Regulatory Impact Assessment: Methodology and Good

Regulatory Impact
Assessment: Methodology
and Best Practices
David Shortall
INMETRO International Workshop on Conformity Assessment
Rio de Janeiro, Brazil
December 11-12, 2006
Impact of Regulations
At their best:
– Achieve social and environmental goals
– Provide consumer protection
– Improve economic performance by promoting
At their worst:
– Create unintended and often unavoidable barriers
to trade
– Present unnecessary burdens to business
What is Regulatory Impact
Examines and measures the likely
benefits, costs and effects of new and
changed regulation
– A key decision making tool for governments
– Underpins regulatory reform
– Used in most OECD countries
– No single model fits all situation
Purpose of Regulatory
Impact Assessment
Systematically and consistently examine
selected potential impacts arising from
proposed government regulations
Promote balanced decisions that trade off
problems against wider economic and
social goals
Communicate the information to decision
Benefits of RIA (1)
Furnishes empirical data to make
appropriate regulatory decisions
Exposes impacts and linkages among
policies and gives decision makers a
capacity to weigh trade offs
Benefits of RIAS (2)
Provides a public accounting of each
Provides a clear explanation of the
regulation, its purpose, the analysis
substantiating it and expected impacts
Enables policy makers to understand
and take personal responsibility for
regulatory decisions
RIA in Canada
Regulatory impact assessment
statement introduced in 1999
RIAS Writers Guide, Guide to the
Regulatory Process
Independent oversight
Regular audits for compliance
Systematic reduction of regulatory
burden experienced
Regulatory Impact Analysis
Statement (RIAS)
Written at the end of the policy analysis and
development process and is a summary of
the analysis done
Pre-published in the Canada Gazette, Part I
Where relevant notified to WTO for
comment by trading partners
Pre-publication and notification offers a
further opportunity for public comment and
Components of the RIAS
1. Description: outlines the
regulations, defines the problem and
shows why action is necessary
2. Alternatives: lists options beside
regulation and other types of
3. Benefits & Costs: quantifies the
Components of the RIAS
4. Consultation: shows who was
conferred with and the results
5. Compliance and enforcement:
explains the policy on conformity
to the regulations and tools to
ensure it is respected
1. Description
Outlines the regulation, defines the
problem and shows why action is
– All problems detected are defined and
– Each fully analyzed to understand nature and
– Analysis of health, safety, environmental risks
– Justification of government intervention
2. Alternatives
Considers alternatives (regulatory,
non-regulatory and status quo)
– Demonstrate that new or revised regulations
will help solve the problem
– Consider solutions based on performance
requirements as alternative to prescriptive
– Use equivalent means where possible to
achieve regulatory objective
3. Benefits and Costs
Quantifies the impact of different options
Address direct and indirect benefits and costs and
impacts on environment, government, business,
workers, consumers, etc.
Address impacts on sustainable development and
balance societal and economic goals
Analysis of regulatory burden required on all alternatives
Specific effects on small business required through the
business impact test
Recommended solutions must impose least costly
information and administration burden
Verification system ensures that all elements have been
fully considered
4. Compliance and Enforcement
Explains the policy on conformity to
the regulations and tools to ensure it
is respected
– Designed to minimize government liability
– Identifies and informs those responsible for
regulatory actions
– Compliance objectives reflected in operational
plans and budgets
– Redress mechanisms established
5. Consultation
Shows the results of consultation
– Regulatory proposals require timely and
thorough consultations with interested
– Authorities must set out process used to
obtain input and identify stakeholders
6. Other Elements
A regulation must be reviewed to
determine any impact on obligations
under an international agreement or
treaty, including WTO TBT Agreement
Environmental Assessment – required
where relevant
OECD Best Practices
1. Maximize political commitment to
– Support needed from highest level of
government (laws, decrees)
– Integrate RIA into the policy process
Attach RIA to legislation
Ensure quality control
OECD Best Practices
2. Allocate responsibility for RIA
programs carefully
– Elements should be shared between
ministries and central control body
– Tool to improve skills
OECD Best Practices
3. Train the regulators
– Need to start when RIA introduced
– Training manuals/writers guides very
– Use simple concrete examples and
case studies and practical guidance on
data collection and methodologies
OECD Best Practices
4. Use consistent but flexible analytical
Quantitative cost/benefit analysis
(socio/economic impact, business impact, costeffective analysis)
Other methods including qualitative
assessments (efficiency, fairness)
Need for flexibility in selecting among
analytical methods
Apply standardized guidelines for each method
OECD Best Practices
5. Develop and Implement Data
Collection Strategies
– Quality of data used to evaluate a
proposal determines usefulness of RIA
OECD Best Practices
6. Target RIA efforts
– Target efforts at proposals which have
largest impact on society and ensure
that all such proposals are subject to
RIA scrutiny
OECD Best Practices
7. Integrate RIA with the policymaking process (beginning as
early as possible)
– If undertaken early in decision-making
process, RIA does not slow process
– Integration is long term process which
leads to cultural change among
regulators and legislators
OECD Best Practices
8. Communicate the results
– Test assumptions and data used in RIAS
through public disclosure
– Means to improve the quality of the
data and therefore the regulations
OECD Best Practices
9. Involve the public extensively
– Consultation can yield important
information on the feasibility of
proposals, range of alternatives and
likelihood affected parties are to accept
proposed regulation
OECD Best Practices
10.Apply RIA to existing as well as
new regulation
– Involves fewer data problems so quality
of resulting analysis is usually higher
– Local government regulations as well as
actions of independent regulators
should also be subject to RIA
For more information:
Canada’s RIAS:
OECD Best Practices:
OECD 1997: Regulatory Impact Analysis:
Best Practices in OECD Countries, Paris