Methodological guide on ex-ante assessment

Government of the Republic of Moldova

METHODOLOGICAL GUIDE on

ex-ante assessment of the impact of Public Policies

Machinery of Government, 2009

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Content INTRODUCTION .............................................................................................................................................3

BASIC NOTIONS AND DEFINITIONS ...................................... ERROR! BOOKMARK NOT DEFINED.

DECISION-MAKING PROCESS....................................................................................................................5

CHAPTER I. EX-ANTE ASSESSMENT OF THE IMPACT OF PUBLIC POLICIES ....................8

1. STAGES OF PUBLIC POLICIES EX-ANTE EVALUATION 8 2. TYPES OF EX-ANTE IMPACT ASSESSMENT 9 3. PUBLIC POLICY PROPOSAL ERROR! BOOKMARK NOT DEFINED. 4. PROCESS COORDINATION WITHIN THE GOVERNMENT 11

CHAPTER II. EX-ANTE ASSESSMENT FACILITIES...... ERROR! BOOKMARK NOT DEFINED.

1. PRELIMINARY STAGE. IMPACT ASSESSMENT PLANNING 14 1.1. Stage description .............................................................................Error! Bookmark not defined. 1.2. Notification of public policy elaboration.......................................................................................16 1.3. Data collection ................................................................................Error! Bookmark not defined.

2. STAGE I. PROBLEM DEFINITION 19 2.1. Stage description .............................................................................Error! Bookmark not defined.

3. STAGE II. OBJECTIVES SETUP 22 3.1. Stage description .............................................................................Error! Bookmark not defined.

4. STAGE III. IDENTIFICATION OF OPTIONS 26 4.1. Stage description .............................................................................Error! Bookmark not defined.

5. STAGE IV. OPTIONS ANALYSIS 30 5.1. Stage description .............................................................................Error! Bookmark not defined. 5.2. Distribution of Costs and Benefits to society.................................................................................32 5.3. Fiscal impact analysis .....................................................................Error! Bookmark not defined. 5.4. Administrative impact analysis......................................................................................................37 5.5. Economic impact analysis .............................................................................................................39 5.6. Social and poverty impact analysis ...............................................................................................41 5.7. Strategic environment analysis......................................................................................................43 5.8. Risk analysis ..................................................................................................................................46

6. STAGE V. COMPARISON OF OPTIONS, AND FORMULATION OF A RECOMMENDATION 48 6.1. Stage description .............................................................................Error! Bookmark not defined. 6.2. Formulation of public policy proposal ..........................................................................................52

CHAPTER III. CONSULTATION PROCESS .......................................................................................54

1. CONSULTATION FACILITIES FOR EX-ANTE IMPACT ASSESSMENT 54 2. CONSULTATION OF EXPERTS 55 3. CONSULTATION OF INTERESTED PARTIES AND PUBLIC PARTICIPATION 56 4. PROCEDURE NOTES AND COMMENTS 56 5. DELIBERATIVE FACILITIES 58 6. ANALYSIS OF INTERESTED PARTIES OPINION 58

APPENDIXES.................................................................................. ERROR! BOOKMARK NOT DEFINED.

Appendix I. ...................................................................................... An example of Public policy proposal Error! Bookmark not defined. Appendix II. . Problem tree: The quality of public policy documens and of regulatory acts elaborated by CPA is not adequate ..................................................................................................................................67 Appendix III.............Objective tree: Elaboration of public policy documents and of regulatory acts is of adequate quality ..........................................................................................Error! Bookmark not defined. Appendix IV. ............................................................................................ Definition of public policy facilities 71

Appendix V. Evaluation and eligibility criteria for public policy proposal...................................................77

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BIBLIOGRAPHY............................................................................................................................................80

Introduction The edification of a modern prosperous state, where the Government actions would have a beneficial impact on the society, implies a coherent functioning of decision-making process within central public administration (CPA). The improvement of this process efficiency within the Government implies both the creation of a sustanable system of Government administration and the introduction of an efficient system of public policies elaboration.

The evolution processes in the economic and social fields which have place in a country require the intervention of central public authorities for correction of certain transformations, which produce or will produce in the future an undesirable impact on the society. These interventions are actually materialized by means of actions fixed in public policy documents and other regulatory acts. At present, the coppendixion between these documents and methods of their elaboration, implementation and evaluation, as well as the division of functions among participants involved into the decision-making process, are not clear and transparent. Over the last years, the public authorities have made sporadic efforts to improve the quality of public policies elaborated. These efforts made possible the familiarization with stages and facilities of public policy elaboration, but are still not sufficient for consolidation of durable and directioned skills of public officials, which are required for public policy analysis. The lack of a common methodological frame to be followed within the process of public policy elaboration compromises all the efforts of public officials to formulate a coherent public policy, the implementation of which assures the achievement of objectives established by the authorities. The necessity of this methodological guide elaboration derives from the importance of public policies in the context of decision-making process in general and of strategic planning in particular. This guide have been elaborated as a methodological guidebook for central public authorities involved into the process of public policy elaboration, however can also be used by large public. The guide fixes the basic principles in edification of a durable and efficient system of public policy elaboration, based on European best practices. This system is based on public policy analysis prior to its approvement, which is also called ex-ante evaluation of the impact of public policy. The impact assessment represents the determined tool of public policy elaboration process, by means of which the problems, objectives and options related to the policy can be identified and evaluated, by providing of decision-making agents with valuable empiric data for correct documentation and decision. This guidebook’s destination is to supplement the Methodological guidebook on decision-making process which describes both the stages of planning within the Government and the stages of public policy cycle, starting with public policy elaboration – the stage permeated by ex-ante evaluation. The methodilogy guidebook on public policies elaboration introduces into the process of public policies elaboration two new important changes – one procedural, and the other one related to the content, as follows:

1. Public policy proposal elaboration (PPP) prior to elaboration of regulatory and legal acts, public policy documents or other specific actions.

2. Establishment of concrete requirements for content ex-ante evaluation, resumed in public policy proposal.

The introduction of requirement to elaborate the public policy Proposal prior to decision-making, will allow to make informed decisions, which would prevent or correct both market failures and Government failures.

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The first project of methodological guidebook has been conceived on the base of the guidebook on Regulatory Impact Evaluation (RIE) elaborated by the Ministry of Economy and Trade for regulatory acts analysis, which could have an impact on entrepreneurial activity. In distinction from guidebook on RIE, the methodological guidebook considers the modality of public policies elaboration in general, which can take various forms – public policy documents, regulatory acts and even documents which do not obligatorily consider the business sphere. The final version of guidebook, which was elaborated as a result of consultations realised with public authorities, takes into account the principles fixed in the gudebook on RIE, in parallel with the extension of set of tools for realizing the ex-ante evaluation of the impact of public policies. The guidebook determines the public officials to use their critical thinking in process of impact assessment, by offering with this view a range of useful questions, the answers to which will lead to a deeper understanding of Public Policy options. In addition, the methodological guide does not represent an exhaustive spectrum of facilities and questions for ex-ante evaluation of public policies impact, but a selection of tools, which are accessible for and applicable by public officers and analists involved into this process. The selection of a set of analitical tools, especially those of high quality, derives from a novelty appeared in the process of ex-ante evaluation of the impact of public policies and, hence, the insufficient capacities of public authorities to use a facility more sophisticated. The requirements to the analysis, which accompanies the process of public policies elaboration will increase as the analitical skills of public authorities will grow. The Ghuidebook contains three chapters. The first chapter describes the stages and the types of ex-ante analysis and explains certain requirements related to the process. The second chapter considers the analitical facilities for every stage of public policies impact assessment. The third chapter describes bothe the consulting modalities within the evaluation process, and sets up the cathegories of participants. Also, the Ghuidebook contains five appendixes. The first Appendix offers an example of public policy Proposal, which contains the ex-ante evaluation synthesis. The second Appendix illustrates an example of problem identified by means of „problem tree” method. The third Appendix contains an example of objective, determined on the base of „objective tree” method. The fourth Appendix describes the public policies facilities, which should be considered while analysing the options of public policies. The fifth Appendix describes the evaluation and eligibility criteria for public policy Proposal. A separate compartment following the introduction is dedicated to the basic notions and definitions used in this guidebook.

Basic notions and definitions Introducing a number of innovative stages and proceeds into the functioning of decision-making process involves the use of certain new notions and terms. These are the basic notions to be learned for better familiarisation with decision-making process and with public policies ex-ante evaluation. In addition, through this guidebook there will persist a number of important notions, which will be defined in the respective chapter, thus allowing to not separate these notions from the context. Thus, within the context of this guide, the following notions will be used: Public policy ex-ante analysis represents the process of identification of problem or objective, eventual options of problem solving or achievement of objective, and analysis of the effects or consequences of these options pending decision; Public policy document represents a tool of reflexion of public policy planification results. In function of proportions, the public policy documents are divided into three types: national,

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intersectorial and sectorial. As regards the form, the public policy documents can be of five types: public policy conception, strategy, program, plan and proposal; Public policy facilities represent a mechanism used for public policy implementation. There are four types of public policy tools – informative, financial, administrative and regulatory. Public policy regards the actions or lack of actions planified by the Government, which influence or change in some way the society or the economy and contribute to the realization of Government agenda. Decision-making process represents the deliberative process implemented by public authorities, which leads to the identification of certain political decisions from a series of options available. The decision-making process is relevant to the whole cycle of public policy: from impact elaboration to its evaluation. Public policy proposal represents a public policy document containing the results of ex-ante evaluation of the impact of public policy.

Decision-making process Before understanding the facilities of ex-ante evaluation of the impact of public policy, it is important to perceive the essention of decision-making process or of public policy cycle. This process is largely described in Metodological Ghudebook on decision-making process. The Decision-making process is composed of five basic stages (Diagram 1): 1. Elaboration 2. Approvement 3. Implementation 4. Monitoring 5. Evaluation The systematic implication of public authorities is important for all five interdependent stages of decision-making process, though the Public Policy ex-ante evaluation has place at the first stage only – Public Policy elaboration. The Public Policy elaboration cycle is not terminated once the decision is made, but continues through Policy implementation. The consecutive traversion of all stages of decision-making process allows to evaluate the Public Policy and to get involved, if necessary, into the process of implementation for eventual correction of this, in order to avoid any eventual failure or harmful effect. The consultation is specific for every stage of decision-making process (excepting the stage of approval) and should start as soon as possible at the stage of Public Policy elaboration. Thus, for bothe Public Policy documents and regulatory acts, the CPA authorities should consider the following requirements set up for basic stages of decision-making process:

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a) Public Policy elaboration The Public Policy elaboration reprezents the formulation by public authorities of effective and acceptable principles and objectives for implementing of priorities established in Government agenda. The Public Policy elaboration accompanied by ex-ante impact assessment reprezents an analitical process involving five interdependent stages: problem identification, objective establishment, options set up for problem solving and objective achievement, options analysis, options comparison and formulation of recommended option. b) Public Policy approval

The Public Policy approval represents the obtaining of formal consent of public authorities for the necessary implementation of actions foreseen by Public Policy identified. The approval of Public Policy documents and of regulatory acts should be made if the respective documents comply with all requirements exposed for elaboration stage only. c) Public Policy implementation

The Public Policy implementation represents the process, where the selected option of Public Policy is implemented toghether with the approval of this option by a regulatory act. The implementation of Public Policy should be made on the base of actions fixed by an action plan, in which should be indicated the responsible persons for execution. d) Public Policy monitoring

The Public Policy monitoring represents the process, when the authorities of central public administration collect qualitative and quantitative data denoting the degree of realization of the actions established, in the aspect of Public Policy proposals. The monitoring should persist through the whole implementation process of Public Policy. The monitoring is realized by the institution, which has iniciated the Public Policy, including with informational support of other public

Public Policy elaboration

(ex-ante analysis)

Public Policy approval

(by a respective

official document)

Public Policy implementation (on the base of an action plan or an

official document)

Public Policy monitoring

(intermediate analysis of

implementation)

Public Policy evaluation

(ex post analysis )

Consultation

Diagram 1. Stages of decision-making process

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authorities and organizations outside the Government. The monitoring is an intermediary evaluation, in medias res, which establishes the modality of actions execution. e) Public Policy evaluation

The Public Policy evaluation represents the process of analysing data collected while monitoring, accompanied with recommendations useful for the following cycle of Public Policy. The evaluation is a stage which, as the matter of principle, succeeds the monitoring process, although these stages are often regarded as to be a complete unit. A monitoring process without an evaluation process has no sense. Though, the evaluation indicates whether the objective of the public policy has been achieved, as opposed to the monitoring, which is based on the processes and actions rather then on the results and impact. The results of the evaluation or of ex post analyse are correlated with the results of ex-ante evaluation – to determine the precision degree of the inicial prognosis and to understand the factors determining the success/failure of Public Policies implemented. In the event that after public policy implementation the anticipated objective has not been achieved, it might be possible that the problem consists not only in the error commited at elaboration of ex-ante analysis, but also in the problems afferent to the process of implementation. In order to edify a coherent system of Public Policies elaboration, it is necessary to sfecify the types of Public Policies, the coppendixtions existent between the documents of Public Policies, both horizontally and vertically, and the relation of these with regulatory acts. It is essential to make transition from system to planning, when the Public Policy and the regulatory acts moves from sporadic initiatives to a strategic system, where the regulatory acts will explicitly derive from policy documents. In decision-making process, the public authorities should be sensible of the fact, that the ex-ante evaluation of the impact of Public Policy involves an analysis of Public Policy to be included in the policy, before the analysis of existent facilities for this policy implementation, which are often regulatory acts and legal documents. The proposed system, where the regulatory acts will represent a mechanism of Public Policy documents realization only, will be assigned to change the paradigm of decision-making process and of strategic planning. This system is largely described in Methodological Guidebook on decision-making process.

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CHAPTER I. PUBLIC POLICY EX-ANTE EVALUATION

1. Stages of public policy ex-ante evaluation The first stage of decision-making process, and especially the Public Policy elaboration, is accompanied with Public Policy multidimensional analysis – ex-ante evaluation of the impact of Public Policy. This type of evaluation is used in elaboration of coherent public policies, the implementation of which will allow to achieve the objectives established by the initiating authorities or at the national level. This process supposes the data collection and the analysis of other alternative modalities of problem solution or objective achievement, and of the effects or consequences of this Public Policy options. This type of evaluation will include in it the evaluation of budgetary, administrative, economical, social and environmental implications of various modalities of this problem solution. The process of ex-ante evaluation of the impact of Public Policies is composed of five interconnected stages: 1. Problem identification. 2. Establishment of an objective. 3. Identification of options for problem solution and objective achievement. 4. Options analysis. 5. Options comparison and selection (see Diagram 2.). These are the steps in the ex-ante evaluation of the impact, which are also purposes to be realized.1

1 The elements of ex-ante evaluation of the impact correspond to OCDE and EU recommendations - Mandelkern Group Report on a better reglementation for European Commission, 2001, available at

Problem determination

Establishment of an objective

Identification of options for problem

solution and/or objective achievement

Options analysis

Fiscal impact Economic impact

Poverty and Social Impact

Impact on the environment

Riscs and incertitudes

Options comparison and selection

Administrative impact

Diagram 2. Stages of Public Policy ex-ante evaluation

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All stages of ex-ante evaluation have equal importance, and omitting one stage or changing their order could result in elaboration of a Public Policy lacking premises for implementation or which will not contribute to the realization of the intended impact. Therewith, the stage needing maximum efforts to be applied by public officials, is the 4th stage „Options analysis”, which implies the evaluation of five types of impact, as well as of risk and incertitude related to the analysed options. These stages will be described further in the guide, while covering the material, in order to facilitate the understanding of the essense of these stages by public officials involved in the process of Public Policy impact assessment.

