The European Impact Assessment and the Environment

The European Impact Assessment and the Environment

Kilian Bizer · Sebastian Lechner · Martin Führ Editors

The European Impact Assessment and the Environment

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Editors Prof. Dr. Kilian Bizer Sebastian Lechner Georg-August-Universität Göttingen Faculty of Economic Sciences Chair for Economic Policy and SME Research Platz der Göttinger Sieben 3 37073 Göttingen Germany [email protected] [email protected]

Dr. Martin Führ Hochschule Darmstadt Haardtring 100 64295 Darmstadt Germany [email protected]

R+D Project (FKZ 370711100) funded with a grant from the Federal Environmental Research Plan by the German Federal Research Agency All contributions express the personal opinion of the authors and do not necessarily coincide with the opinion of the German Federal Environmental Agency

ISBN 978-3-642-11669-8 e-ISBN 978-3-642-11670-4 DOI 10.1007/978-3-642-11670-4 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2010931285 © Springer-Verlag Berlin Heidelberg 2010 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

Preface

This volume contains papers presented in a workshop of international experts in September 2008 in Berlin. The experts discussed how environmental consequences of EU legislation can be incorporated in a more effective way. In other words, this contribution focuses on the question of which measures can strengthen the consideration of environmental effects in the EU impact assessment procedure and in the subsequent legislative decision-making process. This allows drawing conclusions for the impact assessment process in Germany. This volume begins with an introductory paper (Bizer/Lechner/Führ) which served as the basis for discussion in our workshop. The questions raised in this paper are addressed by the authors of the subsequent chapters. Stephen White (DG Environment, EU-Commission) discusses the impact assessment from an internal perspective within the Commission. Pendo Maro (European Environmental Bureau) reviews the impact assessment practice from the perspective of an environmental NGO. Martin Schmidt et al. discuss the potential for more formalism to strengthen environmental issues within impact assessments and favour a checklist. Clive George reviews the current state of rules within the EU Commission and suggests an additional chapter with regard to environmental impacts in the Annexes of the impact assessment guidelines. Martin Drechsler analyses methods of comparing regulatory options, such as cost-benefit analysis and multi-criteria analysis with respect to their informational demands. Finally we offer our conclusion of the discussion in the workshop and compare these with the new impact assessment guidelines from 15 January 2009. The latest guidelines certainly add to the previous improvements and reveal that introducing impact assessments as a form of governance is rather a long-term process than a state to be achieved within a few years. This should be taken in consideration when designing the next development stage of the German impact assessment procedure.

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We are grateful for a research grant (FKZ 370711100) by the Federal Environment Agency, Germany. We also thank all participants of the BerlinWorkshop 2008 for the intriguing discussion and their valuable comments. Göttingen, Germany Göttingen, Germany Darmstadt, Germany May 2009

Kilian Bizer Sebastian Lechner Martin Führ

Contents

1 Improving the Integrated European Impact Assessment? . . . . . . . Kilian Bizer, Sebastian Lechner, and Martin Führ

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2 Impact Assessment – Experience from the European Commission . . Stephen White

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3 Views of the European Environmental Bureau on the Commission’s Impact Assessment Procedure – With a Focus on Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pendo Maro

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4 The Proportionate Impact Assessment of the European Commission – Towards More Formalism to Backup “The Environment” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Schmidt, Eike Albrecht, Hendrike Helbron, and Dmytro Palekhov

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5 Proportionate Impact Assessment: Discretion, Formalism, and the Undefined Responsibilities of European Decision-Makers . . Clive George

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6 Multi-Criteria Analysis for Policy Evaluation . . . . . . . . . . . . . Martin Drechsler

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7 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kilian Bizer, Sebastian Lechner, and Martin Führ

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Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Contributors

Eike Albrecht Centre for Law and Administration, Brandenburg University of Technology (BTU), Cottbus, Germany Kilian Bizer Society for Institutional Analysis (sofia), University of Göttingen, Göttingen, Germany, [email protected] Martin Drechsler Department of Economic Modeling, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany Martin Führ Society for Institutional Analysis (sofia), University of Applied Sciences Darmstadt, Darmstadt, Germany, [email protected] Clive George University of Manchester, Manchester, UK Hendrike Helbron Department of Environmental Resources, UNESCO-IHE Institute for Water Education, Delft, The Netherlands Sebastian Lechner Society for Institutional Analysis (sofia), University of Göttingen, Göttingen, Germany, [email protected] Pendo Maro European Environmental Bureau, Brussels, Belgium Dmytro Palekhov Department of Environmental Planning, Brandenburg University of Technology (BTU), Cottbus, Germany Michael Schmidt Department of Environmental Planning, Brandenburg University of Technology (BTU), Cottbus, Germany Stephen White EU Commission, General Direction for Environment, Brussels, Belgium

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Abbreviations

BRE Better Regulation Executive CAP Common Agriculture Policy CBA Cost-Benefit Analysis CEA Cost-Effectiveness Analyses DG Directorate General EC European Community ECFIN Economy and Finance ECJ European Court Jurisdiction ECR European Court Report EEB European Environmental Bureau EIA Environmental Impact Assessment EMPL Employment, Social Affairs and Equal Opportunities ENTR Enterprises and Industry ENV Environment E.O. Executive Order EPA Environmental Protection Agency IA Impact Assessment IAB Impact Assessment Board IASG Impact Assessment Steering Group ISC Inter-Service Consultation ISSG Inter-Service Steering Group LCA Life Cycle Assessment

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MAUT Multi-Attribute Utility Theory MAVT Multi-Attribute Value Theory MCA Multi-Criteria Analysis NGO Non-Governmental-Organisation OIRA Office for Information and Regulatory Affairs OMB Office of Management and Budget RED Review of Externalities Database RIA Regulative Impact Assessment SEA Strategic Environmental Assessment SIA Sustainable Impact Assessment WTP Willingness to Pay WTA Willingness to Accept

Abbreviations

Chapter 1

Improving the Integrated European Impact Assessment? Kilian Bizer, Sebastian Lechner, and Martin Führ

Abstract Based on an institutional analysis of the incentive situation of desk officers, the DG’s leading officers as well as the Impact Assessment Board, the Inter-Service Steering Group (now called the IASC) and interest groups this chapter develops hypotheses on the functioning of impact assessments and their quality. Checked against the literature and 30 impact assessments conducted by various Directorate Generals of the EU Commission we argue that quality control should be as independent as possible, that de facto blocking rights of the quality control board are necessary and that desk officers must be moved towards quantification and monetarisation of impacts also in the environmental realm in order to balance economic, social and environmental impacts in a transparent way.

Introduction Since 2003, the European Commission has pursued an obligatory integrated impact assessment approach for all its proposals for directives and regulations. Impact assessment is applied to major Commission proposals, i.e. those listed in its Annual Policy Strategy or its Work Program, be they • regulatory proposals; • other proposals having considerable economic, social and environmental impacts; • proposals having a major impact on particular groups; • proposals representing a major change or policy reform.

K. Bizer (B) Society for Institutional Analysis (sofia), University of Göttingen, Göttingen, Germany e-mail: [email protected]

K. Bizer et al. (eds.), The European Impact Assessment and the Environment, C Springer-Verlag Berlin Heidelberg 2010 DOI 10.1007/978-3-642-11670-4_1, 

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The latter include proposals such as white papers, expenditure programmes, communications on policy orientations and negotiating guidelines for international agreements. Since 2005, all major items included in the Commission’s annual Work Programme are subject to impact assessments – with the exception of Green Papers or proposals where dialogue with Social Partners is foreseen by the Treaty.1 The system of (regulative) impact assessment (RIA) which has thus been established is intended to ensure that all economic, social and ecological consequences of the relevant options are described, estimated and evaluated (European Commission, 2005, Chap. 1; European Commission, 2008b, Chap. 1). However, several evaluation studies of this impact assessment system by Ecologic, 2007; Jacob et al., 2008; Watson et al., 2007 reveal serious shortcomings, particularly with regard to how the consequences for the environment are taken into account. In the Commission’s impact assessment documents which were examined by these studies, there are often only brief and at best qualitative observations on possible environmental consequences. The analysis of consequences for the economy, however, is often further developed in quantitative and monetised terms. These evaluation findings provide evidence of deficits in the determination of environmental consequences. In addition, there are also deficits due to the decision-making process, which comes into conflict with the environmental policy objectives and in Art. 6 as well as Art. 174 ECT.2 The European Commission has drawn its conclusions from this and is currently improving the IA Guidelines. The goals of this impact assessment system on the basis of the draft impact assessment guidelines (European Commission, 2005, Chap. 1, p. 5; European Commission, 2008b, Chap. 1, p. 3) are: 1. To improve the quality of the directives and regulations of the European Union, 2. To provide effective assistance to decision makers in the legislative process, and 3. To serve as a means of communication with the public and those affected by legislation. The intention of this contribution was to prepare a workshop of international experts in September 2008 in Berlin. They discussed how environmental consequences of EU legislation can be incorporated in a more effective way. In other words, this contribution focuses on the question of which measures can strengthen the consideration of environmental effects in the EU impact assessment procedure and in the subsequent legislative decision-making process, and which conclusions can be drawn from this for the design of the impact assessment process in Germany. This contribution summarises the findings of the current evaluation studies with respect to environmental issues as well as proposals for solutions. It sets out an institutional analysis of the behaviour of relevant agents, identifies remaining

1 See

http://ec.europa.eu/governance/impact/proposals_en.htm. also section “References in the EC Treaty” on this and on the significance of the principle of precaution.

2 See

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problem areas, carries out an in-depth analysis of these problem areas of IA reports, and finally proposes possible solutions for the remaining problem areas. In particular, section “Institutional Analysis of Agent Behaviour” contains an interdisciplinary institutional analysis of relevant agent’s decisions on environmental consequences. Section “Specific Problem Areas of the Current Impact Assessment” surveys the current evaluation studies. The goal is to identify problems which have not yet been solved by the upcoming improvement of the guidelines or by proposed solutions in the evaluation studies. Section “Case Study Analysis of EU Impact Assessment” reviews 30 impact assessments of the EU, 20 of which are from areas that cannot be directly assigned to the field of environmental policy issues, such as legislative proposals in the fields of transport and energy, health and consumer protection. The remaining 10 impact assessments are from environmental policy. The review reveals some shortcomings and allows testing the hypotheses we gained in the institutional analysis. Chapters 7 and 8 conclude the findings from this research and investigate potential opportunities for improvements on the basis of the literature on the issue of environmental impact assessment. The focus is on findings about the use of assessment methods as well as procedural changes of the regulatory impact assessment. Particular emphasis is placed here upon experiences from Strategic Environmental Assessment (SEA), and whether the environmental impact assessment in the regulatory impact assessment (RIA) of the EU can profit from certain findings with SEA. The comparison of the remaining problem areas with the possible solutions proposed by research establishes which aspects of the current practice of impact assessment need further attention. Unresolved questions are summarized in section “Discussion Points for the Workshop” which are taken up by the following contributions in this volume.

Community Framework: Environmental Issues in Impact Assessment For the evaluation of the practice of impact assessment, but also for the development of the design options for the improved integration of environmental aspects, a normative reference framework is required. Such a normative reference is provided by the EC Treaty (section “Definition of Goals (Art. 2 of the EC Treaty)”); in addition, concretisations which have taken place at Community level – such as via Communications of the Commission – can also be of assistance.

References in the EC Treaty The consideration of environmental consequences in legislative decision-making processes is not only politically astute (Scherzberg, 2006), it is also an expression of normative definitions in Community law.3

3 See

European Community (2002).

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Definition of Goals (Art. 2 of the EC Treaty) The circumscription of the objectives pursued by the Community within the framework of its “policies and measures” already makes it clear that environmental consequences have to play a role. According to Art. 2 of the EC Treaty, the Community strives to achieve a “high level of protection and improvement of the quality of the environment”. Fundamentals of Environmental Regulation (Art. 174) Art. 174 of the EC Treaty concretises this defined objective – which is already a demanding one due to the emphasis on improvement – in several ways: According to Art. 174 para. 1, the environmental policy of the Community contributes “to pursuit of the following objectives: • • • •

preserving, protecting and improving the quality of environment protecting human health prudent and rational utilisation of natural resources and promoting measures at an international level to deal with regional or worldwide environmental problems.”

Paragraph 2 then takes up the objective of reaching a “high level of protection” again. Art. 174 para. 2 line 2 of the EC Treaty then refers to the several “principles” upon which the environmental policy of the Community is based. Taken individually, these are the principles of combating the origin of the problem, making the polluter pay as well as making provisions4 and prevention. The significance of impact assessment is then finally emphasised with particular clarity in Paragraph 3 of Art. 174: “In preparing its policy on the environment, the Community shall take account of: • • • •

available scientific and technical data, environmental conditions in the various regions of the Community, the potential benefits and costs of action or lack of action and the economic and social development of the Community as a whole and the balanced development of its regions.

Paragraph 3 thus already contains the consideration of consequences for the environment as primary legislation. However, the requirements of Art. 174 apply first and foremost only to the measures which are based on the “Environment” Title XIX of the EC treaty.

4 See

European Commission (2000).

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Integration Clause (Art. 6) An additional significance of environmental issues in the impact assessment could be based on the overall objective in Art. 2. However, this is not required, because Art. 6 of the EC Treaty explicitly assigns a special status to environmental issues with the integration clause which it contains. This results from several elements. First of all, it is remarkable that according to Art. 6 of the EC Treaty the “Environmental protection requirements” have to be included in the definition of all Community policies and measures. In this way, Art. 6 of the EC Treaty also integrates the requirements circumscribed in Art. 174 into all legal provisions of the Community which are enacted on the basis of other Titles of the EC Treaty. However, Art. 6 of the EC Treaty goes beyond integration into the legislative process, because the integration clause also applies to the implementation of Community policies. In this way the implementation of legal requirements, which is predominantly carried out by organs of the member states, but also by Community institutions, comes into view.5 The aspect of “implementation” is, however, also relevant to the selection between several design options. An impulse thus comes from the integration clause which results in a suitability test for implementation. In practice this means considering the foreseeable effects on the behaviour of the actors who are responsible for the implementation of the respective regulation. And finally, Art. 6 contains a further bolstering of the environmental-related definition of goals from Art. 2, since the inclusion of environmental issues should take place in particular with a view to promoting sustainable development. From the context it is clear that this refers to the environmental-related “pillar” of sustainability.6 With regard to impact assessment, it follows that the long-term effects of different design options should also be taken into consideration.

Conclusion Looked at from an overall point of view, a range of requirements are thus already revealed at the level of primary legislation which have to be fulfilled by the design of the impact assessment procedure. Criteria for the evaluation of practical implementation can also be obtained from these requirements. The above-mentioned specifications can be classified as a specific feature of the “modern state’s promise of rationality”. The generally recognised demands which are made of legal authority accordingly include the demand that legislation should be “rational” or “sensible”. Rational legislation has at any rate been a pleonasm since the period of Enlightenment. The “postulation of the rationality of law” has been an “uncircumventable benchmark” for all modern forms of legislature: “Dispensing with this benchmark implies dispensing with the claim to

5 Calliess 6 Krämer

(2007, Art. 6, margin number 12 with further references). (2003, p. 9); Calliess (2007, Art. 6, margin number 13 with further references).

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legislative competence completely” (Schulze-Fielitz, 1988, p. 458) programmatically, this demand can be located in the principle of the rule of law (Führ, 1999). In Community law it is embodied in the constitutional rationality criterion of “necessity” in Art. 5 para. 3 of the EC Treaty.7 Ultimately it is a question of the obligation to give “good reasons” for legislative activities and the related interventions into the rights of freedom of the individual and into the state’s resources in the democratic constitutional state.

Concretisation at Community Level The principle of taking precautions is of particular significance for the environmental orientation of the legislative proposals of the Community.8 According to the Communication of the Commission, the precautionary principle should in practice be particularly applied in cases which “indicate(s) that there are reasonable grounds for concern that the potential dangerous effects on the environment, human, animal or plant health may be inconsistent with the high level of protection chosen for the Community.”9 Regarding the precautionary principle, the European Court of Justice states that “where there is uncertainty regarding as to the existence or the extent of risks to human health, the institutions may take protective measures without having to wait until the reality and seriousness of those risks become fully apparent.”10 Precaution can accordingly also be viewed as overcoming a risk situation which is characterised by uncertainty and insecurity.11 In the application of the precautionary principle, Calliess, 2007 differentiates between the facts of a case, the establishment and evaluation of a cause for precaution (in other words the “whether” of a precautionary measure) and the measure and the addressee, which can result as a legal consequence (in other words the “how” of the precautionary measure).12 Legislation under the aspect of precaution cannot be “a trip into the blue”13 in every matter; a specific initial suspicion in the form of a potential concern is required. In the Pfizer case, the European Court of Justice explains that in cases of scientific uncertainty regarding the existence or the extent of risks for human health, no compelling proof for the actual existence and the seriousness of potential adverse

7 This

is the main criterion for the application of the proportionality principle; for its link to economic analysis see Bizer (1999), Führ (2003, p. 218). 8 See also Calliess (2007, Art. 174, margin number 4 ff.) 9 European Commission (2000, loc. cit., p. 3). 10 ECJ, C-157/96, National Farmer’s Union i.a., ECR 1998, I-2211 (cited NFU verdict), para. 63 and ECJ, C-180/96, United Kingdom/Commission, ECR 1998, I-2265 (cited: BSE verdict), para. 99. 11 Calliess (2007, Art. 174 EC Treaty, margin number 26 ff.) 12 Calliess (2007, Art. 174 EC Treaty, margin number 29 with further references.) 13 On this wording see Ossenbühl (1986).

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effects if this risk is realised have to be present in order to take precautionary measures. On the other hand, such measures may not be based on a purely hypothetical consideration of the risk only founded on assumptions which have not yet been scientifically verified.14 In the view of the European Court of Justice, the precautionary principle rather means that a preventive measure can only be taken if the risk seems to be sufficiently documented in scientific data available at the time when the measure was enacted, without the existence and the extent of the risk having to be fully proven by compelling scientific data. The principle of precaution can therefore only be applied in cases where there is a risk particularly for human health, which has not yet been fully proven, but is not only based on scientifically unverified pure hypotheses.15 On the question of which requirements the precautionary principle lays down with regard to the “how”, in other words to the measures which have to be embodied in law, the following applies: according to the precedents of the European Court of Justice on the use of the precautionary principle, “it is for the Community institutions to determine the level of protection which they deem appropriate for society”.16 This is a “political” decision in which the Community institutions have a large scope of discretion which is only subject to limited control by the courts.17 In summary, it can be stated that: The scope for action is defined by the fact that on the one hand the Community institutions are not allowed to view the risk purely hypothetically18 and that their decision may not be orientated towards a “zero risk”.19 On the other hand, the Community has to ensure a high level of environmental and health protection (Art. 174 para. 2 of the EC Treaty). A “high” level of protection does not necessarily have to be the “highest”20 level, nor the “lowest common denominator” of all the member states, but can be a level which is above the Community average and which takes into account whether it is economically 14 ECJ,

Case T-13/99 (Pfizer Animal Health./. Council), ECR 2002, II-3305, para. 143. According to the Communication of the Commission, loc. cit., p. 3, the precautionary principle should be used “particularly in those cases in which due to an objective scientific assessment, there are justified reasons for concern that the possible dangers for the environment and the health of people, animals or plants are not acceptable or could be incompatible with the high level of protection of the Community”. 15 ECJ, Case T-13/99 (Pfizer Animal Health./. Council), ECR 2002, II-3305, para. 146. 16 ECJ, Case T-13/99 (Pfizer Animal Health./. Council), ECR 2002, II-3305, para. 151. 17 ECJ, Case T-31/07 (DuPont./. Council), ECR 2002, II-3305, para. 137. 18 Cf. ECJ, Case C-236/01 (Monsanto Agricultura Italia i.a.), ECR 2003, I-0000, para. 106; ECJ, Case C-95/01 (Greenham and Abel) of 5.2.2004 = DVBl 2004, p. 818, 820; ECJ, Case C-192/01 (Commission./. Denmark, ECR 2003, I-0000, para. 49. 19 European Commission (2000, loc. cit., p. 18). ECJ, Case T-70/99 (Alpharma Inc.), ECR 2002, II-03495, points 145, 152. 20 ECJ, Case C-284/95, Safety Hi-Tech, ECR 1998, I-4301, para. 49; ECJ Case T-70/99, Alpharma Inc., ECR 2002, II-03495, para. 152; ECJ, Case T-13/99 (Pfizer Animal Health./. Council), ECR 2002, II-3305, para. 152.

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reasonable for less affluent states.21 In order to determine the “high level of protection” against risks which require precautionary measures, all of the relevant new scientific information has to be taken into account which has already led to verified findings. The resulting consequences for the impact assessment need to be subjected to a more detailed discussion. The “integration clause” embodied in Art. 6 of the EC Treaty demands the integration of environmental issues into other fields of policy, “in particular with a view to promoting sustainable development”. These treaty objectives shall be promoted by the IA process.22 Thus they are one of the “key analytical steps in impact Assessment”23 and consequently part of the problem analysis24 as well as the definition of the “policy objectives”.25 In terms of the implementation in the IA process the question of criteria of sustainability has to be addressed,26 including the different time horizons. To cope with these demanding treaty objectives a number of methodical problems are to be solved (see section “Use of Methods”).

The EU Impact Assessment Procedure In this chapter, we will give a short description of the current European IA System based on the current EU Guidelines which does neither in relevant agents nor in procedure differ from the draft guidelines (European Commission, 2005, Chap. 2; European Commission, 2008b, Chap. 2)27 For an overview, see, Fig. 1.1 which shows the steps of an IA and suggests a time path.

Roadmap and EU Work Programme The EU impact assessment begins with the creation of a “roadmap”. This document includes an initial rough description of the political problem, the political objectives of the Commission and possible options for action. It additionally serves to collect rough information about the planned analytical steps of impact assessment, 21 The

level of requirements for the establishment of the level of protection (risk assessment) should, however, not be confused with the requirements vis-a-vis the measures to achieve this level of protection (risk management). 22 European Commission (2008b, Chap. 1, p. 3). 23 European Commission (2008b, Chap. 5.1, p. 21). 24 European Commission (2008b, Chap. 5.1, p. 23). 25 European Commission (2008b, Chap. 5.2, p. 29). 26 European Commission (2008b), Chap. 5.4 refers at page 35 to the “set of indicators to monitor the implementation of the EU sustainable development strategy (SEC (2005) 161 final)”, developed by the Commission. 27 With respect to the overall procedure the new draft guidelines do not differ from the current guidelines.

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Interactive process

Preparation of IA work

IA work

Draft IA work

8–52 weeks

IAB

Final IA Report

4 weeks

2–4 weeks

4 weeks

2–4 weeks

Adoption by the Commission

ISC with IA Report & executive summary

Public consultation and collection of expertise

Translation

Proposal development

1 week

Fig. 1.1 A system of the EU Impact Assessment (Source: European Commission, 2008b, p. 6)

the foreseeable political options, their time horizon, the groups which are to be consulted and the other Directorate Generals which have to be involved. The Directorate General which prepares and drafts the EU legislative initiative is also responsible for drawing up the roadmap. The roadmaps are included in the annual EU work programme of the EU Commission and are evaluated by the EU Impact Assessment Board. If necessary, this body makes recommendations for the planned impact assessment process, e.g. on a suitable structure, on the selection of the options to be considered, and the correct methodology. Each Department is called upon to obtain the advice of the Impact Assessment Board and to follow it.

Inter-Service-Steering Groups According to the guidelines, the next step is to form a cross-Directorate working group, the Inter-Service-Steering-Group (ISSG).28 The ISSG accompanies the entire process of impact assessment and involves the other Directorate Generals as well as the General Secretariat, so that these can help shape the impact assessment procedure. An ISSG can only be dispensed with in exceptional cases, and then only if a conducive reason is given in the roadmap or in the impact assessment report. The ISSG should deal with all aspects of the impact assessment, particularly with a suitable design. It advises the Directorate holding overall control in the so-called “scoping” process which sets out the methodological procedure, the options to be examined, the level of detail of the analysis and the extent of consultations. The lead 28 European Commission (2008b), Chap. 2.2, p. 7 calls the Interservice Steering Group (ISSG) now

the Impact Assessment Steering Group (IASG).

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Directorate General concretises the information in the roadmap on the extent of the impact assessment in cooperation with the ISSG and including the comments of the IAB. However, the personnel of the IAB are not involved in the ISSG.

Impact Assessment Board (IAB) The concluded impact assessment has to be presented in detail to the Impact Assessment Board in the form of an impact assessment report. The IAB examines the impact assessment report and puts together a statement which also contains recommendations for the improvement of the assessment procedure. In special cases, the IAB can also demand that the impact assessment report be presented again. This does not stop the legislative process and it is not quite clear whether it can delay it. The IAB is composed of representatives of various Directorate Generals of the EU who have a certain degree of independence due to various procedural rules.29 The members of the IAB are neither bound to the impact assessment process from their previous department nor are their former Directorate Generals allowed to give any instructions to the members of the IAB (European Commission, 2006a, 2006b). The chair of the IAB is held by the Secretariat General of the Commission. If there are doubts about the independence of individual members, the chairperson can decide on the further procedure.

Inter-Service-Consultation (ISC), Presentation to the Commission and Publication In the final step of EU decision making a vote is held by the Commission on the draft legislation. Before this vote, the draft legislation together with the impact assessment report and the IAB opinion are presented in consultation between the various units and departments within the Directorate General as well as between the different Directorate Generals which are responsible for the draft legislation. In the end of the process the draft legislation, the IA report, and the IAB opinion are published on the internet.

Institutional Analysis of Agent Behaviour This section briefly analyses relevant incentives and disincentives of agents in the EU impact assessment process. It focuses on the DGs, the ISSG and the IAB as the central agents in this process. On the basis of the interdisciplinary institutional

29 See

the IAB rules of procedure in the annex “Rules of Procedure of the Impact Assessment Board (‘Board’)”.

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Fig. 1.2 Behavioural model of institutional analysis (Source: Bizer and Gubaydullina, 2007)

analysis it reveals how decisions about use of methods and quality control in regard to environmental consequences will be taken (Fig. 1.2).

The Behavioural Model The behavioural model of the institutional analysis regards individuals as the crucial level of analysis, respecting those institutional setups can influence preferences, modes of behaviour as well as cognitive limits.30 The stage heuristic of the institutional analysis suggests that existing behaviour should be explained as far as possible by rational choice, which allows for situative utility-maximizing behaviour as well as rational rules.31 If behaviour cannot be explained satisfactorily by this cognitive limits should be regarded as well as habitual (non-reflexive behaviour) and emotional or instinctive behaviour. Finally preferences can help to explain.32 Institutions are understood as rules which are common knowledge within a group or a society. Individuals are not necessarily bound by strict prohibitions but can be influenced by prices, taxes, informal rules etc. With regard to the EU impact assessment the guidelines are part of the institutional environment of the agents as they explicitly describe how an impact assessment should be undertaken. Beyond such explicit institutions, the individual officials are influenced in their decisions by their specific group (DG, ISSG, IAB) and the body of rules existing there. The institutional analysis in this section is looking for the likelihood that agents will act according to the normative expectations as set out in section “References in the EC Treaty”. From this we can conclude how the rules of the impact assessment 30 See

Bizer and Gubaydullina (2007).

31 ibid. 32 See

Führ et al. (2007), also Führ and Bizer (2007).

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should be changed in order to improve the quality with regard to environmental consequences.

Incentives and Barriers to Consider Environmental Consequences This section enunciates hypotheses regarding the behaviour of agents as they handle environmental consequences in the EU impact assessment. The hypotheses generated can be tested in following sections by looking at the case studies of actual impact assessments (section “Case Study Analysis of EU Impact Assessment”) and the existing literature (sections “Possible Solutions for Selection of Methods” and “Quality Control”). Relevant agents are the desk officers of the lead DG, the head of the lead DG, the officers of the IAB, the participating officers of the Inter-Service-Steering-Group (ISSG) and the interest groups. For each of these agents the institutional context must be characterised and objectives must be identified. Then, cognitive and informational limits should be regarded. Finally, we generate hypotheses with regard to environment related decisions in the impact assessment. In this context we will limit the hypotheses on rational forms of behaviour and habitual behaviour. We should emphasise that our hypotheses endeavour to characterise the typical behaviour of agents. Director General and Commissioner of the Lead DG The lead DG develops a legislative proposal and is responsible for the process and the content of the impact assessment. They are bounded by the political and legal objectives of the EU and are obliged to bring about the objectives in the legal proposals of the Commission. The first line management of a Directorate General is formed by the Commissioner and the Director General. The Commissioner and his or her cabinet mainly concern themselves with bringing about political decisions, whereas the Director General is responsible for the operational preparation and implementation of regulatory projects. Institutional Context A European Directorate General is basically structured upon departments and units. The usual chain of command proceeds from the Commissioner via the Director General to the Head of Department, on to the Unit Leader and finally to the desk officer. Draft legislation and the corresponding impact assessment report require the agreement of each hierarchical level before being submitted to the College of Commissioners. In consultation with the heads of departments and units, the Commissioner and the Director General lay down the management plan of a Directorate General in which the budgets and resources for the respective areas of work are defined.

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The decisions of the Commissioner and the Director General are subject to the guidelines set out in the budget, the European treaties and the decisions of the Commission, the European Council and the European Parliament. In addition, the Commissioner and the Director General are entitled to all the decision-making competences of the Directorate General. Moreover, due to the Commission’s exclusive right of initiative provided for by the EC Treaty the EU legislative process always begins with a regulatory proposal from a Directorate General, and the Commissioner and the Director General carry out political agenda-setting. Director Generals are appointed by the College of Commissioners. Commissioners, on the other hand, are appointed by the European Council, with the appointment subsequently confirmed by Parliament.

Strategy Set A strategy set describes the possible choices of actors. The strategy set of an IA is defined by a high level of complexity and major informational limitations. The environment, as one of the objectives of the IA, is complex and dynamic. Many cause-effect-relationships can only be detected with high information costs. In most if not all cases remains a substantial degree of uncertainty regarding actual effects. However, only in rare cases the Director General or the Commissioner decide directly on the design of the process or give issue specific instructions. They set out a basic political framework which is then concretised by the other hierarchical levels down to the desk officer. The decisions on the resources and personnel to be deployed are mainly taken by the Commissioner and the Director General. This decision about resources is, however, also very difficult in the assessment of complex and uncertain environmental consequences. Decisions on budget and resources are also restricted by the budget set by Parliament.

Preferences Preferences describe the objectives or goals of an individual. As the posts of Commissioner or Director General are the highest-paid jobs in European politics and administration it can be presumed that further career motives tend to be of secondary importance for a Director General or a Commissioner. Rather Commissioners and Director Generals have to hold on to their own positions and fend off competitors. Commissioners and Director Generals are responsible to and accountable to the President of the Commission, the European Parliament and the European Council. A positive reputation in these institutions as well as in the public opinion strengthens the position of a Commissioner or a Director General. For this reason they are in a constant state of competition with each other to prove that they are capable of achieving policy targets and are carrying their measures through. In consequence, the DGs and their units attempt to call the maximum of attention to their proposals within the Commission if this helps increase their rate of passed legislative proposals (Thiel, 2008, p. 22).

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Rational Behaviour If a leading actor of a DG acts rationally and is orientated towards utility maximisation, she will weigh up the individual costs and benefits of an IA and make this the basis for her decisions on the issue of directives and the use of resources. An impact assessment process can be useful for a Commissioner and the Director General if it strengthens their own political positions, invalidates objections, and contributes towards creating a positive climate in the political process for the draft legislation of the Directorate General. For the Commissioner and the Director General, the impact assessment process is a means of promoting their own political goals vis-à-vis the Commission, other Directorate Generals, Parliament and the Council (Thiel, 2008, p. 15), increasing the chances of their policy being implemented, and in this way asserting and consolidating their own position in the Commission. Producing an impact assessment according to the generally recognised procedures carries some additional authority. In competition with lobby groups for the favour of public opinion, an impact assessment process can therefore be very useful. One might expect that the greater the political significance of proposal, the more resources would be invested in the impact assessment process by the Director General. Particularly when there is a danger of considerable opposition on the part of the public and interest groups against the intended regulatory project, the arguments of the Director General and the Commissioner have to be backed up by a sound quantitative analysis in order to refute counter-arguments. In such cases the use of cost-intensive methods to obtain quantified and monetised results could gain in significance (Thiel, 2008, p. 19). A major problem for the Commissioner and the Director General, however, is that at the time when the decision on resources is made, they can foresee only to a limited extent which results the impact assessment will bring to light. In the worst case it might provide results which do not only not support their own regulatory project, but provide arguments against it. For the leaders of a Directorate General, the expected utility of an impact assessment is highly uncertain. For this reason, a Director General and the Commissioner will first and foremost allocate resources for the assessment of consequences which they expect will lead to positive results for their own regulatory project. The more uncertainty there is with regard to these positive expectations, the fewer resources they are willing to employ. In the case of consequences from a subject matter which is politically outside their immediate area of competence, this level of uncertainty is probably disproportionately higher than in their own political field. In that sense one could expect the Directorate General to place particular emphasis on the assessment of consequences from its own area of responsibility. In the case of relatively insignificant regulatory projects with a wide range of foreseeable consequences from other fields, an impact assessment can quickly degenerate into a routine or token task. One could expect the leaders of the Directorate General to act in close accordance with regulations. It will set a standard budget in order to merely fulfil the minimum requirements for an impact assessment.

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Desk Officers According to Community law, desk officers draw up both the draft legislation as well as the relevant impact assessment. They thus make all the concrete decisions with regard to the design of an impact assessment process. Institutional Context The Impact Assessment Guidelines grant desk officers a great deal of latitude in the design of impact assessments. This is particularly due to the vague definition of the principle of proportionate analysis. This principle states that the IA should be orientated towards the complexity and the political significance of the respective regulatory issue. However, which degree of complexity and political significance justifies which depth of analysis is at the discretion of the Directorate General. In the absence of specific criteria, good reasons can be found for many different designs. This level of discretion possessed by desk officers is only limited by the instructions issued by their superiors. If a desk officer does not follow the directives of his or her superior, he or she risks being reported on negatively. In case of particularly serious infringements, they can face disciplinary proceedings. This can be a severe setback for the civil servant’s career prospects. The course of a civil servant’s career in the EU Commission follows so-called “civil service career law”. Within the respective grades of the pay scale, promotion is awarded automatically according to the number of years served. Desk officers can only enter a higher level via promotion. Civil servants are assessed every 2 years on the basis of their abilities, performance and conduct (European Community, 1962). The executive regulations of the Directorate Generals define this in more detail. Promotion is awarded to selected civil servants with over-average achievements. When assessing these achievements, the Directorate General particularly takes into account the appraisal of the civil servant, their foreign language skills, and if appropriate the level of responsibility which he or she bears in his or her current position. Hooghe (2002, p. 159) shows that the career prospects of young desk officers are dependent on whether Commissioners or General Directors become aware of them. And the best way to gain such attention is to offer creative solutions to political problems. Successful policy development is the prerequisite for a good career (Thiel, 2008, p. 16). This influences the work of all desk officers who will direct their effort towards increasing this success rate.33 A higher success rate will increase their chances of being promoted (Thiel, 2008, p. 23).

33 We should make clear that some legislative proposals are also pushed by national experts. These

national experts come from ministries and administrations of the member states and sometimes from private enterprises. They work for 2–4 years in a DG. These national experts are strongly influenced by the respective home unit they come from as they will return after their work in the DG back to their home organisations. An additional group of agents are consultants.

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Strategy Set Desk officers move within the same highly complex decision field as the leaders of a Directorate General. However, the desk officer has much more specific decisions to make and has much more information at his or her disposal. Desk officers are additionally restricted by the budget and personnel guidelines issued by their superiors. A high-quality impact assessment regarding the environment will demand a lot of personnel as well as financial resources. Each desk officer must handle an impact assessment within his personal time limitations and work loads. Because of this, an impact assessment is first and foremost an additional task for the desk officer, and he or she often has to obtain the time and resources by diverting them from other tasks. The analytical abilities of the respective desk officer and the available sources of data represent a further restriction for the decision-making environment. A lack of abilities and poor data sources necessitate further time and expense in terms of training as well as research and surveys. And finally there are certain formal and informal quality standards, such as those of the IAB, which desk officers should observe when they wish to avoid being reprimanded for their work. Preferences The range of preferences of a desk officer can be diverse. First of all, financial incentives can have an effect. He or she can aim to pursue a career and earn a higher salary. On the other hand, he or she might be driven by an intrinsic motivation towards work or a strong sense of duty. And finally, personal political ideas can also influence the design of the impact assessment. Hooghe (2002, p. 21) shows however that in spite of many possible motives, career-related ambition is the most important motive for the average desk officer. Rational Behaviour How does a career- and payment-orientated desk officer make his or her decisions on the design of an impact assessment process when one assumes that he or she acts in a rational way in order to maximise utility. Career and payment motives can be beneficial for an impact assessment if desk officers can impress their superiors with the quality of an IA and if it can serve the latter’s purposes. Because of this, utility maximizing desk officers compare the costs of a high-quality impact assessment with the additional utility of an increased likelihood for passing their proposal (Hooghe, 2002, p. 21; Thiel, 2008, p. 16). Desk officers use IAs to overcome obstacles in internal discussion processes, to push through the policies of their superiors and in this way to promote their own careers. IA serves to prevent later opposition to the legislative proposal, to identify controversial points and to defuse them in advance (Thiel, 2008, p. 18). Modelling tools are usually used to neutralise or answer objections from other DGs or from stakeholders (Thiel, 2008, p. 18).

