Introducing Regulatory Impact Analysis into the Turkish Legal Framework “Training the Trainers” November 2008 Assessing Alternatives to Traditional Regulation by Lydia Jørgensen Senior Associate, Jacobs and Associates

Benefiting from using alternatives Example: US - programme regulating seafood safety. Approach: Process based regulation Producers required to document and analyse the production process, identifying key points at which hazards arise and putting into place site- specific strategies to manage them. The benefits, (compared with previously regulatory approaches), –estimated in the range of USD 1.4 billion to USD 2.6 billion, –avoiding up to illnesses from contaminated seafood annually. –Further, approach recommended by the UN-based Codex Alimentarius Commission –Source; OECD ’Alternatives to Regulation, 2002

Assessing alternatives is part of RIA Sometimes with reluctance, because –Classic regulation is found to be safer –Alternatives are found to create extra risks and uncertainty –But Classical regulation can have high cost Might not promote compliance

Assessing alternatives is not easy No pure solution, but typically a mix of alternatives and traditional regulation Sometimes difficult to anticipate reactions due to little experience Often involvement of new or unfamiliar institutions and agents Can seem to involve more uncertainty, but in practise not likely to differ

Forms of alternatives Alternative incentivesMore efficient regulatory design

Alternative instruments Free market Voluntary standards Information and campaigns (labels etc) Self regulation Market incentives (taxes, subsidies) Tradable permits (creating new markets) Performance regulation Process-based regulation Co-regulation

Example: Trading schemes in the Netherlands In agriculture, including fisheries licenses, fishing quotas for plaice and sole, manure spreading rights and milk quotas. Why: –To allow business etc. to achieve regulatory goals in the least costly manner. –To let market incentives reward the use of innovation and technical change.

Example: Information Campaigns in Denmark Initiatives have included information campaigns on the disposal of electric batteries, reducing speeding when driving and on reducing drinking water consumption. About 7 campaigns every year just on traffic safety: –Reducing speed, using sear belts, reducing drunkdriving etc. Why? To address information asymmetries To empower citizens and consumers to adopt actions or make informed choices. Some also more explicit in seeking to change behaviour.

How can alternatives be selected? Define problem and objectives clearly Start early and consult Match instruments and incentives Match instruments and expertise and experience Instruments should match political reality, deliveries and monitoring capacities

A clear objective is needed. In order to compare the different alternatives (options) Option 1+3 Option 2 Option 1 Option 3 Option 2

Start early and consult Alternatives are part of the initial screening of RIA Consultation to assess incentives and acceptance of alternatives –Especially with innovative or unfamiliar alternatives

Use the incentives Incentives stressed in the problem definition should be used to decide what instrument is likely to have the most effect Ex: If the problem is lack of understanding of consumer risks, then information campaigns or labelling can be used

Use expertice, experience and data Experts can advice on beast means to achieve objectives, since they have a greater understanding of the area. Alternatives already used with good experience can keep cost of analysis under control Data limitation is an important constraint for selecting alternatives

Take into account deliveries, political realities and monitoring Involve institutions at the right level to implement the instruments Make use of existing institutions, if possible. Use monitoring to gain confidence

Example – EU Postal services options screened Contrary to subsidiarity Option 3 - harmonised universal service standards and obligations with an EU ceiling Theoretically attractive, but near-impossible to gain detailed agreement on content Option 7 - harmonised conditions for financing, including calculation of USO, reserved area abolished Over-regulates where voluntary agreements may suffice may infringe ownership rights; current Directive gives guidelines on special tariffs with Art 82 EC providing complementary 'backup' Option 13 - impose mandatory downstream access and harmonised rules in the Directive

Example – comparing options