2. Types of ex-ante evaluation of the impact The amplitude of Public Policy evaluation depends on the complexity of the problem, on the estimated impact of this, and on the time, ressources and competencies available for the authorities having iniciated the Public Policy. If the cost of analysis exceeds the amplitude of the impact generated by Public Policy, it is not recommended to realize a complex evaluation of such policy. Despite of the fact that the theory on Public Policy recommends the application of a number of quantitative approaches such as analysis cost-benefit, analysis cost-efficiency, risks analysis, etc., in practice the use of such approaches in their classical limits is very difficult, and sometimes is not necassary. It is preferably that public authorities use the quantitative approaches, because the fugures offer a good foundation to the recommendations made by public authorities, although to be going on with, it is recommended to realise combined approaches, where the qualitative analysis and the participative analysis are used in combination with statistic data and simple evaluation of costs and benefits of Public Policy promoted. There are different modalities of determining the complexity degree of the impact assessment. This guide uses the terms of “general” and “extended” evaluation of the impact. These terms describe the degree of evaluation specificity and are not mutually exclusive. A general analysis is required for evaluation of all planned Public Policy proposals, whereas an extended analysis should be realized for a limited number of Public Policies, which after general evaluation appear to be more complex, imply considerable expenses or may generate disputable impacts. The content of general evaluation and of extended evaluation of the impact do not differ considerably, by reason of the same consecutive stages to be followed, which are described in this guidebook. The essential difference consists in analitical aproaches used, as well as in depth and amplitude of eventual options analysis. The extended analysis is often realized with support of a company specializing in the field. The Public Policies involving necessity of an extensive evaluation of the impact are generally referred to the following categories:

1. Ample and expensive Public Policy. There could be mentioned as an instance the Supportive Public Policy for certain social categories such as poor, unemployed and disabled people, etc., which implies major bugetary costs.

2. Government intervention into the business sphere. We refer to this category the fiscal Public Policy oriented on tax quota reduction or increase, the Subvention Policy, etc.

3. Durable projects and investments. Rehabilitation and construction of roads, creation of stations for renewable energy production, etc. are projects specific to this category.

4. State property privatization. The decision to expose certain property to privatization should be thoroughly analysed, in view of such decision irrevocability. It particularly concerns the privatization of companies which are natural monopolies or bring profits.

http://ec.europa.eu/governance/impact/docs/mandelkern.pdf. See also the Guidelines concerning the Impact assessment – European Commision (2005).

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On the assumption that the evaluation of the impact respresents an exercise requiring time and resources, it is important to insure the proportionality in the work2, so that the evaluation does not become burdensome. In Chapter II. Section 1.Planification of impact assessment, there are proposed a number of tests, which would help to decide which type of evaluation is needed for every concrete problem. If the problem is not complex, the realization of evaluation of the impact which requires special knowledges and great efforts can be contraproductive. In this case the evaluation of the impact becomes a check mark exercise or an administrative burden for public service, it does not represent any real or informative value for decision-making factors and does not improve anyway the quality of public policy analysis. The major part of issues daily considered by public officials do not need any extended evaluation of the impact. The stages which should pass to the general evaluation of the imact are sufficient to decide on the opportunity of approval or implementation of any option of Public Policy. Thus, within general evaluation of the impact there will persist both aspects implying heavy workload and aspects needing less efforts to be applied. This guidebook describes the facilities applicable in general evaluation of the impact of Public Policy. The spectrum of these tools will be extended in accordance with the development of skills of public authorities in application of elementary facilities in Public Policy evaluation.

3. Public Policy proposal The results of ex-ante evaluation of Public Policy will be transposed into a Public Policy proposal, a model of which is described in section 6.2 of the Chapter II. The Public Polices materialized in Public Policy documents, regulatory and legal acts will be often preceedes by a public policy proposal, which will include in it a synthesised analysis of several options of problem solution and/or achievement of objective in the aspect of their impact on certain fields and categories of people. The Public Policy proposal could imply the necessity of elaboration of one of above-mentioned documents, specifyed in the action plan performed for Public Policy options implementation. The public policy proposal should be elaborated by the subdivision-author, and after consultations with central public authorities and interested parties, and ulteriorly with subdivision of analysis, assessment and monitoring of public policies, should be presented for examination to the chief of authority and after final approval the proposal will go to the Government. After approval „in principle” of public policy proposal by the Government, there will be initiated the elaboration of properly public policy, which can take the form of a regulatory act, of a public policy document or of other separate actions. The drafts of these documents will be elaborated on the base of a recommended option and have to be approved by the authority, which has iniciated the Public Policy or by the Government (depending on their importance and complexity). The drafts will be accompanied by a brief summary (according to the legislation in power), which will contain a resumed analysis of public policy proposal. The public policy proposals can have different volumes depending on problem complexity and analysis of this. A very brief analysis could omit useful details which might contribute to decision-making, and a very expended analysis could generate confusions and lose reader’s attention. The Public Policy proposal should be elaborated for execution of certain actions fixed in Action plan for implementation of national public policy documents (for example National Development Strategy). At the same time, the PPP is optional for other public policy documents (conceptions, strategies, programs), because a major part of these should properly follow the structure and the

2 European Principles of Proportionality and Significance, European Commision (2004).

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logic of public policy proposal. An important part of regulatory and legal acts elaborated by the Government should be obligatorily supposed to the process of ex-ante evaluation of the impact of options proposed. At the same time, in order to avoid the overloading of central public authorities activity by introducing of obligatory impact evaluation of all public policies elaborated, a range of questions will not be supposed to the ex-ante assessment. While determining questions to be supposed to ex-ante analysis, it is important to not omit major questions involving reforms in certain fields and to not include other questions of minor importance – administrative (purchase of equipment, office change, etc.), questions related to the appointments/designations or other policies, the cost of the analyse of which is more significant than the anticipatet impact.

4. Process coordination within the Government An efficient intra- and interministrial communication is indispensable for a successfull decision-making process. The interaction between all participants within the process should start up as soon as possible, even at the stage of problem analysis and identification of possible options of this problem solution. In this context, it is important to edify an institutional framework to clearly determine the functions and the roles of all parcicipants to the decision-making process (see Diagram 3.). The interministrial coordination principles and facilities are largely described in the Methodological guidebook on decision-making process.

Diagram 3. Coordination of Public Policy proposal

Interministerial Committee for Strategic Planning

Presentation of PPP for approval after the advice of Machinery of Government

Direction for policies coordination and external assistance of Machinery of Government

Methodological and consultative assistance

Presentation of PPP for examination after

consultations with AAPC

Final public policy proposal

Advice Returning

Advice Returning

Subdivision of analysis, monitoring and evaluation Public authority

Chief of authority

Public policy proposal

Initiating subdivision

Adv

ice

MET MF MJ MLSPF MENR Other AAPC

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At the level of initiating public authority, both vertical and horizontal communication is crucial. The public policy proposal is elaborated by the subdivision which has initiated the public policy within central public authority. This is often a department responsible for a specific field rather then an unit of public policy analysis, monitoring and evaluation, whose destination is to assist the subdivision initiating the policy in understanding and application of impact assessment principles. The subdivision of public policies analysis, monitoring and evaluation assures the communication between the subdivision/working group which has initiated the proposal with and other units of this authority, with respective units of other public authorities, as well as with Machinery of Government. The subdivisions for public policies analysis, monitoring and evaluation will assure the elaboration of proposals according to a common format and the complience with the requirements vis-a-vis these documents. These units will have as mission to consult the subdivision-author, to offer assistance within the process of impact assessment and will rave the right to disapprove incoherent public policy proposals, regulatory acts and public policy documents. The evaluation and eligibility criteria of public policy porposals, which will be used by the subdivisions of public policies analysis, monitoring and evaluation for PPP quality control are provided in the Appendix Anexa V. To assure the complience with these principles, it is important to exclude the implication of subdivisions responsible for public policies analysis, monitoring and evaluation in any nonspecific activities, otherwise these hsould not take part in the cycle of public policies elaboration. Within the process of ex-ante assessment, a number of public authorities will have a special role, with obligatory expression on certain aspects of impact analysis. The Ministry of Finances will support the public authorities in the fiscal impact assessment and will present an advice concerning the performed analysis. The Ministry of Ecology and Natural Ressources will support the public authorities in strategic environmental assessment and will present an advice concerning the performed analysis. The Center of Legislation harmonization of the Ministry of Justice will analyse the public policy proposal in the aspect of conformity with european standards and complience with signed agreements. At the same time, the Ministry of Justice will examine the public polici proposal in the aspect of conformity with active legislation. The Ministry of Economy and Trade and the Ministry of Social Protection, Family and Children will offer assistance to public authorities in the process of economic impact assessment and respectively of social impact assessment, and wil present an advice concerning the performed analysis. The Center of Fighting against Economic Crimes and Corruption will analyse the anticorruptional aspects of PPP. The initiating authority will assure that the assessment results at different stages of process be consulted with other public authorities, which will be affected or involved into the process of public policy implementation. At central level, the process of strategic planning will be coordinated by Machinery of Government. The initiating authorities will present the proposal to the Government for advice. The proposal will be returned by the Machinery of Government to public authorities if its content is irrelevant or, otherwise, remited to relevant directions of Machinery of Government for verification of conformity with regulations concerning the elaboration and coordination processes. The evaluation and eligibility criteria of public policy proposal, which will be applyed by Machinery of Government for PPP quality control are presented in the Appendix V. The Machinery of Government, by means of relevant subdivisions, will operate as a filtre processing the proposals recieved from public authorities and will make decisions concerning the admission or rejection of these for ulterior improvement, analysing the proposals relevance and being final destination of their remittal. More specifically, the Machinery of Government should examine all documents recieved to assure:

The analysis of all opinions exposed in the process of consultations The conformity of proposals recieved from public authorities with Government strategic

priorities The compatibility of analyses and analytical materials (fiscal, economic, social,

environmental, administrative impact) with the standards fixed in the guide

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The examination and consideration of sectoral and intersectoral problems The solution or minimization of divergences between the authorities.

Within the process of examination of public policies proposals, other public policy documents and regulatory acts, the Machinery of Government will not have the goal to rewrite these documents or modify the recommendations of the authority-author. To the extent that the Government officials have opinions different from those exposed in the public policy proposal and in other documents remitted, there will be initiated a dialogue with public authorities involved in elaboration of respective public policy. In the event that the participants to the process of impact evaluation will fail to come to an arrangement concerning the public policy elaboration, the Machinery of Government should intervene to settle the case, if however the outstanding problem is too complicated and implies significant costs, the Governmet Community should present a demarche to the Interministerial Committee for Strategic Planning, which will determine conclusively. Finally, after examination of public policy proposal by Machinery of Government, the proposal is remitted for examination and approval to Interministerial Committee for Strategic Planning, which approves the PPP, giving the go-ahead for one of the options proposed by the initiating authority, and it can be not necessarily the option recommended by public authority. In this case, the authorities weel proceed to transpose the options approved to the obligatory implementing facilities. To the extent that noone of proposed option is considered to be adequate, the public policy proposal is returned to the authority for finalization or rejected (if it interferes with a recent public policy). These cases should not however take place, because at every stage the PPP will be extensively consulted both within the Government and with interested parties and affected from outside, and thus the risk of inadequacy of proposed options will be minimized. The documents which will succede the PPP (regulatory acts, legal documents, public policy documents) will be approved according to the procedures described in legislation.

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CHAPTER I. EX-ANTE EVALUATION FACILITIES

1. Preliminary stage. Planificarea evaluării impactului

1.1. Stage description The ex-ante analysis of the impact of Public Policy, the stages of which are described in this guidebook, imply a systematic consideration of a number of analitical questions and formulation of coherent answers to these. A good familiarizaiton with situation characterizing the outstanding question would allow to maximise the positive impact of public policy and to prevent the eventual risks. The best time to determine the questions which are subject to ex-ante evaluation, as well as this evaluation amplitude is the period of yarly activity planning which is carried out in all public authorities. To determine questions is not the same thing as to define a problem. The last activity constitute the first stage of public policy impact ex-ante analysis. The question can be considered a „rough” problem signalizing the imperfection of a system or process, the dissatisfaction of certain categories of people, etc. The question will be formulated as problem in conformity with all obligatory rules, at the first stage of ex-ante analysis only. The planning of activities to be realized in the coming year is exactly the time for questions analysis. In the course of the year, the central public authorities are involved into the process of strategic planning, which should normally proceed as it follows: The authority action plan is initially elaborated on the base of provisions stipulated in the Institutional Development Plan. The yearly authority action plan is ulteriorly used as base for NDS action plan, the latest being used to formulate the Medium Term Budgetary Framework and ulteriorly the state budget. This progression of strategic planning should be observed to assure the financial asset of coherent public policies. The public policies which are subject to ex-ante evaluation should be determined and refined by public authorities within these stages and coordinated with Machinery of Government (by notification system) to determine conclusively whether the analysis is necessary and which would be the type of this analysis. At the stage of analysis planning should be used two tests. Table 1 and Table 2 provide a test for problem impact evaluation and the second one for problem priority evaluation. At this stage it is not necessary to exactly formulate the problem (as it is required at the first stage of impact assessment), but to be familiarized in general terms with the question requiring a more serious consideration and an obligatory analysis.

0. Evaluation planning 1. Problem definiiton 2. Objectives setup 3. Identification of Options 4. Options analysis 5. Comparison of options and selection of recommended option

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Table 2: Test for priority degree evaluation Question or issue characteristics High priority High Government engagement; in case of non-

performance – significant political, fiscal or juridic repercussions

Medium priority

Government engagement with medium fiscal or juridic repercussions

Reduced priority

Public authority priority; administrative of tehnical; in case of non-performance – minimal consequences

After both tests performed, the obtained results should be put toghether (included) in a table. The 3d table represents a summary of interaction between impact and high-priority measures and specifies the cases when a general impact evaluation is required and when an extended evaluation is recommended. This table represents the single method of public policy impact evaluaiton. The final decision for type of analysis to be performed should be made by the authority author as consequence of discussions with memebers of the working group created for public policy elaboration. The combined table will take the following form: Table 3: Analysis of the impact and of priority degree of question or of isue Major impact Medium impact Reduced impact High priority Extended impact assessment

Public policy proposal General impact assessment Public policy proposal

General impact assessment Public policy proposal

Medium priority




Reduced priority



Lack of formal analytical requirements; The Ministry of Finances can require the fiscal impact evaluation

This approach suggests that the general impact evaluation is the most is the best variant in a major part of situations. Just the important public policies generating major impact (of type described in Chapter I. Section 2.) will be subject to an extensive impact evaluation. The analytical approach and general method of impact assessment are the same for all public policy, excepting administrative and technical problems with reduced priority or impact. The last-mentioned do not need elaboration of a public policy – The Ministry of Finances could require the fiscal impact evaluation only. For example public policy in the field of youth employment facilitation is of high priority, but in the same time a medium impact, because the Government will hold negotiations with economic agents concerning the youth employment by offering them obligatory fiscal stimulants, as contrasted with pensionary reform (freeze of retirement age, pension valorization, etc.). In case of pensionary system reform, which is both of high priority and generating major impact, there is necessary an extensive impact analysis, as opposed to public policy in the field og youth employment – a public policy whicn could be examined in the aspect of general impact assessment.

Table 1: Test for impact level evaluation Question or issue characteristics High priority Very complicated, disputable from a policy perspective or very expensive Medium priority A little complicated, disputable from a policy perspective or expensive Reduced priority Direct, technical or administrative, minimal cost

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It is possible that, at first stage, the public officials might aspire to assess the major part of public policies as to be of reduced priority. Such a situation should be avoided, because the underevaluation of elaborated public policies will eventually explode the authority’s reputation. After deciding on the number of public policies to be evaluated and their type (general or extended), it is important to produce a detailed plan of ulterior activities. It implies a decision to be made on terms of activity execution, people/institutions involved, schedule of evaluation and applicable methods. While drafting the plan, take into account the currently available ressources. The plan will serve as ground for public authorities notification on public policy initiation (section 1.2). The following are useful questions for impact evaluation planning:

Before proceeding to de facto evaluation of public policy, it should be mentioned that the elaboration of public policies is often a repeated process. More specifically, the discussions held or data collected at a certain stage will determine the return to the anterior stages and generate the analysis modification. For example, it is possible the problem might be better understood at the stage of policy options setup, thus implying the necessity of problem redefinition and of analysis adjustment; or within the process of consultations there will be unfolded some new objects which will allow to improve the options already determined by the working group involved in the process of analysis.