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However, it is often very difficult for desk officers to know the preferences of their superiors (Radaelli, 2007, p. 10). They can at best try and read between the lines of their superior’s instructions and draw conclusions from the EU’s work programme, the treaties and the management plan of their Directorate General. The utility of an impact assessment for a desk officer is similarly uncertain as for the leaders of a Directorate General. The costs for a desk officer lie in the amount of work needed for the analysis. The less experienced the desk officer is in specific methods of analysis and the smaller the available data basis is, the higher the costs. This asymmetric relation between certain expected costs and uncertain expected benefits will cause a shift towards less elaborated analytical methods as might be adequate for the political importance of the legislation. Elaborated methods such a cost-benefit analysis or simulation studies will rather be the exception. If the desk officer weighs up the uncertain benefits against the costs, multi-stage decision-making behaviour can be expected. First of all, the desk officer will try to carry out the directives and instructions of his or her superior. In addition, he or she will take care not to infringe any legal provisions. In the next stage, taking the budget and personnel guidelines into account, he will carry out the phases of analysis in which he is proficient and from which he hopes to obtain results which are in line with the anticipated preferences of his superior. Finally, the desk officer will avoid the possibility of receiving a reprimand from the IAB for any deficiencies which are all too obvious. Over and above this, no efforts rationally intended to maximise utility are to be expected. In a specific situation, multi-stage decision-making behaviour on the part of the desk officer such as this would mean that a high-quality impact assessment would above all be dependent on the instructions issued by the officer’s superior and his or her ethos with regard to impact assessments. The more value the superiors place on quantitative analysis, the more likely it is that such analyses will really be carried out. Secondly, it can be assumed that the higher the budget and the more personnel available, the better the quality of the analysis. Thirdly, it can be expected that the more experience the desk officer has, and the better the available data basis, the better the impact assessment will be. In conclusion, a positive attitude towards the impact assessment may evolve if it supports the individual objectives which the agent is following. This is the case if the impact assessment • supports the objectives of the respective DG or unit, • does not interfere with time restrictions and the political decision process, • does not generate a strategic or tactical conflict by displaying results deviating from the intended results of the proposed legislation. In many cases, desk officers can also show behaviour according to rational rules or even habitual behaviour. They reduce all efforts and finally do business-as-usual without reflecting rules of thumb or other heuristics. It is possible then, that they

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fulfil the obligation of an IA by simply copying and adapting the last IA to the current one. Above all, this reduces the costs of their IA. This would go along with a low rate of quantifications, little effort to monetise environmental effects and little method diversity. This rule-orientated behaviour can be particularly expected if the benefits for the individual desk officer from the impact assessment are hardly recognisable, as there are no further guidelines from superiors to be observed, the political significance of the regulatory project appears to be rather low, and the desk officer cannot perceive the preferences of his or her superior. The Impact Assessment Board (IAB) The impact assessment board controls the quality of impact assessments. This contributes to the better regulation approach of the EU. The IAB has the task of monitoring adherence to the guidelines for impact assessment and checking whether informal quality standards are being fulfilled. The IAB combs through the roadmaps and offers suggestions and tips as to how the planned impact assessment process could be improved. All the impact assessment reports of the Directorate Generals are examined and evaluated by the IAB. In the case of severe deficits, a report can be referred back to the lead DG. Institutional Context The IAB is formally independent from the DGs. Each member has a vote in the IAB and is not subject to any directives in the exercise of this voting right. However, alongside their work in the IAB, the members also work for their Directorate Generals, which delegate them to the IAB. The IAB is led by the General Secretariat of the Commission. Decisions are taken by majority. Aside from the General Secretariat the IAB consists of representatives from the DG Environment, DG ECFIN (Economic and Financial Affairs), DG EMPL (Employment, Social Affairs and Equal Opportunities), and DG ENTR (Enterprises and Industry). The IAB does not have its own financial and human resources, as these are also made available to it by the respective Directorate Generals and the Secretariat General. The IAB has no formal right to block regulatory projects in the sense that it could stop legislative processes by holding up impact assessment reports. In addition, Directorate Generals are not obliged to take the comments and suggestions of the IAB on the impact assessment reports into consideration. However, the report of the IAB is presented to the College of Commissioners together with the impact assessment report and the draft legislation. Strategy Set Cognitive and informational limitations of the members of the IAB will be relevant. This particularly applies to the evaluation of environmental impact assessments. The IAB has only 4 weeks to review the report of the IA and to assess its quality. It is very likely that this is perceived as rather demanding, because ultimately members of the

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IAB have to develop as good an understanding of the respective impact assessment as the responsible desk officer has. However, IAB members can use the resources of their Directorate General for the appraisal. Once the report is discussed in the IAB and a statement is issued with regard to the quality, additional costs of reaching an agreement or at least a majority decision accrue. Instructions issued by superiors should not be followed. Preferences The preferences of the IAB members are not determinable. They depend on whether the members feel more obligated towards their DG or towards the IAB. IAB members closer to their DG will focus more on consequences for their original policy field. These members look for career chances within their DG. The others will focus more on the general quality of the impact assessment and will possibly look at career opportunities within the General Secretariat. Rational Behaviour If IAB members act in order to maximise utility, they will weigh up the costs of appraising an impact assessment report against the benefits of their criticism. However, utility is very difficult to measure in advance. Those who wish to pursue a career in the Secretariat General might look for severe and obvious deficits in aspects of quality upon which the Secretariat General places particular value, and then help the Directorate Generals to correct them. Those who wish to impress their own Directorate General could, by their criticism, strengthen the arguments for the respective range of issues dealt with by their Directorate General, or might provide their Directorate General with the opportunity to further consolidate its point of departure for the political discourse with the aid of some improvements. In any case, the high costs and the restrictions imposed by the large amount of time needed and scare resources will certainly make it necessary for IAB members to specialise and will tend to lead to a very superficial analysis. The relatively high political transactions costs within the IAB and the obvious majority for economic and social consequences rather than environmental ones makes it unlikely that the IAB will provide strict quality control in regard of environmental impacts. It is not unlikely that these costs will bring about rational rule-oriented behaviour. The member of the DG Environment will concentrate on a few environmental consequences and its assessment. Detailed recommendations on methods and the design of the impact assessment on environmental consequences cannot be expected. More likely are general remarks such as the demand for more quantifications and perhaps occasional monetisation. Inter-Service Steering Group (ISSG) The ISSG serves the purpose to design the impact assessment process in cooperation with other Directorate Generals. Which DGs should be included and if at all an

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ISSG should be formed is left to the discretion of the lead DG. Apparently the lead DG must take notice of the comments and recommendations of the ISSG, but can neglect them without having to fear any other sanctions than a discussion by the Commission. The other DGs take part in the ISSG in order to pursue their political interests. Therefore the hypotheses above also hold for the desk officers of the other DGs in the ISSG. Admittedly, informational and cognitive limitations are of even more consequence for them if they are not operating within their own field of competence as in the lead DG. While the lead DG will always know exactly why they propose a certain legislative option, the other desk officers in the ISSG must familiarise themselves with the topic. The desk officer of the lead DG will most likely act according to utility maximisation. If the information provided by the other DGs will help to fulfil the obligation for better legislation and if the other DGs do not interfere substantially with the original intent of the lead DG, the latter will consider the ISSG’s remarks and follow them. Otherwise it can ignore recommendations and hope that the College of Commissioners will not discuss the process in detail. Due to the relatively high information costs for environmental consequences the DG Environment will act most likely according to rational rules. It will focus on deficits of the impact assessment which can be taken care of without great costs and will endorse recommendations which have a good chance of being considered by the lead DG. Beyond this, the DG Environment would have to increase their efforts disproportionately without reasonably expecting to succeed. It is also possible that they display habitual behaviour. The participation in the ISSG would be ritualised, and the respective desk officer would refer always to the same criticism of the impact assessment report, e.g. that environmental consequences were not quantified and monetised. Such behaviour seems rather unlikely. Interest Groups Interest groups represent the individual interest of a certain target group vis-à-vis the European Union and its bodies. These interest groups have a wide range of formal and informal opportunities to exercise influence. In the EU legislative process and in the impact assessment process they can express their opinions on political initiatives via hearings, internet surveys and workshops. For interest groups, the decision to take part in an IA is characterised by uncertainty and imponderables. Firstly, environmental consequences are very difficult to estimate even for specialised environmental interest groups due to the great complexity and high degree of uncertainty. Secondly, interest groups have to be able to understand all the aspects of the EU impact assessment process in order to filter out all the procedures which are relevant to their interests and to be able to formulate suitable submissions. This can quickly lead to high information and assessment costs. Moreover, most interest groups only have limited resources. This particularly applies to NGOs, which account for the majority of environmental interest groups.

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Their preferences and goals can be seen as a mixture of career and promotion motives with political and moral objectives, whereby the possibilities of pursuing career goals and obtaining promotion tend to be of secondary significance within interest groups. This is particularly the case in NGOs due to the relative lack of opportunities for promotion, so that the greater part of their motivation is probably of a moral and idealistic nature. The main concern of all interest groups is to assert the interests of their members in the EU impact assessment process. A representative of an interest group who rationally tries to maximise his utility will weigh up the costs of this action against the expected benefits, when it comes to deciding whether to engage in an IA or not. Which influence the interest group’s submission will have within the IA can only be guessed in advance. By contrast, the involvement in an IA creates a high need for information in addition to that which is required for the evaluation of the actual draft legislation. Due to the high information costs and the completely uncertain benefits, a high degree of specialisation on core interests can be expected in order to keep the information costs as low as possible. Secondly, they will choose submission channels which are as effective as possible. In this respect it can be expected that participation in workshops will take priority over internet surveys. Specialisation on core interests and concentration on effective methods of exerting influence can result in a situation where environmental interests are subject to strong lobbying in the assessment of the consequences of environmental regulatory projects, but where there is hardly any involvement of interest groups in non-environmental regulatory projects. However, it depends on how politically controversial the respective regulatory project is, because the greater the political significance, the greater the public interest and thus the opportunities for interest groups to create public pressure. The institutional analysis brings about the hypotheses regarding the behaviour of the relevant agents, presented in the next section.

Results in Six Hypotheses 1. The incentives for elaborated and demanding analytical methods for assessing environmental consequences are even low for the desk official of the DG Environment, and even more so for the desk official of other DG’s. 2. Cost-benefit analysis or monetisation of environmental effects will be the exception rather than the rule. 3. Assessments of environmental consequences in policy areas other than environmental policy will be of lower quality than from the DG Environment. 4. The IAB will not even identify obvious deficits of the assessment of environmental consequences. 5. The IAB will in most cases not give detailed recommendations for the methods of assessing environmental consequences. 6. The IAB in the current institutional context provides only little quality control and is insufficient to bring about a better assessment of environmental consequences.

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We will first test these hypotheses by screening the existing evaluation studies. To some extent, these studies provide already solutions to some of the incentive problems of the current impact assessment.

Specific Problem Areas of the Current Impact Assessment The IA procedure of the European Commission has been subjected to continuous restructuring since 2003. The original guidelines from 2003 were revised in 2005 and are currently updated on the basis of the last evaluations in 2008. This chapter summarises the problem areas identified with regard to the estimation of environmental consequences in the most recent evaluation and describes and compares them with the current solutions proposed by the EU Commission. Finally, remaining problems are identified which require a further analysis of 30 impact assessments especially with regard to environmental consequences which is presented in section “Case Study Analysis of EU Impact Assessment”.

Problems and Proposed Solutions The results of the most recent evaluation studies by Ecologic (2007), Jacob et al. (2008), Watson et al. (2007) show that there are many problem areas at each stage of the procedure which have significant effects on the overall quality of impact assessment. This paper focuses on problems related to the environment. They are presented in two stages: A brief description of the respective problem is followed by the most important solutions proposed in the evaluation studies. Table 1.1 provides an overview of all problem areas and the suggested most important solutions from the literature as well as the ones adopted by the draft guidelines. Finally, a summary of areas where further clarification is required is given in section “Remaining Problem Areas”. Road Map and Insufficient Time Resources It was established in the studies that the roadmaps are submitted very shortly before the deadline for the respective annual EU work programme to the Inter-Service Consultations between the different Directorate Generals for the coordination of the roadmap, and that there is hardly any time for comments on impact assessment to be incorporated (Watson et al., 2007). In addition, it is questionable whether deviations are made from the information in the roadmap in the later impact assessment procedure, in other words whether the ISSG and the IAB have a definite influence on the impact assessment. In accordance with the guidelines, the advice of the IAB should be obtained after the roadmap has been drawn up before the actual impact assessment has begun. In addition, the roadmap should be coordinated by the lead

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Table 1.1 Overview of problem areas and proposed solutions in the evaluation studies and the draft guideline Subsequent section Problem area

Proposed solution by studies. . .

. . .and adopted by the draft guidelines

5.1.1

Road map

Sufficient time resources; scoping paper

5.1.2

Inter-Service Steering Group

5.1.3

Principle of proportionate analysis

More influence to suggest alternatives, clear specifications for ISSG, obligatory ISSG as a standard Increase of expertise, more guidance to specify the principle, separating draft of legislation and impact assessment

Suggests time path, support by IAB and Secretariat General if needed Renaming into IASG

5.1.5

Methods

Stricter guidelines, quantification of long-term environmental effects, more methodical support

5.1.6

Quality control

5.1.7

Communication to decision maker

5.1.8

Resources

Separate authority for impact assessment; external expertise obligatory, more competence for quality boards, define regulatory quality indicators Concise impact assessments reports, increased transparency in the process More resources, adequate support for training, helpdesk such as I.Q. tool etc.

Concretisation of proportionate analysis by three criteria: significance, political importance, stages of policy development Suggests quantification to be more convincing; baseline scenario described in more detail including risk assessment, sensitivity analysis –

–

–

DG. If there were hardly any deviations from the information in the roadmap and no real coordination process occurred in the drawing up of the roadmap, the other Directorate Generals would be at a major disadvantage. This disadvantage has a particular effect on the DG Environment, because possible environmental consequences of legislation are not always obvious, but often an indirect effect which can be detected only by a serious and extensive consultation. If this is frequently the case, because environmental consequences are more difficult to estimate than other consequences, then the coordination of the roadmap at short notice leads to the impairment of the appraisal of consequences for the environment.

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For this reason, the newly-formulated impact assessment guidelines for 2008 provide that drawing up and planning of the roadmaps should begin as early as possible and also planning of impact assessments should be integrated into the legislative process as early as possible. If the impact assessment starts after the publishing of the EU work programme including the roadmaps, the Directorate Generals normally have a year to draw up an impact assessment. Normally that should suffice for a thorough and comprehensive impact assessment (Watson et al., 2007). However, if large amounts of data must be collected and complex consequences must be appraised, impact assessments often take longer than a year. Watson et al. therefore propose the introduction of a so-called scoping paper. From the initiation of an idea for draft legislation, those drawing it up are obliged to consider the possible consequences and to create alternative options and record them in a scoping paper. Essentially, an impact assessment should be drawn up first and then the draft legislation should be worked on. However, it should be taken into account that draft legislation is seldom produced on a drawing board, since there are often political guidelines with regard to the basic orientation of the content. A decision has been made on the draft legislation in advance and the impact assessment only receives a constitutive form and in the best case functions as a check and corrective. The intervention of politicians is an important factor in the question of the right magnitude and starting time for the impact assessment (Jacob et al., 2008). Inter-Service-Steering Group (ISSG) as a Standard The evaluation studies basically affirm the usefulness of Inter-Service-SteeringGroups (ISSG) with regard to the technical and procedural support of the impact assessment process (Watson et al., 2007). However, they reject the notion that the ISSG’s have an influence on the possible regulatory alternatives which are to be investigated. There is often a justified suspicion that the ISSG’s are only established in order to “sell” the draft legislation, as the most important decisions on the impact assessment procedure have already been taken. They do not provide quality assurance, but rather methodological support only. In a consequence, it is questionable, if participation of the DG Environment in the ISSG can strengthen environmental impact assessment. For this reason, Watson et al., 2007 proposes that exact specifications should be issued for the appointment of an ISSG, that the involvement of all DGs should be obligatory, and that guidelines should be introduced on how the Inter-Service Steering groups are to be managed. However, in the new EU guidelines the appointment of ISSG’s has only been made somewhat more binding. These are so-called non-obligatory regulations, which are not compelling. It is rather a question of relying on other Directorate Generals insisting on their involvement in an ISSG. The revised EU guidelines also provide for the participation of ISSG’s in each stage of the impact assessment process. The involvement of expertise from outside the Commission has, however, not been made obligatory.

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Principle of Proportionate Analysis and Reducing the Power of Lead DG In the evaluation studies, it was established that the balance between the economic, ecological and social consequences which have to be assessed suffers from an imbalance in favour of the economic consequences, or that environmental consequences are sometimes even completely ignored (EEAC Working Group on Governance, 2006). Many of the assessment procedures only concentrate on direct economic costs and administrative burdens (Jacob et al., 2008). In addition, the suspicion arises that the respective Directorate General with overall control uses its considerable scope in structuring the impact assessment (EEAC Working Group on Governance, 2006) to design impact assessments which support their preferred policy option (Ecologic, 2007). Often only a few alternatives to the preferred option are put forward (Watson et al., 2007; Jacob et al., 2008): in many cases simply the zero option and a rather extreme scenario. However, there is also a great deal of vagueness in the use of the principle of reasonability for impact assessments (Watson et al., 2007). There are hardly any guidelines and regulations for their design: this is carried out internally in the DG in a discussion with its own IA Department, with the Secretariat General and sometimes with the ISSG. The decision on the design of the IA is frequently characterised as an ad-hoc decision. Methodological capabilities, the availability of data, human resources, the time available and political objectives often play a greater role than expertise. It is rather surprising that the assessment of complex environmental consequences is often refrained from for these reasons. Efforts were therefore made to specify the principle of reasonability in the reform of the new IA guidelines. The concept is intended to become clearer through practical examples, specific central questions should be formulated and the investigation of several options should be made more binding (Ecologic, 2007). Examples of rules and model procedures can perhaps also be of assistance (Watson et al., 2007). Jacob on the other hand, proposes that concretisation should be achieved via guidelines on carefully targeted analytical methods (Jacob et al., 2008). However, the trade-off between specification and the necessary flexibility will always offer a great deal of room for manoeuvre for the respective lead Directorate General. The problem of defining a suitable impact assessment can possibly only be solved by separating the design of the draft and the impact assessment procedure. Watson for example, commissioning experts to deal with the entire impact assessment process (Watson et al., 2007). However, it remains questionable whether the external experts might not use their “shaping power” to become politically active themselves. The new IA guidelines follow the path proposed by Watson et al., 2007 of carrying out more in-depth assessment only, if consequences are significant and/or politically important and/or if the stage of policy development requires thorough analysis. But these concepts also remain vague. Determinants which can be more closely defined include the number of affected citizens, the respective amounts of the expected costs and benefits, the political priorities of the EU etc.

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Gathering of Expertise An impact assessment which does justice to the potential consequences for the environment can succeed normally only with the aid of a sound data basis. This data basis is usually not available, and particularly not for the assessment of environmental consequences. The most frequent sources of data are original surveys, existing data sources, freely accessible studies and external expertise. External expertise is particularly important for high-quality impact assessments, and the quality of the impact assessment very much depends on the respective consultation process. The potential of external experts is, however, exploited much less than it could be, and the consultation process is often structured too narrowly (EEAC Working Group on Governance, 2006). In many cases, insufficient time is taken for the involvement of experts, particularly when the impact assessment is started late (Watson et al., 2007). The new guidelines offers more guidance to design the consultation process (European Commission, 2008b, Chap. 4.2, p. 19). Moreover, the ability of the various groups to participate and contribute is often dependent on their resources. NGOs are normally at a disadvantage compared to industrialists’ associations (Ecologic, 2007). This leads to the latter being more strongly integrated into the impact assessment process than NGOs (EEAC Working Group on Governance, 2006). More involvement of external organisations und experts can bring significant advantages especially for environmental impact assessment. Environmental impacts are complex and its assessment improves by a greater data basis methodical plurality. The cause, on the other hand, lies in the design of the consultation process, which is also subject to the principle of reasonability and which is the competence of the respective Directorate General with overall control. The consultation process is strategically orientated towards the main consequences and is carried out with experts who are known to the Directorate and familiar with it. In areas which are not originally involved in environmental policy, this can swiftly lead to environmental consequences not being considered. Fundamentally, the design has to be orientated towards the methodological concepts of the impact assessment process. If a cost-benefit analysis is provided for, it requires specific information which has to be obtained from external experts or stakeholders in a carefully targeted way. Similar concepts as in the principle of proportionate analysis would be recommendable. More specific instructions for the design of this principle – also with regard to the data basis which has to be created and the experts who are to be involved – would also be helpful here. However, effective instructions will be difficult to draw up due to the great complexity involved. Furthermore, the establishment of specific boards of experts has been proposed which are composed of representatives of interest groups, academic consultants and practitioners who can always be consulted on certain groups of questions (EEAC Working Group on Governance, 2006) and who are available on a flexible basis as suppliers of data, thus often making the collection of data cheaper and faster. The

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EEAC, the EEA as well as environmental authorities of Member States can serve as good examples here.

Methodical Difficulties Many problems, such as the neglect of environmental consequences in the design of impact assessment, are due to the circumstance that recording environmental consequences often creates major methodical difficulties (Watson et al., 2007). Environmental consequences are very complex and long-lasting. It has been shown that short-term perspectives dominate compared to long-term ones in EU impact assessment (EEAC Working Group on Governance, 2006). In this way environmental consequences are clearly pushed into the background (Ecologic, 2007). A further problem is the quantification of environmental consequences and their evaluation. Cost-benefit analyses are hardly used for environmental consequences (Ecologic, 2007) and monetisation is more frequent and methodologically more differentiated with economic consequences than in the case of environmental consequences (Ecologic, 2007). In some cases, quantification is simply not possible due to missing data or data which cannot be compared (Ecologic, 2007). Obtaining data is also often so complex, time-consuming and costly that it is not carried out (Watson et al., 2007). Even if it is possible, the result often remains controversial (Ecologic, 2007). At present, the methods used simply offer too many opportunities to construct the desired results. The choice of the discount rate of 4% in the EU, for example, seems particularly arbitrary. In contrast to the very specific problems, the possible solutions proposed in the individual studies are rather vague. The EU Secretary General wants to improve the analysis and quantification of long-term environmental consequences, but will not explain in further detail (EU Secretary General, 2008). Ecologic, 2007 sees the combination of quantitative and qualitative methods as the way ahead for environmental impact assessment. For Watson et al. (2007) the solution lies in improving the data basis and the knowledge of methods, and in the establishment of certain support offices. Finally, Jacob et al., 2008 would like to see greater formalisation of assessment practice and the prescription of certain methods for certain cases. European Commission introduced new chapters on assessing economic and social consequences. Currently, the chapter on environment is prepared (European Commission, 2008b, Chap. 5.4).

Quality Control Ultimately, quality control has proven to be a central issue. It affects all the abovementioned aspects of impact assessment and thus has cross-sectional character. As already mentioned, the authorities have a great deal of scope in designing the impact assessment procedure. In order to promote adherence to the IA guidelines and to advise the officials on difficult questions, the EU has introduced a threestage quality control process. Firstly, the Directorate General itself should ensure a

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high-quality impact assessment; secondly, the ISSG and the Inter-ServiceConsultations (ISC) should contribute to quality assurance; and thirdly the IAB was created. The problem lies in the low level of independence of these quality assurance institutions (EEAC Working Group on Governance, 2006). The lead Directorate General is responsible for quality assurance in its own impact assessment, and this varies considerably from DG to DG (Watson et al., 2007). The lead Directorate General also decides on the composition of the ISSG and the course of the ISC, and the IAB is made up of members of the various DGs. There is thus insufficient separation between quality control and those who are drawing up the impact assessment (EEAC Working Group on Governance, 2006). If there is no effective quality control, this also increases the problems in the selection of suitable methods and the remaining process of impact assessment (Watson et al., 2007). For this reason, strengthening consideration of environmental impacts is partly a question of improving overall quality control of the impact assessment. Most authors therefore urge the strengthening of the independence of quality control by those responsible for the impact assessment procedure (EEAC Working Group on Governance, 2006; Ecologic, 2007). Jacob would like to transfer the coordination of impact assessment to a separate executive authority based on the Dutch model (Ecologic, 2007; Jacob et al., 2008). Watson suggest equipping the Secretariat General and the IAB with more competences (Watson et al., 2007). An increased externalisation of quality control is also favoured: either by integrating more external expertise into the IA Board and granting these external experts full voting rights, or by involving the European Court of Justice in quality control (Watson et al., 2007). The first level of quality control by the Directorate Generals also has to be reconsidered. Watson proposes that the procurement of external expertise should be made obligatory in the case of complex problems of environmental consequences (Watson et al., 2007). In addition, more regulatory quality indicators34 should be used (Jacob et al., 2008). However, it should also be noted that the effectiveness of the IAB has not been verified in any of the evaluation studies, and that it is therefore not possible to say much about whether the IAB ensures quality effectively. Communication to the Decision-Maker Impact assessment serves as a decision-making aid for parliamentarians and politicians (European Commission, 2008b, Chap. 1, p. 2). The decision makers in the Commission, Parliament and the Council of Ministers usually have little time and rely on receiving the essential information in a brief and understandable form. However, many impact assessment procedures have structures which are too complex and a lack of quantitative assessment practice leads to many pages of

34 There

(2004).

are many possibilities to define regulatory quality indicators. See Radaelli and Francesco

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long-winded descriptions (Watson et al., 2007). The decision makers can hardly be expected to read these descriptions thoroughly and to understand them (Watson et al., 2007). Another major problem is that decision makers mostly do not feel that the completed impact assessments are particularly objective, as they doubt that the various stages of analysis have been carried out in a careful and unbiased way. This is particularly due to the low level of transparency of the impact assessment process and the qualitative and institutional deficits described above (EEAC Working Group on Governance, 2006). Increasing the transparency of the impact assessment procedure is proposed as a first stage of a solution to this, in order to create more trust (Ecologic, 2007). But institutional changes in the political decision-making process are also being demanded. This process should become more open to political decisions made on the basis of facts (Ecologic, 2007; Jacob et al., 2008). What form this restructuring of the political process should take in detail remains unclear, however. Problems of Resources Alongside this main problem there are the usual problems of resources. In order to carry out a high-quality impact assessment, time, personnel and non-monetary resources are needed (EEAC Working Group on Governance, 2006). In addition, the personnel has to be trained and has to possess the necessary competences (Watson et al., 2007). The installation of helpdesks has therefore been proposed in order to offer the necessary advice to officials (EEAC Working Group on Governance, 2006; Ecologic, 2007). An example is the I.Q. Tools platform. In addition, the capacities and resources for impact assessment should be increased both in the EU Commission and the individual DGs (Jacob et al., 2008). Poor regulation often causes much higher costs than the creation of a proper impact assessment process.

Remaining Problem Areas The proposal of the scoping paper and the early integration of impact assessment into the drawing up of the roadmap are helpful proposals for an early start of the impact assessment process which have been taken up in part by the draft of new guidelines. Watson also offers proposals for the difficulties with the ISSG’s, including binding rules for their installation and composition as well as rules for their involvement in the impact assessment procedure (Watson et al., 2007). At present it remains unclear what form the cooperation of the respective DG in ISSG’s actually takes at present remains unclear, and also whether the DGs even possess the knowledge and the resources to work with each ISSG. Basically, the exchange of knowledge between the DGs needs to be strengthened. However, there are some first signs of this occurring.

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Also proposals exist of solutions for a suitable design for the impact assessment process. These range from the separation of impact assessment from the drawing up of draft legislation to more so-called regular examples. According to the new Impact Assessment guidelines, better and more detailed reasons are required for why certain options are assessed and others are not. However, more compulsion would also essentially be required in the question of why certain consequences, particularly environmental consequences, are disregarded in the assessment of a policy option. The choice of analysis also seems to be decisive for the concretisation of the principle of reasonability. The findings of the evaluation studies create the impression that the methodological overburdening of the officials responsible could be counteracted by a concentration on a small number of methodological approaches (Jacob et al., 2008). Use of Methods The use of methods is the first major unresolved question. Particularly in this area, the proposed solutions do not seem to bring about far-reaching effects. Essentially, how the implementation and adherence to instructions, methods of analysis etc. can be improved remains wholly unresolved (Ecologic, 2007), as does how methodical overburdening can be counteracted against the background of a lack of time and scarce resources in the everyday work of an Directorate General. Many Directorate Generals mitigate the problem by passing on large parts of the impact assessment process to external consultants or institutions and subsequently summarising the results of the external studies in written or tabular form in the IA report. There is no targeted and reasoned selection of methods of analysis with which all the options can be assessed in a standardised way. A solution could lie in the definition of clear criteria such as the complexity of the regulations or the current level of resources available to the Directorate General, with the aid of which the officials responsible can select suitable methods of analysis for the assessment process. On the other hand, if other methods are selected than those which would be obvious on the basis of such criteria, the respective person could come under intensified pressure to justify the decision, and the selection of methods would become less arbitrary. This is also connected to the targeted involvement of external expertise and the experiences of stakeholders. The consultation process should be orientated towards the selection of the methods of analysis and should compile the required data basis in a targeted way. Quality Assurance The second major unresolved problem is quality management. Particularly unclear is how successful the Impact Assessment Board is, and whether it has any influence on the structure of impact assessment. In view of numerous interests in the legislative process and the ample scope of the Directorate Generals in the design of impact

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assessment, strong quality assurance is necessary in order to ensure high-quality impact assessments. At present, the rights of the IAB of the EU are very limited. Although the IAB can reject an Impact Assessment Report, if the proposal does not achieve the quality standards. In such a case, the responsible Directorate General has to correct its report within a couple of weeks. Afterwards the IAB will check the Impact Assessment Report again and will finish his statement to the Commission. In addition, a negative statement of the IAB could have an effect on the decision of the College of Commissioners. But the IAB does not have a formal right to stop legislative processes when impact assessments exhibit major deficits, it cannot withdraw any competences from the Directorate Generals when it is obvious that their comments cannot be taken up in the impact assessment process and it is powerless, if the College of Commissioners ignores negative statements of the IAB. The question thus arises as to how the IAB should be structured, which competences it should be equipped with, and how the involvement of experts should be organised so that a wide range of opinions is guaranteed and so that high quality impact assessments are achieved.

Case Study Analysis of EU Impact Assessment With regard to the use of methods, the evaluation studies carried out previously offer information on whether the analysis was carried out more on a quantitative or qualitative basis, whether costs and benefits were established, and whether a balance between ecological and economic consequences was held. Until now, no investigation has yet been carried out which focuses particularly on the methods of assessment for environmental consequences. A more precise analysis of the use of methods is helpful, however, in order to be able to establish which forecasting and evaluation methods are used in the assessment of environmental consequences in non-environmental areas, and which methods are applied to which regulatory subjects and assessment situations. It is also interesting whether certain methods such as cost-benefit analysis are used at all. Research is also needed on whether specific forecasting and evaluation methods for economic, ecological and social consequences are perhaps universally used in the assessments. This part of the analysis will test hypothesis 1–3 of section “Results in Six Hypotheses”.35 Also this section offers insights on procedural aspects and their contribution to quality control. In order to do this, it has to be checked to which extent and in which cases the process of analysis is outsourced to external consultants and to what extent

35 These hypotheses were: (1) The incentives for elaborated and demanding analytical methods for

assessing environmental consequences are even low for the desk official of the DG Environment, and even more so for the desk official of other DG’s, (2) Cost-benefit analysis or monetisation of environmental effects will be the exception rather than the rule, (3) Assessments of environmental consequences in policy areas other than environmental policy will be of lower quality than from the DG Environment.

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methodological support and input is provided by external consultants and NGOs see section “Involvement of Environmental NGOs, Stakeholders and Experts”. In addition, the work and the success of the IAB are highlighted. It is not clear which comments the IAB normally makes and which deficits it criticises. Its comments with regard to the use of methods are of particular interest. Ultimately, the essential question is which influence the recommendations of the IAB have on the impact assessment process, and whether its comments are included in the impact assessment report. This second part of the analysis will test the hypothesis 4–6 of section “Results in Six Hypotheses”.36

Method The subject of the analysis is a total of 30 EU IA reports including ten legislative procedures in the area of the environment (which we call “ENV IAs”) as well as 20 from other Directorate Generals (which we call “IA-Other”). The analysis covers IA reports from the years 2006, 2007 and 2008. A significant difficulty was that among the impact assessment reports of the EU Commission from non-environmental areas there were hardly any which mentioned environmental consequences to any extent quantitatively or qualitatively. The existence of direct environmental consequences was mostly negated, because due to the objectives of the regulatory subject no obvious environmental effects were expected. Only 20 impact assessment reports in the fields of transport, energy, health and consumer protection could be found which at least commented on possible environmental consequences. An additional condition was that the statement of the IAB was also accessible. Due to this low number of cases a decision was made to also include 10 IA reports from relevant environmental legislation, also against the background that a comparison of the analysis in areas not directly relevant to the environment with directly relevant areas could provide insights with regard to the use of methods. It could be suggested that the application of methods in environmental legislation is much further refined and more detailed with respect to environmental consequences. The method of this analysis of 30 EU IA reports is based on the scorecard approach which was applied in a similar way by Renda, 2006; Hahn and Dudley, 2007. This approach poses questions regarding specific requirements which an impact assessment procedure has to fulfil. These questions can be answered with a simple yes or no. A question from the analysis carried out here, for example, is whether environmental assessment models were used. In section “Results of the Analysis of the IA Reports”, an evaluation is carried out the IA reports to determine 36 These

hypotheses were: (4) The IAB will not even remark upon obvious deficits of the assessment of environmental consequences, (5) The IAB will in most cases not give detailed recommendations for the methods of assessing environmental consequences, (6) The IAB provides only little quality control and is insufficient to bring about a better assessment of environmental consequences.

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how many of the respective questions were answered with “yes”. The scorecard used here contains 52 items on the areas of procedure and method (see annex “List of IA-Reports”). There are basically three different ways of testing the quality of impact assessment. The so-called content test establishes to what extent impact assessment fulfils specific procedural criteria. This test corresponds to the scorecard approach. The criteria are usually specified by corresponding IA guidelines, so that the content test investigates whether the guidelines have been adhered to. The second possibility is a results test. Here, a retrospective analysis is conducted to check whether the predictions of the IA agree with the actual developments. This test requires a large amount of data and a large amount of time to carry out comparisons. Thirdly, a functional test could be carried out. This asks whether the IA has improved the quality of the legislation. In addition to the work required to collect data and compare it as in the results test, there is also the issue that there have to be exact quality standards for legislation which can be considered as a benchmark (Harrington and Morgenstern, 2004). This analysis is based only on the IA reports which are freely accessible in the internet as a data basis, and therefore only a content test by means of a scorecard is possible.

Results of the Analysis of the IA Reports In this section the most important results are summarised in order to be able to draw conclusions from them. (The results are given in detail in Annex to Chapter 1.) The first part of this section is dedicated to methodology, and in particular to the question of which methods are applied to environmental impact assessment (section “Environmental Impact Assessment”). Section “Comparing Options” shows how different impact assessment results in the EU IAs are compared and to what extent environmental consequences come to light in these comparisons. Section “Involvement of Environmental NGOs, Stakeholders and Experts” addresses to what extent external environmental expertise is employed, and to what degree environmental organisations are involved. The last section “Impact Assessment Board” looks at the IAB and asks which comments the IAB makes on environmental consequences and to what extent these comments are included in the IA reports of the EU Commission. Environmental Impact Assessment All of the analysed impact assessments discuss costs and benefits of environmental consequences at least in qualitative terms. Case studies and scenarios are, however, hardly used to assist this work. The IA-Other did not use case studies at all and only used scenarios of environmental consequences in 30% of the cases. In the ENV IAs case studies were used in 10% of the cases, but scenarios were portrayed in at least 50% of the cases. To what extent the impact tables of the EU guidelines were used by the DGs to provide ideas about impacts cannot be judged from the IA reports.

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Another well-known aspect of the many previous evaluation studies related to environmental impact assessment also appeared: the long-term environmental consequences still play a subordinate role in the assessments. Only between 30 and 40% of the IA reports deal with them. The Quantitative Assessment of Environmental Consequences Only 30% of the IA-Other quantify at least the costs and/or benefits of environmental consequences. In the ENV IAs, on the other hand, this figure is 70%. So even in the area of DG ENV, 30% of the analysed IAs were thus not quantitatively underpinned. An example of this is the Directive on Seal Products (SEC (2008) 2290), in which the consequences of reduced seal hunting on fish stocks and the remaining ecosystem are completely disregarded. The difference between IA-Other and ENV IAs also continues with regard to the application of theoretical models. In IA-Other, quantitative models are used to determine environmental consequences in 20% of all cases. In 10% of all cases these are special environmental models as described in I.Q. Tools. ENV IAs, on the other hand, base 60% of their impact assessments on model results. In all IAs, models such as Primes (electricity and gas market), Gains and Poles (SEC (2008) 85/3) were used, or alternatively macroeconomic models such as GEM-E and Pace. In addition, RAINS was used to calculate air pollution. The sectoral model Tremove was used for the transport sector and for the assessment of emission values of heavyduty vehicles (SEC (2007) 1723). A life-cycle assessment was also carried out in one case (hydro-power). Sensitivity analysis is carried out in 10% of ENV IAs and risk analysis is also completed in 10% of cases. The IA-Other used sensitivity analysis in only 5% of the cases and risk analysis in none at all. Monetary Evaluation of Environmental Consequences Regarding the monetisation of the consequences following picture is presented. Unlike the qualitative assessment of environmental consequences, there is a uniform picture for ENV IAs and IA-Other. The costs and benefits of environmental consequences were monetised in only 30% of the ENV IAs and in 25% of the IA-Other. In all cases, the benefit/cost transfer method was used, and standard cost and/or benefit values, e.g. for a reduction by a tonne of CO2 , were applied in the DG’s own studies. Standard cost rates from the CAFE study37 were mostly employed here. The monetisation of environmental benefits is generally reduced to savings in health costs due to emissions. Other environmental benefits from the reduction in emissions, e.g. for the ecosystem, are hardly taken into consideration.

