Regulatory Impact Analysis
Encyclopedia
A Regulatory Impact Analysis or Regulatory Impact Assessment (RIA) is a document created before a new government
regulation
is introduced. RIAs are produced in many countries, although their scope, content, role and influence on policy making vary.
of the potential impacts of a new regulation in order to assess whether the regulation is likely to achieve the desired objectives. The need for RIA arises from the fact that regulation commonly has numerous impacts and that these are often difficult to foresee without detailed study and consultation with affected parties. Economic approaches to the issue of regulation also emphasize the high risk that regulatory costs may exceed benefits. From this perspective, the central purpose of RIA is to ensure that regulation will be welfare-enhancing from the societal viewpoint - that is, that benefits will exceed costs. RIA is generally conducted in a comparative context, with different means of achieving the objective sought being analysed and the results compared.
RIA requirements have broadened in scope over time in many countries in which they have been adopted. Conversely, few if any countries have abandoned the use of RIA after having adopted it.
. In May 2007 a new system of Impact Assessments (IAs) was introduced and made fully operational in November 2007. BRE, now part of DBERR is responsible for the IA process.
The aim of IAs is to help improve policy making by placing a greater emphasis on quantifying benefits and costs in the IA. The removal of the word 'Regulatory' was also a recognition that many Government burdens on business, the third sector and public bodies were not always implemented as legislation or regulations e.g. codes of practice, reporting requirements or funding guidance, and that the impacts of these measures also needed to be assessed.
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
is introduced. RIAs are produced in many countries, although their scope, content, role and influence on policy making vary.
Role
The role of an RIA is to provide a detailed and systematic appraisalAppraisal
Economic appraisal is a type of decision method applied to a project, programme or policy that takes into account a wide range of costs and benefits, denominated in monetary terms or for which a monetary equivalent can be estimated. Economic Appraisal is a key tool for achieving value for money and...
of the potential impacts of a new regulation in order to assess whether the regulation is likely to achieve the desired objectives. The need for RIA arises from the fact that regulation commonly has numerous impacts and that these are often difficult to foresee without detailed study and consultation with affected parties. Economic approaches to the issue of regulation also emphasize the high risk that regulatory costs may exceed benefits. From this perspective, the central purpose of RIA is to ensure that regulation will be welfare-enhancing from the societal viewpoint - that is, that benefits will exceed costs. RIA is generally conducted in a comparative context, with different means of achieving the objective sought being analysed and the results compared.
History and development
The first RIA are generally considered to be the "Inflation Impact Assessments" required by the Carter Administration in the United States from 1978. The RIA requirement was broadened during the Reagan administration, with Benefit-Cost Analysis (BCA) becoming the required methodological approach. Another early adopter of a RIA requirement was Australia (1985). By the mid-1990s approximately 12 OECD countries had implemented RIA requirements of some form, although the scope of the required analysis varied considerably. By 2000, 20 of 28 OECD countries had implemented RIA requirements. Currently, virtually all OECD countries use RIA. RIA requirements had also begun to be strongly promoted to its client countries by the World Bank. As a result, an increasing number of developing countries have now adopted RIA requirements.RIA requirements have broadened in scope over time in many countries in which they have been adopted. Conversely, few if any countries have abandoned the use of RIA after having adopted it.
EU
The European Commission introduced an impact assessment system in 2002, integrating and replacing previous single-sector type of assessments. In the European Commission perspective, Impact Assessment (IA) is a process aimed at structuring and supporting the development of policies. It identifies and assesses the problem at stake and the objectives pursued. It identifies the main options for achieving the objective and analyses their likely impacts in the economic, environmental and social fields. It outlines advantages and disadvantages of each option and examines possible synergies and trade-offs. In 2005 and 2006 the Commission updated its approach to include economic, social and environmental dimensions, thus moving in the direction of Sustainability Impact Assessment. There has also been a 2009 update.UK
In the United Kingdom, RIAs have for many years been a key tool in helping improve the quality of regulation and reduce unnecessary burdens on business. RIAs have been produced by Central Government departments for many years using guidance produced by the Better Regulation Executive (BRE) in the Cabinet OfficeCabinet Office
The Cabinet Office is a department of the Government of the United Kingdom responsible for supporting the Prime Minister and Cabinet of the United Kingdom....
. In May 2007 a new system of Impact Assessments (IAs) was introduced and made fully operational in November 2007. BRE, now part of DBERR is responsible for the IA process.
The aim of IAs is to help improve policy making by placing a greater emphasis on quantifying benefits and costs in the IA. The removal of the word 'Regulatory' was also a recognition that many Government burdens on business, the third sector and public bodies were not always implemented as legislation or regulations e.g. codes of practice, reporting requirements or funding guidance, and that the impacts of these measures also needed to be assessed.