1.2. Notification of Public Policy elaboration The quality of ex-ante evaluation is determined by the amplitude of consultations organized by initiating authority. The consultation basic types and techniques are described in the Chapter III of this guide. To assure an effective process of consultation, just from the stage of impact evaluation planning the initiating authority should inform the interested parties about the launching of this process, to assure the implication of interested parties at the initial stages of evaluation. A simple method to identify these interests is to establish within public authorities a system of notification by official letters (and optionnaly by e-mail), which suppose that when the public authority intends to initiate the work upon an aspect of public policy, it sends a note by the internal network to relevant public authorities selected at the discretion of first authority, and obligatorily to the Government. The notification structure is illustrated in an appendix to this Methodological Guide concerning the decision-making process. This brief note will include, among others:

name of public policy in question

Boxa 1. Key topics for evaluation planning 1. What is the question at hand? 2. What is the objective? 3. What result is to be obtained? How do you imagine a better situation? 4. What are the restrictions? 5. Who are the interested parties? 6. What are the basic effects or results the principal interested parties are aspiring to? 7. What is the connection with Government’s priorities? 8. What is possible or impossible to realize? 9. What are the gaps? How to fill up these gapes? 10. Who should take part at proposal elaboration? What is the sequence of events? 11. What ressources are avilable for impact analysis execution? 12. What are the risks and barriers on the highway to success and how can these be reduced?

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brief description of pending question, preferably no longer than one page description of methods and consulting modalities

As an answer to this notification, the Machinery of Government will write a reference by offering obligatory arguments in favour or disfavour of respective public policy elaboration. In case of acceptance, this notification can serve a ground for public authorities and other interested parties which will allow to take part in the impact evaluation of public policy initiated, according to the shedule established. The notification system can be made accessible for large public by publishing on the Web page of the authority (and/or official page of the Government) the list of problems currently considered by public authority. In this way, the interested parties and the external experts will be familiarized with the activities of public authority and could be prepared for implication in the process of public policy consultations.

1.3. Data collection The data collection is an important requirement for impact evaluation. All five stages of public policies impact evaluation need support of solid information base, which would make possible the foundation of all decisions and recommendations made as a result of evaluation. As in the case of analitical work, the data collection requires time and financial ressources, thus the same principle of proportionality should be respected in this case too. The public officials or the subdivisions involved in public policy elaboration are encouraged to use primaty data, i.e. the data produced especially for the impact evaluation of public policy in question. At the same time, taking into consideration the financial implication of special studies, the secondary data use is also admitted, i.e. data and information existent at the moment of evaluation. Irrespective of type of information materials, the most important continues to be the quality of data analysis, interpretation, critical evaluation and generalization. All informations, Data and ideas are generated by documents and people, thus being accessible both orally and in writing. The documents can include various types of information: Web pages, Government reports, statistic archives, results of communication between public authorities, information circulars, newspapers, books, etc. The Internet is a high-value source of information for public policy analists, because a lot of countries publish on the Web their public policies, laws and rigorous procedures. For international organizations such as World Bank, IMF, OECD, FAO, OMS etc. the Web pages are sources of information and detailed technical studies. The persons – individuals of groups to be consulted are a high-value source of information too (see Chapter III. concerning the consultation). Both types of sources of information are used in the process of impact evaluation, although the references to studies and reports are sometimes more credible as references to discussions with individuals or with groups. All data can be also divided into quantitative and qualitative. The quantitative data generated by questionaries, polls and statistic releases are concrete and measurable. The number of beneficiaries, the cost of public policy, the number of kilometers of rehabilitated roads – constitute quantitative data. Without this data the analysis is not successfull at all. Although, these data do not obligatorily represent the „general table” of the intervention. The qualitative data generated by studies of case, pilot studies, focus groups, interviews, reflect the opinions and the attitudes of individuals and of organizations. An evaluation should have an equilibrated content, where quantitative data are put together with qualitative data in a compatible manner. An evaluation prevailingly qualitative, rises

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doubds concerning the credibility of given proofs, while an evaluation prevailingly quantitative risks to omit certain realities characteristic to the sphere/issue in question. As in the case of data types, the modalities of their collection are different too. These can be unformal conversations with collegues, meetings with experts, target groups or other groups concerned, to the extent of use of Government official statistics and reports, public policy documents and scientific reports, or reports elaborated by other research institutes and non-governmental organizations, as well as informations obtained from mass-media, or other sources. In general terms, the subdivisions involved into the policy impact assessment should consider the following aspects while formulating any informed evaluation, based on credible data:

1. It is necessary to identify the existent data sources and to use these in the analysis. 2. All data collected in accessible forms should be kept in order to be available for all persons

involved in the impact evaluation and in all ulterior stages, for example, at the stage of monitoring and of ex post evaluation.

3. In case of lack of information or data incompleteness, the public officials should make recourse to their proper estimations (primary data), to apply “proxy measures” or “argumented assumptions”, which allow to analyse the respective problem by using the appropiate information. These data might be substituted when other more precise information will be available. The public officials often hesitate to make recourse to such argumented assumptions because they do not want to be accused for lack of exactitude or are not ready to assume the responsibility for recommendations offered by them. When a public policy does not implies any significant costs or any considerable impact, the use of proxy measures or of argumented assumptions in the absence of primary data is extremly recommended.

4. When the lack of information is very sensitive, the officials are encouraged to organize a study or a poll concerning the problem in order to clearly define the problem dimensions and characteristics. For this type of studies it is important to clearly identify the necessity of additional data and of all possible sources of information or of a sample. These excercises could be realized with sponsorship support.

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2. Stage I. Problem definiiton

2.1. Stage description The first step in public policy impact assessment is to determine and to understand the Government engagement, the question under consideration or the problem to be solved. A correct problem definition is a very important thing, because this is the first stage in the process of public policy impact evaluation and every ulterior stage arises from previous and are together oriented to the solucion of the problem identified. An erroneous problem definition could have a negative incomensurable impact. Even it seems more easily to identify a problen than the actions for this problem solution, this stage is in reality a difficult one, even for public policy analists with sufficient experience in the field. The development of a clear understanding of this problem can turn out to be a veritable provocation, because the problem is often confounded with reasons which determine it or with effects generated by this problem. Confusing these elements results in chosing of an erroneous course of action and in setup of incorrect actions the implementation of which can result in aggravation of situation. At this stage of ex ante analysis, as well as at ulterior stages, the analytical process of reflexion represents a particular facity which would allow to public authorities to turk the trick. Within the process of problem analysis it is important to understand the reasons, effects, amplitude, cathegories concerned and the problem evolution through the time. This stage assures the setup of the context of public policy or of „basic case” and allows to make the appreciation of current public policies and of modality of their implementation. Every problem has its own history and a special managemen modality used till present (or maybe has never been considered, in case of a recent or previously unevident problem). To understand the context of a public policy, the process of impact evaluation should include in it the examination of actual modality of problem treatment, including the active legislation. This evaluation should appreciate the interventions already done, as well as other interventions which could have certain effect on the problem. To understand the problem, for question "why the current situation is unsatisfactory" should be find out an well argumented explication. Before proceeding to examination of intervention modality, it is necesarry to correctly understand the reason or the necessity of intervention. Thus, to better understand the problem, it is useful to address the following questions:

0. Evaluation planning 1. Problem definition 2. Objectives setup 3. Identification of Options 4. Options analysis 5. Comparison of options and selection of recommended option

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Beside these there are a lot of schematic methods of problem identification which would be useful to public officials at this stage. The most common qualitative techniques are „problem tree”, the diagram „fishbone” and SWOT analysis. Also, the secondary data analysis constitute a quantitative technique largely used for problem identification. An example of problem analysis realized with application of „problem tree” technique is illustrated in the Appendix II. This method allows to separate the problem from causes which provoked it and effects generated by this. At the same time, noone schematic tool does not replace the analytical thinking process. The reflections on the problem imply a range of questions, answers to which can be indicated by the problem itself, its magnitude, and to uncover certain possibilities of its solution. The problem formulation is less important as its identification. A problem formulated ambiguously could undermine the ulterior actions of the Government. The problem should be briefly formulated and to not offer a variant of its solution. Box 3. illustrates an example of clear formulation and another example of ambiguous problem statement. The initially formulated problem can be reconsidered through the process of impact evaluation together with new information elucidation. The modality of problem definition will influence the considered options of public policy. The precision in problem explication usually leads to improved performancies of its solution.

Boxa 2: Key subjects for problem identification What is the question or the problem? Is the question under consideration an engagement assumed by the Government vis-a-vis the society or international bodies, or if it constitute an opportunity to promote the public policy? It is an appearing/continuous problem? If any angagement is assumed, what problem does it treat?

Symptoms identification

What are the symptoms of the problem? What is the sphere of covering, magnitude and measure of this question/ problem? Does this problem affect certain regions of country more than other regions? What is the tendency? Does this problem progress? Do we know why? Do we have any figures?

Understanding who is affected Who is affected by this problem? Who is beneficiary and who disadvantaged? Do we have any figures?

Understanding of active public policy and of its context What is the current public policy? What laws are currently applicable? Why do the problem exist? Should we differenciate the problem and the symptoms. What is the history of this problem? What is the history of the proposal? What is the context of the question or of the proposal? Are there any other questions, more important or connected we should be conscious of? What is currently doing for problem consideration? What is functioning and what is not functioning? Why? What is the public policy capacity in this field? What is the reason of the problem? Is the question about current public policy or modality of its implementation (or not)?

Understanding of values and of engagements Why the interventions of Government is required? What is the importance of his problem?

Other useful information How could our experience be compared to foreign experiences? What additional data do we need for problem/engagement understanding?

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Box 3: Clear formulation of the problem Problem: According to a study realized by the Ministry of Economy and Trade, 18% of employers

breach labour laws and regulations. × Problea: It is known that the employers breach labour laws.

This example denotes, that a problem is better formulated when it makes reference to the source of information, the field and the target group, and gives a basic figure indicating the target group dimensions. These data are extremely useful for objectives formulation, which is the second stage of ex-ante policy evaluation. A clear formulation of the problem is indispensable to assure a similar perception and understanding of the problem by all persons involved in the process of impact evaluation. The 4th table presents a schematic method of problem sumarizing which could be useful to public officials involved in the process of problem formulation. Table 4: Problem summary

1. Problem: (name)

2. Description: Problem brief description, field, importance, trends

3. History: Brief description of what has be done to this moment

4. Actual public policy: Responsible persons for implementation, active legislation in the field concerned; reasons of problem

5. Who is affected: Principle categories of interested parties (companies, local authorities, NGO) and country regions affected; categories of people

6. Why the intervention is important?

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3. Stage II. Objectives setup

3.1. Stage description Within the process of impact evaluation it is important to identify the results which a public policy aspires to achieve. The objectives are the anticipated beneficial effects of public policy, without which it is very difficult to solve the problem or establish concrete actions. The objectives setup allows to establish a bridge between the problem identified and the ulterior actions oriented to this problem solution. The objectives are setup as a reaction to the problem or a dezideratum of the authority in a certain field of activity.

The art of objectives setup is similar to the art of problems identification. The objectives should be clear and explicit or in other words to be SMART (Simple, Measurable, Acceptable, Realizable and fixed in Time). The Government intentions should be transposed into a time framework with indication of action sphere and intervention measure. An example of objective correctly formulated and another of ambiguous objective is offered in the 4th Box.

Box 4: Correct formulation of the objective Objective: Reducing polution by chemical wastes with 15% by 2015. × Objective: Significant reduction of chemical polution.

The first objective is a specifical one (chimical polution) being measurable (15 per cent) and fixed in time (by 2015). The second objective is a general one, thus creating difficulties during the period of implementation, monitoring and evaluation. At the same time, the objective should not be confounded with the target of public policy. The target is the desideratum followed by the authority through public policy realization. The target is not necessary SMART. The objectives are the specific and measurable „targets” of a public policy. The objectives indicate concretely the achievements expected from public policy. The consequence of stages at this phase of policy impact evaluation is usually the following: target setup – identification of objectives – actions formulation – identification of monitoring indices. For example3, competitive growth of agricultural products at the EU markets is a target. The objective for this target achievement is the increase of export volume of agricultural products to the EU market from 24% of total amount of exporting goods in 2008, up to 40% by 2011. The actions are even more certain than the objectives are and are setup for shorter periodes of time. To achieve an established objective, the following actions should be realised: (i) VAT reduction for agricultural 3 The example is an illustrative one and does not pretend to use any real data.


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products from 20% in 2008 down to 10% in the year 2009; (ii) increase of subsidies for agricultural products from 15% of total amount of agricultural expences, up to 30% in the year 2009; (iii) creation by 2010 of 5 laboratoaries for control of agricultural production quality. Within the process of objectives setup it is necessary to take account of the fact that the monitoring of these objectives implementation will be realised by means of monitoring indicators which will measure the ressources (input), the results of public policy activities (output), the results of public policy (outcome) and the impact. Indicators of ressources are sources which make part from a program or service within the Government. These are people, money and time needed to obtain the products planned. Any public policy should specify the ressources necessary for its objectives achievements. Indicators of public policy activities results are measures of an activity. These can be number of manuals elaborated and distributed, or number of kilometers of rehabilitated roads, or number of abolished restrictive regulations on enterpreneurship. Indicators of public policy result measure the direct and immediate results of actions on the target established – people, economic agents, institutions, etc. These are reflexed by changes in behaviour, competencies, abilities or performance. The examples of this type of effects can be trains or buses which running on sheduled time, a reduced number of road accidents or increased rate of school gratuation. Impact indicators evaluates the effect or the consequence of public policy or of its facilities on a part of society. As examples of the impact we can cite the increase or reduction of literacy rate, of

competitiveness, of longevity, of water and air quality, etc. Although it seems to be complicated to setup the targets, the objectives and the actions, which could be monitored and evaluated with help of these indicators, using simple principles this activity could become less embarrassing. In this aspect it is important to understand the following relation. The impact indicators will show if the

targets have been achieved, the indicators measuring the public policy results will illustrate the objectives realization, and the indicators measuring the results of public policy action and the ressources will show the realisations degree of planned actions. At the same time, the monitoring of objectives realization can be also carried out by means of indicators measuring the results of public policy action. It comes from the fact, that in order to achieve a target, there can be setup several objectives differing in level of disaggregating. An example illustrating the relations between objectives and indicators is presented in the Box 5. The difference between indicators measuring the result of public policy actions and the result of public policy, consists in the fact that the first show what has been done by the authorities and their partners to achieve the target, while the second type of inidcators illustrates the degree of

Box 5. Relation between monitoring indicators

Indicator of ressources Investments for construction of schools

Indicators of public policy activities results Construction of schools

Indicator of public policy result Increase of schooling degree

Indicator of the impact Increase of literacy rate and education of population

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contribution of perofmed activities to the change of target group attitude. The table 5 illustrates an example of relation among problem, target, objective, actions and indicators. Table 5: Examples of objectives and of indicators Problem: According to a study realized by the Ministty of Home Affairs, about 17% of total ammount of child abuse cases do not come to trial

Target: Growth in number of child abuse cases came to trial

Indicator of the impact: Number of child abuse cases came to trial

Objectives and actions Indicators Objectives Assuring by the year 2010 the detection by authorities of 40% cases of suspected child abuse The adjudication by the year 2010 of 100% of persons involved in child abuse

Public policy results Number/percent of target group contacted by relevant authorities after recognition of the symptoms of child abuse Number/percent of child abuse cases that have been adjudecated

Actions Training of 500 interrogators by the end of the year 2008 Vesting police officers with greater powers, which would allow to make perquisition of reported houses The growth in number of inspections in families suspected of child abuse from 1500 families in 2008 up to 4000 in 2010

Ressources and results of public policy activities Number of trainings; Number of participants at these trainings Per cent of policemen specialized in child abuse cases Number of investigations of the families suspected of child abuse

Because the entire period of public policy elaboration depends on a more precise understanding of the process of its implementation, it is important to include a multitude of parameters characterisin this public policy, and namely the actions, the monitoring indicators, the period of implementation and the institutions responsible – in a „logical framework” which would allow an easy delegation of roles and an effective public policy monitoring (table 6). This table should be part of public policy proposal. Table.6. Logical framework for description of implementation process Target Objectives Actions

Implementing period

Responsible institutions

Monitoring indicators

As at the stage of problem definition, there are several techniques which can be used by public officials in the process of objectives setup. The most common is the „objective tree” analysis. After the identification of problem, of its causes and effects by means of „problem tree” method, the results of analysis could serve as base of objectives identification, including the facilities and the targets of public policy. An example of „objective tree” analysis is provided in the Appendix III. At the same time, as well as in the process of problem identification, the most effective method of objectives setup is the reflection on the modality of intervention. In this context, the questions contained in the Box 6 will contrubute to the implementation of an analytic process in formulation of measurable objectives.