37 See

the Impact Assessment Report SEC (2005) 1133.

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Evaluation methods for non-market goods as they are listed in the guidelines are not used in any of the IAs which were analysed. It was not clear whether the respective values were already discounted or were simply taken over and integrated. Discounting was discussed openly and carried out with a rate of 4% just set by the EU in the IA to hydrogen power vehicles (SEC (2007) 1301). However, different discount rates were not applied in sensitivity tests. The cost-benefit analysis was generally carried out with external support, e.g. from Price Waterhouse Coopers in the case of the European Ports Policy which monetised environmental effects. This example reveals – perhaps contrary to general expectations – even greater methodological deficits in draft environmental legislation than in other legislative fields such as transport.

Comparing Options The most popular method of comparing the various impacts is the impact table (see Table 1.2) 70% of the IA-Other and 90% of the ENV IAs illustrate their varying assessment results in an impact table, regardless of whether the results are purely qualitative, quantitative or even monetised. However, the monetised final results are underrepresented. Only 20% of the ENV IAs and 15% of the IA-Other show total cost values, and only 10% of the cases show total benefit values. In 30% of the ENV IAs and 45% of the IA-Other, the intensity of the consequences is illustrated in the impact table via a “++/– –”-scale. However, this is not sufficient for a proper multi-criteria analysis. Scores would have to be attached to the various consequences and their features according to a transparent and comprehensible method, so that on the basis of total scores the different policy options can be compared to each other and ranked. However, this type of methodology was not encountered in any of the IAs. In 80% of the ENV IAs and 90% of the IA-Other, comparison of the various policy options is carried out purely on the basis of verbal explanations, that are not plausible and that therefore seems often almost arbitrary. Without a transparent method of comparison with fixed weighting, how should it be decided whether e.g. a “+” in the environmental consequences in the impact table counts more or less than a minus or a zero in economic consequences? No dominant or preferable option can be defined from such an impact table with the dominance criterion, and no ranking of the options can be made. A good example for this is the Directive ENV SEC (2008) 54/2 on the Storage of Carbon. In this IA, a great deal of data, quantitative and qualitative, is entered into an impact table, but in the end the comparison is carried out in a purely verbal manner and not even according to the criteria of effectiveness, efficiency and coherence which are listed in the guidelines. Overall, options regarding effectiveness are compared in only 30% of all IAs, and options related to efficiency are compared in only 20% of the ENV IAs and 5% of the IA-Other. The criterion of coherency played no role at all.

36

K. Bizer et al. Table 1.2 Typical impact table (see Annex 1, SANC 14. 1.2008, SEC (2008 12))

Type of impact

Option 1

Option 2

Option 3

Option 4

Description of option

No change: authorisation linked to the applicant (only applicant able to market, others by simplified procedure)

Generic authorisation (all companies able to market in the EU and abolishment of the simplified procedure)

Generic authorisation + data protection for certain foods (abolishment of the simplified procedure)

Different types of authorisation (generic and for certain foods applicantlinked, abolishment of the simplified procedure)

Social Impacts Impact on public health and food safety Impact on consumer rights Impact on employment and jobs Economic Impacts Impact on administrative burden imposed on business Impact on competitiveness, markets and trade (including third countries) Impact on innovation and research Environmental impacts Socio-economic impact (third countries in particular)

0

0

0

+

0

+

0

+

–

+

0

++

–

+

+

+

–

+

+

+

–

+

+

++

0 0

+ ++

+ 0

0 +

++ Very beneficial impact + Fairly beneficial impact 0 Low/neutral/not relevant/don’t know – Not very beneficial impact – – Not at all beneficial impact

Cost-benefit analysis was also only used in very few cases. Net benefits were not given at all in the ENV IAs which were analysed; in the IA-Other they were at least encountered in 10% of the cases.

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However, a cost-effectiveness relationship was drawn up in 20% of the ENV IAs. This did not appear in any of the other IA reports. It can generally be stated that there was absolutely no ranking of different options in the ENV IAs, and only in 10% of the IA-Other. Overall it was noticeable that different methods of comparison are used within the respective category of consequences, but seldom in a universal way across all categories of consequences. In the IA to emissions of passenger cars (SEC (2007) 1723, p. 32) for example, the cost-effectiveness criterion is only calculated for economic consequences. It would, however, be just as possible for environmental consequences. Involvement of Environmental NGOs, Stakeholders and Experts In 90% of the IAs of the DG ENV (ENV IAs) environmental stakeholders, organisations, NGOs and stakeholders were involved in almost every procedure. On the other hand, they were only integrated into 42% of the IAs from other DGs (IA-Other). In more than half of these IA reports the assessment of consequences was carried out without special input from environmental organisations and NGO’s. However, it should be stated that in 85–90% of all IAs, public consultations were usually held via the internet, so that in this way environmental stakeholders, organisations and NGOs received the opportunity to voice their suggestions and concerns in almost every IA. The difference between ENV IAs and IA-Other becomes even clearer with regard to the commissioning and use of external studies. External expertise was used in 100% of the ENV IAs, in 70% of them this explicitly meant environmental consultants. The other DGs used external expertise in 80% of the cases, but this is only explicitly described as environmental expertise in 5% of the cases. In the end, a total of 68% of the IA receive no input whatsoever from environmental stakeholders, organisations, NGOs or from environmental consultants and experts. In 10% of these cases, an online consultation was not carried out. The non-involvement of environmental stakeholders, organisations, NGO’s and experts should be taken seriously because 80–90% of all IAs are based on and supported by external studies and consultation. In ENV IAs this figure is only 80%, in IA-Other it is 90%. It is obvious that if only 42% of these IAs involve environmental experts and organisations the environmental impact assessment must be rather weak. These circumstances are aggravated by the fact that only 44% of the IA-Other made use of external or internal environmental data or databases. In the ENV IAs of the DG ENV, however, the figure was 90%. However, the DG ENV was involved in 78% of the IA-Other.38

38 Apparently,

environmental NGO’s are not participating in consultations of DGs other than environmental. Why this is so will be an important point to discuss in the workshop (see section “Discussion Points for the Workshop”).

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Impact Assessment Board In many cases, the IAB made critical comments on the use of methods, on the comparison of options and the involvement of environmental organisations, stakeholders, NGOs and experts. With regard to the quantitative assessment of environmental consequences, the IAB called for improvements in 20% of the ENV IAs and in 30% of the IA-Other. By implication, it could be concluded that the IAB considered a purely qualitative impact assessment suitable for at least 40% of the IA-Other and for 10% of the ENV IAs. The IAB has urged a higher level of monetisation in 20% of the environmental IAs and only in 5% of the non-environmental IAs. By implication, it could be concluded that the IAB considered the monetisation of consequences appropriate for at least 65% of the IA-Other and for 50% of the ENV IAs. Overall however, according to IAB the environmental impact assessment was not appropriate in 60% of the ENV IAs and in 35% of the IA-Other. The comparison of options often seemed inadequate to the IAB as well. It urged improvements in 50% of the ENV IAs and 30% of the IA-Other. The fact that no net benefits were calculated was criticised in 20% of the ENV IAs. This rather meagre use of special environmental input in IA-Other was, however, hardly criticised by the IAB. It only urged the increased use of external environmental expertise in 10% of the cases. With regard to the influence of the Impact Assessment Board on the IA process, two points still have to be made. The IAB made critical statements in all of the IA reports which were analysed. These statements by the IAB were at least partly integrated into the IA report in 100% of the ENV IAs, whereas in 50% the comments of the IAB were fully adopted. The ratio for IA-Other is not as good. In 23% of the cases the statement of the IAB was almost ignored, and only in 33% was it fully adopted.

Conclusion The most severe problem for environmental consequences in impact assessment is the way in which the authors of the IA reports compare various options for action in the analysed impact assessments. Hypothesis 1 indicates, that demand of analytical methods including complex comparison methods will be low for desk officials, and we find this confirmed by our analysis of case studies. The criteria for comparison mentioned in the EU guidelines are largely ignored. Officials seldom rank the various policy options in a clear and understandable way. There is a lack of explanations of why certain consequences outweigh others. For example, many comparisons only use a couple of short sentences without further explanation to illustrate how economic or social consequences compensate for ecological ones. This is aggravated by the fact that quantified and sometimes even monetised economic consequences are frequently compared to environmental consequences which are only stated in a

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qualitative way, which makes the former much more real and tangible to readers of the IA report than the latter. Hypothesis 2 predicts that cost benefit analysis or other costly methods will rarely be used assessing environmental impacts. Overall, the IA reports hardly subject environmental costs and benefits to monetary evaluation. Even commissioned studies seldom carry out their own evaluations of environmental consequences with the aid of relevant evaluation methods. Cost-benefit analysis and cost-effectiveness analysis are hardly ever applied. The impact assessments justify this with a lack of data and the excessive time and effort required to collect more. The case studies support also hypothesis 2. As expected in hypothesis 3 this analysis shows a clear difference in the methods used to assess the impact of environmental consequences between ENV IAs and IAOther. The ENV IAs use more external environmental expertise and integrate more frequently environmental organisations into impact assessment. DG Environment thus quantifies environmental consequences more often and in this way succeeds in giving a higher degree of validity to their IAs with regard to environmental consequences. In many of the IA-Other there are only short and purely qualitative statements on possible environmental consequences without further reasoning or more detailed explanations of the causal connections. Estimations of the intensity and the extent of environmental consequences are therefore hardly possible in many cases. The low level of quantification is particularly due to a small data basis with regard to quantitative environmental consequences. IA-Other use existing data to a low degree and seldom involve environmental organisations and environmental experts. The reason for this seems to lie in the principle of proportionate analysis. A more detailed investigation is often halted due to the perceived “insignificance” of environmental consequences. But the alleged insignificance is seldom explained. Hypothesis 4 states that the IAB will remark rarely upon deficits regarding the assessment of environmental consequences. This we do not find supported by our analysis. The obvious failings in impact assessments are criticised in many cases by the IAB. However, there is a lack of clarity with regard to the quality standards which the IAB expects a proper impact assessment to fulfil. Comments which are made about a certain IA could be made in exactly the same way about other IAs, and it is often not clear why a point of criticism is made regarding one IA and not also another. Hypothesis 5 we find affirmed as the IAB does not give detailed recommendations for the methods of assessing environmental consequences. The remarks contain general statements suggesting more quantified approaches, but only in very few cases a specific method such as cost-benefit analysis is demanded. On our sixth hypothesis we cannot provide a definite answer. The hypothesis suggests that the IAB provides only little quality control and is insufficient to bring about a better assessment of environmental consequences. The lead DG itself assesses to what extent the comments of the IAB are included in the respective IA report. If the data we collected accurately reflect the real situation, the IAB would indeed appear to have a certain influence on the IA process. This influence might

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increase occasionally the quality of the impact assessment, and certainly serves to reach a minimum level of quality. But the IAB does not make use of its potential with regard to environmental consequences as long as detailed and specific demands are not presented to the lead DG. Hypotheses 1, 2, and 3 on methodical deficits are fully supported by our analysis. This shows that the impact assessment process contains severe incentive problems for the relevant agents which should be resolved in order to improve analytical approaches. Hypothesis 4 and 5 we find also supported, whereas the results on hypothesis 6 remain indefinite. However, overall we conclude that there are serious deficits with regard to quality control as the IAB does not demand specific analytical methods even though it frequently remarks upon deficits in a general way and somewhat improves the impact assessments. In addition, the comments are given not in a consistent way so that improvement could be expected over time. Insofar, also with respect to the IAB the incentive situation of the relevant agents requires changes in order to assure an effective quality control with regard to the environmental consequences.39

Possible Solutions for Selection of Methods This chapter investigates solutions for two major incentive problems within the EU impact assessment process, collects impulses from other countries and suggests ways in which these problems could be resolved to strengthen the impact assessment. The two remaining problems are the selection of assessment methods and the quality control or quality management of the actual impact assessments. With regard to the selection of methods, there are basically two possibilities. On the one hand, a comparative method such as cost-benefit analysis or multicriteria analysis could be defined as the standard assessment method. This approach is taken in the USA or the UK, for example, which can be considered as “costbenefit states”. However, it would also be possible to choose multi-criteria analysis as the standard method. Overburdening in terms of methods can also be relieved by the improvement of aids in the selection and application of methods or alternatively by defining specific quality standards for methodological analysis, such as in the draft EU guidelines 2008. With regard to quality management the demands on and the opportunities provided by effective quality assurance in the impact assessment procedure are discussed. To this end, findings from political economics as well as from practice in other states such as the USA, the UK or the Netherlands are drawn upon.

39 In

this light, the new guidelines might bring about clarifications of certain issues, but certainly do not sufficiently change the incentive situation of the relevant agents. But as there can be no empirical evidence about the new guidelines, this should be discussed at the workshop.

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Concentrating on One Comparative Method The EU refers to four comparative methods: cost-benefit analysis, cost-effectiveness analysis, multi-criteria analysis and risk analysis.40 An initial step in simplifying the use of methods could be deciding on one comparative method for EU impact assessment. In the USA and the UK, cost-benefit analysis is predominantly used as the comparative method. Experiences with Cost-Benefit Analysis, Cost-Effectiveness Analysis and Multi-Criteria Analysis The impact assessment system in the Anglo-American countries is significantly different to that in Europe. In the USA, the authority drawing up draft legislation is obliged to roughly estimate the costs of the legislation in a first step, and then to carry out a cost-benefit analysis of the regulatory alternative if the costs exceed USD 100 million. According to the Executive Order (E.O.) 12866, Section 1a of 1993 of the American President41 all the costs and benefits of a regulatory alternative have to be monetised as far as this is possible, or at least quantified. Only the benefits and costs which are not quantifiable due to technical or methodological impracticalities may be represented in a purely qualitative way. The difference between the expected benefits and costs (net benefit) is the criterion for evaluating individual legislative proposals, not the relationship between costs and benefits. Major legislative proposals in the USA can only be adopted if the net benefit is positive. The guidelines for impact assessment in the USA are very much tailored towards cost-benefit analysis, and standardise the calculation of costs and benefits for all government bodies (Office of Management and Budget, 2003). Advantages of the US Impact Assessment System It is questionable whether this type of prioritisation of cost-benefit analyses leads to an increased quantification of environmental consequences, and whether it improves the degree to which they are considered in the legislative decision. In a study, Hahn and Dudley examined the demands made on cost-benefit analyses on the basis of 48 impact assessment reports on environmental legislation of the Environmental Protection Agency (EPA) in the Reagan, Bush and Clinton administrations (Hahn and Dudley, 2007). The findings of these studies revealed that 100% of the impact assessments monetised cost impacts and 50% monetised benefit impacts. Moreover, 90% of the benefit impacts were at least quantified. However, the lack of monetisation of benefits resulted in the fact that only around 30% of the impact assessment

40 See 41 See

Annex no. 10 of European Commission (2008b). Clinton (1993).

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reports calculated net benefits, while a further approx. 50% at least calculated a cost-effectiveness relationship. A total of approx. 65% thus calculated either a costeffectiveness relationship or net benefit. Measured against the objective to achieve a cost-benefit in all cases, these results may be in need of improvement; however, measured against the quantification of environmental consequences in EU impact assessment, such quantifications and monetisation levels would be a genuine success. It can be rightly assumed that selecting cost-benefit analysis as a method of comparison strengthens efforts in quantification and monetisation, particularly in the field of environmental issues (Renda, 2006). Cost-Benefit Analysis in Order to Strengthen Environmental Consequences A higher degree of quantification of environmental consequences could redress the imbalance created by the more frequent quantification of economic consequences in an integrated impact assessment procedure (Thiel, 2008, p. 22). Economic and ecological consequences would become more comparable. The manifold conflict between the economy and ecology can be illustrated in exact dimensions (Arrow et al., 1996). If qualitatively-assessed environmental consequences are juxtaposed with quantified economic consequences, it is then up to the political decision-maker to decide whether the qualitative ecological consequences outweigh the quantified economic consequences. A greater degree of quantification of environmental consequences within the framework of a cost-benefit analysis would make this situation much more transparent for political decision-makers with regard to environmental consequences and would increase the weight of ecological consequences compared to social and economic consequences (Hanley and Spash, 1993). Assuming that legislative proposals use up resources, and that resources are scarce, the use of resources can be improved with the aid of cost-benefit analyses (Hanley and Spash, 1993) – and cost-benefit analysis is the only method of comparison named by the EU which allows for a statement on whether a legislative initiative raises or lowers the overall welfare of the state. The analysis by Hahn and Dudley also shows, however, that the quantification of goods without a market price is a major weakness of cost-benefit analysis. Particularly for many environmental goods, there is no market price and environmental consequences are often too complex, too long-term and difficult to grasp, so that individual stakeholders can hardly have a clear idea of the significance of a healthy environment for themselves (Hahn and Dudley, 2007). As a consequence, the calculation of their willingness to pay does not lead to a solid reflection of the benefit of specific environmental goods (Hanley and Spash, 1993). Many of the methods with which specific benefits – for which there is no market price – are monetised are not considered particularly precise, and as a consequence the results of the comparison between such benefits and costs are questioned (Ackerman and Heinzerling, 2002). Environmental consequences are often external effects of manufacturing activities. It is also questionable to what extent cost-benefit analysis can include and reflect such external effects. Besides, environmental legislation can stimulate businesspeople to new and innovative behaviour which yields economic

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value previously unknown, as for example the current boom in renewable energies is showing (Ackerman and Heinzerling, 2002). In addition, due to the long-term nature of many environmental consequences, the selection of the correct discount rate is of decisive importance. In this context it is questionable whether it is actually possible to define a discount rate for major irreversible damages such as contamination by atomic waste (Ackerman and Heinzerling, 2002). Moreover, cost-benefit analyses are often difficult to implement in practice. Time and resources available are too limited for carrying out a proper cost-benefit analysis (Ackerman and Heinzerling, 2002). This criticism can be countered with the fact that remarkable progress has been made in the field of quantifying benefits, testing the sensitivity of various discount rates and improving methods in many respects.42 If the quantification of benefits is not possible for technical reasons, it is possible to fall back on cost-effectiveness analyses (CEA) as in the US model. In this method, only the costs are established in monetary terms, and the change in a certain environmental indicator caused by the policy measures is determined qualitatively as an expression of the effectiveness of the measure. The different options are compared on the basis of the cost-effectiveness relationship (Pearce et al. 2006). In this way, all options can be clearly ranked. Hahn and Dudley, 2007 showed that the costs of environmental consequences in the USA can be monetised in all cases. The CEA however does not answer whether the policy measures should be implemented or not in terms of overall welfare as is the case with the aid of the net-benefit criterion of cost-benefit analysis. In addition, the respective indicators for effectiveness are selected by experts and are not based on individual benefit changes. However, due to the problem that individual environmental goods often cannot be evaluated, this can even be an advantage. Multi-Criteria Analysis (MCA) Environmental decisions are often based on multi-disciplinary research and highly complex. Legal, economic, medical, ecological and ethical as well as other input is required in order to be able to make a meaningful decision. Many of these findings are not passed on in a quantitative form to the authority which is responsible for the impact assessment. Often many of the stakeholders and external experts are not in a position to translate their objections into quantitative terms. In this way, an impact assessment carried out purely on the basis of quantitative data could be inadequate and could blank out many qualitative findings. What would be needed is a means of representation and comparison which enables all data and findings to be integrated, whether quantitative or qualitative. In practice, this integration ultimately takes the form of so-called decision tables. In these, the various findings are very often juxtaposed and compared with each other in an ad hoc or often almost random way.

42 For

an overview: Pearce et al. (2006).

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A more effective comparison is possible with a multi-criteria analysis. The multicriteria analysis attempts to illustrate the effects of a political measure via specific indicators and thus measures their degree of effectiveness with regard to specific policy goals. The various indicators are expressed qualitatively or quantitatively in a matrix and subsequently compared to each other via different comparison mechanisms. The most important of these are multi-attribute utility theory and the analytical hierarchy process (Belton & Stewart, 2002). With the aid of such processes, scores are assigned to the different alternatives, and on this basis the selection of the suitable regulatory alternative is made (Kiker, Bridges, Varghese, Seager, & Linkov, 2005). The advantages are that complicated conflicts of objectives can be illustrated with the aid of multi-criteria analysis. In addition, income distribution goals can be included in the assessment as well as sustainability aspects. However, as with cost-effectiveness analysis, multi-criteria analysis also cannot give a verdict on whether a legislative measure will increase or decrease the overall welfare of a state. Moreover, an important question is who determines the weightings in a multi-criteria analysis. In practice, this is carried out by experts or on the basis of political negotiations (Janssen, 2001). The question of the selection of the assignment procedure for the scores is the most contentious point and can also rapidly lead to methodological overtaxing. Experiences in the Netherlands show that multi-criteria analysis should be kept simple in order for it to be of real assistance for the decision-makers. A constructive role here is played by the method of calculation in which certain scores are assigned to the individual quantitative and qualitative results via simple linear functions, and the selection of the regulatory alternative is made via the average score achieved. This method is sufficient in most cases (Janssen, 2001).

Selection of Assessment Methods Until now the EU has not followed the path taken by the USA and focused on costbenefit analysis. EU officials have a wide range of methods and procedures at their disposal for analysing the impact of legislation. The EU guidelines set hardly any limits for the selection of methods. But even in a purely cost-benefit analysis regime as in the USA, decisions on the selection of methods remain necessary, such as on the right evaluation method for non-market goods. The question of the correct and suitable choice of methods of analysis therefore arises in every impact assessment regime. In order to avoid overburdening those working on impact assessments, selection criteria and instructions are required for the selection of methods.

The State of Affairs in the Draft EU Guidelines 2008 In the annexes of the draft EU guidelines of June 2008 (European Commission, 2005, Annex 7–12; European Commission, 2008b, Annex 9) there are many

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approaches which create links between methods and their applications in certain situations. The process for the selection of methods in the EU basically starts out with the qualitative elicitation of the effects and proceeds to the quantitative establishment of their severity. For the first steps of the analysis, the EU guidelines recommend creating a cause and effect model (European Commission, 2005, Chap. 4.2, p. 26; European Commission, 2008b, Chap. 5.4.1, p. 35) and only then a quantitative assessment of the qualitative results with regard to their effect on welfare. Assistance for methodological procedure in the EU impact assessment process is provided by the descriptions in the EU guidelines and via the internet-based support platform I.Q. Tool. In the impact inventory of I.Q. Tool, many different possible qualitative effects of laws are detailed, with the aid of which an official should come across possible effects of his or her impact assessment. In the field of environmental consequences, for example, key questions are posed on air, soil or water quality, on effects on the climate and biodiversity or the effects of company activities. In the model inventory of the I.Q. Tool there are various qualitative and quantitative assessment models for different impacts as well as a description of their main areas of use. Also environmental impact models are to be deployed for the evaluation of environmental consequences. With these models it should be possible to quantitatively estimate the physical effect of emissions (Ecosens, IMAGE, RAIN), climate change (FUND) and soil contamination (SMART), partly also in monetary form. Technical support for the implementation of quantitative analysis with the aid of such models is offered by the Institute for Prospective Technological Studies of the Joint Research Centre of the EU. This institute continuously develops quantitative models and also provides assistance in the development of ad hoc models for different specific assessment scenarios. It is noticeable, however, that monetisation hardly receives any attention in the I.Q. Tool. In the EU guidelines (European Commission, 2005, Annex 11.1; European Commission, 2008b, Annex 7.9), various assessment procedures based on the concepts of willingness to pay and willingness to accept (WTP and WTA) are described. The guidelines point to methods for determining willingness to pay such as the stated preferences or revealed preferences method as well to cost and benefit transfers, in which cost rates which have been calculated in other procedures are transferred to the procedure in question. In the EU there are even databases available (e.g. the Review of Externalities Database43 ) for cost-benefit transfer. The I.Q. Tool support platform does not address these assessment issues or cost-benefit transfers at all. Which method to choose for comparison is neither discussed in the guidelines nor considered at depth in the I.Q. Tool. Precise instructions on how comparison

43 See

at http://www.red-externalities.net/.

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via a cost-benefit analysis or a multi-criteria analysis should be carried out are not explained in either the EU guidelines or the I.Q. Tool. Problem of the Appropriateness of Method Selection Nevertheless, neither the support platform I.Q. Tools nor other support facilities of the EU Commission offer answers to the question of how to select the appropriate method. Even if officials know which method they could use to analyse and assess consequences, they still have the decision to take whether the method should be used in the analysis at all or whether it is too time consuming or costly. In order to honour the principle of appropriate impact assessment, according to the EU guidelines (European Commission, 2005, Chap. 2.5, p. 6; European Commission, 2008b, Chap. 3, p. 11) the official should proceed in three stages. First of all, the probable consequences are determined with the assistance of the impact inventory described above, as are the social groups who will be affected by the consequences. The second stage of the process considers the range of possible consequences and separates the most important ones. To this end, probabilities (low, medium, high) are assigned to the consequences, and an initial rough estimate of the magnitude of the consequences themselves (low, medium, high) is made. Only the consequences with the highest probability of occurrence and the greatest expected effects may be then subject to an in-depth quantitative analysis. In the third and last stage, this in-depth quantitative analysis is carried out, which if possible should contain the monetisation of costs and benefits. The political importance and the stage of the legislative process which has been reached are further important criteria for assessing the reasonableness of a process of analysis. The aspect of political importance is particularly orientated towards the goals and priorities of the current EU work programme. The official thus has to decide which probability of occurrence, which level of effects and which political importance a consequence possesses, and which method of investigation is suitable given the stage of the legislative process. There are hardly any clear pointers towards any of the suitability criteria in the EU guidelines. There is no cost ceiling of EUR 100 million as in the USA, above which a cost-benefit analysis is obligatory. In the EU, expected costs of EUR 100 million could be considered highly significant in one impact assessment process, while in another process they might be considered to be of medium or low significance. A specification and concretisation of the suitability of the selection of methods could take place in two ways. Firstly, the EU could extend the instructions on the selection of methods to include criteria such as regulatory complexity and the time and costs required to collect data, and the EU could define exact standards or thresholds above which a certain method of analysis (qualitative or monetary) should be carried out. Experiences from strategic environmental assessment (SEA) show how to proceed. A second possibility would be the definition of precise quality standards which the respective analysis would have to fulfil, and which could subsequently act as “guiding stars” in the selection of methods.

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What Can We Learn from SEA? The SEA process and the environmental impact assessment of strategic measures/actions serve to provide information for the decision-making process and evaluate the environmental consequences of proposed policies, plans or programmes (PPPs). As in most EU laws, typical strategic measures can affect extremely large areas, lead to several hundred projects and last for up to 10 years or more. In the drawing up of impact assessments, the responsible officials only have a limited period of time to complete the process as well as a limited amount of personnel and resources. The SEA literature provides further criteria for the selection of methods. In order to be able to resolve the problems of large areas, lack of data and time, and considerable uncertainty, Schmidt formulate demands on the tools/methods and techniques of the SEA (Schmidt et al., 2005). First of all, a good SEA tool has to be suited to its purpose and must be able to deal with various types of uncertainty, tackle accumulated and indirect impacts and enable the comparison of different options. These requirements correspond to the criterion of suitability and functionality of methods and are very well described by the EU guidelines and the I.Q. Tool for the different methods available for selection in an impact assessment process. Schmidt however, specify further requirements for a SEA tool, particularly the question of how many resources and how much time capacity should be used for a SEA tool and how the initial data basis is assessed (Schmidt et al., 2005). They attempt to differentiate between common SEA methods beyond the question of suitability, also with regard to these criteria, which are displayed by Fig. 1.3 on the axes. In addition, a good SEA tool should fit in with the schedule of the decisionmaking process and the respective stage of impact assessment. For the officials working on the impact assessment it would also be helpful to know which methods they can use for the first rough evaluations, and which are preferable for the more intensive later evaluation stages. Figure 1.4 indicates which tool can be useful at which stage of the SEA. The columns present the stages of the SEA, the rows the respective tools. Ultimately, robustness, transparency and practicability are further important criteria of an SEA tool, as well as the need for it to be understandable for all those involved in the SEA such as decision-makers, experts and the public (Schmidt et al., 2005). The description of methods and the instructions for their use in EU impact assessment do not yet really differentiate between all these criteria of time requirements, the need for resources, data requirements, practicability, the stage of the impact assessment and comprehensibility of the results.

Thresholds Thresholds are limit values which need to be exceeded before a certain activity or process can begin. Thresholds have long been used in environmental impact assessment (EIA). They are used in various stages of the EIA process, e.g. in the scoping stage to decide whether an EIA is actually necessary, which impacts are most

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K. Bizer et al. Many resources, much time (new system required) Land use part. analysis Risk assessment Modeling

Public participation

Restricted data available

GIS

Comprehensive data available

Quality of Life Ass. Causal effect diagram

Compatibility appraisal Impact matrix Expert judgment

(existing system available)

Few resources, little time

Fig. 1.3 Resources and data required by SEA tools (Source: Schmidt et al., 2005, p. 353)

significant, and which methods should be used for the analysis of which impacts (Schmidt et al., 2008). The EIA Directive of the EU, for example, contains such thresholds. In its Annex 1 it is laid down that an EIA has to be carried out before the construction of thermal power stations with a capacity over 300 MW refuses incineration plants with a capacity of more than 100 tonnes, and oil installations with a production volume of 500 tonnes per day, etc. Thresholds have the advantage that they make discretionary decisions in the EIA considerably easier, such as whether an EIA is required or not. They permit swift decisions and provide the official dealing with the matter with a high level of confidence in the decision. Also, they apply universally for all decisions regardless of the responsible individual, the specific project or other circumstances (Glasson et al., 2005). On the other hand, thresholds are difficult to define and are often randomly set in a political decision-making process. They hardly offer any room for flexible decisions, have to be continuously adapted to the standard of knowledge in theory and practice, and the consequences of projects below the thresholds remain unnoticed (Glasson et al., 2005). In the research literature, there is little of substance to be found on the use of thresholds in regulatory impact assessment. However, a good example of a threshold in an impact assessment process is the USD 100 million cost ceiling in the USA, where the carrying out of a cost-benefit analysis is obligatory for all laws of which the effects exceed this limit.

Expert judgement Public participation tools* Impact matrix Quality of Life Assessment GIS Land unit partitioning anal. Causal effect diagrams Modeling Scenario/sensitivity anal. Multi-criteria analysis Risk assessment Compatibility appraisal

?

?

Monitoring

Public participation

Propose mitigation

Ensure coherence

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Identify cumulative/ indirect impacts

Compare alternatives

Evaluate impacts

Predict impacts

Tool

Identify impacts

Improving the Integrated European Impact Assessment?

Describe baseline

1

?

?

? ?

? ? ?

?

?

? ? ? ? ? ?

Key: fully ? partly (blank) not * e.g. visioning, Planning for Real, workshops

Fig. 1.4 SEA stages during which SEA tools could be used (Source: Schmidt et al., 2008, p. 352)

Standards and Good Practice Standards, on the other hand, define a specific optimal procedure (Schmidt et al., 2008). The principle of suitability could also be further specified with their help. A good example for such standards is the so-called methodological convention of the Umweltbundesamt, the German Federal Environment Office, for the quantitative assessment of environmental damages. It defines standard cost rates (Umweltbundesamt, 2007) for the calculation of damages caused by contamination, emissions, damage to human health, risks of death etc. The best-practice examples in the I.Q. support platform are also good examples of such standards.

Summary Establishing cost-benefit analysis as the standard method has the advantage that impact assessment is fundamentally orientated towards quantifying benefits and

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costs. The persons responsible cannot simply take the easy option and conclude their assessment without quantifications. They are forced to carry out the quantification stage as there is pressure to base decisions on quantitative data. The advantages of this type of focusing are a high level of comparability of the consequences and an insight into whether a measure should be implemented at all. This compulsion to quantify is considerably weakened if cost-effectiveness analysis is set as the standard, and fundamentally does not exist at all in multi-criteria analysis. However, stipulating the use of multi-criteria analysis as the standard model does compel the responsible officials to at least also make the different results comparable via the assignment of scores. This would be helpful for the environment if the method according to which scores are assigned weights environmental consequences particularly strongly. For choosing the appropriate methods of assessment thresholds and quality standards can be helpful as applied in SEA or EIA. They reduce decision costs of the actors within the impact assessment process. In addition they force actors to justify their decision, if they deviate from the standard model or neglect quality standards. However, methods to compare, the criteria data availability and time resources,44 and quality standards can only improve the assessment of environmental impacts if they are followed by actors as well.

Quality Control Impact assessment serves to improve legislation. However, it can only achieve its full potential if it is carried out in a high-quality way. The evaluation studies have revealed various and important failings even though there is already a threestage quality assurance process in place in the EU in order to avoid such mistakes (Chap. 3). Can this quality assurance process and in particular the IAB be strengthened in order to increase the importance of the environment in the impact assessment? This chapter provides a brief institutional analysis and highlights the incentives of those involved and points out possible design options for the IAB. This is followed by a closer examination of institutional solutions in the EU, the USA and the United Kingdom.

Theoretical Classification and Design Options The lead Directorate General decides on the design of an impact assessment. The desk officers responsible for the respective draft legislation have to decide which procedure they consider suitable for the impact assessment of the respective regulatory subject. They can decide which alternative options they evaluate, which important consequences they analyse in more detail and which methods they use. 44 In

addition: robustness, transparency and practicability.

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The theory on the exercise of discretion (Epstein and O‘Halloran, 1999) shows that the decision-making power and the power of interpretation is delegated to agencies in order to profit from their expertise. This offers scope to agencies or bureaucracies for deviating behaviour and the pursuit of their own interests. A trade-off for policymakers thus arises between the usefulness of expertise and the risk of deviating and opportunistic behaviour. This trade-off also prevails in the design of the impact assessment guidelines and the impact assessment process. If the specifications of the impact assessment process are set too narrowly, the process might not capable to determine and analyse the most important consequences of the respective laws. If too few specifications are laid down regarding the design of the impact assessment, the lead Directorate General could design an impact assessment which mainly supports its own draft legislation (Posner, 2001). The lead Directorate General can exploit their position to filter information and to use any leeway in their favour. Reasons for this can be individual career goals, the feeling of imposing their own political ideas, or solidarity with one’s own agency (Downs, 1957; Niskanen, 1975). This type of behaviour is also referred to as rent seeking. Through his or her positions and responsibilities, the official creates a type of monopoly from which he/she can cream off the rents (Rowley et al., 1988). There would be two ways of mitigating the risks created by DG staff behaviour in EU integrated impact assessment. First of all, separating responsibilities in the impact assessment process can make the build-up of a monopoly position more difficult. This would correspond to the idea of Watson of having different authorities draw up the draft legislation and the impact assessment (Watson et al., 2007). A separate administrative unit would be created to carry out the impact assessment process. The goal of this authority is first and foremost to achieve a high-quality impact assessment. The respective Directorate General continues to draw up the draft legislation. No links in terms of personnel between the authorities are permitted. This ensures the maximum level of independence. How much decision-making power this authority should possess still requires clarification, because such an authority might create a new monopoly position for itself and intervene in the legislative process to a major extent. The problem of rent-seeking would thus only be shifted. This danger can be encountered by the assignment of decision-making powers to, for example, two agencies, with the objective of balancing powers between the authorities drawing up the draft legislation and the impact assessment authority. The second possibility is the establishment of a body whose task is simply to monitor compliance with the EU guidelines, support Commission officials in drawing up the IA and clarifying questions of design where there is doubt. It would not carry out its own impact assessments but would assist and monitor only. Then, the first question would be how the intervening competences of this unit should be designed. At any rate, the possibilities of such a unit to exercise influence would be lower than those of an independent authority which draws up the impact assessment itself. The greatest possible intervening power would certainly be the right to halt the legislative process if the quality of the impact assessment does not reach the standards. It would also be conceivable to provide the power to impose

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sanctions on the offices of the Commission which draw up the impact assessment and the draft legislation. However, it is questionable which type of sanctions can and may be exercised upon administrative offices and units. A further important question is which level of independence would be accorded to this supervisory unit. Its independence would be largely defined by its composition in terms of personnel. It is questionable whether it should consist of administrative staff of the respective Directorate Generals who have only been delegated for this task, or by employees generally assigned to this unit. In order to increase the weight of environmental consequences, the involvement of staff with environmental expertise would be particularly important. The next section investigates the institutional structures selected by the EU, the USA and the UK, and compares which intervening powers and which level of independence they assign to their quality control institutions.

