1. C.H. Montin, Tbilisi, 12 November 2014 11 Tbilisi, 12 November 2014 Developing Regulatory Impact Assessment In Georgia Defining the problem (issue), the objectives and the options 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 Summary  Importance of a good definition of the problem/issue to solve  Example (motorbike accidents)  How to identify and characterize the issue  Example (rice paddies)  Establish the need and rationale for action  Formulating the policy objective  Options and alternatives  Selecting the best option

3. C.H. Montin, Tbilisi, 12 November 2014 3 Stages of the RIA process

4. C.H. Montin, Tbilisi, 12 November 2014 4 Importance of Defining the Problem/Issue Problem Definition: example There are many road accidents caused by motorbike drivers on the roads. The main reason for this is motorbike drivers who do not have the ability to control their motorbikes.

5. C.H. Montin, Tbilisi, 12 November 2014 5 Draft legislation prepared with no RIA The Ministry of Health (of country X) plans to introduce a new regulation that states only people who weigh over 40kg, and have a height of over 1.45m and a chest size under 73cm would be allowed to ride motorbikes on the road with engine sizes of 50cc and above.

6. C.H. Montin, Tbilisi, 12 November 2014 6 Correct Analysis Appropriate Problem Definition At least 30 people die everyday from transportation-related incidents, and many more are seriously injured. Almost 70% of these accidents are caused by motorbike drivers. The majority of these accidents (67%) are caused by drivers either speeding, or driving while under influence of alcohol. And 81% of the accidents are caused by men.

7. C.H. Montin, Tbilisi, 12 November 2014 7 Brainstorm the Issues Clarify the ProblemDecide the Problem to SolveAnalyze the Problem How to identify the Issue

8. C.H. Montin, Tbilisi, 12 November 2014 8 8 Brainstorm the Issues Issue 1 There is a market failure... Issue 2 There are a lack of incentives... Issue 3 There is a deficiency in the current regulatory framework... Issue 4 There is a lack of information or transparency... Issue 5........

9. C.H. Montin, Tbilisi, 12 November 2014 9 Problem ImportanceFeasibilityLegitimacyScope Define the Problem to Solve

10. C.H. Montin, Tbilisi, 12 November 2014 10 Establish need for action and rationale for intervention  Establish need for action (new regulation or policy): –Are there deficiencies in the regulations? e.g. a missing constitutional mandate, a legal vacuum produced by a a court ruling, a legislative mandate to develop regulation, a need to fulfill an electoral promise, etc.  Is there a market failure ? –e.g. prices do not reflect the real costs and benefits to society ( "externalities" ); –insufficient supply of public goods; –little or no competition; –information insufficient for decision-makers ( including consumers and government )

11. C.H. Montin, Tbilisi, 12 November 2014 11 Problem definition: the process Identify and describe the issue –evidence about the nature of the problem –probability of the problem arising and frequency –who is impacted? –who is best placed to manage/resolve the problem Analyze and list the causes (examples) –longstanding known causes –new opportunities due to science and technology, –changes in attitudes –new awareness

12. C.H. Montin, Tbilisi, 12 November 2014 12 Characteristics of a Problem/issue  When did the problem begin?  What is the scale of the problem?  Who is impacted by the problem?  What regulations exist?  Why is government intervention required?

13. C.H. Montin, Tbilisi, 12 November 2014 13 Example Problem Definition There is a concern about Food Security due to the urbanization of agricultural land, particularly rice paddies.

14. C.H. Montin, Tbilisi, 12 November 2014 14 Consequence of no RIA Ministry of Agriculture and Rural Development is proposing to increase the level of compensation payable to land owners of rice paddy fields to: 1) Deter developers from purchasing rice paddy fields 2) Provide higher and more equitable price for rice paddy fields

15. C.H. Montin, Tbilisi, 12 November 2014 15 Correct Analysis Appropriate Problem Definition The production of rice is not an attractive business. The profitability of rice production is low. Often rice paddy fields vary in quality and are therefore also inefficient in their production. Therefore owners of rice paddy fields are choosing to sell their land and find another source of income, possible in urban areas.

16. C.H. Montin, Tbilisi, 12 November 2014 16 How to formulate a Policy Objective  “Objective” means the intended outcome or effect that the proposal will have.

17. C.H. Montin, Tbilisi, 12 November 2014 17 Qualities of a Policy Objective

18. C.H. Montin, Tbilisi, 12 November 2014 18 Options: what action should be taken?  Do nothing is always the first option…

19. C.H. Montin, Tbilisi, 12 November 2014 19 Types of Options  Do nothing/maintain status quo  Intervene directly e.g.  Enforce existing regulations differently  Co-regulate with professional bodies  New regulations  Create a climate for change e.g.  Set standards  Information and education campaigns  Self regulation and codes of practice  Quality assurance marks  Incentives (financial, other)

20. C.H. Montin, Tbilisi, 12 November 2014 20 Consider Alternatives to Regulation

21. C.H. Montin, Tbilisi, 12 November 2014 21 Selecting the right option You are looking for policy solutions that:  Address the defined problem (focused)  Will be effective in delivering the desired outcome (effective)  Are proportional to the problem  Fit with wider social, economic and environmental policy objectives  Give good value for money  Are enforceable

22. C.H. Montin, Tbilisi, 12 November 2014 22 Conclusion  How you intervene is as important as whether to intervene.  You need to exercise logical judgement about which option to develop to take to a full Regulatory Impact Assessment