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At this stage, if not realized at previous stage, it is importqnt to identify the public policy beneficiaries, thus individuals of groups of individuals who will benefit from the respective public policy. The policy beneficiaries can be entrepreneurs, professors, students, children, poor people, veterans, disabled persons and other cathegories of people and professions. At the same time, the policy should not disregard the other persons or groups of persons who could be negatively affected by the respective public policy – taxpayers in case of tax quota growth, households in the neighbourhood of industrial parks, factories, the activity of which could endamage the environment and the health of people, etc. Within the process of objectives identification the following aspects should be taken into consideration:

It is important to consider several objectives. A single objective can rarely describe adequately the desired effects of public policy and to fully measure its impact.

It is important to select the objectoves in terms of their relevance for the Republic of Moldova. Even when the basic imperative determining the proposal is harmonization with European standards or discharge of internaitional commitments, it is important to setup a target and objectives which would be relevant for autochthonous political environment.

It is also important to analyse the final and intermediary objectives – for a short, medium and long period.

The summary analysis of the objectives should be realized on the model provided in the Table 7. Table 7: Objectives summary Target: Brief description of the target and of relation with Govermnent priorities Objectives: First objective Second objective The third objective Actions: Performance measures, result and impact: How to realize the monitoring of implementation? How to know if the aspired result is being obtained? How to appreciate the impact?

Box 6: Key subjects for objectives formulation 1. What is the target of proposed intervention? What effects are planned to be obtained?

Is the objective a relevant one in the context of national public policy document? Which is the relation between the objective and the Government priorities?

2. What are the objectives to be achieved? Are the target and the objectives clearly separated? Which measures will determine the public policy results? How to know if the results are being

obtained or not? Which measures will identify the actions results? How to know if the behaviour has been

modified or not? Which measures will identify the public policy impact? How to measure the degree of final

target realization?

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4. Etapa III. Identification of options

4.1. Stage description This is one of the most important stages of impact evaluation. Within this stage we identify the eventual solutions or options and describe eventual facilities of their implementation. The option constitutes a modality of problem solution or achievement of the established objective. For a problem solution there are at least two opportunities: state intervention and status quo, the last implies the noninterference in the existent situation. The intervention, in its turn, can have a different character and thus can be: major – creation of new system, abrogation of existent Legislation and elaboration of a new Legislation, moderate – formation of new components within the existent system, significant modification of existent Legislation, and minor – current situation improvement by development of certain elements within the existent system, unsignificant modification of Legislation. The setup of options for problem solution allows to assure the foundation of final decision concerning the policy on the analysis of all exestent facilities. The tools selection is an important process too. The modality of Governmet intervention is of the same importance as the answer to the question if the Government should intervene. The Government authorities traditionally consider the legislation as basic solution in the context of public policy. It is customary for Central and Eastern European Countries where, traditionally the legislation was accentuated as basic tool of public policy. Thus, the legislation is neither a single nor necessarily the best way for problems solution. The elaboration of this tool can take a lot of time and ressources, and its implementation – more financial ressources. The regulatory acts and the legal documents require most commonly a number of mechanisms of application and sanctions to assure the complience with these regulations. The excess of laws can in return be counterproductive: the citizens will not manage to know all their obligations, and if the charge of regulations will become too significant, the people will voluntarily cease to comply with these. The alternative approaches – for example use of market mechanisms or public information – could be sometimes more effective in accomplishment of objectives setup at precedent stage. In this context it is important to consider several solutions or options, as a part of impact evaluation and to consider the alternatives of „traditional” modalities of reglementation. The Governmetn can select among a variety of juridical, economic, informational and organizational tools, from restrictive to motivational and from tools which require a high degree of implication to those requiring a reduced degree of state implication. There are four types of public policy tools which should be taken into account by the authorities (Appendix IV. provides more detailed information concerning the available public policy tools):


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1. Information tools (information campaigns, educational campaigns). 2. Financial tools (grants, subventions, guarantees, taxes, budgetary allocations). 3. Administrative tools (direct performing by the state, external contraction, implication of family and community, voluntaty bodies). 4. Regulatory tools (traditional prescriptive legislation, EU regular directives, mechanisms of autoregulation, reglementation on the base of performance). Even if the major part of decisions made by decision-making bodies require the issue of a legal act, not all these acts contain a reglementation. In this context the administrative tools should not be confused with, for example, regulatory tools. The administrative tools, although are materialized similarly to those of regulation – by a legal act, do not contain any rules or regulations which are contained in regulatory tools. Thus, the Government decision to authorise a non-governmental organization to manage a project (administrative tool) is not the same thing as the Government decision to modify the regulations in the field of concurrency protection (regulatory tool) even though both are approved by legal acts. An option can imply not only a public policy facility but also other tools such as education and information at the first stage and reglementation at the ulterior stage. The combination of several public policy facilities could be more efficient than a single regulatory solution. The 4th Diagram illustrates an example of an objective having three distinctive options everyone including one, two or more tools of implementation.

Thus, to accomplish the objective of decreasing youth tobacco use, there could be launched a publicity campaign by means of which the population and especially the youth will be informed on smoking damage. At the same time, there could be considered the option of taxes growth for smocables and adopted a legislation introducing smoking ban in public places. There could also be proposed another option regarding the cancellation of subsidies for tobacco cultivation and approval of a legislation banning smokable sales to young people. Thus, to get better results, there can be use both a separate public policy tool or a combination of several tools the application of which can be done both in a staged manner or realized simultaneously. While the tools are different by nature, there are also differencies in modality of their application. All four types of tools can be restrictive, voluntary or mixed, depending on situation (Table 8). The

Diagrama 4. Types of public policy options

Objective: Decreasing Youth Tobacco Use as regularity from 32,7% in 2006 down to 20% by the year 2010

Option 1. Population warning on smoking damages for health

Option 2. Increase of tobacco taxes Smoking ban in public places

Option 3. Cancellation of subsidies for tobacco cultivation Approval of a legislation banning smokables sales

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public authorities can consider different options implying both high or low degree of Government implication (from those restrictive to those voluntary, topdown by table).

The options should flow from problem and established objectives and to not aspire to cover other question as those fixed at first two stages of analysis. Also, the formulation of options which set aside the moment of problem solution should be evited. For example, to solve the problem of lack of teachers in rural areas there are fixed two alternatives, and notably: (i) elaboration of strategy of teaching staff attraction in rural areas and (ii) creation of a consultative body for coordination of aspects concerning the teaching staff attraction in rural areas. These solutions do not seem to solve the problem, because it implies concrete options such as: (i) teachers salary increase; (ii) granting teachers tax exemptions; (iii) decent housing for teachers in rural areas. In the field of public policy analysis, at all its stages and especially at the stage of options identification, there are prescribed a range of useful qualitative methods. The most common methods are brainstorming, analogy method, benchmarking and experts methods. These techniques will be considered in detail in Chapter III. The brainstorming can be realized in combination with other mentioned methods being in substance a debate on the options. The analogy method is useful because it concerns certain options applied in the past in other sectors or countries. At the same time, before emulating a borrowed solution, it is important to evaluate the degree of its success or failure al acesteia in the respective sector or country. For this purpose should be used the benchmarking method which is also an analogy method. The „benchmarking” practices are often available in accessible publications. The expert methods are useful too, because the implication of external persons could contribute to an increased degree of objectivity in problem treatment and identification of options for this problem solution. From a practical perspective, it is necessary to limit the number of options to be analysed to five or six, but not less than three, among which one opiton must obligatory be status quo or „no intervention of public authorities”. The „status quo” option, even if it is not the preferred policy option, constitutes an useful reference which could be applied while comparing with other options identified. The Box 7 provides the key subjects for this stage of ex ante evaluation.

Table 8: Public policy tools Tools Regulatory Financial Information Administrative

Restrictive Rules, interdictions, dispositions

Control of price, quantity, production, business joining and leaving, taxes and deductions

Assuring customer protection by informing population on damages caused by the product

Direct provision of services Infrastructure development and capacities increase

Mixed

Secondary legislation (decisions), Methodological directional lines, internal rules

Grants, guarantee certificates, subventions, loans, credits, assuring loyal competition

Information supply, mediation campaigns Participation and consultation mechanisms

Indirect provision of services (contracting external sources)

Voluntary Code of ethics and of conduct

Quality quatations, competitions

Implication of non-governmental organizations, families and community

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The basic options and their characteristics should be described in a summary-table which would facilitate the discussion and lead to the next stage – evaluation of options. The Table 9 provided below is an example of options generation, with brief presentation of outstanding characteristics of everyone of these. This should include in it the information concerning the public policy tools to be applied, the categories affected and implied in implementation process, as well as information regarding the time and costs of implementation. Table 9: Summary of options

Basic characteristics No intervention

Alternative no.1 Alternative no.2

Alternative no.3

The main features of the option Target population/ sectors/ regions Public policy facilities, for example: Information tools Financial tools Administrative tools Regulatory tools Characteristics of implementation – who is responsible – any Governmental institution, private sector, citizens, etc.

Period of implementation

Boxa 7: Key subjects for options elaboration 1. Is the Government intervention necessary for problem solution? 2. Is the problem generated by existent public policies? 3. If yes, what did not function within the existent intervention; for example, the sphere of legislation application of public policy implementation? 4. Is the problem a temporary and could it disappear naturally? 5. If an intervention has place, will the problem be transferred to any other part? 6. Whether the skills and ressources for intervention performing are available? 7. Is the staff responsible of implementaion qualified, formed, with suitable skills? 8. Whwther the options of informing and education have been examined? 9. Whwther the autoregulatory or voluntarily-regulatory options have been considered similarly to the legislative regulatory options? 10. Whether the option includes in it a legislative/regulatory component? Whether the application of this regulatory component and, if available, the sanctions, have been examined? 11. Whether the opportunities of other fiscal stimulents application have been examined? 12. Whether the options of program implementation and increase of capacities have been examined? 13. Whether the civil society, the private sector or the funders could be implied into the process of implementation? 14. Whether the administrative aspects of every option have been considered? 15. Whwther the target groups have been identified?

16. Whwther all possible alternatives have been considered? If the option "no intervention" has been examined?

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5. Stage IV. Options analysis

5.1. Stage description The next step of impact evaluation process after delineation of options, is the analysis of these options with purpose to determine the strengths and weaknesses of every option. The purpose of this exercise is to determine differrencies in costs and benefits of options, the impact on different categories of population, the implementation feasibility and the risks, for attenuation of which the rigorous measures will be elaborated. At this stage it is important to carefully identify the strengths and weaknesses of every option – for example to identificate if any social group is negligently excluded from the category of beneficiaries and other unintentional consequences. It is important to appreciate how the public policies will function in practice and to identify the restrictions to be got over in case of public policies implementation. The options analysis is important for developing of the most precise estimates of costs to be supported by the Government – to determine if public policies will justify the costs of their implementation and to evaluate if the benefits of these seem to be of long-term. The consequences in a lot of other fields such as impact on business sphere, economy, poverty, health, sexes, environment4, can be examined as a part of general impact evaluation. This guide presents an integrated framework for several of these impacts with a nowise exhaustive list of questions which could be used for performing of impact analysis. The proceeds and methods used in analyse of public policy effects or consequences vary considerably but are rarely very technic at the first stage. The impact evaluation facilities as well as the types of analysis in process could be extended in the course of time, when the skills of public autorities will be consolidated. Thus, at current stage the options will be analysed in the aspect of their impact evaluation on five inteconnected spheres, as follows:

1. Fiscal impact evaluation 2. Administrative impact evaluation 3. Assessment of the impact on the economy 4. Evaluation of social impact on poverty level 5. Strategic environment analysis

4 The European Commision makes distinction between the evaluation of environment aspects performed for certain projects such as dams, auto roads, airports or factories ('Evaluation of environmental impact') and the evaluation of environment aspects realized for plans, programs and public policies ('Environment strategic evaluation'). The methodologies elaborated for both types of evaluation can be accessed on the Web page of European Commision, http://ec.europa.eu/environment/eia/home.htm.

0. Evaluation planning 1. Problem definiiton 2. Objectives setup 3. Identification of Options 4. Options analysis 5. Comparison of options and selection of recommended

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The impact evaluation is indispensable for all options of public policy, irrespective of their nature. The evaluation can however vary in terms of data available, specific character of options and skills of public authorities. All activities imply a cost financed either from budged or with support of finacers, which should be indicated in fiscal impact evaluation. Althoug, certain options, in terms of their character, could have not any administrative, social, economic or environmental impact. Where the option have not any impact on one of mentioned spheres, this thing should be indicated in public policy Proposal. At this stage the analysis also represents the comparison of solutions in the aspect of their relevance, efficiency and term evaluation. The relevance regards in the first place the relation between option and problem/objective, and the analysis of environment of this oprion ulterior functioning – if does not contravene the active legislation or strategic itinerary established by the Government. The analysis of the efficiency will show if the investment will lead to a successful execution of actions, and the efficiency analysis will prove that the established actions lead to accomplishment of objective or achievement of final results. Public policies can be efficient, thus can produce results at minimum costs, but not effective, i.e. can not realise the envisaged objectives. In other cases, public policies can be effetive, i.e. very successful as regards the results achievement, but ineffective, i.e. the costs of these results will be too high vs. their importance. Thus, it is important to find out an equilibrum betweem efficiency and effectiveness. The analysis of durability will show if the options in question could be affected by external factors, which could compromise their successful realisation as well as the durability of positive or negative impact. There are several modalities of description of public policy eventual consequences (effects or impacts). Though, at options examination the emphasis should be put on the most important elements and on those of significant difference. For options assessment there should be used a wide range of analytical questions. The Box 8 illustrates general aspects of evaluation which should be also considered by other analysts. These subjects reflect the general view on evaluation followed by specific aspects of different evaluations.

Box 8: Key subjects for analysis of every option

1. What will be realized by every intervention proposed? Which will be the consequences (positive and negative)? How much are these consequences/events possible? The realization of proposal effect is certain, probable or

speculative? Which is the effects amplitude? What part of population could be affected? When the impact will be perceptible? In certain situations, the long-term benefits could be worth of short-term

risks and costs. 2. Which is the impact of the option “no action” or status quo? What will happen if the Government will not

intervene? 3. Who and how will be affected by every option? Identify interested parties (private companies, citizens, target groups of citizens) which will be directly affected

by the options. How large are these groups? How will the effects be distributed? Will the proposal affect different groups of people in different ways? Could

the proposal favour a part of population, but disfavour another part. Which is the apmplitude of impact on these groups? Which are positive and negative effects? Is it possible that any effects/consequences/results be disproportional for certain groups, for example vulnerable

groups or regions? Will this thing affect the success of proposal implementation? What measures will be taken to minimize these risks?

4. Which are the indirect consequences (positive and negative) of every option? What is the cost of every option? Have these resources been agreed? Are these more significant as the authority budget?

5. Which are implications of authority resources– use of human rsources? 6. Which donor organizations are nvolved in this proposal implementation? What is their role? Does this public

policy depend on any financial arrangements established by donors? 7. Is the proposal a realizable one? What does it implies? Which are affected institutions? In what manner? Local

authorities /NGOs?

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At this stage there are a nubmer of qualitative and quantitative methods of oprions analysis, among which the most important quantitative techniques are cost-benefit analysis and cost-effectiveness analysis. The cost-benefit analysis consists in ample estimation of costs and benefits for society5. This analysis is very suitable for public policies implying a significant economic component – of which costs and benefits are tangible and can be easily quantized and monetized. For major part of public policies, the costs and especially benefits can be neither quantized nor monetized as required by a traditional cost-benefit analysis. In these cases the alternative could be application of cost-effectiveness analysis which consists in costs monetization only, the benefits being transposed into quantitative values, as units and percentages. For example, the costs of policy oriented on unemployment compensation tax increase can be monetized, while the benefits will constitute a number of unemployed people, an unemployment rate or increasing incomes of unemployed people, in terms of this public policy destination. A correct application of these methods require abilities, skills, efforts, time and oftenly considerable resources, which are frequently lacking within public authorities. Taking into account the difficulty of these methods application for a great number of public policies under examination by public authorities, this guide advises to public officials the use of cost-benefit analysis of public policies not by their menetization, but by qualitative analysis and, as possible, quantitaative of this policy impact on certain sectors and categories of people. Similarly to other stages of impact evaluation, it would be probably correct at this stage to determine rigorous questions, a part of which is provided above. This approach is more suitable for general impact evaluation considered in this guide, the cost-benefit and cost-effectivness methods being specific for an extended impact analysis. At this stage, the consultations with interested parties are essential. The interested parties are generaly very well positionned to can determine direct and indirect consequences of proposed policy implementation. After the identification of proposal consequences, these should be examined together with intersested factors to determine the existent opportunities for maximization of benefits and minimization of eventual risks and costs. The consultations can help in identification of a number of additional measures which could lead to options improvement.

