 15% and 50%. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 46 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Box 1.2. OECD regional typology and rural classification (cont.) 3. Size of urban centre(s) within a region. A region that would be classified as rural on the basis of the general rule is classified as intermediate if it has an urban centre of more than 200 000 inhabitants (500 000 for Japan) representing no less than 25% of the regional population. A region that would be classified as intermediate on the basis of the general rule is classified as predominantly urban if it has an urban centre of more than 500 000 inhabitants (1 million for Japan) representing no less than 25% of the regional population. This regional typology results in the above figure on population distribution by region type in OECD countries. Source: OECD (2005), OECD Regions at a Glance, OECD Publishing, Paris. The OECD definition of rural Canada A very large part of Canada's territory can be classified as rural, but a relatively small share of the population lives in rural regions. With 96% of national territory classified as predominantly rural, Canada is among the most rural OECD countries, after only Iceland and Ireland. In spite of its large rural territory, the share of Canadians living in predominantly rural (PR) areas is only 29% of the total, while more than 50% live in urban (PU) regions (Figure 1.2). However, Canada’s relatively small population (33.9 million in 2009), its size (almost 10 million km2), and the geographic concentration of human settlements may bias the OECD territorial classification. For this reason, the OECD is currently developing a new territorial definition that takes also into account distance and regional accessibility. Rural Canada’s performance within OECD rural regions On average, Canada’s predominantly rural regions perform in line with other OECD predominantly rural regions, yet there are large regional differences. There is a large divide among rural regions in Canada when employment rates and demographic trends between 1999 and 2006 are taken into account. PR areas with higher employment rates and with positive demographic trends (located in the upper right hand quadrant of Figure 1.3) are mostly located in the areas rich in oil, or in areas with greater economic diversification. For instance, two PR areas located in Alberta rank among the 15 faster-growing PR areas within the OECD. Conversely, rural regions whose economy depends on the primary sectors of agriculture, forestry and OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 47 Figure 1.2. OECD regional typology A. Territory PR IN PU Ireland Finland Sweden Norway Austria Hungary Greece Poland Denmark Iceland Mexico Turkey France Canada Portugal Slovak Rep. United States Australia OECD Korea Japan Spain Germany Italy Switzerland Czech Rep. UK Belgium New Zealand Netherlands Luxembourg 0% 20% 40% 60% 80% 100% OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 48 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.2. OECD regional typology (cont.) B. Population PR IN PU Ireland Finland Sweden Norway Austria Hungary Greece Poland Denmark Iceland Mexico Turkey France Canada Portugal Slovak Rep. United States Australia OECD Korea Japan Spain Germany Italy Switzerland Czech Rep. UK Belgium New Zealand Netherlands Luxembourg 0% 20% 40% 60% 80% 100% Source: OECD Regional Database (2009), internal database. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 49 Figure 1.3. Employment (Y) and population (X) trends in Canada’s rural economic regions and OECD predominantly rural regions 1999-2006 8.00 Las Vegas-Paradise-Pahrump, Percentage point change in employment rates between 6.00 NV (EA), USA 4.00 Red Deer, Alberta Wood Buffalo-Cold Lake, Alberta Southeast, Manitoba 1999 and 2006 2.00 Thompson-Okanagan, British Columbia Centre-du-Québec, Quebec 0.00 North Coast and Nechako, British -Notre Dame-Central Bonavista Bay, Columbia Newfoundland and Labrador -2.00 South Coast-Burin Peninsula, Newfoundland and Labrador -4.00 Jeollanam-do, Korea -6.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 Regional demographic trends between 1999 and 2006 Notes: Canadian “economic regions” are groupings of census divisions (i.e. grouping of Territorial Level 3 geographic units) and are assigned as predominantly rural, intermediate and predominantly urban using an algorithm similar to the one outlined in Box 1.2. The blue points refer to OECD predominantly rural regions and the black points refer to Canada’s rural economic regions. Source: OECD Regional Database (2009), internal database. fishing perform less well. This is due to international competition but also to the mismanagement of the local resource. For example, the Burin Peninsula, in the province of Newfoundland and Labrador, is among the poorer performers. It had a thriving fishing industry which was destroyed by overfishing, resulting in the highest unemployment rate in Canada, with peaks of about 30% during the second half of the 1990s. Canada’s intermediate regions parallel the heterogeneity of PRs (Figure 1.4). The richest intermediate regions are often located on the fringe of large metropolitan areas. Examples are the Kitchener-Waterloo and Barrie regions, which are close to Toronto, and the Outaouais region, in OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 50 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Québec, which benefits from the Ottawa-Gatineau metro-region. These intermediate regions benefit from economic spillovers and in-flows of population. The poorer performers usually have a relatively small and isolated local labour market. Their economy is dependent on traditional manufacturing and primary activities. This is the case for Québec's Saguenay-Lac-Saint-Jean region, which is home to mining, agriculture activities and wood processing. Figure 1.4. Employment (Y) and population (X) trends in Canada’s intermediate economic regions and OECD predominantly rural regions 1999-2006 Percentage point change in employment rate from 1999 to 2006 5.00 Guadalajara, Spain 4.00 3.00 Edmonton, Alberta Kitchener-Waterloo-Barrie, Ontario 2.00 Outaouais, Quebec 1.00 0.00 Mauricie, Quebec -1.00 Saguenay-Lac-Saint-Jean, Quebec -2.00 Dessau, Germany -3.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 Regional demographic trends between 1999 and 2006 Percentage rate of change of total population from 1999 to 2006 Note: Canadian “economic regions” are groupings of census divisions (i.e. grouping of Territorial Level 3 geographic units) and are assigned as predominantly rural, intermediate and predominantly urban using an algorithm similar to the one outlined in Box 1.2. The blue points refer to OECD predominantly rural regions and the black points refer to Canada’s intermediate economic regions. Source: OECD Regional Database (2009), internal database. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 51 The national rural typology While the OECD definition proves useful for benchmarking rural Canada’s performance against OECD rural regions, other definitions can give a more detailed assessment of trends in rural territories. Each of these emphasises different criteria (population size, density or geography) and has different associated rural thresholds. The size of the territorial units (building blocks) also varies. Each set of definitions covers the entire territory of Canada. The federal Rural Secretariat, for most of its analysis, has adopted the rural and small town (RST) definition.3 Each federal or provincial policy and programme can adopt a definition that is specifically designed for the given policy or programme. However, federal departments are encouraged to use the RST definition when undertaking research and analysis. Policy makers and researchers must also consider the issue of identity and social representation when defining rural. Another important factor in the definition of rural areas is the way in which communities perceive themselves and other communities. Local evaluations, rather than comprehensive ones, can spur a strong commitment to rural identity. According to the RST definition, rural areas can be differentiated according to their functional linkages with metropolitan areas. This typology is based on “Metropolitan Area and Census Agglomeration Influenced Zones” (MIZ) (Figure 1.5). MIZ is a refinement or extension of the Census Metropolitan Areas (CMA), Census Areas (CA) or RST concept introduced above.4 Statistics Canada uses MIZ to better show the effects of metropolitan accessibility on non-metropolitan areas (Mendelson, Murphy and Puderer, 2000). This classification system is applied at the Census Subdivisions (CSD) level and disaggregates RST Canada (or non-CMA/CA) into four sub-groups based on size of commuting flows: • Strong MIZ: 30% or more of the employed labour force living in the CSD work in any CMA/CA urban core. • Moderate MIZ: at least 5% but less than 30% of the employed labour force living in the CSD work in any CMA/CA urban core. • Weak MIZ: more than 0% but less than 5% of the employed labour force living in the CSD work in any CMA/CA urban core. • No MIZ: includes all CSDs that have a small employed labour force (less than 40 people), as well as any CSD that has no commuters to a CMA/CA urban core (i.e. none of the employed labour force living in the municipality works in any CMA/CA urban core). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 52 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.5. Metropolitan Influenced Zones in rural and small town areas, 2006 Using the statistical area classification Larger urban centres Census Metropolitan Areas (urban core of 50 000 or more with a total population of 100 000 or more) Census Agglomerations (urban core of 10 000 Rural and small town areas to 49 999) (showing Metropolitan Influenced Zones (MIZ)) Strong MIZ Moderate MIZ Weak MIZ No MIZ Territories Source: Statistics Canada, Census of Population, 2006. Map produced by the Remote Sensing and Geospatial Analysis Section (RSGA), Agriculture Division, statistics Canada, 2010. Canada’s geography can also be defined on the basis of different statistical classification or provincial typologies. Census subdivisions (CSDs) and census consolidated subdivisions (CCSs) are among the most important.5 In the 2006 Census, there were 5 418 CSDs. CSDs can be further grouped into CCSs. The general case is a small town (i.e. a CSD) surrounded by rural municipalities (i.e. other CSDs). The CSDs are consolidated for statistical purposes to form a CCS. Finally, provinces can define rural regions based on Census divisions (CDs). CDs are intermediate geographic areas between the municipality (i.e. CSD) and the province. They represent counties, regional districts, regional municipalities and other types of provincially legislated areas. In Newfoundland, Manitoba, Saskatchewan and Alberta, provincial law does not provide for these administrative geographic areas. In co-operation with these provinces, CDs have been created by Statistics Canada to facilitate the dissemination of statistical data. In the Yukon Territory, the CD is equivalent to the entire territory. CDs are used to represent Territorial Level 3 geographic units in the OECD territorial grid. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 53 1.1 Demographic trends in rural areas Canada’s rural population has been concentrating in rural regions close to urban areas The share of the population living in rural regions has been decreasing over the last 15 years, but measuring demographic trends in rural areas can be challenging because of the evolving regional classification.6 In 2006, Canadians living in rural and small towns (RST) accounted for 19% of the Canadian population, compared to 20.6% in 2001 and 22.8% in 1991 (RST definition). At the same time, the size of the RST population has been essentially constant since 1981. Its representation is complicated by the fact that rural areas are re-classified when their population exceeds 10 000. Between 1966 and 1981, there were up to 8 million rural and small town Canadians and from census year to census year, the population generally grew. At each census year, therefore, Statistics Canada re-classifies some towns and municipalities because they reach the urban core density criteria or commuting patterns change. These reclassifications reduce the number of individuals living in rural areas. Rural regions with the largest population growth are those that are integrated in urban labour markets (Figure 1.6). Although the bulk of Canada’s RST population still lives in moderate and weak MIZ, only strong MIZ showed constant population growth between 1996 and 2006; weak MIZ showed an overall decline between 1996 and 2006.7 These trends prove the influence of large urban centres on rural areas (strong MIZ grew faster than moderate MIZ which grew faster than weak MIZ). There are however exceptions, such as the no MIZ RST in the territories. Their population increases more than the other RST, due to higher birth rates among the aboriginal population.8 Another exception is Alberta where weak MIZ rural areas saw significant growth. This trend is mainly due to the oil and gas sector which created some boom economies during the past 15 years. Demographic trends in RSTs vary considerably across the country, and the most populous provinces have a large impact on the national demographic structure. At the provincial level, only Ontario, Alberta and Manitoba had consistent growth in their rural and small town population between 1986 and 2006 (Table 1.1). Following the federal regional classification, Ontario had the largest rural population with over 1.8 million, followed by Québec with nearly 1.5 million (2006). Together these two provinces account for almost 53% of Canada’s rural population. In general, between 2001 and 2006, RST areas in Québec, Ontario, Alberta and British Columbia had net in-migration while Newfoundland and Labrador, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 54 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Manitoba and Saskatchewan had the highest net losses through out- migration (OECD, 2009). Figure 1.6. Community population gains and losses 1981-2001 Legend Communities that lost population during all five inter-censal periods Communities that lost population in three or four out of five inter-censal periods Communities that gained population during three or four out of five inter-censal periods Communities that have gained population during all five inter-censal periods Note: Continuous population gain is defined as communities (Census consolidated subdivisions) that reported more residents in each inter-censual period: 1981 to 1986 and 1986 to 1991 and 1996 to 2001. Continuous population loss is defined as communities (CCSs) that reported fewer residents in each inter-censual period: 1981 to 1986 and 1986 to 1991 and 1996 to 2001. Source: Statistics Canada, Census of Population, 1981 to 2001. Map produced by the Remote Sensing and Geospatial Analysis Section (RSGA), Agriculture Division, statistics Canada, 2010. Demographic trends in RSTs vary considerably across the country, and the most populous provinces have a large impact on the national demographic structure. At the provincial level, only Ontario, Alberta and Manitoba had consistent growth in their rural and small town population between 1986 and 2006 (Table 1.1). Following the federal regional OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 55 classification, Ontario had the largest rural population with over 1.8 million, followed by Québec with nearly 1.5 million (2006). Together these two provinces account for almost 53% of Canada’s rural population. In general, between 2001 and 2006, RST areas in Québec, Ontario, Alberta and British Columbia had net in-migration while Newfoundland and Labrador, Manitoba and Saskatchewan had the highest net losses through out- migration (OECD, 2009). Table 1.1. Population change in rural and small town areas, Canada, provinces, and territories 1986-2006 1986 to 1991 1991 to 1996 1996 to 2001 2001 to 2006 Newfoundland and Labrador -3.0 -5.1 -10.6 -5.6 Prince Edward Island -0.2 2.4 -1.0 -1.3 Nova Scotia 0.5 -0.6 -2.3 -1.8 New Brunswick -0.2 1.3 -2.7 -2.5 Québec 1.6 3.5 -0.8 2.2 Ontario 9.3 4.7 1.5 2.4 Manitoba 0.5 4.4 0.5 2.4 Saskatchewan -6.9 -2.0 -3.5 -4.7 Alberta 3.1 7.8 5.5 3.8 British Columbia 7.2 12.8 -1.1 0.8 Yukon 18.9 16.0 -18.9 2.8 Northwest Territories 4.9 11.0 0.9 1.7 Nunavut -7.6 Total rural 3.0 3.9 -0.4 1.0 Source: Statistics Canada, Census of Population 1986 to 2006. Rural areas display high elderly dependency rates… Ageing is a nation-wide trend and a high proportion of Canada’s elderly people live in rural areas. By 2026 one Canadian in five will have reached age 65, and the proportion of Canadians aged 85 or more is expected to grow to 1.6 million in 2041 – 4% of the overall population. In 2006, 13% (4.07 million) of Canadians (one out of eight) were at least 65 years of age. Of these, 21% (871 815) resided in rural areas. Yet, since rural areas accounted for only 19% of Canada’s population, a high share of seniors lived in rural areas. Canada’s moderate MIZ areas had an older population relative to all other areas. The 16% (357 835) of moderate MIZ area residents at least 65 years of age was greater than the Canadian average of 13%. As a share of the population in moderate MIZ areas, seniors OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 56 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA increased by 2.5% from 1996 to 2006. As a result, rural Canada as a whole displays a higher (and increasing) aged dependency rate than the rest of the country and of course of urban areas (Figure 1.7). Figure 1.7. Aged dependency ratios in rural and urban areas 1996-2006 Total rural (MIZ definition) Urban Canada 25 22.07 20.58 20 19.35 18.87 17.88 18.15 16.95 17.24 16.36 15 10 5 0 1996 2001 2006 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. Out-migration of young people is common. The percentage of people aged 0-14 living in rural areas has been declining constantly in the last decade.9 In moderate MIZ areas there was a 4% point decrease in the youth population between 1996 and 2006 (Statistics Canada, 2006). In particular, it is estimated that rural areas experienced a net loss of between 12% and 16% of 15-to-19-year-olds between 1986 and 1996.10 In some provinces, including Saskatchewan and Newfoundland, losses of rural youth within this age cohort ranged from 21% to 25%. While youth out-migration is not a phenomenon unique to rural communities, rural communities have much lower rates of return migration than urban centres. For example, in OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 57 Canada only one in four rural youth who leave their community will return to the same community within ten years (Statistics Canada, 2006). ...which are not offset by in-migration of foreign workers On average, rural Canada holds little attraction for foreign workers, especially compared with urban regions (Table 1.2).11 Of the 1.1 million new immigrants who arrived between 2001 and 2006, only 4.9% settled in rural Canada. It is likely that new immigrants will continue to choose urban communities unless rural communities actively plan for recruitment and retention and are competitive. Some rural areas have done this. Labour needs in some rural areas of British Columbia, Alberta and Manitoba, combined with successful immigration programmes and extensive recruitment activities, put a handful of rural census divisions in the top 20 destinations for new immigrants between 2001 and 2006. Table 1.2. Distribution of new immigrants (having arrived during the previous five years), Canada Percentage 1996 2001 2006 Larger urban centres 94.9 94.8 95.1 All rural and small town areas 5.1 5.2 4.9 Strong MIZ 1.2 1.3 1.3 Moderate MIZ 1.8 1.9 1.8 Weak MIZ 1.9 1.9 1.7 No MIZ 0.2 0.2 0.1 RST territories 0.04 0.04 0.03 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. Foreign immigrants are essential for the sustainability of many rural economies, but they also raise challenges. Working conditions are often less favourable in rural areas, and in many cases it is difficult to recruit local workers for the work that is available. As a reaction to the labour shortage, food processing plants in Alberta and Manitoba are extensively hiring OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 58 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA immigrants and refugees from Africa, Asia, and Central America to meet labour requirements (Broadway, 2007; Fairy et al., 2008). This causes housing shortages, rising demand for social services, increases in various social disorders, the creation of relatively low-paying or part-time jobs, and a relative fall in income levels (Broadway, 2007; Donato et al., 2007). The host community usually lacks the experience or the social infrastructure to assist immigrants and this can feed into racial/ethnic tensions (Donato et al., 2007). While these potential problems are not unique to rural communities, they may be more overwhelming because a smaller community tax base is less able to provide resources and a smaller population is less able to provide assistance and may have less experience with cross-cultural community development (Beshiri and He, 2009). Some rural communities have nevertheless demonstrated the capacity to integrate immigrants through the establishment of specific local services (from groceries to music) for the immigrant and refugee population. According to some scholars, the capacity to integrate immigrants has probably enriched the local communities (Broadway, 2007). Many rural regions are “witnessing the reality of diversity and demographic transformation” (Radford, 2007). Some characteristics of the immigrant population may help the integration process. For instance, Ram and Shin (1999) suggest that the more mobile an immigrant group is, the greater its degree of integration into the mainstream of society. As a result, spatial dispersal of the population, as opposed to enclaves of immigrants, is indicative of socioeconomic integration (Beshiri and He, 2009). Mobility of immigrants into a rural community with a relatively strong sense of community (Mitura and Bollman, 2003) may facilitate the integration of immigrants into Canadian society more easily than in urban areas. In 2006, most immigrants in rural zones are well established pre-1986 immigrants (3.7% of the total population) while those who arrived later are a much smaller share (1.6% of the total population). This contrasts to metropolitan areas which have fewer well-established immigrants compared to those who arrived later (11% versus 15%) (Figure 1.8). Overall, every fourth person in a metropolitan area is an immigrant compared to about one in 19 in RST areas. Interestingly, compared to RST areas, the smaller cities or census agglomerations have a similar number of immigrants and a similar profile of total immigrants for each period of arrival. In both CA and RST areas, most immigrants arrived at least 20 years before the 2006 Census (i.e. prior to 1986). Within rural and small town Canada, immigrants constitute a higher share of the population in strong MIZ than in the more rural zones.12 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 59 Figure 1.8. Immigrants as a percentage of the total population within larger urban centres and rural areas 2001-06 Well established (pre-1986) Established (1986 to 1995) Recent (1996 to 2000) New (2001 to 2006) 30 25 20 15 10 5 0 LUC CMA CA RST Strong MIZ Moderate Weak MIZ No MIZ RST (subtotal) (subtotal) MIZ Territories Note: Larger urban centres (LUCs) comprise census metropolitan areas (CMAs) and census agglomerations (CAs). CMAs have a total population of 100 000 or more with 50 000 or more in the urban core and include all neighbouring towns and municipalities in which 50% or more of the workforce commutes to the urban core. CAs have an urban core of 10 000 or more and a total population of less than 100 000 and include all neighbouring towns and municipalities in which 50% or more of the workforce commutes to the urban core. Rural and small town (RST) areas are comprised of metropolitan influenced zones (MIZ) which are assigned on the basis of the share of the workforce that commutes to any CMA or CA (strong MIZ: 30% or more; moderate MIZ: 5% to 29%; weak MIZ: 1% to 5%; no MIZ: no commuters). Source: Beshiri, R. and J. He (2009), “Immigrants in Rural Canada: 2006”, Rural and Small Town Canada Analysis Bulletin, Vol. 8, No. 2, Statistics Canada, www.statcan.gc.ca/pub/21-006-x/21-006-x2008002-eng.pdf. 1.2 Rural-urban linkages Commuting flows are intense, but also multi-directional Because of cheaper housing and good natural amenities, rural areas close to large urban markets attracted population between 1981 and 2001 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 60 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA (Figure 1.9). Rural areas close to larger urban centres (LUCs) attract specific categories of urban residents. For instance, for age groups 25 to 69 there has been consistent net in-migration to RST areas, as young families move to rural communities within commuting distance of jobs in the city and early retirees move to rural areas rich in outdoor and recreational amenities.13 For instance, in 2001, out of 14.7 million workers in Canada, 2.8 million resided in rural and small town (RST) areas. Figure 1.9. Demographic trends in accessible and remote rural communities in Canada 1981-2001 1981 1986 1991 1996 2001 50 45 40 35 % distribution of total population 30 25 20 15 10 5 0 Less than 25 km. 25 to 49 km. 50 to 74 km. 75 to 99 km. 100 to 149 km. 150 to 199 km. 200 to 299 km. 300 km. or more Distance to nearest CMA with more than 100 000 inhabitants Note: Communities more than 50 km from a CMA with over 100 000 inhabitants are, on average, not competitive (i.e., their share of the total population is declining). Source: Bollman, R.D. (2007), “Factors Driving Canada's Rural Economy, research paper”, Agriculture and Rural Working Paper Series, Statistics Canada. Commuting flows out of rural communities tend to be multidirectional rather than merely periphery to core. Of the 2.8 million workers living in rural areas, about 2.3 million worked in an RST. Among them, 447 000 worked in an RST different from their place of residence. The bulk of these OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 61 RST residents, therefore, contributed to the economy of other rural areas, while a similar amount, approximately 444 000 workers, commuted to an LUC.14 These results indicate that when it comes to workers commuting from a RST area, rural jobs were as important as urban jobs (Table 1.3). Table 1.3. Distribution of commuters by place of residence and place of work LUC RST All areas Commuters by place of work (number) LUC 3 765 950 163 740 3 929 690 RST 443 605 447 000 890 605 All areas 4 209 555 610 740 4 820 295 Distribution by place of work (row percentage) LUC 95.8 4.2 100 RST 49.8 50.2 100 All areas 87.3 12.7 100 Distribution by place of residence (column percent) LUC 89.5 26.8 81.5 RST 10.5 73.2 18.5 All areas 100 100 100 Source: Harris S., A. Alasia and R.D. Bollman (2008), “Rural Commuting: Its Relevance to Rural and Urban Labour Markets”, Rural and Small Town Canada Analysis Bulletin Vol. 7, No. 6; Statistics Canada, Catalogue No. 21-006-XIE, Ottawa. Urban sprawl puts pressure on agricultural land In the last 30 years, urban sprawl has been intense, even though it is concentrated in a relatively small area of the country. Canada’s urban landscape is dominated by four major regions with half of the Canadian population: Ontario’s extended Golden Horseshoe; Montreal and the adjacent region; British Columbia’s Lower Mainland and southern Vancouver Island; and the Calgary-Edmonton corridor. In 2001, approximately one in every three km2 of urban land was in Ontario (9 800 km2). Québec (7 500 km2) had the second largest area of urban land, followed by British Columbia (4 100 km2). The total area of urban land in Canada (31 000 km2 in 2001) has increased significantly in recent decades. Between 1971 and 2001, urbanisation consumed about 15 200 km2 of OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 62 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA surrounding land, an increase of 96% in urban land over the three decades. At the provincial level, Ontario and Québec registered the largest increase of urban land. Ontario’s urban land grew by 4 300 km2, an increase of almost 80% over that period (Figure 1.10).15 Figure 1.10. Evolution of urban land in Canada between 1971 and 2001 km2 1971 2001 British Columbia Alberta Saskatchewan Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island Newfoundland and Labrador 0 2 000 4 000 6 000 8 000 10 000 12 000 Estimated urban land (km 2) Source: Hofmann, N., G. Filoso and M. Schofield, (2005), “The loss of dependable agricultural land in Canada”, Rural and Small Town Canada Analysis Bulletin, Vol. 6, No. 1, Statistics Canada Catalogue No. 21-006-XIE, Ottawa. Urban development has consumed important portions of Canada’s best farmland (Figure 1.11). In 2001, approximately 46% of the urban land in Canada was situated on dependable agricultural land. Despite Canada’s size, dependable agricultural land is a scarce resource. Limitations such as climate and soil quality reduce the amount of land that can be used dependably for agricultural activities. Only about 5% of Canada’s land (492 727 km2) does not place severe constraints on crop production. Urban uses cover 14 300 km2 or 3% of all dependable agricultural land and 7.5% OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 63 of the best agricultural land, classified as “Class 1” in the Canada Land Inventory (OECD, 2009).16 This land is, for all intents and purposes, permanently lost to agriculture. Figure 1.11. Urban developments and consumption of dependable agricultural land 1971-2001 Urban land use on dependable agricultural land Urban land use 35 000 30 000 Urban land (km2) 25 000 20 000 15 000 10 000 5 000 0 1971 1976 1981 1986 1991 1996 2001 Source: Hofmann, N., G. Filoso and M. Schofield, (2005), “The loss of dependable agricultural land in Canada”, Rural and Small Town Canada Analysis Bulletin, Vol. 6, No. 1, Statistics Canada Catalogue No. 21-006-XIE, Ottawa. The quantity of dependable land varies dramatically across Canada’s provinces. For instance, although Québec is the largest province, it has only 5% of all dependable agricultural land. Three-quarters of Canada’s dependable agricultural land is concentrated in three provinces: Saskatchewan, Alberta and Ontario (Figure 1.12). Hence, the impact of urban development on available agricultural land changes according to the province. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 64 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.12. Km2 of class 1 dependable agricultural land in Canada's provinces, 2001 British Columbia, 78 Quebec, 223 Alberta, 6 719 Saskatchewan 12 282 Ontario, 27 635 Manitoba 2 111 Source: Hofmann, N., G. Filoso and M. Schofield, (2005), “The loss of dependable agricultural land in Canada”, Rural and Small Town Canada Analysis Bulletin, Vol. 6, No. 1, Statistics Canada Catalogue No. 21-006-XIE, Ottawa. 1.3 Social well-being It is difficult to measure the quality of life in rural areas in Canada, as in rural communities in general. For instance, rural areas have both advantages and disadvantages compared to urban areas. On the one hand, Canadian rural communities lag behind urban communities on a number of indicators of quality of life, such as household income, education, employment and health. However, they are appreciated for their social and environmental qualities, including lower levels of stress, crime and pollution, and higher levels of social cohesion. However, these are only proxy measures of well- being and can give only a broad idea of what may be needed to improve the quality of rural life.17 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 65 Rural areas are less affluent, but poverty is an urban issue In general, Canadian rural populations have lower incomes than their urban counterparts.18 At the national level, the income gap between rural and urban families is approximately USD 7 100 in purchasing power parity (PPP) (2005) (Figure 1.13). However, some rural disadvantages in terms of income disparities vis-à-vis urban regions are compensated by three major monetary transfers. First, as a result of lower income levels, rural citizens pay less tax than urban citizens (Murphy, 1992; Rupnik, Thompson-Jones and Bollman, 2001). Second, rural citizens receive more government transfer payments because unemployment rates are higher in rural areas (with high levels of benefits from the Employment Insurance programme). Third, owing to the higher share of seniors and children, rural areas receive more pension income and relatively more government transfers from the Child Tax Credit programme. The income gap between rural and urban areas is stable and has not changed notably over the past two decades (Bollman and Michaud, 2006) (Figure 1.14). However, the income gap varies across Canada’s provinces. For example, between 1980 and 2000, average rural incomes increased at a faster rate than average incomes in urban areas in some provinces. As a result, the rural-urban income gap, while persistent, declined in six provinces and increased in three (Singh, 2004). Fewer rural individuals than urban individuals live in poverty today. Since the late 1980s, the incidence of low-income households in rural and small town Canada, as measured by the low income cut-off (LICO), has been lower than in larger urban centres (Figure 1.15). The LICO is adjusted for urbanisation classes. The LICO for rural areas is lower to reflect lower living costs (largely, the cost of housing, but also food and clothing). This partly explains the lower share of rural individuals living in households with income below the LICO. Nonetheless, the result may change when using other measures of wealth or well-being. According to other approaches, rural areas are poorer than urban areas once local income is adjusted by transport costs, or urban fringe areas are those with the highest level of well- being (Box 1.3). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 66 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.13. Household income levels in urban, rural, and MIZ areas in 2005 Constant USD PPP 2000 Median income Average income Median income Average income 40 000 40 000 35 000 35 000 30 000 30 000 25 000 25 000 20 000 20 000 15 000 15 000 10 000 10 000 5 000 5 000 0 0 Urban total Rural total Strong MIZ Moderate MIZ Weak MIZ No MIZ Territories Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 67 Figure 1.14. Trends of income in RST and LUC, 1984-2004 Constant CAD 2000 Larger urban centres Rural and small town areas Gap: Urban minus rural Median income for families with two or more individuals 60 000 50 000 40 000 30 000 20 000 10 000 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Statistics Canada, Survey of Labour and Income Dynamics (and Survey of Consumer Finances for earlier years). According to a quantitative analysis of social progress in urban and rural areas, the highest level of well-being is achieved on the urban fringe. Harris and Burns (2004) developed a formula for operationalising a definition of social progress, which included education, life expectancy, youth dependency, incidence of low incomes and unemployment. In this approach social progress depends on: i) the percentage of the population with grade 9 education or higher; ii) the average life expectancy in number of years; iii) the local population change between 1996 and 2001; iv) the youth dependency ratio; v) the percentage of the population below LICO; and, finally, vi) the unemployment rate. Using mainly census data for 1996 and 2001, the model found that the level of social progress tends to be lowest in rural areas outside of CMA/CAs and highest on urban fringes within CMA/CAs subdivisions (Table 1.4). Average rates of social progress on urban fringe CSDs also showed the greatest increase over the five-year period, with an average that rose from .37 in 1996 to .73 in 2001. Thus, being located near but not in an urban core region seemed to offer the most favourable conditions for social progress.19 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 68 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.15. Percentage of individuals in households with income from all sources below the low income cut-off (LICO) 1984-2004 Larger urban centres Rural and small town areas 20% % of individuals in households with income from all sources 18% 16% less than the low income cut-off (LICO) 14% 12% 10% 8% 6% 4% 2% 0% 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Statistics Canada, Survey of Labour and Income Dynamics (2004). Box 1.3. Different measures of poverty in Canada's rural areas and provincial performance A number of quality-of-life and social well-being reporting systems have been developed and applied across Canada. These systems measure and value economic, social and environmental well-being, taking into account equity, human rights and social justice. In general, techniques to measure poverty that do not adjust for differences in the cost of living between urban and rural areas or adjust the costs according to other variables than the LICO obtain different results. • Low income measure (LIM) (i.e. individuals in households with household income less than one-half of the national median income, adjusted for household size) shows that the incidence of low incomes in rural areas can be higher than in urban areas (Rupnik, Tompson- Jones and Bollman, 2001). This result is solely due to the fact that the LIM makes no adjustment for differences in the cost of living between urban and rural areas. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 69 Box 1.3. Different measures of poverty in Canada's rural areas and provincial performance (cont.) • Market basket measure (MBM) includes transport costs in the calculation of the cost of living. Higher rural transport costs due to the lack of public transit means that the minimum “market basket” of goods and services costs more in rural areas. Consequently, the incidence of individuals living below the MBM is similar in rural and urban areas (Bollman and Michaud, 2006). • The Environment and Sustainable Development Indicators Initiative (put in place by the government of Canada). This is a substantial effort to measure the impact of Canada’s current economic activities on the environment. As of 2004, the federal government committed to begin using several of the recommended indicators, incorporating clean water, clean air and emissions reductions into its decision making. • Social progress indicators have also been explored by the Rural Secretariat (the administrative body that co-ordinates rural policy in Canada) as a measure of social well-being and quality of life and applied specifically in rural Canada. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. Table 1.4. Social progress: average of CSDs by urban and rural type Territory* 1996 2001 Urban core 0.268 0.346 Urban fringe 0.37 0.729 Rural fringe, in CMA/CA 0.365 0.563 Urban, outside CMA/CA 0.01 -0.226 Rural outside CMA/CA -0.127 -0.062 Total -0.02 0.032 Note: Harris and Burns (2004) do not use the RST classification of rural. Their regional breakdowns include urban core, urban fringe and rural fringe and distinguish between accessible and peripheral urban and rural areas within or outside of a census metropolitan area (CMA) or census agglomeration (CA). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 70 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA The rural population has lower education attainment and health status than the urban population In Canada, there is a rural-urban divide in educational attainment. In 2006, rural Canadians were less likely to have completed high school and a university degree, but more likely than urban Canadians to have obtained a trades certificate or diploma. More specifically, 25% of rural residents aged 25 to 64 had not completed high school in 2006, compared to 13% of urban residents. Approximately 17% of rural Canadians had obtained a trades certificate or diploma, compared to 11% of their urban counterparts. Close to 20% of both rural and urban residents held college diplomas and approximately 11% of rural citizens held a university degree, compared to 26% of urban citizens (Statistics Canada, 2008). While a rural-urban education gap persisted, between 1981 and 1996 educational attainment steadily improved in both rural and urban areas (Alasia, 2003).20 The rural-urban education gap in Canada depends on three main factors. First, as in rural areas in other OECD countries, there are fewer incentives for rural individuals to obtain higher education since fewer local jobs require higher skills (i.e. university degrees). Second, attainment of higher skills often requires relocation to larger urban communities. Third, universities in Canada tend to be located in larger urban centres and technical and community colleges in smaller cities and towns. Taking into account postsecondary educational attainment by high-school graduates in general, rural high-school graduates are just as likely to pursue postsecondary education as urban high school graduates (Frenette, 2003). Rural areas also display lower health status than urban areas, even though the lower pollution and the rural modus vivendi offer some advantages. In general, health decreases as distance from an urban centre increases (Desmeules and Pong, 2006; Mitura and Bollman, 2003). The physician-to-population ratio displays a similar pattern (Table 1.5). Health- related factors such as smoking and obesity are more prevalent in rural than in urban areas while healthy behaviour such as good dietary practices (eating fruit and vegetables) and physical activity are less common (OECD, 2009). Circulatory diseases, injuries, poisonings and suicide contribute to higher overall mortality rates in rural areas and small towns. Citizens residing in the most rural areas are at highest risk. For instance, higher mortality rates from injury and poisoning in rural areas may be related to occupational hazards in rural-based industries such as agriculture, fishing, and forestry. Longer commuting distances for work and shopping and dangerous road conditions in rural areas may contribute to higher injury rates and deaths due to traffic accidents (Desmeules and Pong, 2006).21 However, owing to less exposure to pollutants, cancer mortality rates are OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 71 slightly lower in rural communities. Other rural health advantages include a greater sense of community and lower stress levels (Desmeules and Pong, 2006). Table 1.5. Distribution of physicians and total population across Canada, 2004 Moderate Strong MIZ Weak MIZ No MIZ Territories Total rural Urban Canada MIZ % of all 1.4 3.2 4.4 0.3 0.1 9.4 90.8 100 physicians % of Canadian 5.6 7.6 6.6 1.1 0.2 21.1 79.3 100 population Source: Statistics Canada (2004), Population Estimates (2001 boundaries); Southam Medical Database. Data extracted from Canadian Institute for Health Information (CIHI) (2005), Geographic Distribution of Physicians in Canada: Beyond How Many and Where. Rural labour markets’ demonstrate good performance, especially in the territories Rural Canada’s labour markets perform at a lower level than those of urban regions in terms of participation rates, but participation and employment rates are relatively high. In 2006 the participation rate in RST areas was 63.7%. At 68.5% participation rates in the rural areas of the territories were higher than those in urban areas and all other types of rural areas. Conversely, moderate and no MIZ areas have the lowest performance (Figure 1.16). The employment rate in rural Canada was 58.5% in 2006, compared to 63.3% in urban Canada. Employment rates for rural areas were highest in strong MIZ at 62.8% while those in no MIZ were the lowest of all rural and small town areas at 50.6%. The unemployment rate in rural communities was 8.2% in 2006, compared to 6.2% in urban centres. The unemployment rate in strong MIZ was below that of urban areas at 5.9%. Unemployment rates generally increased with “rurality” with the most rural areas showing the highest rates. For example, unemployment rates in no MIZ and the RST territories were 14.6% and 15.5%, respectively. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 72 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.16. Labour force participation rates in rural and urban areas in Canada, 2006 15 years and over 1996 2001 2006 80 70 60 50 40 30 20 10 0 Territories No MIZ Weak MIZ Moderate MIZ Strong MIZ Total rural Urban Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. In terms of trends, RST areas performed well and in line with large urban centres between 1996 and 2000. Both labour force participation and employment rates in RSTs grew at just over 5% (Rothwell, 2001). At the same time, unemployment rates declined between 1996 and 2000 (although they declined less in rural areas than in urban areas). At the provincial level, labour force participation and employment rates varied notably (Rothwell, 2001). Employment rates in rural areas in the Atlantic provinces increased between 1996 and 2000, yet each province’s employment rate was below the overall Canadian rural employment rate. Increases in rural employment in Québec and Ontario were similar during the period, although the rural employment rate was above the Canadian rural average in Ontario, while it remained below it in Québec. The four western provinces had essentially steady rural employment rates above the national rural average; however, the gap between these rates and the Canadian rural average was closing. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 73 Delivery of services can be challenging in remote rural areas owing to ageing and depopulation As longevity increases in rural areas there is a concern that seniors may not be able to receive the services they need, such as recreational activities, housing and health care. However, because of the huge differences that characterise rural Canada, some rural areas perform better than others in this respect. Distance from urban areas is likely to play a key role in the delivery of some specific public goods. For instance, adjacent rural and urban areas share jobs, labour markets and services. In other rural areas, particularly weak MIZ, regular population decreases have been reducing rural municipalities’ tax base, thus affecting their ability to deliver services. Distance and decreasing population also affect the capacity of the private sector and civil society to offer key services in rural communities. For instance transport and finance firms find it difficult to maintain or expand the level of goods and services offered on location in rural areas. Likewise, as the population base diminishes so too does the number of people available for volunteer and community service. Rural residents face significant additional pressures on their time and resources. These rural areas have had to adjust and adapt and find new approaches to procuring needed services. Co-operative business approaches, regional co-operation, asset mapping for community and economic planning, strategies for attracting and maintaining immigrants and migrants have all been part of the adjustments made in rural areas. In Manitoba, successful immigrant sponsorship programmes helped increase the population in both moderate and weak MIZ. These trends have had a significant impact on the rural communities involved. 1.4 Economic profile The rural economy is home to a diversified economic base… Altogether, rural Canada has been shifting from goods-producing sectors to services-producing sectors (Table 1.6).22 For example, the share of rural employment in the goods-producing sector declined from 36% in 2001 to 35% in 2008, while increasing from 64% to 65% in the services- producing sector. This is primarily due to labour-saving technologies and declining transport/communication costs. Because primary sectors have adopted labour-saving technologies, they have been shedding massive amounts of jobs.23 Another force reshaping the rural economy has been the constant decline in the price of transporting goods, moving people and exchanging information, which have favoured the geographic spread of firms and services in non-central areas (Bollman, 2007). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 74 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Table 1.6. RST employment by industry sector, 2008 Goods-producing sectors Services-producing sectors Business, building and other support services Professional, scientific and technical services Finance, insurance, real estate and leasing Forestry, fishing, mining, oil and gas Accommodation and food services Information, culture and recreation Health care and social assistance Transportation and ware-housing All sectors All services-producing sectors All goods-producing sectors Wholesale and retail trade Public administration Educational services Other services Manufacturing Construction Agriculture Utilities Number employed in rural and small town areas in 2008 ( in thousands) Newfoundland and Labrador 1 9 1 9 9 28 15 5 2 2 2 7 13 2 6 6 6 65 93 Prince Edward 2 2 x 3 3 11 4 2 1 1 1 2 3 1 2 1 2 18 29 Island Nova Scotia 4 9 1 10 16 40 24 5 5 5 6 9 19 5 8 6 7 99 139 New Brunswick 5 8 2 11 20 45 22 9 6 4 5 11 22 3 9 7 9 107 152 Quebec 46 17 7 54 145 269 118 39 28 24 22 40 89 22 48 42 28 499 768 Ontario 37 13 19 73 117 260 117 45 28 30 30 46 96 31 47 38 39 547 806 Manitoba 26 3 2 11 18 61 22 9 6 3 3 12 23 4 8 8 7 104 165 Saskatchewan 36 14 2 13 9 74 24 9 8 4 3 11 20 4 9 7 6 103 177 Alberta 53 45 4 43 26 169 57 21 14 13 11 25 38 10 28 19 12 247 417 British Columbia 11 22 2 35 23 92 38 14 10 14 9 13 25 12 24 10 10 178 270 CANADA 220 142 38 262 386 1 049 439 157 107 99 91 175 348 93 188 144 127 1 966 3 015 % distribution of rural and small town employment within each province, 2008 (row %) Newfoundland and Labrador 1 10 1 10 9 30 16 6 2 2 3 7 14 2 6 7 6 70 100 Prince Edward 8 8 n.a. 9 11 37 13 5 3 2 3 6 11 3 6 4 8 63 100 Island Nova Scotia 3 6 0 7 12 29 18 3 3 3 5 7 13 4 6 4 5 71 100 New Brunswick 3 5 1 7 13 30 15 6 4 3 3 7 14 2 6 5 6 70 100 Quebec 6 2 1 7 19 35 15 5 4 3 3 5 12 3 6 5 4 65 100 Ontario 5 2 2 9 15 32 14 6 3 4 4 6 12 4 6 5 5 68 100 Manitoba 16 2 1 7 11 37 13 6 4 2 2 7 14 2 5 5 4 63 100 Saskatchewan 21 8 1 7 5 42 14 5 4 2 1 6 11 2 5 4 3 58 100 Alberta 13 11 1 10 6 41 14 5 3 3 3 6 9 2 7 5 3 59 100 British Columbia 4 8 1 13 9 34 14 5 4 5 3 5 9 4 9 4 4 66 100 CANADA 7 5 1 9 13 35 15 5 4 3 3 6 12 3 6 5 4 65 100 % distribution of rural and small town employment within each industrial sector, 2008 (column %) Newfoundland and Labrador 0 7 2 3 2 3 3 3 1 2 3 4 4 2 3 4 5 3 3 Prince Edward 1 2 n.a. 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 Island Nova Scotia 2 6 2 4 4 4 6 3 4 5 7 5 5 5 4 4 6 5 5 New Brunswick 2 6 4 4 5 4 5 6 5 4 5 6 6 4 5 5 7 5 5 Quebec 21 12 18 21 38 26 27 25 27 24 24 23 26 24 26 29 22 25 25 Ontario 17 9 50 28 30 25 27 29 26 31 33 26 28 33 25 26 31 28 27 Manitoba 12 2 6 4 5 6 5 6 6 3 3 7 6 4 4 6 6 5 5 Saskatchewan 16 10 5 5 2 7 6 5 7 4 3 6 6 4 5 5 4 5 6 Alberta 24 31 10 16 7 16 13 13 13 14 12 14 11 10 15 13 10 13 14 British Columbia 5 15 5 13 6 9 9 9 9 14 10 8 7 13 13 7 8 9 9 CANADA 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 75 The relative role of agriculture and other primary activities has been constantly shrinking On average between 2000 and 2006, the primary agricultural sector accounted for about 2.4% of GDP and 2.7% of total employment (Figures 1.17 and 1.18). Although near the OECD country average in terms of output share, Canadian agriculture employs fewer people. Agriculture is capital-intensive, and in 2006 average capital per farm in Canada reached almost CAD 1.1 million, up nearly 36% since 2001 (OECD, 2008). Because of the availability of land, farms tend to be very large: in 1996, the average size of a farm in Canada was 608 acres (422 hectares), whereas in OECD countries in 1993 it was 242 acres.24 Figure 1.17. Contribution of agriculture to national GDP in OECD countries Average 2000-05 or latest available year, percentage Hungary Greece Mexico Spain Portugal Czech Republic Finland France Denmark Nederland Canada 2.49 Korea Austria Italy Iceland Japan Sweden United States OECD average Germany 2.34% Belgium Norway United Kingdom 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Share of national GDP (%) Source: OECD (2008), OECD Economic Surveys: Canada, OECD Publishing, Paris. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 76 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.18. Contribution of agriculture to national employment in OECD countries Average 2000-06 or latest available year Mexico Greece Austria Portugal Korea Hungary Spain Japan Finland Slovakia Italy Czech Republic France Norway Nederland Denmark Canada 2.51 Sweden Germany Belgium OECD average 5.73% United States United Kingdom 0 2 4 6 8 10 12 14 16 18 Share of national employment (%) Source: OECD (2008), OECD Economic Surveys: Canada, OECD Publishing, Paris. Given the large amount of land suitable for agricultural production relative to its population, the agriculture sector is a net exporter. Canada is the OECD’s fifth largest exporter and importer of agricultural and agri-food products (OECD, 2008). Trade opportunities and access to foreign markets are crucial to good functioning and longer-term sustainability of the agricultural sector (Government of Canada, 2006). Farming activities are more and more integrated into a broader regional production framework, and farm families generate income from several sources. According to Alasia et al. (2007), between 1991 and 2001, there was an approximate 11% loss in the number of census-farm operators, and a 6% increase in the number of operators reporting off-farm work. Approximately 45% of census-farm operators (about 150 000) reported off- farm work in 2001 and over 90% of these were operators of census-farms that generated less than CAD 250 000 in gross receipts (Alasia et al., 2007). Farm families generate income from several sources, including income from farming activities, wages and salaries earned from work done on-farm, off- farm or both, and other non-farm sources. Between 1990 and 2005, the family’s share of net farm income declined by 16% in real dollars, while OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 77 other sources of family income (not including wages and salaries from farm and non-farm sources) increased by 21% (Figure 1.19). Income from wages and salaries is increasingly important to farm family incomes. For example, wages and salaries earned by the farm family increased by 67% to CAD 41 870 in 2005 (OECD, 2009). Figure 1.19. Net farm income and other sources of family income for farm families in Canada 1990-2005 (2005 CAD) Net income from f arming Wages and salaries from farm and non-farm Other sources of income 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note: Revenue received by families from operating an incorporated farm is not included as net farm income. Source: Agriculture and Agri-food Canada, taxfiler farm family data. Rural Canada has been increasing its specialisation in manufacturing and services, with small and medium-sized enterprises playing a leading role Larger manufacturers’ outsourcing to smaller, independent companies enhances the manufacturing specialisation of rural areas. Rural Canada has always had manufacturing jobs (fish processing, smelting, sawmills, pulp and paper plants, etc.) but some of the newer manufacturing jobs are part of the network of just-in-time delivery systems. In Canada, early manufacturing was a rural activity, much of it taking place close to the harvest or extraction of the raw resource, such as fish processing plants, sawmills, pulp and paper mills, and smelters. Also, many early OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 78 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA manufacturing activities required waterfalls, which tended to be in rural areas, to power waterwheels. Over the last three decades, however, rural Canada has been increasing its share of total manufacturing employment in sectors unrelated to primary activities. The share of Canada’s manufacturing workforce living in rural and small town areas has increased about 0.13% a year since 1976 (Figure 1.20). In 2004, 21% of Canada’s manufacturing workers lived in rural and small town areas.25 This suggests that rural areas may have acquired a location advantage for manufacturing activities vis-à-vis urban areas. Rural Canada displays higher rates of entrepreneurship than urban areas, as the number of small and medium-sized enterprises (SMEs) demonstrates. The statistical evidence tends to support the claim that small businesses are crucial to rural Canada’s economic health. Rural SMEs represented 28% of the estimated 1.4 million SMEs in Canada in 2004, a proportion well above rural Canada’s share of the overall population (i.e. just under 20%).26 This probably reflects both the important role of local resource-based economic activities (agriculture, forestry, fisheries and mining) and the fact that rural Canadians are more entrepreneurial than their urban peers, a hypothesis supported by the fact that 6% of rural Canadians owned an SME compared with 4% of urban Canadians. Businesses in rural Canada also tend to be very small. For example, a 1999 Statistics Canada study found that, in 1996, 82% of rural Canada’s businesses employed fewer than ten people, compared with 74% of small businesses in urban areas. A survey conducted in 2004 found that 86% of all rural SMEs fall into what is known as the micro-business category, that is, they employ fewer than five employees. In urban Canada, the comparable figure is 83%. Likewise, the price of services provided by the telecommunications sector has fallen by 80% since the 1960s, thus improving rural areas’ capacity to attract firms and residents. A typical example is the Internet, for which prices have been declining in recent years.27 The overall decline in the price of transferring information implies a decline in the price of this dimension of “rurality”. It is relatively less expensive for rural-to-urban communication. However, the price of urban-to-urban communication may have fallen even faster. The falling price of transferring information is a two-edged sword. Rural people can receive and send information faster, but so can urban people. The result, for example, is that rural areas have fewer bank tellers and fewer travel agents and there are fewer face-to-face interactions. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 79 Figure 1.20. Percent of Canada's manufacturing workers residing in rural Canada, 1976-2008 % of Canada's manufacturing workers residing in rural and small town areas 28 From 1976 to 1993 y = 0.1316x + 21.624 R2 = 0.6503 26 24 22 From 1996 to 2004 y = 0.1344x + 16.512 20 R2 = 0.47 18 From 2001 to 2008 y = 0.1547x + 14.47 16 R² = 0.4875 14 12 10 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Bollman, R.D. (2007), “Factors Driving Canada's Rural Economy”, research paper, Agriculture and Rural Working Paper Series, Statistics Canada. The decreasing costs of transporting people benefits accessible rural areas The rise of “agglomeration economies” is another force that is changing the rural economy and demography, especially in rural regions close to LUCs. As discussed above, between 1981 and 2001 rural populations have concentrated in accessible areas (i.e. areas within a range of 50 kilometres from large urban centres). Some of these rural regions produce speciality goods and services for the rich, growing and segmented metro niche markets. They also have easy access to highly specialised services (e.g. international airport, research centres and a large hospital) which allow them to access international markets or to maintain a relatively high quality of life. However, not all rural communities close to metro centres performed equally well between 1981 and 2001. For instance, in 5% of the communities within 25 kilometres of a LUC, a nearby metro agglomerated economy was unable to drive population growth in these communities and the number of inhabitants declined continuously over the period. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 80 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA …but resource-based rural communities are still numerous… A large part of rural Canada has emancipated itself from primary industries in the energy, minerals and forestry sector, but their contribution to GDP is still quite large. In 2006, these sectors accounted for 13% of Canada’s total GDP and CAD 200 billion in exports. The forestry sector accounted for 2.4% (CAD 28.8 billion in 2002 constant dollars), mining and mineral processing accounted for 3.4% (CAD 40.9 billion in 2002 constant dollars) and energy (including crude oil and natural gas, electric power, and pipelines) accounted for 7.2% (CAD 85.5 billion in 2002 constant dollars) (OECD, 2009). While the energy and mining and mineral processing sectors enhanced their contribution to the Canadian economy, the forestry sector’s contribution fell from 2.4% in 1999 to 1.9% in 2006 (Figure 1.21).28 The natural resources sector directly employed 911 000 people or 6.5% of total employment in 2006, up from 5.2% in 1999 (Figure 1.21). Of the 6.5%, the forestry sector directly employed 273 300 or 1.9% of total employment in Canada. For the forestry sector, wood industries employed 128 900, paper and allied industries 84 400, logging 35 500 and forestry services 24 500. The mining and mineral processing industry directly employed 369 900 or 2.7% of total Canadian employment. Of these, 40 000 were employed in mining, 80 000 in smelting and refining, and 240 000 in the mineral-processing and manufacturing industries. The energy sector directly employed 269 116 or 1.9% of total Canadian employment.29 Figure 1.21. Contribution of natural resources to Canada's total GDP and employment 1999 and 2006 0 5 10 15 0 2 4 6 8 Total natural resources Total natural resources Energy sector Energy sector Minerals sector Minerals sector Forest sector Forest sector % of national GDP % contribution of national employment Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 81 Canada has 1 475 resource-dependent communities (28% of total) with a total population of around one million (2006).30 The provinces with the largest share of resource-based communities are Saskatchewan and Alberta, and the three territories have the lowest rate of resource towns (Figure 1.22). The agriculture sector (37%) has the largest share of resource-dependent communities, followed by forestry (33%), energy (18%), fishing (8%) and mining (3%). Most resource-dependent communities are located in RST areas. Considering Canada’s rural typology, weak and moderate MIZ areas are more specialised in resources than strong and no MIZ areas. This suggests that communities located closer to urban centres (strong MIZ) are more diversified, while geography and transport costs impinge upon primary activities in the most remote (no MIZ) regions, which are usually home to a large public sector. Strong MIZ communities benefit from proximity to urban labour markets while no MIZ areas often act as centres for government services, such as health and education, and public administration (Sorensen and De Peuter, 2005). Figure 1.22. Percentage of census subdivisions in rural and small town areas that are resource-dependent by sector and province/territory, 2006 Canada Nunavut Northwest Territories Yukon Territory British Columbia Agriculture Alberta Saskatchewan Forestry Manitoba Fishery Ontario Mining Quebec New Brunswick Energy Nova Scotia Prince Edward Island Newf ounsland and Labrador 0 10 20 30 40 50 60 70 Note: A census subdivision (CSD) is an incorporated town or municipality, and can be considered a proxy for communities. Rural and small town CSDs are outside the commuting zones of larger urban centres (with an urban core of 10 000 or more). Communities dependent on more than one resource sector among agriculture, forestry, fishery, mining, energy are included twice in this figure. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 82 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Excessive specialisation in resource-based industries poses challenges to rural communities The importance of natural resources in the economy of some rural communities should not necessarily be viewed negatively, but it does raise challenges. First, owing to the “increasing economic value of human time” (Schultz, 1972), labour is more and more substituted with capital. As a result, employment in primary activities is continually declining. This challenges the capacity of resource-based communities to maintain their demographic size. Second, resource-based communities are exposed to boom and bust fluctuations which depend on the vagaries of the international market for resources or upon government or corporate decisions, rather than on local initiatives (Sheffer, 2008). When demand for the locally produced resources is high, the economy will be healthy and relatively competitive. Nevertheless, once this delicate and exogenous equilibrium fails, the community is endangered and under certain conditions may even disappear. Generally speaking, resource-dependent towns are small and characterised by simplified local labour markets. Several factors discourage the development of a diversified economy that would generate a more heterogeneous work force. These communities are usually isolated and far from large markets. Transport costs are high and discourage the establishment of other economic activities. Some resource activities also pay relatively high wages so that one earner’s income provides adequate family income and only males are employed. The share of women employed is smaller than in Canada as a whole. Finally, there is also the problem of physical appearance. Especially in older towns, the built environment is considered unattractive by some.31 Canadian resource-based communities mirror all these characteristics and also display some peculiarities at the provincial level (Walisser, Mueller and McLean, 2006).32 For instance, the origin of the people living in single- industry towns varies. The industrial population of many of the resource towns of the Atlantic Provinces and Québec is drawn from the surrounding fishing, lumbering and agricultural population. In sharp contrast, the work force and management of the resource towns of Ontario and western Canada are drawn from non-local populations or from outside the country, so the “new towns” created in largely uninhabited areas are “artificial”, resulting in weak cultural connections between the local population and the place.33 Because of these features, resource-based communities cannot easily absorb the blows to their economy when their main source of jobs and income faces a crisis or suddenly shuts down. The crisis activates a vicious cycle: irreversible direct job losses and the resulting loss of indirect industry OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 83 and services-sector employment; rapid population decline which creates further losses in employment and significant cuts in public services; decline of residential, industrial and commercial property values, thereby eroding the tax base and further reducing local services; and a sense of helplessness and a loss of confidence in the community's future. There is also increasing recognition that many primary-sector practices have adverse environmental consequences which should be counted among the costs of using resources. To date in Canada, the use of natural resources has mainly followed a neoclassical approach. This approach assumes that environmental degradation can be addressed and corrected by market forces and government remedies. However, “neoclassical economics avoids the long-term consequences of environmental degradation – the diminishing vitality of the resource base, the extinction of species, and the social consequences of excessive pollution – such as increased cost of human health” (Hessing et al., 2005). As a consequence, there is a need for an approach that internalises the ecological values of resources and avoids overexploitation, as happened in the example of Burin Peninsula, Newfoundland and Labrador, mentioned above. The global economic downturn clouds the sustainability of rural communities in Canada Although the global economic downturn has affected Canada as a whole, its effects may be particularly intense in rural regions, owing to difficulties in accessing bank credit and reduced international demand for their commodities (Box 1.4). Rural entrepreneurs face greater hurdles than their urban peers. First, their businesses tend to be less profitable. According to Industry Canada, 26% of rural SMEs were profitable in 2004, compared with 29% in urban areas. Second, rural entrepreneurs tend to have fewer options to choose from when they seek financial bridging for day-to-day operations or finance for starting a new business or expanding an existing one. This is reflected in the tendency for rural entrepreneurs to use credit unions and caisses populaires as their main financial institution. In 2004, more than one-third of rural-based SMEs used these for their day-to-day banking, compared with only 15% of urban SMEs. Third, rural SMEs were far more likely to deal with one financial institution for longer periods of time than urban-based SMEs. Again in 2004, 43% of rural SMEs had been with the same financial institution for more than ten years, compared with 33% of urban SMEs. Smaller firms, which are prevalent in rural areas, have a higher incidence of having a loan application rejected. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 84 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Box 1.4. How does the credit crunch affect rural areas in OECD countries? The recession and the credit crunch challenge the sustainability of many rural communities in OECD countries. Although the impact of the crisis to date has largely been felt in cities, rural communities are likely to see major adverse effects from the global downturn owing to a series of related factors: First, rural regions are more exposed to economic shocks because their local labour markets (LLMs) are small, fragmented and typically weakly connected to other labour markets. In fact: i) because they are small any change in demand or supply has a disproportionate effect and even a relatively small loss of jobs can lead to large local consequences; ii) because they are fragmented there are limited opportunities for people with specific skills to find employment opportunities that match their skills; and iii) because they are unconnected to other labour markets it is more difficult to relocate and find jobs in other places. Moreover, commuting costs are particularly high in rural areas, both in terms of time and expenditure, which tends to raise reservation wages. This, combined with an environment in which job prospects are perceived to be limited, may result in large numbers of discouraged workers who withdraw from the labour force. If this happens, reported unemployment rates will seriously understate true levels of unemployment (Freshwater, 2008). Second, rural regions will be also confronted with return migration and reduced remittances. With a lack of job opportunities, a large number of people who migrated to urban regions in the early 2000s are likely to go back to their rural communities. Accordingly, there will be a large displacement of unemployment from urban to rural regions. There are empirical examples of such a dynamic in some countries. For instance, China is now dealing with a return flow of workers from urban factories to rural areas. Mexico faces an influx of workers from the United States and the loss of remittances. The reduction of remittances is also likely to be felt keenly in the rural areas of eastern Europe, South America, and Central Asia. Third, the credit crunch will probably affect SMEs located in rural regions more than firms located elsewhere. In many rural regions SMEs act as the main local employer and produce the bulk of regional wealth. These firms are particularly exposed to the financial crisis. The credit crunch, in fact, will affect firms differently, depending on their size, location and risk features (OECD, 2008). In this context, SMEs are exposed to the crisis owing to their dependence on bank credit, their weaker financial structure, and their lower credit rating. Accordingly, even a momentary unavailability of bank credit can have a structural impact on rural regions by reducing the number of SMEs located in these areas. The recession thus presents rural areas with two employment-related challenges. The first parallels the cyclical downturn that is also being experienced by urban areas, where the main policy concern is buffering a downturn that will ultimately end. If firms can survive the current stress there are good prospects for ultimate recovery and job creation. However in many rural areas a protracted downturn leads to structural unemployment and lost jobs do not reappear. The broad-based potential for the recession to result in major permanent losses in employment and in the number of firms is the second rural employment challenge. Source: Freshwater, D. and R. Trapasso (2009), “Where Did the Rural Jobs Go”, unpublished paper prepared for the OECD Regional Policy Forum, “Global Crises – Regional Responses”, 30 March 2009, Paris. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 85 Resource-based communities dependent on the forestry sector are particularly endangered by the current crisis because of the sharp reduction in the demand for lumber.34 For instance, even though Canada’s forestry industry started declining at the end of 2006, its worst performance was registered in the first quarter of 2009 and was related to the crisis in the US housing market, the main importer of Canadian wood products (Figures 1.23 and 1.24). Lumber production dropped by 56% between April 2005 (one of the highest values of the series) and April 2009. The paper and packaging industry saw its net earnings reduced by CAD 492 million in 2007, followed by another reduction of CAD 1 595 million in 2008. Owing to the crisis, employment in forestry and logging declined. For instance, British Columbia has suffered some 20 000 layoffs in the forest industry, a 20% decline in employment in this sector since the peak achieved in 2004. In general, total employment in forestry and logging has been reduced by 42.8% over the period.35 Figure 1.23. Tonnes of lumber produced in Canada January 2001 - April 2009 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Source: Statistics Canada (2009). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 86 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.24. Employment trends1 in forestry and logging in Canada January 2001 - April 2009 60 000 50 000 40 000 30 000 20 000 10 000 0 Apr-01 Jul-01 Oct-01 Apr-02 Jul-02 Oct-02 Apr-03 Jul-03 Oct-03 Apr-04 Jul-04 Oct-04 Apr-05 Jul-05 Oct-05 Apr-06 Jul-06 Oct-06 Apr-07 Jul-07 Oct-07 Apr-08 Jul-08 Oct-08 Apr-09 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Note: 1. Employment data not seasonalised. Source: Statistics Canada (2009). 1.5 Environmental sustainability There is a diffuse concern in rural Canada about climate change. All areas, urban and rural, are likely to experience higher temperatures, a rise in sea level, and more frequent heavy precipitation. The northern territories, which are home to a large portion of Canada’s predominantly rural regions, may be the most exposed to climate change. Since 1948, temperatures have risen by more than 1.4°C, a rate of warming that is about twice the global average (Figure 1.25). Over this period, the greatest temperature increase in Canada has been observed in the Yukon and Northwest Territories. In terms of precipitation, climate change has been altering patterns in Canadian regions since 1950, resulting in an increase in overall precipitation of about 12% across the country. In most regions of Nunavut, however, precipitation has increased by between 25% and 45%, whereas the southern part of the country has seen little change compared to the long-term average. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 87 Figure 1.25. Long-term increase of average temperature in Canada 1945-2007 3 2.5 2 1.5 1 0.5 0 -0.5 -1 -1.5 -2 -2.5 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. Canada’s rural and northern communities, particularly resource- dependent ones, are affected by these changes and their regional variations. Several factors increase the vulnerability of resource-dependent communities to climate change. They include the high sensitivity of many natural resources to climate, as well as factors related to low adaptive capacity, including limited economic diversification, a shortage of economic resources available for adaptation, an ageing population, and generally more restricted access to services. Climate change will exacerbate many current climate risks and will also present new risks and opportunities. The consequences for communities, industry, infrastructure and ecosystems will be significant. Some of the effects of climate change have a direct impact on Canada’s rural communities: • Snow cover: reduced annual extent and duration. A 10% decrease in the extent of snow cover in the northern hemisphere between 1972 and 2003. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 88 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA • Sea, lake and river-ice cover: reduced extent and duration. The ice cover season on the Great Lakes has decreased by 1 to 2 months over the past 150 years. • Plant phonology: events occurring earlier. In Alberta, there has been a 26-day advance in the onset of phonological spring over the past century. • Plant productivity. The growing season has lengthened, and plant productivity has increased. • Distribution of some animal species: increasing abundance of cool- and warm-water fish species relative to cold-water species. • Coastal erosion: enhancement due to decreased ice cover, rise in sea level, increased storminess and non-climatic factors. Accelerated erosion and degradation of the dunes and coastline throughout the Gulf of St. Lawrence and in certain parts of Atlantic Canada. • River and lake levels: changes in water levels and timing of peak flow events. A decline in summer and fall runoff in the Prairies, leading to lower river and lake levels at those times. Canada is one of the largest per capita producers of greenhouse gases… The impact of the oil industry Rural territories are responsible for a large share of GHG emissions in Canada, which are mainly due to the extraction of oil and natural gas. Canada signed the Kyoto Protocol but has the second highest level of per capita emissions of GHG (Figure 1.26). Canada accounts for 2% of world GHG emissions, and its emissions are growing faster than those of nearly any other OECD country (OECD, 2008). Alberta and Saskatchewan are the largest per capita contributors to national GHG emissions (Figure 1.27). Alberta’s oil sands alone are responsible for 4% of Canada total GHG emissions (OECD, 2008). Besides their climate-change effects, the oil sands generate large and mounting environmental costs in several areas: added demand for water and natural gas (use of between one and three barrels of water per barrel of oil extracted); the accumulation of waste; destruction of delicate boreal ecosystems; and air pollution in the form of acid rain.36 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 89 Climate change, and Canada’s commitment to joint global action in fighting it, requires a switch to a model of sustainable development, i.e. much less energy-intensive consumption and production patterns, notably in the energy sector itself. Figure 1.26. Canada’s per capita GHG emissions compared to selected countries Tonnes of CO2 equivalent per capita, 1990-2005 25 1990 2005 20 15 10 5 0 India Brazil China France Italy United Japan Germany Russia Canada United Kingdom States Source: OECD (2008), OECD Economic Surveys: Canada, OECD Publishing, Paris. …but it is also one of the world’s leading producers of sustainable energy Hydroelectricity Canada is the world’s second largest producer of hydroelectricity, and this is one of the pillars of Canada’s rural economy. This is partly due to OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 90 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Figure 1.27. GHG emissions by province in 2005 Tonnes of CO2 equivalent per capita Quebec, 11.77, 3% Yukon , 13.43, 4% British Columbia, 15.48, 5% Ontario, 16, 5% Prince Edward Island, Saskatchewan, 71.62, 22% 16.5, 5% Manitoba, 17.29, 5% Alberta, 71.09, 22% Newfoundland and Labrador, 20.43, 6% Nova New Scotia, Brunswick, 24.25, 7% Northwest Territories, 28.34, 9% 21.74, 7% Source: OECD (2008), OECD Economic Surveys: Canada, OECD Publishing, Paris. the large number of rivers that drain large surfaces as they flow towards its three bordering oceans. Hydroelectricity represents about 11% of Canada’s total primary energy supply. All the hydroelectric stations in Canada generated about 350 million megawatt-hours in 2006. This accounted for 59% of Canada’s total electricity production. In 2006, Canada had 499 hydroelectric stations, which together were capable of producing about 73 000 megawatts (or million kilowatts). These stations include 360 small hydroelectric facilities, that is, with a nameplate capacity of 50 megawatts or less; together they are capable of producing 3 400 megawatts, about 5% of Canada’s total hydroelectric production capacity (Figure 1.28). …but it is also one of the world’s leading producers of sustainable energy Hydroelectricity Canada is the world’s second largest producer of hydroelectricity, and this is one of the pillars of Canada’s rural economy. This is partly due to the large number of rivers that drain large surfaces as they flow towards its three bordering oceans. Hydroelectricity represents about 11% of Canada’s total primary energy supply. All the hydroelectric stations in Canada generated about 350 million megawatt-hours in 2006. This accounted for 59% of OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 91 Canada’s total electricity production. In 2006, Canada had 499 hydroelectric stations, which together were capable of producing about 73 000 megawatts (or million kilowatts). These stations include 360 small hydroelectric facilities, that is, with a nameplate capacity of 50 megawatts or less; together they are capable of producing 3 400 megawatts, about 5% of Canada’s total hydroelectric production capacity (Figure 1.28). Figure 1.28. Installed hydroelectric capacity by province 2006, in megawatts 40 000 000 35 000 000 30 000 000 25 000 000 20 000 000 15 000 000 10 000 000 5 000 000 0 Source: Statistics Canada (2007), Electric Power Generation, Transmission and Distribution, Catalogue No. 57-202-X, www.statcan.gc.ca/pub/57-202-x/57-202- x2007000-eng.pdf. Owing to the large number of rivers and its topology, Québec is Canada’s largest producer of hydroelectricity. British Columbia, Ontario, Labrador and Manitoba also produce large quantities of hydroelectricity. There still are significant untapped moving-water resources in Canada. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 92 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Large-scale hydroelectric projects are currently under consideration in British Columbia, Manitoba, Labrador, Alberta and Québec. As well, there is potential for small- and medium-scale developments, particularly in British Columbia, Ontario and Québec. Other renewable sources of energy Bioenergy. With its large landmass and active forestry and agricultural industries, Canada has access to large and diversified biomass resources that can be used for energy production. Currently, bioenergy is Canada’s second most important form of renewable energy and represents about 5% of the country’s total primary energy. The most important type of biomass is industrial wood waste, especially waste from the pulp and paper industry, which is used to produce electricity and steam. Every year, nearly 500 petajoules of bioenergy are used in the industrial sector.37 At the end of 2006, Canada had 62 bioenergy power plants with a total electricity generating capacity of 1 652 megawatts. Most of this capacity was built around the use of wood biomass and spent pulping liquor, as well as landfill gas. In 2006, 7 million megawatt-hours of electricity were generated using wood and spent pulping liquor. Most of the biomass-fired capacity is found in provinces with significant forestry activities: British Columbia, Ontario, Québec, Alberta and New Brunswick. Biofuels are another growing form of bioenergy in Canada. The principal agricultural feedstocks for producing ethanol, a gasoline substitute, include corn, wheat and barley. Canada is a major world producer and exporter of these grains. Vegetable oils and animal fats can also be used to produce biodiesel, a diesel substitute. In 2006, Canada’s domestic production capacity of biofuels was approximately 600 million litres of ethanol and 100 million litres of biodiesel. For rural Canada, the production of biodiesel by farm businesses has increased considerably over the last few years and complements small-scale industrial production facilities. The federal and provincial governments have announced several measures that should lead to increased production and use of biofuels in the coming years. Wind power. Canada has large areas with excellent wind resources and therefore significant potential for expanding wind-generated power. The bulk of wind farms are located in coastal areas, where the winds are generally most intense. However, the diffusion of wind farms is limited because most of Canada’s coastline is in regions remote from the existing electrical grid. At the end of 2007 Canada had 1 400 wind turbines operating on 85 wind farms for a total installed capacity of 1 846 megawatts, compared with only 60 wind turbines, 8 wind farms, and 23 megawatts a decade earlier. The provincial leaders in wind power capacity are Alberta, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 93 Ontario and Québec. Nonetheless, Canada is still far behind the global top five countries in terms of installed wind power capacity (Figure 1.29). Figure 1.29. Installed wind power capacity in the top five countries and Canada Megawatts 30 000 25 000 20 000 15 000 10 000 New 2008 Total end of 2007 5 000 0 Source: GWEC (2009). Solar, geothermal and tidal energy. The potential for solar energy varies across Canada. It is lower in coastal areas because of their greater cloud coverage and higher in central regions. The solar potential varies even more around the globe. Many Canadian cities have a solar potential that is comparable to that of many of the world’s major cities. For instance, about half of Canada’s residential electricity requirements could be met by installing solar panels on the roofs of residential buildings. Canada’s use of solar energy has increased in recent years but remains relatively limited in terms of market penetration. Installed capacity for solar thermal power has seen average annual growth of 17% since 1998, reaching 290 megawatts of thermal power in 2005. For geothermal energy, Canada’s steam resources are limited, but electricity generation projects are being considered. Furthermore, approximately 3 150 ground-source heat pump units were installed in residential, commercial and institutional buildings across Canada OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 94 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA in 2006. Finally ocean energy is a potential opportunity because much of Canada is surrounded by oceans. Currently, Canada has a tidal power plant in Nova Scotia with a generating capacity of 20 megawatts of electricity. Additional tidal current demonstration projects are being considered. 1.6 Challenges and federal policy responses There is an increasing rural-urban divide… Although rural regions still play a key role in Canada’s economy, the country faces an increasing rural-urban divide. As this chapter has shown, this divide is multidimensional. First, there is a demographic divide. Canada’s increasing population is concentrating along the border with the United States and in accessible, mostly intermediate, rural regions close to the major metropolitan areas. Conversely, predominantly rural regions suffer from depopulation and ageing. Second, the shrinking population in predominantly rural areas has weakened their social infrastructure. Predominantly rural communities lack key public services related to health care and education. Third, although Canada has evolved towards a differentiated economic framework, it is still an export-led economy that depends on natural resources (which represented some 22% of total export in 2003). Natural resources are extracted in the remote “provincial norths”. These little inhabited regions under many aspects, are not perceived as a part of the country and have been subject to what some would define as internal colonialism (Hessing et al., 2005). The intense and relatively rapid substitution of capital for labour in these regions has worsened the employment situation and reduced the possibility of integrating communities and territories. The rural regions that have been successful in the past in attracting manufacturing have been challenged by international competition and firms have seen jobs disappear. Finally, the rural-urban divide also feeds into environmental challenges that cloud the future of rural Canada. As discussed above, some rural regions are large contributors of GHG emissions owing to intensive exploitation, for example of oil sands. … and large disparities exist among rural regions… Besides the rural-urban divide, there is also a large gap between the richest and the poorest rural regions in Canada. For instance, while rural Alberta and Saskatchewan have grown dramatically because of the presence of oil and natural gas, rural regions specialised in more traditional resource industries, such as forestry, are suffering from the economic downturn because of the contraction of international demand for these commodities. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 95 Regional disparities are also due to the performance of local manufacturing. Some rural areas located on the fringe of metropolitan regions attract firms and have enough momentum to generate local development. Conversely, less accessible rural regions are home to small businesses specialised in traditional manufacturing and suffer from international competition and, more recently, from the credit crunch which constrains rural SMEs’ access to bank loans. Because of the lack of job opportunities in lagging regions, rural populations either migrate to metropolitan regions or go to the best- performing rural regions. However, moving the workforce from a poor to a rich region is a short-term solution with many potential negative outcomes in the long run. It worsens the situation of the lagging regions. While this facilitates growth in regions that perform well, the lack of labour in lagging regions reduces their capacity to exploit local comparative advantages (e.g. a region with tourism potential), or attract new business (e.g. production of renewable energy). The misuse of regional comparative advantage may lead the overall Canadian economy to a lower economic equilibrium, as factors of production are not allocated optimally. …which need to be addressed by a holistic rural development policy Canada does not have an official rural policy but does have a set of government initiatives to support rural and regional development… According to the OECD assessment of the various aspects of the federal government's rural approach, Canada does not have an official rural policy; however Canada’s Rural Partnership (CRP) represents the federal government’s approach to rural development, and some provincial governments have developed their own rural policy, programme or strategy. The CRP is administered by the Rural Secretariat (RS) within Agriculture and Agri-Food Canada. With the exception of British Columbia, all provinces and territories have either an official rural development strategy or policy or a broader regional development approach. These strategies can be sorted according to their focus: rural development strategies and policies (Alberta, Ontario, Québec, Manitoba, and Saskatchewan) or regional development approaches (New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and Yukon). Additional federal policies aimed at enhancing regional competitiveness are carried out through the Community Futures Programme (CFP) and six regional development agencies present in provinces and territories. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 96 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Through the CRP, which is a horizontal initiative, the RS works to link the activities of different federal departments and agencies targeted to rural and remote areas and works with sub-national governments and non- governmental stakeholders. Since 1998, three successive CRPs have been implemented. The current one focuses on rural communities facing economic challenges and their transition to a more competitive economic base. This includes mono-sectoral areas such as agriculture, forestry, fishery, mining and energy communities. In the last decade the focus of CRP has shifted from knowledge development (1998) to collaboration within and among rural communities (2003), and in the latest cycle (2008-13) to equipping rural communities with the information and tools needed to develop local opportunities tied to competitive advantages. It is designed to: i) enhance rural competitiveness; ii) foster the transformation of local ideas and untapped assets into sustainable economic activities; and iii) facilitate the development of new economic opportunities from existing amenities. These ambitious targets have to be met with a limited budget (CAD 57 million for the current five-year CRP). This federal approach assigns responsibility for policies and programmes for rural Canada not to one specific body but to all federal departments serving rural citizens. This approach avoids a situation in which certain departments abdicate responsibility and point to the RS as the only body responsible for rural Canadians' interests. The CRP includes co-operation by rural teams. As intergovernmental and interdepartmental collaborative forums, the rural teams are an important feature of Canada's federal system. They are present in all provinces and territories to share information, build broad partnerships and facilitate co-ordination of different actors' strategies. However, in some regions they have a rather low and not very proactive profile at the local level, owing in part to limited resources. In general, the teams include federal and provincial representatives (except in the province of Québec), non-governmental organisations (NGOs), and other stakeholders involved in rural development. Another CRP item is the rural lens (see Chapter 4, Box 4.2), a mechanism to pre-assess and pre-review policy proposals that affect rural areas. The mission of the rural lens is to promote awareness of the conditions and needs of rural communities and to evaluate the impact of all federal policies, programmes and services on rural and remote areas.38 Finally, the federal government has established the Rural Development Network for researchers and policy development practitioners which aims to help inform policy and research on the challenges and needs of rural communities. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 97 Regional development agencies are another key federal institutional actor for rural development in Canada. There are six regional agencies, the first four of which were created between 1984 and 1998: Atlantic Canada Opportunities Agency (ACOA) for the Atlantic provinces, the Federal Economic Development Initiative for Northern Ontario (FedNor), Canada Economic Development for Quebec Regions (CED-Q), and Western Economic Diversification (WED) for the four western provinces. In January 2009 two other agencies, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) for southern and western Ontario, and the Canadian Northern Economic Development Agency (CanNor) for the three northern territories, were introduced in the budget. The regional agencies were created in an effort to de-concentrate (not decentralise) federal power and act in accordance with the long-standing federal government target of reducing regional disparities and creating equal opportunities for every Canadian. In the case of Québec, for instance, the provincial government strictly enforces the constitutional jurisdiction of provinces to provide sole authority to deal with municipalities. Therefore, the federal government is not allowed to deal directly with Québec municipalities without provincial permission and CED-Q mainly works with umbrella agreements between the federal level and the provincial government on particular groups of projects. These projects are generally designed by other federal institutions and only delivered through the regional CED-Q bodies. This helps to respect the federal level's broad horizontal policies and sectoral programmes with territorial reach. …with a bottom-up approach to rural development… To promote local leadership, community capacity and business development in rural areas, the federal government created the Community Futures Programme (CFP) 1986. The CFP is a community-based economic development initiative delivered in rural areas by Community Futures Development Corporations (CFDCs). The CFDCs operate independently of government as non-profit organisations and are overseen by volunteer boards of directors which are representative of the regions and communities that they serve. Business development has become the dominant aspect of the CFP. It supports the creation, development and transfer of mostly small businesses through consulting, debt finance, equity investments and technical assistance.39 Since their creation in 1986, local CFP offices in Canada have provided 93 000 reimbursable loans, mostly in rural areas, involving CAD 2.7 billion (data from Community Board, 2009b, and Ontario Association of Community Futures Development Corporations [OACFDC]). The CFP is also active in rural Québec, where it is called SADC (or Société d'aide au développement des collectivités), although the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 98 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA province has developed a similar approach to promote local economic development and entrepreneurship (local development centres, see Chapter 3). SADCs work in parallel with provincial initiatives aimed at rural development, but there are some exceptions (Box 1.5). Box 1.5. Community Futures in rural Québec: SADC The Community Futures Programme in Québec in based on a network of 57 local CFP offices (SADCs). As in other parts of Canada, the SADCs are governed by a board of directors that includes representatives from the local community. As Québec strictly enforces the Canadian Constitution which places local communities under the jurisdiction of the provincial government, the federal government only provides the framework for the programme and facilitates the exchange of information within the CF network. The provincial government of Québec has also created a similar strategy to support local development based on local centres (120 local development centres – CLDs, distributed throughout Québec). The government has not put in place any formal mechanism to facilitate collaboration and avoid duplication between CLDs and SADCs. Collaboration between CLDs and SADCs only occurs at the local level and depends on the local context. In few cases, SADCs and CLDs are strongly integrated and give the local board of directors access to a broader set of resources and tools (virtually pooled together) to promote the development of their community. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. The Community Futures Development Corporations, like other parts of the CFP, have similarities with the European LEADER40 initiative. They recognise that before spending money on economic development for a region, it is important to achieve social cohesion. Locally based development can then lead to growth in local labour markets and thus over time to additional employment opportunities. The federal government is committed to providing long-term support and funding to local committees. This has allowed, on the one hand, the recruitment of local staff responsible for monitoring and advising (comparable to the rural development agents implemented by Québec's government, see Chapter 3), and, on the other hand, the financing of selected capacity-building projects in each Community Futures area. These committees are engaged in local development over a period of five years. This gives different local constituencies the opportunity to participate in setting local development strategies and selecting the kinds of business to develop. This programme OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 99 has not been successful everywhere. Success has been greatest in localities whose residents took primary responsibility for their economic future. Thus, the capacity of the CFP to develop business in a given community is strongly related to the level of engagement of the local community and its capacity to define a clear vision of the area’s economic development. As in the case of LEADER, the governance of CFP is decentralised and Community Futures offices are under the responsibility of the regional development agencies. This is due to the need to better co-ordinate the activity of CF with that of the regional development agencies, to promote local autonomy, and to avoid the duplication of interventions. …and a specific focus on resource-based communities The federal government’s approach to rural development places a particular focus on single-industry towns in rural areas. As discussed above, the performance of resource-based communities can be very diverse. While some are thriving, such as those in the oil fields of Alberta, the majority face a structural, probably irreversible, decline in employment and population, as the resource sectors continue to substitute capital for labour. To support employment and income, the federal government has put in place a series of initiatives, ranging from social redistributive measures to industry subsidies and regulations (Hessing et al., 2005). Strategies that have minimised the impact of economic downturn and community restructuring in resource- dependent communities include: i) anticipating and planning proactively for industry closure or decline as a normal event in the life cycle of a resource industry, before the actual event of closure or decline; ii) implementing a wide range of activities, including diversifying economic strategies, providing worker support, and maintaining community morale; iii) providing time-limited financial support that encourages a collaborative strategy for managing local revenues and services; and iv) restructuring in collaboration with all stakeholders (Walisser, Mueller and McLean, 2005). In 2008, because of volatility in financial and commodities markets, the government established a CAD 1 billion programme to provide support for small resource-dependent towns to allow economic restructuring. Areas of investment include: job training funds and skills development to meet identified local or regional gaps; measures to assist workers in unique circumstances facing adjustment challenges; funding to develop community transition plans in support of economic development and diversification; infrastructure initiatives that support the diversification of local economies and other economic development; and diversification initiatives aimed at helping communities manage transition and adjustment. A base amount of CAD 10 million was provided to each province and CAD 3 million to each northern territory, with the balance of the funding allocated on a per capita OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 100 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA basis. This allocation improves the capacity of all provinces and territories to respond to adjustment challenges. Provinces and territories have the flexibility to draw down funds as required over the three-year lifespan of the programme. Funding is administered by the provinces and territories. In 2009, as part of an economic stimulus package in response to the global recession, the government invested an additional CAD 1 billion to support communities affected by the economic slowdown in order to foster economic development and promote diversification. This fund is being administered by the regional development agencies. Other sectoral policies with an impact on rural development Sector-specific federal policies with rural reach are implemented, often in shared jurisdiction with the provinces, in agriculture, natural resources, infrastructure, industry, services and human resources. Investment in infrastructure is particularly necessary as a large deficit has eroded rural citizens' capacity to be engaged in society (Fairbairn and Gustafson, 2008). Several investment plans provide for rural and small-town jurisdictions, such as the “community component” of the CAD 33 billion Building Canada (2007-14) plan (data from Infrastructure Canada) and the federal government's stimulus package in the wake of the global economic downturn. The government has been streamlining federal approval processes so that more projects can start in the upcoming construction season. These investments can constitute significant resources for rural and small-town communities;41 at more than 4% of 2008 GDP Canada's fiscal package, which includes both spending increases and tax reductions (OECD, 2009), is among the largest in all OECD countries.42 Other federal departments have programmes or components within programmes that affect rural development. The three major projects are: “Growing Forward”, managed by Agriculture and Agri-Food Canada, the Building Canada plan and the Municipal Rural Infrastructure Fund (MRIF), both managed by Infrastructure Canada.43 • Growing Forward’s aim is to build a competitive and innovative agricultural sector, to be proactive in managing risks, and to ensure that the agricultural sector contributes to policy priorities. GF started in 2008 with a total investment of CAD 1.3 billion for five years from federal, provincial and territorial governments. Through GF, governments are investing in innovation, modernising regulatory systems and improving regulatory co-ordination, addressing environment and food safety priorities, adapting programmes to meet regional needs and setting measures that enable farmers to be proactive in managing risk when faced with disasters. The funding OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 101 is cost-shared between the Canadian government and provincial governments on a 60:40 basis. Since 2008 new assistance components focused on business risk management have been implemented: AgriInvest offers producers individual saving accounts to compensate for small income losses; and AgriStability is a margin-based income stabilisation programme providing compensation to farm operators in case of large income losses. These programmes aim to stabilise the gross margins of producers. Thus, producers with low margins receive no stabilisation support and producers with declining margins receive declining support. The result is a reduction in both the level of support and in reliance on the most distorting forms of support, and a shift towards payments linked not to single commodities but rather to a “whole-farm” business risk management approach. • Infrastructure Canada has been the government’s focal point on infrastructure issues since 2002. It is currently part of the Transport, Infrastructure and Communities portfolio, which includes Transport Canada, the Canadian Transportation Agency, the Transportation Appeal Tribunal of Canada, and 16 Crown corporations.44 Infrastructure Canada manages various funding programmes that support infrastructure projects across the country, including several new initiatives under the government’s CAD 33 billion Building Canada Plan. Building Canada was launched in November 2007 to help realise the federal government’s 2006 long-term economic plan. Advantage Canada outlines several priority areas for the government for the years ahead, including ensuring the seamless flow of people, goods and services (the “Infrastructure Advantage”). Both the Building Canada Plan and the 2009 economic stimulus package recognise the unique infrastructure needs of small communities. The CAD 1.1 billion communities component of the Building Canada fund provides targeted support to smaller communities (with fewer than 100 000 people). Recently, the government allocated an additional CAD 500 million to the communities component for targeted infrastructure projects. • The MRIF was launched in 2003, with an initial budget allocation of CAD 1 billion, to focus on smaller-scale municipal infrastructure projects. The main aim of the project is to increase connectivity for smaller and rural communities.45 In 2007, the government topped up the MRIF programme with an additional CAD 200 million. To ensure equitable distribution of funding and to address the individual needs of smaller communities, a minimum of 80% of MRIF investments was to be directed to projects that benefit OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 102 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA municipalities with populations of fewer than 250 000. To encourage the use of integrated asset management by small-scale Canadian municipalities, provinces and territories could allocate up to 1% of their respective MRIF contributions to a municipal capacity building component. Beyond the 250 000 population cut- off (which excludes 16 communities across Canada as of the 2001 Census), “rural” communities are not further defined under MRIF. However, the federal-provincial or territorial contribution agreements do provide for exceptions for projects in “rural or isolated areas” that do not necessarily meet the mandatory project requirements (OECD, 2009). As of November 2007, almost 94% of MRIF was used for projects in communities with a population of 250 000 or fewer (well above the initial 80% target).46 The federal approach implemented by the Rural Secretariat faces specific challenges As in other OECD countries, Canada's rural development approach is constrained by a lack of a political authority and low political attention to pro-rural initiatives. In particular, the Canadian approach faces the following issues: • First, the Rural Secretariat may be in an unfavourable institutional setting relative to non-sectoral departments in charge of rural affairs (such as Québec's non-sectoral ministry, see Chapter 3). However, relative to other possible institutional settings, the present one is probably as good as possible. The assignment of the RS to report through the minister of Agriculture and Agri-Food Canada (AAFC) places it in a rather weak position, but (compared to other options) still the strongest possible. It is true that sectoral agricultural interests often conflict with the needs of rural residents, and experience in many OECD countries shows that locating rural development initiatives within a ministry of agriculture tends to reduce consideration of territorial interests. Also, the importance accorded to rural issues by this structure tends to be smaller than in a ministry with a territorial approach. However, subsuming the RS under the regional development agencies, which have a regional approach, may further minimise its visibility given the agencies' distance from policy design and budgeting, which take place in Ottawa. • Second, the rural lens mechanism has not been very effective, as it lacks the political authority to enforce its views at the Cabinet level. Some federal government bodies are not carrying out a cross- OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 103 departmental examination at a point in the policy process where changes are still possible. This indicates that it is difficult for the RS to gain attention for its cause from other departments. Moreover, collaboration between the federal and Québec governments to foster effective concentration of activities could be improved. This would make sense, as their main rural policy objectives are similar. • Third, there is no formal collaboration between the Rural Secretariat and the CFP initiative. Although rural teams, on the local level, can include CFP actors, closer co-ordination between the two local development approaches is lacking. This is a missed opportunity as the local CFP offices often have more comprehensive information and expertise on local businesses and leaders than a government agency. In this respect, CFP's long-term financial viability should be ensured by the federal government (Fairbairn and Gustafson, 2008). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 104 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Notes 1. The OECD acknowledges the contribution of Mr. Ray D. Bollman, Statistics Canada, and Mr. Carl Sauriol, Rural Secretariat (AAFC), who provided data, detailed information and comments for this section of the report. 2. As Roy MacGregor states when talking about farming in Saskatchewan: “It’s not that money is no longer being made by farming in the Canadian prairies, it’s that the money does not stay – as a cursory look at most small-town Main Streets will immediately confirm.” (Canadians: A Portrait of a Country and Its People, 2007, Penguin Canada, Toronto). 3. The RST definition includes all territories that are not part of the area covered by a CMA or CA. 4. MIZ commuting flows, like those used in the delineation of CMAs and CAs, are calculated using place of work data from the census. In contrast to the CMA/CA delineation, however, MIZ recognises the possibility of multiple centres of attraction. Flows of commuters from a municipality in RST Canada to employment in any larger urban centre (of 10 000 or more) are combined to determine the degree of influence (strong, moderate, weak or no influence) that one or more larger urban centres has on that municipality (Rambeau and Todd, 2000, p. 3) 5. CSDs include municipalities (i.e. incorporated towns, rural municipalities, cities, etc., as determined by provincial legislation) and their equivalent in cases such as Indian reserves, Indian settlements and unorganised territories. 6. To meet the need of assessing the evolution of rural communities and the increasing functional linkages between territories, Canada changes its geographic limits of rural areas during each population census. So while some rural communities decline over time, other rural communities, close to metropolitan areas, grow and are then integrated into metropolitan areas. Other rural areas may eventually develop into an own urban core. 7. Owing to the territorial re-classification of rural areas, the trend in this decade is also affected by the changes in the definition of RSTs between the three census periods. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 105 8. Within RST Canada, aboriginal representation increases as urban influence decreases. In 2006, 8.8% of RST Canadians identified themselves as aboriginal (7.9% in 2001) compared with 2.4% of urban residents (2.1% in 2001). High birth rates are primarily responsible for growth of the aboriginal population. 9. In 2006, 17% (374 135) of the moderate MIZ area population was 14 years of age and younger, slightly below the Canadian average of 18%. In 1996, the moderate MIZ area population 14 years of age and younger was 21% (465 600) of the total moderate MIZ area population. 10. This calculation takes into account changes in the statistical definition of rural areas (RST) as discussed above (Statistics Canada, 2006). 11. It is worth noting that immigration is the key to demographic growth in Canada as a whole. Population projections suggest that population growth due exclusively to demographic natural balance (i.e. births minus deaths) will be negative in about 2030. 12. Remote rural regions in the north represent an exception to the general trend, as they have been able to attract a relatively large percentage of highly skilled immigrants in resource-based industries and in key public services, such as health care. Attracting skilled workers is a national trend. In 2001, new immigrants in all regions were much more likely to have a university degree. However, those living in rural northern regions tend to be more educated and report higher earnings and higher employment rates. For instance, rural Canada has been able to attract more foreign-trained physicians than urban Canada. In 2004, 26.3% of all physicians in rural Canada were foreign trained, compared to 21.9% in urban areas (Canadian Institute for Health Information, 2005). 13. For the population over 70 years of age, more moved out of rural and small town areas than moved in, possibly seeking to be closer to specialist health-care services in larger urban centres. 14. Note that CMAs and CAs (i.e. larger urban centres) are defined on the basis of commuting flows, so by definition already include all of the surrounding neighbourhoods where 50% or more of the workers commute to the urban core. For details on the definition of CMAs and CAs, see Statistics Canada (2007), 2006 Census Dictionary Catalogue No. 92-566, Ottawa (background report prepared for the OECD by Statistics Canada). 15. By 2003, there were over 18.9 million motorised, on-road vehicles registered in Canada. Between 1999 and 2003 alone, vehicle registrations increased by over 1 million (Statistics Canada, 2003). A new urban form emerged, shaped by car-oriented planning (Environment Canada, 1996), which led to what is commonly referred to as urban sprawl. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 106 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA 16. The total area of dependable agricultural land in Canada is defined as land classified by the Canada Land Inventory in agricultural land classes 1 through 3, at a scale of 1:250 000. These classes include all land areas that do not suffer severe constraints for crop production. The area of available dependable land is estimated by subtracting the area of dependable land occupied for urban and other non-agricultural uses from the total area of dependable land in the country. 17. The OECD is currently developing a specific programme aimed at improving the statistical capacity to measure quality of life and the “happiness” of populations within their socio-economic ethos. Recent advances in the study of happiness and life satisfaction have opened new perspectives. Statistics are much closer to measuring how happy people are and to understanding more clearly other aspects of their subjective well-being. These advances open the door to different paradigms for policy making: paradigms, for instance, which view people’s happiness, rather than national income, as the goal which policy makers seek first to achieve (OECD, Second World Forum, “Measuring and Fostering the Progress of Societies”, June 2007, Istanbul, Turkey). 18. Gross domestic product (GDP) remains a standard measure of economic activity in Canada. However, GDP is officially estimated only at the provincial and national level. There have been attempts to estimate GDP at a sub-provincial level (i.e. in rural areas) but these ran into data limitations. However, GDP is estimated for some industrial sectors. For example, the resource-based sectors (primary industries and related downstream manufacturing industries) accounted for 17% of GDP in 2006 (forest 2.4%, minerals 3.4%, energy 7.2%, agriculture 4.0%). Rural Canada is important for the resource-based sector, as 95% of Canada’s land area is rural and contains much of Canada’s natural and environmental resources (OECD , “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat [AAFC] and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD). 19. In particular, the model found that CSDs in the province of Saskatchewan had the highest average rate of social progress; CSDs in Saskatchewan had a social progress index of slightly less than 0.9% in 1996 and 0.65% in 2001. On the other hand, CSDs in Nunavut were found to have the lowest rate of social progress, averaging -7.6% in 2001; however, the authors caution that Nunavut’s result is based on a very small number of CSDs (N=23). Among the ten Canadian provinces, CSDs in Newfoundland had the lowest rate of social progress with CSDs in that province averaging –2.9%. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 107 20. In particular the share of individuals (25 to 54 years of age) with less than grade 9 education declined and the share of individuals with some post- secondary education increased. These trends paralleled changes for Canada as a whole (Alasia, 2003). 21. Health status varies in different MIZ areas and there is a spatial pattern of specific diseases. For instance, strong MIZ residents have reduced risk of mortality from respiratory conditions compared to residents of urban communities and other MIZ areas. Citizens living in strong, weak and no MIZ areas have a higher incidence of arthritis than their urban counterparts. 22. The primary sector includes agriculture and related services, fishing and trapping, forestry (logging and wood) and mining (iron, other metals, coal, crude petroleum and natural gas, and related services). 23. The main incentive to adopt labour-saving technology is the increasing value of human time (Schultz, 1972). For example, in agriculture, the ratio of the index of farm wage rates to the index of farm machinery cost (measured as operation and purchase costs) went from 0.20 in the early 1930s to around 1.00 in the early 1990s (Bollman, 2007). 24. In Canada farm size varies from province to province. In 1996, Newfoundland reported average farm size was 146 acres while Saskatchewan reported an average of 1 152 acres. 25. Obviously, some residents may be commuting to larger urban centres to work. 26. Industry Canada (2007), “SME Perspective: Canadian Rural-based Entrepreneurs,” Small Business Quarterly, Vol. 9, No. 3, p. 1. Note that “small and medium-sized enterprises” are defined as firms with 500 or fewer employees. 