C.H. Montin, Manama, 20 January Manama, 20 January 2014 Regulatory Impact Assessment Defining the problem Charles-Henri Montin, Senior Regulatory Expert, Ministry of economy and finance, Paris Delegate to OECD RPC

C.H. Montin, Manama, 20 January Summary  Step 1: Identify the issue –Importance of a good definition of the problem (issue) –Example (motorbike accidents) –How to identify and characterize the issue –Example (rice paddies) –Establish the need and rationale for action

C.H. Montin, Manama, 20 January Stages of the RIA process

C.H. Montin, Manama, 20 January 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.

C.H. Montin, Manama, 20 January 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.

C.H. Montin, Manama, 20 January 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.

C.H. Montin, Manama, 20 January Brainstorm the Issues Clarify the ProblemDecide the Problem to SolveAnalyze the Problem Identifying the Issue

C.H. Montin, Manama, 20 January 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

C.H. Montin, Manama, 20 January Problem ImportanceFeasibilityLegitimacyScope Define the Problem to Solve

C.H. Montin, Manama, 20 January 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 )

C.H. Montin, Manama, 20 January 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

C.H. Montin, Manama, 20 January How to define the Problem  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?

C.H. Montin, Manama, 20 January Example Problem Definition There is a concern about Food Security due to the urbanization of agricultural land, particularly rice paddies.

C.H. Montin, Manama, 20 January 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

C.H. Montin, Manama, 20 January 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.