5.2. Distribution of Costs and Benefits to society At starting of process analysis it is necessary to take account of the fact that every option implies a nonhomogenous distribution of costs and benefits to society. Certain persons, groups or regions will benefit more, others – less. The eventual effects of certain proposals can be ambiguous – a number categories of people will support costs, other will benefit of respective public policy implementation, and still others will not be affected by public policy at all. For example, the growth of a tax will contribute to the increase of budget income, which in its turn will result in expenses rise for certain sectors or categories of beneficiaries and a perceptible cost for taxpayers. In terms of public policy nature, the analysis of costs and benefits should take account of their distribution by sectors, geographic areas, categories of people, including by sex and age groups. The public policies imply costs and generate benefits both during implementation period and after public policy realization. In this context, the public officials imvolved into the process of options impact evaluation, should think of costs and benefits distribution in time, as well as to attempt to assess the indirect costs and benefits or the externalities which could be generated by respective options.

5 To deeply understand this technique, we recommend the book - Cost – Benefit Analysis and Regulatory Reform: an Assessment of the Science and the Art (Kop-Krupnick-Toman 2007).

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The cost of a public policy is the price of actions execution and achievement of established objectives. In case of an investment project, the cost is just the entrepreneurial investment which will ulteriorly bring profits. The costs can be alternatively supported by individuals or households, by economic agents of Government. Costs can be direct or indirect. The fiscal impact evaluation implies the assessment of public policy direct costs, while the evaluation of conformity costs within the economic impact implies the assessment of indirect costs, which are not supported by authorities or by policy beneficiaries, but by other categories which must comply with the approved public policy. For example, the tightening of labour security at enterprises will imply costs supported by employers, and the employees will beneficiate of the impact by avoiding accidents and occupational injuries. The benefits of a public policy initiatives are nearly concerned in its objectives. For example, if the objective of a public policy consists in reduction of air pollution, a successful policy would produce benefits such as pure air of polution reduction. While options comparison the emphasis should be put on the degree to which every option will implement the wished benefits. The benefits and sometimes costs can be both tangible and intangible. The assessment of corruption level, freedom of expression or justice independence is not an easy goal. It is difficult to estimate the benefits generated by actions in these spheres. These benefits are intangible, opposite to tangible benefits such as export level, number of beneficiaries, etc. Benefits can be intensified for a contingent of population (for example, a certain group of workers who beneficiate of new public policy concerning the labour security) or for general public (measures for foodstuffs hygiene improvement or air pollution reduction). Benefits can be divided into following categories: (1) individuals health and welfare, (2) enterprises (3) economy and (4) environment. These benefits may include changes or improvement in quality of life, provisions of services, economic domain, as well as in degree of environment pollution. Certain options will generate incomes such as users taxes and commissions. Grants from donors could be an important consideration in a particulat option. The amount of these incomes, if substantial, should be estimated. These types of income are considered “lateral benefits” and should be included as compensations for total costs (see section 5.3). Although, the income increase will lead to distribution of costs to be paid by natural persons or legal bodies, and this can be a negative consequence of the option and an obstacle for implementation of effectiveness.

5.3. Fiscal impact evaluation A critical aspect of evaluation of the impact of public policy alternatives is to assess the impact on Government budget resources. These should include both impact on budget allocations of a particular authority and significant implications to the entire Medium Term Budgetary Framework. Theoretically, as part of public policy planning and of budget cycle, the basic new public policies planned by public authority for elaboration and approvement throughout the year will be identified, as already mentioned above, within the process of planning of Medium Term Budgetary Framework and National Development Strategy, and a part of stipulations will be included into Medium Term Budgetary Framework of the authority. For all that, if previously the public policy was not carefully developed, these stipulations will be at the best case an approximate estimation only. Also, it is possible that public policy has not yet been included in Medium Term Budgetary Framework and thus the results of impact evaluation will serve as base for the following process of Medium Term Budgetary Framework. In all circumstances it is particularly important that the Government be conscient of budget implications generated by all considered options, in order that the approved

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option be possible within limits of existent allocations or be of high priority and implying significant benefits to justify the reallocation of funds for implementation. The initiating authority bears liability for fiscal impact evaluation. At the same time, in order that the Ministry of Finances could verify and evaluate the analysis, it is important to use standard methods with consistent definitions and estimations. The Table 10 presented below provides a template which can be used for every option cost evaluation (excepting indirect and conformity costs), including impact on budget income. In point of fact, the intention is to determine for a multy-year period:

1. What is total cost of the option; and 2. How will the option be financed:

from existent allocations foreseen in budget / Medium Term Budgetary Framework from external sources not included in the approved Medium Term Budgetary

Framework 3. Impact on budget income 4. Net cost of option which does not have financing source

This net cost or “unfinanced balance,” is just this critical information to be considered when Government decide whether to approve or to reject an option. The value or benefit of all options should be compared with Government ability to support additional costs. Moreover, in cases where the cost is too high, it could be necessary to review the identified options and to adjust one or more options in such a way that these options become less expensive. Also, the form requires the analysis of several years to demonstrate the year to year evolution of the impact on Medium Term Budgetary Framework. In sum, the form provides important information in cases when, for example, a proposal implies a trifling cost in the first year, but with dramatic growth in the future. Without multiannual perspective, a proposal could seem attractive at present, but in several year become too expensive. The following points describes the modality of this table completion:

1. Functional classification and/or program classification. The first cell in the table should be used for codes (on the base of budgetary classification) and names of group or of basic program concerned by this option. If program classification is not available, specify the functional classification.

2. Impact on public expenditure. The second cell represents an important part of table. Here is

realized the evaluation of proposal cost and identified the existent budget funds.

2a. Total cost of option. This cell should include the total cost of the option, irrespective of whether the funds are already included in Medium Term Budgetary Framework of financed from any other part. The total cost hsould be divided in accordance with economic classification: expenditures for staff, goods and services, payments to individuals, transfers for production(subventions) and general expenditure. At the same time, in case of particular options of public policy the cost of which can not be assessed by constitutive elements approach, there should be applied the comparison method or metnod of unilateral costs. If the option implies the improvement of existent program, than indicate the program total cost, including the cost of existent program. The column “ Current Budget / Medium Term Budgetary Framework Year 1” should contain the estimated cost for current budget year, if exists. It should be mentioned that the cost for current year will cover the period after policy implementation start only. There could appear certain additional costs both single or “starting” such as equipment procurement and staff training. The columns “ Medium Term Budgetary Framework Year 2” and “Medium

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Term Budgetary Framework Year 3” should indicate total costs of the option projected for respective years. In certain cases, the costs indicated for these years could be identical; although, there are a lot of reasons for these costs changing from year to year, and especially:

First of all, the proposal could be limited in time. In most cases these are projects of public investments.

Secondarily, the program could contain more stages during a big period of time.

Thirdly, the program costs could change if the activity level is based on such factors as population or economic growth.

To calculate the cost of an option, a greater attention should be paid to the detailed aspects of implementation. Below are given several subjects suitable for this stage:

After collection of all data concerning the modality of option implementation, there could be initiated the estimation of charges for staff, of incidental administrative charges, of transfer paiments. Besides the costs of implementation, there should also be mentioned the costs afferent to the activities associated with public policies or other indirect administrative activities, which will be associated with public policy but realized by the staff existent within authority. Even though these activities could augment the charge of authorities, these should not be included in option cost evaluation if the program proportions do not emply the new staff recruitment. These „internal” costs are not sgnificant, difficult to be estimated and thus should be considered as a part of regular responsibilities of the authority.

2b. Financing available from Medium Term Budgetary Framework/budgetary allocations. This section should incicate the sum of funds already allocated for this public policy within Medium Term Budgetary Framework / budget. If public policy implies consolidation or extension of an existent program, then there should be included the financing for existent activity level. Also, in case of new program proposal, there could exist funds allocated in Medium Term Budgetary Framework/Buget as a part of planning of National Development Strategy/Medium Term Budgetary Framework, and calculated on the base of a preliminary estimation of costs. In any case, these funds currently allocated for the respective public policy should be also included in this section of the form. The public authorities should identify all potential fields of economies from other parts of budget by reason of limited capacity of Government to finance new public policies and to the extent possible should reallocate the resources from minor priorities. This section is overwhelmingly important, because it presents not only an altenrate financing sourse, but also demonstrates the importance of this public policy for authorities vis-a-vis other their activities.

Box 9. Key subjects for costs evaluation

What new services will be provided and which will be the activity volume? What kind of administrative activities will be needed for provision of services? What staff should be

emplyed and whether there are needed any new bureau facilities? Where will the services be provided? Are the units or regional offices needed? Will any payments or other benefits offered to people or enterprises? What is the cost of benefit for

every person or affair? How much beneficiaries are foreseen yearly?

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The economies can be made from two sources. The authority could have a surplus of funds resulted from increase of efficiency or thanks to a lower activity level than it was expected. In these circumstances, these funds reallocation should not affect the level of services provided by authority. The second source of economies is when the authority identifies an activity or program as unnecessary or of low priority comparing to any new proposal or other programs of authority. 2c. Need of additional allocations in Medium Term Budgetary Framework /Budget (2a-2b). To determine the necessity of additional financing to that already established in allocations of Medium Term Budgetary Framework /Budget, it is necessary to deduct the sums indicated in 2b from sums given in 2a. The difference obtained will represent net increase (or net decrease) of financing needed for proposal implementation. In case of new programs, for which the allocations are not foreseen, the sum will be equal to total cost of program.

3. Eventually available facilities to cover additional requirements. To fill in this section, the

public authority should specify other possible sources of financing.

3a. External financing available for additional necessities covering, though not included in Medium Term Budgetary Framework. This section should specify the eventual resources of external donors not covered by actual Medium Term Budgetary Framework, but eventually can be included in the next MTBF (with reference to the donor name and stage of negotiations). 3b. From technical assistance (direct donors financing). This section should include in it all kinds of technical assistance which will cover a part of program costs.

4. Impact on budget income. It is possible that the public policy generates incomes from taxes or other tools used for progit obtaining. Even if these funds are not automatically available to authorities, these will reduce the total cost of policy for the Government and thus could be considered as an alternate financing source. Although it is very important to consider within other sections of general impact evaluation the effects of these taxes on economic entities or individuals who pay these taxes. This question is considered below, in section concerning the conformity costs and the economic impact evaluation.

5. Need of resources in lack of financing sources (2c-3-4). This section represents the

generalization of the option concerning the budged and Medium Term Budgetary Framework and is calculated by deduction of cells 4 and 5 from cell 3. At the same time, it is very important to recognize that the sums from 4th and 5th cells imply certain risks: the economies reallocation could be impossible; the donors assistance could not be materialized; the incomes obtained from taxes could turn out to be too optimistic.

As it was already mentioned above, the authority is responsible for evaluation of the impact produced on budget by every option, with the help of this table (or as prescribed by the Ministry of Finances). It is however strongly recommended, that the authority initiates a dialogue with Ministry of Finances in course of preparations for fiscal impact evaluation, in order to minimize disagreements which can appear at a latter stage of consultations. Table 10: Form for fiscal impact evaluation

(thousand MDL)

Functional classification (basic group, group) and/or classification by program:

Actual budget/ Medium

Medium Term Budgetary

Medium Term Budgetary

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____________________________________ Term Budgetary Framework Year 1

Framework Year 2

Framework Year 3

2. Impact on public expenditure (by economy categories):

a. Total option cost including: Expenditure for provision with personnel Goods and Services Payments to individuals Transfers for products General expenditure

b. Financing available from Medium Term Budgetary Framework/budgetary allocations* including: Expenditure for provision with personnel Goods and Services Payments to individuals Transfers for products General expenditure (* if the financing comes from more sources than from one single minister, present its detailed description on a separate page)

c. Need of additional allocations in Medium Term Budgetary Framework /budget (a - b)** including: Expenditure for provision with personnel Goods and Services Payments to individuals Transfers for products General expenditure (** Negative sums denote Net Economies)

3. Eventually available facilities to cover additional requirements:

a. External financing available for additional necessities covering, though not included in Medium Term Budgetary Framework Source :___________________________

b. From technical assistance (direct donors financing)

4. Impact on budget income

5. Need of resources in lack of financimg sources (2с-3-4)

5.4. Administrative impact evaluation The evaluation of administrative impact or feasibility of options performing is another parameter of analysis which helps to make decision on relevance of public policy options in aspect of analysis of administrative requirements and needs at the stage of implementation. The public authorities should initially think on administrative interventions required for public policy implementation. When initiating a new public policy (adoption of a new legilsation, program creation or modification), there should be also considered its practical consequences both at the initial stage and at an advanced stage of implementation. In general terms, the administrative impact evaluation implies reflexion not only on immediate questions, but also on the aspects of duration which do not seem evident at first sight. An important

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aspect of this evaluation constitutes the planning of organizational needs and resources for public policy options. This aspect has been also considered in previous section regarding the fiscal impact evaluation. The requirements for periodical implementation can advice the option price, can reduce its effectiveness, cause delays and even prevent the realization. Thus, this type of administrative consequences evaluation has the following objectives:

To specify the level of evaluation feasibility, including the probability of apparition of additional budget costs besides those already allocated in Medium Term Budgetary Framework / budget, including for next years

To planify practical details of implelmentation To suggest modification of certain options which will minimize certain obstacles in

implementation. From the perspective of administration, the implementation of new public policies implies new functions within public authority or other organizations, or modification of existent functions. The key fields to be examined in the context of administrative impact evaluation are:

The need in a new legislation or in additional amendments and/or regulations, which should be approved by the initiating authority, Government or Parliament. It is important to analyze the probability of these modifications in legislation to assure their realization without obstacles, as well as to estimate the changes in behavior of certain categories of people and prevent undesired effects. For example, the increase of tobacco taxes in addition to increase of the cost of smokables and reduction i number of smokers could generate contraband of smokables.

The application of mechanisms implied by public policy and, if necessary, sanctions – administrative methods, penalties stipulated by legislation, civil and/or penal liability, or their combination.

Organizational auspices foreseen for process of implementation and associated requirements - implication of subordinated agencies, local bodies or NGOs.

Eventual reactions on public policy option both during the period of elaboration and

Box 10. Key subjects for administrative impact evaluation 1. How much agencies/organizations (both internal and external) should cooperate to assure a successful

implementation? Are these experienced in public policy provision or administration (program, services, application of regulation)? Will this option require the contraction of the private sector?

2. Are the resources (financias, human, information, etc.) available for implementation? Is the qualified personnel available – both initially and in future? Could certain resources be unavailable or could exist any incertitude regarding their obtaining. Are the discussions with potential donors needed?

3. To what exend does this option need creation of a new institution, a new function, procurement of new equipment or implication of new administrative procedures? Should be considered such elements as time needed for vacancies occupation, transfer of public officials, approvements, equimpment procurement, time and facilities for training, support for informational system, etc. These factors will affect the implementation.

4. Are there certain premices for corruption? Is the risk minimal or maximal? Why? How could the corruption be prevented or eliminated?

5. Are there certain interested groups whose interests are affected by the option? The more controversed is the option, the more changes are associated with this and the more significant will be the probability of difficulties or even of resistance vis-a-vis the implementation.

6. To what extend does the option threaten the workplaces? Can the powerful syndicates create a solid opposition. Could there be required any measures of counteraction or compensation and could these augment the option costs.

7. To what extend does this option need changes in behavior of public officials? Could the public officials be not able or not want to behave as required.

8. Which are practical details of implementation: will it be easy or difficult? For example, if an information campaign oriented on youth familiarization with smoking damage is under consideration, is the Ministry of Health able to implement it?

9. Will the public policy be correlated with the priorities established on the level of institution responsible for implementation? For example, there is little sense in introduction of new traffic regulations, when the police does not apply the existent traffic laws or when these are applied by corrupted methods? If a new legal authority will be created, how will its activity be integrated in the activities of existent agencies?

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especially during the period of implementation - on the part of supporters and opponents, beneficiaries and negatively affected groups.