Institutional Structure in the EU: The Impact Assessment Board In the preparatory stage of an impact assessment, the IAB expresses its opinion to the lead Directorate General on the quality of the impact assessment, gives advice and makes recommendations to increase the quality of impact assessment.45 The IAB examines to what extent impact assessment guidelines and the standards of good impact assessment were followed. It also provides an assessment of whether the analysis appears suitable and of sufficient quality, both with regard to the reliability of the data basis as well as the methods used. The IAB acts upon request of the lead Directorate General and on issues where it appears appropriate. Four weeks before the conclusion of the preparation of legislation, the lead Directorate General has to submit the impact assessment to the IAB for evaluation. In cases where serious deficits are established, the IAB can demand that the improved impact assessment be submitted once again to the IAB. The IAB’s opinion on the impact assessment is adopted by majority and is made available to the Commission for its decisions on the respective legislative initiative. However, there is no formal obligation for the respective lead Directorate General to include these remarks and opinions in its impact assessment report. The IAB is composed of the Deputy General Secretary of the European Commission and one Director each of the Directorate Generals Environment (ENV), Economy and Finance (ECFIN), Employment, Social Affairs and Equality (EMPL), and Enterprise and Industry (ENTR). The members of the Directorate Generals are chosen by the respective Director General of the DG and nominated by the President of the Commission. They report directly to the President of the Commission. They have no obligations towards their Directorate General and the latter may under no circumstances issue instructions to their member in the IAB. However, the mem-

45 All

details given are in European Commission (2008a, Chap. 2.4, p. 9)

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bers do not work solely for the IAB, but also in their original jobs in the respective Directorate General. If there are conflicts of interest, they can opt out of the IAB process for the respective decision. The IAB is supported by the staff of the Secretariat General and the various Directorate Generals and financed by their budgets. If required, the IAB can enlist external expertise. However, the 4 weeks evaluation period is often too short for this. Therefore, hardly any external expertise was employed in 2007.

The Office for Information and Regulatory Affairs in the USA In the USA, the task of the Commission’s IAB is fulfilled by the Office for Information and Regulatory Affairs (OIRA), which is answerable to the Office of Management and Budget. The OMB is the central coordination and supervisory body of the President of the United States and belongs to the White House administration. The OIRA is thus an administrative unit like the IAB. It is fully independent of the ministries of the US government both in terms of personnel and materially. Unlike the IAB, the OIRA is equipped with far-reaching competences. After completion of the preparatory phase of draft legislation and the conclusion of the relevant impact assessment, the latter has to be submitted to the OIRA. The OIRA has 90 days to examine the quality of the impact assessment and can stop the entire legislative process in cases of serious deficits. If the OIRA rejects the draft legislation, it subsequently begins negotiations with the leading ministry or agency about the improvements which are to be made. The legislative process is interrupted until the impact assessment fulfils the quality requirements of the OIRA.

The BRE in the UK The Better Regulation Executive (BRE) in the UK, on the other hand, only has similar competences to the IAB of the EU. It advises the government on questions of the suitable design of impact assessments and issues a regulatory impact statement about the impact assessments drawn up by the government. In contrast to the European Commission and also to the US, the BRE is part of the Department for Business, Enterprise and Regulatory Reform and is thus answerable to the relevant British minister and not directly to the Prime Minister. This appears to have historical reasons, as the development of regulatory impact assessment in the UK began with the efforts to reduce bureaucracy of the Thatcher governments (Renda, 2006). A further difference compared to the EU is that the BRE is responsible for the guidelines and the standards of the impact assessment. It has produced many documents and rules on the topic of “better regulation” and good regulatory impact assessment practice. The development of quality standards and the monitoring of compliance with them are thus both carried out by one body.

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Finally, at a certain stage of the impact assessment process the BRE makes specific comments and provides advice on whether the chosen method of analysis is appropriate to the respective regulatory subject.

Summary These brief descriptions from the EU, the USA and the UK show that in neither there is a separation between the drawing up of the draft legislation and the impact assessment. The reasons for this remain unclear, but could be due to the danger that a separate authority for impact assessment might create a monopoly position and could mutate into a shadow legislative authority (section “Theoretical Classification and Design Options”). The OIRA in the USA possesses greater decision-making powers than its counterparts in the EU and the UK. It is the only unit which can halt a legislative process. It is also independent of the ministries which draw up the draft legislation and the impact assessment itself. The OIRA is an administrative unit of the White House which is answerable to the President and derives its power to object to draft legislation from the President’s power of veto. In effect, the President’s power of veto is thus incorporated into the OIRA, and in this way the President can block legislative processes without formally exercising his power of veto. The question thus arises as to how far the OIRA actually can take independent decisions with regard to draft legislation put forward by the President. The BRE in the UK is also an administrative unit and as such is answerable to the minister for economic affairs. According to Epstein’s premise on self-interest in the behaviour of bureaucrats in discretionary decisions (see section “Theoretical Classification and Design Options”), this solution would certainly appear unsuitable for strengthening the weight of environmental consequences, as it can be expected that economic aspects would be given priority in impact assessment. However, the BRE does not possess any significant opportunities to influence the impact assessment process. The EU’s counterpart to the BRE and the OIRA is a board consisting of representatives of various Directorate Generals of the Commission as a supervisory authority. This type of organisation has the advantage that the Directorate General for the Environment has the chance to contribute its expertise to the IAB. At the same time, the IAB also enjoys a higher degree of independence vis-à-vis the President of the Commission, as it makes its decisions on the basis of majority voting and the Commission President has few opportunities to influence its decisions via simple directives. However, obligatory unanimous voting would avoid the danger of environmental aspects being outvoted by other members of the IAB. On the other hand, it is questionable to what extent the respective members of the IAB have a free vote on the legislative proposals of the Directorate General to which they themselves belong. An interesting question is whether there might be reciprocal blocking or political negotiations among the Directorate Generals if the IAB were to be granted the right to halt legislative processes due to qualitative deficits in the impact assessment process.

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Discussion Points for the Workshop In front of remaining problems and possible solutions, many questions are raising, which should be answered by the workshop. Topics of the workshop were: Topic 1: Problems and Challenges of the EU impact assessment with emphasis on environmental impacts 1. What is the actual influence of stakeholder groups, especially for the environment? 2. How should an effective stakeholder participation be organized? 3. How great is the level of involvement of environmental groups in internet-based consultations? 4. What criteria rule the priority setting for environmental aspects, e.g. “there is an environmental effect, but we can’t change it” as a rule? 5. Can the employment of external environmental expertise be made cheaper and more flexible? Should financing stakeholder groups change? Topic 2: Methods of the regulatory impact assessment with respect to environment 1. Should the EU IA guidelines set a standard assessment method? Should this be the cost-benefit analysis, the cost-effectiveness analysis or the multi-criteria analysis? 2. If this is the cost-benefit analysis what are the crucial problems of cost-benefit analysis for environmental consequences? 3. How can external effects and non-market goods be evaluated simply and at reasonable costs? 4. Which discount rates should be used in environmental impact assessment? 5. To what extent can cost-benefit analysis contribute to the strengthening of environmental consequences in an integrated IA or could it also weaken the IA if environmental values are ambivalent? 6. How can environmental consequences be weighted accurately within multicriteria analysis? How should the weighing be procedurally organised to avoid a suboptimal provision of environmental quality? 7. Are environmental consequences in danger of being undervalued within MCA, if economic and social consequences are quantified and monetised whereas environmental consequences are not? Topic 3: The proportionate impact assessment – discretion or formalism? 1. Is it reasonable to formalize the decision when an impact assessment has to be carried out or to what extent should discretion remain? 2. Should there be a clear-cut criterion such as the USD 100 million impact as in the USA?

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3. Is the significance criterion of the EU impact guidelines sufficiently defined to be helpful? 4. Does the political importance criterion of the EU impact guidelines put the environment at a disadvantage as it focuses on economic issues and asks for contestants and controversy in order to estimate political importance? 5. When should a possible environmental consequence be considered significant? Should there be additional thresholds for environmental impacts? 6. Which additional standards for the IA should be defined in the EU guidelines to limit discretionary power of the lead DG? Topic 4: Institutionalisation of the regulatory impact assessment 1. Should the drafting of legislation and the impact assessment itself be carried out by different agencies? 2. What degree of independence is necessary to ensure an effective quality control of impact assessments? How should the independence of the current IAB be assessed? 3. Which intervening power in the legislative process should be allocated with the quality control agency? Can the IAB be effective without 4. Which quality standards should be defined for the EU impact procedure? 5. How should the impact assessment be set up in Germany? Should the “Normenkontrollrat” (responsible for reducing bureaucratic costs) function as a quality control board? How can environmental expertise be incorporated? To each of these topics, the following chapters will give some answers. Our results based on these answers are summarized in the last chapter. Acknowledgement We are grateful for the support of Yvonne Eggert and Martin Breßlein in preparing this chapter.

References Ackerman, F., & Heinzerling, L. (2002). Cost-benefit-analysis of environmental protection. University of Pennsylvania Law Review, 150(5), 1553–1584. Arrow, K. J., Cropper, M. L., Eads, G. C., Hahn, R. W., Lave, L. B., Noll, R. G., et al. (1996). Is there a role for cost-benefit-analysis environmental, health and safety regulation? Science, 272(5259), 221–222. Belton, V., & Stewart, T. J. (2002). Multiple criteria decision analysis. Boston, MA: Kluwer. Bizer, K. (1999). Die Ökonomik der Verhältnismäßigkeitsprüfung. Sofia- Diskussionsbeiträge zur Institutionenanalyse, 99(1). Bizer, K., & Gubaydullina, Z. (2007). Das Verhaltensmodell der interdisziplinären Institutionenanalyse in der Gesetzesfolgenabschätzung. In M. Führ, K. Bizer, & P. H. Feindt (Eds. ), Menschenbilder und Verhaltensmodelle in der wissenschaftlichen Politikberatung. BadenBaden: Nomos. Calliess, C. (2007). Kommentierung. In C. Callies & M. Ruffert (Eds.), EUV/EWG Kommentar. München: Beck. Clinton, B. (1993). Executive order 12866 – Regulatory planning and review. The White House.

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Downs, A. (1957). An economic theory of democracy. New York, NY: Harper & Row. Ecologic (2007). Improving assessment of the environment in impact assessment. Amsterdam: Institute for European Environmental Policy. EEAC Working Group on Governance (2006). Impact assessment of European commission policies: Achievements and prospects. European environment and sustainable development advisory councils (EEAC). Epstein, D., & O‘Halloran, S. (1999). Delegating powers – A transaction cost politics approach to policy making under separate powers. Cambridge: Cambridge University Press. EU Secretary General (2008). Beitrag zur Frühjahrstagung des Europäischen Rates (13./14. März 2008) – Schlussfolgerungen des Rates. Rat der Europäischen Union. European Commission. (2000). Communication from the commission on the precautionary principle. Neue Zeitschrift für Verwaltungsrecht (NVwZ), 4. European Commission. (2005). Impact Assessment Guidelines. European Commission. (2006a). Impact Assessment Board Mandate. European Commission. (2006b). Rules of Procedure of the impact Assessment Board. European Commission. (2008a). Impact Assessment Board. Report for the year 2007. European Commission. (2008b). Impact Assessment Guidelines Draft Version. European Community. (1962). Regulation No 31 (EEC), 11 (EAEC) . Official Journal of the European Community 45, 14.6.1962 – Special Edition 1959–1962. European Community (2002). Treaty establishing the European community. Official Journal of the European Community, C325, 24. December 2002. Führ, M. (1999). Rationale Gesetzgebung – Systematisierung verfassungsrechtlicher Anforderungen. In E. Gawel & G. Lübbe-Wolf (Eds.), Rationale Umweltpolitik – Rationales Umweltrecht – Konzepte, Kriterien und Grenzen rationaler Steuerung im Umweltschutz. Baden-Baden: Nomos. Führ, M. (2003). Eigen-Verantwortung im Rechtsstaat. Berlin: Duncker & Humboldt. Führ, M., & Bizer, K. (2007). REACh as a paradigm shift in chemical policy – responsive regulation and behavioural models. Journal of Cleaner Production, 4, 327–334. Führ, M., Bizer, K., & Feindt, P. H. (2007). Menschenbilder und Verhaltensmodelle in der wissenschaftlichen Politikberatung – Möglichkeiten und Grenzen der interdisziplinären Verständigung. Baden-Baden: Nomos. Glasson, J., Therivel, R., & Chadwick, A. (2005). An introduction to environmental impact assessment. London: Routledge. Hahn, R. W., & Dudley, P. M. (2007). How well does the US. Government do the cost-benefitanalysis? Review of Environmental Economics and Policy, 1(2), 192–211. Hanley, N., & Spash, C. L. (1993). Cost-benefit analysis and the environment. Vermont: Edwar Elgar. Harrington, W., & Morgenstern, R. D. (2004). Evaluating regulatory impact analyses. Paris: OECD. Hooghe, L. (2002). The European commission and the integration of Europe: Images of governance. Cambridge: Cambridge University Press. Jacob, K., Hertin, J., Hjerp, P., Radaelli, C., Meuwese, A., Wolf, O., et al. (2008). Improving the practise of impact assessment. Berlin: EVIA. Janssen, R. (2001). On the use of multi-criteria analysis in environmental impact assessment in the Netherlands. Journal of Multi-Criteria Decision Analysis, 10, 101–109. Kiker, G. A., Bridges, T. S., Varghese, A., Seager, T. P., & Linkov, I. (2005). Application of multicriteria decision analysis in environmental decision making. Integrated Environmental Assessment and Management, 1(2), 95–108. Krämer, L. (2003). EC Environmental Law. London: Sweet & Maxwell. Niskanen, W. A. (1975). Bureaucrats and politicians. Journal of Law and Economics, 18(3), 617–643. Office of Management and Budget. (2003). Circular A-4. White House. Ossenbühl, F. (1986). Vorsorge als Rechtsstaatsprinzip im Gesundheits-, Arbeits- und Umweltschutz. Neue Zeitschrift für Verwaltungsrecht (NVwZ), 161.

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Pearce, D., Atkinson, G., & Mourato, S. (2006). Cost-benefit-analysis and the environment – recent developments. Paris: OECD Publishing. Posner, E. A. (2001). Controlling agencies with cost-benefit-analysis: A positive political theory perspective. Chicago Law Review, 68 (4), 1137–1199. Radaelli, C. (2007). Regulatory quality in Europe: Concepts, measures, and policy processes. Manchester: Manchester University Press. Radaelli, C., & Francesco, F. D. (2004). Indicators of regulatory quality. Brussels: European Commission. Renda, A. (2006). Impact assessment in the EU – The state of art and the art of state. Brussels: Centre of European Policy Studies. Rowley, C. K., Tollison, R. D., & Tullock, G. (1988). The political economy of rent-seeking. Boston, MA: Kluwer Academic Publishers. Scherzberg, A. (2006). Kluges Entscheiden. Tübingen: Mohr Siebeck. Schmidt, M., Glasson, J., Emmelin, L., & Helbron, H. (2008). Standards and thresholds for impact assessment. Berlin: Springer. Schmidt, M., Joao, E., & Albrecht, E. (2005). Implementing strategic environmental assessment. Berlin: Springer. Schulze-Fielitz, H. (1988). Theorie und Praxis parlamentarischer Gesetzgebung. Berlin: Duncker & Humboldt. Thiel, A. (2008). Changing administrative culture and political debate? A review of impact Assessment practices in the European commission. Zeitschrift für Umweltpolitik & Umweltrecht, 1, 5–27. Umweltbundesamt (2007). Ökonomische Bewertung von Umweltschäden – Methodenkonvention zur Schätzung externer Umweltkosten. Dessau: Umweltbundesamt. Watson, J. P., Wolff, J. M., Kuehnemund, M., Ward, B., Burke, S., & Kitchener, M. (2007). Evaluation of the commission’s impact assessment system. Brussels: The Evaluation Partnership.

Chapter 2

Impact Assessment – Experience from the European Commission Stephen White

Abstract The purpose of this paper is to set out in broad terms the Commission’s impact assessment system and why it has evolved in the way that it has. The chapter gives some responses to chapter one and shows, that EU Impacts Assessment may be still imperfect, but it already helped to develop a culture of analysis. To implement an impact assessment successfully, an acceptance of decision-makers and political support are needed. People must be convinced that IA will help them. From this, some experiences will then be drawn for the potential introduction of an impact assessment system in Germany.

What Is Impact Assessment? Impact Assessment is a tool to improve the quality and coherence of the policy development process. It contributes to an effective and efficient regulatory environment and further, to a more coherent implementation of the European strategy for Sustainable Development. It does so by requiring the identification of the likely positive and negative impacts of different possible policy actions, enabling informed political judgements to be made about the proposal and to identify trade-offs in achieving competing objectives. This allows for decision-makers to make their decisions on the basis of better information. Informed decision making should clearly lead to better decisions. At its heart, Impact Assessment can be broken down into a series of common sense questions: • What is the problem? • What are the objectives? S. White (B) EU Commission, General Direction for Environment, Brussels, Belgium e-mail: [email protected] The views expressed are purely those of the writer and may not in any circumstances be regarded as stating an official position of the European Commission.

K. Bizer et al. (eds.), The European Impact Assessment and the Environment, C Springer-Verlag Berlin Heidelberg 2010 DOI 10.1007/978-3-642-11670-4_2, 

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• • • •

What are the main policy options? What are the economic, social and environmental impacts of those options? What is the most favourable option? How will it be monitored and evaluation in the future? Two things are notable about these questions: • Firstly, the depth of the answer can vary considerably (an issue called “proportionality” in the jargon) • Secondly, every government organisation is already asking these questions. They are nothing new. However, Impact Assessment ensures we ask them more systematically and usually in more depth.

Why Do It? 1. Coherence. This issue of coherence is significant in major organisations. One of the areas for improvement identified for almost all organisations is the need for integrated policies that take account of side-effects and realise potential synergies. This is especially important as many of the problems faced in the future (social inclusion, climate change etc) require cross-cutting actions across policy departments. Encouraging people to talk to colleagues in other policy departments and bring them in from an early stage of policy development is beneficial to policy design. Notably, if you want a coherent system then the implication is that the system should apply to all policy areas in the same way. So, policies dealing with justice and home affairs, consumer protection, industrial policy and environmental policy should all conform to the same basic framework of policy analysis. This happens in the Commission’s Impact Assessment system with a consistent structure and top-level questions balanced by flexibility on the specifics. 2. More transparent and open decision making process. The more open the system is then the easier it is for stakeholders to contribute to the policy analysis in the form of data and opinions. This allows the Commission a better information base for its decision-making. Transparency also allows for the Commission to explain why it has reached a given decision. This can help those further down the policy design cycle – notably the European Council and the European Parliament – to consider the process and make their amendments. Finally, transparency is important in terms of accountability and showing the consideration given to a proposal by the Commission. 3. Better policies. The key purpose of Impact Assessment is to deliver better policies. The system does so by ensuring that decision-makers have a better information base from which to take decisions. Of course, the “decision-maker” is a loose term that encompasses a number of people to different degrees starting with the policy officers responsible for investigating alternative proposals and leading ultimately up to the College of Commissioners. Throughout the process of Impact Assessment, the analysis

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should open up new alternatives and allow for them to be better understood before the final decision. (This is, importantly, why it makes most sense that the people responsible for developing the proposal are also responsible for analysing it.)

Economic, Social and Environmental – Why? Classically, most Impact Assessments were called Regulatory Impact Assessments or even Business Impact Assessments. Their practice was in theory to look at “all” impacts, which implicitly covers all economic, social and environmental impacts. Some of the European Member States with the most advanced Impact Assessment systems did just this of course – explicitly covering everything that was relevant including environmental impacts. This raises the question of why did the European Commission implement an Impact Assessment process that is so explicitly focused on economic, social and environmental impacts? Firstly, the mandate for the European Commission was two-headed. 1. The Gothenburg European Council called for a sustainability assessment of the main policy proposals (SIA),1 and indeed it was the Sustainable Development Task Force within the European Commission that was responsible for setting up the Impact Assessment process. 2. The Mandelkern Group was in parallel exploring how a system for Regulatory Impact Assessment (RIA) could be used within the Commission, and their recommendations were endorsed at the Laeken European Council of 2001.2 In practice, whilst they may sound like inherently different beasts, they are almost identical. Both RIA and SIA advocate asking the same basic questions set out above and looking at “all” impacts. Although in theory the same though, SIA in practice was deemed likely to force consideration of wider impacts in practice, by explicitly mentioning economic, social and environmental impacts. In so doing, it might help to avoid one of the implementation risks in RIA that people ignore wider impacts and consider only their own area, a form of “tunnel vision”. Therefore, it might promote better coherence between different policy fields. 1 http://www.cc.cec/home/dgserv/sg/i/impact/docs/goteborg.pdf Gothenburg European Council of June 2001“the Commission will include in its action plan for better regulation to be presented to the Laeken European Council mechanisms to ensure that all major policy proposals include a sustainability impact assessment covering their potential economic, social and environmental consequences”. 2 http://www.cc.cec/home/dgserv/sg/i/impact/docs/laeken.pdf the Laeken European Council of December 2001 “welcomes the final report by the High-Level Advisory Group (“Mandelkern Group”) on the quality of regulatory arrangements and the Commission communication on regulatory simplification, which should lead to a practical plan of action in the first half of 2002”.

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Nevertheless, it is noticeable that the European Commission developed Impact Assessment and not RIA or SIA. In effect, the decision was taken for the sake of simplicity to drop the R or S, as they were seen as redundant. A possible advantage is also that it is easier to have buy-in to a process that is seen as balanced and not biased towards any particular issue. Buy-in translates into easier adoption and implementation by staff.

What Is the Commission’s Impact Assessment Process? The first part of the process visible outside the Commission is publication of the Roadmap in the Commission’s Legislative and Work Programme.3 This is a short document alerting stakeholders to likely policy proposals in the next year. It provides an overview of the issue and outlines the preliminary thinking on how any Impact Assessment will be done. In practice the thinking and work on the Impact Assessment may well have begun before the roadmap is published. The planning phase needs to consider analytical gaps, stakeholder consultation, identification of options, studies to undertake, analysis to commission etc. Inter-service Groups are a feature of Commission Impact Assessments. These encourage more systematic communication between the different DirectorateGenerals responsible for different policy areas and so better integrated policies. When the draft final Impact Assessment is available then it is sent to the Impact Assessment Board. The Board will make suggestions for improvements in the Impact Assessment, and may ask for a resubmission. The proposal along with the Impact Assessment and the opinion of the Impact Assessment Board enter into Inter Service Consultation in the Commission. This is the official opportunity for Services of the Commission to comment on and improve the policy proposal, and to comment on the Impact Assessment. After successfully completing Inter Service Consultation the package is sent to the College of Commissioners for their changes and final adoption (though Commissioners will of course have previously been involved in the process through their Services). After adoption, the Commission transmits to the European Council and European Parliament the proposal as well as the Impact Assessment and the opinion of the Impact Assessment Board.4 These are also posted on the Europe website, and so are available. The Impact Assessment itself is a Commission Staff Working Paper (SEC), usually in English but some are also in French, with the executive summary translated into all Community languages. 3 The key documents are available on the Commission’s website at http://ec.europa.eu/governance/

better_regulation/impact_en.htm exception to publication does exist, applying to Impact Assessments that are for negotiating mandates usually in the field of development. This has been applied in around 1% of cases.

4 An

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In line with the standard questions identified above, the report has a compulsory format: • • • • • • • •

Executive summary Procedural issues and consultation of interested parties Problem definition Objectives Policy options Analysis of impacts Comparing the options Monitoring and evaluation

Evolution of the IA System The proposal for the Commission’s Impact Assessment system was made in 2002, and the first Impact Assessments were produced in 2003. Since then, over 400 Impact Assessments have been published. The number per year has increased over time, reaching 135 in 2008.5 The first version of the Commission’s Impact Assessment Guidelines was published in 2003 and later versions in 2005 and then again in 2009. Each version has kept the original vision whilst trying to improve on its implementation by improving the guidance on how to analyse policies and then present the analysis. Certainly, the analysis of a policy in 2003 could be entirely consistent with the analysis of a policy in 2008 and vice versa, with the marginal exception of some of the presentation of that analysis. What has arguably changed most is the expectation over the depth of the analysis. One important element in the development of the Impact Assessment system was the external evaluation of the Impact Assessment system completed in May 2007.6 The objective of this evaluation is to review the experience with regard to the set-up, implementation and results of the Commission’s approach to Impact Assessments (IAs) and to draw lessons for any necessary development or further refinement of the system. The report drew a number of conclusions, which in general can be seen of the “some success, some failure” nature: “it is clear that while some [13 out of 20 for the sample looked at in most depth] IAs have been conducted in a way that is very likely to have helped to improve the proposals they accompany, others have clearly had no effect. “And” the IA system has achieved its objective of enhancing both external and internal communication to a relatively large extent” Looking forward, the conclusion is broadly that impact Assessment has helped and with changes to the system will be more helpful in the future. 5 Note that the numbers will fluctuate to some extent over the political cycle and the 5 year term of

office of a College of Commissioners. 6 http://ec.europa.eu/governance/impact/docs/key_docs/tep_eias_final_report.pdf

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Response to Chapter 1 People Act Differently from How You Might Expect – What Are Actors’ Motives? The background paper makes a number of assumptions that need to be addressed to explain why Impact Assessment works in its current form. 1. There is a single (potentially biased) actor. This is over simplistic, and ignores the real world in which a single Directorate General does not take decisions but rather decisions are taken collegiately. In other words, an environmental policy is not the decision of just the Environment Directorate General but for the College and has to be agreed by all Directorate General who, between them, represent every potential interest (and participate in the steering of the Impact Assessment process). Of course, any one Directorate General would say that it already avoids bias and regulatory capture. Finally, if this potentially biased actor issue was a problem, then the answer would be attempts to improve internal transparency which could quickly lead to Impact Assessment as the solution. 2. People already know what to do. Naturally, policy does not start from a vacuum. Many proposals are changes or follow-ons to an existing proposal (we will increasingly see Impact Assessments following on from other Impact Assessments in the same policy area, as well as following ex-post evaluations) and there is always a base of stakeholder consultation (including with Council and Parliament). But, whilst people will usually have some ideas, they are never sure and there are always elements that they have not thought about. As such, Impact Assessment is a good way of discovering these new elements. 3. Deskofficers judged on whether they adopt a proposal. Again this is simplistic, deskofficers are assessed not on whether a prior idea is adopted but on whether a “good” proposal is adopted and “bad” parts are dropped.

Is It Easy to Judge from Outside? The background report says that there are “serious shortcomings” in the quality of the analysis. An example is given that “consequences of reduced seal hunting on fish stocks and the remaining ecosystems are completely disregarded”.7 Note however, that the Impact Assessment does discuss this and reaches the conclusion it is not relevant (text below for ease of reference).8 So, this was discussed 7 See

Sect. 6.2.2 of the Impact Assessment available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=SEC:2008:2290:FIN:EN:PDF 8 “If the number of seals being killed is reduced this may have an impact on the respective seal population and consequently on the population of fish on which they rely for food. One of the arguments put forward by fishermen for killing seals is that it safeguards fisheries i.e. that there

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and discounted for valid reasoning. For example, only around 2–3% of the seal population is affected, seals also kill predators so may be good for fish, seals can be killed as pests. . . There are two conclusions: • Usually everything is discussed and considered but you can still reach a different decision • The Impact Assessment reports summarise the evidence and shows that issues have been considered, but can not be exhaustive or they would be too wrong to be readable.

The Real Test – Does It Help and Are We Any Good? Firstly, it is important to stress that the quality bar is rising over time. What was deemed good 10 years ago, would be deemed as average now and will probably be deemed as poor in 10 years time. That said, the quality of Impact Assessments is obviously mixed but is generally good. Some of the Commission’s Impact Assessments are extremely good – the product of years of work and analysis (for the biggest analyses the underlying studies themselves may have cost millions of Euros).9 Better Impact Assessments tend to be found in our traditional areas of more direct legislation where costs have been imposed directly on business, and so business will be a double whammy, whereby communities lose income from sealing and income from fishing because the increased number of seals reduces fishing opportunities. This is, however, much disputed. It is difficult to establish a direct link between a seal population and fish stocks in the same area. Marine ecosystems are complex and dynamic and seals are only one of many factors affecting them. Seals eat a wide range of fish and marine invertebrates, many of which are not commercially fished and some of which are themselves predators of commercially fished species. As such, seals may even be positive for fish stocks, and are certainly unlikely to have a significant impact. Furthermore, the impact of any trade ban on seal products in the EU may not have a significant effect on total seal populations, at least in relation to other factors. This should mean there is no significant impact on the fishing economies.” 9 A good example: Thematic Strategy on Air Pollution

– – – – – – – –

Work began around 4 years in advance in earnest Unit had economists steering the analysis; Policy area has history of analysis Legislation lends itself to a cost-benefit analysis Used RTD, JRC plus invested C4 million in modeling and consultancy to buy-in what we couldn’t do ourselves Quantification of costs, environmental and health impacts State-of-the-art monetisation of all aspects Analysis in advance of work done in most Member States, who use our breakdowns internally Did it cost a lot? In practice, a small investment as annual costs are around C7 billion per annum, so it pays-off and is proportionate.

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has put pressure for actions to be justified. In “newer” areas, where it is not direct legislation, there is more room for improvement? Has it helped? The broad conclusion is that it has changed around two-thirds of proposals.10 The incremental ratcheting up of the quality bar for Impact Assessment should improve this in the future; hidden but not forgotten is that systematic Impact Assessment helps encourage a culture of analysis. It has also helped the European Commission to explain contentious proposals (such as REACH).

What Are the Links with the Outside? EU rules are proposed by the Commission, are adopted by the European Parliament and Council, and national governments and parliaments transpose them into national laws. They are often complemented with regional and local rules. All of these actors have a role to play in improving the regulatory framework, and need to undertake analysis of policy proposals. This creates a virtuous feed-back mechanism as the European Commission’s Impact Assessments will be stronger if they are supported and can build upon good analysis elsewhere. 1. The other European institutions have adopted a “Common Approach to Impact Assessment”, whereby they all use the same methodology. The European Parliament and Council have a commitment to do Impact Assessments for significant amendments to the Commission’s proposals. The operation of this in practice is to be reviewed in 2009. 2. The most comprehensive review of Impact Assessment practice in Europe is being carried out as part of SIGMA – a joint initiative of the OECD and the European Union. As part of SIGMA, a review of Impact Assessment systems in the Member States is ongoing. Whilst SIGMA’s results are not yet available, the results of other surveys (such as EVIA) seems to be that the European Commission’s Impact Assessment system is more advanced than those in almost all Member States. The majority does not practice systematic and integrated analysis of economic, social and environment al impacts, and certainly do not publish it when completed.

Conclusion The quality of analysis in the Commission’s impact Assessments is increasing, but the overall quality can still improve. Generally speaking, it has met its objectives. It has increased inter service co-operation, exposed evidence gaps and forced us to fill 10 As

said before, it is difficult to say what would have been done in the hypothetical scenario of “no Impact Assessment”. This figure is based on general feedback from deskofficers and should be taken as an honest feel rather than a precise figure.

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them, provided a framework for widened consultation, improved transparency and improved policy proposals and led to some being dropped.

Planning Is Key The quality of an Impact Assessment depends on how long is spent doing it and how well that time is planned. Work needs to begin early on identifying data gaps and planning information gathering. At an early stage, therefore, there is a need to check out the level of ambition and say “this is what needs to be done”.

Stakeholders Contribute Transparently Stakeholder consultation needs to be thorough, and when it is it can offer a lot. This is why The European Commission’s Impact Assessments all include a report on the stakeholder consultation that was done during the Impact Assessment process. This consultation must be in line with the European Commission’s minimum standards for consultation. Almost always, there is no “single” consultation but rather a mix of meetings, Working Groups, internet consultation, Green Papers etc. This consultation is undertaken to get both facts and opinions across all of the issues – stakeholders can help in identifying the problem, the possible options and in describing how they will respond to different policy measures. One key is to consult all interested parties, this helps especially to show different tensions and trade-offs and to avoid biased analyses (which is, in practice, rarely a problem).

What Does the Support Unit Provide? In the European Commission almost every Directorate General has a unit that provides support for Impact Assessment. These units are often also responsible for general economic advice. The support they provide is often adjusted according to the different policy unit’s needs. • An increasing number of policy units have specialised knowledge in analysis of their areas so the support unit will act as an informal process consultant, providing consistency between IAs and general advice • For other units, the support unit will provide economic expertise in costs and benefits analysis, modelling, value of health impacts, use of market based instruments etc It is always the case that the deskofficer in a policy unit needs to be provided with support as they go through the Impact Assessment process. This support needs to

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include clear guidelines but, for those who are new to the issue, individual hands-on support is essential.

Principles of the EU System In the discussions of the potential German system for Impact Assessment, many of the issues that came up for the Commission’s system apply as well and are instructive. Of course, though, what works in the Commission may not work in the German institutional setting. Successful Impact Assessment systems tend to be similar but tailored to the specific case.

Proportionality The detail and depth need to vary with the likely impacts: • A Communication setting out broad proposals (e.g. a Consultation document), will focus most on identifying the main options and issues and promoting an informed debate • A Legislative proposal will need to be accompanied by a more concrete and indepth analysis, allowing informed political judgement There is no hard-and-fast rule, but generally the more binding or costly a proposal is likely to be then the more analysis you need. This is hard to understand as the rule is subjective – what is expected changes over time. However, it is impossible to provide an objective rule for depth. Also, with experience, a cultural expectation evolves that allows for depth of analysis to be consensually agreed on.

No Thresholds There is often talk about applying Impact Assessment only to proposals with benefits or costs of more than X million Euros. The problem is that this is rarely known in advance (and big surprises over magnitude of impacts do happen frequently), and it is unclear how such thresholds can be used for non-monetised environmental and social impacts. The Commission has instead relied on a link to its legislative Programme. Anything in it, gets a proportionate Impact Assessment. Some people still find this unsatisfactory (some people criticise the Commission for doing Impact Assessments of policies that are too marginal). On the other hand, many people believe that it is reasonable to expect an informed analysis of any proposal bearing in mind that such analyses can be quickly and cheaply done and the principle that all decisions should be informed.

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Compare Costs and Benefits The Commission is extremely strong on promoting the comparison of costs and benefits (unless the target is set in an earlier Impact Assessment). However, this should not be interpreted as an attempt to derive the net present value of action for every option. It is unreasonable to expect to quantify everything (so this is not a financial Cost Benefit Analysis). In many cases, a qualitative assessment of pros and cons is proportionate. That said, the cultural shift over time is towards more quantification. This is in line with the principle of “qualitative then quantify then monetise” for analysis of impacts that is set out in the Impact Assessment Guidelines.

Not Voluntary Although people claim that they have fully thought through their policy proposals, they are naturally reluctant to commit the process and rationale to paper for outside scrutiny. This exposes them both to attack for the decisions made, and also takes resources. Therefore, Impact Assessments need to be a requirement and not a voluntary exercise. Of course, if the system is not to be voluntary then it needs to be policed internally.

Integration In the past, Impact Assessments in some Member States and the Commission were cut up into constituent parts (business, social, environmental impacts all separate). This rarely worked well. For an Impact Assessment system to work, it is best if everyone applies a single set of rules proportionately: a single integrated Impact Assessment of economic, social and environmental impacts. Of course, if the proposal has no environmental impacts then a proportionate assessment of them would be one line saying that there are no environmental impacts. The system does not need to be bureaucratic.

Valuing Non-marketed Goods There is a question asked in the background paper about whether we should monetise environmental impacts. The Commission approach is to do so, where reasonable. Overall, the framework is “qualitative, quantitative, and monetary where possible”

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One of the arguments for doing so is that where we don’t do it explicitly, we do it implicitly anyway. In practice, we have made wider use of value of a statistical life than for environment, as health impacts are easier to aggregate.

Should You Discount? The question is also asked in the background paper about whether we should apply the same weight to impacts in the future. The Commission uses a 4% real discount rate.11 In practice, there is very little dissent to the principle of discounting and the argument is around what the discount rate should be. In truth, there is no single right answer – justifications can be made for figures between 2 and 6%. But, for the sake of consistency it is important to have a single number used. Perhaps it is useful to set out a relative order of importance – do an analysis – quantify as far as possible – have a discount rate – choice of the discount rate. In other words, the choice of the discount rate should not be the central issue in an analysis. In practice, perhaps only a third of Impact Assessments have quantified impacts that need monetising and of these it is quite possible that only a handful (if that many) will be sensitive to impacts more than 30 Years or the choice of discount rate.

Independent Agency? The basic principle of properly functioning Impact Assessment processes is that the assessment should be done by the people who design the policy. Why? Well, they are the ones who need to understand the impacts and they are most likely to understand the implications of their policies if they have thought them through themselves. Also, they are best placed to pull information together. On a purely practical level, even during a process of a few months, analysis done elsewhere could quickly diverge from the options being considered and so be irrelevant for helping in policy choice. Finally, government civil services are supposed to be independent in their preferences – the same is not the case for stakeholders. Therefore, the role for others is perhaps strongest in scrutiny and checking (which US academia is particularly strong at).

Support Is Needed For an Impact Assessment process to work support is needed and resources must be allocated to it. In particular, guidelines should be as common sense as possible and free of economic jargon given the audience. Moreover, hands-on support is needed throughout the Impact Assessment process. 11 So

C100 in a years time is equivalent to C96 today (i.e. 100 ∗ (1 –- 0.04)).

