An Evaluation of the Redistributive Efficiency of Alternative Crow Benefit Payment Policies in Western Canada

Changes in the method of Crow Benefit payment have important implications for the feed-grain and livestock sectors of western Canada. This article analyzes the relative efficiency and welfare impacts of the current Western Grain Transportation Act and four alternative methods of Crow Benefit payment: (1) the Gilson Plan; (2) the 50:50 Plan; (3) the Grain Transportation Refund Plan; and (4) the Agricultural Diversification Alliance Plan. These policies were assessed in terms of their efficiency in redistributing income from taxpayers to western feed-grain producers. The welfare impacts of the policies were estimated for both the feed-grain and the livestock sectors. The Agricultural Diversification Alliance Plan was the most efficient method, while the existing policy was the least desirable of all policy options considered. The Grain Transportation Refund Plan was inferior to the Gilson Plan, but both were superior to the 50:50 Plan. The Gilson and the Agricultural Diversification Alliance Plans resulted in an increase in the feed-grain producers' welfare, but a slight decrease in the livestock producers' welfare. Results suggest that the Gilson and the Agricultural Diversification Alliance Plans have the potential of simultaneously maintaining feed-grain producers' welfare, lowering deadweight losses, and cutting the taxpayers' burden of financing the Crow Benefit Plan.