For administrative impact evaluation, consult useful questions provided in the Box 10. The options should not be eliminated by reason of major obstacles at implemenntation. It would be better to identify contra-measures which would neutralize these obstacles. Finally, the decision-making factors decide if this option worths the examination, even with obstacles previewed at the stage of implementation. The Table 11 generalizates the administrative impact analysis of all options. Table 11: Administrative impact summary Characteristics

Option “No action”

Option 1

Option 2

Option3

Capabilities of institution respponsible ofr implementation Human ressources availability Need of changes at the level of existent institutions Need of new institutions/ equipment/ procedure Impact on interested groups and their reaction Impact on workplaces Need in certain changes in behavior within public services and institutions subordinated

Resistance of certain categories Impact on corruption Other impacts Measures for negative consequences attenuation

5.5. Economic impact evaluation6 A significant part of public policies elaborated and implemented by public authorities produce a certain impact on country economy. Any state intervention could generate of prevent the activity of entrepreneurs, and it will finally be reflected in competitivity and economic growth of the country. Within fiscal impact evaluation there have been considered costs and monetary benefits which will be materialised in expenses and incomes to state budget. The economic impact evaluation performs the analysis of costs and benefits of public policy options in nonmonetary equivalent (but preferably in quantitative terms) on country economy. Thus, during the evaluation of options impact on economy, a special attention should be paid to the eventual impact of public policy options on business sphere. In particulat there should be considered the impact of options on competitiveness, productivity and competitive environment. The competitiveness is a measure of economy ability to produce goods and services of high quality, to offer population a decent mode of life and to promote labour market, and competition is driving force of productivity increase. For example, the increase of subventions in vinicultural sector could contribute to the improvement of competitiveness of wine production, the resources being invested in reequipment and increase of final product quality. At the same time, this public policy should be thoroughly considered – allocation of subventions to a sector could situate this sector in conditions more favourable comparing to other sectors which do not beneficiate of subventions, or to create distorsions and disloyal competition within this sector by targeting certain categories of companies.

6 Among common fields of EU Member States are the impact on economy, especially on small and medium enterprises and the impact on competitiveness. Details in Report to the Ministers responsible for Public Administration in the EU member states on the progress of the implementation of the Mandelkern Report's Action Plan on Better Regulation, 2003.

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The economic impact evaluation does not only concerns the analysis of the effects on certain dimensions of the economy of country, but also the impact on certain categories of entrepreneurs, and especially categorized by their affair dimension – small, little and big enterprises. The evaluation of public policy impact on companies, and especially on small and medium enterprises, is very important, because it constitutes the base of a health economy in the country. Thus, any intended or not intended impact on decisions concerning the production, the technology development and the innovative solutions made by enterprises, is very important and should be considered. The companies and citizens are under duty of different conditions and obligations derived from public policies approved. These can be associated with observation of new public policy, but can be also related to bureaucratic work which could be evited and represents a so-called “administrative charge” or “conformity costs” for companies and citizens. Thus it is important to examine the effects of the option on natural persons and legal bodies and whether it represents an unuseful administrative charge. There are two basic types of conformity costs: single costs and continuous costs. Single costs concern the company adaptation to a new or modified public policy and include charges for information (of policy identification and understanding), charges for modernisation or introduction of new production processes/equipments/buildings/software and charges for procurement of specialized services (for example for accountancy, information technologies, legal services). Continuous costs concern the maintaining of the state of affairs to assure a continuous observance of public policy and include individual, staff and time costs, taxes for inspection / applying, for licencing (application, correspondence, publicity) and costs which concern the paper work/administration/office activities (data compilation, time needed). To evaluate the conformity costs, the authorities should determine relevant activities to be carried on by citizens and /or companies for every option. While considering possible impacts on enterprises the activities of which concern the investments, operational costs, goods and services, there should be also analysed if the option of public policy affects the business sphere. The following questions can help at evaluation of economic consequences of public policy options:

Box 11. Key subjects for economic impact evaluation

1. Whether the option produce any negative effect on business sphere from the Republic of Moldova? 2. Does the proposal create any advantages or desadvantages to certain firms as compared with others? 3. Does the proposal contain any rules which (in totality or partially) liberate the market/the sector of competition

rules application, thus eventually creating or intensifying a monopole? 4. Does the proposal contain any rules which directly intervene into the policy or firms concerning the

commercialization or prices fixing for their products/services; limits or reserves the distribution for certain channels or mediators, thus restraining the consumer choice or creating obstacles for newly-crated companies?

5. Does the proposal facilitate or interfere with foreign or Moldovan commercial proposal and investments? 6. Does the proposal affect the training level and labour force skills? 7. Does the proposal affect the entrepreneurial activity, especially small and medium? 8. Does the proposal affect the innovation and creativity? 9. Does the public policy influence both directly and indirectly the affordability or appreciation of production

factors , for example: primary material, semi-finished products, components etc., of mechanisms and equipments, of work, licence taxes, costs of inspection, etc.

10. Whether the investment decisions and changes in affordability and/or appreciation of production factors will result in modification of modality of goods and services production used by companies, range of company products (new or substituent products), quantity of goods and services produced by the company and financial viability of companies actually functioning at correspondent market?

11. As a result of costs increase, to what degree does the structure of market allow the tranfer of a part or of all costs to the clients or inversely to producers?

12. Whether the proposal will generate eco-innovations, for example, by means of new methods of work, an efficient use of natural resources and reducing expenses on refuse collection, which in their turn will reduce general charges of companies?

13. Who is directly affected by the option? The categorization of affected groups by type, dimension and sector helps to determine the “distribution effects”. For example, self-employed persons or little and medium enterprises support costs (especially those occasional), in a different way as big corporations do.

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Whithin the process of conformity costs evaluation it is important to consider the obligations and requirements which could be implied by public policy option. These are:

a. The obligation to present information: it concerns different modalities to obligate the companies and citizens to report, to offer data, to present declarations of incomes, to require permissions/authorizations/subventions, to comply with marking requirements, or to provide information concerning complaints and contestations.

b. Obligation of notification: it concerns the liability of companies and citizens to notify the authorities on certain activities, for example, danger cargo transportation or construction works in apartment.

c. Obligation to pay taxes: direct taxes associated with certain activities or authorizations

d. Obligation to modernize or introduce new production processes, equipments, buildings, software.

The results of economic impact evaluation will be synthesised in Table 12, as it follows. Table 12: Economic impact summary Field of consequences


Option 2

Option 3

Option 4

Effect on business sphere/ competition Effect on trade/ innovations/ investments Differencial consequences of sectors/ regions Effect on costs supported by economic agents Effect on labour force Other impacts Measures for negative consequencies attenuation

5.6. Social and poverty impact assessment7 The Governmental actions should be oriented not only to creation of favourable business sphere and to increase of population welfare but also should prevent the risks of negative effects for vulnerable categories of people or widening social inequality. Thus, the basic objective of social and poverty impact assessments is to determine the impact of public policy options on individuals or groups of individuals confronted with difficulties or whose situation coud become worser as a result of implementation of the respective public policy. In this context, it is necessary to identify all possible negative impacts, to adjust all actions and thus reach maximum benefit while preventing negative effect on certain categories of population. It is also important to determine positive impacts on society in general and on vulnerable categories in particular, in such a way that these were increased as much as possible. The identification of positive and negative impacts implies the identification of categories of people to be affected by public policy. In terms of problem specificity, there are various categories of people who could be affected by promoted public policy. These can be single parents, families with many children, old people, groups dependent on various allowances (unemployed people, people with low income), disabled persons, social minorities from rural or urban zones, tramps. At the same time these can be not only target groups or vulnerable categories, but also vulnerable categories in general terms, and even people who are not referred to any of categories mentioned above, but who

7 This section is based on A User’s Guide to Poverty and Social Impact Analysis (World Bank, 2003), Good Practices In Using Poverty and Social Impact Analysis to Support Development Policy Operations, (World Bank, 2004) and Guidelines for Poverty Impact Assessment (Ireland, 2007).

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could just become vulnerable as a consequence of public policy implementation. An especial attention should be paid to factors who deal with multiple disadvantages such as numerous families, people with low incomes and unemployed persons. The social impact specificity and magnitude depends on the field of intervention. Its aspects persist in a lot of public policy fields– employment, education, health, housing, etc. These however persist first and foremost in public policies properly, and these are denominated and redistributive. For example, public policy for providing nominative compensations is destined to support vulnerable categories, but can also contribute to the errors of inclusion such as support of certain persons who although rank with certain categories are not poor, or to the errors of exclusion such as omission of certain persons who do not rank any established categories, but are poor. In this context, it is necessary to reconsider the public policy in such a way than these errors be eliminated. At the same time, the social aspects persist in economic public policies. For example, the decision to build a railway can result in engagement of labour force in the process of construction leading to unemployment rate decrease, but could also imply the change of domicile for certain households situated on passage or railway. This situation should be foreseen and suitable measures enterprised. Also, public policies which concern the deprivation of certain rights, subventions or liquidation of a number of enterprises, should take account of eventual impact on labour force. The following questions help to identify the social and poverty impact:

In function of public authorities capabilities, the social and poverty impact evaluation can take the form of of a narrative description which determines the target categories of public policy, as well as the categories of people who could be negatively affected by Government intervention, specifying, if possible, the category of affected pesons – poor, unemployed, disabled, etc. and the type of the impact – lose of work, reduction in income, infringement of certain rights, etc. In case when the capabilities of public authorities allow, it is recommended to estimate the number of affected persons, the impact of public policy on poverty level and the degree of increase or decrease in incomes of these categories as consequence of respective public policy implementation. Table 13. generalizes the costs obtained on the base of answers to these questions, by specifying the probability of impact lack, of positive or negative impact produced by the option.

Box 12. Key subjects for social and poverty impact assessment 1. Which are target groups of the options and how will these groups be targeted? Enumeration of these

persons and groups toghether with anticipated results relevant for everybody. 2. Which are differencies between target groups which could result in a nonuniform distribution of public

policy benefits and how could this situation be solved? Could there be more than one target group or a diversity within a target group and could these be considered differently and by different means. For example, in case of an educational youth oriented program – the youg people who have little children could need additional services for participation; the minorities could need support in the field of language; youth from rural areas could also need additionsl support. In such cases, there should be considered all possible measures which could be applied for improvement of situation of target groups which could not fully benefit of public policy in the form foreseen at the stage of policy elaboration.

3. Does the proposal consider the inequalities which could lead to poverty? 4. Which changes will the proposal produce in public policies or in existent procedures and how relevant

are these for groups identified as the most vulnerable? Discussions of these subjects can elucidate the unintentional consequences both positive and negative.

5. If the proposal does not produce any poverty impact, can there be identified any other options which would generage a positive effect?

6. If the proposal produces a positive impact, will this reduce the poverty level or prevent the impoverishment?

7. If the proposal produces a negative effect, cwhich options or measures can be considered for this effect diminuation?

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Table 13: Summary of social and povery impact Option

“No action”

Option 2 Option 3 Option 4

Description of affected groups Impact on incomes (+-) Impact on employment Impact on citizens rights Impact on powerty Impact on inequality Impact on citizens security Impact on social exclusion Impact on health of population Other impacts Measures for attenuation of negative effects

5.7. Strategic environmental assessment Considering the fact, that a healthy environment is essential for quality and prosperty of life, whereas the damages and costs produced by pollution and climate change are significant, it is important that within the process of public policy analysis the public authorities consider all eventual ecological effects of identified options. One of tools largely used in this aspect is strategic environmental assessment (SEA). This facility is used for evaluation of the impact of public policy options on environment and health of population8. Public policies producing a significant impact on the environment (both positive and negative) should be subject to a strategic environmental assessment, to identify the amplitude, duration and, on the occasion, the gravity of the impact. Actually, the public policy elaboration is not accompanied by the analysis of the environmental impact, though the documents of project and planning both public and private should be subject to ecological expertise (in accordance with Law no.851-XIII from May 29, 1996 on ecological expertise and environmental impact evaluation)9. For elimination of this legislative gap, the Ministry of Ecology and Natural Resources has elaborated the draft Law on strategic environment evaluation, the main target of which is to assure the analysis of public policy documents concerning the eventual effects on the environment and population health, as well as integration of environment considerations wherever it may be necessary. Besides of these, the draft Law describes the stages of strategic environmental assessment and the requirements associated. The European Commision makes distinction between the environmental impact evaluation (Directive 85/337/CEE on the assessments of environment effects produced by certain public and private projects), which is performed for all public and private projects of construction or rehabilitation of certain objects specified in Appendix1 of Directive, such as factories, airports, dams, etc. and strategic environmental assessment (Directive of Council 2001/42/CE on the assessments of environment effects produced by certain plans and programs), which is performed 8 In 1993 the Republic of Moldova has ratified the Convention on environmental impact evaluation in transfrontier context, supplemented by Protocol on strategic environment evaluation, that should be obligatorily implemented by all signatory states by introduction of objectives for assessment of ecologic effects of public policies at the stage decision-making. The objectives of this Protocol are the similar to those from Directive 2001/42 of the European Parliament and Council concerning the evaluation of the environment effect produced by certain plans and programs, adopted June 2001, that should be obligatorily implemented by all EUs member-states and countries currently negociating their adhesion. 9 The Ministry of Ecology and Natural Resources has recently elaborated the draft Law on environmental impact evaluation, which will substitute the Law no.851-XIII from May 29, 1996.

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for public policies plans and programs and public policies in general. Even though these two types of evaluations concern different subjects to be evaluated, the principle of analysis always is the same. The results of strategic environment evaluation of public policies frequently serve the base of evaluation of the environmental impact produced by public and private projects, which are characterized by a higher degree of detalization. As opposed to economic, fiscal and administrative impact of public policies, the environmental impact can not be perceived at the stage of options analisis. A great part of public policies do not produce any environmental impact or may produce an insignificant effect on the environment. There are however certain public policies, especially in the fields of industry, agriculture, energy and transports, which could produce a significant environmental impact. The list of policies harmful for environment is more extended10. For example, the construction of industrial parks, railways and agricultural extensions through deforestation, destruction of pastures, soil dranage will produce a bigger environmental impact, than public policies for pension valorization, wage increase, upgrading of benefits or extention of free medical services for population. There are however certain public policies which do not seem to have an immediate environment effect, but a deep analysis, including examination of practices of other countries, will show the possibility of arising of a long-term ecologic impact (such as the impact on global warming of refrigerators and conditioners production). Because of difficulty involved in obtaining of quantitative information concerning the environment, the most important part of evaluation will be qualitative. The strategic environmental evaluation implies the analysis of public policies in the aspect of eventual environmental effects and impacts on other factors, especially on biodiversity, fauna, flora, soil, water, air, climatic factors, material goods, cultural patrimony, including archaeological and architectural patrimony, landscapes, population, human health and interaction between these factors. Also, the analisis implies the reflexion on the character of these effects: secondary (generated not by public policy itself, but by its primary impact), cumulative (combined effects of public policy), sinergetie (generated by several public policies), short-, medium- or long-term, permanent or temporaty, negative or positive. The environmental effects are not geographically-limited, thus the policies implemented by the Government could affect the environment situation of neighbourhood countries. Whan any plan or program could imply a transfrontier environmental effect, its implementation should be thoroughly considered. The strategic environmental assessment should be realized along with other analyses of public policy impact (fiscal, economic, social) and thus it is possible that the decision-making factors face difficulties in determination of a preferred option, because public policies rarely produce positive impact on all sectors and fields concerned without producing any negative impact on at least one analysed parameter. The preferred will however be the option, which produces an unessential environmental impact but significant financial benefits (including positive social and poverty impact). If the negative ecological effects of any option are significant, and the economic and fiscal benefits inferior to the cost of these effects attenuation and of damage to the health of population, the public policy initiator should specify this in public policy Proposal and recommend to the decision-making factors another option. The financial benefits shall not prevail over damages caused to the environment, human health and abilities of following generations to satisfy their necessities. When public policy solves important economic and social problems but produce a negative

10 The strategic environment assessment is obligatory for public policies elaborated for the following fields: agriculture, silviculture, fishing and aquaculture, energy, industry, transport, tourism, waste treatment, water economies, telecomunications, regional development, site improvement and urbanism or land use, and which establishe a framework for approval of future projects which will ever be subject to the procedure of evaluation of the environmental impact according to the respective legislation.