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The Impact Assessment Board The Impact Assessment Board of the European Commission was launched by President Barroso on 14 November 2006. It is an “Independent body” with the purpose of ensuring good quality of the Commission Impact Assessments. The members are Directors from the Directorate General for: Environment, Economic and Financial Affairs, Enterprise and Industry, Employment and Social Affairs. As such, the Sustainable Development pillars are all present. The chair is the Deputy Director General of the Secretariat General. These senior-level officials are appointed in a personal capacity and on the basis of their expert knowledge. While Board members are expected to contribute the specific expertise of their departments, they act in a personal, expert capacity and are not instructed to take any specific policy line by their home departments. Their role is to provide expertise on the quality of the impact assessments, not to take positions on the policy options. The main tasks are: • Assess the Impact Assessment reports before the Commission adopts proposals they accompany • Give quality support for horizontal and methodological aspects • Advise if a Commission proposal should be accompanied by an impact assessment It is instructive to consider how the Board works. • Is the Impact Assessment in the planning for the Board? • Send the Impact Assessment to the Board 4 weeks before the proposal is due to be launched into Inter Service Consultation with other Directorate Generals • The Board secretariat distributes it to the Members and their support staff • An Impact Assessment Quality Checklist is prepared • Set of main questions (3–5) to the responsible Directorate General • Set of detailed comments/questions on all the main elements • Decision on whether written or oral procedure • Oral procedure, the responsible Directorate General needs to attend Board meeting. Then, there will be a detailed discussion based around questions in IAQC • Written procedure • Respond in writing to questions in IAQC • Board prepares an opinion (possible resubmission) In 2008 the Board examined and issued an opinion on 135 impact assessments. It discussed 101 (or 75%) of these with the author service in the 26 meetings it held in the course of the year. The Board examined the remaining 34 impact assessments in written procedure. The resubmission rate in 2008 was 32% (or 43 out of 135). This was an increase on the year before, and reflected a desire to increase the quality of the Commission’s Impact Assessments.

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In general there was an improvement in quality perceived. The Board’s report notes that there was an “improvement in the internal coherence of the impact assessment and in the extent to which they comply with the structure and approach which is laid out in the Guidelines. This took place against a backdrop of Commission services gaining more experience and investing more in background analysis. As a result, the discussions between the Board and the author services have moved on from these structural issues to more advanced issues such as the level of detail that is needed in the assessment of various impacts.”12 Transparency is maintained through making the opinion available to the author DG and other DGs after IAB adoption, so that it can be referred to in the Inter Service Consultation on the proposal. It is also published externally after adoption of the proposal by the Commission The conclusion about the Impact Assessment Board is that it: • provides a serious assessment of each Impact Assessment • has led to an incremental ratcheting up of quality of assessment, leading to better proposals • has not second guessed policy decisions

Conclusion Impact Assessment can help lead to better policy proposals. However, it has to build upon an embedded culture and to do that it needs to be a serious measure and not a half-hearted attempt. Some of the enabling factors can be seen as: • • • • •

Need to convince people it will help them Need to convince people they need to do it Need to provide them with immediate technical support and guidance Need to introduce culture of transparency Need acceptance of decision-makers to analysis (to inform them, not replace them) • Need culture of analysis to develop (with quality control function introduced) • Need political support

12 http://www.cc.cec/iab/i/docs/key_docs/sec_2009_0055_en.pdf

Chapter 3

Views of the European Environmental Bureau on the Commission’s Impact Assessment Procedure – With a Focus on Environment Pendo Maro

Abstract EEB’s experience pointed out in this chapter shows a genuine need for further investments in data collection – to identify and collect the relevant data needed for impact analysis and to invest in finding appropriate methodologies – qualitative or quantitative. Our assessment also identified the danger of political influence in impact assessments, which could lead to inappropriate trade-offs and policy choices based not on objective information but on political interests and influence. The need for improvements in transparency – of data, methods and stakeholder participation, and improvements in the consultation modes were also addressed.

Introduction Introduction to EEB The European Environmental Bureau (EEB) is a federation of over 145 environmental citizens’ organisations in EU Member States and beyond. EEB has been working since 1974 with the mission to be an effective instrument in visibly improving EU’s environmental policies and achieving sustainable development by effectively integrating environmental objectives in horizontal and sectoral policies of the EU as well as ensuring compliance of such policies at the EU and national levels. EEB works on a wide range of policy areas such as air, water and waste policies as well as on sustainable development and environmental governance. Its tools include working groups formed by national member organizations and collaborations with other partners in Brussels such as the Green Ten1 informal coalition of environmental organisations working on the EU level and non-environmental partners.

P. Maro (B) European Environmental Bureau, Brussels, Belgium e-mail: [email protected] 1 http://www.eeb.org/index.html

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EEB views impact assessment as a tool for environmental policy integration, more specifically, as a tool to promote the environment dimension of sustainable development. The view that sustainable development should be the central objective of all sectors and policies is emphasized in the Treaty of the European Community (EC). According to Article 6 of the EC Treaty [European Community, 2002]2 Environmental protection requirements must be integrated into the definition and implementation of the Community policies and. . . in particular with a view to promoting sustainable development.

EEB and its allies have been instrumental to ensure inclusion of this Article in the EC Treaty. Our involvement in this work dates back to the late 1990s. The 1998 Cardiff European Council decided to make the Council of Ministers responsible for implementing Article 6, but the so-called “Cardiff processes” never really delivered effective integration of environmental policy into other EU policies nor has it effectively protected the environment. Despite this, it raised the profile of Article 6 and gave a political backing for work on environmental policy integration within Council formations. The Commission launched its impact assessment procedure in 2002. EEB was worried about the possible marginalisation of Article 6 in the Commission impact assessment work. Therefore, EEB decided to launch an “Article 6 Watch” project which became operational in mid-2003. The aim of this 1-year project was twofold: • Council watch: to assess the relevant Council agendas meant to promote the systematic inclusion of the environment. In parallel, ensuring that Council strategies meet their Cardiff obligations as required; EEB to intervene when this is not the case • Impact assessment: systematically following the impact assessment procedure inside the Commission and intervening when needed. This part of our work is still going, past “Article 6 Watch” project. Our experience with the impact assessment tool is presented in subsequent sections below. First, a brief background on the political context of impact assessments is given below. Then we discuss the methodology and results of our assessment of the Commission’s impact assessment procedure. Thereafter, we give suggestions for improving the impact assessment procedure, and lastly, a short conclusion.

Brief Background on Impact Assessments In 2002 the European Commission launched a new impact assessment procedure, replacing sector-based impact assessments. The new impact assessment procured requires assessment of economic, social and environmental impacts of European

2 http://eur-lex.europa.eu/en/treaties/dat/12002E/htm/C_2002325EN.003301.html

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Commission proposals, starting from 2003. Political origins of impact assessment lay within the 2001 Göteborg European Council and the 2002 Laeken Council and its commitments to work on “better regulation” and simplification of the regulatory environment. Impact assessment is aimed at improving policy coherence (through assessment of economic, social and environmental impacts); result in evidence-based policy-making; simplicity and comparability of policies (away from single-sector assessments) and increased transparency in policy-making. According to the Commission3 : “Impact Assessment is 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.” Therefore, impact assessment is meant to be a tool to support decision-making and not replace it. The first impact assessment guidelines published in 2002 [COM (2002) 276 final] were revised by the Commission in 2005 and supplemented with two annexes in 2006 [SEC (2005) 791], to include a methodology for assessment of administrative burdens, Composition of Inter-Service Steering Groups and later in the year, the Commission President appointed an independent Impact Assessment Board to monitor Commission’s application of impact assessment in order to ensure quality control. An external evaluation of the Commission’s impact assessment tool was carried out in 2006/07. This evaluation and the independent Impact Assessment Board triggered another revision of the impact assessment guidelines in 2008, marked by an on-line stakeholder consultation (June/July). The Commission has yet to publish the revised Guidelines, expected in early 2009. EEB has been involved in a number of impact assessments carried by the Commission, as a stakeholder. We have subsequently assessed application of the Commission’s impact assessment guidelines since 2003 and the revised guidelines 2005/2006 and draft 2008. Our main focus has been ensuring that environmental (and social impacts) of environment policy are considered in impact assessments, look for effective public participation and check for quality of impact assessments and the role an impact assessment plays in decision-making. A more detailed presentation of our assessment is given in the coming sections.

Is Impact Assessment a Tool for Better Decision-Making? Assessing the Impact Assessment Procedure The main objectives of our assessment of the impact assessment procedure are to evaluate whether:

3 http://ec.europa.eu/governance/impact/index_en.htm

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• it takes sustainable development as a starting point or objective (as explicitly stated in the guidelines) • gives sufficient attention to the environment (and social) dimension • whether it includes effective public participation during the process and feedback • and its role in decision-making. Our initial assessment of application of the impact assessment procedure was in 2004, when we assessed impact assessments carried out by the Commission during the “pilot” year, 2003.4 Then, as part of our contribution to the Commission’s “Evaluation of the Commission”s Impact Assessment System5 ’ in end-2006, we evaluated application of the Commission’s 2006 impact assessment guidelines and our experience as stakeholders in selected consultations. Furthermore, we continued to make presentations, contributions and are involved in various discussions and events that seek to gather views of different stakeholders on the Commission’s impact assessment procedure and its revision in order to identify gaps, shortcomings and suggestions to address these.

Methodology Firstly, we selected which impact assessments to assess, based on their relevance to the environment. For example, from the list of 43 impact assessments that were foreseen in 2003, we excluded those with no obvious links to environmental issues. For the “pilot” year, we then studied selected6 individual impact assessments and carried-out interviews with Commission officials. We developed and used a checklist of questions [Annex 2] for the assessments and interview with relevant Commission officials. We also gathered general remarks about: • • • •

the availability of impact assessment documents consistency of impact assessments with operational guidelines comparability of impact assessments and the quality of consultation and reporting.

For our subsequent assessments of the Commission’s application of the impact assessment procedure, we continued using the checklist [Annex 2], sometimes adapting it to reflect relevant changes in revised impact assessment guidelines. In the section below we present the result of this exercise, which covers all our assessments to date. 4 http://www.eeb.org/activities/integration/Article6watch-report-to-member-june04.pdf 5 http://www.eeb.org/activities/General/EEB-input-to-IA-evaluation-301106-FINAL.pdf 6 http://www.eeb.org/activities/integration/Article6watch-report-to-member-june04.pdf (ANNEX I

and II).

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Results Our view is that impact assessment is a useful process; one that can provide additional information to decision-making, particularly through the inclusion of a number of stakeholders’ views, and thus enrich the decision-making process. In this light the guideline’s general aim of systematically analysing the environmental; economic and social impacts in relation to the problem, objectives, and proposing alternative options, advantages, disadvantages, and others could be commended. However, impact assessments and their “participative” aspect continue to suffer a number of shortcomings, which potentially reduce the effectiveness of the procedure and their role as an aid to better decision-making. Findings on Process and Content Sustainable development is not the overriding objective; focus is on administrative burdens and economic impacts One of the fundamental shortcomings of the impact assessment tool is the fact that sustainable development is not always explicitly considered as the central objective of impact assessments. Thus, inherently, the integrative element of impact assessments and its link to the three dimensions of sustainable development risks dilution. Linked to this is the increasing focus on competitiveness, which often results in a bias towards quantitative/cost-benefit assessments of economic impacts and an increasing focus on economic impact assessment, at the expense of the environment and social dimensions and potential positive impacts associated with considerations of the environment and social dimensions. The current guidelines and the 2008 draft Commission impact assessment guidelines also emphasize assessing administrative burdens. The lead Commission Directorate General (DG) in charge of an impact assessment can also influence the weight attached to the different impacts. For example: DG Environment, in most cases, placed an emphasis on ensuring that the environment dimension of policies originating from their DG (and to some extent other DGs), adequately considered the environment dimension. Inappropriate and Inaccessible Data and Methodology The choice of methodology used to assess impacts influence the outcome of an impact assessment and the choice of options. Quantification methods and cost-benefit analysis may not always be the most appropriate or in some cases may be limiting by focusing on monetisation of impacts, which is not always possible or appropriate. Appropriate data and methodologies for calculating positive and negative environmental and health impacts are sometimes still unreliable. Furthermore, when the impact assessment is based on comparing several policy options (to favour one and discard the others in the end), the very choice of the initial

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options is already introducing a bias. The list of scenarios assessed should include all those proposed during consultations and be assessed properly. Otherwise, some scenarios supported by some stakeholders might be discarded in the process just because of a lack of assessment. Regarding access to data, it is common that the economic part of the impact assessment relies heavily on data provided by the very private companies that will be affected by the policy. Several examples show that the quality of this data is then questionable or insufficient. Therefore, the Commission should be encouraged to increase the availability of alternative expertise on economic, industrial and competitiveness aspects. In the impact assessment for EURO 5 (DG ENTR), for example, the process as well as data verification was inaccessible to Non-Governmental Organisations (NGOs) due to claims of confidentiality. Policy Proposals Not Always Linked to Appropriate Information Provided by Impact Assessment The purpose of impact assessments is to aid decision-making, partly by providing a choice of alternative policy measures based on a thorough analysis of their negative and positive impacts on the environment, economy and society. A policy proposal should then identify measures that can avoid negative impacts or promote measures that can deal with identified negative impacts, while enhancing positive impacts. The impact assessments for Biofuels Strategy and Biomass Action Plan made it clear that there would be serious impacts on the environment, competition with food etc but then in the Communications it remained very unclear how those impacts were going to be addressed and avoided. Furthermore, new information and studies emerged on the subject after publication of the Communication and before publication of the legislative proposals putting ever louder question marks to the direction proposed. Yet, these were explicitly ignored or rejected as they were contradicting political decisions already taken. A best case example of impact assessments is that on the Thematic Strategy on Air (lead by DG Environment). It was good, detailed and ambitious (particularly in terms of resources and efforts) and the process was transparent. However, the policy proposals were based on calculations of the business-as-usual scenario which were based on “false” assumptions – assumptions based on 3.6% CO2 reductions between 1990 and 2020 instead of 15–30% CO2 reductions by 2020 as previously agreed by EU Heads of States and governments. Therefore, by basing the policy options on the “faulty” former and not the latter model, the real potential for reducing CO2 emissions has been underestimated giving the false impression that ambitious environmental targets are very costly or even “unattainable” which leads to a general lowering of ambition for the strategy. Inadequate Justification for Ignoring Policy Options An example of the worst-case impact assessment is that on the Thematic Strategy on Waste (lead by DG Environment). The consultation process was very poor and

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there was no feed-back on the decisions taken by the Commission. The quality of the impact assessment was very poor, many policy options were ignored and the reason for their rejection was based on many unjustifiable assumptions; In addition an incomplete background analysis was made. Another example is that the impacts of change proposed to the Waste Framework Directive were not adequately assessed. Take the proposal to reclassify incinerators using an energy efficiency formula in Annex II7 where the necessity to use such a formula as opposed to using the criteria from Jurisprudence were not assessed. Legislation on large waste streams such as biowaste and construction waste and simple targets on prevention were not examined. On biowaste there was no assessment of the option of legislation on biodegradable waste and no assessment of impacts of non-action. Also on waste oils no comprehensive impact assessment and stakeholder consultation was performed.8 Political Misuse of Impact Assessments While general statements are made that impact assessment is just an information tool to aid decision-making, in reality in some cases such assessments have a central role in decision-making. A clear example of the political misuse of impact assessment, in our experience, is seen in the EU chemicals regulation, REACH (DG Environment is co-DG). First, no impact assessment was required, but due to political pressure an impact assessment was carried-out to justify the proposal. Pressure from industry stakeholders led to another impact assessment being negotiated between Commission and industry in an unprecedented way. At the end NGOs were invited, but with severe limitations. Although industry could control most of the impact assessment design, a minimum of transparency reduced the possibilities of bias and finally industry failed to confirm its claimed massive negative impacts. Nevertheless the follow-up was politically negotiated between DG Enterprise and Environment; and EU Commissioner for Enterprise and Industry decided to highlight problems faced by Small and Medium Enterprises (SME) that were not at all confirmed by the study – on the contrary. The consequences of this misuse of impact assessments could be a flawed design of REACH (registration requirements) with negative consequences for business in general and public health, but to the benefit of a few companies. In the impact assessment for the revision of the Eco-design Directive, for example, due to controversy on the “scope” at a high political level in the Commission, the policy option selected, “extension to energy related products” was chosen without even having been assessed. 7 See

http://www.eeb.org/activities/waste/20060630-Okopol-Brief-on-MSWI-efficiency-formulav5-final.pdf and “EEB’s key concerns with Commissioner Dimas’s letter and note to MEP Florenz (24/8/2006) assessing the potential impacts of the proposal to use an energy threshold to distinguish between municipal incinerators that are disposal installations from those that are recovery.” 8 EEB Comments on the Commission Staff Working Document – Impact Assessment on the Thematic Strategy on Prevention and Recycling of Waste and the immediate implementing measures; February 2, 2006.

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Quality Concerns We found a general “quality” difference between legislative versus non-legislative, “broad” policy proposals. We had mixed views on whether it was necessary to carryout impact assessments on non-legislative proposals whereby the impacts of policies are not clearly outlined and the policies are more “broad”. The 2008 draft Guidelines try to address this issue by providing guidelines on the proportionate level of analysis for the different types of policy initiatives. An example of such a broad proposal is the Commission’s Green and upcoming White Paper on Adaptation to Climate Change. As it is proposing no hard policy tools such as new legislation or new funding lines it is very difficult to assess the impacts of these first steps in this new policy area. This is of course also linked to a trend within the Commission towards less new proposals, in favour of more consolidation and more framework legislation. Findings on Stakeholder Participation Timing and Restricted Participation In general, the Commission’s timing of stakeholder consultations has improved. However, in some cases transparency remains an issue. To allow stakeholders to fully contribute to the decision-making process, well-timed invitations to all affected/interested stakeholders ought to be the norm. The Commission should strive to avoid the creation of opaque sub-groups that deal with certain aspects of an impact assessment. For example: in the impact assessment for the Directive restricting the marketing of certain measuring equipment containing mercury (lead by DG ENTR), environmental and health NGOs were not invited to take part in the “Restrictions” working Group, whereas industry stakeholders were. A particularly bad case was the consultation by DG Agriculture on the Common Agriculture Policy (CAP) Health Check proposals in 2007–2008. Consultation on the Commission’s proposal was planned over the Christmas holidays, effectively cutting out 2 weeks in an already very short period of time for on-line consultation. Moreover, the kick-off conference for the consultation took the format of DG Agriculture’s CAP advisory committee’s with a limited and fixed number of seats allocated – with most of the seats going to producers’ organisations and little to environmental or consumer groups. The results of the online consultation where put on the internet but without any clarification about what was done with them or how they had affected the final proposals, except for broad brushed statements that “the majority of the comments supported the overall direction of the proposals”. Another example: under the Ecodesign of Energy-Using Products Directive, a broad Consultation Forum has been established to systematically discuss early draft policy proposals from the Commission for each implementing measure. This seems a good transparent process introduced in the legislation. However, the impact assessment studies following the Forum consultation are then non-public, opaque and heavily based on questionable data from manufacturers of the products. Stakeholders have access to the study only when the implementing measure is published in the Official Journal, which is way too late to react.

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Reasons for Stakeholder Consultation and Lack of Feedback Stakeholders need to be clearly informed on the purpose of a consultation in order for them to respond effectively: is it input for an impact assessment? Or is it a general consultation on the policy proposal? This was unclear in, for example, the consultation on the Biofuels Directive (led by DG TREN). But there is also a good example to be mentioned: for the impact assessment on the proposed regulation for EU Mercury export ban (led by DG Environment). DG Environment organised a stakeholder meeting with a clearly indicated purpose. The resulting comments submitted by stakeholders (in this case, environmental and health NGOs) were acknowledged in the explanatory memorandum and in the impact assessment report. Effectiveness of Stakeholder Participation Effectiveness of stakeholder participation is partly determined by human and financial resources; mode of consultation (e.g. internet versus face-to-face); nature of environmental impacts and capacity of stakeholders to provide necessary information as a result (e.g. non-quantifiable, long-term intergenerational issues versus monetised impacts) and also previously mentioned issues such as timing of consultations and feed-back. In our experience, these issues have played a role in influencing our effective participation in impact assessment consultations. Influence of Stakeholder Participation It is not easy to determine what influence stakeholders have on an impact assessment or on the resulting choice of policy options. In the rare case where there is feedback and acknowledgement of stakeholder input (e.g. example on Mercury export ban consultation), we can somehow see to what extent our input has made a difference. Otherwise, we try mainly to highlight environmental concerns and prevent them from being ignored. We would like to emphasise that transparency in availability of impact assessment reports and consultation results has greatly improved since the “pilot” year 2003 with the publication of Commission’s central web-site where planned and on-going impact assessments and consultations can be found. We welcome and applaud this. The 2008 draft impact assessment guidelines also go further in trying to improve stakeholder participation, by offering guidance to clarify some of the issues raised above on effective stakeholder participation. However, it still remains a challenge to ensure effective stakeholder participation, not least because of the limits of the favoured mode of consultation (internet-based close-ended questionnaire), but also largely because of limitations (financial/human) in stakeholder capacity. As can be seen from these results, although impact assessment is a theoretically a good process and useful tool in decision-making, it is not yet a perfect tool to help achieve better decision-making.

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The next section offers some proposals towards improving Impact Assessment, particularly as relates to the challenges highlighted above.

Proposals to Improve Impact Assessment for Better Decision-Making Below is our list of proposals to improve the Impact Assessment procedure, in order to make it an effective tool to aid decision-making.

Proposals to Process and Content • Make sustainable development and its environmental dimension a systematic main criteria for any impact assessment • Increase investments in data collection and assessment methods, with a special focus on non-tangible health and environmental impacts. Ensure full transparency in data verification and validation to increase acceptability • Improve overall quality of impact assessment methods. Improve guidelines on the availability and appropriate choice of methods and invest in data collection and assessments. Promote alternative and independent expertise, to avoid relying only on industry numbers. • Link results of impact assessments to policy proposals – in order to enrich policy-making – and ensure informed decisions are made. Guard against politically-motivated assessments based on inappropriate data for political or other justifications, which would otherwise constrain the policy-making process

Proposals to Improve Stakeholder Consultation • Clarify purpose of stakeholder consultations and give clear feed-back on how stakeholder input was used and followed • Consultations should be well-timed, adequately communicated to all potential stakeholders; background material should be provided in good time • Introduce broad stakeholder consultation not only on early policy drafts but also on impact assessment studies, quality and availability of data, choice of scenarios assessed and methodology used. Circulate draft impact assessment results for comments. • Consider giving financial support to non-profit oriented stakeholders that defend general interests so that they can have the necessary expertise needed for consultations and also so to facilitate their participation • Limit the use of on-line consultations, particularly the use of multiple choice questionnaires. Such questions in most cases constrain effective stakeholder participation during consultations. Instead, the focus should be on consultations that generate real dialogue. The Commission should also improve the quality of on-line questionnaires.

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Conclusion EEB welcomes the Commission’s impact assessment tool and applauds the Commission’s efforts at improving it. We stress our view that impact assessment is part of the tools for environmental policy integration. It is particularly meant to ensure that any potential environmental, social and economic negative and positive aspects of a policy proposal are adequately assessed so as to identify the best possible policy option. However, we do see an increasing focus on assessments of competitiveness and administrative burdens. The impact assessment is expected to lead to a more integrative approach to policy-making, improve coherence in policy-making and the possibility to consider long-term, intergenerational issues together with short-term issues. But, as our experience has pointed out in the previous sections, long-term, intergeneration issues are still difficult to assess in impact assessments and there is a genuine need for further investments in data collection – to identify and collect the relevant data needed for this, and to invest in finding appropriate methodologies – qualitative or quantitative, for the analysis of such impacts. The need to improve the general quality of impact assessments was also identified. This is despite recent existence of the Inter-Service Steering Group and the Impact Assessment Board. Our assessment also identified the danger of political influence in impact assessments, which could lead to inappropriate trade-offs and policy choices based not on objective information but on political interests and influence. The need for improvements in transparency – of data, methods and stakeholder participation, and improvements in the consultation modes were also addressed. Stakeholder participation is absolutely crucial to enrich the policy-making process, ensure representation and acceptability of policy choices. Support for improved participation of non-profit organisations that defend the general interests should be considered a necessity. In conclusion, we stress that the requirement to integrate environmental protection into the definition and implementation of EU policies and activities is enshrined in the EC Treaty (European Community, 2002). The ultimate aim of this integration is to promote sustainable development. Finally, an impact assessment should fulfil the following conditions: transparency, accountability and openness.

Chapter 4

The Proportionate Impact Assessment of the European Commission – Towards More Formalism to Backup “The Environment” Michael Schmidt, Eike Albrecht, Hendrike Helbron, and Dmytro Palekhov

Abstract The paper reflects main findings from a presentation on “Problems and challenges of the EU impact assessment with emphasis on environmental aspects” presented on the International Workshop “Improving the integrated European impact assessment?” from 15th to 17th September 2008 in Berlin. The discussion concentrates on an analysis of the EC communication and guidelines on IA on the consideration of environmental issues and draws a conclusion with recommendations for an assessment tool, which supports a more transparent assessment of environmental impacts in the future. This addresses particularly Directorate Generals of non-environmental policy such as the DG Trade, where desk officers have limited experience in the selection of methods to assess environmental impacts.

Introduction Different evaluations of the European Integrated Impact Assessment (IA) process since 2005 underlined an insufficient consideration of environmental aspects. Therefore many experts called for the improvement of the proportionate impact assessment and the application of assessment methods and tools in IA (e.g. Hertin, 2005; Volkery and Jacob, 2005; Bizer et al., 2008a). The paper reflects main findings from a presentation on “Problems and challenges of the EU impact assessment with emphasis on environmental aspects” presented on the International Workshop “Improving the integrated European impact assessment?” on behalf of the German Federal Environment Agency from 15th to 17th September 2008 in Berlin. This scientific discussion concentrates on an analysis of the EC communication and guidelines on IA on the consideration of environmental issues and will draw a conclusion with recommendations for an assessment tool, which supports a more M. Schmidt (B) Department of Environmental Planning, Brandenburg University of Technology (BTU), Cottbus, Germany e-mail: [email protected]

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transparent assessment of environmental impacts in the future. This addresses particularly Directorate Generals (DGs) of non-environmental policy such as the DG Trade, where desk officers have limited experience in the selection of methods to assess environmental impacts. The overall objective of IA is to ensure that all policy objectives comply or do not conflict with the objectives of sustainable development. As it shall give input to decision-making and present mitigation options and alternatives, ideally a high quality of the process and its results is initiated already at an early stage of the IA process.

European Environmental Policy and Impact Assessment The protection of the environment is one major concern of European policy. In the meantime, the European Court of Justice has accepted in various decisions a certain priority of the protection of the environment in comparison to other policy fields (Callies, 2007: Art. 174 no. 15). To guarantee the specific meaning of the environmental protection the European treaties since the European Single Act from 1986 consisted of provisions for the protection of the environment and for the consideration of environmental concerns in European policy. Art. 6 of the EC Treaty requires that environmental concerns are integrated in the definition and implementation of those Community’s activities which are named in Art. 3 of the EC Treaty. Those activities are related to the different policy fields of the European Community, like environment (para 1 l.), transport (para 1 f.), agriculture and fisheries (para 1 e.), trans-European networks (para 1 o), research and technological development (para 1 n.), consumer protection (para 1 t.) energy, civil protection and tourism (para 1 u.), just to mention the most important in relation to the environment. Not included is the currency policy, including all activities for implementation of the common currency Euro, because it is regulated separately in Art. 4 EC Treaty (Geiger, 2004: Art. 3 no. 1). Article 6 EC Treaty: Environmental protection requirements must be integrated into the definition and implementation of the Community policies and activities referred to in Article 3, in particular with a view to promoting sustainable development.

Art. 6 EC Treaty applies for all activities of the European Community which have reached a certain status and bindingness as the term “definition and implementation” in Art. 6 EC Treaty shows. This includes of course all legislative activities and furthermore all major preparatory action, in particular green- and white books, but also individual actions (Callies, 2007: Art. 6 no. 10). The procedure for environmental assessment of those activities is not regulated in Art. 6 EC Treaty; therefore different procedures for different activities are possible. Art. 6 EC Treaty contains the so called “cross-cutting clause”. It refers on the environment mainly in respect to sustainability. Additionally this provision is linked to the more specific Arts. 174 ff. EC Treaty in Title XIX – Environment of the EC

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Treaty (Geiger, 2004: Art. 6 no. 4), in particular to the principles of Art. 174 para 1 and 2 EC Treaty (Callies, 2007: Art. 6 no. 5). Furthermore, the principles of Art. 2 EU Treaty, in particular the principle of sustainable development, can be addressed for the definition of environmental concerns in respect to Art. 6 EC Treaty. Art. 6 EC Treaty itself is quite open. The objective is, to consider environmental concerns in activities in other policy fields. But it does not give environmental concerns a priority or justifies environmental policy making in the shape of another policy (Geiger, 2004: Art. 6 no. 5). Art. 6 EC Treaty does not regulate a procedure, how environmental concerns have to be introduced into other policy activities and, it does not regulate the extent of consideration of the environment. This was subject of Declaration no.12 of the Amsterdam Treaty1 on environmental impact assessments. With this declaration the Conference noted that “the Commission undertakes to prepare environmental impact assessment studies when making proposals which may have significant environmental implications.” This commitment of the European Commission is legally binding (Geiger, 2004: Art. 6 no. 7) and the basis for further activities in the field of Impact Assessment in relation to the environment.

Communication and Guidelines on Impact Assessment The Impact Assessment process of the European Commission was legally adopted in 2002 with the Communication on Impact Assessment (EC, 2002). It was implemented with increasing expertise since 2003 for policy proposals of the European Commission’s Legislative and Work Programme (“major initiatives”) by the respective Directorate-General responsible for the policy (the “lead DG”). Major initiatives are regulatory initiatives, expenditure programmes, negotiating guidelines, international agreements or white papers, to be released at EU policy level. IA requires a substantive integration of economic, social and environmental concerns; it thus includes no separate procedure for environmental assessment. IA is central to the policy-making and legislative processes of the European Union. The Work Programme, IA “roadmaps” as well as planned and carried out IA are published on the internet. The 2008 list includes all kinds of sectors, from spatially relevant, such as the transport sector or climate change, to energy, migration or health issues. As impact assessment is a key tool of the Better Regulation Action Plan and of the European Strategy for Sustainable Development, it should beside a comprehensive sustainability assessment contribute to reducing bureaucratic costs and effort: “an important part of making better laws is having a full picture of their economic, social and environmental impacts, including the international context” (EC, 2006, p. 7, see also Donelan, 2006). Therefore the Commission set up the integrated system for IA

1 Treaty

of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts, signed on 2 October, OJ C 340, p. 1.

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and issued guidelines. In June 2005 first IA guidelines, which set methodological and procedural standards, were adopted by the EC (EC, 2005). A major alteration to these guidelines was released in January 2009 (EC, 2009).

Consideration of Environmental Concerns in Impact Assessment Currently the assessment of environmental impacts requires further improvement, as these are still often overweighed by quantifiable economic concerns. Hertin (2005, p. 31) stated that “anticipating environmental effects in detail is frequently very difficult – especially in areas with uncertainty, lack of data, external effects and complex causal chains”. In 2009 still a number of IAs of important policies does not address environmental impacts in adequate detail. Some lead DGs have better expertise (e.g. Transport DG for Trans-European transport network) than others, which traditionally did not intensively integrate environmental concerns into decision-making such as DG Trade. Although there is improvement and a tendency of learning by doing, some IA reports in the past merely stated that there are “no” or “no significant” expected effects on the environment (Hertin et al., 2004; Wilkinson et al., 2004). Consequently the main objectives of this paper are recommendations for improvements of the quality of environmental assessment as part of IA: • consider all likely environmental impacts and their significance; • increase transparency, clarity and objectivity of IA report findings; • widen the view on problems, initiate the presentation of options and comparison of alternatives; • leave flexibility for discretional decisions and “learning by doing”; • apply a proportionate analysis2 ; and • integrate quantitative and qualitative environmental values into the overall assessment of a policy. The crucial aim of the environmental assessment as part of an overall sustainability assessment must be to identify, describe and assess non-compliance or conflicts with existent international and EU environmental policy targets. A high quality IA process contributes as a consequence to a dynamic change towards more environmentally-friendly options in the process of policy-making. The Impact Assessment Board (IAB) is responsible for the quality control of the IA. It supports the application of adequate assessment methods and provides advice on IA report before it is finalised (Bizer et al., 2008b, p. 11; EC, 2009, p. 6).

2 “The impact assessment will be conducted according to the principle of proportionate analysis, i.e. varying the degree of detail to the likely impacts of the proposal. This means that the depth of the analysis will be proportionate to the significance of the likely impacts” (EC 2002, p.8).

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IA Process: Formal or Discretional? Impact Assessment is defined as a partly formalised systematic process of identifying economic, social and environmental impacts and conflicts of objectives of major initiatives with policy targets. Formalism can be defined as the practice or the doctrine of strict adherence to a set/system of rules previously defined and usually known (adapted from Merriam-Webster Dictionary Online, 2009). In IA this affects the application of regulated, predetermined IA procedures and the identification of impacts and assessment of significance based on standards and thresholds. Guidance and formal process regulations shall assist desk officers and the IAB. The formal IA process starts early in the policy-making process. It aims at an early identification of the “no policy change” scenario and its comparison with appropriate options or genuine alternatives. The IA process ideally leads to significant adjustments to draft policy proposal and a transparency of trade-offs – for instance between different valuation criteria or between valuation criteria and costs – uncertainties in predictions or not quantifiable information. Results are documented in an IA report, which should follow a standard format and cover the following main aspects: procedural issues and results from consultations, policy context and definition of problem, objective of the proposal, policy options, analysis of impacts, comparing options and follow-up (EC, 2009). It is argued by some experts that more formalism would not necessarily strengthen the consideration of environmental impacts within the impact assessment. Rather the expertise of the institutional framework should be enhanced. The Communication from the Commission on Impact Assessment (COM, 2002, 276 final) leaves a free choice on the selection of methods and tools for the assessment of impacts. The responsible actors, i.e. the College of Commissioners, have to decide on the level of detail and effort of the assessment by learning-by-doing. They decide what is proportionate and appropriate for individual proposals (Bizer et al., 2008b, p. 12). Discretion is a process of separating, distinguishing, or making individual choice or judgment within certain legal, procedural, substantive bounds (adapted from Merriam-Webster Dictionary Online, 2009). Accordingly desk officers decide case-by-case in agreement with the IAB on appropriate environmental assessment methods. The choice of tools and methods is left to the DGs. Discretional decisions can be made on the latitude in breadth, depth (scope) and choice in application of IA procedures and methodologies. However this requires a high level of knowledge on environmental problems, awareness and political commitment of the desk officers, if no standards or best practice examples are accessible. An important informal instrument in IA is the consideration of public recognition in the form of opposition to the impact, controversy over it or conflict between different sections of the community. The political importance criterion in the EU Guidelines is a good example. In the future increasing public attention for environmental policies will backup these more informal sources of input. Another often discretional element of IA is cross-institutional communication between desk officers about regulatory tasks as well as individual consultation of external experts (Bizer et al., 2008b, pp. 3, 7).

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It can be summarized that the EC IA process combines formal and discretional mechanisms that enable the return of poor quality IAs to the lead DG for reconsideration and correction (Hertin, 2005, p. 26). It is essential that IA stays practicable and flexible in order to avoid an administrative overburden and alienating of the responsible DG implementing it. Flexibility is important to encourage as much cooperation between DGs and stakeholders as possible. Overburdening can lead to failure of DGs in giving adequate consideration to important issues. Hertin (2005, p. 36) warned that “over-ambitious and insufficiently-resourced appraisal processes” will be rather poorly implemented. On the contrary, if in-depth assessments of substantial environmental impacts stay voluntary and discretional to the desk officer, they may have a limited quality and uptake. In EU Member States two objectives for the application of IA can be identified according to Jacob (2008): 1. implementing a more centralised and formalised impact assessment process; 2. enhancing consultation and participation in decision-making. The combination of both objectives shall ensure a transparent and high quality IA process. But the problem remains that often formal regulations and technical analyses conflict with the political logic and dynamic of law-making (Jacob, 2008). Therefore the implementation of more formal elements must leave sufficient flexibility for input from outsiders, discretional and case-by-case decisions. The aim of this research is to keep IA operational through effort, time and cost savings and at the same time to strengthen the formal assessment of environmental impacts, in order to achieve a transparent and equal consideration beside economic and social concerns. Discretion should be exercised only under an independent and transparent quality control.

IA Contents: Environmental Quality Standards As determined in legislation, Impact Assessment emphasises on an iterative process and not on material standards for environmental precaution and sustainable development. COM (2002) 276 final does not create a systematic link to existent Environmental Policy with strict legally-binding restrictions (e.g. protected sites of Natura 2000, EC Habitat and Birds Directive) and other environmental standards and objectives. It does not take account of an effective connection to Strategic Environmental Assessment (SEA) at lower plan and programme tiers, where policies will be implemented in more detail (e.g. Schmidt, João, & Albrecht, 2005). IA should result in “requirements for supplementary impact assessments to focus on downstream impacts” (WB, 2004, p. 62). The EU’s SEA Directive (2001/42/EC) already lists systematically natural resources and significant environmental impacts, which could be used as guidance for the assessment of environmental impacts in IA. The EC IA guidelines of 2009 were analysed on their systematic inclusion of environmental impacts and receptors according to existent environmental problems and environmental quality standards (see Table 4.1 for climate).

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Table 4.1 Effects and receptors for impacts on the climate (extracted and changed from EC IA guidelines, 2009, Table 3, pp. 36–37) Key questions Does the option affect the emission of greenhouse gases (e.g. carbon dioxide, methane etc) into the atmosphere? Does the option affect the emission of ozone-depleting substances (CFCs, HCFCs etc.)? Does the option affect our ability to adapt to climate change?

