Regulatory Impact Assessment
What is Regulatory Impact Assessment (RIA)?
Public regulation of markets increases or decreases regulatory burdens for companies. There are winner and loser companies of each particular regulation. Impact assessment is an information-based analytical approach to assess probable costs, consequences and side effects of public policy instruments (laws, normative acts, etc.), based on the collected information. Impact assessment can also be used to evaluate the real costs and consequences of regulation after they have been implemented (assessment of the regulatory act’s efficiency regulatory impact evaluation). In either case, the results are used to improve the quality of regulations and instruments, such as laws and normative acts.
Since 2004, the Ukrainian bodies of executive power have been preparing the Regulatory Impact Assessments for every new regulatory act in business sphere1
The result of a RIA is a document that can be used:
- in improving the planned public regulation;
- in decreasing the regulatory burden for companies;
- in structuring the consultation process between the Government on the one side and companies and their professional associations on the other side;
- in helping to harmonize the public regulation with the legal norms of other countries and their associations (EU);
- in enforcing the planned public regulation;
- in replacing regulatory steps by other non-regulatory measures, e.g. subsidies or awareness raising.
How to make a RIA?
A RIA is applied to a law or regulatory acts of the executive power bodies. The preparation of RIAs is based on a continuous consultation with the stakeholders and on collection of expert information. RIAs should give answers to the following questions:2
- What is the issue or problem that may require regulatory action?
- What are the underlying drivers of the problem?
- Who is affected, in what ways, and to what extent?
- How would the problem evolve, all things being equal (ceteris paribus)?
- Does the Government have the right to act?
- Definition of the regulation objectives
- What are the general objectives of the regulation?
- What are the more specific/operational objectives of the regulation?
- Underline the consistency of these objectives with other policies and, if applicable, horizontal objectives.
- What are the possible options for meeting the objectives and tackling the problem? (E.g. are there any non-regulatory options?)
- Which options have been discarded at an early stage of discussion among stakeholders, and why?
- Analyze the impacts of each option for reaching defined objectives
- What are the likely economic, social and environmental impacts of each of the short-listed options?
- Positive and negative impacts,
- Direct and indirect impacts
- Impacts inside and outside the country
- Specify uncertainties and how impact may be affected by changes in the parameters of the regulation (uncertainty and sensitivity analysis).
- Specify which impacts are likely to change over time and how
- As relevant, specify which social groups, economic sectors or particular regions are affected.
- What are the potential obstacles for making activity of business entities in compliance with the regulatory norms ?
- Indicate how positive and negative impacts have been weighed for assessment of each short-listed option.
- Present results of the options assessment.
- Present the results in aggregated and disaggregated form.
- Indicate if the analysis confirms whether regulatory action would have an added value (weighting of positive over negative).
- Highlight the trade-offs and synergies associated with each option.
- If possible, rank the options in terms of various evaluation criteria.
- If possible and appropriate, set out a preferred option.
- Outline the methodology for monitoring and evaluation of public regulation policy
- What are the core indicators of progress towards meeting the objectives of public regulation?
- What is the general outline for possible monitoring and evaluation arrangements?
Methodological note on special features of RIA within EU Legal Harmonization
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