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environmental impact, in lack of any better alternative, the initiator of public policy should present a plan for attenuation or elimination of negative environmental consequences. When selecting public policies, it is recommended to accord special priority to the developming measures which: promote and facilitate the use of the best technologies available; promote the investments in brownfield vs. greenfield; promote the energy efficiency, minimize and reduce the energy demand and promote the reutilisation of waste; have as objective the production and replacement of fossel combustible with biocombustibles; promote the environmental services in the sector of tourism and tourist activities such ase ecotourism, agrotourism, etc.; have an "ecological" approach of landscape and ecosystems, such as rehabilitation of industrial areas or actions related to afforestation and areas development / green spaces. The following subjects can be useful to public officials in strategic environment evaluation of public policy options:

It is extremely important to analyse the options of public policy in the aspect of their impact on human health, which could be affected as concequence of negative environmental impact of public policy. At the same time, it is important to take account of the fact that the health could be affected not only by the environmental situation, but also by social aspects such as living conditions, which are often determined by economic aspects. In this context, the impact on the health of population could be considered at the intersection between economic, social and environmental impact (see diagram 6). To the extent that the implications of public policies into the health of population are extremely significant (the gray portion is more extended) it is recommended to establish a number of actions to prevent the negative impact on human health. Digram 5. Impact on health in intercoppendixion with other impacts

The public officials who will realize the strategic environmental assessment produced by the alternatives of public policies could synthetize the analysis results in a standard formate or by the model provided in the table 14.

Box 13. Key subjects for strategic environmental assessment 1. On which natural resources does the proposed public policy produce the impact (soil, water, air,

landscape, etc.) and how does this impact manifest? 2. What is the probability, duration, frequency of ecological effects of public policy? 3. Is the public policy impact irreversible? If yes, than which are actions required? 4. Whether the public policy will create risks for human health (for example, as results of accidents or

pollution)? 5. Which is the magnitude or extension of effects (geographic area and dimensions of pipulation that could

be affected)? 6. Will the proposed public policy produce impact on areas or landscapes with statute of protection

established at national, community and and international level?

economic impact social impact

environmental impact impact on health

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Table 14: Summary of strategic environmental assessment

Field of impact Option „No action”


Energy consumption and natural rsources erosion

Wastes collection Air pollution Noise Water pollution Soil pollution Landscape deterioration and affecting cultural, historical and archaeological values

Transport volume increase Impact on population health Transfrontier impact Other impacts Measures for negative consequences attenuation

5.8. Evaluation of risk and incertitude Within the process of elaboration and evaluation of public policy options, the public officials expect that a relative stability will persist within public administration during the entire period of public policy implementation. Whereas in reality there can intervene various events or situations both unexpected and expected, which have not been prevented by rigorous measures. The risk and incertitude suspend the process of public policies elaboration and implementation and thus should be considered at the stage of public policy impact evaluation. The risk means arising of situations which could establish the probability of certain event non-realisation or of any impact arising, whereas the incertitude is the situation when the probabilities are known. For example, the drought represents a risk for agriculture because the probability of this is known and is very high. While the losses caused by the drought can be only presupposed, being extremely uncertain. All stages of policy options ex-ante evaluation should be permeated by the analysis of risk and incertitude. The evaluations regarding the immediate future only, such as budget for the next year, could be more precise, but could also result from „short-sighted” decisions. The evaluations which consider the benefits, budget costs and consequences for a longer period of time, could confer to analysis an increased degree of “realism”, although, the longer is the period of time, the more significant are incertitudes and estimations. For the major part of public policies, the nature and magnitude of the impacts can not be certainly predicted, especially when there is considered a longer period of time. The public policy implementation could be affected by other interventions, unforeseen circumstances, and, in general, by bahavior of organizations and interested parties in one or another field. The evaluation of any option acceptability or feasibility can be based on assumptions and estimations enough real but sill not absolutely precise. These can be optimistic or unjustifiably pessimistic. For example the estimation of assimilation capability of economic subventions can not be underappreciated, while the estimations of the number of families who bring their children for vaccination could be overestimated. Also, among the risks there can be included: important resistance of companies identified during consultations, lack of planned donor financing, hezitation of Parliamant to adopt necessary legislation. It is useful to decision-making factors to know the

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degree of credibility are these estimations or, alternatively, to what extent the reality differs from estimations. The method of elaboration of “optimistic” and “pessimistic” estimations will depend on the circumstances of every particular case and will imply the opinion of public authorities based on the information available as part of the process of impact evaluation. These alternative scenarios will help the decision-making factors to see a range of possible effects. The basic idea is, that in case of public policies involving an eventually significant and volatile effect, the decision-making factors should be familiarized with the entire variety of results, from the best to the worst; as well as with the most probable effects. Thus, it is very important for public officials to collect as much exact information as possible – about population group, sector, etc. which concern the option under analysis. The Table 15 provides the summary of risk and incertitude evaluation. Table 15: Summary on risk and incertitude Fields of evaluation



Implementation feasibility

Resources availability

Reaction of target groups/ general public

Other risks Measures of risks attenuation

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6. Stage V. Options comparison and formulation of recommendations

6.1. Stage description The last stage of impact evaluation before its presentation for analysis in paper form is comparison of options to determine one option recommended for approval. The target of this stage is to compare strengths and weaknesses of every option and decide which of these is the most effective for achievement of objectives, with mimimum of disadvantages. At the same time, it is important to take account of the fact that no one solution is perfect. All options will have both advantages and didadvantages. When all “arguments pro şi contra” will be generalized, the base for formulation of recommended option will be formed. There are a lot of techniques of options comparison. Among quantitative techniques, the best known are cost-benefit analysis, cost-effectiveness analysis, analysis of rentability, etc., and the most popular qualitative techniques are multi-objective analysis, matrix approach, piloting, etc. Because this guide does not emphasise the quantitative approaches, but a combination of qualitative analysis based on questions and answers and calculation of certain costs of the options, at this final stage of impact evaluation there are mostly recommended the qualitative approaches in options comparison. An accessible method which could be used by all public officials is multi-objective analysis which allows the evaluation of options in respect of different types of impacts of aspects of the impact, all of these having their proper weight. This approach is especially useful in cases when the impact of public policies options of is difficult to quantify or monetize. The multi-objective analysis is composed of the following stages:

1. Every type of the impact or of impact's aspect should be evaluated on the base of the following criteria: 0 – no impact; 1 reduced impact; 2 – medium impact; 3 – significant impact; 4 high impact. The impact value can be evaluated by considering the modality of objectives realization by the options, the level of benefits generated, the fiscal and administrative impact and the result of consultations. At the same time, the public officials can modify these criteria, but obligatorily considering the achievement of objectives and of most important impacts by means of options comparison. The comparison can be established as it follows:

Achievement of options (effectivity)

o High – realizes all objectives, no disadvantages o Significant - realizes the major parts of objectives; minor disadvantages o Medium – realizes a great part of objectives; disadvantages can be mimimized o Reduced – realizes certain objectives; significant reserves of interested parties


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Benefits (economic, social, ecological impact) o High – efficient in terms of the cost and contribution to the results o Significant - efficient for almost all aspects o Medium – less efficient, but should contribute more to poverty level decrease or affect

less the environment o Reduced – a lot of indirect disadvantages; the costs exceed benefits

Ficsal impact o High – resources are available in the budget; the potential of income is high o Significant - a part of costs will be financed from budget, and for another part the

donor financing is available o Medium – new charges for financing of which there are not sufficient funds

approved or promised o Reduced – is required a new significant financing

Administrative impact o High – the intervention can be implemented by private sector/ by volunteering,

without involving costs for state; responsible organizations provide support o Significant - the intervention can be implemented by authirities in partnership with

private sector and other interested categories o Medium – the intervention can be implemented by authorities with particulat

changes of functions or system adjustments o Reduced – the intervention implies the creation of a new agency or an essential

system moidfication Consultations

o High – interested parties have a positive attitude o Significant - interested parties have positive attitude excepting several dissatisfied

participants, with establishment of measures for consideration of aspects which bother some of them

o Medium – a part of interested parties demonstrate a positive attitude o Reduced – the interested parties demonstrate a high-level scepticism vis-a-vis the

proposal 2. Every type of impact or of its aspect should be pondered out in function of its importance,

the total pondered value being equal to 1. 3. At this stage is calculated the pondered value of all policy options by multiplying the value

attributed to the impact by its weight. The option with highest amount of points will be recommended.

Below is illustrated a simplified example of multi-objective analysis conceived for three options for achievement of the objective which regards the transport of 100% of pupils in schools from rural areas. Providing rural areas with transport is a modality of attracting pupils in schools and reducing school abandonment. To achieve this objective, there have been identified three options of public policy: 1. Status quo – the school transport does not function. 2. Establishment of a new public network of school buses for free transportation of children. 3. Establishment of a network of private school transport and allocation by the state of subventions for tickets for transportation of children. These three options are analysed in the Table 16, in the aspect of above-fixed criteria. Table 16. Example of multi-criteria analysis Evaluation creiteria Points (0 – 4) Weight (0-1) Impact Option 1. Status quo Achievenemt of objectives 0 0,4 0 Benefits 0 0,2 0 Fiscal impact 0 0,1 0 Administrative impact 1 0,1 0,1

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Consultations 1 0,2 0,2 Total 0,3 – reduced impact Option 2. Public transport offered by the state for free Achievenemt of objectives 4 0,4 1,6 Benefits 2 0,2 0,4 Fiscal impact 2 0,1 0,2 Administrative impact 2 0,1 0,2 Consultations 3 0,2 0,6 Total 2,8 – medium impact Option 3. Private transport with tickets subventionned by the state Achievenemt of objectives 4 0,4 1,6 Benefits 2 0,2 0,4 Fiscal impact 3 0,1 0,3 Administrative impact 3 0,1 0,3 Consultations 3 0,2 0,6 Total 3,2 – significant impact In multi-objective analysis we could observe, that the option status quo is excluded because this does not produce any impact on the fixed objective. The second and third options produce similar impacts – both contribute to the achievement of objective and generate medium benefits because will produce negative environmental impact by emitting exhausts and on this basis the NGOs from the field of environment protection could be opposed to this ation implementaion. Despite a lot of common effects, the third option has accumulated more points than the second did, having a significant administrative and financial impact thanks to private sector implication in project financing. This option should be recommended, with elaboration of actions suitable for maximization of benefits and reaching of a consensus by all parties consulted. At the same time, at the stage of options comparison, as well as at other stages of impact evaluation, it is important to apply good judgement and critical thinking. Irrespective of approach applied for options comparison, it is important to assure, that the following analytical stages be covered by public officials:

1. All positive and negative effects of every option should be considered in comparison, irrespective of the form of their exprimation - qualitative, quantitative or monetary.

2. All arguments pro and contra of every option should be contoured. 3. The options should be compared by all criteria of general characteristics such as extent of

objects realization, benefits, including economic, social, environmental, fiscal impact, administrative impact, consultations results, as well as risks and incertitudes.

4. All options should be generalized in key conclusions which could be used in public policy Proposal.

In practice, the work group for impact evaluation will possess this evaluation already done at this stage, because the relative advantages and disadvantages of every option are clearly marked during the elaboration of analysis at precedent stages and within the process of consultations. In the majority of cases the impacts of the options are distributed nonuniformly – one option can imply major charges but also generate a significant impact on the economy, which is in fact the objective of public policy. At the same time, the option of public policy could produce a negative impact on certain categories of people and/or on the environment. Or the costs could be less significant, as well as the anticipated economic impact, but could at the same time negatively affect the environment or certain categories of people. There are a lot of these impacts combinations, and the decision concerning the recommended option is conditioned by different factors: resources availability, possibility to implement measures for attenuation of negative consequences produced by preferred option, etc. A number of impacts combination and rigorous recommendations are illustrated in the Table 17 provided below.

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Table 17. Impact combinations and recommendations Impact type Economic/fiscal

impact Administrative impact

Social and poverty impact

Environmental impact

Recommendation

Option 1 High costs high benefits

High - need of new laws/institutions

Negative impact Negative impact Not recommended

Option 2 Low costs low benefits

Medium – is required the modification of functions/laws

Negative impact Negative impact Not recommended

Option 3 Low costs high benefits

Significant – required the modification of functions/laws, resistance of certain groups

Positive impact Negative or zero impact

Is recommended the elaboration of measures for settlement of disputes which arise between authorities

Option 4 Low costs high benefits

Reduced – administrative measures are not required, there is a consensus

Positive impact Negative impact Is recommended toghether with elaboration of plan of attenuation or elimination of environment consequences (in lack of option 3)

Few options will accumulate a high amount of points. Within the process of impact evaluation, the provocation consists in identification of options which could help in achievement of objectives which imply minimum of lacks and disadvantages and. However, perfect solutions do not exist – only the best solution among other available solutions. For all that, it is important to leave the matter of final decision on necessity and modality of providing decision-making factors within public policy elaboration. There could however exist certain political reasons which could generate the choice of any other option than recommended option. All information collected by the moment, which have been covered through five stages should by synthetized in a table (see Table 18.). The typical formate of this table indicates the options of public policy and different analytical criteria which have been used. The cells of matrix contain the results and consequences of every option evaluated by making reference to the criterion applied. If any cell can not be filled with quantitative data, use qualitative descriptions. Table 18: Summary of impact evaluation Option 1 –

“No action” Opţiunea 2 Option 3 Option 4

Problem Objective Characteristics of options

\Problem solution and achievement of objective

Fiscal impact Administrative impact Economic impact Social and poverty impact Ecological impacts Risks Conclusions/recommended option

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6.2. Formulation of public policy Proposal When all five stages of policy ex-ante evaluation have been covered, the results of analysis should be synthetized and exposed in public policy Proposal. This particular document will be presented to the chief of initiating authority for decision-making. The chief of the initiating authority could accept or reject the recommended option taking account of certain risks which could undermine the process of approval or implementation, with which the authors of proposal are familiar. The acknowledgement on policy impact ex-ante evaluation should be presented in a table by the model presented below (see Table 19.). An example of public policy proposal elaborated in a narative form is provided in the Appendix I. Name of public policy Institution which has initiated the public policy

1. PROBLEM DESCRIPTION Target Objective 1. Objective 2.

2. PUBLIC POLICY TARGETS AND OBJECTIVES

Objective 3. Beneficiary 1. Beneficiary 2.

3. BENEFICIARIES OF PUBLIC POLICY

Beneficiary 3. Option 1. Option 2.

4. OPTIONS OF PROBLEM SOLUTION

Option 3. Analysis of the option 1. Analysis of the option 2.

5. OPTIONS ANALYSIS

Analysis of the option 3. 6. RECOMMENDED OPTION 7. SYNTHEZIS OF CONSULTING PROCESS

Date of presentation Signature of Director of the Initiating Authority Appendixes: X file The structure of public policy Proposal follows the principle of ex-ante analysis and should contain data from problem determination up to the recommended option and the synthezis of plan of consultation. Besides the analytical information, there should be included also the information about the initiatory authority and the date of PPP presentation. It is important that PPP be signed by the chief of the initiatory public authority. The public policy Proposal will also contain appendixes. In the appendixes there will be presented a developed evaluation, which can contain graphics, tables, diagrams and a detailed narrative description. All argumentative documents such as detailed analyses, expert reports or summaries of consultations should be appendixed too. The application through the entire evaluation process of tables describing the stages of evaluation provided at the end of chapters, could be very useful in public policy Proposal formulation, to which

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these tables could be appendixed. When a public policy concerns a major decision, the PPP becomes more detailed and implies the elaboration of a general summary. The informative note on the foundation of a draft of regulatory act should be elaborated on the base of public policy Proposal representing the summary version of Proposal. The modality of presentation and the volume of public policy Proposal have not the same degree of importance as the quality of evaluation has. The evaluation should be elaborated in a simple and clear language. The decision-making factors have not time for examination of extended public policy proposals and will not able to understand the essence of documents exposed in an incoherent language or which does not consider the subject concerned. The most important is that the Proposal of public policy reflect all considered options rather than the preferred solution. Also, it is necessary to evit technical terms which proper to a restrained circle of persons. These terms could be combined with a narrative description, which would clearly explain the meaning of terms to other categories of readers. The goal of public officials in formulation and remittance of public policy proposal consists in stimulation and facilitation of decision-making process instead of its complication. The recommendations concerning the public policy should offer to decision-making factors all information necessary for particular subjects promotion or certain problems solution, and the final solution of these will be based on informed decisions.