Receptors/assessed importance of

Impact factors

Atmosphere;

Emission of greenhouse gases (e.g. carbon dioxide, methane etc);

Policy, actions and land uses for adaptation to climate change;

Emission of ozone-depleting substances (CFCs, HCFCs, etc.);

Bio-climatic important areas and corridors

Loss of land uses of importance for adaptation to climate change

xxx = impact. xxx = receptor, environmental media or factor, nature or sensitivity of receiving environment.

The catalogue of questions in the EC IA guidelines of 2009, which are recommended to be part of the IA process, should provide a basis for identification of impacts, but is not considered as an exhaustive checklist. Guidelines encourage identifying additional questions relevant to the assessment area. Unfortunately this list is not systematic and the documented questions do not sufficiently reflect the current EU environmental policy. For instance it neglects to mention any conflict with EU policy and actions for the protection of cultural heritage, sustainable use of resources, regulations on environmental justice/liability, environmental education or cooperation etc. Moreover it does not systematically distinguish between pressures or impacts and receptors (i.e. importance, nature or sensitivity of receiving environment, carrying capacity of the natural resources) and does not guide well on the identification of potential cause-effect-receptor-relationships. Some impact factors are not specified and could be simply answered with ‘no’ (e.g. “Does the option affect our ability to adapt to climate change?”). The EC IA guidelines 2009 define several criteria for the proportionate analysis such as significance of impacts and political importance. The assessment of significance or importance of impacts is generally done in qualitative way. The guidelines provide also several criteria for determining significance including obligation, impact receptor, irreversibility, likelihood, uncertainty or magnitude of effects, but do not propose thresholds for the assessment. Not mentioned are cumulate impacts, which should get special attention: particularly how the current state of environment and population’s living quality will likely change in the future. Positive and negative impacts should also be more clearly distinguished (e.g. “Does the option decrease or increase the quality or quantity of air?”) Therefore a lot of flexibility is left for the desk officers during the identification of significant impacts.

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Proposed Methodology for Strengthening “The Environment” in IA – Example of the Trans-European Transport Axes The aim of this research is to propose an adequate formal assessment method for the IA process and contents, which can embed discretional political decisions. It was assumed that more formalism at early stages of IA will lead to more comprehensive, discrete components at later stages in the impact analysis. Therefore the roadmap stage and its link to a more detailed assessment stage were specifically analysed as part of the proportionate analysis. A methodology for the environmental assessment as part of IA shall be proposed with the example of the major initiative “Communication from the Commission on Extension of the major trans-European transport axes to the neighbouring countries” of the lead DG Transport (EC, 2007). It can be predicted that for instance the transport axis from Berlin towards Warsaw will cause significant impacts: sealing of soil, loss of agricultural land in Poland, increase of greenhouse gas emissions as a result of traffic growth in a global scope. A process and method for the identification of significant impacts from this transport policy on climate shall be presented in this article. No standard method can be set, but a mix of methods and inputs will be preferable in practice. The assessment process was simplified to five main steps, which focus on assessment contents and exclude quality review and stakeholder consultation (see Fig. 4.1).

Preparation of Roadmap In the first step the competent desk officer fills in a 2 pages long roadmap template (see Annexes to the IA Guidelines, EC, 2009, pp. 4–5) with key social, economic and environmental problems to be addressed (see Box 4.1). Roadmaps should also include information on each of the analytical steps and the timing

IA Procedural Steps 1. Preparation of roadmap

2. Identification of environmental impacts 3. Identification of significance of environmental 4. Analysis of compliance with legally - binding

Fig. 4.1 Proposed methods for various IA steps

5. Analysis of conflicts with EU environmental policy tragets

Proposed Methods Roadmap Checklist

Threshold-based significance assessment matrix Three results of environmental assessment: (5) Substantial conflict (3) Moderate conflict (1) Negligible conflict

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of the IA, or explain why an IA is not necessary, indicate which DGs will be invited to the impact assessment steering group and outline the consultation plan (EC, 2009, p. 8).

Box 4.1 Roadmap Questions Subject to Decision-Making (Annexes to EC IA Guidelines, EC, 2009) Initial IA Screening and Planning of Further Work A. Context and Problem Definition • • •

What is the political context of the initiative? How does this initiative relate to past and possible future initiatives, and to other EU policies? What are the main problems identified? Is EU action justified on grounds of subsidiarity?

B. Objectives of EU Initiative: • •

What are the main policy objectives? Does the objective imply developing EU policy in new areas or in areas of strategic importance?

C. Options: • • •

What are the policy options? What legislative or ‘soft law’ instruments could be considered? Would any legislative initiatives go beyond routine up-date of existing legislation? Does the action proposed in the options cut across several policy areas or impact on action taken/planned by other Commission departments? Explain how the options respect the proportionality principle

D. Initial Assessment of Impacts: • • • •

What are the significant impacts likely to result from each policy option, even if these impacts would materialise only after subsequent Commission initiatives? Could the options have impacts on the EU-Budget (above 5 Mio C) and/or should the IA also serve as the ex-ante evaluation, required by the Financial Regulation? Could the options have significant impacts on simplification/administrative burden or on relations with third countries? Who is affected?

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E. Planning of Further Impact Assessment Work: •

•

What information and data is already available? What further information needs to be gathered? How will this be done (e.g. internally or by an external contractor) and by when? What type and level of analysis will be carried out (cf. principle of proportionate analysis)? Which stakeholders and experts have been/will be consulted, how and at what stage?

It is the authors’ opinion that the identification of environmental impacts in roadmap should be explicitly mentioned in the guidance on roadmap. A separate section in the roadmap template should address environmental impacts, in order to prevent risks of overweighting socio-economic issues. In a roadmap all major initiatives are basically assessed on their need for more detailed investigation. This stage has the intention to announce and circulate the first policy objectives within the European Commission. However, the lead DG can decide to which extent to reflect on the questions asked in the roadmap template (EC, 2002). A more systematic roadmap checklist (see examples in Box 4.2) will make the selection of assessment methods, specific significance criteria and tools more transparent for all stakeholders. The use of simple criteria in the roadmap checklist adds both certainty and flexibility to the IA roadmap stage. Desk officers acting under (time) pressure should not consider the roadmap checklist as an additional burden, but as a chance for a targeted and systematic IA. Questions, which cannot be answered at the roadmap stage, shall be passed on to the in-depth analysis. In addition, this checklist could help the IAB to review the IA and make suggestions for the impact assessment at an early stage in the IA process.

Box 4.2 Examples of Additional Questions for a More Specific Roadmap Checklist F. Legal Restrictions and Objectives of Environmental Policies • •

Is the non-compliance of a strict legally binding environmental policy expected? High conflict with an existent environmental policy target

G. Type of Impacts • •

How shall uncertain and controversial impacts be addressed? Which significant environmental impacts can be predicted? [e.g. emissions, land take]

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Are large-scale (spatially-relevant) effects at international and/or transboundary scope expected? Will the analysis focus on particularly irreversible effects? Will the analysis focus on cumulative effects? Is a high level of uncertainty of predicted effects expected? Frequency and duration of an impact: one-time only occurrence, shortterm, medium-term or long-term effect, permanent or temporary effect? Location and magnitude of an impact: anticipated scale of effect, local, regional, national, international scope, geographical context?

H. Proposed Methods • •

Which methodologies (qualitative or quantitative) shall be used for which impact areas and under what circumstances? [e.g. CBA, MCA, Scenarios] Which methodological framework will be used that allows the integration of both quantitative and qualitative analyses?

I. Assessment Process • • • • • • •

Does the analysis focus on the most relevant environmental impacts to avoid overloading the process? How does the iterative assessment process reflect the fact that proposals at different stages of development require different types of assessment? Can only be a low number of policy options identified? Why? What is the level of political or strategic importance of the policy option? How will this influence the IA? Which certain groups of the society will be affected? How will this influence the IA? Does the analysis focus on providing sufficient information for the overall sustainability policy assessment? Does the analysis focus on detecting data gaps and uncertainties?

Identification of Environmental Impacts In a second step, using the results of the roadmap checklist, an in-depth analysis of the significance of identified environmental impacts shall be carried out. Significant impacts have to be identified, described and assessed with adequate qualitative and quantitative methods and tools. The systematic assessment of environmental impacts requires the prediction of environmental problems and estimation of sensitivities of the environment.

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The aim of an introduction of a standard matrix in the scoping process is to avoid wasting time, money and effort by enabling the responsible DG to focus on the significant sustainability issues to be assessed and following a selective impact process. A matrix was proposed to simplify the impact-receptor relationship. With the aim to prevent negligence of environmental impacts 16 environmental criteria were derived from existent environmental policy standards and targets (Table 2; Schmidt, Glasson, Emmelin, & Helbron, 2008). Crosses were made as example for environmental impacts of the planned transport axis.

Identification of Significance of Environmental Impacts The level of significance can be estimated and documented in a threshold-based significance assessment matrix, e.g. in three levels of (5) “substantial impact”, (3) “moderate impact” and (1) “negligible impact”. Table 4.2 can be used to document the significance of impacts. To ensure that all important environmental themes are covered, the IA guidance could define a mandatory list of impact areas each IA needs to consider. At EU level approved indicators of sustainable development should be explicitly incorporated into this list. A significance matrix can give support to desk officers for the identification of causal links between drivers of environmental degradation (e.g. transport demand, traffic) and their environmental impacts (e.g. air pollution, increase of greenhouse gas emissions). An effective option is to charge an inter-departmental working group with the drawing up the list of relevant impact areas on a case-by-case basis (Hertin, 2005, pp. 30, 31).

Table 4.2 Matrix for identification of environmental impacts and receptors Environmental factors: Natural resources legally fixed in Arts. 6 and 174 EC treaty; EC EIA and SEA Directives 1. Human health/population/quality of life 2. Fauna/flora/biodiversity (species, habitats, biological diversity, biotope connection etc.) 3. Soil/land use (productivity, greenfields etc.) 4. Water – Groundwater (quantity, quality, balance, allocation etc.) 5. Water – Surface water (e.g. quantity, quality; lakes, rivers, sea etc.) 6. Air/local climate (quality, fresh air corridors etc.) 7. Global climate (mitigation and adaptation) 8. Landscape (aesthetics, recreation) 9. Cultural heritage, cultural assets (constructed, landscapes)

Other or more specific issues of EU environmental policy 10. Protected sites (nature conservation, drinking water, recreation etc.) 11. Renewable resources (fish, water, timber, crops etc.) 12. Non-renewable resources (sand, lignite, oil etc.) 13. Environmental management as part of business operation; 14. Environmentally-friendly goods and services; life-cycle of products 15. Waste production/generation/disposal/ treatment/recycling (quality, quantity of waste) 16. Animal and plant health, food and feed safety

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Receptors/Environmental factors

1. 2. 3. 4. 5. … Effects/Impact factors Increase or decrease/promotion or restriction/deterioration or improvement of: Soil/Water/Air 0 X 0 0 X X Acidification Consumption of natural resources

0

0

0

0

0

0

Emissions of acidifying, eutrophying, photochemical or harmful air pollutants

0

X

X

X

X

0

Erosion/physical degradation

0

0

X

0

0

0

Likelihood/risk of flooding

X

X

X

X

X

0

Pollution/contamination with chemical substances, debris, discharges of sewage, nutrients, oil, heavy metals, fertilizers, pesticides, other pollutants

X

X

X

X

X

X

Quality of natural resource or factor (e.g. water, waste)

0

0

0

0

0

0

Quantity of natural resource or factor (e.g. water, waste)

0

0

0

0

0

0

Salinity

0

0

0

0

0

0

Sewage production Nature and Habitat Protection/ Biodiversity

0

0

0

0

0

0

Landscape fragmentation/barrier effect

X

X

X

X

X

X

Loss of natural resource

X

X

X

X

X

X

Risk of unauthorised or unintentional dissemination of environmentally alien or genetically modified organisms

0

0

0

0

0

0

X

X

X

X

X

X

X

X

0

0

0

0

Thermal load/heat production/temperature Energy

X

0

0

0

0

0

Energy consumption

0

0

0

0

0

0

Energy intensity of production

0

0

0

0

0

0

Energy production

X

X

X

X

X

0

Energy storage Land Use

0

0

0

0

0

0

Species (i.e. number of species/varieties/races in any area; range of species) Climate Emissions of greenhouse gases (carbon dioxide, methane etc) or ozone-depleting substances (CFCs, HCFCs etc.)

Land consumption/soil sealing

X

X

X

X

X

X

Land use change/functional change of land use; Others

X

X

X

X

X

X

Demand for transport (passenger or freight)

0

0

0

0

0

0

Likelihood of natural disasters

0

0

0

0

0

0

Likelihood or prevention of fire, explosions, breakdowns, accidents and accidental emissions

X

0

0

0

0

0

Noise/disturbance

X

X

X

X

X

X

Visual impacts Only positive environmental impacts expected

X

X

X

X

X

X

x Environmental impact expected. 0 No environmental impact expected. ? Uncertain: more in depth case-by-case analysis is necessary.

n

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Substantial impacts require a detailed quantitative or qualitative analysis. Moderate impacts require a specific agreement of the IAB. Values used in the significance matrix shall not function as clear cut criterion, but as guidance for the desk officers and the IAB in the early stages of IA for the decision on the need of a more detailed impact analysis and additional input from external experts. An important source for methods and tools are national sustainability assessments of the EU Member States as well as Strategic Environmental Assessment (SEA) at policy level. Adequate assessment methods can be directly linked to crosses made in a significance assessment matrix. For instance impacts, which can be quantified and monetised – as encouraged in the IA guidelines (Wilkinson et al., 2004) – could be linked to the cost-benefit-analysis. Categories of non-tangible environmental impacts can be linked to qualitative assessments with the help of scenarios. The guidance on the selection of methods should also be linked to the availability of data. Desk officers face the challenge to define the level of analysis that is “proportionate” to the significance of the proposal’s expected impacts. The significance shall influence the level of effort and depth of IA, the selection of assessment methods and tools. Day (2007) argued that often the proportionate analysis “can not be fully defined a priori for all proposals and lastly has to be determined case by case”. Criteria for defining the proportionate level of analyses of an IA are beside the significance of impacts, the political importance of the initiative and the stages of policy development (EC, 2009, pp. 12–14). One of the main problems will be that the data that would be required for a rigorous analysis is often not easily accessible (Hertin, 2005, p. 27). Table 4.3 presents the types of conflict, which result from IA. They assist the DG in decision-making. The results of the assessment of environmental impacts contribute to the framework for an overall result of the impact assessment, which incorporates economic, social and environmental aspects under the sustainability principle. The final policy option is a political compromise achieved by the responsible DG and other bodies of the European Commission.

Table 4.3 Types of conflicts resulting from the environmental assessment as part of Impact Assessment Type of conflict

Explanation

Example

(5) Substantial conflict

Non-compliance with EU Environmental Policy

(3) Moderate conflict

Conflict with EU Environmental Policy

(1) Negligible conflict

In accordance with EU Environmental Policy

Increase of ozone-depleting substances or greenhouse gas emissions in the EU expected Spatial shift of ozone-depleting substances or greenhouse gas emissions Decrease of ozone-depleting substances or greenhouse gas emissions

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Analysis of Compliance with Legally-Binding Restrictions In this example an assessment tool was selected, which can make non-compliance or conflicts with existent environmental policies transparent and can be easily operated and circulated by responsible desk officers of the Directorate Generals and easily quality checked by the IAB. During the analysis of compliance with legally-binding restrictions a template with most important strict legally-binding EU environmental objectives could be used (see Table 4.4 for climate). An example for an assessment criterion for impacts of the planned transportation axis on the climate is the “decrease or increase of ozone-depleting substances and greenhouse gas emissions in the EU”. Non-compliance of these restrictions must be categorised as substantial impact. Table 4.4 Restrictions of climate policy Compliance with legally strict binding environmental policy target ECCP Green Paper Reduced emissions of greenhouse gases Land use adapted to effects of climate change Reduced heat stress and pollution in urban areas

Impact factor/assessment criteria

Receptor, sensitivity or importance of environmental factor

Environmental information and data needs

Emission of ozone-depleting substances (CFCs, HCFCs, etc.) and greenhouse gases (carbon dioxide, methane etc.) Air pollution Thermal load Land consumption/ soil sealing Land use change Fragmentation of air corridors

Atmosphere; Land uses of importance for adaptation to climate change; Bio-climatic important areas and corridors

Air quality maps Climate change projections Land use maps etc.

Analysis of Conflicts with EU Environmental Policy Targets In the next step of an analysis of conflicts with EU environmental policy targets conflicts of the EU proposal with other existent environmental policy targets are assessed (see Table 4.5). The basic environmental policy targets are regulated in Art. 174 EC Treaty, in particular the environmental principles of para 2 (Callies, 2007: Art. 174 no. 12 ff.). These principles are specified in directives and regulations, based on the competence provision of Art. 175 EC Treaty.

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European statutory standards/statements United Nations Framework Convention on Climate Change (UNFCCC) Kyoto Protocol (1992) The Energy White Paper (2002) 2003/87/EC greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC EC Green Paper on adaptation to climate change

European policy targets Kyoto Protocol (1997) target to cut emissions of greenhouse gases by 12.5% below base year levels by 2008–2012 Reducing CO2 emissions to 20% below 1990 levels by 2010 and by 60% by 2050 EC Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC

Activities that contribute/generate the impact Increase in greenhouse gas emissions from: - Fuel consumption in transport - Domestic and business use of energy products - Fossil fuels - Inefficient land use planning (increasing distances travelled) - Energy inefficient homes - Tree felling Conflicts with objectives for adaptation to climate change, e.g. - Reduction of heat stress - Prevention of flooding - Provision of future migration network

Conclusions and Recommendations A more systematic process of identifying, describing and assessing conflicts with environmental policy targets is recommended. The EC IA Guidelines (EC 2009) checklist should be more systematically organised according to environmental factors and impacts legally fixed in the EU’s SEA Directive, in order to create a consequent link to sustainability assessments at lower implementing plan and programme tiers. Additionally, best practice cases of IA should be continuously exchanged between DGs. Communication between different DGs should be engaged. In the IA stage improvements of the assessment of environmental impacts could consist of: • A clear guideline, which includes definitions and is linked to a systematic catalogue of the main EU environmental policy areas and sustainability targets; • Proposed thresholds for the identification of environmental impacts and assessment of their significance, ideally link to data pools from the environmental information systems and sustainability indicator sets of the EU; • Criteria for the selection of adequate methods dependent on significance and nature of impacts; • Vertical tiering in environmental assessments to Strategic Environmental Assessment at national level; • Database of best practice examples of the application of different methods for benefit transfer;

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• Centralized as well as decentralized assistance of environmental experts; • Beside formal regulation of IA political commitment and consultation should be improved through training and communication.

References Bizer, K., Lechner, S., & Führ, M. (2008a). Improving the Integrated European Impact Assessment? Society for Institutional Analysis, sofia, University of Göttingen, University of Applied Sciences Darmstadt. Bizer, K., Lechner, S., & Führ, M. (2008b). Improving the Integrated European Impact Assessment? Executive Summary of the International Workshop 15th–17th September 2008 in Berlin, on behalf of the German Federal Environment Agency (Project No 3707 11 100) and financed by the Federal Environmental Research Programme. University of Göttingen, University of Applied Sciences Darmstadt, Society for Institutional Analysis, sofia. Callies, C.2007Commentary on Art. 6 and of Art. 174 EC Treaty, In: Callies C., Ruffert M. (Ed.) EUV/EGV (EU Treaty/EC) Treaty Munich:Beck. Day, C., (2007). Enhancing Impact Assessment. European Commission Impact Assessment – Discussion with Stakeholders 28 June 2007. Closing speech by Catherine Day, Secretary General of the European Commission. Brussels: Centre Borschette. Donelan, E., (2006). RIA in the context of Better Regulation: a policy for improving governance and achieving economic growth and development. Ankara: Conference on Regulatory Impact Assessment. EC − European Commission (2002). Communication from the Commission on Impact Assessment, COM (2002) 276 final. Brussels. EC – European Commission (2005). Impact Assessment Guidelines, SEC (2005) 791, 15 June 2005. EC – European Commission (2006). Communication from the Commission to the Council, the European Parliament, the European Economic and social Committee and the Committee of the Regions: A strategic review of Better Regulation in the European Union, COM (2006) 689 final, Brussels, 14.11.2006. EC – European Commission (2007). Communication from the Commission to the Council and the European Parliament: Extension of the major trans-European transport axes to the neighbouring countries. Guidelines for transport in Europe and neighbouring regions, COM (2007) 32 final, Brussels, 31.1.2007. EC – European Commission (2009). Impact Assessment Guidelines, SEC (2009) 92, 15 January 2009. Geiger, R. (2004). EUV/EGV (EC Treaty/EU Treaty), 4th ed, Beck Munich. Hertin, J. (2005). The Environmental Dimension of Impact Assessment − Learning from Experiences. In: Volkery A., Jacob K. (eds.) The Environmental Dimension of Impact Assessment, pp 22–36. Hertin, J., Bartolomeo, M., Giugni, P., Jacob, K., Volkery, A., Wilkinson, D., et al. (2004). Review of 2003 Extended Impact Assessments - Preliminary conclusions. Jacob, K. (2008). Instrumente zur Verbesserung der Wirksamkeit von Nachhaltigkeitsstrategien Ergebnisse aus der Evaluationsforschung. Fachgespräch des RNE „Governance – wie lässt sich Verbindlichkeit und Wirksamkeit von Nachhaltigkeitsstrategien verbessern“ am 9.4.2008, Forschungsstelle für Umweltpolitik Freie Universität Berlin. Merriam-Webster Dictionary Online (2009). Web address: http://www.merriam-webster.com/ dictionary/, last accessed on 25.03.2009. Schmidt M., Glasson J., Emmelin L., Helbron H. (eds.) (2008). Standards and Thresholds for Impact Assessment. Environmental Protection in the European Union, Vol. 3. Heidelberg: Springer Verlag.

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Schmidt M., João E., Albrecht E. (eds.) (2005). Implementing Strategic Environmental Assessment. Environmental Protection in the European Union, Vol. 2HeidelbergSpringer Verlag Volkery A., Jacob K. (eds.) (2005). The Environmental Dimension of Impact Assessment. Documentation of a Workshop organised together with the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 17–18 June 2004, Berlin, Forschungsstelle für Umweltpolitik report 01–2005. WB − The World Bank (2004). Case Studies of Policy SEA: Final Report. 27 September 2004. Wilkinson, D., Fergusson, M., Bowyer, C., Brown, J., Ladefoged, A., Monkhouse, C., et al. (2004). Sustainable development in the European Commission’s integrated Impact Assessments for 2003 – Final report, April 2004, London.

Chapter 5

Proportionate Impact Assessment: Discretion, Formalism, and the Undefined Responsibilities of European Decision-Makers Clive George

Abstract The chapter examines the extent to which the need for and scope of an impact assessment should be defined in formal procedures or left to the discretion of individual policy-makers and assessors. By drawing on European and international experience with environmental impact assessment and strategic environmental assessment, a number of potential components of appropriate screening and scoping procedures are identified. It is argued that these and other revisions to the IA guidelines may have little effect unless the responsibilities of the EU’s decision-making bodies for taking the IA findings into account are more clearly defined.

Introduction Every impact assessment should provide sufficient information for a reliable decision to be made on the approval of a proposal, without placing excessive demands on human and financial resources or causing unnecessary delays. As indicated in the European Commission’s guidelines for Impact Assessment (IA), the breadth and depth of an assessment should be proportionate for the magnitude and significance of the impacts the proposal is likely to have. If a quick and simple analysis is enough to show that the chosen option is the most cost-effective and that any adverse impacts will be insignificant, nothing more will be needed. A complex policy with complex impacts will need more thorough assessment. This paper examines the third of the questions posed by the workshop organisers, concerning the extent to which the need for and scope of an assessment should be defined in formal procedures or left to the discretion of individual policy-makers and assessors. The question is not new. It was a key issue in the procedures for Environmental Impact Assessment (EIA) that were introduced in the USA with the National C. George (B) University of Manchester, Manchester, UK e-mail: [email protected]

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Environmental Policy Act of 1969, and subsequently in the European Union’s EIA Directive of 1985. It arises also with the EU’s 2001 Directive for Strategic Environmental Assessment (SEA). Experience with EIA and SEA offers pointers for any formalised process of ex ante impact assessment, including the EC’s IA procedures for assessing the economic, social and environmental impacts of policy proposals. In some respects the SEA Directive is the more relevant, although in others the lessons from project level EIA are more informative. The EIA process is generally more highly procedural than SEA, with extensive international experience of both formal and discretionary approaches to defining when an impact assessment is needed and what level of analysis is appropriate. Lessons from both EIA and SEA have implications for the EC’s policy level assessments. For a formal impact assessment process to be effective it must be consistent with the decision-making context to which it applies (Radaelli, 2004). We will therefore briefly review the approval structure for EU legislation and other policy measures, before proceeding to discuss the six highly pertinent subsidiary questions posed by the workshop organisers.

The Decision-Making Process for EU Policy Initiatives Decision-making authority for most EU legislation and policy is shared between the European Council and the European Parliament (European Commission, 2008a). The powers of the Council, the Parliament and the Commission are defined in the EU treaties. For some types of measure Council need only consult Parliament, for others it must obtain its assent, and in some specific cases the Commission can adopt laws on its own initiative. Most EU legislation is approved through a codecision procedure in which legislative power is shared equally between Council and Parliament. Proposals sent to Parliament are examined by committees whose reports are submitted to plenary session along with the proposal. Those presented to Council are examined by relevant departments in Member State governments, whose representatives state their position at a meeting of the European Council. The European Commission is the only institution empowered to initiate legislation, although Council and Parliament can ask it to do so. Commission proposals and their associated IA reports are prepared by the Directorate-General responsible for the relevant policy area. Other DGs are consulted through an Inter-Service Steering Group or Impact Assessment Steering Group convened by the lead DG. The proposal and its IA are presented to the College of Commissioners, and are approved for submission to Council and Parliament by collegiate decision of all Commissioners in a meeting of the College of Commissioners. The quality of each IA report is evaluated by the Impact Assessment Board (IAB), chaired by the Commission’s Deputy Secretary-General responsible for Better Regulation (European Commission, 2006). The IAB has a permanent member from each of the four Directorates-General most closely associated with

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sustainable development issues (Economy and Finance; Enterprises and Industry; Employment, Social Affairs and Equal Opportunities; Environment). Board members are required to evaluate IA quality in a personal capacity, and their departments are prohibited from giving them instructions. Of the institutions directly involved in the legislative process only the IAB has a formally defined responsibility for Impact Assessment. Its Rules of Procedure require it to present its opinion on the quality of the IA report to the College of Commissioners, with the power to ask for a re-submission. This has been invoked in about 10% of cases (European Commission, 2008b). However, the IAB has no mandate to specify the content of a report or make policy recommendations based on its findings. The Rules of Procedure of the European Council and of the European Parliament make no mention of Impact Assessment (European Council, 2006; European Parliament, 2008). Those of the College of Commissioners were amended in 2005 to incorporate the IA process, but with no clear responsibility to take account of the IA findings in its decisions. The relevant change was to Article 23 on Cooperation and Coordination Between Departments, with the introduction of paragraph 5(d). This requires that the Secretariat-General shall be consulted on all initiatives which are subject to impact assessment or public consultation (European Commission, 2005). This is the only mention of Impact Assessment in the Rules of Procedure of the three decision-making bodies. When the IA process was being introduced experimentally it may well have been appropriate to assign no formal responsibility for taking account of its findings in policy decisions. However, this limits the extent to which the IA process can be made proportionate for those decisions. It contrasts with the EU Directives for EIA and SEA, in which decision-makers are ultimately responsible for specifying what information they need in order to make a reliable decision. It also contrasts with the transparency requirements of those Directives. Article 8 of the EIA Directive states that the impact assessment report must be taken into consideration in the consent procedure for the proposal (European Commission, 2003). Article 5 gives the competent authority the power to require further information if the report is considered to be inadequate. Article 9 requires that, when the decision has been made, the public must be provided with information describing the main considerations on which it was based, including the public participation process and the measures taken to avoid, reduce or offset any major adverse effects. Similarly, Article 9 of the SEA Directive requires that the public be provided with a statement summarising how the impact assessment report and the opinions expressed on it during consultation were taken into account in the decision, and the reasons for choosing the proposal in the light of other reasonable alternatives (European Commission, 2001). Legislation on environmental assessment in most other high income countries is similarly prescriptive in defining the responsibilities of decision-makers. In countries with less well developed democratic institutions the law is often more discretionary (George, 2000). In Nigeria, for example, the EIA Act was drafted to contain all the elements of international best practice, with the inconspicuous but

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convenient proviso that for any given proposal their implementation would be at the discretion of the relevant Minister (Nwafor, 2006). A similar level of discretion may have been appropriate for the EU’s IA system when it was still at an experimental stage. Commissioners, members of Council and Parliamentarians should now have a much clearer understanding of the circumstances in which IA makes a useful contribution to their decisions. If IA reports have proved to be of use only for highly controversial major proposals, considerable wasted time and effort could be saved by a screening procedure which restricts IA to such proposals. Renda (2008), for example, has suggested that IA should be targeted at key strategic priorities identified by the Council. The IA guidelines would then need to be revised accordingly. The remainder of the discussion will instead assume that the objectives of the EU’s IA system will remain unchanged, and that it will continue to be used as a means of promoting better regulation across the full spectrum of EU law and policy.

Discretion or Formalism in the Screening and Scoping of Policy Proposals The first of the six subsidiary questions addressed by workshop is: Is it reasonable to formalise the decision when an impact assessment has to be carried out or to what extent should discretion remain? The EIA Directive and many other countries’ EIA systems include a formal definition of those types of project for which an impact assessment must be carried out, other types for which the requirement is at the discretion of the decision-making body, and those for which an assessment is not needed. The SEA Directive adopts a similar three tier approach for the screening of plans and programmes. These Directives apply only to the assessment of environmental impacts. It may be argued that any development project, plan or programme will have an impact on the environment, and that an assessment should therefore be mandatory for all. However, environmental assessment is just one component of an extensive body of EU environmental legislation. It was introduced with the prime aim of filling a gap left by existing laws and regulations. Many types of development, particularly small ones, are highly generic in their effects, and are readily subjected to specific legislation. Environmental assessment fills the gap for more complex projects whose impacts would be uncertain without a specific investigation of each individual case. For simpler developments subject to other legislation EIA contributes nothing, unless the decision-making body identifies some additional aspect of a proposal that could have significant impacts not covered by other controls. While this three tier approach has passed the test of time for environmental assessment it may not be appropriate for an IA process that is not a complement to other controls, but the only relevant control, and which examines economic and social impacts as well as environmental ones. If a policy is not expected to have any significant impact in any of the three spheres it should not be proposed. The

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prime aim of IA is to promote better regulation, by ensuring that policy makers do not introduce new or revised legislation in response to some new problem without a full understanding of the consequences, along with those of alternative courses of action. This objective applies to their own sphere of responsibility as much as it does to those of other officials. On the basis that every policy proposal that is worth proposing will have a significant impact, at least in the sphere of influence of its own proponent, and that the intended impact is unique to that proposal, IA should apply to them all. Three caveats should be added. Firstly, there may be some types of decision made by the College of Commissioners that have no significant impact outside the Commission itself. If such decisions can be identified generically they would not need an IA. Secondly, there may be some types of policy proposal that can be shown on a generic basis to be highly unlikely to have impacts in one of the three spheres (economic, social or environmental). In such cases it would be reasonable to exclude that sphere from the assessment. There may also be cases where the IA needs to cover only one sphere, which would be the sphere of responsibility of the lead DG. Even here, however, an IA will always be needed if the objectives of better regulation are to be achieved. Thirdly, the need to assess a proposal’s likely impacts in every case does not mean that a highly complex assessment is needed in every case. In its 2007 annual report the IAB noted that some of the impact assessments that were reviewed did not seem justified by the limited impact of the corresponding initiative, and that a more proportionate analysis could have been incorporated in the initiative itself. It suggested that “full impact assessment” should be carried out only where it adds real value. There is no definition of what a less than full assessment might consist of. Here again there is much to be learned from experience with EIA, and to a lesser extent SEA. Under the EU Directive and in most other jurisdictions EIA begins with a scoping exercise to define the breadth and depth of the subsequent assessment. In some jurisdictions scoping is the responsibility of the competent authority, while under the EU Directive the competent authority must at least give an opinion on the scope if this is requested by the proponent. This leaves the authority free to request further information if the assessment reveals a need for it. The EC’s IA system is faced with a major difficulty in this respect. It does not define any equivalent competent authority. The purpose of the EU’s formal systems for EIA and SEA is not to provide a report which an independent body considers to be of high quality, but to provide decision-makers with sufficient information, but no more, on which to base their decision. Whether the level of assessment is proportionate for the likely impacts is decided by the body that needs the information. Guidance is often available on what is likely to be needed for different types of proposal, but decision-makers retain the authority to request whatever is needed for each particular case. It would not be practicable for the College of Commissioners to do the same for EU policy proposals. Commissioners would need to get their Directorates-General to do it for them. The four DGs from which IAB members are chosen would have particularly important roles, since they have the greatest expertise in economic,

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social and environmental issues. DG Environment has the competence to operate a three tier screening system for environmental impacts similar to those for EIA and SEA, and, where appropriate, to issue guidance on what is likely to be required for particular types of proposal. The other DGs are equally competent in their own spheres. All have the competence to specify what additional information might be needed if an IA report does not provide it, or if they doubt its validity. Commissioners would need to do no more than take the issues raised by their DGs to the College, debate them as necessary, and come to their collegiate decision. Similar considerations apply to Council and Parliament. Each Member State represented in Council already evaluates proposals and IA reports as fully as they consider necessary, making use of the expertise in their relevant government departments. Parliament already evaluates them through its committees. However, if Council or Parliament considers the IA report to be inadequate it cannot require the Commission to revise it. The Commission, the Council and Parliament have agreed a common approach to IA which concedes only that when the Commission is asked to complement its original IA it may, or may not, decide to do so (European Council, 2005). When Council or Parliament introduces a substantive amendment to a proposal, responsibility for assessing the impacts rests with them. Nonetheless, both Council and Parliament have access to the necessary expertise to make appropriate contributions to a three tier screening approach similar to those defined in the EIA and SEA Directives. In answer to the first of the subsidiary questions we may conclude that it would indeed be reasonable to formalise the decision on when an impact assessment has to be carried out, by making IA mandatory for all proposals other than those in any definable category that can have no significant impact outside the Commission itself. For all other proposals a three tier screening system would be applied in each of the economic, social and environmental spheres, developed and implemented by the DGs responsible for those spheres. The European Council, in collective response to advice from Member States, would have the power to require further information when needed. Parliament would have similar discretion to ask the Commission to revise a report if its committee considered it to be inadequate for the decision that has to be made.

Screening Criteria The second of the subsidiary questions is: Should there be a clear-cut criterion such as the USD 100 million impact as in the USA? The conclusion for the previous question leads directly to a negative answer for this one. The only criterion that would be needed in the EU’s IA system is whether the proposal is intended to have any significant impact outside the Commission itself. The US system for Regulatory Impact Assessment (RIA) predates the EU system and was introduced primarily to improve economic performance. The system is

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more prescriptive than the EU’s in the level of economic analysis required, as appropriate for impacts that are significant for the whole economy. Its cost-effectiveness therefore benefits from the cut-off criterion. The objectives of the EC’s IA system are different, and require a different approach.

Significance Criteria The third question is: Is the significance criterion of the EU impact guidelines sufficiently defined to be helpful? The criterion to which the question refers is given in section “Assessing the Impact Assessment Procedure” of the proposed IA guidelines (European Commission, 2008c) issued in draft form in May 2008 (Box 5.1):

Box 5.1 Draft IA Guidelines section “Assessing the Impact Assessment Procedure” Significance of Impacts An initiative may have a particularly significant impact in one or more of the fields analysed in the impact assessment (economic, social or environmental). It may also have impacts on certain economic sectors, on economic actors, groups of citizens, on businesses, SMEs, or citizens, fundamental rights, or on regions, species or habitats. Other issues may also be relevant – the impact on a third country or the contribution to Commission programmes such as the programmes for simplification of legislation or for the reduction of administrative burdens. The first step in deciding whether these impacts merit special attention in the IA will be in the IASG on the basis of past experience, observation of markets and political developments etc. The first paragraph gives valuable guidance on issues that need to be considered when deciding whether or not an impact is significant. The second goes some way towards indicating how significance might be assessed. As a whole the guidance is helpful, but not helpful enough. A key aspect that needs to be stressed is the relationship between magnitude and significance (Wood, 2003). If the magnitude of an impact is uncertain it may be less significant than it appears. An impact whose assessed magnitude appears to be large may be insignificant in comparison with the baseline for the same parameter and the magnitude of existing trends. Once these issues have been dealt with the assessor still needs fuller information on how to evaluate significance. For environmental impacts Annex III of the EIA Directive and Annex II of the SEA Directive specify criteria for determining the likely significance of effects.

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Those in the SEA Directive are the more appropriate for strategic level decisions and may be applied directly to policy assessment with only minor revisions. They are given in Box 5.2.

Box 5.2 Significance Criteria in the EU Directive for SEA ANNEX II. Criteria for determining the likely significance of effects referred to in Article 3(5) 1.

