The impacts of intergovernmental grants on municipal infrastructure: Evidence from the Canada-Quebec infrastructure works 2000 program

Abstract

This article reports the results of a study on the outcomes of the Canada-Quebec Infrastructure Works 2000 Program (CQIWP), an infrastructure grant program to Quebec municipalities. The focus of this study is on the effects of the CQIWP on municipal investment and physical conditions of drinking water systems and, as such, it goes beyond the usual emphasis on the fiscal consequences of intergovernmental grants. The study results show that the CQIWP was an efficient tool to induce municipalities to increase investment and to reduce the number of aqueduct breakdowns. In light of these findings, this study suggests that upper levels of governments can rely on infrastructure grants to fill the gap in municipal investment and, therefore, to improve the availability and quality of municipal infrastructure.

Keywords: Difference in difference estimator; Drinking water; Impact evaluation; Intergovernmental grants; Municipal infrastructure; Municipal investment; Panel fixed-effects model.