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Natural Resources Canada

Natural Resources Canada (NRCan) is one of the leading departments of the federal government in terms of its participation in and support of science and technology (S&T) activities. It is always necessary for government to review the rationale for its expenditures including those related to S&T activities but pressures to do so are heightened in the current environment of restraint. The purpose of our study was to provide an analytical review of the rationale for government support of S&T activities and to indicate how current NRCan S&T activities fit within this framework.

The rationale for S&T activities was developed in terms of the potential gains in social efficiency through such activities. The source for this rationale comes from market failure-the inability of markets to capture fully all relevant social benefits and costs. The sources of market failures discussed in the report included externalities, public goods, technology transfer issues, risk, and resource pricing.

We also developed a checklist by which research managers could determine the degree to which research projects fit this rationale and thereby could be expected to generate high returns to society.