27. The only exception is the price of postal services which has been increasing since the mid-1970s (Bollman and Prud’homme, 2006). The price of postal services is essentially the price of stamps for letters and parcels. With the exception of postal services, the overall price of communicating information across space has been declining. 28. Over the long run, the contribution of the primary resource sector to Canada’s GDP has been growing, but it has been declining in relative terms because of high growth rates in the services sector. The primary resource sector accounted for 7.1% of Canada's GDP in 1981 but only 5.8% in 2002. The primary sector represented roughly 60% of total Canadian commodity exports in 1981, but has accounted for between 30% and 40% since 1993. Much of the decline in share can be explained by rapid growth in automotive exports to the United States, with some rural areas receiving direct employment benefits. Agriculture, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 108 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA forestry, fishing and hunting have declined most rapidly, while mining, oil and gas exploration have been more stable. Between 1987 and 1999, employment in agriculture, mining and fishing declined across Canada. Forestry employment grew until 1995, but has declined since. The decline in primary resource sector employment has occurred in all Canadian regions, with Québec, Ontario and the Maritimes showing the highest rates of loss. 29. Excluding service stations and wholesale trade in petroleum products, which alone employed 96 583 people or 0.6% of total Canadian employment. 30. Communities are considered resource-dependent when at least 30% of their economic base is one of the five resource sectors (agriculture, forestry, fishery, mining, energy). These communities also tend to be very small, rarely with more than 10 000 people. 31. The built environment may change depending on the characteristics of the resource-based town. For instance, there are two types of resource-based towns. The service and supply towns, which sometimes begin as boom towns, and the company towns, which are generally small and static communities strongly dependent on the local industry. 32. Western Economic Diversification, Canada www.wd.gc.ca/eng/9732.asp. 33. Some resource-based communities, like the fishing community of Great Harbour Deep in Newfoundland and Labrador or Saskatchewan's Uranium City, are so remote they can only be reached by air or water during periods of good weather. 34. Resource-based communities suffer more than others from economic slowdowns. This is because commodity prices are generally procyclical, i.e. they depend on the international business cycle (Behrooz Afrasiabi, 2008). 35. Forestry, like other resource-based industry, has evolved towards a capital-intensive model. This partially justifies the reduction in the industry’s total employment. However, the period assessed is relatively short, so the reduction is probably entirely dependent on the reduction in international demand. However, seasonal changes must also be remembered (April is the month in which employment is lower in the Canadian forestry industry, because of lower activity). 36. Oil-sands developments are also reported to be responsible for the decline in a number of fur-bearing mammals (including caribou) and some forest birds throughout rural regions in Northern Alberta (OECD, 2008). 37. A petajoule is a 1015 joule. A joule is a standard measure of energy. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 109 38. The rural lens implements policy mainstreaming through a set of questions that is taken into account when evaluating the impact of a given policy on rural areas. The questions are: How is this initiative relevant to rural and remote Canada? Is the impact specific to a selected rural or remote environment or region? Have the most likely positive and negative effects on rural Canadians been identified and, where relevant, addressed? Have rural Canadians been consulted during the development or modification of the initiative? How is the benefit to rural Canadians maximised? (e.g. co-operation with other partners, development of local solutions for local challenges, flexibility for decision making) (Canada’s Rural Partnership, www.rural.gc.ca/RURAL/display-afficher.do? id=1246383722421&lang=eng). 39. Some local efforts demonstrate the success of CF. For instance, the Ontario Association of Community Futures Development Corporations (OACFDC) shows the benefits of integrating social and economic development: Ontario's 61 CFDCs offer repayable loans of up to CAD 150 000 to rural and northern SMEs. Between 2003 and 2008, the programme provided CAD 263.6 million in loans and raised a total of CAD 700 million in capital investment funds via owner’s equity and third-party funding. This created over 15 000 jobs from 2004 to 2008, mostly in services. 40. LEADER is the acronym for Liaisons entre actions de developpement de l'économie rurale ("links between development actions of the rural economy"). 41. In the field of natural resources, the federal government targets resource- based communities mainly in forestry (Forest Communities Programme, and First Nations Forestry Programme), promoting the development of new forest-based economic opportunities, the engagement of communities in sector-transition issues, the sharing of information with other forest communities and environmental and energy efficiency improvements in the pulp and paper industry. Other important programmes target fishing communities. 42. The largest fiscal packages besides Canada’s include: the United States (with about 5.5% of 2008 GDP), Australia, Korea and New Zealand (all of which have introduced fiscal packages amounting to more than 4% of 2008 GDP) (OECD, 2009d). 43. In 2006, Canada had 16 municipal governments (i.e. cities) with a population of 250 000 or more. These cities had a total population of 11 714 548 or 37% of Canada's total population. 44. Canadian Crown corporations are state-owned enterprises within either the federal or provincial and territorial jurisdictions of Canada. Crown corporations have a long-standing presence in the country and have been OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 110 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA instrumental in its formation. As they are presently involved in everything from the distribution, use and price of certain goods and services to energy development, resource extraction, public transport, cultural promotion and property management, Crown corporations remain important in Canada. 45. The MRIF was meant to balance the CAD 4 billion investment announced concurrently for major infrastructure projects in metropolitan areas launched by the Canada Strategic Infrastructure Fund (CSIF). 46. For MIRF, there are some provincial differences in its application that should be taken into account. For instance, in Québec, the federal government cannot unilaterally spend money on municipal infrastructure without a previous bilateral agreement with Québec. As many investments have to be driven and partly funded by provinces, it is essential for rural and small-town communities to ensure that projects are among the Québec government's priorities. Following the launch of the federal government's MRIF (2003-11) Canada and Québec negotiated an agreement to govern both the Infrastructure Canada programme (2000-11) and the MRIF. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 111 Bibliography Acs, Z. and C. Armington (2006), Entrepreneurship, Geography, and American Economic Growth, Cambridge University Press, Cambridge, MA. Alasia, A. 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He (2009), “Immigrants in Rural Canada: 2006”, Rural and Small-Town Canada Analysis Bulletin, Vol. 8, No. 2, Statistics Canada, 21-006-XIE, Bulletin, Ottawa. Blake, R. (2003), “Regional and Rural Development Strategies in Canada: The Search for Solutions”, research paper prepared for the Royal Commission on Renewing and Strengthening Our Place in Canada, St. John’s. Bollman, R.D. (2007), “Factors Driving Canada's Rural Economy”, research paper, Agriculture and Rural Working Paper Series, Statistics Canada, Ottawa. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 112 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Bollman, R.D. and M. Prud’homme (2006) “Trends in the Prices of Rurality”, Rural and Small Town Canada Analysis Bulletin Vol. 6, No. 7, Statistics Canada, 21-006-XIE, Ottawa. Bollman, R. D., Michaud S. (2006), “Portraying Rural Canada”, Presentation to the Standing Senate Committee on Agriculture and Forestry, 5 October 2006. Broadway, M. 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GC (Government of Canada) (2006), An Overview of the Canadian Agriculture and Agri-Food System, Agriculture and Agri-Food Canada, Ottawa. Green, M.B. and S.P. Meyer (1997a), “Occupational Stratification of Rural Commuting”, in R.D. Bollman and J. M. Bryden (eds.), Rural Employment: An International Perspective, Brandon University for the Canadian Rural Revitalisation Foundation and Wallingford, UK, pp. 225-238. Green, M.B. and S.P. Meyer (1997b), “An Overview of Commuting in Canada: With Special Emphasis on Rural Commuting and Employment”, Journal of Rural Studies, Vol. 13, No. 2, pp. 163-175. GWEC (Global Wind Energy Council) (2009), Global Wind Report 2008, Brussels. Harris, C. and M. Burns (2004), Seven Reports on the Identiﬁcation of Rural Indicators for Rural Communities – Social Progress, Rural Secretariat of Agriculture and Agri-Food Canada. Harris S., A. Alasia and R.D. Bollman (2008), “Rural Commuting: Its Relevance to Rural and Urban Labour Markets”, Rural and Small Town Canada Analysis Bulletin Vol. 7, No. 6, Statistics Canada, Catalogue No. 21-006-XIE, Ottawa. Hessing, M. et al. (2005), Canadian Natural Resource and Environmental Policy (2nd ed.), UBC Press, Vancouver. Hofmann, N., G. Filoso and M. Schofield, (2005), “The Loss of Dependable Agricultural Land in Canada”, Rural and Small Town Canada Analysis Bulletin, Vol. 6, No. 1, Statistics Canada Catalogue No. 21–06-XIE, Ottawa. Industry Canada (2007), “SME Perspective: Canadian Rural-Based Entrepreneurs”, Small Business Quarterly, Vol. 9, No. 3, p. 1. MacGregor, R. (2007), Canadians: A Portrait of a Country and Its People, Penguin Canada, Toronto. Mendelson, R., P. Murphy and H. 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OECD (2002), OECD Territorial Reviews: Canada, OECD Publishing, Paris, DOI::10.1787/9789264176300-en http://dx.doi.org/10.1787/9789264176300-en. OECD (2005), OECD Regions at a Glance, OECD Publishing, Paris. OECD (2007a), “Measuring and Fostering the Progress of Societies”, Second OECD World Forum, June 2007, Istanbul, Turkey. OECD (2007b), OECD Rural Policy Reviews: Germany, OECD Publishing, Paris, DOI::10.1787/9789264013933-en http://dx.doi.org/10.1787/9789264013933-en. OECD (2008), OECD Economic Surveys: Canada, OECD Publishing, Paris. OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by the Rural Secretariat (AAFC) and Statistics Canada, Directorate for Public Governance and Territorial Development, OECD. OECD (2010), OECD Territorial Reviews: Sweden, OECD Publishing, Paris. Polèse, M. and R. Shearmur (2004), “Is Distance Really Dead? Comparing Industrial Location Patterns over Time in Canada”, International Regional Science Review, Vol. 27, No. 4, pp. 431-457, DOI: 10.1177/0160017604267637, http://irx.sagepub.com/cgi/content/abstract/27/4/431. Présidence Française de l’Union Européenne (2008), “Cohesion Serving the Regions (press kit)”, informal meeting of Ministers for Spatial Planning and Cohesion Policy, 26 November 2008, Marseille, France, www.eu2008.fr. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA – 115 Preville, E. (2004), Rural Canada: Gross Domestic Product and Employment, 1986-2001, Library of Parliament, Parliament research Branch, PRB 03-45E, Ottawa. Radford, P. (2007), “A Call for Greater Research on Immigration Outside of Canada’s Three Largest Cities”, in B. Reimer (ed.), Our Diverse Cities, No. 3, pp. 47–51. Ram, B. and Y.E. Shin, (1999), “Internal Migration of Immigrants”, in S. Halli and L. Driedger (eds.), Immigrant Canada: Demographic, Economic, and Social Challenges, University of Toronto Press, Toronto. Rambeau, S. and K. Todd (2000), “Census Metropolitan Area and Census Agglomeration Influenced Zones (MIZ) with Census Data”, Statistics Canada, Geography Working Paper Series No. 2000-1, 92F0138, Ottawa. Rothwell, N. (2001), “Employment in Rural and Small Town Canada: An Update to 2000”, Rural and Small Town Canada Analysis Bulletin, Vol. 3, No. 4, Statistics Canada, 21-006-XIE, Ottawa. Rupnik, C., M. Thompson-James and R.D. Bollman (2001), “Economic Wellbeing of Rural Canadians: Income Indicators”, Statistics Canada, Agriculture and Rural Working Paper Series, Working Paper No. 45, 21-601-MIE01045, Ottawa. Schultz, T.W. (1972), “The Increasing Economic Value of Human Time”, American Journal of Agricultural Economics, Vol. 54, No. 5 (December), pp. 843-850. Sheffer, P. V. (2008), Commodity Modeling and Pricing Methods for Analyzing Resource Market Behaviour, John Wiley & Sons, Inc., Hoboken, New Jersey. Singh, V. (2004), “The Rural-Urban Income Gap within Provinces: An Update to 2000”, Rural and Small Town Canada Analysis Bulletin, Vol. 5, No. 7, Statistics Canada, 21- 006-XIE, Ottawa. Sorensen, M. and J. de Peuter (2005), “National Rural Profile: A Ten-year Census Analysis (1991-2001)”, Rural Secretariat, Agriculture and Agri- Food Canada, Ottawa, pp. 1-96. Statistics Canada (1998), Survey of Consumer Finances (DLI), Ottawa. Statistics Canada (2003), “Visible Minority Population, 1996 Census”, Census Metropolitan Areas. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 116 – 1. TRENDS, PERSPECTIVES AND POLICIES FOR RURAL CANADA Statistics Canada (2007), Electric Power Generation, Transmission and Distribution, Catalogue No. 57-202-X, www.statcan.gc.ca/pub/57-202- x/57-202-x2007000-eng.pdf. Statistics Canada (2008), Survey of Labour and Income Dynamics (SLID), Ottawa. Walisser, B., B. Mueller and C. McLean (2006), “The Resilient City”, Vancouver Working Group Discussion Paper, Vancouver, BC. Woehrling, J. (2001), « Les anciens et les modernes : une conciliation difficile au Québec », Raisons politiques, Vol. 2, pp. 195-206. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 117 Chapter 2 Economic profile of rural Québec This chapter provides a socioeconomic assessment of rural Québec. The first section presents a regional typology of the province’s rural areas. Next, it focuses on the source of economic competitiveness in rural territories: the productive framework, the labour market and the sectoral contribution to the rural economy. It then focuses on the social well-being of rural Québécois, with an emphasis on service delivery. Finally, it discusses the main challenges to the sustainability of rural communities in Québec. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 118 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Key points • Today's rural Québec has a component of modernity and generates 20% of provincial gross domestic product (GDP). Overall, the rural population and employment opportunities are increasing owing to the diversification of the economic base. Many rural areas have been reducing their dependence on agriculture and other primary activities while increasing their specialisation in manufacturing and, above all, service activities. • The rural-urban split is less intense in Québec than in the rest of Canada, because of a denser network of small and medium- sized cities. The province has more than 1 000 municipalities, the bulk of which are located in rural areas in the southern portion of the province. This supports the social aim of occupying the territory. Many of these municipalities are functionally linked. As a result, in Québec, many rural labour markets are connected and relatively large. • On average, rural Québec displays good performance but, as in the rest of Canada, there are regional disparities. Rural areas located in the peri-metropolitan fringe and in intermediate areas have a diversified economic base and attract people and businesses. Conversely, predominantly rural areas, especially those that are remote and rely on natural resources, face structural socioeconomic change. In some cases this threatens their sustainability. • The structural change occurring in rural areas is a multidimensional phenomenon that involves social and economic issues. First, in predominantly rural areas, the population is ageing and declining because of low birth rates, longevity and net out-migration. Second, some rural labour markets offer fewer job opportunities because agriculture absorbs a smaller number of workers and because the comparative advantages of resource-based and traditional manufacturing are exposed to international competition. Third, in some cases, decreasing environmental quality feeds into the challenges brought about by climate change. • In particular, resource-based rural communities are the province’s most vulnerable areas. The forces that determine the course of these communities are often external, such as decisions made by the central government, metropolitan financial elites, or international traders. In many cases, the current global financial crisis is exacerbating the local decline. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 119 Introduction This report focuses on rural Québec. The choice of this province is due to a series of factors. First, Québec is the province with the largest land area and, after Ontario, Canada’s second most populated province. Second, “rurality” is an important component of the character and culture of the province.1 Although the bulk of the population has been concentrating in urban centres in the south of the province which contains three major urban regions of Montréal, Québec City and Gatineau, Québec still has a strong rural character, with a typically rural landscape and a relatively large number of rural communities, which are strongly attached to their territory. Third, the rural areas contribute significantly to the province’s economy. Québec is rich in natural resources and there are communities in some remote rural areas whose existence is justified by the extraction and processing of natural resources. Fourth, for a series of historic and political reasons, the provincial government wishes to ensure the sustainability of rural communities, including those in remote areas. Finally, it has the characteristic of a large territory at the frontier of human settlements, with a wide range of challenges and opportunities. The province’s effort to promote rural development represents precious experience for to feed into the OECD’s collective knowledge about this issue. Only the southern part of Québec is defined as rural by the provincial government, because the north has extremely low population density and few stable human settlements.2 In most OECD countries the only categories for classifying the national territory are urban and rural; Québec additional category is the north. This is a vast region that reaches approximately from the 49th parallel almost to the polar circle. However, the rural-urban dichotomy exists in the south of the province, in the area called écoumène, where human settlements are contiguous. This area alone is the size of New England in the United States.3 Overall, rural Québec demonstrates good economic performance, but there are differences among predominantly, intermediate and peri- metropolitan rural areas. In particular, the rural areas closest to urban centres registered the strongest demographic and economic performance over the last 15 years (1991-2006). These areas have gained 18.5% in population, compared to the rural and urban averages of 1.6% and 9.6%, respectively. Local employment increased by 9.4% between 2001 and 2006, with a positive impact on rural GDP, which increased by some 3% a year between 1991 and 2006 (Conference Board, 2009). These peri-metropolitan areas are becoming a key economic and social space in Québec and support a process of endogenous development based on the services sector and high value-added manufacturing. Conversely, remote, predominantly rural OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 120 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC territories are losing population (-7.4% between 1981 and 2006) and their economic framework, specialised in primary activities, is under strain from structural change and a negative economic situation. Rural areas face challenges that are often due to the ongoing transformation of their society and economy. Within one generation, Québec underwent a “demographic revolution”. From having the highest birth rate in Canada, Québec now has the lowest in North America. Combined with longevity and limited immigration, this has led to an ageing and, in some parts, declining rural population. The population’s longevity, in particular, requires the delivery of new public services, yet may also represent an opportunity to develop new economic activities. In any case, Québec faces two major challenges: to create employment opportunities to attract new residents and immigrants and to improve amenities to achieve a higher quality of living in rural areas. Finally, the strong functional linkages between urban and rural territories put pressure on natural amenities, transport infrastructure and the environment. Urban sprawl and increased commuting are transferring negative urban externalities such as congestion and pollution to some rural areas. The “urbanisation” of some rural territories arises from successful rural development, but a functional approach to spatial planning is lacking. 2.1 “Rural” in Québec Due to the extreme variation of population density, only the southern part of the province can be defined as rural in its usual sense Because of the small number of stable human settlements and extremely low population density, a large part of Québec can be considered as a separate territorial component when applying the OECD regional typology (Du Plessis et al., 2001). The province of Québec covers a territory of more than 1.5 million km2 in the eastern part of Canada, more than five times the size of Texas and almost three times the territory of France, and it is home to 7.5 million people. Accordingly, the overall population density is very low: 5.1 inhabitants per km2. Yet, population density varies greatly across the province. The large majority of Québécois live in the south, between the 49th parallel and the border with the United States; in the rest of the province (the administrative region of Nord-du-Québec and the northern parts of Saguenay – Lac-Saint-Jean and Côte-Nord), population density is extremely low. Part of this territory is also home to First Nation reserves (Box 2.1). Furthermore, the total territory can be divided into the écoumène OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 121 (188 522 km2) and territories outside of this zone (hors écoumène, 1 260 813 km2). The former is mainly located above the border with the United States and along the shores of the St. Lawrence River, and it is here that the majority of Québécois live. The latter is composed of internal territories which lack continuity of human settlements (Table 2.1, Figure 2.1). Box 2.1. Indian reserves in Canada and Québec In Canada, an Indian reserve is specified by the Indian Act as a “tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band.” While many communities refer to the term “First Nation”, “band” is the term used by the federal government to describe a “body of Indians” in a community. The Indian Act also specifies that land reserved for the use and benefit of a band that is not vested in the Crown is also subject to the Indian Act provisions governing reserves. A reserve is similar to a US Indian reservation, although the histories of the development of reserves and reservations are markedly different. In 2006, there were over 600 bands in Canada residing on one or more reserves, most of them quite small in area. The Indian Act gives the Governor in Council the right to “determine whether any purpose for which lands in a reserve are used is for the use and benefit of the band”. Title to land within the reserve may only be transferred to the band or to individual band members. Reserve lands may not be seized legally, nor is the personal property of a band or a band member living on a reserve subject to “charge, pledge, mortgage, attachment, levy, seizure distress or execution in favour or at the instance of any person other than an Indian or a band” (section 89 (1) of the Indian Act). Provinces and municipalities may expropriate reserve land only if specifically authorised by a provincial or federal law. Few reserves have any economic advantages, such as resource revenues. The revenues of those reserves are held in trust by the Minister of Indian Affairs. Reserve lands and the personal property of band members and bands situated on a reserve are exempt from all forms of taxation except local taxation. Corporations owned by members of First Nations are not exempt, however. This exemption has allowed band members operating in proprietorships or partnerships to sell heavily taxed goods such as cigarettes on their reserves at prices considerably lower than those at stores off the reserves. Some First Nations have self-government agreements with Canada while others have minimal governance structures. Many First Nations fall somewhere in between. Source: Indian Act (R.S., 1985, c. I-5), Act current to 25 November 2009; Indian and Northern Affairs Canada, www.ainc-inac.gc.ca; “Indian Reserve” in The Canadian Encyclopedia, www.thecanadianencyclopedia.com. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 122 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Table 2.1. Québec in figures Total surface Km2 1 438 228 Écoumène Km2 188 522 Hors écoumène Km2 1 260 813 Total population (2006) 7 435 805 Absolute population densities In./ Km2 5.1 Population density within the écoumène In./ Km2 39.4 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Rural Québec is home to one-quarter of the provincial population and covers two-fifths of the territory The definition of “rural” used in this report is based on three variables: population density, the presence of an urban centre close or within the rural area, and the distance between a given rural area and the main metropolitan region.4 As a result, 42% of the province is rural. This area is organised in over 1 100 municipalities and unorganised territories, and 34 Indian reserves.5 The methodology used to define what is rural in Québec is based on municipalities or groups of municipalities called regional county municipalities (or Municipalités régionales de comté, MRCs) that represent the “building blocks” of the regional typology, and are Territorial Level 3 (TL3) regions in the OECD regional typology (Box 2.2). First, any area in an MRC that is part of the Census Metropolitan Area (CMA) or Census Agglomeration (CA) as defined by Statistics Canada (Statistics Canada, 2007) is not considered part of the rural area of the MRC. Second, MRCs whose population density is less than 400 inhabitants per km2 are classified as predominantly rural. Third, the other MRCs and municipalities are considered rural if at least 50% of their population lives in areas whose population density is less than 400 inhabitants per km2. This criterion comprises the residents of the countryside within CMAs and CAs. Fourth, for social and geographical reasons, six areas located in the region of Nord- du-Québec and six smaller cities with populations of fewer than 13 000 inhabitants are considered rural. Fifth, predominantly rural MRCs are divided into two sub-categories: those in central, or accessible, areas and those in remote areas (Figure 2.2).6 At the end of the iterations, rural Québec is divided into: • 62 predominantly rural MRCs (divided into 31 accessible and 31 remote areas); OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 123 Figure 2.1. The écoumène in Québec Écoumène Source: Government of Québec. • 21 intermediate rural MRCs (MRCs with low population density but with a relatively large urban centre within their territory); • 10 rural areas within metropolitan regions, or peri-metropolitan regions. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 124 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Box 2.2. Regional County Municipality (MRC) In Québec there are 86 MRCs (and 14 equivalent bodies). They are county-like administrative and geographic units. Each MRC is composed of a number of municipalities that control the MRC. The council of an MRC is composed of the mayors of the member municipalities as well as a prefect. The prefect is usually elected by and from the council by secret ballot. Universal suffrage is also used in eight cases: the local population elects the prefect, who is not necessarily a mayor. The prefect's mandate is two years when elected by council or four years when elected by universal suffrage. The MRC’s primary responsibility is spatial planning. In particular it must: manage land use by creating a “land use scheme” and revise it every five years; establish a plan for waste management, fire protection and civil protection (police); see to the proper functioning of watercourses in its territory, especially those used for agricultural drainage; prepare the evaluation rolls for local municipalities; and sell buildings for property tax default. MRCs are also responsible for local development and have to name or create, and fund, a local development centre to support regional businesses. MRCs, in their definition as political units, do not cover the entire territory of Québec. The local municipalities of Québec (and equivalent aboriginal territories) not belonging to an MRC fall into two categories: i) all Indian reserves; and ii) 14 cities and urban agglomerations which do not belong to an MRC because they exercise some or all of the powers which are normally those of an MRC (a city or agglomeration in some cases exercises only some of these powers because some MRC powers are delegated to a metropolitan community). Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Population distribution in rural Québec Rural Québec hosts one-quarter of the total provincial population, or 1.95 million people in 2006. In particular, 70% of the rural population (18.5% of the overall provincial population) lives in predominantly rural MRCs. Remote and predominantly rural MRCs are home to 566 000 people, while 811 000 people live in accessible predominantly rural MRCs. The rest of the rural population is distributed as follows: 21% (5.5% of overall population) live in intermediate MRCs and 9% (2.2% of total population) in peri-metropolitan areas (Table 2.2). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 125 Figure 2.2. Rural classification in Québec Rural typology Rural typology – for analytical purposes Predominantly rural MRCs of remote regions Predominantly rural MRCs of central regions Intermediate MRCs (or rural communities in the vicinity of a medium-sized city “in the region”) Peri-metropolitan rural MRCs (or peri-metropolitan rural communities) Not covered by the PNR Urban sector Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. In Québec, population density is strongly related to distance from the largest metropolitan areas. Unlike Sweden, Québec has very few large communities far from main urban hubs.7 For the predominantly rural MRCs, the areas located within a range of 150-250 kilometres from the larger metro-regions display higher population densities (Figure 2.3) OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 126 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Table 2.2. Rural and urban population in Québec, 2006 Number of individuals % Predominantly rural MRC 1 377 455 18.5% Remote 566 320 (41.1%) Accessible 811 135 (58.8%) Intermediate MRC 410 920 5.5% Peri-metropolitan MRC 162 295 2.2% Rural 1 950 670 26.2% Urban 5 485 135 73.8% Québec 7 435 805 100.0% Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Figure 2.3. Distribution of the population in Québec's predominantly rural MRCs 2006 70 Les Îles-de-la- Montcalm Madeleine 60 Population density (inh/sq. km) 50 40 30 y = 7717.4x -1.256 R² = 0.3545 20 10 0 0 200 400 600 800 1 000 1 200 Average linear distance from Québec City and Montreal (km) Note: Distance is the average linear distance (in kilometres) between the geographical centre of the MRC and the centre of the metropolitan areas of Montréal and Québec City. Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 127 The demographic rural-urban split is less intense than in the rest of Canada. The spatial distribution of population in Québec tends to be closer to that of European countries and the OECD average. For instance, demographic growth in rural areas is not as slow as in the rest of Canada, and the pace of urbanisation is closer to the OECD average, while for Canada as a whole it is more than double the OECD average (Figure 2.4). This is due to the presence of relatively large networks of small and medium-sized cities in rural areas. Figure 2.4. Urbanisation trends in OECD, Canada and Québec between 1996 and 2005 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Population growth in OECD urban regions (excluding Canada) Population growth in OECD intermediate regions (excluding Canada) Population growth in OECD rural regions (excluding Canada) Population growth in Canada's urban regions (excluding Québec) Population growth in Canada's intermediate regions (excluding Québec) Population growth in Canada's rural regions (excluding Québec) Population growth in Québec's urban regions Population growth in Québec's intermediate regions Population growth in Québec's rural regions Percentage change in population between 1995 and 2005 Source: OECD Regional Database (2009), internal database. Rural areas are gaining population but the largest increases are on the urban fringe and in accessible rural areas After a long decline, rural Québec has gained population since the mid-1990s, yet there are regional differences. Between 1981 and the mid- 1990s all rural areas lost population. The modernisation of Québec’s society owing to the so-called Révolution tranquille, which imposed a new set of values and aspirations and reduced the average size of households, favoured the concentration of the population in the main cities and particularly in the metropolitan region of Montréal, whose population skyrocketed over the period.8 The trend changed at the end of the 1990s, when in a reaction against urbanisation, rural territories started to attract new residents. However, this phenomenon affected mainly intermediate and peri- metropolitan rural areas. In fact, these rural areas increased their population OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 128 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC by 11%, while remote areas lost 7.4% (Figure 2.5). The capacity of these territories to attract new residents depends on several factors. The most important are: the possibility of piggy-backing urban services; access to a larger labour market; and the possibility of enjoying rural amenities, a choice particularly popular among baby-boomers (those born in the decade following World War II), who leave metropolitan areas after retirement. Conversely, remote areas have lost population over the last three censuses. Figure 2.5. Demographic trends in rural and urban areas 1981-2006 1.8 Predominantly rural MRCs 1.6 of resource-based regions 1.4 of central regions 1.2 Intermediate MRCs 1 Peri-metropolitan rural MRCs 0.8 1981 1986 1991 1996 2001 2006 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. 2.2 Levels and sources of income Income level in rural areas Mirroring the national trend (see Chapter 1), personal income in rural areas in Québec is lower than the provincial average and the income in OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 129 urban areas.9 In particular, rural personal income is 11.6% lower than the provincial average. The gap is 15% if rural is benchmarked against urban. Also income per household follows a similar pattern (Table 2.3). There are, however, differences in the distribution of income with respect to the degree of “rurality”. Rural areas located within the metropolitan areas of Québec City and Montréal have income per capita higher than the provincial average. When income per household is taken into account, they have the highest level in Québec. Table 2.3. Income distribution in Québec and gap with the national average, 2005 Income per Per capita Household Income per household income as a % income as a % capita (CAD 2005 of the national of the national (CAD 2005 current prices) average average current prices) (Québec = (Québec = 100) 100) Predominantly rural 27 550 51 689 85.9 87.7 MRC Remote 26 651 49 868 83.1 84.6 Accessible 28 177 52 958 87.8 89.8 Intermediate MRC 29 294 56 590 91.3 95.9 Peri-metropolitan MRC 33 181 65 267 103.4 110.7 Rural 28 364 53 737 88.4 91.2 Urban 33 374 60 715 104.1 102.9 Québec 32 074 58 954 100.0 100.0 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. The impact of distance on income levels Although regional accessibility is often considered an independent variable that shapes the performance of rural areas, Québec’s territories display a non-linear relationship between distance and economic performance. Among MRCs which, based on their population density, are classified as intermediate, some areas close to the main metro-regions have poor performance. Conversely, some remote areas have very high personal OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 130 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC income, such as Sept-Rivières, which is located in the central part of Côte- Nord at the extreme border of the écoumène. Figure 2.6. Distance (X) and income levels (Y) in intermediate rural areas CAD 2005 31 000 Rivière-du-nord 29 000 Sept-Rivières 27 000 Memphremagog Beauharnois 25 000 Salaberry Vallée de l'Or 23 000 Lac St-Jean Est R² = 0.2751 Beauce Sarigan Rimouski -Neigette 21 000 L'Amiante Riv-du-Loup 19 000 Manicouagan 17 000 0 100 200 300 400 500 600 700 800 900 Source: Based on Statistics Québec. A similar pattern is observed in predominantly rural MRCs which display income disparities that are not related to distance. On average, predominantly rural MRCs are Québec’s less affluent areas, but, as for intermediate rural areas, accessibility and distance are not the independent variables determining territorial wealth. For instance, considering average distance for the major metro-regions and average income, it is possible to cluster predominantly rural MRCs into four groups (Figure 2.7). The first consists of adjacent and relatively rich areas; 25% of the predominantly rural MRCs fall in this group. The second is that of adjacent and poor areas; with 39% they represent the largest cluster. The third and the fourth groups are, respectively, predominantly rural areas that are remote and less affluent (23%) and those that are remote but rich (11%). Hence, some remote rural areas display very high incomes, while many central areas have low incomes. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 131 Figure 2.7. Distance (X) and income level (Y) in predominantly rural MRCs Disposable income 2007 – current prices Central and affluent Remote and affluent Disposable income per capita (current prices 40 000 Caniapiscau 35 000 CAD) 30 000 Les Pays-d'en-Haut Québec (disposable) income per capita CAD 24 455 25 000 La Nouvelle-Beauce Les Collines-de-l'Outaouais Abitibi Bécancour Bellechasse Minganie Le Domaine-du-Roy La Côte-de-Gaspé Les Îles-de-la-Madeleine Nicolet-Yamaska Charlevoix Témiscamingue Mékinac Matane Abitibi-Ouest 20 000 Montcalm Bonaventure Papineau Les Basques La Matapédia Le Haut-Saint-François Le Rocher-Percé Rural Québec (disposable) Antoine-Labelle Le Haut-Saint-Laurent La Haute-Gaspésie Pontiac income per capita CAD 21 165 15 000 0 200 400 600 800 1 000 Central and less affluent Remote and less affluent Linear average distance (kms) from major metro-areas Note: Distance is the average linear distance (in kilometres) between the geographical centre of the MRC and the centre of the metropolitan areas of Montréal and Québec City. Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Predominantly rural areas registered the highest increase in household income in the province, yet disparities are widening in some cases Rural areas display the best performance in terms of growth of household income between 2000 and 2005, although regional disparities are widening.10 In particular, the median income for households living in predominantly rural areas (PRs) increased by 5.4% between 2000 and 2005. Intermediate and urban regions had an increase of 3.8% over the same period (Figure 2.8 C and D). Among PRs, a majority had increases of over 5% a year (Figure 2.8 A). The other PRs displayed slightly positive or even negative growth (Figure 2.8 B). The PRs that registered lower (or negative) performance of household income are also Québec’s least affluent areas; their income is some 10% lower than good performers. This points to significant and increasing disparities among predominantly rural MRCs. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 132 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.8. Median income in rural, intermediate and urban areas between 2000 and 2005 A. PRs that registered the highest growth in income CAD in % 80 000 20 75 000 2005 variation en % in 18 70 000 16 65 000 14 60 000 12 55 000 10 50 000 8 45 000 6 40 000 4 35 000 2 30 000 0 Brome-Missisquoi Manicouagan La Nouvelle-Beauce Nord-du-Québec Charlevoix Collines Outaouais Vallée-de-l'Or Montmagny La Jacques-Cartier Bécancour Papineau Lotbinière Témiscouata La Côte-de-Beaupré Nicolet-Yamaska Bellechasse Charlevoix-Est Abitibi-Ouest Les Laurentides Kamouraska Avignon Mirabel Portneuf L'Islet L'Île-d'Orléans Les Etchemins Val-St-François La Haute-Côte-Nord Matawinie Bonaventure Argenteuil La Mitis Les Basques Rouville La Matapédia Abitibi Montcalm total Quebec B. PRs that registered a low or negative growth in income CAD in % 70 000 5 65 000 4 60 000 2005 en variation in % 3 55 000 2 50 000 1 45 000 0 40 000 -1 35 000 -2 30 000 -3 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 133 Figure 2.8. Median incomes in rural, intermediate and urban areas between 2000 and 2005 (cont.) C. Intermediate areas’ level of income and growth rate CAD in % 85 000 10 80 000 9 75 000 8 2005 in variation en % 70 000 7 65 000 6 60 000 5 55 000 4 50 000 3 45 000 2 40 000 1 35 000 0 30 000 -1 25 000 -2 20 000 -3 D. Urban regions’ level of income and growth rate 85 000 10 2005 variation en % in 80 000 9 75 000 8 70 000 7 65 000 6 60 000 5 55 000 4 50 000 3 45 000 2 40 000 1 35 000 0 30 000 -1 25 000 -2 20 000 -3 in % CAD Source: Statistics Canada (Conference Board). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 134 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Rural income depends on economic diversification Paralleling a general trend in the OECD area, the economic performance of rural economies in Québec depends on the degree of diversification of the local economic base. The correlation is strong in the case of intermediate MRCs, where local income is significantly related to the share of employment in secondary and, above all, tertiary activities. This is evident in the case of Rivière-du-Nord and Memphremagog. In these two intermediate MRCs the share of employment in manufacturing and services is above 85%, while the less diversified area of this group, Arthabaska, has a share of employment in secondary and tertiary activities close to 65% (Figure 2.9). Figure 2.9. Level of disposable income and percentage of secondary and tertiary activities in intermediate MRCs Income level calculated as of 2005 100 % of manufacturing and service firms of the total 95 Rivière-du-nord 90 Memphremagog 85 Haute-Yamaska Beauce Sarigan Sept-Rivières 80 Joliette Manicouagan Beauharnois 75 Salaberry Bas-Richelieu Vallée de l'Or Haut-Richelieu 70 Rim ouski -Neigette Riv-du-Loup 65 Arthabaska 60 R² = 0.3649 55 50 10 000 15 000 20 000 25 000 30 000 35 000 CAD Source: Statistics Canada; OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 135 Economic diversification can be assessed by looking at the share of employment absorbed by primary, secondary and tertiary activities at the MRC level. In the case of predominantly rural MRCs, the share of employment in primary activities in 2006 involved 9% of the local workforce. This share rises to 12% in the case of remote predominantly rural MRCs (Figure 2.10). Conversely, intermediate and peri-metropolitan rural MRCs have a more diversified economic structure. In particular, a specialisation in manufacturing predominates in intermediate areas (rural areas with a medium-sized city), where secondary activities absorb almost one-third of the regional workforce; it declines in peri-metropolitan areas where the services sector has the lion’s share (Figure 2.11). Figure 2.10. Sectoral breakdown of the labour market in accessible and remote rural MRCs Percentage, 2006 Predominantly rural regions Remote PRs Primary activities 12% Manufacturing and 25% construction Wholesale and retail 9% 20% Finance, insurance, real estate 6% Non-commercial services 26% Public services 14% 20% Primary activities Other services 3% Manufacturing and construction 25% Wholesale and retail Finance, insurance, real estate Accessible PRs Non-commercial services 5% Public services 8% Primary activities Other services Manufacturing and 27% construction Wholesale and retail 27% Finance, insurance, real 17% 14% estate 5% Non-commercial services Public services 15% 14% Other services 4% 4% Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 136 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.11. Sectoral breakdown of the labour market in intermediate and peri-metropolitan rural MRCs Percentage, 2006 Intermediate regions Peri-urban (rural) regions 9% Primary activities 4% Primary activities 25% Manufacturing and construction 30% Manufacturing and 24% construction Wholesale and retail Wholesale and retail Finance, insurance, real estate 29% Finance, insurance, real estate 4% Non-commercial services Non-commercial services Public services 7% Public services 15% 16% Other services Other services 3% 15% 15% 4% Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Between 1991 and 2006, rural Québec as a whole reduced its economic dependence on primary activities. Over this period, the weight of manufacturing and service activities (i.e. “commercial services” and “wholesale and retail”) increased as a percentage of Québec’s total GDP (Figure 2.12). In parallel, the relative contribution of sectors such as “non- commercial services” or “primary activities” to regional GDP declined. Manufacturing and the services sector in particular have become the largest employers in rural Québec. They absorbed some 25% and 40%, respectively, of total employment in 2006. This confirms that in Québec, as well as in Canada generally, rural areas attract secondary and tertiary activities and in some cases have enough momentum to create local dynamism owing to the location of firms (and related services) which are functionally linked (see Chapter 1). Economic diversification has created new and better job opportunities in rural Québec. New jobs grew faster in rural MRCs than anywhere else in the province between 1991 and 2006. In terms of employment by place of residence, the number of jobs in rural Québec rose from 729 300 in 1991 to 848 600 in 2006. This 16.4% increase exceeds the 10.7% growth in urban Québec. Over the period, the percentage of jobs in tertiary activities increased the most, followed by manufacturing and construction OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 137 Figure 2.12. Evolution of the share of GDP by sector in rural Québec 1991-2006 40 Manufacturing and 35 construction 30 25 Commercial services 20 Non-commercial services Finance, insurance, RE 15 Wholesale and retail Primary activities 10 Public administration 5 0 -40 -30 -20 -10 0 10 20 30 -5 Note: The size of the circles represents the size of employment in each sector. The vertical axis corresponds to the size of GDP in percentage. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. (Figure 2.13). Better management (organisational innovations), mechanisation, and the introduction of information and communication technology (ICT) played an important role in this result. High GDP per worker, which is a proxy for labour productivity, also indicates that rural Québec has been able to attract good jobs between 1991 and 2006. Over the period, it increased by 33.2% (from CAD 42 000 to CAD 55 900). All rural areas displayed values higher than or equal to those of urban areas (a 28.9% increase in urban areas and 27.4% in metropolitan regions). The strongest increase was in accessible predominantly rural MRCs (34.4%); the smallest was in remote predominantly rural MRCs (28.9%). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 138 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.13. Increase in jobs1 in predominantly rural MRCs, by macro-sector 1991-2006 Wholesale & retail Services Manuf acturing Constructions Primary activities -1 -0.5 0 0.5 1 1.5 % change in the number of employed Note: 1. Jobs at place of residence. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. The number of jobs available to rural residents is also influenced by proximity to urban labour markets, as people living in rural areas close to urban centres benefit from the presence of a larger urban local labour market (LLM). The total number of workers living in rural areas is, in fact, higher than the number of jobs. Between 2001 and 2006 the percentage of workers living in rural Québec rose from 18.8% to 19.1%. In contrast, the proportion of jobs located in rural areas dropped from 16.1% to 15%. In particular, all predominantly rural MRCs (accessible and remote) can be considered “residential zones” since the number of people living there is greater than the number of local jobs. Intermediate MRCs display an even larger gap between residents and number of jobs, and can be classified as “strongly residential zones” (Figure 2.14). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 139 Figure 2.14. Difference between jobs at place of work and place of residence in rural Québec Units, 2006 Jobs at place of residence Jobs at place of work 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 PR MRCs remote PR accessible PR Intermediate Peri-urban MRC MRCs MRCs MRCs Residential zones Strongly residential zones Strongly residential region Residential region Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Data for predominantly rural and intermediate MRCs show that the increase in the employment rate has been higher in predominantly rural MRCs with a relative specialisation in the services sector. The rise in the number of tertiary-sector jobs has buffered the decline of industries such as manufacturing and construction (particularly in intermediate MRCs) and primary activities (in predominantly rural MRCs). Only 14 MRCs, out of 65, suffered from a net loss of local jobs. In these MRCs the reduction in employment in primary activities, manufacturing and construction has not been offset by the creation of new jobs in the tertiary sector (Figure 2.15).11 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 140 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.15. Variation in (sectoral) employment by predominantly and intermediate rural MRCs 1991-2006, aggregate trends -2 -1 0 1 2 3 4 Les Îles-de-la-Madeleine Le Rocher-Percé La Côte-de-Gaspé La Haute-Gaspésie Bonaventure Avignon La Matapédia Matane La Mitis Les Basques Témiscouata Kamouraska Charlevoix-Est Charlevoix L'Islet Montmagny Bellechasse La Nouvelle-Beauce Robert-Cliche Les Etchemins Le Granit L'Érable Lotbinière Portneuf Mékinac Les Chenaux Bécancour Les Sources Le Haut-Saint-François Le Val-Saint-François Coaticook Brome-Missisquoi Acton Nicolet-Yamaska Maskinongé D'Autray Matawinie Montcalm Les Jardins-de-Napierville Le Haut-Saint-Laurent Argenteuil Les Pays-d'en-Haut Les Laurentides Antoine-Labelle Papineau Les Collines-de-l'Outaouais La Vallée-de-la-Gatineau Pontiac Témiscamingue Abitibi-Ouest Abitibi La Tuque Le Domaine-du-Roy Maria-Chapdelaine Le Fjord-du-Saguenay La Haute-Côte-Nord Caniapiscau Mingamie Basse-Côte-Nord Baie-James OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 141 Figure 2.15. Variation in (sectoral) employment by predominantly and intermediate rural MRCs (cont.) 1991-2006, sectoral trends -15 -10 -5 0 5 10 15 Les Îles-de-la-Madeleine Le Rocher-Percé La Côte-de-Gaspé La Haute-Gaspésie Bonaventure Avignon La Matapédia Matane La Mitis Les Basques Témiscouata Kamouraska Charlevoix-Est Charlevoix L'Islet Montmagny Bellechasse La Nouvelle-Beauce Robert-Cliche Les Etchemins Le Granit L'Érable Lotbinière Portneuf Mékinac Les Chenaux Bécancour Les Sources Le Haut-Saint-François Le Val-Saint-François Coaticook Brome-Missisquoi Acton Nicolet-Yamaska Maskinongé D'Autray Matawinie Montcalm Les Jardins-de-Napierville Le Haut-Saint-Laurent Argenteuil Les Pays-d'en-Haut Les Laurentides Antoine-Labelle Papineau Les Collines-de-l'Outaouais La Vallée-de-la-Gatineau Pontiac Témiscamingue Abitibi-Ouest Abitibi La Tuque Le Domaine-du-Roy Maria-Chapdelaine Le Fjord-du-Saguenay La Haute-Côte-Nord Caniapiscau Mingamie Basse-Côte-Nord Baie-James Primary activities Constructions Manufacturing Services Wholesale & retail Note: Jobs at place of residence. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. The analysis demonstrates that performance (measured in terms of the change in the number of resident workers with jobs) of a given rural MRC depends on three variables: i) regional accessibility (which, in turn, depends on the distance from the major metropolitan areas); ii) soil fertility and climate; and iii) population density. Depending on the intensity of these three variables, rural economies display qualitative changes. Small and OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 142 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC remote predominantly rural MRCs, with low population densities cannot be considered a smaller-scale version of the economy that is found in an accessible predominantly rural area or in urban regions. Their economic base may have specific characteristics, such as truncated supply chains, the presence of large firms that employ the bulk of the local residents, and complete dependence on external demand. On this basis, it is possible to divide Québec’s rural economies into three groups with different industrial bases and productive features. • The first category is peri-metropolitan and intermediate MRCs. These rural economies have a diversified industrial base. They are home to agricultural activities because of the fertility of their soil and climate. They also host medium-low-technology manufacturing firms, such as textile firms, or they transform raw materials from remote territories. As they are close to metropolitan areas, residents can work outside of the area, in an urban area or in another adjacent rural labour market. Finally, the relatively high population density means that they are also home to a “residential economy”, in which proximity services, such as retail, benefit from the presence of constant local demand.12 • When population density and distance display more extreme values, a structural modification of rural economies appears. In Québec, a first structural change can be observed in predominantly rural areas that are located in central areas, i.e. in a range of 200-400 kilometres from the major metro-regions, on the northern shores of the St. Lawrence River. Because of their poor soil and high transport costs these areas have a weakly differentiated industrial base. They depend on traditional manufacturing and natural resources, especially lumber, but intense exploitation and strong international competition mean that they are not as profitable as they once were. • Finally, in the most extreme cases, particularly in remote rural areas, the local economy is usually based on highly truncated supply chains and specialised production entirely based on local natural resources. This is where large firms specialised in mining or forestry are located, and whose presence alone justifies the existence of the local community. Sectoral contribution to rural income Agri-food, crop, and livestock production In Québec the food industry is responsible for more than 6% of provincial GDP. Agri-food is also important for provincial employment. In OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 143 14 administrative regions (out of 17) this industry accounted in 2006 for more than 10% of local employment (481 000 jobs) including over 70 000 jobs in food processing plants. Agriculture alone generated a total income of CAD 1.17 billion in 2006 (1.9% of total GDP). Québec has the second largest value of agricultural production after Ontario, Its dominant agricultural products are: dairy (34%), pork (15%), crops (11%) and beef.13 Some primary activities have been converted into organic production, yet the proportion is still very low. The 2001 Census counted 372 Québec farms that were certified organic, just over 1.2% of the province’s farms. Québec ranked third in this area, following Saskatchewan and Ontario. In Québec, 2 230 farms reported certified organic commodities. Four out of ten of these farms reported producing a certified organic “other” crop, mostly organic maple products. The second highest category was fruit, vegetable or greenhouse products. Despite their importance, agricultural activities cover a small portion of the provincial territory. What is formally considered agricultural land covers 4% of the provincial territory and represents 34% of the écoumène. This area is protected by the 1978 Loi sur la protection du territoire et des activités agricoles (law on the protection of agricultural land and agricultural activities) and cannot be used for other activities, such as urban development or forestry (Table 2.4 and Figure 2.16). Table 2.4. Areas protected by the law on agricultural land, 2009 Protected Total agricultural Écoumène surface land km2 km2 % km2 % Predominantly rural MRC 43 195 1 312 506 3 144 455 30 Remote 17 094 1 245 586 1 96 190 18 Accessible 26 101 66 920 39 48 265 54 Intermediate MRC 13 350 115 535 12 28 830 46 Peri-metropolitan MRC 2 144 10 188 21 4 130 52 Rural 58 689 1 438 228 4 177 415 33 Urban 4 759 11 107 43 11 107 43 Québec 63 449 1 449 335 4 188 522 34 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 144 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.16. Agricultural zone in Québec as defined by the law on the protection of agricultural land Protected agricultural land Regional County Municipality Source: Government of Québec. Because of climate and soil quality, primary agriculture is concentrated in the south of Québec, along the shores of the St. Lawrence River in the most urbanised area of the province. In particular, the land below 200 metres above the sea level, i.e. the area south of the St. Lawrence River, is the most fertile agricultural land in the province. For example, the Montérégie administrative region, located on the border with the United States and within the area below 200 metres above sea level, accounts for 24% of Québec’s farms, the highest proportion in the province. The administrative region with the second highest share is Chaudière-Appalaches, which has about 19% of all Québec farms, and presents the highest specialisation in the production of maple syrup. Outside of this area, and more than 200 metres above sea level, the quality of agricultural land is lower as measured by crop heat units, which measure both climate conditions and quantity of daylight (Table 2.5).14 In these areas, agriculture represents a marginal economic activity and the area of land under production is declining constantly. In accessible predominantly rural areas, farms are concentrated within a 200-kilometre radius of the largest metro-regions (Figure 2.17). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 145 Table 2.5. Soil fertility and altitude Crop heat units < 200 m > 200 m Total < 200 m > 200 m km2 km2 km2 % % Predominantly rural MRC 258 334 1 054 173 1 312 508 20 80 remote 240 533 999 970 1 240 503 19 81 accessible 17 801 54 203 72 005 25 75 Intermediate MRC 14 332 101 203 115 535 12 88 Peri-metropolitan MRC 2 481 7 707 10 188 24 76 Rural 275 147 1 163 083 1 438 231 19 81 Urban 8 415 2 692 11 107 76 24 Québec 283 563 1 165 775 1 449 338 20 80 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Figure 2.17. Number of farms in predominantly rural MRCs, 2006 450 400 350 300 250 R² = 0.0264 200 150 100 50 0 0 200 400 600 800 1 000 1 200 Note: The data only refer to the number of farms. They do not take into consideration their size, which is usually larger in accessible areas. Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 146 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Farms tend to be smaller in Québec than in the rest of Canada (see Chapter 1), yet the average dimension is increasing due to concentration of property. The average size of Québec farms increased by 35.6%, from 194 acres in 1981 to 263 acres in 2001.15 Symmetrically, the number of census farms declined by 10.7% over the same period,16 and the total number of farms declined by 33.2% (the national average was 22.4%). Because of the concentration process, the number of dairy farms, still the most common type in Québec, has declined drastically over the past two decades. In 1981, dairy farms accounted for nearly half (41.3%) of total farms. By 2001, their number had declined to just over one-quarter of the total. Québec still has the largest number of dairy cows among Canadian provinces. However, farmers reported 407 206 dairy cows on their farms in 2001, down by 13.7% from 1996, the largest decline in numbers among the provinces. These changes in the productive framework of agriculture parallel structural transformations in Québec’s farm society (Box 2.3). Farm families are increasingly involved in activities outside of their farm and have additional sources of income. In the 2006 Census, about 39% of farm operators in the province of Québec reported their main occupation as non-agricultural, up from 32.6% in 2001. This suggests that more operators are working off the farm. A higher proportion of female than male operators reported a non-agricultural occupation (48.7% and 35.4%, respectively). Among non-agricultural occupations, the top occupation for Québec's male operators was transport equipment operators and related workers, excluding labourers, while for women operators, secretarial occupations predominated. As a consequence, farm families have many different sources of income.17 In 2006, 9 020 farm families in the province of Québec were involved in an incorporated farm. This is considerably fewer than the 21 915 farm families involved in an unincorporated farm in 2006, down 9.6% from 24 240 families in 2001. The median total income for Québec farm families on unincorporated farms in 2005 was CAD 51 204, compared to CAD 58 675 for census families in the province's general population. Forestry and logging Forestry represents 3% of the provincial economy, and in 2006 exports reached CAD 11.1 billion with a net trade balance of CAD 9.2 billion in forest products. Québec’s forests account for 20% of the total Canadian forest and 2% of the world’s forests. In Québec, forests cover an area of 761 000 km2 (551 400 km2 of continuous boreal forest, 98 600 km2 of mixed forest and 111 100 km2 of hardwood forest), equivalent in size to the territories of Norway and Sweden combined (Figure 2.18). Some 55% of OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 147 Box 2.3. Structural changes in Québec’s farm society Québec's farm population continues its steady decline in numbers, dropping by 6.2% to 90 940 between 2001 and 2006. In 1931, when the farm population was counted for the first time, 777 017 people were living on a farm, i.e. 27% of Québec's population. By 2006, farms accounted for only 1.2% of the province’s population. In less than one lifetime Québec has moved from 1 in 4 inhabitants living on a farm to 1 in 83. At the same time, Québec's total population grew from 2 874 662 in 1931 to 7 546 130 in 2006. The farm population is also ageing faster than the provincial trend. In 2006 those aged 65 and older made up 7.2% of the province's farm population, up from 4.8% in 1971. Those 65 and over in 2006 made up slightly more of the province's general population, at 14.3%. The language profile has also been evolving. Of Québec's entire farm population in 2006, 90.8% reported French as their mother tongue, 6.3% reported English, and the remainder (2.9%) reported a mother tongue other than English or French. Of those who reported another language, the largest group named German. The profile for the province's general population in 2006 differed, with 80.1% reporting French as their mother tongue, 8.6% reporting English, and the remaining 11.3% citing another language. Of the other languages spoken by the province's general population, the Italian language led, followed by Arabic and then Spanish. The 2006 Census of Population counted 2 680 immigrants to Canada in the province of Québec's farm population or 2.9% of the total provincial farm population. In 1971, immigrants made up 1.2% of the province's farm population. The Swiss were a significant proportion (32.0%) of Québec's immigrant farm population, but they made up less than 1% of immigrants in the province's general population. About 14% of the province's immigrant farm population was from France, compared to about 7% of immigrants in Québec's general population. The third most common place of birth for Québec's immigrant farm population was Belgium at 9.0%, compared to 1.1% in the province's general population. In 2006, 7.2% of Québec farm operators had university degrees (bachelor level and above) up from 6.4% in 2001. As a point of comparison, approximately 20% of the province's total labour force had university degrees. Proportionally more Québec farm operators reported apprenticeship or trades certificates or diplomas than the overall labour force (22.2% compared with 18.1%). This may well be the result of a number of factors, including time required away from the farm and a preference for the more practical approach of college courses on animal care and field-cropping techniques. Source: 2006 Census of Agriculture, Statistics Canada, www.statcan.gc.ca/ca- ra2006/index-eng.htm. this area is productive (commercial) forest (Québec Ministry of Natural Resources, MRNF).18 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 148 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.18. Different types of forests in Québec Boundaries Vegetation subzones International Southern arctic subzone Continuous boreal forest subzone Provincial Forest tundra subzone Mixed forest subzone Québec-Newfoundland-and-Labrador border (this border is not definitive) Taiga subzone Hardwood forest subzone Northern limit of timber allocation Cartographic Lambert Conformal Conical, projection standard parallels 45° and 60° 0 200 km Source: Rigorous and Adaptive Forest Management, Ministry of Natural Resources and Fauna, Department of Forest Inventory, Government of Québec, (www.mrnf.gouv.qc.ca/english/publications/forest/understanding/forest-management.pdf). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 149 There are almost 6 000 firms active in Québec’s forestry sector, and the majority are located in the north of the province and in remote predominantly rural MRCs in the south. In the north (mainly Nord-du- Québec) the forest is public and large enterprises exploit it under a concession regime. The rest of the forest, some 10% of the total, is located in the centre-south of the province and is private. In this area a large number of SMEs exploit the forest resources, and within the écoumène, forestry is also an ancillary production for more than 25 000 farmers. Activities related to forestry are located in remote rural areas, and in some cases they represent the most important economic activity. It is the case for the MRC of Maria-Chapdelaine (region of Saguenay – Lac-Saint-Jean), which, with a total population of 25 000, is home to 125 forestry firms (Figure 2.19). Figure 2.19. Location of forestry firms within Québec's écoumène, 2008 140 Maria- 120 Chapdelaine 100 Absolute number of firms 80 60 40 20 0 0 200 400 600 800 1 000 1 200 Linear kilometres (average distance from major metro-areas) Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 150 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Québec’s forestry industry presents multiple specialisations and directly generates more than 80 000 jobs.19 In the whitewood sector, 300 factories consume more than 10 000 m3 of wood a year. The sector directly generates more than 20 000 jobs. For the woodworking and hardwood exploitation sector, Québec ranks in first place among Canadian provinces with 65% of Canadian production (Québec Forestry Industry Council). The pulp and paper industry is also very important and millions of tonnes of commercial articles, newspaper, different kinds of paper and paperboard are produced annually. More than 40 000 Québec workers find employment in one of the numerous sawmills located in more than 200 municipalities, in which they are the main employer. Another emerging specialisation is in the non-timber forest products industry, which has four major sectors: agro-forest food products (e.g. wild fruits), ornamental products (e.g. Christmas trees), pharmaceutical and nutraceutical products (e.g. Canada yew extract) and manufactured products or materials (e.g. resins, alcohol, essential oils). In 2005, blueberry sales amounted to CAD 38 million and the production of Christmas trees was valued at CAD 50 million. Finally, the forest is also home to economic activities related to hunting, fishing, recreational tourism and ecotourism, which generate 32 000 jobs and had a total turnover of some CAD 450 million in 2005. Given the importance of the forest, Québec has an integrated system to manage and protect this resource. In 1996, the provincial government introduced the Forest Act to guarantee the sustainability of the forest. Under the law Québec forest managers must respect the Règlement sur les normes d’intervention dans les forêts du domaine de l’État (Regulation respecting standards of forest management for forests in the domain of the State). The aim of this regulation is to ensure the maintenance or reconstitution of the forest cover, the protection of forest resources, including the quality of water and wildlife habitats, and the compatibility of forest management activities with other uses of the territory. In 2005, and again in 2008, Québec’s legislation was amended to introduce the concept of ecosystem-based management. This new approach attempts to ensure that biodiversity is maintained and ecosystems remain viable while meeting socioeconomic needs and respecting social values related to the forests. To do so, new approaches to silviculture are tested and pilot projects implemented, in partnership with scientists and with the direct involvement of local communities (Box 2.4). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 151 Box 2.4. Forest protection and participatory resource management: the experience of Québec Forest management plans that came into effect in 2008 provide for the maintenance of mature and over-mature forests. These ecosystems have special ecological attributes (structure, woody debris and microclimates) which are often essential for certain species of birds, small mammals, mushrooms and insects. Québec is in the process of adding a vast network of biological refuges to its protected areas in which there will be no harvesting of forest products. Over the last 40 years, Québec has carried out three forest inventory programmes: the network now consists of more than 28 000 ecology observation points. These inventories have made it possible to analyse the forest ecosystems' evolution, their fragility, their productivity and their wood volume; they are also essential for locating protected areas. By drawing a line on a map above which the harvesting of wood is not allowed, the government protects the northern territories whose special characteristics may adversely affect the forest’s ability to regenerate itself or grow (climate, soil, natural perturbations). The result of this northern limit is to exclude nearly 70% of the boreal vegetation zone from exploitation (including the tundra forest, the taiga and a part of the continuous boreal forest) yet allow other activities to take place. So far, nearly 170 000 km2 of public and private forests are certified through a forest certification standard, which represents more than 40% of Québec's productive forest territories. In 2005 Québec enacted a first major decrease in the annual allowable cut of 20% for softwood species and 5% for hardwoods. The decrease was 25% in the north of Québec. This prudent move was made to ensure the sustainability of wood resources in public forests, and was redefined in 2008. At the same time, to enhance the effectiveness of the strategy to protect the forest, the provincial government involves local communities in decisions that concern the use of their resource. There are different ways in which the population can express their opinions on the direction forestry management and development should take, under an information and consultation policy which is part of the Forest Act. Local and regional stakeholders (regional county municipalities, aboriginal communities, wildlife organisations, etc.) are consulted when forest management plans are prepared. Aboriginal communities also occupy an important place in the planning and conducting of forest management activities. They benefit, among other things, from special programmes to encourage their training and participation in these activities, to promote job creation in forestry and to support their communities. Source: Government of Québec, Ministry of Natural Resources, www.mrnf.gouv.qc.ca/english/publications/forest/understanding/forest-management.pdf. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 152 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Mining and quarrying Mining is another key primary sector for Québec’s rural areas. Primary metal processing alone represents more than 6% of the provincial economy. Mining activities directly generate more than 18 000 jobs and investment approached CAD 1 billion in 2006. Québec is one of the world’s ten largest producers in the mining sector.20 The province has 30 mines, 158 exploration firms and 15 primary processing industries. Abitibi- Témiscamingue, in the western part of the province, was the first region to experience the mining boom. This region, mostly predominantly rural, has gold and copper. Exploration has since been carried out in the regions of Saguenay-Lac-Saint-Jean, Côte-Nord, and Nord-du-Québec. Between 2003 and 2007 exploration expenditure soared from CAD 134 million to CAD 430 million, an indication of the province’s potential in this field.21 Production of energy (hydroelectricity and wind energy) Québec has major renewable energy resources. As discussed in Chapter 1, Québec is strongly specialised in the production of energy, which contributed 3.2% of provincial GDP in 2006, and directly generates more than 50 000 jobs. In particular Québec is Canada's leader in hydroelectric energy production, which is generally located in remote rural areas and in the north of the province which has an abundant supply of water. It is a major exporter of hydroelectricity to other Canadian provinces and the United States and is building additional capacity. It is also installing wind turbines on the north shore of the St. Lawrence River and has a strong interest in third generation biofuels based on cellulosic processes that could use low-value wood supplies. The principal economic actor in this sector is Hydro-Québec, the world’s largest operator in the field of hydroelectricity. With 59 hydroelectric and one nuclear generating station, Hydro-Québec is Canada’s largest electricity generator and one of the largest in North America. The combined capacity of its power stations was 36 429 megawatts in 2008. Hydro-Québec generates and distributes electricity within the province, to Ontario, and to the United States. The Québec government is the sole shareholder of Hydro-Québec, which directly employs 46 000 people. Wind energy, while small compared to hydroelectricity, is a growing industry in rural areas. The province of Québec has 100 000 MW of wind energy potential within 25 kilometres of existing transmission lines that is economically viable in the short and medium term. In particular, the Gaspé Peninsula is home to the majority of Québec’s wind farms. This region has some of the best wind potential in Québec and is expected to lead to the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 153 development of a wind energy industry able to compete at national and international levels. The construction of wind farms using components manufactured on the Gaspé Peninsula is a first step towards reaching this objective. Manufacturing Manufacturing activities represent a traditional specialisation in rural Québec. They generated 25% of GDP in rural areas in 2006, and accounted for more than 250 000 direct jobs. Québec has the highest specialisation in manufacturing activities within Canada. This is due in part to geographical proximity to the United States, which absorbs the bulk of provincial exports. For many years rural Québec represented an ideal location for firms specialised in traditional sectors such as textile or clothing. The workforce was less expensive than in the United States because of lower wages, and was equally skilled, and Hydro-Québec provided inexpensive electricity. More recently Québec has lost many of these firms because of an inability to compete with low-wage developing countries and the reduction of tariff barriers. There are important differences in the territorial concentration of manufacturing firms in rural areas. The location of manufacturing in Québec is strongly influenced by the availability and cost of land, the availability of a workforce, and transport costs.22 Thus, while intermediate and predominantly rural areas located in more accessible parts of the province are attractive to firms, remote areas are not and tend to host specific sectors strongly linked to the resource-based industries (Figure 2.20). Data on the distribution of firms in predominantly rural MRCs show that SMEs tend to concentrate in accessible predominantly rural MRCs, while remote areas are more likely to host large firms. The choice of location of manufacturing SMEs is probably driven by larger local markets, lower transport costs, particularly to the United States, and access to services. Accordingly, accessible areas, well connected with urban markets or major transport infrastructure, offer SMEs some location advantages. Where these externalities are not available, as in remote rural areas, firms have to internalise their production inputs. This leads to the higher concentration of large firms in this type of rural area (Figure 2.21). Data also show that the number of micro firms (1-4 employees) located in PRs dropped between 2001 and 2006. This negative trend may be due to a change in the registration of firms adopted by Québec in 2005. However provincial data show that there is a concentration of micro-firms and small firms in the areas surrounding Montréal and a reduction in peripheral areas.23 The reduction of firms has been more intense in sectors such as textiles and clothing, forestry, and agro-food. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 154 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.20. Location of manufacturing firms in predominantly rural areas – absolute number (left hand) and per capita (right hand) 2006, distance in kilometres 180 0.007 Absolute number of manufacturing firms Per capita number of manufacturing firms 160 0.006 140 120 0.005 100 80 0.004 60 0.003 40 20 0.002 0 0.001 -20 R² = 0.3555 R² = 0.2283 -40 0 0 200 400 600 800 1000 1200 0 200 400 600 800 1000 1200 Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. According to St-Pierre and Mathieu (2005), small firms in remote areas face structural problems relating to the availability of skilled labour and access to finance. Their study uses a different territorial classification from the one implemented in the OECD assessment and divides Québec into three main areas: metropolitan regions, urban regions and remote areas. Entrepreneurs’ answers show that the obstacles and needs of SMEs vary according to their location.24 In particular, firms located in remote areas highlight the need for external (public) help for obtaining access to skilled labour, identifying new possible markets/niches, obtaining access to finance for marketing and research and development (R&D), and getting access to credit (especially if the firm is going through a crisis). Services sector As discussed above, a flourishing services sector is a common characteristic of competitive rural MRCs in Québec. On average, rural Québec lost service firms between 2001 and 2008 (Figure 2.22). The distribution of tertiary firms is correlated with the level of population and with demographic trends, meaning that a rural area that is losing population is also losing service firms. A very clear example is the number of education services (schools, etc.) that have been increasing strongly in intermediate MRCs and in peri-metropolitan MRCs, the two areas that displayed higher OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 155 Figure 2.21. Distance and increase in firm numbers according to size 2001-06 0.1 1.4 1-4 employees 5-19 empoyees 0 1.2 1 -0.1 0.8 -0.2 0.6 R² = 0.1241 -0.3 0.4 R² = 0.2066 -0.4 0.2 -0.5 0 -0.6 -0.2 -0.7 -0.4 0 200 400 600 800 1 000 1 200 0 200 400 600 800 1 000 1 200 1.2 2.5 20-199 employees + 200 employees 1 2 0.8 1.5 0.6 1 0.4 0.5 0.2 R² = 0.0569 R² = 0.3012 0 0 -0.5 -0.2 -0.4 -1 -0.6 -1.5 0 200 400 600 800 1 000 1 200 0 200 400 600 800 1 000 1 200 Note: The classification presented in this chart follows that set by Québec's ministry in charge of economic development (MDEIE). In this classification, firms with 1-4 employees are considered micro-firms, those with 5-19 as small, 20-199 as medium, and over 200 as large. This classification is different from the one adopted by the OECD in which firms with fewer than 9 employees are micro- firms, those with 10-49 are small, 50-249 are medium, and over 250 are large. Source: Statistics Canada. demographic growth between 2001 and 2008. There are some exceptions. Public services are more numerous in rural areas, owing to the presence of a large number of small municipalities. Service firms are also becoming larger. The number of wholesale and retail firms has been decreasing faster than the population because of the growing concentration of activities. Large firms have squeezed small OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 156 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC businesses out of the market. The same dynamic of concentration has led to a decreasing number of financial firms (clustered in Figure 2.22 with insurance and real estate). In fact, the number of bank offices has been decreasing owing to branch consolidation and to the fact that Desjardins (the most important financial player in rural Québec) reduced its presence in small remote communities. Figure 2.22. Variation of the number of tertiary firms in rural Québec 2001-08 -20% -15% -10% -5% 0% 5% 10% 15% Wholesale and retail Rural Finance, insurance, and real estate Other services (transportation, restaurants, professional services, technology, etc.) Education Urban Health and social services Public administration Québec Total OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 157 Figure 2.22. Variation of the number of tertiary firms in rural Québec (cont.) 2001-08 -30% -20% -10% 0% 10% 20% 30% 40% Wholesale and retail PR MRCs Finance, insurance, and real estate Remote PR MRCs Other services (transportation, restaurants, professional services, technology, etc.) Education Accessible PR MRCs Health and social services Intermediate MRCs Public administration Total Peri-urban MRCs Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. 2.3 Level of well-being of rural Québécois The rural population’s access to key services In Québec, as marginal costs have increased, public and private services have concentrated in urban areas. Over the past 20 years, the average distance to visit a health facility for childbirth rose from 30 to 50 kilometres, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 158 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC because fewer centres offer this service. This is due both to an increase in the critical mass needed to provide appropriate quality of service and to a decline in the fertility rate and thus in demand for the service. As a result, rural Québécois have had to accept the lack of nearby services. Recent research has shown that rural dwellers perceive a service as available or accessible if the facility delivering it is located within a one-hour trip from their place of residence.25 Of course, the perception may change depending on the kind of service and the characteristics of the user. For instance, the research also shows that retaining a primary school (public service) or grocery store in a small rural community is considered a priority to be satisfied through specific institutional arrangements. However, maintaining a small school or other kinds of key services is not always possible. Finding ways to rationalise service delivery (or to find alternatives) is an important issue in Québec, as it is in other OECD rural regions. Several means of lowering the marginal cost of services are currently being implemented in Québec. First, services are delivered through hubs within a territorial network. Many OECD countries have adopted this method of delivering health care or education, for instance. The advantage is that basic services that rural residents use relatively often remain close by, while they go to urban areas for more specialised services. Territorial networks, however, are not a panacea. Remote rural areas that cannot be integrated in territorial networks continue to lose key services, with an impact on their socioeconomic sustainability. Second, some large service facilities (library, indoor pool, but also landfills) are established by a group of municipalities through “inter-service agreements”. This makes it possible to share the cost among a larger population pool. Municipalities involved in the use of the facility establish mechanisms to share the costs and guarantee equal access to all those living in the area. Again, this solution is not appropriate for isolated communities. A third solution is the use of ICT. In some communities services are delivered online through the Internet. But this may create problems of access for certain categories of the population (e.g. elderly people), and rural Québec has a relatively low rate of access to the Internet, as discussed below. Finally, some rural MRCs produce services through the voluntary sector, civic engagement and co-operatives. The basic logic of the approach is that if residents of rural and small town places wish to retain these services, they will have to find new ways to have them delivered. In this context, voluntary groups have been filling many of the emerging service gaps (Halseth and Ryser, 2007). These services, however, often address complex problems, such as unemployment, community revitalisation, community health, or recognition of volunteers’ skills. They may require information, support or assistance from a range of sources and institutions, conditions that may not be met in rural areas.26 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 159 Health care and social services The number of health-care and social-service facilities is relatively high in rural Québec, yet access to specialised services may be difficult for people living in remote areas. The number of facilities depends on distance from major metro-regions and population density. This correlation is evident in predominantly rural MRCs (Figure 2.23). However, when normalised for local population, rural areas display a higher concentration of facilities than urban centres (Table 2.6). This reflects the presence of many small general service facilities in rural areas, whereas larger and specialised facilities are usually located in urban areas. A provincial policy implemented in the early 1990s increased the number of day nurseries throughout the province and particularly in rural areas. Therefore, large numbers may not necessarily indicate good access to health care and social services across rural Québec. The territorial organisation of health care in Québec is done at the scale of the 17 administrative regions; thus, each health district covers a very large portion of territory. Figure 2.23. Number of health-care facilities in predominantly rural MRCs (X) and distance from major metropolitan areas (Y) Distance in kilometres, 2006 120 Les Laurentides Brome-Missisquoi 100 Portneuf Le Domaine-du-Roy 80 D'Autray Antoine-Labelle Matawinie Témiscouata Kamouraska Maria-Chapdelaine 60 La Mitis Matane La Côte-de-Gaspé Le Granit 40 La Haute-Gaspésie Le Rocher-Percé Les Îles-de-la-Madeleine Les Basques Témiscamingue Minganie - Basse-Côte- La Haute-Côte-Nord Nord Les Etchemins 20 Acton Le Fjord-du-Saguenay R² = 0.0891 Caniapiscau 0 0 200 400 600 800 1 000 1 200 Source: OECD Regional Database (2009); OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 160 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Table 2.6. Number of public health-care and social-service facilities in rural Québec 1996-2008 1996 2008 2008/1996 n n n / 10 000 h. n PR MRCs 399 518 3.8 119 Intermediate MRCs 52 68 1.7 16 Peri-metropolitan MRCs 15 26 1.6 11 Rural 466 612 3.1 146 Urban 814 1 129 2.1 315 Québec 1 280 1 741 2.3 461 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. A main limit, especially in the case of health-care services, is the lack of qualified personnel at the local level. This is a broader Canadian issue as well. For instance, recruitment of medical specialists and nursing staff for public health institutions is particularly difficult in rural and remote northern areas throughout Canada. Remote northern areas have the unique challenge of extreme social isolation, although turnover in rural and northern areas is reportedly low. Remote areas that have retained experienced public health medical staff for long periods now face the problems associated with an ageing workforce. Medical staff new to the north need the opportunity to develop the breadth of skills and depth of knowledge needed to practice independently. Funds and mechanisms for continuing education are therefore an important part of retention and career development for public health staff in remote areas. Education As birth rates have declined, rural populations have seen school accessibility decrease because there are too few students to justify keeping a local school open. Between 1996 and 2008, some 270 of the province’s primary and secondary schools were closed. A large share were located in rural MRCs, where an average of ten schools a year were closed. In 2008, there were six schools per 10 000 inhabitants in rural areas. The figure is slightly higher in predominantly rural MRCs, which have 11 schools per 10 000 inhabitants (Table 2.7). The higher concentration is due to the presence of very small schools in remote rural communities. Tertiary education is mainly located in urban areas (88% of total facilities), but many OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 161 of the 48 CEGEPs (Collèges d'enseignement général et professionnel) in Québec are in rural areas. CEGEPs are comparable to a community college. A CEGEP diploma is a university entrance requirement. The purpose of CEGEPs is to make postsecondary education more accessible, as well as to provide proper academic preparation for university.27 Table 2.7. Number1 of education facilities in rural Québec 1996-2008 University and Primary and secondary schools CEGEP 1996 2008 2008/1996 2008 n n n / 10 000 h. n n % PR MRCs 1 581 1 502 10.9 -79 51 9.7 Intermediate MRCs 326 271 6.6 -36 6 1.1 Peri-metropolitan MRCs 151 146 9.0 -5 2 0.4 Rural 2 058 1 919 9.8 -120 59 11.2 Urban 2 658 2 509 4.6 -149 467 88.8 Québec 4 716 4 428 6.0 -269 526 100.0 Note: 1. We refer here to the unit of evaluation and not to the number of higher education institutes or primary or secondary schools. A unit of evaluation comprises one property or a group of properties belonging to a single owner. A higher education institute or a primary or secondary school can be the owner of more than one unit of evaluation (property) with one building, several buildings or no buildings. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Reduced access to education and high wages in resource-based industries may also play a significant role in dropout rates and student performance. In rural Québec, around 70% of students complete secondary school. This is 5 and 7 percentage points lower than the provincial and urban average, respectively (Table 2.8). Within rural areas, predominantly rural MRCs have the lowest performance (69%). This may be because the lack of local secondary schools forces pupils to commute long distances. The presence of high-wage jobs in resource-based industries is generally considered another factor influencing the number of dropouts (especially males) in rural areas, particularly in the remote ones.28 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 162 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Table 2.8. Annual rate of graduates and dropouts in secondary schools in rural Québec Cumulated values, 2004/05, 2005/06, 2006/07 Total Graduates Dropouts n n % n % PR MRCs 44 381 31 335 71 13 044 29 Remote PR MRCs 17 474 11 976 69 5 496 31 Accessible PR MRCs 26 907 19 359 72 7 548 28 Intermediate MRCs 12 460 8 558 69 3 902 31 Peri-metropolitan MRCs 4 810 3 489 73 1 321 27 Rural 61 651 43 382 70 18 267 30 Urban 170 259 131 639 77 38 620 23 Québec 231 908 175 021 75 56 887 25 Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Internet Québec displays a significant rural-urban split in terms of household access to the Internet. In general Québec has a relatively high level of Internet access. According to CEFRIO (Centre francophone d’informatisation des organisation), in 2008 74.6% of households were connected to the Internet in Québec and 61.8% had intermediate- or high- speed access, a situation similar to that of Norway and the Netherlands, the OECD countries with the highest percentage of households connected to the Internet. However, access is lower in rural areas, where 57% of households have an Internet connection and only 44% have intermediate or high-speed access. Financial and banking services In Québec, rural dwellers access credit and banking services mainly through co-operative financial institutions. Québécois use co-operative financial institutions more than other Canadians (Figure 2.24). These organisations, which also exist in other sectors to provide services in rural areas, were mostly the result of spontaneous efforts by people to help themselves and have played a key role in supporting the development of OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 163 rural Québec. Each financial co-operative (caisse populaire is presently required to belong to one of 11 federations, which in turn belong to the province-wide confederation, the Confédération des caisses populaires et d'économie Desjardins du Québec (Desjardins). The Desjardins Group is the largest association of credit unions in North America.29 Founded in 1900, it is located mostly in Québec but also in Ontario, Manitoba, and New Brunswick. It is composed of 536 local caisses, which serve 5.8 million members. In Québec Desjardins serves 80% of the population including children who are members of the co-operative network. Figure 2.24. Percentage of Canadians using a credit-union or caisse populaire as their primary financial institution 1997 80 70 60 50 40 30 20 10 0 Source: Department of Finance Canada, www.fin.gc.ca/toc/2000/ccu_-eng.asp. Due to the increasing complexity achieved by the Desjardins network, individual caisses have been integrated in a single structure, while the number of branches in rural areas has been declining. Technological changes continue to push the credit union movement to re-evaluate the most appropriate method of delivering services to members. Many credit unions and caisses populaires now offer services over the Internet (Sriram, 1999). Credit decisions are taken using a centrally developed credit scoring model. However, centralisation and automation have changed the relation between members and caisses. The personal knowledge that credit committee members used to have of members' finances is being replaced by computers and credit scoring models. At the same time, the number of caisses has been OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 164 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC reduced, and many branches located in remote rural areas have been closed. This process started in the late 1990s. For instance, in 1998, the number of branches dropped from 1 275 to 1 222. It must be said that the process of consolidation and amalgamation takes a consultative and collaborative approach to limit the impact on rural communities (Sriram, 1999). 2.4 Challenges and opportunities There are increasing socioeconomic disparities among rural MRCs A large rural-urban split… Although the rural-urban split is less intense in Québec than in the rest of Canada, some 80% of the provincial population is concentrated in urban areas. As a result of the uneven distribution of the population, there are large differences between the economic performance of urban and rural areas. The comparison may be unfair, however. Large differences in the scale (both of the population and the productive framework) may also have qualitative impacts that are worth considering when comparing the rural economy with the urban one. The rural economy, in fact, may produce different kinds of goods and services and local production chains may have particular characteristics which should be carefully considered when benchmarking rural against urban (Box 2.5). …but also large disparities among rural territories Besides the rural-urban economic divide, Québec also displays intra- rural disparities. GDP differences among predominantly rural MRCs are comparable to the OECD average, and there are fewer internal disparities than in countries with an internal economic divide such as Italy and Germany. However, Québec is less “equal” than Spain and France in terms of rural performance, and, above all, Québec’s predominantly rural areas display a much higher gap (standard deviation) from the average GDP per capita than the Scandinavian countries, which share with Québec many geographic and socioeconomic characteristics (Figure 2.25). As noted above, the level of GDP is not related to the distance from main metropolitan regions, although the richest areas are located relatively close to large cities. Differences in growth of GDP are also persistent and in many predominantly rural areas annual GDP growth is systematically lower than the average performance of rural Québec as a whole (Figure 2.26). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 165 Box 2.5. Structural differences between rural and urban economies In broad terms the economic structure of rural areas has become very similar to that of urban areas. Public and private services are the primary source of employment, while manufacturing plays a significant but shrinking role. Primary industries are typically only found in rural areas, but their contribution to income and employment has declined in the vast majority of rural areas, so that it is no longer possible to define a distinct rural economy driven by resource-based activities. However, a more detailed comparison suggests that their economic functions are less similar to those of urban areas than aggregate indicators suggest. In a few key sectors, such as tourism and hospitality, manufacturing, health care, education and public administration, there are significant differences in terms of the types of activity, the skill mix of the labour force and the wage structure. Tourism and hospitality is a growing sector in many rural areas and appears to have much opportunity for expansion. A closer comparison with the same broad category in urban areas suggests first that tourism in rural areas is most likely to be outdoor-based (camping, water sports, hiking etc.) while in urban areas it involves indoor activities (theatre, museums, art galleries). This makes urban tourism a year-round activity while most rural activities are seasonal. Second, tourism in many rural areas has a critical mass of activities and providers, so each city serves as a self-contained magnet for visitors and can provide sufficient opportunities to make itself attractive. By contrast, in all but the largest parks, tourism tends to be small-scale and comprised of spatially dispersed opportunities that provide only a limited range of activities. Third, while there are some skilled positions in rural tourism (managers, instructors etc.), there are more opportunities for skilled employment in urban tourism (managers, chefs, actors, museum curator, etc.). In both types of places the majority of the labour force only needs limited skills. Manufacturing now makes a larger contribution to rural economies than urban economies in many OECD countries. In both urban and rural areas the composition of manufacturing has changed as firms producing routine items that require only low worker skills and that are not sensitive to market conditions have largely relocated to countries with low labour costs outside the OECD area. But here too urban rural differences remain. First, large manufacturing firms are less likely to be found in rural areas because of their smaller labour markets and because of the reduced range of worker skills. This means that there are fewer opportunities for high pay and high-skill jobs in rural manufacturing. Second, manufacturing that is tightly coupled to its markets has a tendency to be in more urban locations because of the benefits of proximity. Typically this type of manufacturing has higher value added and employs more skilled workers at higher wages. Third, large manufacturing firms almost always have their corporate, marketing, and R&D functions in urban areas, and the high-paying jobs associated with these functions are almost strictly urban. Rural branch plants tend to focus on the production of specific products and consequently have limited scope for higher levels of management. There are clear differences between urban and rural health care. First, in rural areas the majority of health-care facilities and workers offer primary care and emergency care. By contrast urban areas also have secondary and tertiary care facilities. Second, virtually no medical research takes place in rural areas. Third, the mix of occupations in rural areas tends to lead to a higher incidence of work-related accidents that are either life-threatening or can lead to physical disabilities. Given the distance between where accidents take place and care facilities, rural areas place a higher premium on a distributed network of emergency care facilities and emergency response vehicles than urban areas. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 166 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Box 2.5. Structural differences between rural and urban economies (cont.) In both urban and rural areas there are ongoing efforts to enhance the quality of education and provide better opportunities for students of all ages. As a result the relative role of education in urban and rural economies is converging in terms of broad indicators. But differences still exist. In rural areas there may be equivalent access to basic primary and secondary education on a per person basis or in terms of students per teacher, but there is far less access to higher education (college, university, technical schools). In rural schools the range of course offerings is generally smaller, and tends not to include more advanced courses at any given age level because there are too few students to make offering these courses practical. In many rural areas a large share of education expenditure is for student transport, which obviously conveys no direct education benefits. Public administration is a growing share of both urban and rural economies. However here too there are significant urban and rural differences. In urban regions, for a given population, a relatively small number of local government units provide a broad range of services and employ a labour force with an equally broad range of skills. Conversely in a rural area with a population of similar size there will be far more individual local governments but each will tend to provide only a limited set of functions and most will not require high levels of skill. Perhaps more importantly for local development, an urban area may have more opportunity to integrate different public service activities. This reflects the presence of a critical mass of skills in an urban government; many rural areas do not have equivalent skills. Similar observations hold for other broad sectors, such as finance, construction and retail. If the focus is on broad levels of employment, the sectoral composition of urban and rural areas almost always looks similar. However, a more detailed examination of specific functions reveals fairly major differences in the skill mix of the labour force and the level of compensation. It thus appears that because of differences in density, size and distance, rural areas perform different functions from urban places. This was well understood when there were obvious differences between the broad types of urban and rural economic activity. Today this is no longer the case. But just as developed countries appear to exchange the same types of goods with each other, in seeming contradiction to the principles of trade, rural and urban economies appear similar but actually engage largely in complementary functions. Consequently it is unlikely that they will eventually converge to a uniform economic structure that differs only by size. This point has clear policy implications. To the extent that a rural economy is different from an urban economy, care must be taken in determining the extent to which a government can adopt the same policy framework for both. Source: Freshwater, D. (2009), “Rural Urban Interaction NL: Understanding and Managing Functional Regions”, unpublished paper. Predominantly rural regions suffer from strong depopulation and ageing Loss of population is the main result of rural areas’ inability to generate economic growth. If people persistently have problems finding employment OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 167 Figure 2.25. Regional disparities among predominantly rural areas in selected OECD countries Standard deviation, 2006 or latest available year United Kingdom Portugal Ireland Korea Austria Italy Hungary Greece Germany Québec Spain Japan Finland France Norway Denmark Slovak Republic Sweden 0 5 10 15 20 25 30 % Note: The graph displays the standard deviation of GDP per capita within PRs. Data are calculated at the MRC level. Source: OECD Regional Database (2009); Le Conference Board du Canada (2009), Les communautés rurales: l'autre moteur économique du Québec, prepared for the Groupe de travail sur la complémentarité rurale urbaine, June. they go to areas with higher growth. As described above, demographic trends differ depending on the location of the rural areas. Those close to a large urban centre have seen their population increase over the last three censuses. In particular, peri-metropolitan MRCs improved their population by 60% between 1981 and 2006, while intermediate MRCs registered an increased of close to 20%. Predominantly rural areas, and particularly those located in remote areas, have suffered a net loss of population. Ageing is a widespread problem in Québec, the territory with the lowest birth rate in North America. According to the Ministry of Health and Social Services (MSSS), the share of the age cohort 65 years and older in Québec will rise from 12% in 1995 to 27% in 2030, a period of 35 years. A comparable rise in the elderly population spanned over 45 years in Canada and over 65 to 75 years in Germany, France and the United Kingdom. If one considers the two broad categories “urban” and “rural” there is not much difference in the concentration of elderly people. However, following the classification used here, the variations among different types of rural areas can be important. Owing in part to depopulation, the share of elderly OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 168 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Figure 2.26. Aggregate GDP growth rate in rural Québec, 1991-2006 The regional performance is higher than the provincial average The regional performance is in line with the provincial average The regional performance is lower than the provincial average Source: Le Conference Board du Canada (2009), Les communautés rurales: l'autre moteur économique du Québec, prepared for the Groupe de travail sur la complémentarité rurale urbaine, June. population in Québec's remote rural areas increased sharply from 10.7% in 1986 to almost 15% in 2006. also in the remote areas the population belonging to the age bracket 0-14 years dropped from 23% of total population in 1986 to 17% in 2006 (Figure 2.27). Projections show that the ageing of the population in rural areas will increase exponentially in the near future. For instance, in the administrative region of Abitibi-Témiscamingue the share of elderly people (more than 65 years old) in 2000 was around 5%, significantly below the provincial average (Figure 2.28). According to projections calculated by Québec’s MSSS, Abitibi-Témiscamingue will equal the national average in 2016-17. After this period Abitibi-Témiscamingue will age faster than Québec, reaching a share of elderly people close to 30% after 2026. It is easy to see that a high share of elderly population will not only affect the regional capacity to generate endogenous development but will also affect the sustainability of some basic services, such as health care and primary education.30 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 169 Figure 2.27. Population of Québec by age group 0-14 years 15-64 years 65 years + 100% 10.7% 14.8% 8.5% 11.4% 8.5% 9.5% 10.0% 13.5% 90% 80% 70% 60% 66.2% 68.3% 66.4% 70.0% 70.2% 69.5% 50% 68.6% 69.7% 40% 30% 20% 10% 23.0% 25.3% 18.6% 23.1% 20.3% 20.5% 16.6% 16.8% 0% 1986 2006 1986 2006 1986 2006 1986 2006 Predominantly rural Intermediate MRCs Peri-metropolitan rural Québec MRCs MRCs Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Figure 2.28. Projection of ageing trends in Abitibi-Témiscamingue and Québec Percentage of persons aged 65 or more in the total population, 2000-26 Abitibi-Témiscamingue Québec 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% Source: MSSS (2005). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 170 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Ageing and depopulation are not offset by immigration. The influx of foreign workers in rural Québec remains very low. Immigration to Québec has traditionally concentrated in Montréal and, to a lesser extent, in Québec City. Since the 1990s, however, the provincial government has adopted specific initiatives to increase the number of foreign workers going to rural territories. The impact of such initiatives is still relatively small as immigration remains concentrated in urban areas. Furthermore, the integration of foreign workers in rural areas poses challenges for the cultural homogeneity of the local communities and the lack of the needed social infrastructure to facilitate the integration process. Rural jobs are vulnerable to external shocks Another factor impinging upon rural areas’ capacity to generate endogenous growth is the loss of comparative advantage in manufacturing activities, due to international competition. As discussed above, the industrialisation of the Québec countryside partially freed the province from dependence on a resource-based economy. Of course, a large share of manufacturing in Québec is tightly linked to primary activities (transformation of raw materials). It is also true, however, that the province exploited its proximity to the United States and relatively low wages in rural areas, to develop a productive framework specialised in traditional manufacturing such as textile and clothing. The internationalisation of markets has challenged this pattern of industrial development, causing a reduction in jobs and in the number of secondary firms located in rural areas. As Baldwin and Lileeva (2008) have found, Canadian manufactures (and particularly Québec, owing to its specialisation in mature activities) shifted away from the production of peripheral goods used as inputs in the production of their core product and instead concentrated on manufacturing the latter. Goods once produced locally are now substituted with imports from low-cost countries. This cannot be considered a negative impact in itself, since imports can provide the population higher well-being and firms can lower the total costs of their core product, which therefore should gain in competitiveness. Nevertheless, globalisation has destroyed many jobs in Québec, especially in rural areas. Manufacturing lost the largest number of jobs, and because of concentration/rationalisation some services (and especially public administration) also suffered from large reductions (Figure 2.29). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 171 Figure 2.29. Percentage change in the number of firms in rural Québec between 2001 and 2008 NAICS and ISIC denomination of sectors Québec Rural Quebec (93 areas) Accessible predominantly rural areas (31 areas) Remote predominantly rural regions (31 areas) Total Other service activities Health and social work activities Education Public sector Wholesale and retail Construction Manufacturing Primary activities -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. The impact of these job losses is more pronounced in rural than in urban areas owing to the smaller size and lesser diversity of rural labour markets. Often, urban economies are less susceptible to such shocks because of their larger and diversified local labour markets. Sectors confronted with the crisis adjust their production and lay off some workers. Some of these are eventually absorbed by other sectors in which production is expanding.31 In rural areas, due the small size of LLMs, a worker is considerably less likely to be absorbed by another industry, simply because firms whose production is growing may be located far from the affected rural area OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 172 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC (Freshwater, 2008). Such workers may therefore leave the rural area and relocate where there are job opportunities. This migration enhances the crisis of the LLMs because it reduces it further, making it more vulnerable to fluctuations. Gentrification and urban sprawl affect the rural milieu causing increasing cost of living, congestion and pollution While gentrification helps enhance community facilities and purchasing power in peri-metropolitan and intermediate rural areas, it has also altered the social framework and put pressure on the environment. Due to the inflows of former urban dwellers in rural areas, many communities have registered an increase in the quality and quantity of services provided locally. Local labour markets have become larger and have a larger range of skills. This creates the basis for a gradual process of regional development. Retirees relocating in rural areas spurred the development of a residential economy (proximity services such as local stores, personal services, and tourism services). Inflows of new residents raise housing prices and property taxes, the main source of revenues for municipalities in Québec. However, the concentration of Québec’s population on urban fringes and other “attractive” rural areas also has some shortcomings. First, newcomers cause housing prices to increase as well as property taxes. In some cases, the increase in taxes is so high that long-established owners are unable to pay more taxes and decide to sell their higher-valued property and leave. Likewise, the less affluent younger local population, or even young newcomers, may be unable to buy property. Gentrification is particularly intense on the urban fringe and in rural areas that are attractive for tourism (those located close to a watercourse or a lake). The risk is that rural areas will become locations for second homes or will change radically the kind of population living there. Second, urban sprawl and intense commuting are increasing congestion and pollution on the urban fringe. As highlighted by the OECD in a report assessing Montréal’s competitiveness (OECD, 2004), transport congestion represents an important challenge for Québec’s metropolitan areas (which include both rural areas and an urban fringe). In Québec, because of the dimensions of the province, space is perceived as abundant, and people tend to spread out over a considerable part of the territory. At the same time, Québec has relatively few places that are suitable for human settlement. For instance, as discussed above, a very small part of the landbase is suitable for agriculture. As a result, the (social) impact of population sprawl is negative because it causes congestion and the net loss of good agricultural land, but also because of the increasing energy needed to compensate for distance and OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 173 people’s way of life.32 Finally, although Québec is the smallest producer, on a per capita basis, of GHG in Canada (see Chapter 1) the provincial population is particularly exposed to the effects of climate change. More than a third of its inhabitants are estimated to live less than 500 metres from the banks of the St. Lawrence River, and more than 90% less than 5 kilometres away. Therefore, a change in the water level will endanger communities’ critical infrastructure (Lemmen et al., 2008).33 OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 174 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Notes 1. The term “rurality” is used in this report in the sense of the degree of being rural. Thus, the degree of rurality would be greater for individuals living in a place with lower population density or in a place further from an urban centre. 2. The northern part of Québec is also home to aboriginal communities that have a special status (First Nations) vis-à-vis the provincial government. 3. Écoumène is the French word indicating the continuously inhabited territory, organised in 1 100 municipalities, in the southern part of Québec, mostly south and along a smaller strip north and northwest of the St. Lawrence River basin, where the large majority of the provincial population resides. 4. The regional typology used in this report was elaborated jointly by the OECD and the Ministère des Affaires municipales des Régions et de l’Occupation du Territoire (MAMROT). 5. In Canada, an unorganised territory is a region of land, generally with less self-governmental power than other regions, which is controlled by a specific government. The term has several meanings depending on the exact usage and context. In particular, in Québec a given territory is “unorganised” if it does not have a local government and is managed by MRCs and the provincial government. 6. This report considers “remote” those rural regions classified as “resource regions and MRC” in the “Strategy of Economic Development of Resources Regions”, published by the Québec government in 2001. This strategy aimed at reducing regional disparities and focused on resource- based regions, which are located in sparsely populated areas and are not home to major urban centres. According this definition, all MRCs in the regions of Gaspésie–Îles-de-la-Madeleine, Bas-Saint-Laurent, Mauricie, Abitibi-Témiscamingue, Saguenay-Lac-Saint-Jean, Cote Nord, and Nord- du-Québec are remote. Conversely, the MRCs that are in the regions of Chaudière-Appalaches, Estrie, Montérégie, Outaouais, Laurentides, Lanaudière and Capitale-Nationale are central or accessible. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 175 7. Like Québec, Sweden is characterised by a large metropolitan system in the south and smaller urban centres in the rest of the country. However, Sweden has large cities in remote areas such as Umea, Lulea, Östersund or Piteau (OECD Territorial Review of Sweden, forthcoming). 8. The term Révolution tranquille or “quiet revolution” describes a multitude of social, political, economic and religious transformations which took place in Québec in the 1960s and 1970s. They accompanied a shift in the province of Québec's priorities from the defence of Catholicism, traditional rural life and economic conservatism to the affirmation of a modern, secular, French-speaking but pluralistic society. It was a period of intense change characterised by the rapid and effective secularisation of society, the creation of a welfare state (État-providence) and a re-alignment of Québec's politics into federalist and separatist factions. The provincial government took over the fields of health care and education, which had been in the hands of the Roman Catholic Church. It created Ministries of Education and Health, expanded the public service, and made massive investments in the public education system and provincial infrastructure. The government allowed unionisation of the civil service. It took measures to increase Québécois control over the province's economy and nationalised electricity production and distribution. 9. The lower income is partly due to differences in the make-up of the labour force in terms of skills and occupations in rural and urban areas. 