The characteristics of plans and programmes, having regard, in particular, to • • • • • •

2.

the degree to which the plan or programme sets a framework for projects and other activities, either with regard to the location, nature, size and operating conditions or by allocating resources, the degree to which the plan or programme influences other plans and programmes including those in a hierarchy, the relevance of the plan or programme for the integration of environmental considerations in particular with a view to promoting sustainable development, environmental problems relevant to the plan or programme, the relevance of the plan or programme for the implementation of Community legislation on the environment (e.g. plans and programmes linked to waste-management or water protection).

Characteristics of the effects and of the area likely to be affected, having regard, in particular, to • • • • • • • • • •

the probability, duration, frequency and reversibility of the effects, the cumulative nature of the effects, the transboundary nature of the effects, the risks to human health or the environment (e.g. due to accidents), the magnitude and spatial extent of the effects (geographical area and size of the population likely to be affected), the value and vulnerability of the area likely to be affected due to: special natural characteristics or cultural heritage, exceeded environmental quality standards or limit values, intensive land-use, the effects on areas or landscapes which have a recognised national, Community or international protection status.

Several of these criteria are equally relevant for social or economic as well as environmental impacts. Others would be needed with a more direct bearing on economic and social issues. These could be developed fairly easily using similar principles.

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Significance Thresholds The fourth of the subsidiary questions has two parts, of which the first is: When should a possible environmental consequence be considered significant? The criteria discussed above serve mainly to identify characteristics that should be considered when evaluating significance, and give little guidance on how to judge whether an impact is significant or not. The concept of significance is particularly important in the approach to environmental assessment employed in the USA, where the National Environmental Policy Act requires that an assessment be carried out for all major actions “significantly affecting the quality of the human environment” (Wood, 2003). In order to implement this approach to the screening of development proposals the regulations issued by the US Council on Environmental Quality specify that the significance of a potential impact should be evaluated in terms of both its context and its intensity, for which the US Federal Environmental Assessment Review Office identifies three main forms of significance criterion (Canter, 1996). These are summarised and interpreted in Table 5.1. All three forms are equally important. The first is straightforward, in that an impact will be significant by definition if it breaks the law, results in a legal standard being exceeded, or fails to comply with an officially adopted policy. The second type of criterion applies when public concern is equally high but has not yet resulted in the adoption of an institutional norm. The third applies when equally serious concerns expressed by experts have yet to influence the general public. The significance of greenhouse gas emissions was recognised primarily by technical experts in the 1960s and 1970s, then increasingly by the general public in the 1980s before achieving institutional recognition in the UN Climate Convention in 1992. The second part of the question is: Should there be additional thresholds for environmental impacts? As discussed above, every policy proposal that is intended to have a significant impact beyond the Commission itself should have an IA, but not necessarily covering all three spheres of sustainable development. For the environmental aspects,

Table 5.1 Types of significance criteria (George, 2000a) Form of criterion Institutional recognition Public recognition

Technical recognition

Nature of impact significance

Iegal requirement or other Widely understood and agreed institutional norm, e.g. official policy, legal standards Opposition to the impact, controversy Not widely enough agreed to have over it, or conflict between resulted in an institutional norm, different sections of the community but of concern to at least some sections of the public Concern based on technical Not widely enough understood to understanding of the impact’s cause public concern, but of consequences concern to technical specialists

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screening criteria could be established that are similar in principle to those in the SEA Directive. These define types of plan or programme rather than thresholds, other than for the possible exclusion of those which apply only to small areas at the local level. More extensive use of thresholds is made in the EIA Directive. However, thresholds are generally less useful at the strategic level of plans and programmes than they are at the project level. They may have little to offer at the policy level.

Political Significance The fifth of the six questions is: Does the political importance criterion of the EU impact guidelines put the environment at a disadvantage as it focuses on economic issues and asks for contestants and controversy in order to estimate political importance? The criterion in question is given in section “Methodology” of the proposed IA guidelines (Box 5.3):

Box 5.3 Draft IA Guidelines section “Methodology” Political importance • Does the initiative relate to Commission strategic or annual priorities (such as promoting growth and jobs, promoting energy efficiency) and/or does it cut across several policy fields? • Could the initiative raise subsidiarity/proportionality concerns? • Is it particularly controversial? Who might contest the initiative? • Has the initiative a particular importance in the inter-institutional context or for certain Member States? There is only one mention of a specific environmental issue in the criterion (energy efficiency), but also only one mention of a specific economic issue (promoting growth) and one social issue (jobs). This would seem to be a reasonable balance. Table 5.1 identifies controversy over environmental impacts as one of the factors recognised in the USA as a measure of their significance. Economic, social and environmental issues are all equally likely to generate controversy and political concern. It may be argued that the adoption of political importance as a significance criterion reduces rather than increases any disadvantage to environmental issues. Much of the guidance on IA encourages assessors to use cost-benefit analysis techniques to attach an economic value to all environmental (and social) impacts, so that a decision can be made on the basis of one significance criterion only (net present economic value). Not all environmental economists agree that this is legitimate (Winpenny, 1991). Any direct or indirect effect that an environmental impact has

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on economic performance should obviously be included in the assessment of a proposal’s economic impact. The use of environmental economics techniques to incorporate any other effect into an economic equation is itself highly controversial. The recognition that impacts can have political as well as economic significance reflects the view that not all human values are economic values. It also allows for wide variations in those values, without relying on the assumption that a particular economic theory is an adequate description of human motivation. Reconciling the different values of different people is an inherently political process. While the political importance criterion of the IA guidelines presents no disadvantage to environmental issues, Annex 7 of the draft does. It bears the title “Assessing economic, social and environmental impacts”, with ten sections (Box 5.4):

Box 5.4 Draft IA Guidelines Annex 7 7.1. Impacts on international trade and cross-border investments 7.2. Impacts on firms in terms of investment, operating costs, products and services 7.3. Impacts on technological development and innovation 7.4. Impacts on the number and the quality of jobs 7.5. Impacts on SMEs 7.6. Impacts on public authorities 7.7. Macroeconomic impacts 7.8. Impacts on consumers 7.9. Monetisation of non-market impacts 7.10. Life cycle assessment approach These would seem to be unduly weighted towards economic interests. The last, life cycle assessment (LCA), appears to have been added as an afterthought, as “one of the tools commonly used in assessing environmental impacts”. While LCA can give valuable information for particular types of decision, it is rarely used for assessing the environmental impacts of EU legislation or policy. The treatment of social impacts in the annex is only marginally more useful. The annexes to the 2008 draft guidelines need to be expanded considerably in these respects.

Limiting the Discretionary Power of the Lead Agency The last of the subsidiary questions is: Which additional standards for the IA should be defined in the EU guidelines to limit discretionary power of the lead DG? As argued above, the prime responsibility for limiting the discretionary power of the lead DG in its preparation of IA reports rests with the three decision-making bodies. Of these the College of Commissioners has the most important role, as it

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represents all aspects of the appropriate expertise at European level, and is responsible for their coordination. As the decision-making body for submitting proposals to the Council and Parliament, the College has full authority to require the lead DG to provide whatever information it needs for making its decision. If the Rules of Procedure of the Commission were amended to incorporate this responsibility, it may be desirable to minimise the number of IA reports rejected by the College through the provision of guidance on the quality standards that lead DGs are expected to meet. The draft IA guidelines provide a strong basis for this, but would benefit from the addition of quality criteria similar to those used for EIA and SEA. Quality review packages that have been developed for SEA may be adapted for use in the EC’s IA system (Lee and Kirkpatrick, 2004). Box 5.5 gives examples of criteria that have been derived from one of these packages (Lee et al., 1999), from a total of 49 criteria covering a report’s description of the proposal and the affected environment, the identification and evaluation of impacts, alternatives, mitigation, monitoring, and presentation of the results.

Box 5.5 Example Review Criteria for IA Reports (Lee et al., 1999) Alternatives • Are the nature and causes of the problem to be addressed adequately analysed and described? • Are the objectives of the proposal and their relationship to other policy objectives adequately defined? • Have the affected parties been consulted in identifying alternative options for meeting these objectives? • Have both regulatory and non-regulatory options been considered? • Are the alternative options, including the do nothing option, described and evaluated? • Are the reasons for adopting the chosen option adequately described? • Has the significance of the predicted impacts been used in making the choice?

Assessment of Impacts • Is impact magnitude predicted, either in quantitative or qualitative terms? • Is impact significance assessed, taking into consideration, where relevant: impact magnitude; baseline magnitude; baseline trends; impacted locations (Member States, regions, localities); impacted economic sectors; impacted social groups; impact duration; opinions of affected parties; opinions of relevant experts; EU policies; international commitments?

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• Is the methodology used to predict impact magnitude and significance described and adequately justified? • Are the sources of data described and adequately justified? • Are all value judgements explicitly stated?

Uncertainties • Are uncertainties and other limitations regarding data, methodologies and results acknowledged and, where appropriate, quantified? • Does the report explain and justify how these uncertainties and limitations have been handled?

Consultation • Does the report present information on consultation undertaken with relevant: government authorities; business associations; expert institutions; NGOs; other affected or interested parties; the general public? • Are the opinions expressed by consultees summarised and taken into account? Quality criteria of this nature might, for example, be developed and issued by the IAB and used in its reviews of IA reports before they are submitted to the College.

Summary and Conclusions While the Impact Assessment Board is mandated to evaluate the quality of IA reports, the decision-making bodies responsible for approving the legislation and policies that are assessed have no formally defined responsibility to take the findings into account in their decisions. This limits the extent to which the resources devoted to IA can be made proportionate to the importance of those decisions. Sufficient experience with IA has now been gained to formalise the objectives of the process and the corresponding responsibilities of the College of Commissioners, the Parliament and the Council. It would then be possible to define those types of proposal whose economic, social or environmental impacts are such as to require assessment, and to specify the depth and breadth of that assessment, using a similar approach to that used in the EU Directives for EIA and SEA. The paper has argued that, since every proposal is intended to have a significant impact that is unique to that proposal, and since the prime objective of IA is to contribute to better regulation across the full spectrum of EU law and policy, IA should be mandatory for all proposals other than those in any definable category that

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can have no significant impact outside the Commission itself. The suggested mechanisms for screening proposals that need assessment, and for scoping the content of that assessment, would apply separately to economic, social and environmental impacts. Every proposal that is intended to have an impact beyond the Commission itself would require an IA covering at least one of the three spheres. By drawing on European and international experience with environmental impact assessment and strategic environmental assessment the paper has identified a number of potential components of appropriate screening and scoping procedures. These include significance criteria, guidance on evaluating significance, and additional criteria which the Impact Assessment Board might use in evaluating the quality of IA reports. The paper also notes that the EC’s current draft guidelines need to be expanded considerably in their guidance on assessing social and environmental impacts. However, irrespective of any such improvements, revisions to the IA guidelines may have little effect on the quality of EU legislation and policy until the responsibilities of decision-makers for taking the IA findings into account are more clearly defined.

References Canter, L. W. (1996). Environmental impact assessment (2nd ed). New York, NY: McGraw Hill. European Commission. (2001). Directive 2001/42/EC of the European Parliament and of the Council on the Assessment of the Effects of Certain Plans and Programmes on the Environment, Official Journal of the European Communities, Brussels. European Commission. (2003). Council Directive 85/337/EEC on the Assessment of the Effects of Certain Public and Private Projects on the Environment, as amended by Directives 97/11/EC and 2003/35/EC, Brussels. European Commission. (2005). Rules of procedure of the commission as amended by commission decision 2005/960/EC, 15 November 2005. European Commission. (2006). Rules of procedure of the impact assessment board, Brussels. European Commission. (2008a). Decision-making in the European Union, http://europa.eu/ institutions/decision-making/index_en.htm. European Commission. (2008b). Impact Assessment Board Report for the year 2007, SEC(2008) 120, Brussels. European Commission. (2008c). Impact Assessment Guidelines, Draft version 27/05/2008. European Council. (2005). Inter-Institutional Common Approach to Impact Assessment (IA), Council Document 14901/05, Brussels. European Council. (2006). Council Decision of 15 September 2006 adopting the Council’s Rules of procedure, Brussels. European Parliament. (2008). Rules of procedure (16th ed.). Brussels. George, C. (2000). Comparative review of environmental assessment procedures and practice. In N. Lee & C. George (eds.), Environmental assessment in developing and transitional countries. London: Wiley. George, C. (2000a). Environmental impact prediction and evaluation. In N. Lee & C. George (eds.), Environmental assessment in developing and transitional countries. London: Wiley. Lee, N., Colley, R., Bonde, J., & Simpson, J. (1999). Reviewing the Quality of Environmental Statements and Environmental Appraisals, Occasional Paper 55, EIA Centre, University of Manchester. Lee, N., & Kirkpatrick, C. (2004). A pilot study of the quality of European commission extended impact assessments (Working paper 8). Impact Assessment Research Centre, University of Manchester.

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Nwafor, J. C. (2006). Environmental impact assessment for sustainable development: The Nigerian perspective. Enugu: EDPCA Publications. Radaelli, C. (2004). How context matters: Regulatory impact assessment in the European union. Paper presented at the annual meeting of the American Political Science Association, Chicago, Sept 02. Renda, A. (2008). Advancing the EU better regulation agenda: Selected challenges for Europe. Brussels: Centre for European Policy Studies. Winpenny, J. (1991). Values for the environment: A guide to economic appraisal. London: HMSO. Wood, C. (2003). Environmental impact assessment: A comparative review (2nd ed.). Harlow: Prentice Hall.

Chapter 6

Multi-Criteria Analysis for Policy Evaluation Martin Drechsler

Abstract Multi-criteria analysis (MCA) has been proposed as a helpful tool for policy evaluation. Important steps of MCA are the structuring of the problem, including the formulation of policy options and policy objectives, the evaluation of the policy options with regard to the policy objectives and, from these evaluations, the identification of preferred policy options. This chapter describes the main requirements for the proper formulation of policy objectives and options and outlines popular methods used for identifying preferred policy options. Advantages and disadvantages of these methods are discussed, including a brief comparison with other decision methods like cost-benefit analysis.

Introduction In 2003 the European Commission introduced a procedure for integrated assessment (IA) (CEC et al., 2005) that aims, among others, at “improving the quality of regulation, and ensuring that all major policy proposals are assessed on their potential economic, social and environmental consequences” (de Ridder et al., 2007). De Ridder et al. (2007) distinguish between several groups of decision aiding tools, including (1) assessment frameworks; (2) participatory tools; (3) scenario analysis tools; (4) multi-criteria analysis tools (MCA); (5) cost–benefit (CBA) and costeffectiveness analysis (CEA) tools; (6) accounting tools, physical analysis tools and indicator sets; and (7) model tools. Each tool group finds its application in one or more phases of an IA process (de Ridder et al., 2007, see also Klauer et al., 2006). In the first phase the decision problem is framed, which includes collecting the facts relevant to the decision problem as well as the views and values of the stakeholders involved. The second M. Drechsler (B) Department of Economic Modeling, Helmholtz Centre for Environmental Research – UFZ, Leipzig, Germany e-mail: [email protected]

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phase of the IA process casts the outcome of the first phase into a formal structure, which includes the definition and formulation of policy objectives and policy options. In the third phase the decision alternatives are evaluated which involves especially MCA, CEA and/or CBA. Modelling may help in the assessment of the impacts each policy option has on the various policy objectives. The fourth and last phase of the IA process involves reflection on the decision process (involving participatory tools) as well as monitoring the intended and unintended impacts of the selected policy option(s). The latter task involves the same tools that were applied in the third phase but now ex-post instead of ex-ante. The present chapter on MCA in IA focuses on the second and third phases of the IA process. In the following section “Structuring the Decision Problem” of the paper I will give an overview on problem structuring (phase 2 of the IA process) for MCA (cf. Klauer et al., 2006). Problem structuring in MCA involves the proper definition and formulation of decision criteria (reflecting the policy objectives) and decision alternatives (reflecting the policy options). In the formulation of criteria and alternatives it is most important that they capture all relevant aspects of the decision problem and are meaningful to the stakeholders. After the criteria and alternatives have been specified the impacts of the alternatives on the criteria need to be evaluated through expert judgement and/or modelling. Process models (e.g. Verboom et al., 2007) may help estimate impacts in complex situations where multiple factors interact on several spatial and temporal scales. Probably the main problem in impact assessment is the aggregation of criteria. If the criteria are commensurable, i.e. measured on the same scale this is comparatively easy. Assume e.g. that all impacts can be characterised by their monetary costs and benefits (as is assumed in a CBA) these costs and benefits can be simply added. In an IA which needs to consider and integrate ecological, economic and social effects the criteria will generally be incommensurable: one criterion might, e.g., be the expected life time of an endangered species, measured in years, another one might be the cost of a policy to society, measured in Euros, another one the effects on employment, measured in person years, and so on. If criteria are incommensurable, their aggregation requires additional assumptions and information. In section “Deriving a Decision”, I will outline the procedure of deriving a decision in a multi-criteria problem. For this I will apply two methods, Pareto analysis and Multi-Attribute Value Theory, to an environmental management problem. The discussion in section “Discussion” compares the methods used in section “Deriving a Decision” to alternative methods of decision making, including CEA, CBA and other methods of MCA.

Structuring the Decision Problem Specifying the Criteria According to Roy (1999) “a criterion is a tool constructed for evaluating and comparing potential actions according to a well-define point of view.” In the context

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of an IA a point of view is a policy objective, and actions are policy options. To compare two policy options on a criterion (i.e. with regard to a policy option) the criterion needs to a have a preference scale on which the performance levels of the actions are positioned. A preference scale contains mainly two types of information: (i) the (physical) unit on which the performance of a policy option is measured, and (ii) a preference order telling for each pair of performance levels which level is preferred. For instance, a unit for measuring the cost of a policy could be Euros and we would prefer a smaller to larger value. Or, the temperature of a living room (associated with the room’s comfort) could be measured in degrees Celsius and most people would prefer a medium value between 19 and 22 to a high value above 22 or a low value below 19. As the examples demonstrate, preference scales may be qualitative (e.g., “low”, “medium”, “high”) or quantitative (e.g., 18, 20, 22, 24). To allow policy options to be compared on a set of N > 1 criteria this set needs to have a number of properties: (Roy, 1999) a. It needs to be exhaustive so that “no argument acceptable to all stakeholders can be put forward to justify a preference in favour of action A via-à-vis action B when A and B have the same performance level on each of the n criteria”. Put more simply, if action A and B perform equally on all criteria there should be no reason to prefer one of them to the other. b. The criteria need to be cohesive so that if “stakeholders unanimously recognise that action A must be preferred to action B whenever the performance level of A is significantly better than that of B on one of the criteria of positive weight, performance levels being the same on the other N–1 criteria”. In other words, if actions A and B perform equally on all criteria except for one criterion on which A outperforms B, than A should be preferred to B altogether. c. The criteria are non-redundant so that removing one of the N criteria from the set would violate at least one of the two requirements (a) and (b). To make sure that the criteria are all acceptable and meaningful to the stakeholders d. they need to be understandable to each stakeholder, and e. each stakeholder must agree that the criteria are appropriate to capture all relevant consequences of the actions.

Specifying the Alternatives Alternatives are the objects to be evaluated and compared along the criteria. Alternatives may be composed of actions or measures. The difference between alternatives and actions is that alternatives are mutually exclusive so that only one or another alternative (lat. alter = the other) can be chosen. Klauer et al. (2006) consider in an IA for a water catchment two possible actions which include: reduction of water protection zones and expansion of gravel mining activities. Clearly, these two actions are not mutually exclusive: one can decide to reduce water protection zones independently of the decision to expand gravel mining. The choices “expand gravel mining and reduce water protection zones”, “expand gravel mining and not

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reduce water protection zones”, “not expand gravel mining and reduce water protection zones”, and “neither expand gravel mining nor reduce water protection zones”, however, are mutually exclusive and are termed alternatives. In the present paper I focus on the most common task of MCA, which is ranking alternatives with respect to some overall goal (for other applications, see, e.g., Figueria et al., 2005). Sometimes the word option is used instead of action or alternative. For an economist this may lead to confusion, since in economics an option refers to an action that can, but need not to, be carried at some time in the future (like, e.g. a buy option on the stock market). Strategies are usually plans that prescribe when and under which condition an option should be realised. Options and strategies therefore generally apply to dynamic decision contexts where one or several actions are carried out at several points in time. When specifying actions and alternatives it is necessary to consider the realm of influence of the decision maker. Even though one could formulate the decision “reduce the amount of CO2 in the atmosphere on a large scale”, there is no technology yet to carry out that action; or, a local government will generally not be able to raise or lower taxes even if it wished to do so, because taxes are usually set on higher administrative levels. On the other hand, in a free world no policy maker can fully control the responses of all individual citizens to an implemented policy. Klauer et al. (2006) therefore distinguish between issues of the decision problem which the decision maker can actually influence, termed “alternatives”, and issues the decision maker cannot influence, termed “frameworks of development”. The authors term the combination of a framework of development and an alternative a “scenario”. In this notion a scenario involves assumptions about how the world around the decision maker develops, his or her action(s), and assumptions about the responses of the world to that/those action(s).

Evaluation of the Alternatives After the criteria and alternatives have been specified, the alternatives have to be evaluated with regard to the criteria. As mentioned in the Introduction this can be done with expert judgement and/or modelling. The performance of an alternative Ai (i = 1,. . .M) with regard to a criterion Cj (j = 1,. . .,N) is denoted as gj (Ai ). These performances can be conveniently arranged in a so-called multi-criteria matrix where each column of the matrix refers to a criterion and each row to an alternative (Table 6.1).

Deriving a Decision Having constructed the multi-criteria matrix (Table 1) the question is how to derive a decision from it. If only the first criterion, C1 , in Table 1 was to be considered the decision would be easy: Alternative A3 shows the best performance with a net benefit of 5.9 Mio DM. If the criteria C1 and C3 where to be considered, however, the

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Table 6.1 Example of a multi-criteria matrix with four alternatives and four criteria

Criteria (C)

C1 : Net benefit undiscounted (difference with regard to A1)

C2 : Value added (difference with regard to A1 )

C3 : Employees (difference with regard to A1 )

C4 : Nitrate concentration (mean value)

Alternatives (A)

[Mio. DM]

[Mio. DM]

[Person years]

[mg/l]

0

0

0

78

–7.5

14.8

–88.1

94

5.9

–7.6

–39.9

78

4.9

9.5

–128.3

94

A1 : wpz= gravel+ A2 : wpz– gravel+ A3 : wpz= gravel= A4 : wpz– gravel=

“wpz=” and “wpz–” represent no changes (=) and reductions (–) in the size of wellhead protection zones. “gravel+” and “gravel=” represent opening (+) of new gravel pits or no further openings (=). Simplified from (Klauer et al., 2006).

decision would be much more complex, because while A3 performs best in criterion C1 it does not perform best in criterion C3 . A first step towards a decision is to carry out a Pareto analysis which will be described in the following section.

Pareto Analysis A Pareto analysis seeks to eliminate all alternatives whose choice would be irrational regardless of the decision maker’s preferences. In economics a situation is termed Pareto-optimal if it is not possible to improve the welfare of one individual without reducing that of at least one other (e.g., Samuelson and Nordaus, 2004). Transferring this concept to a multi-criteria decision problem, an alternative A is termed Paretooptimal if there is no other alternative B that outperforms A in one criterion without underperforming A in at least one other criterion. If there are only two criteria the property of Pareto-optimality can be visualised quite easily. Consider Fig. 6.1 which plots the four alternatives of Table 6.1 with regard to their performances in the two criteria C1 and C3 . Each alternative Ai is represented by a circle with coordinates 4. The choice of alternative A2 (open circle in Fig. 6.1) is obviously not optimal, because alternatives A1 and A3 outperform A2 in both criteria. Similarly, alternative A4 is outperformed by A3 in both criteria. Alternative A3 outperforms A1 in criterion C1 but underperforms in criterion C3 . Without any additional information it cannot be decided which of the two alternatives, A1 and A3 , is to be preferred. These two alternatives are Pareto-optimal with regard to criteria C1 and C3 while the other two

Fig. 6.1 Illustration of Pareto-analysis

M. Drechsler g3: Employees in person years

124 100 50 A1 0

A3 – 50 A2 – 100 – 150 – 10

A4 –5 0 5 g1: Net benefit in Mio DM

10

alternatives are not Pareto-optimal and should not be chosen under any preference structure. The elimination of non-optimal alternatives simplifies the decision problem and lays the focus on the Pareto-optimal ones. If the initial number of alternatives is large the set of Pareto-optimal alternatives may be very small compared to that initial set and the simplification of the decision problem substantial. Nevertheless, eventually the task of policy making is to identify one preferred alternative. For this, additional information is required: the preferences of the decision maker. A decision maker who values employment very high compared to net benefit would prefer alternative A1 while a decision maker who values net benefit very high would prefer alternative A3 . In a simple decision problem with only two criteria and a small number of alternatives the decision can be made without any technical assistance. In the example if Fig. 6.1, the decision maker basically has to decide whether s/he values the increase in employment by 40 person years that would be gained by moving from alternative A3 –A1 , higher than the associated loss in the net benefit by 6 Mio DM. If yes s/he should choose A1 , otherwise s/he should choose A3 . In a complex decision problem with many criteria and alternatives that cannot be overlooked easily, formal methods are required at least to aid the decision process. One of the most popular methods (for a review, see, e.g., Kiker et al., 2005) is the Multi-Attribute Value Theory, MAVT presented below.

Multi-Attribute Value Theory (MAVT) Multi-attribute value theory (e.g., Keeney and Raiffa, 1993) deals with the construction of a value function that allows alternatives to be ranked in the presence of multiple criteria. To achieve this, first a value function is created for each criterion and then the single-criterion value functions are aggregated to a joint value function.

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1

Fig. 6.2 Illustration of a value function

v1

0 g1, worst

g1, best

g1

Table 6.2 Values vj of the four alternatives in Table 6.1 with regard to the four criteria in Table 6.1, using the linear value function, Eq. (1)

A1 A2 A3 A4

C1

C2

C3

C4

0.56 0.00 1.00 0.93

0.34 1.00 0.00 0.76

1.00 0.31 0.69 0.00

0.00 1.00 0.00 1.00

To start, assume a single criterion C1 and alternatives Ai (i=1,. . .,M) which have performances g1 (Ai ) in criterion C1 . The decision maker now has to attach a positive value v1 (g1 ) to the performance g1 . The question is what shape the value function v1 (g1 ) has. Economic theory argues that value functions are usually of a concave shape (Fig. 6.2, solid line), because the more one has of one good the less value is usually attached to an additional amount of that good (the concept of diminishing marginal utility: e.g., Samuelson et al., 2004). For real-world problems, methods exist to elicit the particular shape of the value function in an interviewing process from the decision maker (e.g., von Winterfeldt and Edwards, 1986). In the practice of IA, however, there is often not the time to elicit the value function from the decision maker. Instead, very often a linear function is assumed where a value of v1 = 0 zero is attached to the worst performance, g1,worst , a value of v1 =1 to the best performance, g1,best , and for all values in between: ν1 (g1 ) =

g1 − g1,worst g1,best − g1,worst

(1)

(Fig. 6.2, dashed line). For the first criterion in Table 6.1, e.g., we observe g1worst = –7.5 Mio DM, g1best =5.9 Mio DM, with the associated values v1 (g1worst )=0 and v1 (g1best )=1. For the other two alternatives we obtain from Eq. (1): v1 (g1 =0 DM)=(0+7.5)/(5.9+7.5)=0.56, and v1 (g1 =4.9 Mio DM)=(4.9+7.5)/(5.9+7.5) =0.93. In the presence of multiple criteria, for each criterion Cj a value function vj is established. For the example of Table 1, Table 6.2 shows the values vj for all criteria Cj (j=1,. . .,4) and alternatives Ai (i=1,. . .,4) obtained with the linear value function, Eq. (1). The question is now how these value functions should be aggregated to a single value function V. The simplest and most common method, though requiring a

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M. Drechsler Table 6.3 Numerical example of the aggregation

A1 A2 A3 A4

v1

v2

v3

v4

w 1 v1

w 2 v2

w 3 v1

w 4 v4

V

0.56 0.00 1.00 0.93

0.34 1.00 0.00 0.76

1.00 0.31 0.69 0.00

0.00 1.00 0.00 1.00

0.14 0.00 0.25 0.23

0.08 0.25 0.00 0.19

0.25 0.08 0.17 0.00

0.00 0.25 0.00 0.25

0.47 0.58 0.42 0.67

The aggregation is carried out using Eq. (2) with weights w1 =w2 =w3 =w4 =0.25. The four leftmost columns are the values vj from Table 6.2, the following four columns represent those values multiplied by the corresponding criteria weights, wj , and the rightmost column represents for each alternative Ai the sum V=w1 v1 +. . . +w4 v4 .

number of assumptions (Keeney et al., 1993), is to multiply each value function with a certain weight factor wj and add the multiplied value functions. The value of an alternative Ai that performs with gj (Ai ) in the criteria Cj then is V(Ai ) =

N 

Wj νj (gj Ai )

(2)

j=1

The higher the value V the better is the alternative. This allows ranking all alternatives from best (associated with the highest value of V) to the worst. A numerical example is shown in Table 6.3. For the chosen criteria weights, w1 =w2 =w3 =w4 =0.25, alternative A4 leads to the highest value V. The weights in MAVT are usually normalised to a sum of one: w1 +. . . +wN =1. Each weight wj measures how important the associated criterion Cj is. In particular, the ratio of two weights tells how a change from the worst performance to the best performance in one criterion is valued to a change from the worst to the best performance in the other. A value of w1 /w3 =2 in the example of Tables 6.1, 6.2, and 6.3, e.g., would mean that ceteris paribus increasing the net benefit by 13.4 Mio DM (from –7.5 Mio DM to 5.9 Mio DM) is valued twice as much as an increase in employment by 128 person years (from –128 person years to 0 person years). Accordingly, a way to elicit the weights from a decision maker is to ask him or her how much s/he values a change in one criterion from the worst to the best performance to the same change in another criterion. For further details on the elicitation of criteria weights (see, e.g., von Winterfeldt et al., 1986).

Discussion Information Requirements The Pareto analysis belongs to those MCA methods with the least information requirements. It does not require any information about the decision maker’s

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preferences. Furthermore, the impacts of the alternatives need not to be known quantitatively, but (for a given criterion) it is sufficient to know for each pair of alternatives which one performs better. Multi-attribute Value Theory, MAVT, in contrast requires cardinal information about the decision maker’s preferences (value functions and criteria weights) as well as the performances of the alternatives in the various criteria. This is the price for the ability of MAVT not only to deliver a (possibly large) set of Pareto-optimal solutions but most preferred solutions. Some methods (e.g., Brans and Mareschal, 2005) claim that they are able to process ordinal information (better/equal/ worse). However they can do this only with additional assumptions that are equivalent to assigning cardinal values (numbers) to the ordinal input data.

Compensation The presented multi-attribute value theory can be regarded as a representative of the family of so-called value-based MCA methods which, next to MAVT, include the analytical hierarchy process (AHP: Saaty, 1980) and the multi-attribute utility theory, MAUT (e.g., Keeney et al., 1993). They all have in common that alternatives are ranked according to some scalar value and that the constructed rank order is complete which means that all alternatives can be compared with each other and for each pair of alternatives (A, B) it can be decided whether A is ranked higher than B, B ranked higher than A, or both ranked equal. This requires the decision maker to make trade-offs, i.e. to specify how much gain in the performance of one criterion is required to compensate him or her for a loss in the performance of another. If a decision maker is not willing to trade performances between different criteria s/he has to refrain to methods like the Pareto analysis that do not employ any information about preferences and thus do not require any assumptions about compensation. A compromise between value-based methods and the Pareto analysis are the socalled outranking methods (e.g. Vincke, 1999) which partly restrict compensation between criteria. They are, however, more complicated than the former methods which may restrict the acceptance of the methods by decision makers.

MCA Versus Cost-Benefit Analysis (CBA) When comparing MCA and CBA one should bear in mind that there is a multitude of MCA methods. The value-based MCA methods are relatively close to CBA. With some assumptions one can in fact achieve formal equivalence between MAVT and CBA (Drechsler, unpublished). The Pareto analysis, in contrast, is nearly equivalent to cost-effectiveness analysis (CEA) which aims ad identifying the policy option that delivers a given bundle of goods and services at minimum costs (or budget). MCA as

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a whole therefore offers a richer toolbox than CBA to consider different assumptions about if and how decision makers’ preferences are included in the analysis. CBA is often criticised that conflicts between policy objectives are not made sufficiently explicit (e.g. Martinez-Allier et al., 1998). I would argue, however, that a CBA that is subjected to comprehensive sensitivity analyses is equally able to reveal conflicts as an MCA that is carried out in the same manner. With regard to the mathematical requirements, CBA may look simpler than MCA if one considers only the final step of CBA which is the aggregation of the various costs and monetised benefits. If however, the monetisation procedure of the various goods and services (e.g., Hanley and Spash, 1993) is taken into account CBA is rather more complex than MCA. An important difference between MCA and CBA seems to lie in the scope of the methods. While MCA is usually carried out within a small group of stakeholders (which may act as representatives of certain societal groups) the valuation of goods and services in a CBA generally considers a larger proportion of the public. It is in fact such scope issues and the required assumptions that should guide the choice of the decision method. Whatever method is eventually used, it should be carried out at the highest possible scientific standard. Acknowledgments I am grateful to Martin Quaas for helpful comments on a previous version of the paper.

References Brans, J. -P., & Mareschal, B. (2005). PROMETHEE methods. In J. Figueria, S. Greco, & M. Ehrgott (Eds.), Multiple criteria decision analysis. State of the art surveys. Heidelberg: Springer. CEC, Commission of the European Communities. (2005). Impact Assessment Guidelines. Brussels, Belgium. SEC(2005) 791. de Ridder, W., Turnpenny, J., Nilsson, M., & von Raggamby, A. (2007). A framework for tool selection and use in integrated assessment for sustainable development. Journal of Environmental Assessment Policy and Management, 9(4), 423–441. Figueria, J., Greco, S., & Ehrgott, M. (eds.). (2005). Multiple criteria decision analysis. State of the art surveys. Heidelberg: Springer. Hanley, N., & Spash, C. L. (1993). Cost-benefit analysis and the environment. Brookfield, VT: Edward Elgar. Keeney, R. L., & Raiffa, H. (1993). Decisions with multiple objectives and value tradeoffs (2nd edn), Cambridge: Cambridge University Press. Kiker, G. A., Bridges, T. S., Varghese, A., Seager, T. P., & Linkov, I. (2005). Application of multicriteria decision analysis in environmental decision making. Integrated Environmental Assessment and Management. 1, 95–108. Klauer, B., Drechsler, M., & Messner, F. (2006). Multicriteria analysis under uncertainty with IANUS-method and empirical results. Environmental Planning C, 24(2), 235–256. Martinez-Allier, J., Munda, G., & O’Neill, J. (1998). Weak comparability of values as a foundation for ecological economics. Ecological Economics. 26(3), 277–286. Roy, B. (1999). Decision aiding today: What should we expect. In: T. Gal , T. J. Stewart, & T. Hanne (Eds.), Multicriteria decision making. Advances in MCDM models, algorithms, theory and applications. Boston, MA: Kluwer. Saaty, T. (1980). The Analytic hierarchy process: Planning, priority setting, resource allocation. New York, NY: McGraw-Hill.

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Samuelson, P. A., & Nordaus, W. D. (2004). Economics. International edition (18th edn), New York, NY: McGraw-Hill. Verboom, J., Alkemade, R., Klijn, J., Metzger, M. J., & Reijnen, R. (2007). Combining biodiversity modelling with political and economic development scenarios for 25 EU countries. Ecological Economics, 62, 267–276. Vincke, P. (1999). Outranking approach. In: T. Gal, T. J. Stewart, T. Hanne (eds.), Multicriteria decision making. Advances in MCDM models, algorithms, theory and applications. Boston, MA: Kluwer. von Winterfeldt, D., & Edwards, W. (1986). Decision analysis and behavioral research. New York, NY: Cambridge University Press.

Chapter 7

Conclusions Kilian Bizer, Sebastian Lechner, and Martin Führ

Introduction In our understanding it is clear that the current practice of the Commission’s impact assessment goes far beyond the practice in most Member States. Also, the Commission’s policy to introduce a “culture of analysis” appears sensible as it addresses the differing educational backgrounds within the staff and attempts to gently move desk officers to increase the potential benefits of a systematic assessment of impacts in a written way. Overall, we value these developments and believe that the Commission’s position on impact assessment should be considered when designing an effective impact assessment system in Germany. However, in our opinion there is still considerable potential for improvement of the Commission’s practice especially concerning impacts on the environment. Concluding our results we focus on how the incentive problems of the relevant agents, which we described in the institutional analysis in Chap. 1, can be resolved in order to improve the assessment of environmental consequences in the impact assessment process. To do so, we will ask, which of the solutions presented in sections “Possible Solutions for Selection of Methods” and “Quality Control” of Chap. 1 will change effectively the incentive situations and will lead to more substantiated and higher quality impact assessments, particularly of environmental consequences. Some of these shortcomings are addressed by the revised impact assessment guidelines as published by the Commission in January 2009. Still the remaining problems are serious enough to suggest further improvements. Chapter 1 and especially the contributions of the experts presented in the other chapters of this book fundamentally highlight three essential fields of improvements. Firstly, more stringent instructions for desk officers in the impact assessment process are required. The Commission should offer desk officers more assistance in selecting a suitable design for the impact assessment and the most effective methods of analysis, and in comparing various policy options. The principle of proportionate

K. Bizer (B) Society for Institutional Analysis (sofia), University of Göttingen, Göttingen, Germany e-mail: [email protected]

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analysis demands too much of desk officers, and offers an enormous space for manoeuvre to design the impact assessment in accordance with their own interests and objectives. More rigorous instructions for desk officers also reduce their information and decision costs. In this area, the new guidelines of 2009 offer additional help by providing desk officers with a best practice library, the mandatory impact assessment steering group, an additional discussion of a primary test of impacts, a more detailed discussion of the consultation process and a gentle nudge towards quantification in connection with the clear demand for justification if quantification or monetisation is not feasible. Secondly, the assessment process can be hindered by cognitive and informational limitations, such as insufficient analytical skills and a lack of data, or scarce financial and human resources. The Commission should extend formal and informal support and advice for desk officers and ensure that sufficient financial and human resources are available in the budget and the management plan of the Directorate General for a comprehensive impact assessment of the planned regulatory project. Finally, the EU should increase the incentives to carry out internal checks for all those working in a Directorate General, from leadership level to desk officer level. Currently, there is an incentive to carry out a high quality impact assessment in terms of methods and expertise if a Directorate General can assume that by help of a very good impact assessment the chances are improved of getting one’s own position accepted. Desk officers, on the other hand, try to design the impact assessment process in accordance with the wishes of their superiors in order to obtain advantages for the development of their own careers (see the institutional analysis in Chapter 1). If deficits in an impact assessment would reduce the chances of a legislative initiative being implemented, and on the other hand would lead to reprimands and negative reports on the desk officer, there would be an incentive for the leading positions of a Directorate General and the desk officer to avoid suboptimal impact assessments. In order to create such anticipatory effects, the actors have to know in advance which deficits need to be avoided. As a consequence of this, the Commission should strengthen the IAB and draw up clear quality criteria. All three areas of action will be explained in detail below.

