1. C.H. Montin, Tbilisi,12 November 2014 11 Tbilisi, 12 November 2014 Developing Regulatory Impact Assessment In Georgia Assessing the impacts Charles-Henri Montin, Smart Regulation Consultant Former Senior Regulatory Expert, Ministry of economy and finance, Paris http://smartregulation.net

2. C.H. Montin, Tbilisi,12 November 2014 2 Contents  Identify who will be impacted by the options  Identify the scale of the impact  Quantify the impacts –Gathering the evidence –Analysing the evidence –Presenting the evidence  Some quantification methods  Valuation methods for non-market impacts  Quantifying indicators

3. C.H. Montin, Tbilisi,12 November 2014 3 Who will be impacted?

4. C.H. Montin, Tbilisi,12 November 2014 4 Scale of impacts (quantitative assessment)  What is the nature of the impact?  Who will be the winners?  Who will be the losers?  What is the likelyhood of the impact  What is the scale of the impact? –Small/medium/large

5. C.H. Montin, Tbilisi,12 November 2014 5 Listing the impacts “Basic” impacts –Economic –Business –SMEs –Competition –Regional development “Additional” impacts (ex.): -Race equality -Health -Rural development -Sustainable development -Small firms -“family” -gender -etc Broaden an initial model or integrate separate studies?

6. C.H. Montin, Tbilisi,12 November 2014 6 The quantification process  RIA is designed to support ‘Evidence Based Decision Making’  Assessing Impacts involves: –1. Gathering the evidence –2. Analysing the evidence (what does it tell us about the impacts of the draft regulation?) –3. Presenting the evidence

7. C.H. Montin, Tbilisi,12 November 2014 7 Gathering the evidence Possible range of sources, including:  Your own knowledge and experience  The knowledge and experience of colleagues in your own organisation and other agencies  Consultation with external experts  Consultation with those that are likely to be affected  Research documents, market reports, government statistics, internet searches

8. C.H. Montin, Tbilisi,12 November 2014 8 Analysing the evidence  The evidence needs to be used to explain how and why the impacts occur. What are the ‘cause and effect’ links between the regulation and the impact indicators?  The analysis is presented in the form of a narrative in the RIA report, in which the evidence is used to validate the analysis.  This is called causal chain analysis.

9. C.H. Montin, Tbilisi,12 November 2014 9 Analysing the evidence: the proportionality principle  How Much Evidence is Needed?  Proportionate Analysis  the more significant the impacts are likely to be the greater the effort of quantification that is needed  level of detail also needs to be related to the resources and time available  the preliminary analysis will give an indication of the level of detail needed in the Final RIA

10. C.H. Montin, Tbilisi,12 November 2014 10 Presenting the Analysis  The results of the assessment should be described and explained in the text of the RIA  The significance of the impacts should also be clearly shown in tabular form  The positive impacts (benefits) and negative impacts (costs) should be shown separately  Positive and negative impacts should be quantified, where-ever possible

11. C.H. Montin, Tbilisi,12 November 2014 11 A choice of quantification methods Benefit – cost analysis (BCA) Monetise all major B&C: eco, fin, soc, envt… of each option Difficult to collect stats. but most common method Cost- effectivenes s analysis (CEA) Compare range of options in terms of costs of achieving a given outcome (benefit) Used when difficult to monetise policy benefit Example: US Multi-criteria analysis Comparison of options incorporates non- monetised impacts Used when difficult to monetise Ex: EU, AUS; IE

12. C.H. Montin, Tbilisi,12 November 2014 12 Quantifying impacts

13. C.H. Montin, Tbilisi,12 November 2014 13 Valuation methods for non market impacts  Stated preference methods –Contingent valuation –Choice modelling  Revealed preference methods –Travel cost studies –Hedonic price studies –Defensive expenditures  Need for economists’ inputs to make use of these techniques, for instance to apply discount rates

14. C.H. Montin, Tbilisi,12 November 2014 14 Examples of quantifying indicators

15. C.H. Montin, Tbilisi,12 November 2014 15 The breakdown of business costs

16. C.H. Montin, Tbilisi,12 November 2014 16 Conclusion  Evidence on impacts should be quantified wherever possible but non-monetiseable impacts must not be disregarded;  Creative Economics  Quantification in market value terms wherever possible.  Quantify benefits as well as costs

17. C.H. Montin, Tbilisi,12 November 2014 17 To continue the study…  Assessments methodologies –OECD: “A tool for policy coherence” (chapter 3)A tool for policy coherence –UK :Better Regulation framework manual (2013)Better Regulation framework manual –Green Book (p. 57 sq for non-monetary impacts)  Further questions contact: montin @ smartregulation.net File and URL of this presentation