10. According to Alasia (2003), this is also a common trend in the rest of Canada. 11. There is evidence that in OECD countries the rise in employment rates in rural regions has a direct impact on their overall economic performance and competitiveness (OECD, 2009). 12. “Residential economy covers all the activities generated on the local level by the consumption of the population living on the territory considered.” Cohesion Serving the Regions (press kit), Informal Meeting of Ministers for Spatial Planning and Cohesion Policy, 26 November 2008, Marseilles, France, www.eu2008.fr. The term is usually used as the opposite of “productive economy”. 13. Québec is still a modest player for beef on the Canadian scale, with less than 5% of the national total. However, the Québec veal sector is the unchallenged leader in Canada, with over 80% of overall production. Québec also produces more than 10% of commercial beef from cull cattle. The bovine spongiform encephalopathy (BSE) crisis slowed the growth rate of this production. However, thanks to its abundant pasture and forage, Québec has strong development potential. Beef production ranks third in Québec livestock production, after dairy and hog production. In OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 176 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Québec, there are currently more than 14 000 farm operations partially or totally dedicated to cattle production. At present throughout Québec, cattle production generates more than 11 000 direct and indirect jobs. Over 910 000 cattle are marketed each year, for a farm-gate value of more than CAD 618 million (2007). 14. “Crop Heat Units (CHU) are temperature-based units that are related to the rate of development of corn and soybeans. CHU are used to help farmers select the hybrids and varieties that are best suited to their climatic region.” Government of Canada (2009), Natural Resources Canada, http://cfs.nrcan.gc.ca/subsite/glfc-climate/maritimecropheatunits. 15. Average farm average size was considerably smaller in Québec than the national average of 676 acres. Saskatchewan, which has mainly a field- crop-based agriculture, has the largest average size, at 1 283 acres. 16. Statistics Canada defines census farm as an agricultural operation that produces at least one of the following products intended for sale: crops (hay, field crops, tree fruits or nuts, berries or grapes, vegetables, seed); livestock (cattle, pigs, sheep, horses, game animals, other livestock); poultry (hens, chickens, turkeys, chicks, game birds, other poultry); animal products (milk or cream, eggs, wool, furs, meat); or other agricultural or agro-forest products (Christmas trees, greenhouse or nursery products, mushrooms, sod, honey, maple syrup products) (www.statcan.gc.ca/pub/95f0301x/notes/4064749-eng.htm). 17. The total income of a census family is the sum of all incomes received during the calendar year preceding the census by all members of that family aged 15 years of age and over. Income includes wages and salaries, net farm income, net non-farm self-employment income, government transfer payments, investment income, retirement pensions and other money income. 18. Québec’s boreal forest covers an area of roughly 551 400 km2. Less than 36% of this area has been set aside for forest production. 19. Both forestry and wood processing and including urban centres. 20. Québec is Canada’s second largest producer of gold and iron, second largest producer of metallic substances, and second largest producer of industrial minerals and construction materials, as well as the world's second largest producer of niobium. 21. The claim is the only valid exploration right in Québec. The claim gives the holder an exclusive right to search for mineral substances in the public domain except sand, gravel, clay and other loose deposits, on the land subjected to the claim. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 177 22. In certain rural areas the land available for manufacturing activities is extremely constrained owing to the provincial law that protects agricultural land, even when it lies idle. 23. Data referring to the 17 administrative regions within Québec show that the increase in the number of SMEs (and especially micro-firms of 1 to 4 employees) is higher in accessible rural and urban regions. Between 2002 and 2006, in a period of economic growth for the province, the highest increase in number of firms was registered in the regions of Lanaudiere, Laval, Laurentides and Monteregie, which surround the metro-region of Montréal. Outside of the direct influence of Montréal, the only regions that had positive values were Centre-du-Québec and Nord- du-Québec (Figure 2.21). 24. These results confirm those of Boter and Lundström (2005) who show a regional effect as well as the influence of enterprise size on the extent of firms’ use of public services. 25. This research on the new rural economy was co-ordinated by University of Concordia.The project assessed the entire country (32 rural communities) in collaboration with the Canadian Rural Revitalization Foundation (CRRF), http://nre.concordia.ca/nre_reports.htm. 26. The provincial and federal governments have been encouraging voluntary organisations to develop partnerships with government departments, the private sector, service providers and other voluntary organisations in order to qualify for funding programmes (Borgen, 2000; Bradford, 2003; Osborne and Flynn, 1997; O’Toole and Burdess, 2004; Zahner, 2005). Collaboration (see Schaeffer and Loveridge, 2000, for a classification of co-operative/collaborative efforts) with local government or other local service providers was encouraged to demonstrate that voluntary organisations propose activities with wide appeal and legitimacy in the community (Radin and Romzek, 1996; Wall and Gordon, 1999). Such partnerships can be an important asset for voluntary organisations that seek to develop and maintain services. 27. There are both public and private subsidised CEGEPs. The public CEGEPs have little or no tuition fee. The CEGEP system was started in 1967 by the Québec government. 28. Alasia (2005) summarises the “Catch-22” situation of rural communities. Both individuals and communities would appear to face a lower rate of return from investing in higher education than urban individuals and communities. Individuals in rural communities have less incentive to pursue higher education because it means that they will have to leave their home community. Rural communities have less incentive to offer high- level training and education to their residents as the individual will leave the community. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 178 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC 29. In 1988, the Québec government passed new legislation governing the province's banking co-operatives. The Savings and Credit Union Act of that year enabled Desjardins to restructure its operations, grouping together its growing number of subsidiaries under holding companies that provide central direction to each specific area of operation. 30. It is important to note however that ageing can be looked at in two ways. An increase in the ratio of older persons to persons 15 to 64 years of age is a relative “dependency” measure, which might be interpreted as “demand for transport to a clinic per person able to provide transport”. Alternatively, ageing might be considered in terms of the rise in the number of older persons and thus increasing demand for services by older persons. Many rural areas in Canada may be ageing in the first way but not in the second. There is no increase in the number of older persons because when this cohort was younger, a large share migrated to the city (Dandy and Bollman, 2008). 31. At the regional level, the probability of an unemployed person being absorbed by another local sector depends on a series of factors. For instance, if a worker is geographically close to a firm that is experiencing a surge in demand for its output, he/she is more likely to be hired. Also, a worker who has skills that are compatible with the sector that is experiencing growth is more likely to be hired (and may also move up within a given supply chain) (Marino and Trapasso, 2009). 32. Québec’s economy is associated with high energy consumption because of its industrial base, climate, size and way of life. In 2002, the industrial sector accounted for 39% of energy demand, transport for nearly 25% and the commercial, institutional and residential sectors for 37% (Lemmen et al., 2008). 33. In the north, global warming severely curtails winter transport. All northern communities depend upon ice roads to transport supplies to their community for the whole year. A shorter period of safe ice roads dramatically increases transport costs. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 179 Bibliography Beauchemin, J. (2004), “What Does it Mean to be a Québecer? Between Self-Preservation and Openness to the Other”, in Alain-G. Gagnon (ed.), Québec: State and Society (third edition), Broadview Press, Peterborough, pp. 17-32. Borgen, W.A. (2000), “Developing Partnerships to Meet Client’s Needs within Changing government Organizations: A Consultative Process”, joint special edition of the Career Development Quarterly, No. 48, pp. 357-369 and the Journal of Employment Counselling, No. 37, pp. 128-14. Boter, H. and A. Lundstrom (2005), “SME Perspectives on Business Support Services”, Journal of Small Business and Enterprise Development, Vol. 12, No, 2, pp. 244-258. Bouchard, J. (1978), Les 36 cordes sensibles des Québécois, Éditions Héritage. Bradford, N. (2003), “Public-Private Partnership? Shifting Paradigms of Economic Governance in Ontario”, Canadian Journal of Political Science, Vol. 36, No. 5, pp. 1005-1033. Conference Board (Le Conference Board du Canada) (2009), Les communautés rurales: l'autre moteur économique du Québec, prepared for the Groupe de travail sur la complémentarité rurale urbaine, June. Dandy, K. and R.D. Bollman (2008), “Seniors in Rural Canada”, Rural and Small Town Canada Analysis Bulletin, Vol. 7, No. 8, Statistics Canada, Catalogue no. 21-006-XIE, Ottawa. Du Plessis, V., R. Beshiri, R.D. Bollman and H. Clemenson (2001), “Definitions of Rural”, Rural and Small Town Canada Analysis Bulletin, Vol. 3, No. 3, Statistics Canada, Catalogue. No. 21-006-XIE, Ottawa. Freshwater, D. (2008), “Active Labour Market Policy: Implications for Local Labour Markets and Regional Development”, working paper, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 180 – 2. ECONOMIC PROFILE OF RURAL QUÉBEC Graduate Studies for Agricultural Economics at the University of Kentucky. GQ (2005), La population du Québec par territoire des centres locaux de services communautaires, par territoire des réseaux locaux de services et par région sociosanitaire de 1981 à 2026, Ministère de la Santé et des Services Sociaux, Québec. Halseth, G. and L. Ryser (2007), “The Deployment of Partnerships by the Voluntary Sector to Address Service Needs in Rural and Small Town Canada”, Voluntas: International Journal of Voluntary and Nonprofit Organizations, Vol. 18, No. 3, pp. 241-265. Lemmen, D.S., F.J. Warren, J.E. Lacroix and E. Bush (eds.) (2008), From Impacts to Adaptation: Canada in a Changing Climate 2007, Government of Canada, Ottawa. Maclure, J. (2004), “Narratives and Counter-Narratives of Identity in Québec”, in Alain-G. Gagnon (ed.), Québec: State and Society (third edition), Broadview Press, Petersborough, pp. 33-50. Marino, D. and R. Trapasso (2009), “The New Approach to Regional Economics Dynamics: Path Dependence and Spatial Self-Reinforcing Mechanisms”, in U. Fratesi and L. Senn, Growth and Innovation of Competitive Regions, Springer Verlag Berlin Heidelberg, pp. 329-367. OECD (2004), OECD Territorial Reviews: Montreal, Canada, OECD Publishing, Paris, DOI::10.1787/9789264105980-en http://dx.doi.org/10.1787/9789264105980-en. OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Ontario Association of CFDCs (2009), Annual Review, www.oacfdc.com/Downloads/General/Annual_Reveiw_2008_Final_Eng. pdf. Osborne, S.P. and N. Flynn (1997), “Managing the Innovative Capacity of Voluntary and Non-Profit Organizations in the Provision of Public Services”, Public Money & Management, Vol. 17, No.4, pp. 1-39. O’Toole, K. and N. Burdess (2004), “New Community Governance in Small Rural Towns: The Australian Experience”, Journal of Rural Studies, Vol. 20, No. 4, pp. 433-443. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 2. ECONOMIC PROFILE OF RURAL QUÉBEC – 181 Radin, B.A. and B.S. Romzek, (1996), “Accountability Expectations in An Intergovernmental Arena: The National Rural Development Partnership”, The Journal of Federalism, Vol. 26, No. 2, pp. 59-81. Ribichesi, C. and R. Shearmur (2008), Les communautés mono-industrielles au Québec: portrait et analyse de vulnérabilité, Institut national de la recherche scientifique (INRS), Montréal. Salée, D. (1995), « Espace public, identité et nation au Québec : mythes et méprises du discours souverainiste », Cahiers de recherche sociologique, Vol. 25, pp. 125-151. Seymour, M. (2002), « Une nation indécisive qui ne nie pas ses origines », in Michel Venne (ed.), Penser la nation québécoise, Éditions Québec Amérique, Montréal, pp. 245-258. Sriram, M.S. (1999), “Financial Co-operatives for the New Millennium: A Chronographic Study of the Indian Financial Co-operatives and the Desjardins Movement, Quebec”, working paper, Indian Institute of Management. St-Pierre, J. and C. Mathieu (2005), “The Competitiveness of SMEs: Obstacles and the Need for Outside Help”, in I. D. Salavrakos, From Small Firms to Multinationals: Industrial, Entrepreneurial, Managerial, Financial, Fiscal, Transaction Cost and Consumer Perspectives in the Era of Globalisation, ATINER, Athens, pp. 37-52. Statistics Canada (2007), 2006 Census Dictionary, Statistics Canada, 92-566-XWE, Ottawa. Wall, E. and T. Gordon, (1999), “Voluntary Organizations in Rural Canada: An Education Strategy”, in B. Reimer (ed.), Voluntary Organizations in Rural Canada: Final Report, Canadian Rural Restructuring Foundation, Concordia University, Montréal, pp. 3.1–3.30. Zahner, S.J., (2005), “Local Public Health System Partnerships”, Public Health Reports, Vol. 120, No. 1, pp. 76-83. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 183 Chapter 3 Assessment of rural policy in Québec This chapter assesses provincial policies targeting rural development and features good practices introduced to cope with the rural development challenges in Québec. The first section presents the evolution of rural policy in Québec. The next section assesses the policies and governance arrangements put in place under the province's Politique nationale de la ruralité (national policy on rurality). The final section broadens the policy assessment to include sectoral policies implemented by the provincial government that affect rural development. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 184 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Key points • Québec’s place-based rural policy applies to a large part of the territory and is focused on social development and land occupancy. It is part of a societal vision of “rurality” shared by different levels of government and the civil society. Social development and community capacity building are seen as preconditions for economic development. Dynamic occupancy of rural land is a societal choice to maintain the current settlement structure, even if efficient use of public resources for service provision is difficult in barely sustainable communities. • Rural policy is led by a non-sectoral ministry (MAMROT) which is independent from agriculture and economic development. It co-operates with provincial partner associations to ensure implementation and monitoring. The supralocal administrative level (regional county municipality, MRC) is the core unit of policy implementation in order to shift decision-making power downward and create supralocal functional territories. • Development is stimulated through three key elements: i) place- based partnership agreements (“rural pacts”) between the provincial government and MRCs that support local community capacity building; ii) rural development agents who are among the central actors for promoting the emergence of rural initiatives and integrating policy with other measures; and iii) innovation programmes such as the rural laboratories whose value is to think “out of the box”. The rather limited rural policy budget proves that decentralised territorial policies can be effective with small budgets if they are compatible with local aspirations. The provincial budget seems increasingly to consider the spatial dimension of policies. MAMROT has a strong position in monitoring, but external evaluation could be enhanced as a way to demonstrate the effectiveness of the approach. • Multi-level governance is strong, but requires further integration. There is broad horizontal co-ordination by the central level, but integrating social and economic policy and adapting sectoral programmes to rural conditions remains challenging at the local level. The province’s vertical co-ordination between administrative levels is strong, but the federal level acts in parallel to many provincial programmes. The strengthened role of MRCs facilitates local-level horizontal co-ordination. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 185 • Sectoral policies affecting rural Québec pose specific challenges. Land policy aims to avoid urban sprawl, but it risks constraining economic activities in more remote parts of the rural territory. While there have been some changes at the federal level, provincial agricultural support is still partly linked to commodity output and distorts markets. Local economic development measures are comprehensive but the institutional separation from MAMROT weakens policy outcomes. Natural resource management is only gradually enhancing regional and local actors' involvement. • Rural policies in a broader sense address challenges related to health, education, employment and migration. While health and education encounter cost and service delivery problems, mostly due to demographic changes, low population density and the size of Québec's territory, employment policy tries to implement a territorial approach that responds to specific labour market needs. The demographic challenges are also at the core of efforts to attract youth and immigrants to rural areas. Introduction Rural policy in Québec is strongly determined by a specific provincial government policy which targets the place-based vitalisation of rural areas and is founded on the principles of land occupancy, territorial equity and community capacity building: The Politique nationale de la ruralité (“PNR” or “rural policy”, hereafter) is a multisectoral policy which takes account of the diversity of rural communities. At the outset the PNR reflects the assumption among OECD countries that social cohesion and community capacity building are a precondition for strengthening socioeconomic development in rural areas. The central PNR policy document expresses the political consensus in Québec that rural communities are an essential element of the province’s dynamism (Government of Canada, 2006a). It affirms the reasoning supported by the experience of many OECD countries that rural regions, like intermediate or urban regions, provide valuable opportunities for overall growth and development. Responsibility for rural development is shared through a contract between the government of Québec (“the government”, hereafter) and elected municipal representatives who manage the regional county municipalities (MRCs). Other local, regional and provincial organisations and institutions are involved in this arrangement, its implementation and monitoring. Whereas the provincial government decides on the general policy directions, elected representatives at the supralocal and local level are OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 186 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC the principal actors for designing and implementing rural development measures. 3.1 Evolution of rural policy The evolution of rural policy in Québec demonstrates a societal consensus on “rurality” The evolution of Québec's rural policy shows an important degree of consensus among politicians, government officials at all levels, academia and civil society. Consultation between the government and non-profit, private and local public actors has long been a part of the political process, with a view to a broad societal consensus. However, sector-based support for agriculture and natural resource industries has dominated rural development for a long time. As in any country or region, the context in which Québec carries out its rural policy is decisive, as it constrains policy choices. With the emergence of the welfare state in the 1960s, during the period known as the Révolution tranquille, politics in Québec started to take into account the development of public educational, health and social services, while public attention to rural areas declined. As society turned towards modernisation, it turned its back on many of its traditional pillars, among them rural society. Reforms were mostly implemented in a top-down, sectoral policy approach driven by provincial priorities and focused on support for agriculture, fishery, forestry and mining, along with assistance to different types of manufacturing. However, with the decline of family-based farming in the second half of the 20th century, it became clear that sector-wide economic measures alone could not address major public concerns about the well-being and sustainability of rural areas. In the 1980s regional development policies started including people- based policies through consultation mechanisms between the government and civil society. This was facilitated by the existence of a regional and a local administrative level (Box 3.1): 10 administrative regions were created in the 1960s and split into 17 units in the 1980s. These regions nominally sat over 1 300 (today about 1 100)1 local municipalities which were at the centre of these regional development efforts. Nonetheless, governance on an intermediate level remained very weak; the province and municipalities were the only important levels. To better co-ordinate territorial development, strengthen cohesion among municipalities and capture efficiencies through scale economies, a supralocal level was introduced in the 1980s with the Loi sur l'aménagement OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 187 et l'urbanisme. Over time, the MRCs (Box 3.1) changed citizens' idea of their local territory and assumed responsibility for spatial planning, territorial development and public services. For the first time, local residents and stakeholders were involved in issues that went beyond local matters. At the same time, the government published a policy document for regional development, “The choice of regions”. Its first aim was to set a bottom-up development approach (Government of Québec, 1983). Gradually, MRCs have assumed responsibility for local economic development and employment support. To this end, the government created local development centres (CLDs) as a key local economic development structure. Since 2004 they legally depend on MRCs and are co-financed by the state (with a share of 71% in 2007-08; Government of Québec, 2009a) and municipalities (29%). In the 1990s a rural focus was added to this regional development approach. As the standard local economic development approach was unable to revitalise rural communities sustainably, civil society pushed public debate on the future of rural areas beyond the usual support for agriculture, forestry and fisheries. In contrast to many OECD countries, this process was supported by leading figures of a dominant professional farmers' trade union, the Union des producteurs agricoles (UPA).2 Together with non- agricultural organisations, co-operatives and credit unions active in rural areas it played a critical role in initiating this development through events such as the “States general of the rural world” in 1991. Again in contrast to other OECD jurisdictions, this organisation had the confidence and the strength to ensure that increases in rural development spending would not come at the expense of a reduction in support to farmers. Leading civil organisations, in particular the rural advisory body Solidarité rurale du Québec (SRQ), played a significant role in the elaboration of a specific rural policy. Several documents published by SRQ together with propositions emerging from the provincial government's work in the 1990s and 2000s set the basis for Québec's rural policy. They proved to be decisive in promoting a multisectoral approach towards implementing place-based policies instead of uniform province-wide interventions. Thus, rural policy was the outcome of an evolution of rural development initiatives that were led not only by the public administration but also by civil society. Contrary to institutional structures created ex post to favour horizontal co-ordination with civil organisations, Québec’s situation has benefited from civil society's sentiment of ownership of rural policy from the beginning. Specific rural policy measures found their way onto the government's political agenda. For the first time, the government budget for 1997-98 included concrete measures for a rural policy targeting local capacity building. Based on this experience and the above-mentioned territorial OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 188 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC governance framework, Québec passed a specific rural policy (the first PNR) in late 2001. It focused on the responsibility of local representatives for development planning and on building social capital and cohesion in rural communities as a force to partner with the province on different territorial levels of government. A cross-party consensus to support rural development through a specific policy is demonstrated by the fact that the first PNR (2002-07) and the second (2007-14) were decided by different political parties. A single ministry was responsible for rural policy and regional economic development policy during the first PNR, but the institutional framework has changed. Jurisdiction over regional economic development was reorganised in 2003, with control over CLDs being assigned to the ministry in charge of economic development, while rural policy under the PNR, together with regional and local development, was placed under the responsibility of the ministry of municipal affairs and of regions (see 3.2.2). Although the CLD mandate covers more than rural areas, separating the CLDs from rural and regional policy involves the risk of weakening the subsequent PNR policy approach. 3.2 Rural policy measures and governance Québec has opted for a territorial approach to rural development that is largely in line with the OECD's New Rural Paradigm (OECD, 2006) and helps rural areas address the perception of inevitable decline. The policy integrates a number of elements that can offer lessons of good practice for other governments. This section analyses the main policy and governance issues characterising Québec's PNR, in particular the PNR for 2007-14 (Government of Québec, 2006a) in the context of the shift leading to a New Rural Paradigm. This paradigm shift has been observed in the rural policy of many OECD countries, which now reflects the idea that rural areas can make positive contributions to national economies and to visions of society. There is now a common understanding that rural policy can no longer be reduced to sector-based agricultural policy given the dramatic reduction in farm employment, the diversity of rural regions, and significant opportunities for growth and development in emerging non-farm economic sectors and niche markets. To embrace the new rural policy challenges faced by many countries, innovative governance mechanisms have been developed to enhance co-ordination across sectors and levels of government, as well as between public, private and non-profit stakeholders. Moreover, new policy instruments with a significant territorial and place-based focus are being created to identify and capitalise on rural areas' competitiveness, local assets OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 189 Box 3.1. Territorial administrative divisions of Québec Below the provincial level of government, Québec has three administrative levels: the regional level (17 administrative regions), the supralocal level (86 MRCs and 14 equivalent bodies), and the local level (over 1 100 municipalities): Regional level: The provincial territory is divided into 17 administrative regions which provide a framework for provincial government activities. Provincial ministries and government bodies have regional directorates which meet in a consultative body called the Regional Administrative Conference (CAR). Moreover, Conferences of Elected Officials (CRÉ) act in each region as the government's privileged consultative body on regional development matters. Most members of CRÉ boards are elected municipal representatives. Administrative regions vary in their geographic features, natural resources and economically useable territory. The smallest regions (Laval and Montréal) have a surface area of less than 500 km2, but most have between 7 000 km2 and 35 000 km2. The four northern regions of Abitibi-Témiscamingue, Saguenay – Lac-Saint-Jean, Côte-Nord, and Nord-du-Québec stand out with a population density of less than three inhabitants per km2 and an area of between 57 000 km2 (Abitibi-Témiscamingue) and 718 000 km2 (Nord-du-Québec, comparable to Chile and larger than France). Supralocal level: In the 1980s, Québec established a supralocal administrative level which groups together municipalities of different sizes in a “community of interest”. These MRCs have responsibilities for spatial planning and territorial development, including the administration of “unorganised territories” (territories outside of municipalities). MRCs are in charge of tasks such as: i) managing land use by creating a “land use and development scheme”, which is revised every seven years; ii) planning waste management, fire protection and civil defence; iii) watching over the functioning of watercourses; iv) preparing evaluations for municipalities; and v) selling buildings for property tax default. MRCs are also responsible for local economic development, since they are in charge of the management of CLDs. The population of MRCs differs greatly between fewer than 10 000 and more than 100 000 and so does the surface area. Out of the 100 units at this level, only 86 are MRCs, 14 are similar units with the same competences. The rural territory of Québec as defined for this report comprises 91 MRCs or similar units. Local level: The lowest administrative division is the municipal level. In 2006, Québec had around 1 140 cities and local municipalities. Out of these, more than 1 100 municipalities and non-organised territories as well as 34 Indian reservations compose the rural territory that is integrated into the 91 MRCs or equivalent bodies mentioned above. Québec has significantly more municipalities than other Canadian provinces which might be due to local residents' strong sense of belonging to their territories. Previous governments have reduced the number of municipalities by mergers but, as a result of local tensions, some merged municipalities decided to reconstitute themselves into their former territory. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 190 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC and knowledge, as well as to tap diverse potentials for development. The OECD has described this evolution as a paradigm shift in rural development policies generating a New Rural Paradigm whose defining characteristics are a focus on places rather than sectors and an emphasis on investments instead of national transfers and subsidies (Table 3.1). Table 3.1. The New Rural Paradigm Old approach New approach Objectives Equalisation or entitlement, farm Competitiveness of rural areas, income, farm competitiveness exploitation of local assets and unused resources Key target sector Agriculture (sector-based) Various sectors of rural economies (e.g. rural tourism, manufacturing, ICT industry, etc.) Main tools Subsidies Investments Key actors National governments, farmers All levels of government (supra- national, national, regional and local), various local stakeholders (public, private, non-governmental organisations (NGOs) Source: OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris. 3.2.1 Principles, objectives, and scope The PNR is a territorial approach to rural development based on the principles of territorial equity, community capacity building and dynamic land occupancy. With its comprehensive territorial approach, the policy reflects an understanding that decline is not inevitable, that opportunities for growth exist in all territories, and that their development should be promoted by central (or federal) and regional (or provincial) governments (OECD, 2009e). The PNR principles reflected in four strategic policy objectives address the challenge of mobilising and strengthening rural communities. Economic development measures are not a main focus of the policy. Social capital and local community capacity are seen as preconditions for stronger development… As its first principle, the PNR focuses on territorial equity associated with local community capacity as a precondition for socioeconomic development in rural areas. Québec's policy differs from that of many OECD countries which first promote economic development as a means to OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 191 enhance social capital. Because the basic unit for the PNR is the MRC, it was important to find a way to encourage people to think of the MRC, and not just their municipality, as their community. The two strategic policy objectives related to this principle are: to unlock the potential of all human, cultural and physical resources present in rural areas; and to maintain a balance between quality of life, social environment, natural environment and economic activities. The latter illustrates the focus on sustainability and the harmonisation of economic, ecological and social concerns. Even if this remains theoretical, as rural policy does not yet offer a quantifiable measure for an optimal equilibrium between the factors mentioned, it promotes an innovative perception of rural development. Local stakeholders commit to collaborating through capacity building and the participation of citizens and groups in collective projects to create a sense of community.3 The government tries to strengthen a sense of belonging and connections among people and groups as a basis for socioeconomic development efforts. Indeed, a sense of community and social cohesion can create a distinctive basis for a rural community's attractiveness and capacity to innovate, whereas economic success is often based on unique characteristics that cannot be easily transmitted to other areas, such as the availability of natural resources or proximity to an urban core. The benefits of a focus on territorial equity are difficult to measure. The government has developed a methodology for measuring local development through an index composed of different socioeconomic variables (Box 3.2). The PNR is also committed to producing a vitality index to be used by rural communities, which, once established, should capture the dynamics and mobilisation of a community. … and dynamic land occupancy is a societal choice to maintain the settlement structure. The societal choice of land occupancy by dynamic rural communities is well reflected in the PNR. In light of population ageing, out-migration of young people, and significant demographic change (see Chapter 2), the different measures aim at two strategic policy objectives: to revitalise and integrate rural populations; and to ensure the continuity of rural communities. To achieve these objectives, which are part of Québec’s larger societal project, key policy elements are new social, economic and cultural activities, a new way of using resources and the integration of new rural residents through in-migration. There is a consensus along the political spectrum and among civil institutions that the province should maintain the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 192 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Box 3.2. A development index to determine devitalised rural communities In the framework of Québec's rural policy, devitalised rural municipalities receive additional financial support from the government. To determine “devitalisation”, the government is establishing a development index composed of socioeconomic variables such as population change in the municipality, the unemployment rate, the share of income from transfer payments, average household income, and the share of residents over 15 years with less than nine years of schooling. Municipalities are defined as “devitalised” if their development index is below 0 and as “very devitalised” if it is below -5. Accordingly, an action plan targeting very devitalised municipalities was implemented in 2008 which focuses on a vision for the future and includes sectoral measures for economic diversification as well as infrastructure and basic public service investments. However, since the index is calculated at the municipal level and the population base is small, the calculation is rather unstable with results varying greatly from one year of reference to another. Source: OECD (2009), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. current settlement structure in its vast and sparsely populated rural territories, even if delivery of many public services is increasingly costly in many remote communities which are difficult to sustain. This objective goes beyond nationalistic rhetoric and has become a distinct and stable policy trait which favours the successful implementation of the PNR. The policy does not provide explicit arguments for the government's strategic focus on land occupancy. It is difficult to find means of properly evaluating the benefits of a strategy that views territorial occupation as the goal of policy intervention. The application of cost-benefit analysis is challenging as it seems hardly possible to properly quantify the benefits of occupying land. Policies based on unquantifiable objectives have a higher risk of generating rent-seeking since it is easy for beneficiaries to lobby for further intervention by arguing that the objective has not yet been achieved. Apart from quantifiable justifications, the principle may be linked to the political and societal objective of strategically ensuring the conservation of the province's landscape or of facilitating the access to resources which are often located in remote rural areas (Jetté-Nantal, 2008). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 193 Rural policy is a territorial approach that applies to a large part of rural Québec except the north Instead of selecting specific territories, the PNR applies to all of rural Québec's territory. The policy's area of application is determined by the government's definition of “rural territory” and in 2005 included 1 011 rural municipalities, 34 aboriginal communities and so-called “non-organised territories” outside of the continuously inhabited écoumène (see Chapter 2). An MRC's rural territory is defined in each rural pact (see 3.2.3) and discussed with its elected representatives. The total area comprises around 1.9 million residents in predominantly rural, intermediate and peri- urban territories. By contrast, like the 31 urban agglomerations, most areas of the vast northern region of Nord-du-Québec are not concerned by the rural policy, following the signing of territorial treaties in the 1970s between the government and three aboriginal groups (Box 3.3). Box 3.3. Policies for the north of Québec Apart from six small localities of the region Nord-du-Québec, Québec's vast and predominantly rural north (regions north of the 49th parallel) is not affected by the government's rural policy. This is mainly because the government and three aboriginal groups (First Nations) signed territorial treaties during the 1970s which determine each party's responsibilities and have since signed complementary development agreements. Beyond rural policy, governments have outlined an overall development policy for these areas. In doing so, they have to consider in a sensitive way the stipulated competences of the local jurisdictions involved. Whereas plans outlined by the government to launch a development policy for Nord-du-Québec were finally not completed, the Ministry of Natural Resources and Wildlife (MRNF) is currently in charge of elaborating a new inter-ministerial development policy for the north (Plan Nord). It mainly targets the social development of aboriginal and other local populations, resource-based economic development (hydroelectricity, forestry and mining), and sustainable development. Moreover, the plan schedules collaboration between different government bodies on wider economic sectors such as tourism, including rural tourism and tourism linked to aboriginal people. The policy will apply to the northern territories of the province, including Nord-du-Québec and the northern parts of Saguenay – Lac-Saint-Jean and Côte-Nord. Source: OECD, based on information provided by the Government of Québec. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 194 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Québec's rural policy is based on the potential of people and places and tries to integrate the historically deep-rooted sectoral and more recently introduced territorial approaches to development. Its scope goes beyond a “niche policy” solution designed for limited rural areas such as the European Commission's LEADER programme, yet it does not constitute a “grand plan” solution which aims to integrate all policies for rural areas into a comprehensive strategy such as Mexico's “Special Concerted Programme” (on the scope of rural policy, see Box 3.4). Box 3.4. The scope of rural policy As identified in the New Rural Paradigm (OECD, 2006), two opposing policy models aim to define an appropriate scope of rural policy: The “grand plan” solution at one extreme aims at integrating all policies and programmes directed to rural areas into a broad and co-ordinated strategy. This approach has a strong effect, and involves considerable amounts of money and a large number of people. However, it also involves considerable risks of failure and inaction, as it is difficult to have a broad policy framework that includes both the policy’s nature (territorial policy versus general sectoral policy) and the territory’s nature (rural versus non-rural). Moreover, institutional leadership and co-ordination raise challenges as a large number of institutions and policies are supposed to be integrated. The “niche policy” solution at the other extreme is characterised by policies that are designed for a limited number of regions and generally have very limited budgets. Besides the European Commission’s LEADER, many OECD countries have opted for this model. Niche policies are often separate from other regional policies such as urban development and sectoral policies. This and limited funding risks producing policy results with modest social and economic impact. To achieve a balanced compromise between those two suboptimal policy models, OECD countries have discussed a rural policy framed by a comprehensive and well-funded regional policy which provides an umbrella for co-ordinated urban and rural development policies while addressing relevant rural-urban linkages such as public service delivery, infrastructure, market access and supply chains, commuting, and flows of goods and services. This would be accompanied by mechanisms to assess and review sectoral policies for their impact on different types of regions. Source: OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris; OECD (2008), OECD Rural Policy Reviews: Finland, OECD Publishing, Paris. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 195 3.2.2 Institutional framework The PNR's institutional framework represents a balance between central rule setting and decentralised implementation. It targets the mobilisation of local communities and the strengthening of the supralocal and local levels of government. The ministry in charge of rural policy is separate from agriculture and economic development… Québec's rural policy is institutionally separate from the ministries of agriculture and economic development, an unusual situation among OECD countries. The notion of “rural” is country-specific and often strongly influenced by pre-existing agricultural and economic development policy frameworks. In Québec, these policy frameworks are dealt with separately in sectoral ministries. Whereas the separation from agriculture has existed since the beginning of a proper rural policy, making it easier to embrace the inter-sectoral dimension of rural development, the split from regional economic development was only decided recently (see 3.1). The policy is led by the Ministry of Municipal Affairs, Regions, and Land Occupancy (MAMROT). Like the first PNR, the second was prepared by an inter-ministerial committee involving different government bodies, with consultation of local actors through field work done by SRQ and the participation of rural development agents recruited by local and supralocal administrations (see 3.2.3). The inter-ministerial rural committee continues its work and brings together 18 ministries led by MAMROT’s internal directorate for rural development. Beside MAMROT, rural policy also relies on local stakeholders and several partner associations for policy conceptualisation, design, implementation, monitoring and evaluation. The policy includes a network of publicly funded partner associations which declare, at the beginning of the second PNR policy document (Government of Québec, 2006a), their commitment to promote the policy and overall rural sustainability. Grouped together in a committee of rural partners (Comité des partenaires de la ruralité), which is headed by MAMROT, these associations include: the advisory body SRQ, the Québec federation of municipalities (FQM), the Union of Québec's Municipalities (UMQ), and the Association of Québec's Local Development Centres (ACLDQ) (Box 3.5). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 196 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Box 3.5. The four partner associations for rural policy The government has concluded a formal understanding with four provincial partner associations to ensure implementation and monitoring of its rural policy. As members of the committee of rural partners, they have obligations to promote policy measures. This committee can make recommendations to MAMROT for adapting policy measures to the specificities of rural areas: Solidarité Rurale du Québec (SRQ) has agreed to a partnership with MAMROT at least until 2014 which includes CAD 5.6 million of funding under the second PNR (2007-14). In return, it commits to providing research and technical advice to the government and rural areas, to facilitating the correct implementation of PNR measures and to offering training to rural development agents. By observing government actions and interacting with the government as an advocate for rural interests, SRQ plays a role similar to the Commission for Rural Communities (CRC) in England, United Kingdom, which is the key supervisory body for verifying “rural proofing”. The Québec Federation of Municipalities (FQM) and the Union of Québec's Municipalities (UMQ) are the two main organisations representing elected municipal officials. FQM represents 950 small municipalities with fewer than 8 000 inhabitants, and brings together 7 000 elected representatives and 87 MRCs. FQM and UMQ offer training to local elected representatives on local development, community participation and the implementation of rural pacts. They also call MAMROT’s attention to municipal officials' concerns, for instance regarding land occupancy, urban-rural linkages or Internet service delivery. The Association of Québec's Local Development Centres (ACLDQ) encompasses all CLDs, their elected municipal officials and other collective representatives. The association deals mainly with two governmental institutions: the Ministry of Economic Development (MDEIE) which is legally in charge of CLDs, and MAMROT. ACLDQ encourages CLDs to contribute their resources to the PNR, to support the work of rural development agents and to promote access to CLD development funds for enterprises located in rural areas. Source: OECD, based on interviews with the partner associations. … and aims to empower MRCs as the supralocal level of government. The 91 regional county municipalities, or equivalent bodies for the rural territory, are the core unit of rural policy intervention and local decision making. Whereas many governments have difficulties devolving power to supralocal or regional levels, the concentration of powers at the MRC level illustrates Québec’s efforts to create functional regions above the relatively OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 197 strong municipal level. [note reorganisation] This shift of decision-making power is essential for effective place-based rural policy, particularly given the longstanding deficiencies in local governance which have been the Achilles heel of the country's rural development efforts (OECD, 2002). For regional and local development policy to be effective, Canada has to overcome continuing federal-provincial jurisdictional challenges, and this is best facilitated by strong local governance. The federal government is not involved in the PNR's institutional framework, policy design, implementation and budget. As specified in Canada's Constitution, local governments have an exclusive relationship with provincial governments, and provinces are more strongly involved than the federal level in local territorial organisation, development and service delivery (Box 3.6). Among the provinces Québec has been the most protective of its rights under the division of powers in the Constitution and places the greatest limits on federal activity in the province. Box 3.6. Jurisdiction over local governments in the Canadian Constitution In Canada, the federal government is not allowed to make laws relating to municipal institutions and to deal directly with local governments. As the Constitution of Canada gives provinces sole responsibility, the federal level does not play any role in defining the size of municipalities, their number or political competences. Accordingly, Québec’s MRCs and their elected municipal officials have an exclusive relationship with the government of Québec which is more strongly involved than the federal government in local territorial organisation, development and service delivery in rural areas. Federal-provincial negotiations are needed if the federal level plans to distribute financial subsidies to Québec's municipalities, MRCs and other government bodies mainly financed by the province. Source: Constitution Acts, 1867 to 1982. The MRCs' central role and their collaboration with municipalities illustrate the policy's decentralised approach. MRCs and municipalities have room to manoeuvre in planning and implementing policies and adapting them to local circumstances. To do so, they mobilise non-profit actors and civil society and carry out the initiatives as stipulated in a supralocal working plan for the period 2007-14. The municipal level is in charge of OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 198 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC implementing rural policy measures on the local level. Even if MRCs are the government's main counterpart for rural policy, many projects are realised directly by municipalities. Nonetheless, all municipal mayors meet at the MRC level to co-ordinate rural policy measures and plan collectively. MRCs are the key level for rural policy implementation, but they are governed and largely financed by the municipal governments that compose them. MRCs depend on property tax transfers from municipalities and intergovernmental transfers from the province. Property represents 57% of municipalities’ budget; it can be up to 70% if compensation taxes for government properties and specific tariffs are added. In rural areas, the relative weight of property taxes is higher owing to the lack of administrative authority to collect other types of revenue. The funding situation in MRCs reflects a tendency apparent in many countries: governments accept that rural development requires devolution of responsibility to local authorities, but are reluctant to provide direct financial capacity. However, if revenues at the supralocal level are unstable over a lengthy period of time, relevant investments may not be undertaken. MRCs are led by a council and a prefect elected by mayors or by direct election. The council is a board of mayors of all the municipalities within the MRC and sometimes other elected officials. One of the mayors is elected by the others as prefect. Given the absence of a single dominant population centre in an MRC, the risk that a prefect would also be the mayor of a large urban municipality and might marginalise smaller communities is limited: in almost all rural MRCs, the number of rural municipalities (and thus their votes in the council) is larger than the urban membership. However, if there is a dominant municipality with more than 50% of the MRC's total population, it has a right of veto in the decision-making process. Also, large municipalities often have better administrative capacity than smaller ones, and this can strengthen their influence on MRC policy. To facilitate better coherence with the PNR, the legislation has been modified to permit MRC councils to establish an alternative distribution of votes regarding rural pacts (see 3.2.3). For example, if municipalities with larger populations agree to be excluded from decisions on rural pacts, the MRC council can vote to allow this. In addition, 13 MRCs are currently experimenting with direct elections of prefects. This system which allows people other than mayors to become MRC leaders might eventually be extended to all MRCs, but the government encounters resistance as people ready to assume more responsibilities may be lacking. The empowerment of MRCs represents an effort to avoid localism and to encourage broader groups than municipalities to work together. Most (though not all) MRCs reach the critical mass required for PNR-funded projects, thus facilitating a focus on territorial development. MRC decision OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 199 making encourages political mobilisation and planning beyond the limited territory, population size and social capital of municipalities. Neighbouring communities within an MRC have incentives to work as allies and to find ways to link their respective interests. This is a good approach, but one that creates challenges as many municipalities still have a local development agenda that is not co-ordinated with other communities in the MRC. Small- scale interventions on the local level risk having limited impact on the regional economy if there is no common vision and insufficient co-operation between communities. However, this may change once the dynamics of community mobilisation extend beyond local borders. In a few cases, municipalities have implemented projects that can negatively affect adjacent municipalities in the MRC: this has occurred in cases where municipalities used public funds and rural policy measures to attract firms from within the same MRC instead of concentrating on local assets and mobilisation. Administrative regions have largely remained administrative units for the government and are only marginally involved in rural policy. MAMROT's regional directorates co-ordinate with those of other ministries in regional administrative conferences (CARs). Regional conferences of elected officials (CRÉs) have become the government's main counterpart for elaborating five-year regional development plans. Moreover, they provide a consultation role for MRCs and municipalities and administer a regional development fund that supports selected projects that go beyond across MRC boundaries. CRÉs are not a regional government but a co-ordination body for local governments and the civil society. As members of CRÉ boards are not directly elected by the citizens, they are in a relatively weak position compared to regional directorates. They cannot impose their regional development strategy on lower administrative levels nor can they adapt policies to place-based needs. Representatives include MRC prefects and mayors of large, often urban, municipalities. Given the under- representation of rural jurisdictions, a rural commission has been created in the Abitibi-Témiscamingue region to help the CRÉ and MRCs develop large rural projects such as high-speed Internet connections. 3.2.3 Policies Social and local community development is stimulated through rural pacts with MRCs,… As an innovative tool that is coherent with the OECD's New Rural Paradigm, the government and each of the 91 MRCs have signed a “rural pact” targeting social and human capital and community capacity building. The second PNR's rural pacts (pacte rural) are contractual, place-based OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 200 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC commitments for 2007-14 which establish each party's responsibilities and involve the decentralised management of large parts of the funds by MRCs. Rural pacts include technical and financial support for community development projects in municipalities and MRCs provided by MAMROT. For community development, groups of citizens and representatives of local- level institutional actors actively participate in the well-being of their community (Girard, 2009). In Québec, the participatory planning process occurs in local development committees which bring together diverse groups (civil society representatives, local businesses and credit co-operatives, and institutional actors and elected officials) to frame and commit to a vision for development. Initiatives such as the LEADER programme of the European Commission and its national equivalents in EU member countries (Box 3.7) are similar efforts to promote place-based local partnerships beyond administrative boundaries that are coherent with the New Rural Paradigm (OECD, 2006). Québec invests significantly more in community capacity building than other Canadian provinces. This investment can be seen as a consistent reaction to the experience of many countries in which local economic development policies have not been successful. Failure has often been due to the lack of parallel social and local community development measures. The objective is to provide a basis for future action using existing social and human capital and capacity and to fill in major gaps. This is in line with the idea that regions should promote their own growth by mobilising local assets and resources to capitalise on their specific competitive advantages (OECD, 2009e). Contracts, such as the rural pact, allow for a high degree of flexibility, but carry the risk that policy principles may not be followed. The diversity of application allows governments to reorganise rights and duties without requiring a constitutional or legislative change. Since the policy is based on existing administrative structures, no legislative modifications have been necessary in Québec, unlike Spain, for example, which opted for a law to establish a new national framework for rural policy (OECD, 2009c). There is no provision to ensure that region-specific government objectives are addressed (Jetté-Nantel, 2008), although trends in rural areas demonstrate the need for a differentiated approach; whereas social and cultural development measures are often crucial in intermediate rural regions and those close to urban centres, economic development is more important in remote predominantly rural and single-industry communities, even though in Québec the latter also increasingly stress concern for broader quality of life. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 201 Box 3.7. Experience with community development through place-based local partnerships Like Québec's PNR approach, the European Commission's LEADER programme recognises that a long-term commitment to programmes by both the central government and local communities is required, as changing outlooks on development takes time. In three stages (LEADER I, LEADER II and the current LEADER+ running from 2000-06 and from 2007-13), the LEADER programme is a hybrid rural/regional policy for specific target areas. LEADER works as a bottom-up approach to decision making and management responsibilities, adopts a multisectoral vision and favours multi-level governance arrangements between transnational, central and local governments. LEADER brings public and private stakeholders together in local action groups (LAGs) which are responsible for project selection and implementation of local development strategies as agreed with the Commission. Norms regulating the LAGs limit the share of public administrators and elected officials to no more than 49% of the LAG’s executive council. The European Commission provides most of the public financing for LEADER programmes, with a smaller share coming from national and regional levels of government. Among the national equivalents to LEADER, Germany and Spain are particularly interesting. The German Active Regions (Regionen Aktiv) programme is a hybrid policy approach in which the Federal Ministry of Agriculture, in addition to its funding and monitoring roles, is in charge of providing services and capacity building (technical assistance, research, communication, etc.). Regional actors define a community-based strategic view and programme and formulate business plans, and 18 model regions have participated in these partnerships with a minimum share of 50% for actors from NGOs. A specific structure called “regional management” provides day-to-day monitoring, consultancy for project applicants, and management of regional networks. Unlike LEADER, Spain's PRODER programme allows for agrarian investments and puts less emphasis on innovative and transferable actions. While its first phase was limited to regions with a GDP per capita below 75% of the EU average, the second (2000-06) was opened to the entire Spanish territory. Public funds dedicated to this second phase totalled EUR 827.7 million (of which 63% provided by the EU). While there are no new LEADER and PRODER groups in Spain for the 2007-13 European programming period, existing LAGs will remain and become responsible for managing the measures coming through Axis 4 of the Common Agricultural Policy's (CAP) second pillar. Source: OECD Rural Policy Reviews. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 202 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC An internal evaluation of the first PNR (Government of Québec, 2007) found two different perspectives on the rural pacts at the MRC level. While some MRCs follow the government's view of rural pacts as a proactive strategy to strengthen the development capacity of actors and communities, others limit their role to establishing a functional mechanism for the distribution of funds, comparable to the modalities for local investment funds. Only the first group of MRCs will use rural pacts as a long-term approach involving a sustainable consultation process and appropriate use of development agents to mobilise and accompany communities in their development efforts. A similar phenomenon has been observed with the EU's LEADER initiative (OECD, 2006); some target areas perceived the programme as an opportunity to mobilise actors through proactive and place-based development whereas others saw it as partial compensation for their rural territories' structural disadvantages. To avoid any misunderstanding and react to inaccuracies in the first round of rural pacts, the second PNR has more explicitly included indicators for success in every rural pact. Perceiving rural pacts as a proactive strategy is an opportunity to strengthen social cohesion and the sense of belonging to a territory. There is a lack of cohesion in many territories, as factors such as family-based farming, the Catholic Church or large extraction companies in single- industry communities no longer have the influence they had in the past. Intensive farming and a focus on scale have led to agricultural concentration, which has resulted in fewer and larger farms and contributed to the devitalisation of rural communities. The Catholic Church was long a major factor of community life but has lost importance with the drop in the number of worshipers. And large companies in single-industry communities no longer possess the cultural and territorial attachment that allows them to structure communities as a result of closures, reductions in employment or transnational mergers. Measures such as the rural pacts or the annual “Day of Rurality” (Journée de la ruralité)4 organised by MAMROT, its rural partners and a selected MRC can contribute to strengthening the understanding of “rurality”, social cohesion and a sense of belonging. Québec's rural pact approach puts the mobilisation of communities and their sustainability at the centre of policy objectives in order to create social and human capital and is represented in Figure 3.1. Even though the figure refers to the first PNR, it is generally applicable to the role still given to rural pacts. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 203 Figure 3.1. Causal model of rural development: the function of rural pacts Economic context Function Political context of rural pacts Mobilisation Capacities for mobilisation: • citizen participation • local governance Capital • innovative actions (projects) Development • social and Capacities for human capital U development • institutional capital S • cultural capital A • financial and G E Actions and economic capital dynamics for • physical capital development • natural capital Sustainable territorial communities • people’s well-being • quality of life • sustainability Source: Based on Government of Québec (2007), Éléments d'évaluation de la politique nationale de la ruralité 2002-2007. Eléments de suivi de la politique 2007-2014, December. Private projects are excluded from direct rural pact funding, so that non- profit organisations are the main counterparts for project definition and development. Projects are multisectoral with activities ranging from education and training, agri-food and culture to health care and intergenerational linkages. MRCs and municipalities are free to choose appropriate and concrete implementation steps, priorities and projects. This encourages innovation by local actors. The impact of rural pacts on mobilisation and investment in rural communities has been significant. During the first PNR (2002-07), rural pacts generated more than 4 700 projects and more than 35 000 residents (to November 2007) participated in local development committees on the MRC and municipal level. With support of CAD 83.7 million, these rural pact OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 204 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC projects generated total investments of CAD 506.4 million, i.e. CAD 1 leveraged CAD 6.1. According to the government, more than 7 600 jobs have been maintained or created by the projects (Government of Québec, 2007). In the second PNR, the first 1 613 projects, with support of CAD 30.1 million, have generated total investments of CAD 243.7 million, i.e. CAD 1 leveraged CAD 8.1 (Government of Québec, 2009b). Many projects aim to provide non-commodity outputs in the form of local pure public goods. This particular category is characterised by the fact that the goods are non-rival, but largely excludable to outsiders, as benefits mainly accrue to residents of a small jurisdiction, such as a municipality (OECD, 2001). Most of the public and collective goods targeted by Québec's PNR are local in nature, given the spatial dimension of rural Québec. They involve a high level of social and human capital, the use and non-use by residents of natural and cultural amenities and the positive externalities linked to them (visual landscape, cultural heritage), effective local governance institutions, and quality of life, defined as an attractive place to live and work and the related positive image (Petrick, 2006). Although private businesses are not supported by rural pacts, the framework conditions and public and collective goods created by rural pacts also benefit firms and may spur entrepreneurship. … a network of rural development agents,… Rural development agents are essential for creating a vision for local development and assisting in policy implementation and monitoring. They support local committees and project promoters in developing rural pact projects, facilitate knowledge sharing, and contribute to monitoring the rural pact. MRCs or CLDs can hire the agents financed by the government of Québec's rural pact commitments. MRCs do not have to delegate project management tasks to CLDs, but they often do so. Many CLDs in turn assign these tasks to the rural development agents, who are generally administratively integrated in the CLD structure. MRCs make annual assessments of their work. The 136 current agents get annual update training organised by the advisory body SRQ and financed by MAMROT. This training includes annual meetings of agents from all over Québec but also an interactive online portal which facilitates the exchange of experiences. Figure 3.2 shows the importance of rural development agents, local development committees and MRCs as key local figures within Québec's approach to rural policy. The actors and key bodies for PNR implementation on the provincial level are represented in light blue. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 205 Figure 3.2. Implementation of Québec's Politique nationale de la ruralité (PNR) Territorial Government Representative/ division consultant body Committee of rural Premier partners Council of Ministers Provincial MAMROT SRQ Interministerial FMQ, UMQ, rural committee ACLDQ Regional Admin. CAR CRÉ board region (MAMROT/other ministries) President MRC council Training (SRQ) MRC CLD Supra-local Prefect Rural development Local development committee: agent Civil society, business, officials… Other development agents Local Municipal council Municipality Mayor Citizens and organised civil society + political + operational Source: OECD, based on Government of Québec, MAMROT. The commitment, qualification and experience of rural development agents, along with a competitive salary, are important for their success. It is the agents' responsibility to link local project developers with MRCs and municipalities, but also to develop connections between project developers and the funding instruments available in CLDs. Since successful local development depends on a community's capacity to facilitate connections across different socioeconomic groups (Freshwater, 2004), the agents also have a major role to play in building bridges between social and economic development and creating teams of people and groups within a given territory who otherwise do not necessarily interact. Finally, the experience collected by the network of rural agents is important for the government's OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 206 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC efforts to further develop the PNR. In this regard the network's advice was considered when preparing the second rural policy. The funding provided by MAMROT is a critical element; as determined in the rural pact document, MRCs receive annual funding for each agent in the amount of CAD 25 000 (2007-08), increasing to CAD 28 154 in 2013-14. This and earlier salary increases may help reduce the high turnover of agents during the first PRN. The obligation of MRCs to co-finance this sum in order to attract qualified agents is crucial. After evaluating the first PNR, the government decided to give additional financial support to MRCs with more than ten devitalised municipalities (according to the development index, see 3.2.1) so they can hire additional agents (Government of Québec, 2007). …and specific programmes targeting local-level innovation and knowledge development. Specific research and development (R&D) measures in the PNR promote innovation, expertise and knowledge sharing in rural regions. These measures target private enterprises, co-operatives, the social economy and non-profit organisations and aim at disseminating experience about new ways to develop and provide services to other communities and leaders. The three main programmes for this purpose are the rural laboratories, speciality products and working groups. They are directly administered by MAMROT and the committee of rural partners (Government of Québec, 2007). Pilot projects supported as a rural laboratory are selected by the committee of rural partners and have to target innovative ventures in a diverse range of sectors, often following co-operative or community models. Laboratories can be supported with a maximum amount of CAD 100 000 annually for up to six years. In 2009-10, 33 laboratories have been funded with CAD 2.5 million (Government of Québec, 2009b). The promotion of speciality products aims at stimulating the development of original local and regional products in the sectors of agri-food, agro-forestry (timber and non- timber forest products), arts and crafts, and culture. Funding should allow producers to better control product marketing and pricing, and ideally generate high value-added products which help producers keep more financial benefits in the rural region. Limited and partial funding, up to a maximum of CAD 25 000 per product, limits the risk of rent seeking by applicants. Since the beginning, 172 projects have been selected with support of CAD 3.6 million, which generated a total investment of CAD 22.4 million. The objective is to launch 480 products by 2014. Complementing the rural policy's R&D component, a rural future fund is managed by MAMROT to support working groups which explore future development in emerging sectors. These working groups, endowed with a OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 207 budget of CAD 350 000 to CAD 450 000 over three years, bring together private, public and community actors as well as academia in a search for promising activities. The fund (Fonds d'initiative pour l'avenir rural) supports the working groups' activity, a few specific R&D expenses, and projects to experiment with selected initiatives. Currently, working groups are active in six fields: local energy production; rural areas' multi- functionality; use of information and communication technology (ICT) in rural communities; rural-urban complementarities; devitalised municipalities; finding market niches for rural speciality products (agro- food, non-timber forest products, arts and crafts). The working groups aim at bringing new opportunities, ideas and tools to rural communities and leaders to trigger further local efforts. After adopting the second PNR, the government decided to introduce a programme for high-speed Internet access. This programme targets rural residents, organisations and enterprises and will have financing of CAD 24 million (2009-13). Later in 2009, the federal government (Industry Canada) launched a programme for high-speed Internet in rural Canada (see Chapter 1). Increased access to ICT and particularly to broadband Internet contributes to rural areas' quality of life and enhanced competitiveness. Besides better opportunities to attract and retain businesses, diverse health, educational and cultural services can be accessed through broadband Internet. Attracting immigrants becomes easier if migrants can access non- governmental offerings in their native language; this has so far often been limited to urban communities. Although 74.6% of Québec's households have Internet access and 61.8% possess intermediate or high-speed Internet (CEFRIO, 2008), these figures are significantly lower for the territory outside of the nine cities with more than 100 000 inhabitants5 and in particular for predominantly rural regions, where only 57% of households have Internet and 76% of these are intermediate or high-speed Internet (MAMROT). 3.2.4 Budgets The provincial budget increasingly considers the spatial dimension of policies… There seems to be an increasing focus on spatial policies in the allocation of the provincial budget. Targeted funding by provincial ministries to rural residents and territories has increased more than the overall level of expenditures by these ministries. These results emerge from an accounting exercise conducted by Québec authorities in the framework of this report. Québec does not yet have an integrated “rural budget” given the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 208 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC relatively recent territorial division into what is considered “rural” and “urban”. Several OECD countries have already combined funds coming from different ministries into a multisectoral “rural budget”. Countries that have been innovative in this respect include the Netherlands (OECD, 2008a), Mexico (OECD, 2007) with the Special Concerted Programme (PEC) which groups each ministry's budget directed to programmes with a rural scope, and China which summarises spending on sannong issues concerning agriculture, rural communities and farmers (OECD, 2009b). These budgets can be difficult to establish as the number and scope of programmes change regularly, thus complicating comparisons over time. Nonetheless, the “rural budget” is an innovative tool for presenting the evolution of public expenditure and making the government's rural development efforts more transparent. In Québec, rural expenditures include narrow rural policy measures, such as provincial support for agriculture and agri-food businesses, and rural, community and regional development funding and support for enterprises in rural areas, but also broader policy measures affecting rural areas such as education, health and employment services, infrastructure, transport and housing. Rural expenditures increased from CAD 6 341 million in 2001 to CAD 8 027.5 million in 2006, a rise of 26.6%, whereas total ministerial expenditures increased by 23.9% (see Annex 3.A1). As in many OECD countries, by far the most important provincial transfer programmes for rural areas do not concern agriculture or rural development measures (see Annex 3.A1). Rather, the main expenses concern broader sectoral and social policies with no specifically rural dimension such as education, transport, health care and social welfare. In 2006, the ministries in charge of education and of health and social services together accounted for almost 80% of total rural expenditures. MAMROT's part in the “rural budget” has increased slightly, but remains very low at 2.59%. Although much of the agricultural support comes from the federal level, the competent ministry's (MAPAQ) share is still higher than MAMROT's. Surprisingly, spending on natural resources (figures for 2004, however) is relatively unimportant compared to both agricultural and rural policy, in spite of the considerable number of rural communities whose economy relies on forestry. … although the specific rural policy budget is limited in its scope. The government opted for a long-term PNR budget of limited scope which shows that effective territorial policies do not require the large amounts needed for sectoral approaches. The second rural policy (2007-14) OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 209 has a global budget of CAD 280 million (Table 3.2) which gives communities financial security for their local investment commitments. Its scope is limited to MAMROT's programmes targeting social capital and local community development, and in particular: rural pacts, rural development agents, rural laboratories, speciality products, the rural future fund, SRQ funding and the high-speed Internet programme. This budget, which is larger in per capita terms than the amounts to rural areas allocated by other provinces or the federal government, does not include other ministries' financial commitments (see 3.3.2). It demonstrates that Québec's approach to promoting social capital and community capacity development is significantly less costly than policies implemented under the European LEADER programme, as in Spain (OECD, 2009c) and Italy (OECD, 2009d). However, the exclusion of private projects from rural pact projects limits the budget's impact on broader economic development activities, although private firms have access to other government programmes. Some 85% of MAMROT's rural policy budget is transferred to MRCs, which manage the funds for rural pacts and rural development agents. MRCs do not have to spend these sums by the end of each year, but can transfer unspent funds to the following year within the policy's seven-year term. The remaining money is managed by MAMROT to finance measures to encourage rural innovation and knowledge and their distribution to other rural areas (rural laboratories, speciality products). To finance collective projects for high-speed Internet access in rural areas, an additional amount of CAD 24 million was allocated after the adoption of the second PNR. Table 3.2. Total budget of the second Politique nationale de la ruralité, 2007-2014 Policy item Amount of funding, in million CAD Rural pacts 213.0 Rural development agents 25.3 Rural laboratories 15.5 Speciality products 12.0 Rural future fund 8.6 Solidarité rurale du Québec (SRQ) 5.6 Total 280.0 Collective projects for high-speed Internet 24.0 (announced after adoption of the second PNR) Source: Government of Québec, MAMROT. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 210 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC The second rural policy (2007-14) supports rural pacts in municipalities and MRCs with an amount of CAD 213 million. This is more than three- quarters of the total amount invested in the framework of the PNR. Municipalities and MRCs can manage this budget on their own or involve the local CLDs, whose board members are chosen by MRCs since 2004. Apart from PNR funding, rural pact projects receive financial support through other provincial and federal government programmes, project promoters, CLDs and financial institutions (Figure 3.3). Whereas a maximum of 80% of total funding (in practice often much less) comes through PNR and other provincial or federal resources, at least 20% has to be provided by project promoters. Offering only partial funding through government programmes gives local authorities incentives to select projects which provide the most benefits to rural residents and avoid rent seeking. Financial institutions participate in the funding of projects but are rarely the main lender. The main institution active in promoting rural policy is the savings and credit co-operative Desjardins Group.6 It has been important for the success of the PNR that Desjardins is a member of SRQ and that its caisses (local branches) are present in rural communities, with managers often sitting on CLD boards. Figure 3.3. Sources of rural pact funding since 2007 0.2 1.4 Québec government (other than MAMROT) 1.5 Project promoters (MRCs, municipalities, local committees, non-profit bodies) 11.9 Québec government (MAMROT) 3.4 30.3 Other local groups and corporations 6.9 Local municipalities Canada government Financial institutions 18.4 13.8 CLDs SADCs 12.3 Funding to be received Source: Government of Québec, MAMROT. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 211 With CAD 102.8 million over five years, budgetary expenditures on measures in the first PNR (2002-07) were smaller. Only CAD 86.4 million was allocated for rural pacts and only CAD 10.4 million for rural development agents (Government of Québec, 2007). However, the first PNR also provided important direct economic development support, for example through a CAD 11.2 million fund targeting CLDs in MRCs with social and economic difficulties. As in the second PNR, other ministries' financial support for resource-based regions or agricultural diversification and transformation of agri-food products were part of the policy (Government of Québec, 2001). For rural development agents, the PNR (2007-14) provides funding in the amount of CAD 25.3 million. The first rural policy financed 104 agents, but at least 136 are funded within the current budget. With more staff, agents can devote time to help people assess and develop their business plans for rural areas. In the MRC of Montmagny, for example, the local Desjardins caisse collaborates in the process by funding an additional agent and by working closely with agents, thereby increasing the chances to fund promising proposals while screening out weak ones. 3.2.5 Monitoring and evaluation The implementation of Québec's rural policy benefits from a considerable degree of liberty and flexibility, but this also creates problems for assessment. Flexibility has allowed local officials to mould and adapt the policy successfully to the characteristics of the territory. The leeway provided by the policy has helped communities to better reach and capture the desired spirit of the policy. Although no evidence of abuse has been detected, this leeway would nevertheless warrant the implementation of a strong external monitoring and evaluation system, if only for precautionary reasons. MRCs are in charge of evaluating yearly rural pact results and for providing pact policy planning through a working plan. MRCs have to keep an extranet site administered by MAMROT updated with information on the implementation of rural pacts and the projects involved. MAMROT's regional directorates give advice and watch for gaps between commitments and their realisation prior to the government's authorisation of funding for MRCs. The operation includes financial accounting information (reddition des comptes) towards local bodies, details on ways to mobilise the community and expected results. In case of shortcomings in the implementation of the rural pact, government sanctions range from setting a period for solving a problem to a complete ministerial withdrawal from a rural pact, which may involve reimbursement of payments. In addition, related guarantees and securities can also be requested from MRCs OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 212 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC (although this has not yet been applied in practice). The MRC details the terms of reference regarding the pact's content and budgetary management, means of mobilising and leading the different stakeholders, as well as the expected pact results and financial accounting information. With the end of the 2001-06 pacts (first PNR), MRCs are adopting a final report for verification by MAMROT's auditors. At the provincial level, MAMROT commits to a monitoring system with two elements: i) publication by the ministry of recent PNR data in its yearly report (Rapport annuel de gestion); and ii) responses by the ministry to a list of questions established by an annual parliamentary commission set up during MAMROT's budgetary credit acceptance procedure, including the opposition parties. Data are collected from MRCs through the rural pact extranet, from regional offices for the programme on speciality products, and from promoters of rural laboratories. However, Québec's second rural policy does not yet have provisions for a formalised external evaluation and monitoring system. In general policies implemented in the spirit of the New Rural Paradigm (OECD, 2006) require monitoring and evaluation to take place both at the community level (MRCs in Québec) and by external bodies, and to include agreements on how to measure successful rural development. In Québec, the main evaluation reports were conducted by SRQ through an ex post review of the first PNR (SRQ, 2006a) and by MAMROT with a team of external researchers (Government of Québec, 2007). These reviews provided the basis for changes in the second PNR. 3.3 Multi-level governance Despite broad upper-level horizontal co-ordination, modulation remains a challenge To demonstrate the government's political commitment, Québec's rural policy includes specific tasks and measures to be enforced by sectoral bodies. As in Finland's Special Rural Policy Programme (OECD, 2008b), commitments for almost 50 policy measures were made in the PNR policy document by 18 ministries and government bodies, brought together in an inter-ministerial rural committee to support the rural policy's strategic objectives (Box 3.8). These commitments reflect efforts to enhance inter- sectoral co-ordination as described in the New Rural Paradigm (OECD, 2006). MAMROT also deals bilaterally with its counterparts to ensure that they fulfil their engagements. Québec's horizontal co-ordination efforts have been crucial for providing a policy framework and a long-term vision for rural policy, facilitating other ministries' alignment with the policy goals, and engaging them in rural pact funding. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 213 Box 3.8. Sectoral commitments to contribute to rural policy Besides MAMROT, 17 ministries and government bodies contribute politically and financially to rural policy, as described in Annex 1 of the PNR policy document (for a detailed assessment of these measures, see 3.3). Main sectors addressed by the 46 policy measures are: Economic development: The competent ministry commits to supporting the non-profit CLDs that are mandated by MRCs to work on local development and entrepreneurial support. Particular programmes exist to assist enterprises in the social economy and co-operatives through the local investment funds (FLI) and a microcredit network. Agriculture: The sectoral ministry in charge of agriculture design participates in the selection of rural laboratory projects and speciality products or in helping young farmers to establish a business and reconcile work and family. There are new programmes on regional and niche products as well as products with potential for protected designation (produits du terroir), but these sectors are still little developed. Financial support for the agricultural and agri-food sector in the form of revenue stabilisation and insurance is affirmed, though it is put in a perspective of sustainable development. Natural resources: The commitments of the ministry in charge of natural resources focus on: the promotion of production of renewable energy, particularly wind energy, decentralised energy production and small-scale energy plants; support for forestry products and job creation in forestry-based communities; and programmes targeting the utilisation of non-timber forest products. Public services: The policy on public transport includes targeted measures for rural areas such as the availability of funds for municipalities with fewer than 20 000 inhabitants. Health measures such as Villes et Villages en Santé target better living conditions in rural communities. In education, technical and financial support is provided by the responsible ministry to the “last village school” programme and a project to create networks of rural schools through ICT. Moreover, measures aim at limiting a decrease in resources due to sinking school enrolment. To respond to labour market needs, local employment centres (CLEs) continue to support rural communities. Youth and immigrants: The Place aux Jeunes du Québec programme promotes the return and professional and social integration of youth in regions. Regional action plans are elaborated with sub-provincial administrative levels to attract immigrants to rural regions. Project promoters are supported in their efforts to address immigrants' concerns regarding employment, housing and rural communities' cultural diversity. Source: Government of Québec (2006), Politique nationale de la ruralité 2007-2014. Une force pour tout le Québec, Government of Québec, Québec. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 214 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC MAMROT's inter-ministerial co-ordination efforts are repeated at the regional level. In each region, the ministry's regional director chairs the regional administrative conference (CAR) that brings together regional representatives of the different ministries present in the region. This conference puts in place a special rural committee to ensure the implementation of decentralised measures and monitor the commitments made by other ministries. Adapting the sectoral programmes to rural conditions (“modulation”) is a challenge for MAMROT´s inter-ministerial co-ordination. While many sectoral programmes show some adaptation, and although inter-ministerial co-ordination is by all appearances effective, there has been less success in convincing participating ministries to discuss implications for rural areas when designing new policies and programmes. Within the PNR a policy modulation mechanism (clause de modulation) has been introduced for monitoring the adaptation of laws and sectoral policies to the specific characteristics of different rural areas based on advice from MAMROT, but there are still institutional obstacles as government bodies resist the stricter adaptation requested by the PNR. This resistance can often be explained by a lack of knowledge about the real needs for and impacts of the desired modulation. With the formal entente for rural partnership, the government shares responsibility with key provincial stakeholders for rural development (the committee of rural partners). The inclusion of social partners (see 3.2.1) at the top of the rural policy’s institutional structure has generated a sense of ownership and responsibility for rural policy within Québec’s civil society by making civil society agents and promoters of the policy. This is crucial for successful implementation, as it helps instil the cultural norms and informal institutions required for the policy's community-based, bottom-up character. However, Québec’s rural partnership can also become a source of exclusion. In line with the policy’s territorial and non-sectoral ambitions, influential business and agrarian organisations have been left out of the committee of rural partners. Although they can be invited to participate on a subject-by-subject basis, they are less likely to fully embrace the larger policy objectives. As a result, these organisations do not always identify with the policy objectives and strategies and, in some cases, come into conflict with the policy’s measures. One example is the lack of support for rural laboratories from UPA, the farm producers' organisation, which contests the viability of some laboratories. Nonetheless, the annual “Day of Rurality” brings together stakeholders interested in rural development. More than 50 groups, including UPA, are invited to discuss the PNR, its implementation, impacts and possible improvements. Actors such as UPA, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 215 Desjardins and the school board federation are also members of Solidarité rurale du Québec (SRQ). While vertical co-ordination between administrative levels within the province is strong, the federal level largely acts in parallel… The policy’s formal vertical co-ordination structure utilises mechanisms set by prior regional and local development efforts so as to favour continuity. These mechanisms (Figure 3.2) are based at the regional and supralocal levels and are commonly used by other ministries to carry out their own sectoral policies. This facilitates the linking of different policy measures as they are funnelled down to the local level. MAMROT's regional directorates play a strong role in assisting and monitoring MRCs' commitments. MAMROT´s regional directorates assist MRCs and rural communities in their tasks of implementing and managing measures relating to rural policy. The regional directorates also bring together a region's rural development agents and link them to the regional directorates of other ministries. Although rural policy is decentralised, in practice MAMROT has created a strong support framework to guide communities as they implement policies so as to maintain the intended spirit at all administrative levels. At the same time, municipalities and MRCs can be brought together at the regional level to co-ordinate their efforts within the CRÉs. The regional conferences of elected officials do not fall within the structure of rural policy but are institutions that permit vertical and horizontal consultation regarding regional concerns. However, in regions with a predominantly rural character, CRÉs can play an important part in the framework for rural development if they wish. Conversely weak representation of rural MRCs in this body can be a significant disadvantage (see 3.2.1). A possible response is the rural commission created in the region of Abitibi-Témiscamingue (see 3.2.2). MAMROT is well co-ordinated with the different CRÉs through the Table Québec-Regions and with elected municipal officials through the Table Québec-Municipalities. While the first format targets the presidents of CRÉ boards, the second brings in the two rural partner committee members, FQM and UMQ, which are federations of municipalities. Although rural policy is not the only issue addressed at these discussion tables, it does provide a medium which MAMROT uses to facilitate communication and co-ordination both vertically and horizontally across different regions and municipalities. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 216 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC It is interesting to see how often the same individuals are found throughout Québec’s many vertical co-ordination structures. Both PNR documents stress the role of local elected officials as a key to the success of the policy and its implementation. As the ministry overseeing municipal and regional affairs MAMROT has placed much importance on local elected officials and on the presence within the committee of rural partners from de-concentrated organisations at the local level. This greatly favours vertical co-ordination of the rural policy premises, but it can also dilute the participatory character of the policy by excluding broader stakeholders from different civil society groups. Québec's vertical collaboration with the federal administration on issues regarding rural policy is limited. MAMROT’s directorate for rural and regional development is responsible for relations with the federal government and with counterpart institutions from other provinces which have shown an interest in the PNR, its policy design, programmes and implementation. Following those exchanges, the province of Alberta has developed a rural strategy, while Newfoundland and Labrador have put in place a rural secretariat. Finally, the permanent members of the committee of rural partners add parallel vertical co-ordination mechanisms to the public structure set by the rural policy. Apart from the formal structure established by MAMROT, ACLDQ, as an association for CLDs, transmits to its members throughout Québec the policy's strategic guidelines and vision. The same is done through the institutional structures of FQM and UMQ to promote, co-ordinate and monitor policy implementation with local elected officials that make up their membership base. The inclusion of social partners at the top of the rural policy’s institutional structure has not only generated the previously noted sense of ownership by civil society, but also helped to reinforce vertical coherence in implementing the policy. …and while MRCs facilitate local horizontal co-ordination, there is a risk of duplication with economic policy. Québec’s rural policy transfers a large part of the responsibilities for local horizontal co-ordination to local elected officials. MRCs are given responsibility for mobilising the population of their area and for co- ordinating municipal public administrations to create a shared vision for their territory. MRCs become a horizontal co-ordination body that brings together the plurality of views and interests present in rural areas, so as to reach a unique shared development strategy. However, attempts to implement modulation at the local level have not been entirely effective. The problem is that Québec lacks an appropriate administrative level to OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 217 carry out this task. MRCs are convenient, but do not have the capacity to co- ordinate the concrete impact of different policies, nor do they have a clear political mandate. MRCs are able to take a broader view, beyond rural policy, of the programmes and measures implemented in their territory. Their administrative structure greatly facilitates the different programmes' complementarity and helps ensure that the rural pact projects they promote are in line with the entire scope of sectoral policies affecting rural areas. An example of the MRCs' potential for co-ordinating programmes is their strong presence on the administrative councils of the CLDs. In addition, MRCs exercise strong control over CLDs through the legal contract that gives MRCs powers of decision over the allocation of money earmarked to CLDs. However, there have also been overlaps between MAMROT’s rural policy and the CLDs, which are administered by the ministry in charge of economic development, which potentially create conflicts and inefficiencies. The MRCs’ strong supervisory role and the presence of the same individuals throughout the structure of both policies facilitate coherence. However, even though the policies have different objectives, conflicts may arise. Because the pre-2003 government arrangement put a single ministry of regions in charge of these initiatives, both policies now call for participatory local strategic vision exercises, both require the elaboration of separate development plans, and both rely on their own network of development agents. Friction is at times observed, especially when it is time to take the credit (or responsibility) for local development successes (or failures). Like MRCs for municipalities, CRÉs are the main body for horizontal co-ordination of MRCs at the regional level, but cross-MRC collaboration on development remains relatively limited. CRÉs allow local elected officials, MRC prefects and representatives from regional socioeconomic organisations to co-ordinate their development activities. Cross-MRC regional initiatives also exist, for example in the case of some regional tourism projects, but the MRC seems to represent a better territorial unit for the purpose of rural policy as currently conceived. Given the extension of some administrative regions, it is not surprising to find that this territorial administrative unit is often considered too geographically large to give the needed sense of local identity required for the population to rally behind its development objectives. 3.4 Sectoral policies Québec has developed a common strategic vision for rural areas. It has found a compromise between the “grand plan” solution which integrates all OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 218 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC core sectoral policies directed to rural areas and the “niche policy” solution which limits the scope of policy geographically and financially (see 3.2.1). The policy can cope with the complementary relation between rural and non-rural territories as well as with regional and sectoral policies. This section assesses the governance of Québec's rural policy more comprehensively by including sectoral approaches that affect rural residents and territories. 3.4.1 Land use and agriculture Land use policy aims to avoid urban sprawl, but also risks constraining rural economic activities… A law protecting agricultural land was implemented in 1978 to ensure that land valuable for agriculture would not become urbanised or used by other economic activities. This legal situation is grounded in the fact that Québec's stock of agricultural land is relatively small and agriculture has played an important role in the history of the province (see Chapter 2). A provincial government commission monitors compliance with the law's agricultural zoning regulations.7 While a zoning approach makes it possible to maintain green space, the cost of this approach is borne exclusively by landowners who lose the right to develop their land. In OECD countries, land policy is an important issue which affects regional development. Strong protection of agricultural land can result in a shortage of land for urban expansion, while high demand by urban dwellers for second homes can drive up rural land prices beyond values justified by their agricultural yields. Both issues have to be addressed in Québec, as most of the agricultural land is concentrated in the plain of the St. Lawrence River, near major urban populations. Today, MRCs cannot decide on the use and potential conversion of agricultural land for other purposes, and this risks limiting their development potential. Two different types of rural territories are concerned: i) communities in the metropolitan regions of Montréal and Québec City where the quality of farmland is particularly high but suburbs are running out of land zoned for development; and ii) predominantly rural areas with potential for economic diversification. Southern rural communities are most affected by the arrival of urban residents whose demand for second homes has led to a significant increase in land prices. In addition in some rural communities there is insufficient land for business development, especially if a firm requires a relatively large parcel of land or is involved in an activity that is not suited to being in the middle of the town. The fact that OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 219 communities’ development potential is limited by strict protection of agricultural land intensifies this problem. Even for farmers, acquiring land is restricted to those whose main occupation is agriculture. Young people who often start with part-time farming can neither buy additional land nor to build a house on their land. More flexibility regarding land policy is being considered. In reaction to the development constraints mentioned above and following recommendations in several reports (Ouimet, 2009; Pronovost, 2008), discussions are under way to strengthen the MRCs' responsibilities for land use and planning, and to allow economic diversification and a more flexible use of agricultural land in areas not threatened by urban sprawl. … while support for agriculture is partly linked to the output of selected commodities. Farm operators in Québec receive compensation for the loss of land development rights through extensive safety net programmes and market regulation that raises commodity prices. Because of the dual federal- provincial jurisdiction, agricultural policies are delivered through a policy framework that shares the cost of support. Vocal interest groups defend this agricultural subsidy which has reinforced the trend towards fewer but larger farms (OECD, 2008c). In 2006, 26% of all farms in Québec had annual gross income of more than CAD 250 000 and represented 80% of total gross agricultural income (Saint-Pierre, 2009). The situation is similar in other OECD countries where financial support for agriculture continues, but it is rarely viewed as a means to achieve major rural development objectives. At the same time, Québec's system does not favour the multi-functionality of agriculture, as there is no compensation mechanism for farmers providing public goods (landscape) and services (recreation, environmental protection). Owing to high world market commodity prices and policy changes, the OECD estimate of government support in Canadian agriculture (percentage Producer Support Estimate or %PSE) declined from 23% in 2006 to 18% in 2007. Less than one-fifth of farm operators' gross receipts are now provided by support policies. The level of Canada's support is now significantly below the OECD average of 23% (OECD, 2008e). Total support in Canada declined from 1.8% of GDP in 1986-88 to 0.8% of GDP in recent years (OECD, 2008c) and is, as in the OECD area, at its lowest level since 1986-88. With Canada's recent “Growing Forward” initiative replacing the previous Agricultural Policy Framework (see Chapter 1), the federal government has modified its agricultural legislation by introducing a OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 220 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC decoupled system of support focused on business risk management which has reduced both level and the most distorting forms of support. However, progress varies significantly across sectors. Whereas meat and grain farmers (particularly barley and wheat producers in western Canada) are outward-oriented and have accepted more market mechanisms, there has been little liberalisation in other sectors. Milk, for which Québec has a market sharing quota of almost 50% among Canadian provinces (OECD, 2008c), remains the most highly supported PSE commodity (OECD, 2008e). While only some farms have development potential, all covered producers get income support with little concern for market forces. Similarly, eggs and poultry production, which are also major commodities in Québec, are also subject to supply management regulations that raise prices paid by consumers. Two main mechanisms provide protection and support for the output of selected Québec commodities. First, a common supply management system is operated across the various provinces of Canada, with import and domestic quotas at its core. Second, there is an extensive, complementary farm income stabilisation system (ASRA) administered by the Québec government, which ties payment to production rather than to market demand. Both mechanisms entail higher prices for covered producers and lower their financial risk, making dairy farmers but also poultry and egg farmers highly profitable (OECD, 2008c). Although support also goes to some smaller farms, many of the producers covered by these mechanisms have substantially higher income than other farmers (OECD, 2008c) and, within Québec, are among those farmers with the largest scale (Figure 3.4). The first mechanism, the Canadian supply management system, limits the working of the market mechanism and results in higher consumer prices and resource misallocation. Through a quota system largely controlled by provincial commodity marketing boards, it provides covered commodities with significantly greater producer support than other products. It aims to match supply and estimated demand by restricting production of dairy, eggs, poultry meat (chicken and turkey), maple syrup and rabbit in order to achieve a target price for the product. While this system reduces price fluctuations, consumer prices are much higher than those prevailing on world markets, forcing domestic consumers to pay for the protection enjoyed by the sector. For example, before the increase in world prices, prices of dairy products such as butter and cheese, which are Québec's main agricultural production (34% of total), have often been more than double those prevailing on world markets (OECD, 2008c). The share of single commodity transfers (SCT) to producers has decreased significantly since the 1980s (from 71% of PSE in 1986-88 to 55% in 2005-07), but SCT as a percentage of receipts remains high for dairy (48%) and eggs (39%) OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 221 Figure 3.4. Large farms in Québec by type and receipts (CAD 250 000 and over) Percentage, 2007 80 70 60 50 CAD 1 million and over 40 30 More than CAD 250 000 and less than CAD 1 million 20 10 0 Source: Statistics Canada, Canadian Farm Financial Database – Report. (OECD, 2008e). Recently there has been a partial shift away from large programmes to less expensive ones that share costs with producers and give them some influence on how funds are spent. Yet, this shift has not stopped discussion of an even more efficient agricultural support system. The second mechanism, the farm income stabilisation programme ASRA, inhibits the regulation of production by the market, encouraging maximum output and overproduction. According to 2007 data from Financière agricole du Québec (FADQ), ASRA compensated agricultural producers in 17 enterprises (hogs/piglets, veal, grain corn and commercial crops) with CAD 748 million, forcing FADQ to run an operating deficit and requiring it to borrow money. The long-term insurance against price risk which the system has provided has contributed to a sometimes excessive level of debt of covered producers. The benefits have been capitalised into quota values and land prices so new entrants effectively have to prepay for OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 222 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC the support provided, leaving them no better and possibly worse off. ASRA creates disincentives for market actors not covered by the system who want to move towards higher value-added sectors such as horticulture, speciality products or organic food, but who have difficulty accessing credit. The amount in subsidies and the cumulative deficit are expected to increase considerably in the years to come (Saint-Pierre, 2009). Finally, since ASRA is a very significant part of the agriculture budget, there is a lack of money for research, innovation and other expenditure that could contribute to a more diversified agricultural sector and overall economic diversification. In many OECD countries there has been a shift away from support linked to commodity output and towards different types of payments, often coupled with land-use objectives. In many cases, this shift has been intended to contribute to rural areas' economic and social revitalisation, and is not simply a means of maintaining farm incomes. However, there have been concerns about the sector-specificity and economic costs of many of these policies, which call into question their effectiveness for addressing non- agricultural objectives, including rural development (OECD, 2009a). When adapting its agricultural support system to a broader range of policy objectives, including land use and economic diversification, Québec's policy makers will have to keep these experiences in mind. 3.4.2 Economic development, natural resources and environment A weak integration of economic development measures with rural policy can affect outcomes… Several economic development programmes support activities in rural areas. Besides broad economic development strategies for Québec (2007), its resource-based regions (2001) or specific sectors, the approach of Québec's Ministry of Economic Development (MDEIE) includes: the work of CLDs, particularly through the local investment funds (FLI); help for single-industry communities, often located in rural forestry-based areas; self-employment through micro-credits; and support for co-operatives, mostly outside of the urban centres. Rural CLDs combine various means of financial support mainly focused on individual firms. In both rural and urban areas, CLDs aim at: promoting entrepreneurship by offering support services for start-ups and existing companies; developing and monitoring a local action plan for business and employment; and acting as an advisory body for local employment centres (CLEs) whose representatives sit on CLD boards. A total of 120 CLDs provide loans, loan guarantees and other investments to OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 223 enterprises through three initiatives: local investment funds (FLI), financial help for young entrepreneurs (FJP) and financial help for firms active in the social economy (FDEÉS). CLD support is complemented by investments made by the federal and the Québec government, private funding and financial institutions. Between 1998 and 2006, the measures involved total investments of CAD 3.80 billion (the CLD share was CAD 346 million; ACLDQ data). Table 3.3 shows the impact of the three support programmes: Table 3.3. Impact of approved CLD projects Financial help for Financial help for Local investment firms active in the young entrepreneurs funds (FLI) social economy (FJP) (FDEÉS) Jobs (1998-2006) 60 461 16 895 39 131 newly created 23 111 15 991 12 667 maintained 37 350 904 26 464 Enterprises (1998-2006) 5 962 6 442 4 565 newly created 2 696 6 308 1 592 consolidated or expanded 3 266 134 2 973 Investment 2 037.4 752.2 1 006.8 (in million CAD, 1998-2006) CLD contribution 202.2 45.1 98.9 Average CLD support per 38 195 5 088 21 218 request approved (in CAD, 2004-06) Main sources of investment CLDs: 10% CLDs: 5% CLDs: 9% (2004-06) Financial institutions: 39% Financial institutions: 44% Québec government: 32% Private funding: 23% Private funding: 25% Financial institutions: 19% Source: Government of Québec (2009), Bilan triennial des centres locaux de développement 2004-2006, ministère du Développement économique, de l'Innovation et de l'Exportation, Québec; ACLDQ data. Québec's single-industry communities, most of which are in forestry, are supported through special measures and two complementary funds. Many of these communities are affected by industry closures or restructuring. They are supported for establishing revitalisation committees and for diversifying their economic base. Different administrative regions participate in the ACCORD project “niches of excellence” (créneaux d'excellence), which specialises in the value-added wood industry or in technologies for underground mining. A recent bill on the occupancy of forestry land also OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 224 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC involves support for affected single-industry municipalities. Moreover, MAMROT and MDEIE are implementing two complementary financial support programmes: i) CAD 15 million has been earmarked for 54 communities that are currently in a crisis situation to develop a revitalisation plan for industrial diversification; and ii) CAD 60 million can be spent by single-industry MRCs on firms in order to develop activities scheduled in the revitalisation plan (data from MDEIE). Firms are supported through the CLDs in collaboration with the authorities for employment (Department of Employment MESS and, at the local level, CLEs). The community micro-credit programme is a public-private partnership (PPP) activity for supporting self-employment which is not related to CLDs. Programmes target private capitalisation and public functioning which includes micro-credits and training programmes. Investing in self-employment is a particularly relevant and economically viable measure for economic development in rural Québec, particularly when linked to traditionally disadvantaged groups such as rural women, immigrants or First Nations people. CAD 1 invested through the network of community credits in 14 bodies situated in rural areas generated CAD 6.2 in additional investment, a better ratio than for all community credit bodies (MDEIE data). Support for co-operatives is another way to empower rural areas through social and human capital and community development. An MDEIE programme to develop co-operatives has created over 6 000 jobs (2002-06) mostly outside of big urban centres. The survival rate of co-operatives is significantly higher than for enterprises overall. This may be due to the fact that the co-operative process requires people in the community to commit themselves collectively to starting the co-operative and they are therefore more likely to continue to support it. However, this policy framework for diversification presents a series of challenges: First, the weak integration of social and economic development measures at the provincial level hampers community transitions and sustainable land occupancy. An approach which aims to strengthen social cohesion prior to spending on local economic development is promising, but the PNR's institutional separation from local and regional economic policy limits the development perspectives of businesses, particularly in areas struggling with demographic change and sluggish economic growth. The integration of proactive economic support measures and rural policy in a place-based development strategy is a challenge, especially given the institutional separation between MAMROT and the MDEIE, which is in charge of CLDs since the 2003 government reshuffle. Moreover, many OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 225 economic development policies are implemented not at the supralocal but the regional level and are more difficult to co-ordinate with MRCs. Second, the CLD approach is not particularly proactive. Its different support measures are not part of a strategy for key industries that would promote the clustering of economic activities as does the ACCORD project which mostly targets urban areas.8 The rather passive case-by-case approach is in part due to the fact that much of rural Québec seems to lack the basic structure needed for a cluster approach because of an often weak entrepreneurial tradition and a lack of core small and medium-sized enterprises (SMEs) to create clusters of firms in the many small and widely dispersed rural communities. Many rural areas do not have a dominant industry, and if they do, it is often a large branch plant. Third, neither MAMROT nor the Department of Tourism (MTO) has a clear strategy for supporting rural tourism. Rural tourism and other amenity- based activities are acknowledged in the PNR as sectors with promising growth opportunities. However, an explicit development strategy involving policy and economic support measures is lacking. Tourism projects are often organised at the regional level (regional tourism associations, ATR) with little integration of rural topics and it is difficult to convince MRCs to co-operate on particular fields of rural tourism. … while natural resource management only gradually involves regional and local actors… As discussed in Chapter 2, an important part of Québec's GDP depends on natural resources and related exports. Most resources are located on public land as more than 92% of Québec's territory is publicly owned and government-controlled. The economic returns from natural resource industries in forestry, mining and energy are estimated at 10% of the provincial GDP. This represents up to 15% of investments and over 175 000 jobs throughout the province (data from MRNF). An important share of these results directly affects Québec's rural areas and their communities. The decision-making framework has evolved towards both de- concentration and decentralisation.9 The government aims to increase regions' and First Nations communities' autonomy with regard to their natural resources. To do so, the ministry in charge (MRNF) has adopted an “integrated regionalised approach” (AIR) that allows administrative regions to play an active role in the development of their natural resources and territory by delegating certain planning and management powers and responsibilities to the regions. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 226 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC The government gives an enlarged role to regional actors through commissions on natural resources and the territory and local round tables, but the MRCs' role in these activities is limited. The commissions work with CRÉs and First Nations communities to formulate regional plans for the development of resources and the territory (PRDIRT). These plans try to define the optimal degree of use and protection of an administrative region’s natural resources by integrating economic, social and environmental considerations into a “sustainable development” approach. The PRDIRT promotes coherence among public and private actions and delegates specific competences to the regions. MRCs and municipalities participate in local round tables on integrated management, but still have little legal decision- making power on the use and management of natural resources. The government is reluctant to further decentralise responsibilities because of the large number of jobs in forestry which, if put at risk, might destabilise local labour markets. The enlarged role of CRÉs is part of a new approach to the forestry sector which stresses the participation of local and regional actors. The recent bill on the occupancy of forestry land tries to enlarge the role of local and regional development actors but also to consolidate the province's role as an intermediary to ensure more sustainable and higher value-added exploitation of forests. Moreover, First Nation communities are encouraged to participate in the newly established regional bodies and, like the MRCs, can become responsible for the management of so-called “proximity forests” within or close to municipal borders. In general, the government tries to strengthen the local forestry industry by increasing the use of wood in Québec, particularly in public buildings, other non-residential construction and multifamily housing. Using wood for “green construction” is one of the four cornerstones of the industrial development strategy which also includes wood as an energy generator, “green chemistry”, and a modernised primary processing industry. Reacting to the recent crisis, Québec has approved several forestry support programmes. Already, the 2006 Support Plan for the Forestry Sector (Government of Québec, 2006b) involves CAD 722 million to support workers (e.g. assistance to find a new job), communities (e.g. financial support within a contract on diversification), forestry management and business development. More recently, the federal and the provincial governments have agreed on a joint effort (CNW Group, 2009) to support public and private forestry and affected communities with measures in the amount of CAD 200 million (2009-11), with a view to maintaining and creating around 8 000 jobs. In the mining sector, the government promotes more sustainable and diversified exploitation, which can result in stronger benefits for local and aboriginal populations. In this respect, the new Mineral Strategy of Québec targets the growth of the mineral sector through enhanced geo-scientific knowledge, training and support for OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 227 entrepreneurship so that more local firms can participate in the exploitation and transformation of resources that are currently mostly controlled by large multinational companies. A new mining fund endowed with CAD 200 million over ten years and financed through mining fees paid by the companies contributes to these objectives. Importantly, the new strategy aims at stronger involvement of local and aboriginal populations through financial and job training efforts as well as consultation mechanisms. To ensure more sustainable exploitation, the strategy commits to restoring abandoned mining areas and introducing stricter rules for environmental impact assessments. Hydroelectricity and wind energy represent the major investments in the current Energy Strategy 2006-15. According to the MRNF, there are hydroelectricity projects for 4 500 MW until 2010 with a total investment of CAD 25 billion, mostly by the province-owned electricity generator and distributer Hydro-Québec. In contrast, wind-energy projects include an investment of CAD 10 billion until 2015 for 4 000 MW. A study has confirmed that over 70% of the economic benefits from wind energy investments would remain in Québec, with over 62 000 direct and indirect jobs generated over an exploitation period of 25 years (Hélimax, 2004). The government also supports small-scale hydro (maximum 1 MW) and biomass-based energy production. A recent working plan (Government of Québec, 2009c) explores the potential of forestry biomass as a basis for energy production. This is coherent with the government's strategic objective to include up to 5% of ethanol in transport fuel sales by 2012, most of it from ligneous biomass. Also, a working group supported through the PNR's rural future fund conducted research with out-of-use sawmills whose boilers produce energy with biomass on a small scale. The rationale of this policy is to develop new businesses in suffering resource-based regions and to make small communities independent from other sources of energy. In return, Hydro-Québec can export more electricity, mainly to the US northeast. … and environmental measures are mostly excluded from rural policy. Québec's Ministry of Sustainable Development, Environmental Affairs and Parks (MDDEP) is among the ministries with the broadest inter- ministerial governance approach. Based on the Government Sustainable Development Strategy 2008-13 (GSDS), the ministry's Sustainable Development Action Plan 2008-13 (SDAP) is implemented through the Loi sur le développement durable (sustainable development law) and explicitly involves all ministries and public organisations in its responsibilities for OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 228 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC environmental protection, sustainable development and the management of natural parks. Although it adopts a mostly top-down governance structure, the MDDEP has extended its co-ordination structure to reach all public administration bodies down to the most remote municipal council. The SDAP calls for greater involvement of communities and local participation, integrating the sustainable development imperative within all local and regional development strategies. The SDAP places the need to encourage collective participation at the local level both to mobilise citizens around common interests for their community and to bring people closer to their local and regional environment by creating a sense of stewardship. Community mobilisation and participation go beyond specific water and air quality management issues as this is seen as the foundation for a holistic view of sustainable development. Although the PNR is already compatible with sustainable development principles, it could benefit from a similar approach. Some rural communities or MRCs have already put in place approaches close to the Agenda 21 framework, e.g. by including in the rural pact action plan a vision of what to leave to future generations. Given that little decision-making authority over the management of the environment exists at the rural community level, compared to natural resource management and enhancement, this territorial development approach is challenging. It is of special interest for rural and small-town communities as more power would help all actors involved in territorial planning and visioning to gain awareness of the principles underlining sustainable development. The SDAP offers advisory support to local development actors and organisations in areas of sustainable development. There is limited co-operation on rural areas' sustainable development. Although the MDDEP sits on the inter-ministerial rural committee and has much of its field of intervention in predominantly rural areas, no commitments by this ministry have been included in the PNR. Moreover, the SDAP does not make much use of the MRC in its implementation structure but concentrates on regional and municipal bodies. This goes against a growing trend in many OECD countries to consider environmental protection measures within a narrow rather than broad rural policy. Spain has gone even further in this respect, by integrating rural and environmental affairs under the same ministry. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 229 3.4.3 Health and education Broader rural policy addresses cost and delivery challenges in health services… Québec has built its health policy on the premise that services are universal, accessible and publicly managed. However, a recent ministerial report (Castonguay, 2008) recommends quantitative and qualitative restrictions to ensure the public health system's viability. The rapid growth in demand for health services, mostly owing to the increasing cost of treatments and services as a result of technological evolution and ageing, is placing unsustainable financial pressures on the system. A new approach to health care is recommended which may affect the quality and accessibility of these services in rural areas. The Castonguay report proposes to limit health care investments so as to adjust cost increments to the growth rate of Québec’s collective wealth. To do so in a context of projected accelerating health-care costs, it is recommended to make the health system more efficient and to make greater use of private insurance schemes working in parallel with the public system. Due to rural ageing, health-care needs and cost per capita are expected to increase at a faster pace than in urban centres. If implemented, the impact of the report’s recommendations will have to be well monitored, as similar policies in other OECD countries have tended to be detrimental to rural service provision (Castonguay, 2008). Québec’s health services are currently experiencing important shortages of both medical specialists and nursing staff. These shortages affect the entire province, but especially rural areas. Urban health service centres, although not prioritised by the government, are often the first to fill their vacancies (Association québécoise des pharmaciens propriétaires, in La Presse, 24/02/2009). The government has some innovative solutions for dealing with the lack of health professionals in rural areas. One is to resort to “nomadic” doctors and specialists who make rounds to different health centres (CSSS) across the territory and offer services that are otherwise not available in rural health institutions. This may be a better solution than bringing rural patients systematically to a city for specialised treatment. Unfortunately, the shortage of medical staff has forced the ministry in charge (MSSS) to resort to using “nomadic” medical doctors not just as a complement to local physicians but to allow regional centres to fill their basic needs in health personnel. Because they receive higher wages, these “nomadic” doctors tend not to be interested in permanently occupying vacancies in regional health centres (Association des anesthésiologistes du Québec, in La Presse, 14 June 2009). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 230 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Québec also offers incentives to medical school graduates to practice outside of metropolitan areas. This programme called PREM (“Regional medical workforce plan”) is a tool that has received positive reports in other OECD countries. Québec does not have a study evaluating its impact on rural health-care provision. However, according to the Fédération médicale étudiante du Québec, PREM is one reason why Québec is experiencing out- migration of its medical school graduates who undertake residency in other provinces. Because they receive better pay elsewhere, they often do not return to Québec once they have finished. For its part, Québec has been unable to attract resident doctors from other provinces (La Presse, 16 June 2009). Another MSSS initiative with better results in rural areas is the Réseau québécois de Villes et Villages en santé (RQVVS). This community-based initiative (Box 3.9) was launched by civil groups to promote the local population's well-being through community involvement and activities. It mobilises the community's resources to strengthen citizens' capacity for self- help activities, favouring a local climate that maximises “gross municipal happiness”. Initiated in the community of Rouyn-Noranda, the initiative was quickly copied by many other rural and urban municipalities throughout Québec. Today these groups are linked through a network, their activities are partly supported by the government, and many of their actions have been integrated in the MSSS service delivery mechanism. … and education… In Québec, delivering education to rural communities can be extremely expensive because of distance and declining school enrolments. After decades of success in enhancing access to public education, the sector is experiencing a crisis which disproportionately affects rural Québec. In 2009 public primary and secondary schools registered some 20 000 students fewer than in the previous year and some 84 000 fewer over the last five years. Since 2003, 134 public schools have been closed in Québec mostly due to the lack of enrolments as a consequence of demographic change (data from the Ministry of Education, MELS). Many institutions situated mostly in remote rural areas face dramatic reductions in student numbers. This results in greater costs per student which are often difficult to meet and justify. On the other hand, in some urban centres authorities are unable to cope with the growing demand for educational services and the necessary infrastructural investment. As a result, Québec has realised that its capacity to maintain the education system's quality, accessibility and geographical dispersion throughout the territory is under threat. Some stakeholders predict that the current OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 231 Box 3.9. Community initiative to improve quality of life: Villes et Villages en santé The Villes et Villages en santé initiative (Healthy Towns and Villages, RQVVS) aims to improve citizens' health, happiness and quality of life. It does so not through medical intervention, but by stimulating a sense of community, collective initiatives, and a feeling of belonging and self-realisation among local populations. RQVVS incites municipal decision makers to be aware of the importance of their long-term strategic planning and day-to-day decisions for citizens' health. It encourages them to work with a network of partners from the health sector and all community actors involved in projects that target citizens' quality of life and the establishment of healthy lifestyles and living habits. The concept behind the RQVVS network is to co-ordinate the different municipal services offered, by the public health network, the school system, the business sector, by community organisations or any other civil group. The actions undertaken by RQVVS vary from region to region. Some organise community kitchens, youth centres or other means of helping the needy. For others, their projects aim at improving or preserving the local environment for example by organising community-driven clean-ups of local green spaces or planting trees. The originality of this movement and the reasons for its success are related less to the community projects carried out than to the process of encouraging the local population's active participation in community life by working together on issues of local concern and bringing them to prioritise their needs and welfare choices as well as those of their community. Altogether, the RQVVS network has 177 members, of which 165 municipalities, four arrondissements, seven MRCs and one neighbourhood. The network membership represents over 50% of Québec's population. Source: OECD, Réseau québécois de Villes et Villages en santé. generation of students will not benefit from the same access and quality as previous generations. This has become a concern for local and regional development actors. The government has developed innovative initiatives to protect and maintain the quality of educational services offered in rural areas. It has recognised that resources should not be distributed based entirely on the tally of students in an area, but that a critical mass of staff and services must be maintained to guarantee access to quality educational services. Vertical co-ordination boards (Tables interordres) that link the agents of different school levels within a region are promoted to drive optimisation of the education system's resources. They also co-ordinate with local actors, including the local employment centres (CLEs), to adapt services to the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 232 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC area's needs. Prior to any decision to close a village school, parents and the local community must be consulted, a reflection of the government's effort to include them in the debate on quality of and access to local education services. Together with Québec’s school boards, programmes have been put together which allocate resources to school boards to maintain rural educational services. These include projects to maintain the “last village school” (dernière école du village) and to create networks of rural schools through ICT. The latter project, Ecole éloignée en réseau (Box 3.10), is a commitment made by MELS within the PNR. It is comparable to a project implemented in Alabama (United States) where in 2008 more than 22 000 courses were offered through the Connecting Classrooms Educators and Students Statewide (ACCESS) initiative (The Economist, 18 July 2009). Box 3.10. Facing demographic decline in rural schools: École éloignée en réseau To meet the challenges of demographic decline in parts of rural and remote Québec, the government strives to innovate and reorganise educational services. The Ecole éloignéee en réseau (“remote schools network”) project aims at revitalising and re-professionalising small rural schools through networking, the use of fibre optics and information and communication technology. Collaboration at a distance and joint development of what is taught in classes contribute to meeting the project’s objectives. Evaluation studies made by CEFRIO show that this can ensure a future for some small rural schools and enhance students' school achievements. The involvement of different actors, from MELS to school boards, teachers, students and local/regional development authorities, has been crucial to identify their new roles and responsibilities. Teachers and the local communities have become aware of the opportunities provided by ICT and broadband technologies and their possible effects on the quality of education. Moreover, the newly established networks offer possibilities to get in touch with experts located elsewhere and to enhance the quality and quantity of other rural services. The programme which is part of MELS' commitments to the PNR was launched in 2002 and is scheduled to end in 2010. The government of Québec has invested about CAD 10 million of public funding to cover expenses ranging from research to the management and technological resources. Source: CEFRIO (2008), Fiches de projet du CEFRIO, paper prepared for the OECD. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 233 Although they have slowed the trend, such initiatives have not been able to stop school closings across Québec’s mostly rural territory. The main obstacle is financial: Québec appears to have made the societal decision to maintain and encourage access to quality educational services throughout its territory, but this comes at a price and Québec is mostly looking towards federal transfers to cover the cost. However, as education is a provincial responsibility, this may be risky. The federal-provincial equalisation payments, which are written into the Constitution, exist to enable each province to provide a reasonable common level of services such as education, but the level of funding reflects the relative fiscal position of the various provinces. Consequently, Québec has no direct influence on the amount of money it receives through equalisation. The federal government does however play a major role in funding training programmes and postsecondary education programmes. 3.4.4 Employment and migration … while implementing a territorial approach to employment and labour market issues… Québec’s Ministry of Employment and Social Solidarity (MESS) implements a territorial approach. MESS has de-concentrated its service delivery to 147 local employment centres (CLEs) distributed throughout the inhabited territory. However CLEs in rural areas cover relatively large geographic areas with relatively small populations so it is much harder to provide services that improve the local labour market. CLEs work with employers and the labour force to balance employment demand and supply and avoid local labour market mismatches. CLEs are well co-ordinated with the economic (CLDs) and social development institutions present in rural areas. MESS strives to ensure the equilibrium of local labour markets, fighting against poverty and social exclusion while supporting community- based initiatives and local volunteerism. A “pact for employment” helps to achieve these aims at the local level. This pact, implemented through a decentralised commission of labour market partners, is an agreement between the government, partners representing the workers’ organisations, employers, the education sector, the business community and local organisations. The pact helps to co-ordinate the efforts of its signatories around similar premises: • Improve labour market access for those who want to work. This includes interventions to better prepare job seekers for the labour market and to help individuals seek out appropriate employers. The OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 234 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC pact for employment promotes support and training activities for youth, immigrants and members of minority groups, and for members of the workforce with physical or mental disabilities. have also been set up with schools to facilitate simultaneous work and study and to help prevent young people from dropping out of school. • Make work a more valued activity. The pact wants to make employment more attractive to the unemployed by highlighting the advantages of work and improving the incomes of low revenue workers. This involves several different initiatives, from fiscal breaks for workers with lower revenues and the establishment and monitoring of minimum wage legislation, to the development of employment revenue simulators that help illustrate the benefits of work and income to those living on social welfare benefits. • Improve workforce training and business productivity. This encourages the workforce’s continuous human capacity development by supporting training opportunities and offering tax credits to businesses in certain sectors. The pact for employment attempts to increase the supply of training opportunities and make them available throughout Québec, including in rural areas. Employers are encouraged to give greater recognition to the training achievements of workers. • Adapt to specific local and regional labour-force needs. Regional committees have been set up to co-ordinate efforts and strategies for employment, training, business needs and economic development with local actors. Through these committees, a labour force adjustment plan and a work management plan are developed that take into consideration each regional labour market's characteristics. Co-operation between the business sector and local schools should encourage a better prepared workforce and give opportunities to graduating students. … and fighting demographic issues through the in-migration of youth and immigrants. Whereas poor labour market outcomes are not a major problem for young people in Canada, youth living in remote rural areas as well as young people from the First Nations are over-represented in this group (OECD, 2008d). It is important for policy makers to address the issue by designing special programmes to help young people to move where job opportunities exist and to better inform them about labour market opportunities and living conditions. In this regard, Québec puts special OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 235 emphasis on outreach: instead of waiting for young people to visit employment service centres, policies try to reach out directly and assist them in their efforts. The Québec government has created a Youth Secretariat to react to poor labour market outcomes and out-migration of youth. Its main mandates are to ensure the coherence of policies affecting youth, to co-ordinate actions of different youth organisations and to ensure correct implementation of Québec’s youth policy. Among the main challenges set by the second edition of the secretariat's Youth Action Strategy (2009-14) are also “regions”. Youth are placed at the heart of regional development to alleviate their problems in rural communities. The objectives are to encourage the active presence of youth in regions and local democratic institutions and to support the involvement of First Nations' youth in their communities and within Québec's society. The strategy has also set up measures such as tax credits for recent graduates who take up jobs in remote resource regions. It includes a regional youth investment fund that supports youth-driven projects in the region. In Québec, as in all OECD countries, there is a tension between encouraging youth to leave rural areas to improve their personal situation in terms of career development and education and trying to retain them in the community to ensure its long-term survival. An initiative promoted by the Youth Secretariat that is having a positive impact in rural areas is the Place aux Jeunes programme. This assistance programme (Box 3.11) was created to counter the out-migration of youth from rural regions and help them to return by facilitating their integration into the community. Migration agents in 70 MRCs are in charge of implementing this approach locally. The initiative promotes awareness of possibilities for migrating to rural regions so as to encourage more youth to find residency, to initiate their career and to ultimately establish their home in rural areas. Place aux Jeunes is innovative, but to avoid potential duplication should collaborate with the federal government's Youth Employment Strategy (YES) and its Skills Link component which helps young people with multiple barriers to employment (of which coming from rural areas) through longer-term assistance (OECD, 2008d). Because immigration rather than natural growth is the source of population growth in Québec, as in most highly industrialised countries, rural Québec needs to find a way to recruit, attract and retain more immigrants. If Québec, which has significant legislative powers regarding immigration,10 fails to do so, the demographic structure of rural areas will become even more unfavourable to growth, opportunities might go untapped for lack of entrepreneurs and labour, and the persisting gap in the ethno- cultural diversity of rural areas compared to metropolitan regions will further expand (Beaujot, McQuillan and Ravanera, 2007). In reaction to the OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 236 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Box 3.11. Countering out-migration of youth: Place aux Jeunes Place aux Jeunes du Québec (PAJQ) was designed to address the factors driving youth out of their rural areas. It has expanded across Québec to include 70 member MRCs and an important number of supporting partners. The mission of PAJQ is to encourage youth to migrate to rural areas, to take up residency in these communities and to maintain these young migrants in rural areas. To do this, PAJQ pools together and co-ordinates the resources and capabilities of its many partners along with those of the municipal, regional and provincial administrations. The main objective is to stop rural out-migration of youth to urban centres. It also aims to favour the social engagement of rural youth; to facilitate their professional integration in rural areas; to raise public awareness of the local impact of ongoing out-migration; and to stimulate youth- driven entrepreneurship and business creation. The activities promoted by PAJQ take different forms: exploratory journeys are organised to bring youth from cities to rural areas where they are given opportunities to network with local socioeconomic agents, entrepreneurs and potential employers. PAJQ also acts as a link between rural employers with job openings and youth wishing to migrate to the region through its job bank website (Accro des régions). A CyberBulletin aims at rural youth who have left their communities for the city. The objective is to make sure that they do not lose contact with their places of origin. The CyberBulletin reports current events but also communicates services and potential job and business opportunities in the readers' region of origin. Another PAJQ activity is to work with adolescents in rural areas in order to orient their educational career choices to make them compatible with a professional life in the region. Finally, PAJQ holds information sessions in schools, universities, youth organisations and job placement offices in mostly urban centres to promote rural regions as an alternative career destination. According to PAJQ’s latest annual report (2007-08), 875 youth participated that year in the exploratory journeys, 252 of whom were potential entrepreneurs. PAJQ’s job bank held 16 431 offers and it was estimated that over 23 000 adolescents became aware of rural careers through PAJQ’s activities. That year, 965 youth decided to migrate to rural areas with PAJQ’s assistance. Some 802 migrated in order to occupy a specific job and 59 set out to start their own business. Of to the total number of migrants to rural areas under PAJQ, a little over half (501) did not originate from the MRC to which they migrated. The Canadian federal government has recently taken interest in PAJQ, replicating the experience in other parts of Canada. The Rural Secretariat (RS) in collaboration with Canadian Heritage has set up pilot projects in Manitoba, Nova Scotia and Yukon. PAJQ is having an active advisory role in the establishment of these new projects. Source: OECD, Place aux Jeunes du Québec. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 237 fact that most international immigrants have gone to urban areas (see Chapter 1), Québec can use its legislative competences to facilitate immigration to rural areas by attracting international migrants with the trade, artisanal or entrepreneurial skills needed in rural areas. Reduction of the technological gap through modern ICT also offers opportunities to reach out to new groups of migrants previously less tempted to move to rural areas. The Québec government has developed regional action plans that help immigrants access local labour markets. SRQ and some MRCs have established a presence among immigrant communities in cities to persuade second-generation immigrants of the desirability of opportunities in a rural setting. Policy efforts to attract and integrate migrants can be strengthened through enhanced co-ordination. Apart from the government bodies mentioned above, many actors have not yet considered making in-migration a goal. This is especially true for foreign immigrants. Despite the government's efforts to promote the positive impact of migration, readiness to accommodate immigrants of ethnically and culturally diverse origins may not be as strong as the government suggests (Nieguth and Lacassagne, 2009). Initiatives at both the federal and provincial level are complementing MAMROT's efforts, such as the Bouchard and Taylor (2008) report, which has increased awareness of immigrants' impact and how to benefit from increased diversity. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 238 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Notes 1. The decrease in number of municipalities is due to municipal mergers. 2. According to the 1972 law on agricultural producers (Loi des producteurs agricoles), the UPA has the exclusive right to represent the agricultural profession in Québec. Under certain conditions, the trade union can collect compulsory fees and contributions from farmers (source: UPA). 3. In this report, the term “community” includes the following related elements: a specific geographic territory; the individuals who occupy that territory; and the set of social relations that link those individuals (Freshwater, 2004). 4. Bringing together a great variety of actors involved in rural development, the “Day of Rurality” highlights the most innovative achievements. The Grands prix de la ruralité are awarded to individuals and bodies as well as promising initiatives that resulted from the PNR. MRCs can apply to organise this event. 5. The nine cities are: Montréal, Québec, Laval, Gatineau, Longueuil, Sherbrooke, Saguenay, Lévis, Trois-Rivières. 6. The Desjardins Group is the largest co-operative financial group in Canada and by assets the country's sixth largest financial institution (2008). It has 513 local caisses mainly in Québec, but also in Ontario and affiliated branches in New Brunswick and Manitoba. The caisses are autonomous legal entities with a common service offer, shared support services (IT and other) and mechanisms for financial stability. Loans to agriculture represent a large part of Desjardins' business. 7. The regulations included in the law on the protection of agricultural land and activities (Loi sur la protection du territoire et des activités agricoles, adopted in 1978 with an important amendment in 1997) are the core of the provincial land use legislation. The law is administered by a Commission for the Protection of Québec's Agricultural Land (CPTAQ). 8. The government promotes the clustering of economic activities through its ACCORD project and related funding. This project identifies and develops regional clusters of excellence. Given the small and often OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 239 dispersed character of rural Québec, many communities lack the conditions needed to take advantage of the ACCORD approach. 9. Whereas “de-concentration” describes the shift of certain administrative decision-making powers to agents located throughout the territory who are linked to the central power by hierarchical subordination (in Québec often the regional directorates), "decentralisation" implies a hierarchical transfer of responsibilities to lower levels, including the control of funding sources, public election of leaders and significant flexibility as to the choice and assignment of necessary competences (Arbour, 2007; SRQ, 2006b). 10. The Canadian Constitution Act gives the federal government and the provinces concurrent legislative powers over immigration. However, with the 1991 Canada Québec Accord, Québec has obtained responsibility for the selection, reception and integration of immigrants to Québec and has implemented its own selection criteria with a strong emphasis on establishing facilities for learning the French language. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 240 – 3. 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ASSESSMENT OF RURAL POLICY IN QUÉBEC Jetté-Nantel, S. (2008), Québec's National Policy on Rurality, AEC-640, Fall 2008. Nieguth, T. and A. Lacassagne (2009), “Contesting the Nation: Reasonable Accommodation in Rural Quebec”, Canadian Political Science Review, Vol. 3, No. 1, pp. 1-16. OECD (2001), Multifunctionality. Towards an Analytical Framework, OECD Publishing, Paris. DOI::10.1787/9789264192171-en http://dx.doi.org/10.1787/9789264192171-en. OECD (2002), OECD Territorial Reviews: Canada, OECD Publishing, Paris. DOI::10.1787/9789264176300-en http://dx.doi.org/10.1787/9789264176300-en. OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris. DOI::10.1787/9789264023918-en http://dx.doi.org/10.1787/9789264023918-en. OECD (2007), OECD Rural Policy Reviews: Mexico, OECD Publishing, Paris. DOI::10.1787/9789264011687-en http://dx.doi.org/10.1787/9789264011687-en. OECD (2008a), OECD Rural Policy Reviews: Netherlands, OECD Publishing, Paris. 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OECD (2009g), “Questionnaire for the Integration of the Background Report”, internal working document with information provided by MAMROT, Directorate for Public Governance and Territorial Development, OECD. Ouimet, B. (2009), « Protection du territoire agricole et développement régional. Une nouvelle dynamique mobilisatrice pour nos communautés », rapport remis au ministre de l'Agriculture, des Pêcheries et de l'Alimentation du Québec, April. Pacom, D. (2001), “Being French in North America: Québec Culture and Globalization”, American Review of Canadian Studies, Vol. 31. Partridge, M.D. and M.R. Olfert (2008), “Dissension in the Countryside: Bridging the Rural-Urban Divide with a New Rural Policy”, draft OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 244 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC prepared for presentation at the International Agriculture Trade Research Consortium (IARTC) Symposium “Globalisation and the Rural-Urban Divide”, Seoul National University, Seoul Korea, 30 June 2008. Petrick, M. (2006), “Why and How Should the Government Finance Public Goods in Rural Areas? A Review of Arguments”, Leibniz Institute of Agricultural Development in Central and Eastern Europe, http://ageconsearch.umn.edu/bitstream/14961/1/cp06pe03.pdf. Pronovost (2008), « Agriculture et agroalimentaire: assurer et bâtir l'avenir. Propositions pour une agriculture durable et en santé », rapport de la Commission sur l'avenir de l'agriculture et de l'agroalimentaire québécois, January. Saint-Pierre, M.R. (2009), Une nouvelle génération de programmes de soutien financier à l'agriculture. Pour répondre aux besoins actuels et soutenir l'entrepreneuriat, Ministère du Conseil executive. Solidarité rurale du Québec (SRQ) (2006a), Avis pour une nouvelle Politique nationale de la ruralité, Solidarité rurale du Québec, Nicolet (Québec). SRQ (2006b), « En quoi consiste une décentralisation démocratique ? », Vincent Lemieux, 14e Conférence nationale de Solidarité rurale du Québec, http://agora.qc.ca/colloque/solidariterurale.nsf/Conferences/En_quoi_co nsiste_une_decentralisation_democratique__Vincent_Lemieux. TBS (Treasury Board of Canada Secretariat) (n.d.), “Plans and Priorities Agriculture and Agri-Food Canada”, www.tbs-sct.gc.ca/rpp/2007- 2008/aafc-aac/aafc-aac01-eng.asp, accessed 4 June 2009. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC – 245 Annex 3.A1 Table 3.A1.1. Ministerial expenditures targeting rural residents and territories, in million CAD 2001 2006 Ministry or organisation % of total % of total Rural1 Total2 Rural1 Total2 rural rural Affaires municipales, régions et occupation du territoire (MAMROT) 138 2.18 1 475.1 208.3 2.59 1 519.0 Agriculture, pêcheries et alimentation (MAPAQ) 192 3.03 651.3 229.9 2.86 693.2 Culture, communications et condition féminine (MCCCF) 491.3 598.2 (culture) 39.3 0.62 39.1 0.49 MCCCF (women) 0.6 0.01 0.6 0.01 Développement économique, innovation et exportation (MDEIE) (CLD) 22.2 0.35 206.6 21.5 0.27 519.2 MDEIE (FLI) n.d. n.d. 3.0 0.04 MDEIE (enterprises) n.d. n.d. 51.6 0.64 Éducation, Loisir et Sport (MELS), (education) 3 652 57.59 10 621.9 4 387 54.65 12 638.0 MELS (leisure) 3.6 0.06 3.6 0.04 Emploi et solidarité sociale (MESS) 204.3 3.22 4 066.8 183.2 2.28 4 084.7 Santé et services sociaux (MSSS) 1 583 25 17 197.9 1 979.0 24.65 22 452.5 Ressources naturelles et faune (MRNF)3 158.7 2.5 382.2 149.2 1.86 462.8 Tourisme (MTO) 9.8 0.15 65.6 20.7 0.26 143.4 Transports (MTQ) 168.6 2.66 1 412.2 493.8 6.15 2 003.7 Jeunesse (SAJ) n.d. n.d. 9.3 7.6 0.09 9.4 Habitation (SHQ)3 168.9 2.66 248.7 210.7 2.62 340.5 Infrastructures locales (SOFIL) n.d. n.d. n.d. 38.7 0.48 148.9 Total 6 341 100 36 828.9 8 027.5 100 45 613.5 Change 2006 versus 2001 +26.6% +23.9 % 1. Expenses targeting rural residents and territories include the following support sectors, per ministry: MAMROT: infrastructure, village renewable, regional and rural development, and financial support for municipalities; MAPAQ – agricultural and agri-food businesses, fisheries and aquaculture; MCCCF: improvement of cultural offerings, regular credits for regional directorates, gender equality and improvement of the status of women; MDEIE: CLD funding, FLI loans to CLDs, enterprises, innovation and market development; MELS: educational services, Unités régionales de loisir and handicapped people; MESS: employment of individuals and enterprises; MSSS: health services and community development; MRNF: exploitation of natural resources (mainly forestry); MTO: tourism projects by firms and associations; MTQ: road network, land, maritime and air networks; SAJ: initiatives targeting needs and civic engagement of youth, Place aux Jeunes; SHQ: housing and habitation (including federal spending); SOFIL: local and rural infrastructures. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 246 – 3. ASSESSMENT OF RURAL POLICY IN QUÉBEC Table 3.A1.1. Ministerial expenditures targeting rural residents and territories (cont.) 2. Total expenses represent those included in the public accounts (comptes publics), Volume 2, published annually by the Ministry of Finance. They comprise all ministerial expenses for a given year. Contributions made by the Canadian federal government are not included. Besides expenses targeting rural and urban residents and territories and ministerial internal expenses, the total expenses also include (depending on the ministerial mission and portfolio composition): financial expenses (debt service); transfers to state corporations and ministerial bodies (such as Financière agricole du Québec), commissions, research and technology centres, museums and educational establishments; amounts attributed to a national fund (such as the one on heritage) or a research fund; financial support for students (scholarships); transfers to public pension systems; public health service system expenses; etc. 3. Expenses of Ressources naturelles et faune (MRNF) refer to 2004 instead of 2006. They do not include support measures for the forestry sector decided in the framework of stimulus packages reacting to the forestry crisis. Expenses of the Société d'habitation du Québec (SHQ) refer to 2003 and 2007, respectively, and included some transfers from the federal level. Source: Government of Québec, MAMROT. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 247 Chapter 4 Policy recommendations This chapter addresses the critical issues discussed in Chapter 3. It puts forward policy recommendations and provides additional information on current good practice in Québec and specific international examples which show how other countries are coping successfully with challenges similar to those in Québec. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 248 – 4. POLICY RECOMMENDATIONS Key points • The current governance arrangement for rural policy is strong, but may require a series of adjustments. Institutionally integrating the Politique nationale de la ruralité (PNR) with economic and entrepreneurial development would make the approach more holistic. This should be accompanied by: stronger incentives to modulate provincial policies, consideration of the impact on rural territories, and external monitoring and evaluation of rural policy. Integration of sectoral policies requires strengthening functional responsibilities at the supralocal level. This should include more diversified sources of revenue for local government and enable MRCs to design and implement territorial interventions. Finally, collaboration with the federal level should be facilitated at the local level. • Enhanced governance would favour the implementation of targeted interventions to promote development in lagging areas: i) Improving regional resilience to exogenous shocks. This is particularly relevant for resource-based and single-industry communities. Lagging and declining areas should be part of the broad process of community transition. ii) Strengthening existing and emerging sectors. This would require efforts to capitalise on modified agriculture and other primary activities, while supporting the development of emerging sectors such as renewable energy, rural tourism and retirement living. iii) Diversifying the rural economy. To achieve this objective, factors of production need to be improved. The use of land should be more flexible in predominantly rural areas. The local community should be involved in planning and it should be possible to develop productive on- and off-farm activities. Diversification would also benefit from the presence of skilled labour in rural areas. Human capital should be attracted, retained or created through targeted training. • An integrated rural policy should also promote sustainable use of rural amenities and respond to different environmental challenges. For instance, urbanisation in rural areas located on the urban fringe poses problems revolving around competition for land, congestion and intensive agriculture. These challenges require a stronger focus on the protection of valuable land and landscape. Conversely, remote rural areas risk being perceived as territories to be exploited instead of as possessed of comparative advantages OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 249 within a regional economy. Québec’s authorities may need to tackle these issues through stronger involvement of local communities. Introduction The current rural policy is widely accepted as part of a larger societal vision The example of Québec shows that a key factor of success for rural policy is its correspondence to a country or region’s larger societal vision. This simple but important lesson emerges from the analysis of Québec's rural policy and could greatly improve rural policy formulation in other provinces or OECD member countries. The lesson does not apply solely to rural policy, nor does it say anything new to policy theorists. Yet innovative rural development policy initiatives much too often do not reach their full potential because they are designed in isolation from a broader societal plan, especially one that looks beyond the rural population. Policy ownership is often maintained within the department or public body in which it was formulated. This makes it difficult for other parts of government and civil society to understand its purpose and work towards its implementation, thereby reducing the likelihood that they will support the policy. It also makes it hard to mobilise the general (and mostly urban) population in favour of such efforts. A society needs to have a widely accepted vision that is strong enough to stimulate ownership and cohesion around shared objectives. The role of rural areas in meeting these objectives and the contributions of rural development to society's shared vision must be readily identified and well understood by the population and its public administrators. This can be facilitated by giving a prominent role to academia and civil society actors involved in rural development as was done in Québec. The importance given to both civil society and academia by Québec's national policy on rurality (PNR) is mirrored in Finland's rural policy approach, another successful case of policy ownership (OECD, 2008b). Both examples show that rural policy is successful if it recognises civil society and academia not only as providers of local and technical knowledge, but as active participants with the government in programme implementation. Moreover, the importance attached in Québec’s rural policy to social and community capacity development is innovative, and its emphasis is unique in Canada. It is reasonable to see social capital and capacity building as a precondition for sustainable economic development, and experience with the federal government's Community Futures has shown that business development projects were most successful when they were able to create or OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 250 – 4. POLICY RECOMMENDATIONS strengthen a sense of local community (Freshwater, 2004). In contrast, there are many examples of failures in OECD countries to stimulate economic activity through costly investments in particular industries. In Québec, many projects undertaken at the local and supralocal level with decentralised funds from the PNR create the social conditions in local communities that make it possible to avoid spending large amounts of money on unsuccessful sectoral programmes. These projects also provide opportunities for young people and migrants to develop their own initiatives. This is particularly valuable for rural communities in demographic decline and for those in which youth have difficulties finding promising economic avenues. The strengthening of social capacity at the local and supralocal level is a sensible reaction to decreased public service expenditure in rural and small- town communities. Local partnerships favoured by the policy measures can facilitate the provision of services that are no longer offered by public authorities. This is particularly relevant in localities facing economic decline, such as many resource-based and single-industry communities. 4.1 Inclusive governance Governance should integrate rural policies for social and economic development… Québec's rural policy should allow for greater integration of responsibilities for territorial and community development with those for economic and entrepreneurial development. These jurisdictions are highly interdependent and at the heart of rural policy in many OECD countries. By separating them, the PNR is less than optimally effective, particularly given the lack of differentiation in parts of rural Québec’s economic base (see Chapter 2). While there may have been a good argument for separation in the past, when the lack of community capacity was the major obstacle to development, the effects of two rounds of PNR have raised the level of social capital enough to allow reintegration of the two elements of development. A single government body with a territorial approach should have responsibility for both rural social development and local economic development. Although the appropriate place of rural policy within government is a long-standing debate in OECD countries (Box 4.1), such an arrangement could favour a more holistic governance structure in Québec. Their integration would also allow local development centres (CLDs) to return to a ministry in charge of regional development policy and the PNR, as was the case under the former Ministry of Regions. This would facilitate rural development agents' bridge-building function between social and economic development. Even if regional county municipalities (MRCs) try OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 251 to link the two approaches, an integrated institutional counterpart for local authorities would enhance governance. Once the policies are integrated, MRCs could be put at the centre of a broad strategy for rural development, targeting rural-urban linkages, single-industry communities and rural competitiveness, and allowing rural agents to work on a more comprehensive basis. Box 4.1. The place of rural policy There is a long-standing debate in many OECD countries on the place of rural policy in government. Discussions have taken place on the administrative importance, the budget and tools of rural policy, and they have often resulted in second-best solutions. The results have been affected by the inertia of administrative arrangements or by exogenously defined funding rules (as in EU member countries which receive rural development funds as a “second pillar” under the Common Agricultural Policy). Many countries have created a division in charge of rural development in the Ministry of Agriculture, which has traditionally dealt with rural areas (e.g. Canada's Rural Secretariat within Agriculture and Agri-Food Canada or the US Under Secretary for Rural Development within the Department of Agriculture). In this arrangement, ministries have strong incentives to disregard the inter-sectoral dimension of rural development. This tendency is reinforced by the fact that agricultural interests are often better organised than rural development interests. Other countries have created a new body with expanded scope and explicit jurisdiction over rural development policies or have assigned this jurisdiction to another ministry. The first type can be found in both the United Kingdom (where DEFRA is the department in charge of environment, food and rural affairs) and Spain (where the Ministry of Environment, Rural and Marine Affairs was created by merging jurisdictions for agriculture and for environment). The second can be found in Australia, where the Department of Transport and Regional Services (DOTARS) is in charge of regional (rural) policy. Source: OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris; OECD (2008), OECD Rural Policy Reviews: Finland, OECD Publishing, Paris. In a related aspect, the policy should become more inclusive of the private sector and organisations currently excluded from rural pact funding projects. In principle, Québec's rural policy is place-based and multisectoral, largely in line with the OECD's New Rural Paradigm. The policy already goes a long way towards including cross-ministerial and multidisciplinary participation from the policy design stage. However, beyond private initiatives in rural laboratories and the funding of speciality products, efforts OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 252 – 4. POLICY RECOMMENDATIONS should be made to commit the private sector and institutional actors from business and agriculture to support PNR objectives. Closer incorporation of rural business and agrarian-based organisations would allow private actors to help use the new capacities of rural communities to increase entrepreneurship and take advantage of economic opportunities. Bringing private actors into promising rural pact approaches and innovation-related measures such as rural laboratories and speciality products should be encouraged and better integrated with business development policies than is currently done through the rather passive CLD approach. Rural laboratories often take an experimental approach, but their knowledge-sharing component can help structure future rural development. They offer support for many independent projects throughout the rural territory, many of which are valuable for testing the viability of ideas and for encouraging individuals and rural communities to think “out of the box”. Efforts to better link the laboratories, announced by the government for 2010, will be important to encourage knowledge sharing and expand business opportunities. Since innovation is a long-term process and a positive influence on regional growth only appears after several years (OECD, 2009c), knowledge sharing may have important benefits over a longer period of time. In this regard, the seven-year term of the second PNR is helpful because it provides a window for the effects of innovation to emerge. Many OECD countries share the difficulty of sensing new economic opportunities for rural areas, and the laboratories are a promising approach to this problem. … while there is a need to modulate policy interventions in rural areas. For the second PNR, Québec is on the right track by including commitments from other ministries. Like Finland, it tries to strike a balance between committing all sectoral ministries’ policies directed to rural areas (“grand plan”) and specifically targeting certain rural areas with relatively limited financial resources (“niche policy”). Unlike OECD countries such as Mexico or Spain,1 whose laws on sustainable rural development bring other ministries into rural policy at the co-ordination and implementation stage (an approach that is already advanced compared to other countries), Québec has chosen to fully involve ministries early in the policy design and planning stage. This shows greater understanding of the policy principles in favour of compromise and ownership. Consequently, when rural policy has a cross- ministerial character from the start, the concerns and perspectives of other ministries can be better integrated into the policy. This improves coherence and makes it more likely that inter-ministerial commitments will be honoured. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 253 To optimise public resources, policy design and implementation has to take into account the particular conditions of rural areas. Rural areas are strongly heterogeneous in terms of population, density, size and distance between communities. Valuable lessons can be learned from Finland's Rural Policy Committee, Canada's rural lens programme, and the rural proofing mechanism in England, United Kingdom (Box 4.2). All three governments have pioneered the introduction of a modulation mechanism that monitors the adaptability of legislation to specific rural characteristics. However, they have also recognised the limitations of their respective approaches. Lessons learned in these and other cases have shown that cross-ministerial adaptation must occur early in the policy process and will have substance if an authority at the cabinet level has the political authority to insist on a rural assessment and review in each policy document. In recent times Québec has benefited from the fact that the Minister for MAMROT was also a Deputy Premier. This combined function made MAMROT a more politically powerful force than it would be if the Minister was not a Deputy Premier. In Québec, an assessment and review via modulation of the policies from other ministries should become more effective. Through the clause de modulation and the inter-ministerial rural committee, the need for horizontal co-ordination has been taken into account, and many sectoral policies and programmes have been adapted in a flexible way to the conditions of different rural areas. The fact that the inter-ministerial committee is chaired and monitored by a non-sectoral institution with a territorial policy approach is important. However, co-ordination has yet to be completely implemented. So far, some of MAMROT's efforts have met with resistance from other ministries. As the PNR document indicates, ministries should account for the impact of new policies and programmes on rural territories in the inter- ministerial committee but this is not yet enforced. Other OECD countries have also found that ministries tend to be reluctant to adapt to requests from one of their peers, especially if it involves additional expenditures. Moreover, there is an ongoing debate in many countries on whether to focus on ex ante assessment and review (policy mainstreaming and rural proofing) done by each government body during the policy design stage or on ex post regional and rural assessment and review (evaluation) done by a specific internal or external agency (Box 4.2). In some countries, policy arrangements allocate responsibilities for assessments and reviews to organisations that are not under the direct authority of any specific ministry. In Québec, a strong minister or an organisation with “moral authority” over each government body such as the Office of the Premier may have more success with implementing an ex ante review. The rural advisory body SRQ and the other partners could provide an ex post review but would be unable to access cabinet documents for an ex ante review. SRQ also may have OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 254 – 4. POLICY RECOMMENDATIONS difficulties addressing topics related to broader regional development or rural-urban linkages. Box 4.2. Policy mainstreaming and modulation in OECD countries Several OECD countries have implemented mechanisms to strengthen coherence of sectoral policies through ex ante ministerial assessment and review (“policy mainstreaming”) or to evaluate the impact of different ministries' policy decisions on rural areas through ex post assessment and review (“rural proofing”) by a specific agency. The overall goal is to draw attention to the specific needs of rural areas and integrate these into central government decision-making in different sectors: Rural proofing by the Commission for Rural Communities (England, United Kingdom) Rural proofing undertaken since the early 2000s by ministries in England, United Kingdom considers the impact on rural communities of a policy decision and its design and implementation. Through an annual “rural proofing report” published by the independent supervisory body Commission for Rural Communities (CRC), knowledge of and interest in rural proofing have spread from the central government. It is becoming a tool for analysing and improving services among local authorities, by making public sector bodies aware of rural issues. At the CRC's head is a non-executive “rural advocate” who has the authority to bring evidence of policy impact directly to the office of the Prime Minister. However, there has also been criticism of rural proofing's lack of indicators on progress. Clear criteria are still to be developed for judging the success of rural proofing. The rural lens system (Canada) Established at the end of the 1990s, the rural lens includes a checklist for determining if a new policy initiative or programme addresses rural priorities (e.g. it asks how the benefit of an initiative for rural Canadians can be maximised by measures such as co-operation with other partners, place-based solutions or flexibility for decision-making). The officials responsible for the rural lens can advise their minister in the Agriculture and Agri-Food Department (AAFC) on whether or not to support a new initiative in the Cabinet. The rural lens has been somewhat successful as it has led to changes in several federal departments that have improved their services to rural regions. However, experience with the rural lens also shows that it is crucial to carry out a cross-ministerial examination early in the policy process. The rural lens mechanism is often implemented when a bill is already considered by the cabinet, which is generally too late to assess rural issues. This may also be linked to the Rural Secretariat’s (RS’s) location within the sectoral AAFC which gives little attention to rural issues from other departments during the governmental decision-making process. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 255 Box 4.2. Policy mainstreaming and modulation in OECD countries (cont.) The Rural Policy Committee (Finland) In a consensus-building approach to decision making, the Finnish committee brings together nine ministries, other public organisations and federations, as well as research centres and private stakeholders. Importantly, the committee is linked to the Finnish parliament through the Rural Network of the Parliament. Elaborated by the committee, a National Rural Policy Programme that is revised about every four years also includes a regional section which seeks to reinforce the position of rural policy in the government's work on regional development. Ministries involved need to report twice a year on actions undertaken with respect to the issues contained in the National Rural Policy Programme. Although until recently, assessment and review (rural proofing) has only been dealt with in a working group within the Rural Policy Committee, there has been more experience with broader assessment and review at the regional level. The Ministry of the Interior (in charge of regional policy) formally and periodically requires sectoral ministries to assess the regional impact of their policies. This has enhanced the regional perspective of sectoral policies and decision making. Source: OECD (2006), The New Rural Paradigm: Policies and Governance, OECD Publishing, Paris; OECD (2008), Rural Policy Reviews: Finland, OECD Publishing, Paris; OECD Rural Policy Reviews: England, UK (forthcoming), OECD Publishing, Paris. Québec needs to strengthen supralocal political power… There is a need to strengthen the functional responsibility of the supralocal level as the centre of rural and territorial development strategies while keeping in mind the role of regional conferences of elected officials (CRÉs). Participatory local strategic planning is one of the most valuable tools available for rural development. It has been shown effective for increasing rural communities' capacity to optimise local assets and create cohesion around specific development goals. Therefore, a growing number of sectoral policies affecting rural and territorial development are incorporating public strategic planning exercises within their programmes, and local communities and their institutions are starting to be saturated with visioning exercises and the development of strategic plans. Such a tool creates a risk of over-use: it can tire out participants, lead to reduced citizen participation, and become less powerful as participants begin to perceive strategic planning as a bureaucratic burden. Québec can avoid this by co- ordinating the strategy, policy design, implementation and evaluation of comprehensive local development at the supralocal administrative level, OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 256 – 4. POLICY RECOMMENDATIONS while keeping in mind that the administrative regions, with their critical mass of population, may be a more appropriate level for the design and implementation of some territorial development policies. For broader regional policy, transforming CRÉs into proper regional governments (i.e. with directly elected representatives) might be considered to give them a stronger role. A more radical, but promising long-term option would be to replace the two administrative levels between the provincial and the local level by a single regional level which could be constituted of enlarged MRCs. Empowering MRCs as the level of government responsible for rural development, including cross-ministerial sectoral responsibilities, is consistent with the principle of subsidiarity. It is a sensible reaction to the difficulties encountered when trying to merge municipalities. It can promote a greater sense of inter-municipal collaboration, rather than competition, for development initiatives. In a spirit of subsidiarity, MRCs, roughly representing functional regions, are an appropriate lowest and least centralised administrative unit with “competence” for rural and territorial policies across municipalities. Allocating local development policy implementation to MRCs is an effective way to draw many sector-specific policies and programmes together into a co-ordinated, holistic delivery system. This becomes an even more obvious solution with the growing number of provincial sector-specific policies not only implemented at the supralocal level but also defined in part through bottom-up and participatory policy formulation mechanisms. In the case of the government's Sustainable Development Action Plan, steps should be taken to ensure the compatibility and co-ordination of rural and sustainable development policies on the supralocal level. Strengthening MRCs as the level responsible for evaluating and assessing local trends would also include using the PNR's development index at the supralocal level. To avoid large variations in the results for devitalised municipalities in different years of reference (see Chapter 3), the index's MRC measures may be more valuable, since they would stress this level's importance as a functional unit for rural policy. Sectoral responsibilities co-ordinated at higher levels could benefit from a strengthened territorial approach if MRCs (and CRÉs) get more competences and incentives to collaborate with sectoral actors. This applies to administrative boundaries that do not yet overlap with MRCs, particularly for health (CSSS) and education (school boards) services. But it also applies to regional economic development issues such as rural tourism, a policy field in which a cross-MRC approach to promote place-based rural tourism concepts makes sense. Although CLDs are invited to participate in regional partnership agreements between the Department of Tourism (MTO), OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 257 administrative regions and the 22 regional tourism associations (ATRs), giving MRCs more authority could help develop a coherent tourism image for a particular rural area, which would be more marketable in terms of size than a large administrative region. In general, the PNR approach of encouraging people and communities to co-operate on social projects should gradually create the conditions for co-operation on more complex cross- MRC economic development issues. Empowering MRCs does not necessarily mean transforming how prefects are elected (see the case of England, Box 4.3). The current pilot project on direct elections seems appropriate as it prepares institutions at the supralocal level for added responsibilities. As many rural municipalities may not yet have sufficient human capital to carry out this role, political power would probably best be kept at the municipal level. For Solidarité rurale du Québec (SRQ), the justification for popular elections at the MRC level (SRQ, 2006) is to help “alert” the population to local collective governance and to increase citizen participation. However, it seems more likely that an electoral process will take power away from municipalities and further detach MRCs from the rural population. Whereas rural voters currently have a direct relationship with elected municipal representatives, moving the political power up to the supralocal level could impede enforcement of rural interests and the allocation of resources from MRCs. Finally, while each municipality currently gets equal representation and voice on the council (in MRCs without a single dominant population centre), direct elections for the prefect could democratically concentrate the electoral power within an MRC's most populated municipalities, at the expense of smaller rural municipalities. To avoid the possibility of an effective veto by the urban electorate on rural issues, consideration should be given to revoking the current veto right of dominant population centres within the MRC's decision-making process for all rural development issues, as is now the case for votes on rural pacts (see Chapter 3). Veto rights were introduced to favour a balance of power in line with the demographic distribution of the MRC. However, several cases of abuse by elected officials of the dominant population centres have had detrimental effects on rural MRCs’ development objectives. As long as the veto right remains, it will be difficult to establish a supra-municipal development vision in MRCs which have a single dominant population centre, regardless of whether or not there are popular elections for prefect. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 258 – 4. POLICY RECOMMENDATIONS Box 4.3. Rejection of a supralocal level of elected governance: north-eastern England, United Kingdom Experience in England shows that a directly elected regional government institution may not always be the best governance approach in the eye of voters. In the late 1990s, the UK government introduced two new regional institutions: regional chambers/assemblies as future regional government bodies, and mainly business-led regional development agencies (RDAs). However, the plan presented in 2002 to create directly elected regional assemblies was rejected in a referendum held in the north-east. As a consequence, most assemblies will gradually be abolished and their functions passed to RDAs, thereby strengthening these units' competences. Currently, in both rural and urban areas RDAs are in charge of promoting: economic development, business and competitiveness policies, employment, skills required by the local labour market and sustainable development. Working in partnership with local and national bodies, they bring together business representatives, but local governments, trade unions and voluntary organisations also sit on the board. Following the failure to introduce directly elected assemblies, RDAs will have more responsibility for co-ordinating and integrating a ten-year regional economic strategy and a three-year corporate plan. They are also in charge of larger transport and regional planning. RDAs' previously limited powers and restricted budgets have increased gradually but substantially and they have received resources to meet specific rural socioeconomic objectives. Source: OECD (2008), OECD Reviews of Regional Innovation: North of England, United Kingdom, OECD, Paris; OECD (2006), OECD Territorial Reviews: Newcastle in the North East, United Kingdom, OECD, Paris. Getting voters involved risks bringing decision-making dynamics back to a short-term mentality. One of the factors that have prevented the governance of Québec’s rural policy from derailing into civil exclusion and political conflicts is the fact that its municipal governance is non-partisan in nature, and political parties are not present in the electoral process. This has had a positive impact on the capacity of local institutions to operate in a sustainable manner. Non-partisanship can also be linked to the superior horizontal and vertical co-ordination process around the PNR that Québec benefits from. Politics does not appear to be an obstacle to working together and collaborating in Québec’s rural areas. Through the PNR and other policies, MRCs have been gradually trained to make decisions within a medium- to long-term strategic vision of the territory. With direct elections, it is likely that instead of a strategic decision-making process, prefects and their councils would resort to making decisions based on the immediate political popularity of these choices. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 259 …include external actors in monitoring and evaluation… More civil society participation in the governance of rural policy and its monitoring and evaluation mechanisms would help reduce the role of elected officials. In contrast to EU norms which regulate the composition of LEADER's Local Action Groups (LAGs) and limit the share of public administrators and elected officials to no more than 49% of the LAG’s executive council (see Chapter 3), Québec’s MRCs are strongly dominated by public officials. Given their dominant role in the governance structure for rural policy, vertical co-ordination, especially between the municipal, supralocal and regional levels, is very effective. However, despite local development committees' participatory approach, there is a risk that elected officials may lose sight of the local population's concerns, diluting citizens' influence on the system. Although such behaviour has not been observed, there is still the danger of excluding civil participation, especially as the PNR self-assigned monitoring instruments are predominantly internal and again rely mostly on elected officials, MAMROT and the committee of rural partners. In the spirit of the New Rural Paradigm (OECD, 2006a), a greater presence of external monitoring and policy evaluation would help ensure that such threats do not materialise. A comprehensive evaluation carried out regularly or ranging over the whole implementation period should be conducted by an external body before the end of the second PNR. Such an evaluation, comparable to the one undertaken at the end of the first rural policy, should include: i) a restatement of the policy objectives; ii) an evaluation of progress towards strategic objectives; and iii) a review of the flow of funds. Concrete indicators for measuring successful performance over the long term could reduce local communities’ potential impression of rural pacts as simply a mechanism for the distribution of funds. As suggested in the second PNR policy document, possible qualitative and quantitative indicators could be: the variety of proximity services offered locally; the types of rural strategies implemented locally; the number of volunteers; the number of rural pact projects in different sectors; the flow of migration in rural municipalities; and the number of jobs generated and investments. The outcome of the evaluation process should be shared with local communities to inform rural residents about the impact of the PNR and involve them in setting strategic choices. In comparison, the example of Mexico is instructive: Apart from the establishment of two indices (Index of Human Development and Marginalisation Index), policy in Mexico also contracts an annual external evaluation of its rural policy to obtain an unbiased appraisal of the successes and failures of the rural development law (LDRS). The agency that has been contracted to carry out this external evaluation in the past has been the Food and Agriculture Organization of the United Nation (FAO) (OECD, 2007). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 260 – 4. POLICY RECOMMENDATIONS Attention should be paid to providing rural municipalities, especially smaller ones, with the capacities necessary to set a local development agenda. Whereas the PNR relies on strong MRCs able to manage policy implementation, Québec should give municipalities with few resources and capabilities more guidance for implementing PNR measures (after having first enhanced their local funding capacity, see below). This will help municipalities that are reluctant to take on new responsibilities because they lack various types of capacity. Local capacity could be strengthened through better training of rural development agents. Although SRQ trains the agents and helps them create a network for knowledge sharing, there is a need for more substantial and specific programmes to train, motivate and link agents, elected local officials and volunteers. The first PNR suffered from a high turnover of agents (25% in 2007). The situation should be carefully observed to see whether it improves following stronger recognition by MRCs and the introduction of higher salaries. A similar situation occurred in Mexico as the government attempted to implement its decentralised Sustainable Rural Development Law (Box 4.4). Box 4.4. Local capacity building in Mexico Mexico's Sustainable Rural Development Law (LDRS) established municipal rural development councils responsible for developing and implementing locally devised rural development plans. Many rural municipalities lacked the experience and capacity needed to successfully carry out these new responsibilities. Therefore, formal training instances and programmes were established through the Sistema Nacional de Capacitación y Asistencia Técnica Rural Integral (SINACATRI) in order to help construct the law's institutional architecture at the municipal level. SINACATRI involves the resources and infrastructure of different agencies in local training programmes. A set of co-ordination agreements has been established between the federal, state and municipal governments, including horizontal co-ordination at each level. It operates through the training arm of Mexico's Secretary of Agriculture, INCA Rural, which is in charge of co-ordinating the implementation of the LDRS at central level. The contribution of INCA Rural to the process of municipalisation of rural development policy has been crucial. In terms of capacity building for effective social participation, workshops organised by INCA Rural have been instrumental in creating municipal rural development councils and municipal development plans. Source: OECD (2007), OECD Rural Policy Reviews: Mexico, OECD Publishing, Paris. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 261 … and diversify revenue sources for local governments. Beyond the current focus on property taxes, more diversified and autonomous fiscal revenue sources should be available at the local and supralocal level. The fact that taxation is largely based on property, rather than linked to individuals' income, does not take into account new social realities. Rural gentrification (in principle very positive) and related increases in real estate prices and property taxes put financial pressure on poorer, long-established rural residents and younger people who cannot afford to settle there. According to the model suggested in OECD (2004), reform could include a reduction of the property tax share and an increase in locally selected municipal user fees. This would counter the general tendency in Canada to reduce the financial role of municipalities. Whereas on average, local governments' tax revenues in all OECD countries (data: OECD) accounted for 4.1% of GDP in 1996 and for 4.4% in 2006, the corresponding figures for Canada were 3.4% and only 2.8%, respectively. Diversified revenues would allow municipalities to enhance service provision for new and established residents, taking into account the changing social and demographic composition of rural communities. Rural municipalities challenged by ageing and in-migration of the elderly are urged to provide new human services in sectors such as health care, seniors' housing and transport. To deal with these new service needs, the current local taxation system might move from relying exclusively on property tax and fiscal transfers to include other means of taxation more directly linked to individuals. However, in the United States, where municipalities are often financed through sales taxes, thereby intensifying their sensitivity to cyclical fluctuations and favouring an increase in the amount of commercial infrastructure, it is clear that depending too much on sales taxes also carries risks. A diversification of the municipal revenue base seems to be an appropriate solution to these problems. With better local capacities, greater revenue sources could translate into enhanced resource allocation to the PNR’s programmes, which usually require local co-financing. This should not be done, however, by directly increasing the fiscal burden of the local population. Rather, a de- concentration of existing fiscal measures in favour of local or supralocal public institutions' capacity to generate revenues might be decided. However, an essential prerequisite would be prior municipal capacity building. If transfers are used to augment local budgets, they should strictly follow the vertical chain of governance by passing first through the MRCs to avoid removing from the MRCs the influence and power associated with the flow of financial resources. This is a valuable lesson from Mexico's rural policy where direct transfers from the federal to the municipal public administrations negatively distorted the vertical governance and policy OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 262 – 4. POLICY RECOMMENDATIONS co-ordination mechanisms established by that country’s Sustainable Rural Development Law (OECD, 2007). New fiscal responsibilities would require better accountability on the part of local administrations than what the PNR and its governance structure currently ensure. This is not only linked to fiscal responsibilities, but also to growing decision-making power, which has been handed down to local and supralocal administrations in hopes of bringing policy design and implementation closer to those individuals who stand to be most affected by Québec’s rural policy. Municipal administrations and MRCs are given significant leeway to “bend” established procedures to make them best fit their strategy and its implementation. This has greatly facilitated implementation of the PNR so far. However, such freedom should be counterbalanced by a strong external evaluation of objectives achieved and financial management. The confidence accorded to local elected officials should be accompanied by a greater sense of accountability. Collaboration between provincial and federal policies should be facilitated at the local level For their own benefit, local actors should be encouraged in their efforts to enhance coherence and collaboration between federal and provincial rural development measures. Currently, the two structures carry out their policies in a largely parallel fashion, and duplications and inefficiencies can occur. It can be challenging for a parallel federal structure that is not co-ordinated with the Québec government, such as the federal rural teams, to display its effectiveness, particularly given the dominance of PNR programmes at the local level. Yet, as the Constitution is not explicit on rural development responsibilities and given the federal level's interest in maintaining a presence in local economic development, a transfer of rural development programmes to the provincial level is very unlikely. On the local level, the parallel situation is sometimes viewed as favourable as it leads to competition that can enhance local authorities' bargaining power. The two levels of government therefore have an option to allow for greater local- level collaboration between both rural development programmes and encourage complementarities and synergies. MRCs and municipalities would benefit from better support for use of both sets of measures. This should be encouraged as long as activities are not funded twice. Given the similar approaches to local development carried out through the Community Futures initiative (SADCs), there is a strong rationale to co-ordinate territorial bodies that implement similar interventions. The respective roles of CLDs and SADCs are very close and their approaches to economic development can complement each other. In a OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 263 number of cases, federal and provincial officials are co-located or collaborate through joint financial participation on a project base. A more institutionalised integration has been implemented in the remote MRC of Témiscamingue (Box 4.5). Another example is broadband Internet access to rural and remote regions: both the federal (Industry Canada) and provincial (MAMROT) levels of government have launched programmes. The main difference in the criteria for project selection is that the federal level involves private business in tenders, whereas Québec provides funding for the public and non-profit sector, limiting its programme to the PNR territory. In cases such as the MRC of Montmagny, projects are funded and implemented jointly. This increases efficiency and helps avoid duplication. Box 4.5. Federal-provincial collaboration at the MRC level The large rural MRC of Témiscamingue (19 200 km2, almost half the size of Switzerland, but only around 16 000 inhabitants) in remote western Québec is the only example of local actors having agreed on an institutionalised collaboration between the Québec government's CLDs and the federal government's SADCs. The results of this arrangement are very promising. The two local development bodies collaborate on projects through a specially created entity called Témiscamingue Development Corporation (SDT or Société de développement du Témiscamingue). The different administrators meet on the SDT board and often do not strictly separate staff working for one or the other unit. Nonetheless, the evaluation and accounting of projects is made separately to the two levels of government, often using different indicators, according to the different requirements of the higher levels. Enhanced collaboration between the two local development bodies is essential to avoid duplication of approaches and inefficiencies in financing projects. Because of political considerations at both the provincial and the federal level, such a model has remained exceptional. But it proves that the different levels of government should be encouraged to trust in the principle of subsidiarity and give political responsibility to the lowest or least centralised authority competent to resolve an issue. Source: MRC of Témiscamingue. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 264 – 4. POLICY RECOMMENDATIONS 4.2 Development of lagging areas Improving regional resilience to exogenous shocks… In light of Québec's exposure to international competition and the global economic downturn, rural policy should foster development and tackle specific challenges in lagging areas. Although it is usual for a country’s regional differences to be greater than differences between countries, economists and policy makers have tended to pay more attention to national growth than to regional development. However, wherever policy investments have an expected positive rate of return, fostering growth throughout the territory is in the interest of governments. This contributes to overall output without affecting development opportunities in other areas (OECD, 2009c). As previous chapters have shown, lagging areas in rural Québec face difficulties given their specialisation in traditional manufacturing and natural resources. A priority for rural policy should be to shield communities from external shocks and boom-and-bust dynamics while providing framework conditions that facilitate market access for rural dwellers. However, these conditions may not be enough in the context of crises that reduce international demand for goods produced or extracted in Québec. Therefore, rural policy also needs strategies to tackle specific challenges. A holistic rural policy has to provide answers for resource-based and single-industry communities, as these are among the most vulnerable economic entities. External shocks due to the global economic downturn combined with stronger international competition and labour-saving technology have intensified the vulnerability of resource-based rural economies and hastened the decline in primary resource-sector employment (see Chapters 1 and 2). Consequently, many communities based on forestry, fishing, mining or smelting have suffered firm closures and unemployment. With the economic downturn, many of these small rural communities risk entering a spiral of decline marked by environmental decay, demographic decline, diminishing demand for goods and services, falling property values, an eroding tax base, and subsequent cuts in public service provision. These problems hinder efforts to ensure such communities' sustainability, accelerate rural depopulation, and increase economic and social pressures on urban centres (WD, 2009). To maintain employment levels in these rural communities, local producers have to find ways to reach new export markets. A holistic rural policy should therefore combine existing sectoral measures with programmes for single-industry communities currently managed by the Ministry of Economic Development (MDEIE) and with OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 265 measures put forward in the governmental action plan for devitalised municipalities (Government of Québec, 2008). Stabilising the local economy is an important policy goal for lagging communities, but it requires a long-term, inclusive approach which takes demography into consideration. One way to deal with the risks enumerated above is a more diversified economy which can help maintain single- industry towns affected by economic difficulties. However, diversifying the economic base is only an option for larger territories that can more easily focus on a number of exports to various niche markets outside their communities. Many local labour markets in rural Québec are too small to support a diverse range of firms or industries, in terms both of number of workers and mix of skills. Diversification strategies create further challenges: First, the allocation of talent in natural resource-based economies is often biased in favour of the resource sector, as skilled workers try to benefit from resource rents. Consequently, workers may lack the entrepreneurial approaches necessary to build businesses in other sectors. Second, fostering diversification is a long-term process that requires the full commitment of public actors and the community. Many diversification strategies imply a transition from a “capital-intensive” economy (as in the case of modern forestry or agriculture) to a system that uses more “labour”, which is typically a scarce factor in these rural areas. Third, there are many examples of failed diversification policies, but less agreement about what works, as successful policies are often linked to place-based particularities (Ahrend, 2006). Nonetheless, several policies have proved their effectiveness in fostering economic diversification, at least within the framework of larger areas. These include policies to optimise framework conditions for entrepreneurship, ensure a competitive business environment and provide sufficient incentives to invest in non-resource sectors (Ahrend, 2006). Measures to achieve this can range from tax policies to financial sector reforms. While taxes should specifically target the resource industries and lower general tax rates, successful changes in the financial sector's framework conditions create mechanisms for efficiently allocating investment resources across different economic sectors. Given rural Québec's manufacturing tradition and related entrepreneurial skills, a venture capital industry and incubator services are important. In particular, business incubators can provide a nurturing environment through a range of business support resources and services, where entrepreneurs, start-ups and small businesses commercially validate and transform their concepts into viable products and services. As for-profit incubators are less likely to be located in the most lagging areas (Cheng, Schaeffer and Middleton, 2009), OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 266 – 4. POLICY RECOMMENDATIONS support for non-profit incubators, and particularly incubators affiliated with universities and technical colleges, is recommended. However, policy makers also have to consider other options for dealing with the risk inherent in lagging resource-based and single-industry areas. Given the difficulty of implementing diversification strategies in small local labour markets, it is crucial to consider that the workforce size in many rural areas will shrink in the future and thus make diversification all the more challenging (although in small rural areas, re-specialisation through a single successful project may induce other projects or attract new residents). One promising way to deal with this situation can be the inclusion of different options in community transition management. Indeed, the stabilisation of a lagging region's local economy should be part of a larger process of community transition. Dealing with the risks of the local economic structure and better anticipating and planning industrial closures are crucial components of such a process. The Canadian Intergovernmental Committee on Urban and Regional Research (ICURR, 2005) has identified the roles of key actors in community transition and recovery processes. These experiences are also partially or wholly applicable to other OECD member countries with declining resource-dependent communities, although their different systems of government and economic and social conditions have to be considered. In particular, four main strategies (WD, 2009) will have to be implemented at the appropriate moments of action (Box 4.6). First, community transition management strategies have to anticipate and plan for industrial closure as a normal event in the life cycle of a resource-based industry. From the beginning of industrial activity, community stakeholders should start to plan for the future closure. This facilitates an early beginning of transition management and diversification efforts, starting well before the actual announcement. Second, all stakeholders have to collaborate to restructure communities in transition after an industry closure. Collaboration includes efforts by five key stakeholders: i) the federal government, which sets the policy direction and prepares communities for the consequences of closure; ii) the provincial/regional governments, which facilitate planning, help communities anticipate and plan closure, and co-ordinate collaboration and funding; iii) the local governments, which promote community participation and manage closure-related local issues; iv) the departing industry, which communicates its intentions and provides support to affected workers and the local community; and v) civil organisations, which contribute with practical support. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 267 Third, resource-based communities in transition require a lengthy process involving interrelated actions, including economic diversification strategies, labour market adaptation and support for affected workers, incentives for possible new industries and migrants, adjusting public service delivery to an appropriate level but still allowing for attracting in-migrants, stabilising municipal finance and motivating the community. Fourth, community transition requires time-limited financial support by all stakeholders. This is particularly relevant in Québec where communities dependent on property taxes are strongly affected by falling property values and lost employment income. While avoiding dependency on outside financial resources, communities need short-term investments that could for example take the form of a stabilisation fund that can help keep skilled labour in the community and retrain other workers. The money can be justified by the community's past contributions to regional and national economic strength, the need to take advantage of past investments, and the chance to seize new development opportunities. Box 4.6. Managing community transition: experience from Canada Given employment decline in Canada's primary resource sector, provinces and territories have had significant experience in dealing with industry closures and the transition of communities. Actions can be separated into a pre-closure phase, an immediate closure phase and a long-term closure phase. Pre-closure phase: Before making decisions that affect resource-based communities, the federal government consults with provinces/territories and local actors and provides early warning of closure so that employees and communities have time to adjust. Provincial and territorial governments provide funding and advice to vulnerable communities to develop diversification plans well in advance of industry closure. Ideally, they promote municipal efforts to co-operate more broadly in order to capitalise on regional strengths and work towards arrangements with industry and the community on the post-closure process. Local governments play a key role for advancing planning of future economic development and diversification, co-ordinating civil and community organisations, and exploring partnerships with neighbouring municipalities (and MRCs) and aboriginal groups. They should seek assistance from the departing industry to ensure ongoing communication and better anticipate the effects of resource depletion and closure. Immediate closure phase: The federal and provincial/territorial levels give local communities autonomy with regard to decisions and funding during the revitalisation process; they offer employee assistance that provides transitional income and sets models for good corporate behaviour; and they add extra, time- limited assistance services during the transition period. Beyond this, provinces OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 268 – 4. POLICY RECOMMENDATIONS Box 4.6. Managing community transition: experience from Canada (cont.) empower local communities through tools such as flexible municipal legislation and financial, administrative and communications support. They decide on a case- by-case basis on transferring land use rights to local governments if this can improve the community's economic and social capacity. Local governments, while collaborating with upper levels of government and their MRC and regional counterparts (e.g. on sharing service delivery costs), try to maintain a decent level of service delivery, co-operate with civil organisations to soften the impacts of closure, attract new business and residents, and communicate positive messages during the transition process which affirm that the community is resilient. The departing industry provides retraining and job placement services to its workers and transfers capital assets (e.g. industrial land or useful equipment) to the community. Long-term closure phase: The federal and provincial governments provide long-term support through economic development authorities or corporations. The federal level monitors the departing industry to ensure that it deals with its environmental hazards and aesthetic impact on communities. Community closure is considered when it is in the community's best interests, but can only be determined collaboratively by the community and provincial governments. While local governments have to review their budget regularly to adjust it to demographic and tax base changes, they also look for region-wide service delivery opportunities (including restructuring) and evaluate residents' expectations. This can help to find out what type of new residents can be attracted. Civil organisations including from aboriginal groups participate in developing business strategies and market opportunities and act as economic drivers for the areas. Source: ICURR (2005), Facing the Challenge of Industry Closure: Managing Transition in Rural Communities. A Report by the Provincial and Territorial Departments Responsible for Local Government, Resiliency and Recovery Project Committee, edited by Catherine Marchand, ICURR Press, Toronto. Fostering social and human capital in lagging resource-based communities has to be accompanied by efforts to reduce tax reliance on a single industry. Québec has recognised this challenge in its policy framework and specific funding programmes target the revitalisation of communities through industrial planning (the economic development strategy for resource-based regions) and individual support to emerging economic sectors (the ACCORD project targeting mostly urban areas). A strategic plan for revitalising resource-based communities calls for strong local leadership, elected representatives and a community capable of framing a multisectoral vision of future development. These needs are OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 269 addressed in the PNR's participatory planning approach, which demonstrates opportunities for stronger integration of rural policy and support measures for resource-based communities. In this respect, the success of Québec's resource exploitation plans in the northern mining areas will depend on enhanced participation of and stronger benefits for local and aboriginal communities. Stabilisation and economic diversification is particularly urgent in lagging communities dependent on the commercial forestry sector. Forestry- based communities are often affected by two crises: first, a cyclical one due to the global economic downturn, softwood lumber disputes with the United States and the loss of US demand for newsprint and dimension lumber; and second, a structural one related to stronger international competition and high energy and input costs. It is particularly necessary for these communities to reduce the risks linked to the instability of their local economy. Some opportunities may be found for marketing of non-timber forest products. Québec's rural policy has started to recognise the unexploited potential of products, such as mushrooms, wild fruits or essential oils. Also, the regional commissions on natural resources and the territory (CRRNTs) work on the development potential of these products in their regions. This includes possible medical or cosmetic uses of forest plants (Box 4.7). … and strengthen traditional industries as well as emerging sectors. Diversifying rural economies does not mean abandoning valuable structures: comparative advantages and new knowledge-based developments in traditional industries should be valued when developing new competences. Although in decline, Québec’s agriculture and forestry remain a vital part of the rural economy and indirectly generate employment through their demand for local goods and services. They have shaped rural landscapes and are pillars of “rurality” in Québec. However, employment has declined in these sectors for several decades and, in the case of forestry, production has also contracted. Hence, in many places traditional industries will be unable to contribute strongly to future economic growth and the development of rural territories. The same is likely for parts of manufacturing, which has a strong and specialised presence in Québec's rural areas. Agriculture, forestry and manufacturing all feel the impact of low-cost foreign competition. Future economic development will therefore largely have to come from the tertiary sector, which includes government and other services in health and education, tourism and recreation, and possibly, finance, insurance and real estate, as well as other service sectors. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 270 – 4. POLICY RECOMMENDATIONS Box 4.7. The marketing of non-timber forest products in Québec In reaction to the forestry sectors' crisis, resource-based communities try to diversify their economic base. One path embarked upon by local actors in the framework of Québec's PNR is more effective use and marketing of non-timber forest products. Several communities have received government funding through the rural laboratory programme to develop these products, with the aim of higher value added and direct marketing to consumers. A broad range of products are marketable, including mushrooms, blueberries and other wild fruits, pine branches and essential oils. There is also potential for pharmaceutical plants. A challenge encountered by many initiatives for developing non-timber forest products is the lack of technical training of people involved (biologists, technicians, pickers, etc.), competition by informal workers, and a high turnover rate. • Municipality of Girardville: In its rural laboratory project, this remote location in the region of Saguenay – Lac-Saint-Jean combined a marketing effort with research and development plans targeting the study of various plants in order to determine those with the strongest economic potential and to develop derived products (e.g. balms). • MRC of L'Islet: To professionalise their non-timber forest production, local actors created a co-operative including workers, users and supporters. Funding through the PNR's rural laboratory programme totalled CAD 500 000, about half of the total financial support earmarked for the co-operative. Source: Government of Québec and OECD. Capitalise on agriculture To allow the development of diverse sectors in rural Québec it is important to modify the current agricultural support system. The mechanisms that support agriculture have contributed to the development and financial autonomy of products covered by the existing system, but they are less suitable for reducing regional disparities and achieving objectives linked to broader rural development. Both the Canadian supply management system and Québec's ASRA income stabilisation programme (see Chapter 3) have facilitated the modernisation of farms and resulted in a higher standard of living for producers and their families. Within Québec, supply management has allowed important commodities facing structurally low prices to survive, but there is reason to question some of these farms' long- OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 271 term viability. Both policy systems result in rigidity within agriculture and impose high costs on non-farmers. In contrast other parts of Canadian agriculture policy focus on business risk management and support normally profitable businesses in cyclical crises with far less distortion of farmers' decisions. Today's situation, with high incomes and profitability of farm operators covered by existing risk management systems, raises the question of why some particular commodity producers that operate under supply management policies should continue to be strongly protected from market forces. The agricultural support system should progressively introduce market forces, tying support to farm income rather than production. To stop inducing dependency behaviour and allow for adjustment of consumer prices to world-market prices, the ASRA programme should be further adapted. In light of successful trade liberalisation in other OECD countries (liberalisation in New Zealand and Australia also included the dairy sector) and other agricultural sectors within Canada such as barley and wheat, it is difficult to justify continued special treatment for a group of farmers whose situation does not seem fundamentally different from that of producers of grain or livestock. In the medium term, reform is inevitable, particularly if the current Doha Round is successful. The transition to a new system will be easier if reforms start in a timely manner (OECD, 2008c). The ASRA programme should be gradually replaced by a system that is no longer linked to the production of a particular commodity, but which supports farm income independently of the type of agricultural business. The current system risks penalising sectors with higher-quality output by reducing their ability to compete internationally. As argued by Saint- Pierre (2009), a new risk management programme should strengthen the world marketplace's role as a regulator of production, while allowing adaptation mechanisms that take into account regional development objectives. A system decoupled from production objectives gives producers incentives to improve and diversify their operations. This makes it easier to take advantage of new production methods (including in the food-processing sector) and market opportunities in higher value-added sectors such as organic and other certified food and forest (timber and non-timber) production. New government programmes have been implemented, partly in the framework of the PNR, to support organic farming and certified protected designations such as speciality products and regional produits du terroir. However, overall development of these sectors remains modest and there is significant potential for further diversification. Québec's young producers of mostly hand-crafted cheese are an example of the market potential of new types of production linked to the terroir. OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 272 – 4. POLICY RECOMMENDATIONS A way to promote organic and certified food is better marketing, which would also benefit producers without direct access to large markets. The success of high value-added farming products depends on their location relative to markets. Farms close to large metropolitan regions or located in popular tourist areas have more opportunities for direct sale. Successful direct marketing efforts that combine selling fresh products with the experience of visiting a rural area are often the result of co-operatives or organisations with a similar purpose working together to market their products. But more remote areas may still be able to benefit, as indicated by the growing demand for organic products linked to environmental or consumer protection concerns. In Québec, the organic food market is still relatively young and not yet fully established, but it has interesting development prospects. Making access to organic food easier is one step in promoting its consumption: as an example, in the United States, organic food stores have joined to establish a website with information on the location of stores all over the country (http://organicstorelocator.com/). Promote emerging sectors Location and geographic features are key determinants of emerging economic opportunities. A small mining town without assets in other resource-based industries will find it more difficult to grow, whereas accessible communities with natural or cultural amenities such as landscape, recreational facilities or historical buildings can try to promote rural tourism or attract retirees to settle. However, many communities without particular amenities may still have assets in wind, water or forestry, and thus a potential for renewable energy production. In general, growth occurs more in regions that successfully mobilise their local assets, rather than depending on transfers and subsidies from national and provincial governments (OECD, 2009c). In rural Québec, although renewable energy, particularly hydroelectricity, has long been generated, communities can become more involved. Moreover, opportunities for rural employment and income have emerged through more recent methods of energy production such as wind power and biomass, and rising cost for fossil fuel may boost these sectors. In many OECD countries, new sectors that can supplant departing industries have been developing, particularly in renewable energy production, rural tourism and retirement living. Québec's abundance of wind, water and forest resources provides a foundation for a renewable energy industry, and its strong integration with rural policy can increase opportunities for local communities. The production of renewable energy is an important element of Québec's and Canada's efforts to reduce greenhouse gas (GHG) emissions and address OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 273 challenges related to climate change, but renewable energy should also be seen as a source of new employment and income for rural areas (although this potential is affected by the low cost of hydroelectricity in Québec which lowers the profitability of some renewable energy projects). The government's Energy Strategy focuses on the dominant hydroelectricity sector and, to an increasing degree, on wind energy. In this respect, the government should strongly involve rural policy actors and require that research and development (R&D) activities for projects provided by Hydro- Québec or emerging companies take place close to rural communities. This facilitates the pooling of skilled labour in rural regions and maximises communities' benefits from these industries. The fact that Hydro-Québec is owned by the province provides opportunities for the company to act as a “social enterprise” and play a key role in the development of rural areas. Prospects for further developing wind energy in rural Québec are promising. There is an overall technical potential to produce almost 100 000 MW within 25 km of an existing power transmission line (Hélimax, 2004). Wind energy development in rural Québec and other provinces with strong potential could contribute to the Canadian government's efforts to catch up with world leaders in wind power capacity, particularly the United States, Germany, Spain and China (GWEC, 2009). An example of linking opportunities in wind energy with regional industrial development is found in Québec's eastern region of Gaspésie. Given the decision to require wind-energy investors to manufacture for example wind turbines locally, this industrial development project mobilises regional leaders under the ACCORD project to train the current workforce, attract skilled labour to the region and trigger further local investment. For similar projects in other areas, the production of the equipment in Gaspésie is a condition of public funding. Experience in OECD countries such as New Zealand confirms rural communities’ opportunities to generate enough electricity from local renewable energy resources to meet their own demands and sell the excess to the grid (Box 4.8). Likewise, forestry and agriculture resources can increasingly contribute to the production of renewable energies. Wood is the largest biomass energy resource, but other sources of biomass can also be used. They include food crops, grassy and woody plants, residues from agriculture or forestry and the organic component of municipal and industrial wastes (NREL, 2008). Whereas many OECD countries have to balance biofuel and food production, this trade-off is less pronounced in Québec owing to its rich forest resources. Waste products of its large forestry industry may produce a large quantity of input to be transformed into energy. However, to fully benefit from opportunities in forestry-based biomass and biofuels, exploiting resources necessitates stronger investments in innovation and OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 274 – 4. POLICY RECOMMENDATIONS Box 4.8. Opportunities for local renewable energies: Totara Valley, New Zealand A study of the farming community of Totara Valley in New Zealand's North Island exemplifies how a small rural location can exploit a local renewable energy system and export excess power to the grid. After 2013, trust-owned or private electricity distribution companies in New Zealand will no longer be required to maintain unprofitable sections of their lines to rural areas (Electricity Act 1993). Therefore, rural communities try to develop a decision-making methodology to identify local energy resources that can meet local demands for heat and power. Since it is not cost-effective for a community with limited resources to undertake a detailed analysis over a long period, the Totara study's objective was to develop a rapid method of assessing local renewable energy resources. Research partners and electricity companies joined together to monitor Totara Valley and developed a series of electricity profiles related to power demand and seasonal and daily variations of wind and solar data. Small hydropower opportunities were also assessed based on the flow available from streams within the community. Since wind and solar are intermittent and not all properties have a reliable stream with micro-hydro potential, matching power supply with continually varying demand often requires electricity storage. Methods available after 2013 to match potential generation capacity with demand include: i) independent generation systems in houses/farms which combine wind and solar with battery storage and a small petrol generator as back-up; ii) several sources of small-scale generation in a community with a mini-grid connecting all generation plants and supplying all buildings, which could make the community independent; iii) if already connected to the grid, a community could continue to use power, but with the risk of increasing fixed supply charges to cover costs; and iv) if companies agree to maintain the supply, the grid could also be used as a “battery” when power demand exceeds supply from the power generated on site. Ongoing research focuses on the production of a decision-making tool to assist rural communities in identifying economic, social and environmental benefits of introducing small-scale generation systems. Further analysis concerns the potential interest of line companies in becoming a joint venture partner in such a scheme. Source: Sims, R.E.H. and P.E. Murray (2005), “Power to the people – a New Zealand rural community study”, plenary paper for the ISES 2005 Solar World Congress, Orlando, 8-12 August. transformation. Swedish and Austrian experience with forest biomass provides promising business opportunities for forestry-based rural areas (Box 4.9). OECD RURAL POLICY REVIEWS: QUÉBEC, CANADA © OECD 2010 4. POLICY RECOMMENDATIONS – 275 Box 4.9. Forest biomass and rural development: experience from Sweden and Austria Pitea (Sweden): This small northern Swedish town (22 600 inhabitants) has decided to take advantage of its specialisation in the forestry industry. In a project it focuses on dimethyl ether (DME), a gas which can be obtained from direct gasification of biomass. The project aims at producing environmentally optimised synthetic biofuel from lignocellulosic biomass at industrial scale. DME has the potential to become a competitive renewable alternative to fossil fuels and is seen as a highly efficient energy carrier with low exhaust emissions, reduced noise externalities and minimal climate impact. The BioDME project started in 2008 and aims at building the world's first BioDME plant by 2010. A field test to verify DME technology in real applications will run from 2010 to 2012 with 14 trucks in ordinary customer operation, in order to check technical standards, commercial possibilities and engine compatibilities. The project is co-financed by a private consortium, the EU’s Seventh Framework Program (FP7), and the Swedish Energy Agency, with a total estimated cost of EUR 28 million. Its impact on the regional economy has yet to be evaluated. Güssing (Austria): In 1990, local authorities in this small and relatively poor Austrian town of 3 700 inhabitants set a target of energy self-sufficiency, abandoning fossil fuel use in the municipality in order to reduce public spending. Through investments supported by the European Union's regional funds, this objective was achieved: the municipality installed a large biomass heating plant, followed by a biodiesel production plant and a biomass power plant. To use the rich local forest resources (45% of the municipal territory), appropriate wood logistics were built up together with a wood drying facility which helped to use the heating plant all year long. To produce energy, the plant gasifies wood chips by excluding air and adding steam. The result is a high-quality gas which can be used not only for heat and electricity, but can also be processed to synthetic natural gas and fuel. With more than 50 new businesses in town, the local authorities have more than tripled their annual revenues to EUR 1.4 million and reduced their energy costs by over 50%. A centre for renewable energy has realised several pilot projects and offers its local experience to other localities planning to link local natural resources, energy production and regional development. Moreover, eco-energy tourism is developed, with a common regional label (ÖkoEnergieland) and guided tours show the different forms of energy production and other cultural and natural assets of the region. Source: Solander Science Park / Marcus Öhman, Lulea University of Technology; European Center of Renewable Energy G