Enhancement of the Business Environment in the Southern Mediterranean A project funded by the European Union
RIA : Regulatory Impact Analysis Measuring the Impact of Reform... ...a practical approach and some methodological approaches Cairo, December 17 – 18th 2014 EBESM Project 2
RIA : « Analysis » or « Assessment » ? REGULATORY IMPACT ASSESSMENT EBESM Project 3
RIA : History and development The first RIA : "Inflation Impact Assessments" in USA (Carter) in 1978 and Reagan administration, using Cost- Benefit Analysis (BCA). Other early RIA adopters : Australia, Canada, Singapore. OECD Countries (34) and Candidates By 1996 about 50% of OECD countries use some form of RIA. Today, all OECD countries use RIA and it is strongly promoted by World Bank. Most developing countries are now adopting RIA requirements. EBESM Project 4
RIA : Generalisation in OECD EBESM Project 5
RIA : Context and Origin EBESM Project 6
RIA : Context and Origin EBESM Project 7
RIA : Definition EBESM Project 8
RIA : Definition Ex – Ante & Ex – Post Assessment Regulatory Impact Assessment (also known as Regulatory Impact Analysis ) is used to assess : _ potential impact of proposed new regulatory measures _ actual impact of existing regulations. _ Ex post RIA : the actual impacts of an existing regulatory measure or _ Ex ante RIA : measuring the likely impacts of a regulatory proposal EBESM Project 9
RIA : Generalisation of the Instrument RIA is a legal requirement in numerous Countries, including many outside the OECD (ex : Korea, the Philippines, Algeria, Botswana, Tanzania, Jamaica, Mexico, Albania, Lithuania, Romania). Moreover, in a larger number of countries, RIA is used in some form even though it is not a legal requirement. Coverage and formal status of regulatory assessment varies considerably between countries. EBESM Project 10
RIA : Adoption in non-OECD & Transition Economies “Regulatory Impact Assessment in Developing and Transition Economies: A Survey of Current practice” : Colin Kirkpatrick a , David Parker b & Yin-Fang Zhang University of Manchester,: 15 Mar 2010. EBESM Project 11
RIA : Ex - Ante or Ex – Post ? Where RIA is being applied, it is mostly for ex ante appraisal, rather than for monitoring or ex post evaluation. This may reflect : _ a lack of resources within governments to undertake such appraisal _ reluctance on the part of governments to dwell on whether previously introduced regulatory measures have achieved their desired results. In OECD countries there is a similar relative lack of interest in publishing ex post assessments, probably on the grounds of ‘letting sleeping dogs lie’ ! EBESM Project 12
RIA : Three major areas of application RIA is applied mostly to regulation proposals of three types : _ Economic _ Social _ Environmental EBESM Project 13
RIA : Economic regulation is a major area of application Application of RIA across the three main forms of regulation shows a heavy concentration in terms of monitoring economic regulation. Results suggests that no country is applying RIA consistently to all major economic, social and environmental regulation proposals EBESM Project 14
RIA : Political and Governance dimension RIA contributes to ‘good governance’. In most countries where RIA is applied to new regulations, public consultation does occur with emphasis on public notices and invitations to comment on proposals. EBESM Project 15
RIA : Political and Governance dimension Consultation involves outside experts, government bodies and the private sector. Consumer groups and other bodies representing civil society are less commonly included. Consultation occurs either / both before or after the government prepares detailed regulations. However, few countries make public the views of participants in the consultation exercise, suggesting room for improved transparency. EBESM Project 16
RIA : Strategic use for Capacity Building The value of RIA is enhanced when it is adopted as part of an overall strategy for regulatory governance reform and institutional capacity building RIA is frequently applied as part of a broader programme of regulatory governance reform. RIA is a policy reform that has the potential to improve government regulatory practices and outcomes. EBESM Project 17
RIA : Technical & Methodological Difficulties of Implementation _ Ex ante RIA : available data, suitable models or disagreement on method. _ Reactions of target groups are not easily predictable, especially for innovative policies _ Identification of impact areas likely to be affected and considered relevant in IA studies _ Uncertainty in forecasting indirect effects and possible side-effects of policies. _ Some changes in behaviour may trigger other indirect impacts. _ Aggregation of impacts is difficult as impacts are measured by different indicators and scales. EBESM Project 18
RIA : Lack of institutional demand difficulty of Implementation _ Policy proposals are not only based on evidence, but also on agreement among conflicting interests, bargain for compromise and look for legitimacy and support for proposal. _ Impact areas that are more difficult to assess (for example: involving intangible values and long- term benefits) may not be taken into consideration. _ Because RIA studies analyse the pros and cons of legislative proposals they may limit the room for manoeuvre for political actors to pursue their goals. _ Using RIA to challenge pre-commitment of politicians is difficult, so the results of IA studies an be ignored in political negotiations, which does not provide incentives to conduct the analysis. EBESM Project 19
RIA : Lack of resources difficulties of Implementation _ Complete and holistic impact assessment requires time, trained staff and budgets for the collection of data, and the setup and running of models. _ Commissioning of studies can often be in conflict with the timing of particular policy processes that may depend on the utilisation of narrow windows of opportunities. EBESM Project 20
RIA : Monetisation a partial solution to methodological issues _ In some cases, monetisation of different impact areas is possible for aggregating impacts. _ In practice, monetisation is difficult in assessing non tradable goods for which no market exists. In such cases, monetisation is only possible using expensive supporting studies. _ In particular, the non-economic benefits of legislation are difficult to assess. _ Cost saving innovation cannot be predicted and economic costs as well as benefits are frequently overestimated. EBESM Project 21
RIA : Relativity of difficulties : the need for clear assumptions _ Because of such methodological limitations, assumptions & judgements are inevitably part of the assessment. _ The nature and importance of assumptions, and associated areas of risk and uncertainty, must be described in the assessment. _ The RIA is still be of real assistance to decision- makers by clarifying the “certain” and “likely” consequences of regulatory proposals and by making underlying assumptions transparent. EBESM Project 22
RIA : Mechanisms to mitigate implementation difficulties _ Quality control: Several countries have mechanisms and institutions to review IA reports. In some jurisdictions, the IA systems have been reviewed through evaluation studies, others have set up expert bodies and councils responsible for the review of individual IAs. _ Methodological rigidity: Considerable efforts have been undertaken to develop methods that are applicable to a wide range of policies and that facilitate the IA process. The most prominent examples are the Standard Cost Model for the assessment of information requirements or the use of Cost Benefit Analysis for the aggregation of different impacts. Beyond this, there is a range of checklists, toolboxes and models that have been developed and applied in IA studies EBESM Project 23
RIA : Advantages of Standardisation of methods _ Resource requirements: Ready-to-use budgets and tools reduce the resource requirements for IA studies. _ RIA can build on data & experience from previous applications. Support units or consultants provide specialised knowledge and experiences. _ Improved relevance: multi-purpose RIA tools for broad political priorities, beyond the policy relevance of the individual piece of regulation. This increases relevance of the assessment, making it more tailored to political demands. _ Quality control: The use (or non-use) of standardised analytical methods is an indicator of the quality of a RIA. This is politically less sensitive than assessment of the overall quality of the IA or scrutiny of the policy relevance of the proposed regulation. EBESM Project 24
RIA : Dis-advantages of Standardisation of methods _ Factors meaningfully assessed by multi-purpose tools are necessarily narrow and focused. _ Risk that standardised procedures will descend into just box checking while excluding other, more relevant aspects of the policy from the analysis. EBESM Project 25
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