North American Dream: The Rise of U.S. and Canadian Sovereign Wealth

ESADEgeo 2014 Sovereign Wealth Fund Report

Ohio State Public Law Working Paper No. 246

17 Pages Posted: 12 Apr 2014 Last revised: 1 Dec 2015

See all articles by Paul Rose

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: April 9, 2014

Abstract

On March 8, 2014, the West Virginia Legislature approved the creation of a West Virginia “Future Fund,” the latest in a series of North American sovereign wealth funds (SWFs) created in recent decades. Following a model used by other states and provinces, under the West Virginia legislation, 3% from all severance taxes on coal, oil, natural gas, minerals and timber will be diverted to a permanent trust fund. West Virginia joins a large number of U.S. states and Canadian provinces to create a sovereign wealth fund. And West Virginia’s will almost certainly not be the last SWF: recent estimates by the U.S. Energy Information Administration place the amount of undeveloped, technically recoverable shale oil and shale gas in the United States alone at 862 trillion cubic feet in deposits from New York to California. Saskatchewan is also preparing to launch a wealth fund, using revenues from the same natural resource reserves enjoyed by its southern neighbors.

This article will briefly consider the phenomenon of North American funds — their creation, history, goals, and differences — with a particular focus on their governance and investment decision-making. Although the creation of new funds like West Virginia’s Future Fund and North Dakota’s Legacy Fund have received significant popular attention in recent years, many North American funds have existed for decades, and the legislative history of some funds dates back to 1785 (two years prior to the adoption of the U.S. Constitution). And, with significant oil, natural gas, and mineral wealth remaining to be tapped in the United States and Canada, West Virginia and Saskatchewan’s funds may just be the latest in a continuing wave of North American SWFs.

Keywords: sovereign wealth, permanent fund, severance tax, intergenerational wealth

JEL Classification: K20, K23, K34

Suggested Citation

Rose, Paul, North American Dream: The Rise of U.S. and Canadian Sovereign Wealth (April 9, 2014). ESADEgeo 2014 Sovereign Wealth Fund Report; Ohio State Public Law Working Paper No. 246. Available at SSRN: https://ssrn.com/abstract=2423113 or http://dx.doi.org/10.2139/ssrn.2423113

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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