Improving the Selection of Methods The institutional analysis suggests that desk officers chose methods on the basis of their utility maximising behaviour within their cognitive and informational limits. The incentive problem can be solved by changing costs and benefits of the individual agent. Important cost aspects are the decision costs of the agent who must select an adequate method for the respective impact assessment. Such costs can be lowered by giving a clear indication when a more detailed approach should be taken. The concretisation of the principle of proportionate analysis and thus a more detailed definition of an appropriate selection of methods for environmental impact assessment could mitigate the overburdening of officials in relation to methods. On the other hand, high quality analysis with ambitious methods should have clear benefits for the career of the desk officer.

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Principle of Proportionate Analysis The principle of proportionate analysis stipulates that impact assessments must be orientated towards the significance and complexity of the respective regulatory issue. As an aid for the interpretation of the principle of proportionate analysis, the IA Guidelines define three sub-criteria: the significance of possible consequences, the political importance of the regulatory project, and the current status of the respective process. These sub-criteria are hardly more specific than the principle of proportionate analysis itself. For this reason it would be conceivable, in order to reduce the evaluation costs for the desk officer, to prescribe a standard method of analysis and thus to restrict the number of alternative decisions available to desk officers. The USA can serve as an example, as cost-benefit analysis is obligatory there.

No Standard Method, but an ABC Request A standard method (e.g. Cost-Benefit Analysis – CBA1 ) would require agents to demonstrate why they deviate in their analysis from a given methodological standard, and would increase transparency of the decisions taken within the impact assessment and beyond. Greater efforts with regard to quantification and monetisation could be the result, and this would be helpful for a balanced and transparent decision. On the other hand, cost-benefit analysis (CBA) is only one method of analysis among many. While the formal CBA can make a valuable contribution to the impact assessment it has not done sufficient justice to many problems in the assessment and weighing up of environmental consequences to set it as a standard method of analysis. A mixture of various methods of analysis and procedures would therefore be more meaningful in order to cope with the complexity of an environmental impact assessment. Therefore we propose the use of a verbal “ABC formula” as standard request: “Analyse Benefits and Costs!” This we prefer to a standard method because it demands to quantify benefits and costs as far as possible and monetisation wherever it is feasible and thereby offers additional insights to the regulatory options at stake. In contrast to the US, however, there is no strict obligation to carry out costbenefit analyses. But if a purely qualitative analysis is carried out, the reasons for this have to be explained and the obstacles to a quantitative and/or monetary analysis disclosed. Thus the desk officer is obliged to present a reasoned statement which forces him to scrutinize the different “ABC options” which might offer – despite previous assumptions – fruitful contributions to the impact assessment. The “ABC request” supports the culture of analysis which is the core intention of the IA process. Simultaneously the “ABC request” forms a procedural obstacle to the simple finding “No quantification/monetisation possible” found currently in IA reports. 1 Cf.

Chap. 1, section “Concentrating on One Comparative Method”

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The 2009 version of the IA guidelines underscores that desk officers should think in terms of quantification and monetisation to fill in the framework of assessing costs and benefits. It goes as far as suggesting a full cost-benefit analysis “when the most significant part of both costs and benefits can be quantified and monetised.” (Commission of the European Communities, 2009, p. 44) In addition, the new guidelines provide more assistance to actually compare regulatory options. Thus it would be only a small step to actually enunciate the proposed “ABC request”.

Thresholds and Quality Criteria However, a “ABC request” of this type would not relieve the desk officer from the decision on the design of the IA process. The request shifts the focus of the analysis towards quantitative methods, but there is a wide range of quantitative methods, and there are many different ways of carrying out a quantitative analysis. Which method should be selected under which circumstances continues to remain vague. Chapter 1 suggests the introduction of clear thresholds as a possible way of eliminating this uncertainty. Michael Schmidt and his co-authors (Chap. 4, this volume) support this route in their contribution. In their view, thresholds from environmental research and environmental impact assessment research could be employed. They put thresholds into a matrix in order to evaluate the significance of consequences in a more reliable, simple and transparent way. But even thresholds from environmental research and environmental impact assessment research have been defined arbitrarily. Environmental consequences are so complex that it is not possible to carry out a well-founded analysis on the basis of rigid thresholds for the selection of methods. For this reason, Clive George (Chap. 5, this volume) criticises this approach as too inflexible. He considers that desk officers cannot avoid individual case-based decisions in the impact assessment process. The guidelines should not limit decision-making possibilities, but should increase the ability of desk officers to choose the most suitable method from among a wide range of methods. The 2009 version of the IA guideline contains no thresholds or quality standards, but it offers at least a best practice library with many examples of high quality analysis, so that a desk officer could orient oneself by these examples (Commission of the European Communities, 2009).

A Chapter on Environmental Consequences in the Annex Further instructions on the choice and use of methods are therefore much more promising than clear selection standards. Clive George (Chap. 5, this volume) proposes the insertion of a special chapter into the Annex of the EU guidelines which deals solely with the assessment of environmental impacts. There are already similar chapters in the EU guidelines for economic consequences and bureaucratic consequences. Specific indicators for significant environmental consequences could be

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included in this chapter. In addition, different characteristics of the indicators could recommend specific methods of analysis. The different assessment methods could also be linked to the quality of the available data basis. All the descriptions in such an additional chapter in the Annex should be incorporated analogously into I.Q. Tools. Such a chapter on methods would reduce decision-making costs, as it induces the desk officer to take specific analytical steps as well as offering instructions for such steps. In this respect, the chapter would reduce the search and information costs for potential methods of analysis as well as for their use. Unfortunately the new IA Guidelines do not contain such a chapter.

Improving the Chapter on Methods of Comparison Chapter 1 shows that the greatest problems lie in the comparison of different regulatory options. Ranking is seldom carried out and the different economic, social and ecological consequences are weighed without a comprehensible reasoning. Methods of comparison such as the cost-benefit analysis are demanding and resource consuming both in terms of time and labour input. For a cost-benefit analysis all relevant consequences should be quantified and monetised as far as possible. The advantage of such a monetisation is that all economic, social and environmental consequences are made comparable across regulatory options. This advantage, however, is of minor importance to the agent who conducts most of the impact assessment. A better comparability might lead to greater influence of environmental impacts which may affect the preferred option. If the lead DG is not DG Environment this could be viewed as an additional obstacle. Generally, the positive external effects of good governance do not play a major role in the decision of the individual desk officer who is concerned with the specific work load of the impact assessment and with getting a specific legislation passed. In his contribution, Martin Drechsler specifies that criteria for comparison should be complete, clear and non-redundant, and that all the actors in the legislative process should understand them and also recognise them as criteria for the comparison of consequences. Criteria for comparison which meet these requirements could be defined in the IA guidelines. This has not be done to date. However, this type of evaluation of options for political action based on generally recognised criteria for comparison potentially pre-empts the actual political decision, because a political decision-maker would have to present good arguments in the college of Commissioners as well as in public as to why he or she wishes to deviate from the results of such a generally recognised comparative procedure. According to the incentive analysis in Chap. 1, Directorate Generals view impact assessments as a means of promoting their political ideas in the political bargaining process. For this reason they will make sure that in the comparative overview only the option is recommended which on the one hand is in the interests of the Directorate General, and on the other hand is enforceable in the political process. Standard criteria of comparison could severely limit this room for manoeuvre. But in view of the incentive situation of the political leaders, there will be little chance

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to make comparison of all relevant options mandatory for the impact assessment. However, the new guidelines gently nudge desk officers towards such comparisons.

Closer Definition of Proportionality and Significance Finally, there is the option to define the principle of proportionate analysis more specifically. This principle of proportionality corresponds to the economic gauging of costs against benefits (Bizer, 1999). According to this, a method of analysis has to be, firstly, suitable for determining specific consequences of different regulative options. From the methods of analysis which are suitable, secondly, the one which requires the least use of resources is selected as the necessary option. Thirdly, proportionality in a narrower sense is evaluated and the question is posed as to which level of intensity the investigation with the selected method of analysis should have. A reason has to be given for each selection decision at every stage. Such an analysis could be easily transformed into a checklist. With the aid of this interpretation of the principle of proportionality, the selection process for methods of analysis could be made more transparent. The evaluation of reasonability is maintained nevertheless, but through the two criteria of suitability and necessity there is a pre-selection of possible methods of analysis, so that the outlay for evaluating the proportionality of the methods is reduced overall. This principle of proportionality should be embodied in the EU guidelines.

Strengthening of Institutions Providing Support and Advice The analysis of the institutional context in Chap. 1, section “Incentives and Barriers to Consider Environmental Consequences” shows that the decision field of desk officers is characterised by high informational, cognitive and budget-related limits. Suitable formal and informal support measures can help to reduce such restrictions. A serious initial problem is the lack of available data. Better networking of the available data from different institutions could redress this situation. Academic or scientific advisory boards could assist desk officers in their analyses and provide a meaningful supplement to the analytical abilities of the desk officer. Separate budget headings for impact assessments could lead to more funding actually being available for them.

Development of a Transfer Database In his contribution to the workshop, Atkinson suggested that a database for the transfer of costs and benefits should be developed to simplify cost-benefit analyses. Such databases already exist internationally and could form a basis for the Commission’s database. There are certainly serious limitations in the transfer of cost or benefit

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data. Cost-benefit data are usually dependent on the respective context in which they were recorded and cannot be readily transferred to other analytical contexts. Nevertheless, most cost-benefit data are a good approximation for many of the regulatory contexts which arise in legislative proceedings. A database of this type would make expensive additional cost-benefit analyses on the part of the different Directorate Generals superfluous in many cases and would thus significantly reduce the time and effort spent by desk officers on analysis. Furthermore, such a database would broaden the available data basis decisively.

Scientific Advisory Board A further alleviation of the burden on desk officers could be provided by a permanent scientific advisory board, which would offer continuous guidance to support desk officers’ analytical abilities, and would even take on entire sections of an analysis in difficult cases. Such a scientific advisory board could be supplemented by a permanent secretariat which simultaneously can act as a central help desk which would serve as an easily accessible point of contact for the impact assessment experts in den DGs or for the individual desk officer. Advisory and support bodies of this type would significantly reduce the costs of overcoming informational limitations for desk officers.

High-Level Political Commitment The institutional analysis in Chap. 1, section “Incentives and Barriers to Consider Environmental Consequences” shows also that a higher quality of impact assessments is a result of high political commitment. If the Directorate General demands a well-founded impact analysis, the desk officer has to fulfil this demand in order to avoid disadvantages for his or her career. At the same time, the Directorate General also provides the necessary financial and human resources available. For this reason, the impact assessment requires a high-level commitment. Clive George proposes that this commitment should be incorporated into the procedural rules of the Commission. In this way it would be ensured that the Directorate Generals monitor each other with regard to adherence to the procedural rules. If one Directorate General violates this commitment, the chances of it pushing through its regulatory project would be reduced. Each Directorate General would have an increased interest in presenting well-substantiated impact assessments. For such a commitment to be effective, an institution would be required which determines the quality of the impact assessment on the basis of defined quality criteria and could thus establish whether the commitment has been violated. The European Commission already has a suitable institution in the form of the IAB but is still missing procedural rules which formally establish the impact assessment.

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Strengthening the IAB for Monitoring and Quality Control Chapter 1 reveals that the quality control carried out by the IAB is in need of improvement (see section “Quality Assurance”). The limited resources of the IAB and the short examination periods of 4 weeks often only lead to superficial investigations. Moreover, the IAB is composed of representatives who have been delegated by Directorate Generals, which raises the question of to what extent the inspection by the IAB is independent of the Directorate Generals. Finally, the IAB only has the right to draw up its own report on an impact assessment, which is then presented to the College of Commissioners. The IAB does not have the right to stop or suspend legislative processes if an impact assessment does not meet its requirements (see section “Quality Assurance”). Nevertheless, the IAB requires also enough power to create the necessary pressure for changes when the impact assessment contains deficits. A possible formal rule would contain a right to suspend regulatory projects such as: The IAB can suspend legislation if the quality of the impact assessment is questionable, methodical deficits affect conclusions, environmental consequences are insufficiently quantified or monetised.2 The institutional analysis in Chap. 1 shows that the top of the Directorate General tries to use the impact assessment to improve the chances of its regulatory project being implemented. The threat of a legislative initiative being suspended could be an effective instrument to improve quality of impact assessments. In order to avoid their regulatory projects being delayed, Directorate Generals would fulfil the quality standards required by the IAB. However, this pre-emptive effect would only work if it is clear to the Directorate General in advance which quality deficiencies could lead to suspension. For this reason it would be necessary for the Commission to clearly define which quality standards it expects from an impact assessment. The disadvantage of such a right of suspension is that it can lead to major delays in the political process which make it difficult for the legislative bodies to react promptly to political problems. A further problem would be that the IAB could try to use its right of suspension to exert influence on political events and the draft legislation. With the aid of formal suspension rights, the IAB could develop from a purely monitoring agency for impact assessments into an independent actor in the legislative process. In particular, the Directorate Generals which are represented in the IAB could misuse the IAB and its right of suspension in order to promote their own political agenda against the interests of the Directorate Generals which are not represented in the IAB. Overall, a right of suspension appears to have more disadvantages than advantages. Besides, a formal right of suspension would not be necessary if the abovementioned high-level commitment to well-substantiated impact assessments existed between Directorate Generals. With nothing more than its reports to the College of

2 An

alternative would be: A positive IAB statement is a precondition for the initiation of the next stage in the legislative process.

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Commissioners, the IAB could decide whether the commitment has been adhered to or not. The Directorate Generals would ensure among themselves that no one Directorate General could put itself in a better position than the others by violating the commitment. An extension of the formal rights of the IAB is therefore not necessary. A final opportunity to increase the attention placed on environmental consequences in the IAB would be to change the voting rules and to change the composition of the IAB. Presently, all the decisions in the IAB are made with majority voting. Two Directorate Generals have seats on the IAB with an economic focus, one with an environmental focus, and one with a social focus, plus the Secretariat General. If the Directorate General for the Environment had a veto right, the voting imbalance in favour of economic interests could be counteracted. However, Stephen White (Chap. 2, this volume) contends that environmental representatives are hardly ever outvoted and that there is thus no need to change either the voting rules or the composition of the Commission.

Summary The institutional analysis in Chap. 1 shows that the incentive structure of the actors is complex and multifarious. Some procedures are better suited – and others are less well-suited – to changing the incentives of the actors in such a way that a wellsubstantiated impact assessment with regard to the environment can be achieved. The discussion with regard to selecting evaluation methods showed that procedures which limit the range of possible decision alternatives for the actors are not optimal. Procedures which restrict the capacity of actors to take political action, particularly the Director Generals and Commissioners, also have little chance of being implemented. It is unlikely that a Director General or Commissioner will manacle him- or herself in such a way. Efforts with regard to the selection of methods should therefore concentrate on more specific instructions for desk officers in the IA guidelines via a separate chapter in the Annex, the incorporation of the “ABC request” into the guidelines, and the concretisation of the principle of proportionate analysis by the introduction of the sub-criteria of suitability and necessity. Improved instructions for desk officers should be accompanied by increased support on the part of the Commissioner and the Directorate General. Impact assessments need a database for cost-benefit transfer to be created, and permanent scientific advisory boards should be introduced as well as a central help-desk supporting the internal impact assessment units of the various DGs and their individual desk officers. Finally, effective monitoring of the conduct of the impact assessment through the IAB is also required. The composition of the IAB continues to be contentious issue. A commitment to carry out an impact assessment should be embodied in the procedural rules of the Commission. Without a high-level commitment of this type there are few incentives for the Commissioner or the Director of the Directorate General to carry out an objective and well-substantiated impact assessment.

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Ultimately, a combination of the three elements of more specific instructions accompanied by the “ABC request”, improved support and stricter monitoring will lead to higher-quality impact assessments.

References Bizer, K. (1999). Die Ökonomik der Verhältnismäßigkeit. Darmstadt: Sonderforschungsgruppe Institutionenanalyse. Commission of the European Communities (2009). Impact assessment guidelines. Commission of the European Communities.

Annexes

Annex to Chapter 1 Table of Cases

Court

Parties (short title)

Date

File number

Source of information

ECJ ECJ ECJ ECJ ECJ ECJ ECJ ECJ ECJ

Safety Hi-Tech National Farmer’s Union United Kingdom/Commission Pfizer Animal Health/Council DuPont/Council Alpharma Inc. Monsanto Agricultura Italia Commission/Denmark Greenham and Abel

1998 1998 1998 2002 2002 2002 2003 2003 2004

C-284/95 C-157/96 C-180/96 T-13/99 T-31/07 T-70/99 C-236/01 C-192/01 C-95/01

ECR 1998 ECR 1998 ECR 1998 ECR 2002 ECR 2002 ECR 2002 ECR 2003 ECR 2003 DVBl 2004, p.818–820

K. Bizer et al. (eds.), The European Impact Assessment and the Environment, C Springer-Verlag Berlin Heidelberg 2010 DOI 10.1007/978-3-642-11670-4, 

141

Lead DG

ENV

ENV

ENV

ENV

TREN

FISH

SANCO

ENV

SANCO

Nr.

1

2

3

4

5

6

7

8

9

30.1.2008

01.02.2008

03.03.2008

02.04.2008

08.07.2008

16.07.2008

16.07.2008

16.07.2008

23.07.2008

Date

List of IA-Reports

Proposal for a Regulation concerning trade in seal products Proposal for a Regulation on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS) Proposal for a regulation on a Community Ecolabel scheme Communication on “Public procurement for a better environment” Proposal for a Regulation amending Regulations (EC) No 1290/2005 on the financing of the common agricultural policy and (EC) No 1234/2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) in order to set up a School Fruit Scheme Proposal for a Regulation amending Regulation (EC) No 423/004 as regards the recovery of cod stocks and amending Regulation (EEC) No 2847/93 Proposal for a Regulation on the placing on the market and use of feed Communication “Towards a Shared Environmental Information System (SEIS)” Proposal for a Regulation on the provision of food information to consumers

Title

SEC(2008) 275 SEC(2008) 276 SEC(2008)111 SEC(2008)112 SEC(2008) 92–97

SEC(2008)386 SEC(2008)389

SEC(2008)2118 SEC(2008)2119 SEC(2008)2124 SEC(2008)2125 SEC(2008)2225(1) SEC(2008)2225(2) SEC(2008)2226

SEC(2008)2290/2 SEC(2008)2291 SEC(2008)2121 SEC(2008)2122

IA

COM(2008) 40 final

COM(2008) 124 final COM(2008)46

SEC(2008)97 SEC(2008)96

Final IAB Opinion

D(2007)5418

Final IAB Opinion; IAB Opinion 1st AI

SEC(2008)2227 IAB Opinion 1st IA

COM(2008)442

COM(2008)162

SEC(2008)2127

SEC(2008)2120

SEC(2008)2123

SEC(2008)2292

IAB Opinion

COM(2008)400

COM(2008)401

COM(2008)402

COM(2008)469

Proposal

142 Annexes

Lead DG

ENV

ENV

TREN

SANCO

TREN

ENV

ENTR

ENV

TREN

Nr.

10

11

12

13

14

15

16

17

18

15.11.2007

19.12.2007

21.12.2007

21.12.2007

10.01.2008

14.01.2008

23.01.2008

23.01.2008

23.01.2008

Date

Directive amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading system of the Community Directive on the geological storage of carbon dioxide and amending Council Directives 85/337/EEC, 96/61/EC, 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC and Regulation (EC) No 1013/2006 Directive on the promotion of the use of energy from renewable sources Regulation on the provision of food information to consumers Proposals aiming to modernise and reinforce the organisational framework for inland waterway transport in Europe Directive reviewing existing legislation on industrial emissions – Recast IPPC Regulation on type-approval of motor vehicles and engines with respect to emissions from heavy duty vehicles (EURO VI) and on access to vehicle repair and maintenance information Regulation setting emission performance standards for new passenger cars as part of the Community’s integrated approach to reduce CO2 emissions from light-duty vehicles Proposal for a Regulation on a Code of Conduct for computerised reservation systems

Title

(continued)

SEC(2007)1496 SEC(2007)1497

SEC(2007)1723 SEC(2007)1724

SEC(2007)1679 SEC(2007)1682 SEC(2007)1718 SEC(2007)1720

SEC(2008)12 SEC(2008)13 SEC(2008)23 SEC(2008)24

COM(2007)709

COM(2007)856

COM(2007)851

COM(2007)844

Initiative aborted

COM(2007)872

COM(2008)19

COM(2008)18

SEC(2008)54 SEC(2008)55

SEC(2008)85

COM(2008)16

Proposal

SEC(2008)85/3

IA

Final IAB Opinion

SEC(2007)1725

Final IAB Opinion Final IAB Opinion

Final IAB Opinion Final IAB Opinion

SEC(2008)84

SEC(2008)56

SEC(2008)84 IAB Opinion 1st IA

IAB Opinion

Annexes 143

Lead DG

SANCO

FISH

FISH

TREN

TREN

ENTR

TREN

SANCO

AGRI

ENV

AGRI

TRADE

Nr.

19

20

21

22

23

24

25

26

27

28

29

30

18.04.2007

04.07.2007

18.07.2007

11.09.2007

19.09.2007

19.09.2007

10.10.2007

18.10.2007

18.10.2007

18.10.2007

18.10.2007

23.10.2007

Date

Renewed Market Access Strategy

Common organisation of the market in wine

Regulation relating to the type-approval of hydrogen powered motor vehicles Regulation on amending Regulation (EC)1775/2005 on conditions for access to the natural gas transmission networks New Animal Health Strategy (2007–2013) where “Prevention is better than cure” Review of the support scheme in the cotton sector Communication on water scarcity and drought

Communication on a European port policy

White Paper: “Together for Health: Strategic Approach for the EU 2008–2013” Regulation on protection of vulnerable marine ecosystems in the high seas Community strategy against Illegal, Unreported and Unregulated (IUU) fishing Action plan on freight transport logistics

Title

(continued)

SEC(2007)1189 SEC(2007)1190 SEC(2007)1481 SEC(2007)1482 SEC(2007)993 SEC(2007)996 SEC(2007)893 SEC(2007)894 SEC(2007)452 SEC(2007)453

SEC(2007)1374 SEC(2007)1375 SEC(2007)1315 SEC(2007)1317 SEC(2007)1336 SEC(2007)1312 SEC(2007)1321 SEC(2007)1320 SEC(2007)1339 SEC(2007)1340 SEC(2007)1301 SEC(2007)1302 SEC(2007)1179 SEC(2007)1180

IA

COM(2007)183

COM(2007)372

COM(2007)414

COM(2007)701

COM(2007)539

COM(2007)532

COM(2007)593

COM(2007)616

COM(2007)607

COM(2007)601

COM(2007)605

COM(2007)630

Proposal

SEC(2007)462

Final IAB Opinion SEC(2007)997 IAB opinion 1st IA SEC(2007)895

SEC(2007)1193

SEC(2007)1182

Final IAB opinion SEC(2007)1349 IAB opinion 1st IA Final IAB Opinion

SEC(2007)1378 IAB opinion 1st IA Final IAB Opinion SEC(2007)1313

IAB Opinion

144 Annexes

Annexes

Scorecard

Items Variables 1. Procedure 1 2 3

1.1. Consultations Public (Online-)Consultation (Ad-hoc) Consultations with Stakeholders Involvement of environmental NGO’s and organisations

4 5

1.2. External expertise Study of external consultants Study of external environmental consultants

6 7

1.3. Inter-Service-Steering-Group Attendance of the DG ENV Demand of external input from environmental Groups

8 9 10 11 12 13 14 15 16 17 18 19

1.4. IAB Board Disposal of an opinion Critique due to consultations of environmental stakeholders, experts and NGO’s Critique due to no proportionate analysis of environmental impacts Critique due to no or too little use of quantitative measures of environmental impacts Critique due to no or too little monetising environmental costs/benefits Critique due to discounting costs/benefits Critique due to comparison of options Critique due to not using multi-criteria-analysis Critique due to not using cost-benefit-analysis Critique due to no use of sensitive-analysis or risk-analysis Full or middle acceptation of IAB recommendations from the DG’s Only middle acceptation of IAB recommendations from the DG’s 2. Method

23 24 25 26

2.1. Impact Assessment Analysis of environmental impacts Analysis of long-term environmental impacts Only a little analysing environmental impacts due to insignificance of environmental impacts Explanation of insignificance Only a little analysing environmental impacts due to a data lack Use of suggestions from consultations and external studies Use of internal or external environmental databases

27 28 29

2.2.1. Qualitative analysis Described at least qualitative some negative or positive environmental impacts Use of case studies for environmental impacts Use of scenarios for environmental impacts

30

2.2.2. Quantitative measurements Quantified at least some environmental costs or benefits

20 21 22

145

146

Annexes (continued)

Items Variables 31 32 33 34

Use of Environmental Impact Assessment Models Use of other quantitative models for environmental impacts Use of Sensitivity-Analysis for environmental impacts Use of Risk-Analysis for environmental impacts

35 36 37 38 39 40

2.2.3. Monetised quantitative measurements Monetised at least some environmental costs or benefits Discounting at least some environmental costs/benefits Use of market prices for environmental costs/benefits Use of non-market valuation techniques for environmental costs/benefits Use of cost/benefit transfer for environmental costs/benefits Use a range of discount-rates

41 42 43 44 45 46 47 48 49 50 52

2.3. Comparing options Provide a range of total (monetised) costs Provide a range of total (monetised) Utility Summary of all impacts in a table Account of the impacts magnitude with a ++/– scale or something near it Comparison with the criteria of effectiveness Comparison with the criteria of efficiency Comparison with the criteria of coherence Provide a ranking of options by Net-Benefit Provide a ranking of Cost-Effectiveness-Ratio Provide a ranking with a complex Multi-Criteria-Score-Method Only verbal explanation of the preferred option

Results of the Scorecard Analysis

Item 1 2 3 4 5 6 7 8 9 10 11 12

Variables Public (online-)consultation (Ad-hoc) Consultations with stakeholders and experts Involvement of environmental experts, NGO’s and organisations Study of external consultants Study of external environmental consultants Attendance of the DG ENV in ISSG Demand of external input from environmental groups in ISSG IAB disposal of an opinion Critique of the IAB due to consultations of environmental Stakeholders, Experts and NGO’s Critique of the IAB due to non proportionate analysis of environmental impacts Critique due to no or too little use of quantitative measures of environmental impacts Critique due to no or too little monetising environmental costs/benefits

Out of 10 env. IAs, %

Out of other IAs, %

90 90 90 100 70 100 0 100 10

85 95 42 80 5 78 0 100 10

60

35

20

30

20

5

Annexes

147 (continued)

Item

Variables

13 14 15 16 17 18

Critique due to discounting costs/benefits Critique due to comparison of options Critique due to not using multi-criteria-analysis Critique due to not using cost-benefit-analysis Critique due to no use of sensitive-analysis or risk-analysis Full or middle acceptation of IAB recommendations from the DG’s Only middle acceptation of IAB recommendations from the DG’s Analysis of environmental impacts Analysis of long-term environmental impacts Only a little analysing of environmental impacts due to insignificance of environmental impacts Explanation of insignificance Only a little analysing of environmental impacts due to a data lack, impracticality or impossibility Use of suggestions from consultations, external studies Use of internal or external environmental databases Described at least qualitative some negative or positive environmental impacts Use of case studies for environmental impacts Use of scenarios for environmental impacts Quantified at least some environmental costs or benefits Use of Environmental Impact Assessment Models Use of other quantitative models for environmental impacts Use of Sensitivity-Analysis Use of risk-analysis Monetised at least some environmental costs or benefits Discounting at least some environmental costs/benefits Use of market prices for environmental costs/benefits Use of non-market valuation techniques for environmental costs/benefits Use of cost/benefit transfer for environmental costs/benefits Use a range of discount-rates Provide a range of total (monetised) costs Provide a range of total (monetised) utility Summary of all impacts in a table Account of the impacts magnitude with a ++/– scale or something near it Comparison with the criteria of effectiveness Comparison with the criteria of efficiency Comparison with the criteria of coherence Provide a ranking of options by net-benefit Provide a ranking of cost-effectiveness-ratio Provide a ranking with a complex multi-criteria-score-method At least a ranking of options Only verbal explanation of the preferred option

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Out of 10 env. IAs, %

Out of other IAs, %

10 50 0 20 10 100

0 30 0 0 0 78

50 100 40 40

17 100 30

20 100 80 90 100

90 44 100

10 50 70 20 40 10 10 30 0 0 0

0 30 30 10 10 5 0 25 5 0 0

30 0 20 10 70 30

25 0 15 10 90 45

30 20 0 0 20 0 0 80

30 5 0 10 0 0 10 90

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Rules of Procedure of the Impact Assessment Board (“Board”) Article 1: Composition and appointment 1. The members of the Board shall be the Deputy Secretary General responsible for better regulation, acting as the Chair of the Board, and one permanent official at Director level from the Directorates-General with the most direct expertise in the three broad dimensions – economic, social and environmental – of integrated impact assessment (DG ECFIN, DG EMPL, DG ENTR, DG ENV). They shall be appointed as Board members with voting rights. 2. Each member shall have an alternate at least at Head of Unit level. 3. The members and their alternates shall be appointed by the DirectorsGeneral of the respective departments subject to approval by the President. Article 2: Term of office 1. The duration of the term of office for each member and alternate shall be 2 years and it may be renewed. 2. The term of office of a member and an alternate can be extended or shortened in agreement with the President on the initiative of the Director General of the department concerned. 3. If a member or an alternate leaves the department by which he/she was appointed, or, because of change of position within that department, is no longer able to draw on available expertise in his/her particular field of competence, the Director General concerned will without delay appoint a successor subject to approval by the President.

Article 3: Independence 1. The members of the Board shall act independently in the interest of the institution and their role is to provide expertise on the quality of the impact assessments. They shall act in their personal capacity and on the basis of professional expertise. By doing so they do not commit their department concerning individual impact assessments, nor may their department give instructions to members of the Board. 2. Any member (and alternate) is obliged to inform the Chair of any interest which might be considered prejudicial to their independence in relation to individual impact assessments and transfer his/her vote to the alternate, if appropriate. 3. The Chair shall decide on how to deal with cases where independence of a member or alternate is questioned. It shall be noted in the records of the meeting.

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Article 4: Secretariat 1. The secretariat of the Board is provided by the Secretariat-General. 2. The Chair instructs the secretariat on tasks to be carried out. Article 5: Operation 1. The Commission department responsible for an impact assessment which is subject to Board scrutiny will provide the Board with the draft impact Assessment report not later than 1 month before the planned launch of interservice consultation. 2. The Board may recommend that the draft impact assessment report be revised and, if considered necessary, re-submitted to the Board. 3. On request of departments, and at the discretion of the Chair, the Board may provide advice on impact assessments during the course of their being drawn up. The Board can ask departments to report on the progress of the impact assessment work. Article 6: Documentation and Minutes of the Board The Board will issue opinions on individual impact assessments, “promptletters” to Directorates-General concerned and notes signed by the Chair on behalf of the Board. These documents and the records on the discussion of each point on the agenda, are drawn up by the secretariat under the responsibility of the Chair Article 7: Meetings of the Board 1. Board meetings shall be chaired by the Deputy Secretary General. If the Chair is unable to attend a meeting or part of a meeting, his/her alternate shall chair the Board. 2. The Board meets in non-public session. 3. Participants in the meetings are the Board members or, in case of absence, their alternates. A participant may be assisted by one person. The Chair is assisted by members of the secretariat. 4. The Chair may decide to invite further participants in accordance with Articles 13, 14 and 15. Article 8: Quorum 1. The Board members should strive to attend all meetings of the Board. Where a Board member is unable to attend, his/her alternate shall participate and vote on behalf of the Board member.

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2. The Board can take decisions in a meeting if at least 4 of its 5 voting members or their alternates are present. Article 9: Convening a meeting Meetings of the Board shall be convened by the Chair, taking account of possible requests of Board members. Article 10: Agenda 1. The Chair shall draw up in a timely manner a draft agenda and send it to the Board members. 2. Requests for items to be placed on the agenda by the Board members or other departments shall be submitted to the Chair. Article 11: Voting 1. The Board shall strive to adopt its opinions, “prompt letters” and notes signed by the Chair on behalf of the Board by consensus. 2. In case a vote is needed, the Board shall take its decision by a simple majority of the members or alternates with voting rights present at the meeting, excluding abstentions. In case of a tied vote, the Chair holds the casting vote. Article 12: Decisions by written procedure 1. The Chair may decide to submit certain matters to the Board in a written procedure. Decisions are deemed to be adopted if no member opposes them within the deadline set by the Chair. 2. At the initiative of the Chair or if a member asks for the question to be examined at a meeting of the Board, the written procedure shall be interrupted and the Chair shall convene a meeting of the Board as soon as possible. Article 13: Participation of departments in the Board meetings 1. The Chair will normally invite to Board meetings the author department of the impact assessment which is due to be discussed. 2. The Chair may invite any Commission department to contribute its expertise orally or in writing to the Board’s examination of any individual impact assessment. 3. The Chair will decide on a case by case basis on the participation of other departments in the Board meetings.

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Article 14: Internal expertise 1. The Board, acting through its Chair, may seek input from experts within Commission departments. 2. The Board, acting through its Chair, may call on expertise from existing formal and informal groups e.g. the Impact Assessment Working Group, the Economist network and the Evaluation Network. Article 15: External expertise 1. The Board, acting through the Chair, may consult on horizontal and methodological issues with institutions, individuals and groups outside the Commission. 2. The Board, acting through the Chair, may call on external expertise, as needed, to examine particularly complex or problematic issues related to individual impact assessments. Article 16: Transparency 1. The Board will make available its draft agendas, meeting records, opinions, “prompt-letters” and notes signed by the Chair on behalf of the Board as quickly as possible to all Commission departments. 2. The Board’s opinion shall be part of the documentation submitted to the College prior to deciding on initiatives. 3. The principles and conditions concerning the public access to the Board’s documents are those laid down in Regulation (EC) No 1049/2001 Article 17: Other matters The Chair will decide, after discussion in the Board, on matters which are not covered by the present rules. Where necessary, the Chair shall submit these decisions for approval to the President.

Annex to Chapter 3 EEB’s Impact Assessment (IA) Performance check-list used as a guide to evaluate Commission’s Impact Assessment procedure 1. Sustainable development: Is it the objective? – Is there explicit reference/descriptive. If so what definition/description is used? According to EU Sustainable Development Strategy or other? – Weight attached to the three “pillars” of sustainable development i.e. as reflected in the assessment: qualitative/quantitative assessment?

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– What was the role of DG environment? Do we know about any cooperation between DGs? (since 2006 there is the Inter-Service Steering group composed of officials from other DGs) – If sustainable development is not the explicit objective, are the objectives given relevant for environmental protection/managing? Or are they in line with the EU sustainable development objectives? 2. Balance between environment and other pillars of sustainable development: Is it fair? – Is there an explicit reference to the environment (and social e.g. health) dimension? – What is the role of cost-benefit analysis or cost-effectiveness methodology in influencing this balance? – Does Impact Assessment cover both positive and negative impacts of proposal on social, economic and environmental dimensions? – What kinds of policy alternatives are given? Are justifications for their choice given? Are they well explored? 3. Stakeholder consultation: Is it participative? – At which point of the policy formulation process is the participation occurring? – Where environmental NGOs invited to give input? How? Were their views (properly) reflected in the IA report? /taken into account and responded to? – Method of stakeholder consultation: how effective and efficient is this? – Does IA report mention how comments changed context of proposal? 4. Consultation inputs: Does it state the impact of the IA on the policy proposal? – Does IA indicate how the views of stakeholders shaped the final outcome of the proposal? 5. Is IA accessible? Results of the process are they on time? Where are they? Easy to find or not? 6. Is IA relevant for decision-making? – In case of negative IA conclusions on environment or sustainable development, what is the impact on the EU policy proposal? 7. Is the choice of policy instrument effective to achieve the objectives? And to address identified negative impacts? 8. Your views: general impressions.