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CHAPTER III. CONSULTING PROCESS

1. Consulting tools in the ex-ante assesment of the impact11

As already mentioned in the previous chapters, the consulting process represents an essential component of the analysis procedure, needed at all ex-ante evaluation stages of the public policies. The Government consultancy with the community, interested parties and the experts became a common practice in the democratic states. The consultation means only a Government interaction way with the society, other patterns can be the informing and the involvement in the implementation. The consulting process is very important because only on this phase it is determined the implication procedure of the community in this process and the step when the society will be involved in this process. This type of consultation can’t be confounded with the consultancy between central public administration authorities – the inter-ministerial informing process. This part describes the consulting tools in the evaluation process of the impact, until the public policy to be approved. The organization of the public consultancies are important, because these:

can enlarge the row of alternatives of public policies and generate new ideas are a source of valuable and cheap data for elaboration process of the public policies can be applied in order to check the public authorities assumptions and analysis

accomplished by them emphasizes the possible issues from the early stage, offering public authorities a chance to

correct them before the public policy to be approved contributes to the increase of the democratic legitimacy and the guarantee of examination of

a large representation of interests. Before initiating the consulting process it is necessary to identify those categories of persons who could be involved. It is essential to develop a wide list of participants – from the adherents to opponents, from beneficiaries to losers, from interested persons to influent persons. The most important is not to exclude those categories of persons who will loose after implementation of public policy, because these could undermine both the implementation of the public policy and and the beneficiaries of the public policy, including the vulnerable categories (who are not very often heard) in order to coherently direct the proposed intervention. Thus, there are two main types of consultations:

Consultation with the experts12 Consultation with the interested parties and community13.

11 This part is based on the Minimum standards for consultations: towards a reinforced culture of the consultation and dialogue – General principles and minimum standards for consulting process of the parties interested by the Commission – The Commission Communique , COM(2002)704 final and The citizens as partners, OCDE 2001. 12 European Commission and the member states OECD have a rich tradition of consultation with the interested parties regarding the public policy and regulatory proposals. In order to improve the consulting processes, the European Commisiion has approved Pentru a ameliora procesele de consultare, Comisia Europeană a adoptat un set de General principles and minimum standards for consulting process of the interested parties. Similarly, the OECD has prepared the publication The citizens as partners, OCDE 2001. See also, The Commission Communique on Gathering and use of experience by the Commission: Principles and guidelines, COM(2002)713 final. 13 “Those affected by the European or national regulation have the right to access and to understand it” (Mendelkern Report, 2001, p.ii).

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Perfectly, the consultation must take place during the public policy elaboration and impact assessment process. However, due to the lack of resources and time it could take place at two levels:

Usualy the consultancy with the main interested parties and experts is done at primary phases of elaborating the public policies and of evaluation of the impact, in order to contribute to the clarification of the issue’s field and to contribute to the identification of their options and consequences.

A wider consultancy with the society is carried out, in most of cases, at a later phase, usually after the issue and objectives setup and it is going to be established the public policies options. At this step the consultation is often necessary for checking and information: so that to verify if the issue was correctly setup and if the objective matches with the interested parties desires and aspirations, in order to identify the public policies options and their acceptance degree by the community and, especially, in order to analyze the implementation fezability.

After the identification of the main categories of interested parties, it is important to consider the consulting strategy. In the formulation process of the consulting strategy based on the assessed public policies, the public officials will be able to use the following synthesis table, which gives the possibility to separate the participants in the consulting process depending on the phase in which they will be involved and depending on their manner of involving. Table 20. Consulting strategy formulation with interested parties Etapa procesului Information

supplying Consultancy Co – operation Empowerment

Public policy elaboration

Public policy implementation

Public policy monitoring

Public policy assesment

2. The consultation of the experts

The consultation of the experts can take more forms and can involve different categories of experts. The scientists and the researchers from the Academy of Sciences, from universities, research institutions, as well as local and international experts and donation organisations14. Also, the consultancies can be carried out with experts who work in service offering organizations, such as local authorities, implementation institutions, and nongovernmental organizations. The involvement of these experts in the assessment process of the impact can be demanded at all phases of the evaluation, even if at different steps of the assessment could be needed different forms of examination. The experts are united in ad-hoc or permanent workshops. They interact sometimes through the means of workshops or other deliberative forms. The initiator authority can hire local or foreign experts on a contract base (from donator organizations, firms or individuals), in case the examination misses in a specified field. The choice of the experts should be proceeded according to clear rules, which should be made public and respected. The setup, monitoring and evaluation

14 Law Nr. 317-XV emphasises the role of the good workers and scientists in elaborating legislative projects (Article 34) and generarly these experts are involved in formal workshops..

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subdivisions or author subdivisions should keep the data concerning the experts and interested groups, the clue for the consultancy to take place. The workshop will not be officially created, in case this is an embarrassing, time and efforts needing process. It is enough, for example, for the appointed person, who is responsible in the process of impact evaluation, to organize a meeting for a limited period, based on a plan or consulting strategy prepared by the public authority in order to evaluate the impact (according to the diagram mentioned in the informative note sent for notification to the interested parties). The manner and the consultancy frequency will be setup after the first consulting meeting. Later it will be decided whether the consultancy contracts, constitution of workshops, conventional committees, the organization of discussion groups or other consultation types are needed, depending on the complexity of the discussed subject. Non-formal contacts between the departments, ministries and experts can generate quick results. These are often welcome on an initial level of public policy elaboration process and also concerning less serious problems. On the one hand, the presence of the plurality in the workshops and committees encourages creation of ideas, motivates the debate and provoke justified opinions and arguments. This diversity of ideas must improve the public policies and the credibility of the process. At the same time, the final decision, as mentioned previously, belongs to the political leaders, thus the analysts recommendations could be partially or even completely approved. The debates on policies with little budgetary implications and impact should be solved by involving the chiefs of the initiating institutions of public policies and dissatisfied parties. In case of policies with big budgetary implications and with a major impact the Interministerial Committee for Strategic Planning will be invoked.

3. The Consultancy of the interested parties and the community

During the impact evaluation of the public policies, at the same time with the involvement of the experts in the consulting process, it is important to realize the information and the consultancy of the public policies with the interested parties. The term interested parties refers to an organization, a firm or a person who has an interest in an issue and wants its promotion. Also, it is very important to take into account the capacity and the desire of the interested parties to express their positions. Some of the interested parties are demanding, well organized and influential. Others are invisible and not heard, but often they are mostly affected by the public policy implemented. From the last category can be mentioned the children, the young people, the disabled persons, minor communities, the pensioners, the villagers, the suburbs inhabitants the persons with little income , refugees, small enterprises, volunteer organizations, NGO and others. The identification of the possible interested parties and the accommodation of the consultancy ways in order to react, play an important role in the consulting process changeover in a helpful tool for public policies elaboration. The most common and used manners of consultancy with the interested parties performed by the Government are:

Comments and remarks procedure Deliberative tools (workshops, public audience, focus groups)

4. Comments and remarks procedure

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One of the most spread methods of consultancy is that of comments and remarks procedure which represents the process of informing the interested parties and/or the society regarding a proposal and the demand of comments until a fixed date. Depending on the character of the issue, the consultancies in written form can be of different types: for example, it could be both an extensive consultancy of an issue with large economic and social consequences and a limited consultancy concerning the minor or technical aspects of the public policy. It is necessary that the initiators of the public policies to guarantee the publishing and the sending of all relevant papers depending on the impact assessment level, indifferently it was or not taken the decision to perform a extensive or a limited consultancy. The Government consulting paper must contain the informations and analysis gathered during all levels of the impact evaluation. This one will contain informations concerning the consultancy process itself and the procedure to treat the comments. The best consultancy paper will comprise the next elements depending on the impact assessment process stage:

1. A summary of the public policy . 2. Description of the problem or proposal. 3. The purpose of the consultancy and the suggestion objective. 4. The aspects that need comments; if possible each time these should be clear questions and/or

options. 5. The explanation of the decisions already taken, if needed, and the explanation of preferring

an option instead of others. 6. Different sources of information and factual declarations, if relevant. 7. An explanation regarding the affected parties, including an evaluation of specified groups,

such as small and medium businesses or the consumers. 8. An explanation of the compulsions, such as the aspects not opened for changes (for example

the major electoral promises of the government party or the international engagements, such as the demands for European integration).

9. The time limit for comments, if possible, the meetings schedule for the other levels of the decision making process.

10. The name and personal data of the person to be reached if questions arise. 11. The list of consulted persons. This will vary depending on the subject and can comprise

public authorities, enterprises, trade unions consumer groups, commercial associations, academic community, research institutions, as well as important specialized bodies. The consulted persons should propose other parties to be consulted.

12. The respondents should explain who are they and whom they represents. 13. The specification whether the responses will be treated as confidential information. A

possible approach of this aspect could be the notification of the respondents that their comments will be offered to third parties, if they demand (for example the mass-media), in case the respondent will not expressly ask the response to be confidential.

14. A last part designed for additional ideas or incidentally ignored subjects from the previous parts.

The demand to offer at least three weeks for opinion presentation represents the key element in order to obtain an additional value after the consultancies, due to the fact that the most frequent concern in the consulting process is how to offer a limited time for consultancy and opinion presentation. New information technologies offer the public authorities opportunities to obtain references and possibility to offer direct consultancy opportunities during the evaluation of the impact. The most used are the web pages, the portals with unique entrances in order to insure a free access, email lists (for example of registered persons, mentioning interest fields), information stalls settled in public places, online discussions and forums. The access to new technologies is limited anyway and

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anytime there will be somebody who will not want to use these methods. Thus the public authorities will combine old and new methods of communication.

5. Deliberative tools

Deliberative tools are more infrequently used by the Government than the written consultancy, although they offer a helpful background to elaborate coherent policies. Basically, a deliberative mechanism designates any meeting – workshop, round-table conference, public meeting or focus group – during which the public policies authors meet the interested parties or the community so that to see their positions and to reach a consensus regarding the promoted public policy. The main advantage of these tools is that they offer the possibility of a dialogue and opinions presentation: interested parties and the society can put questions to public officials (or to the authorities), who also can ask the respondents to broadly explain their positions. These methods represent important ways of consultancy, that help to reveal many essential things, but usually it is needed much time for developing and implementing them. The simplest types of deliberative consultancy can be developed without the expert supervision: for example a public meeting or a round-table conference. The more complicated tools demand the assistance of the experts. An example is the focus group that gathers a group of persons in order to share their opinions regarding a specified subject and to reveal more details. This can be a very useful tool for a detailed study of the public reactions on a proposition. Or, in order to obtain helpful responses, broad professional capacities are needed, thus a well-educated facilitator should be employed. When the public authorities deal for the first time with the deliberative tools, they should choose the most simple forms : public meetings, round table conferences.

6. Analysis of the interested parties opinions

It is difficult how to explain with details how the comments a analyzed, because they will be very different depending on the treated subject and consulted persons. The analysis will be much easier if (as mentioned in the compartment concerning consultancy paper elaboration) the public authority who organizes the consultancy will identify the number of key questions to which they must find answer and will ask the respondents to prezent their comments via responses , with a final section “other opinions/positions”. The majority of respondents will probably follow this form what should facilitate the analysis. Other guidelines for the analysis are:

It is important to identify the main issues considered essential by the participants. The reasons why the participants responded in a specified manner, if possible. It is necessary to focus on qualitative responses than on the quantitative ones. Obviously the

participants who react to the consultancy events don’t represent the total community, thus its sensless to look for false precision (for example, the exact percentage of the for or against participants to a proposal) which can lead to bad results. It is important to have a general idea for the participants position, for the balance of for and againcet opinions (for example almost a half responded affirmatively, the third part responded negatively and the others abstained).

We should be aware of spontaneous reactions – for example some participants can put questions not yet examined by the Government. In case the questions are important, the planned structure of the report should be modified in order to include these questions.

The participants can’t be forbidden to express their opinions, and the responses should influence the solution preconceived. The consulting process doesn’t have any value if it doesn’t express the real positions of the interested parties and community.

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After the interested parties took place in the consulting process, they should obviously want to have further informations concerning the consultancies results. Base informations well elaborated will inform the consulted persons regarding the general remarks obtained from consultancies and will explain how they were taken into account. A template or letter can be sent for this purpose. Once the Government decides on the proposal and makes it public, it is preferred for the public authority to inform the about this the participants to the consultancies. In table 21. a plan is offered for the assessment summary of the consultancies, which can be used to complete the information regarding the consulting process from the public policies proposals. Tabel 21: Assesment summary Persons/consulted institutions The participantrs poin of

view Authorities decesion

Affected parties Experts Interested parties Other

.

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Appendixes

Appendix I. Example of public policies proposal (it should be replaced with the example of Small and Medium Enterprises)

The improvement of the municipal system of the heating agent supply15 Note. Such a complex policy that represents both a high priority and a major impact, will need the elaboration of a broad assessment of the impact, the general one contained in the Proposition of public policies described further, but which is not enough for taking a decision, only to offer a limited description of the difference between the three options. General description of the proposal The last twenty years, the domestic political and economical conjuncture, the property related issues, the quick price increase to fuel and equipment, the economic difficulties of the people led to the lack of public finances in order to cover the main needs, more than this to do reforms. In addition to this, due to a poor level of the consumption payment gathering and difficulties to grow the heating taxes, the heating agent supply company can’t have incomes. This leads to the expenses reduction for maintenance and doesn’t permit to make investments for renewing the system, also this leads to a significant wear of the equipment and a poor quality of services, even despite their price increase. Almost a half of the heating networks are out of normative wear, and the current expenses for their activity significantly grew up. As a consequence poor quality services are offered, adding the high cost of the heating agent, rise discontents and unpaid invoices. In order to solve the difficulties faced by the heating system and to stop this vicious circle, the Government in co-operation with the municipal townhall decided to elaborate a national public policy of efficient management of the heating system, whose assessment is further proposed. The issue identification Due to price increase to fuel unpaid heating invoices, the management inefficiency of the national and municipal authorities in heating agent supply, considerable investments weren’t made in order to renew the system, thus approximately a half of the heating network are out of normative wear, involving great losses of energy, about 25% and a poor quality of the heating services. The objectives setup The purpose is to renovate the heating agent system in Chisinau. Objective 1. is to reduce the losses in the heating networks from 25 % in 2008 to 5% in 2016. Objective 2. is to guarantee the complete payment of the energy consumption by all the apartment buildings connected to the central heating network until 2016. Beneficiaries

15 Hyphothetic case with virtual figures so that to give an example of PPP elaborated in narrative form without the adequate appendixes

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The beneficiaries of the public policy are the heating agent consumers from those 2800 apartment buildings connected to the central system of heating agent supply. Other beneficiaries are the supply companies with heating agent and water, because they will not have losses anymore and will offer qualitative services. This will happen only if another alternative in the supply of the present heating agent system will not be accepted. Otherwise, the management company of the thermal system and the urban and suburban heating plants may be negatively affected. The townhall is also a beneficiary of the public policy, because it will fulfill its electoral promises. At this time the Chisinau townhall offsets more than a half of the heating agent cost which should be paid by the community, and introducing alternative solutions to the heating agent supply could increase the service efficiency and could minimise the final cost paid by the society. The options to solve the issue An efficient system of the heating agent supply doesn’t depend only on the actual modernization of the infrastructure, but depends on the accomplishment of this purpose with the cheapest costs and the biggest incomes. In this situation three options of public policy were identified, compared with the initial option or the status quo. These are: Option 1. Status quo. Option 2. Renovation of the municipal heating agent system. Option 3. Installment of the boiler houses at a district level. Options analysis Option 1. Status quo The central system of the heating agent supply comprises 4 urban heating plants and 20 suburban heating plants. Even if during the last years were taken actions of modernization of the thermal infrastructure including donator aids, the circumstance they work in and the level of new technologies implementation. The possible losses are estimated at 25% from the total amount of the energy, and 15 % of apartment buildings pay less than 50 % from the cost of the heating agent used. The townhall offsets more than a half of the heating agent cost which should be paid by the community, although it has debts of millions lei compared with the heating system management company, the latter mentioned not having means in order to offer good quality services and to make investments in the heating system infrastructure. As a result the community don’t enjoy the use of the heating agent in time and from the quality, though it has to pay a growing price. Another consequence of the above mentioned situation is the consumers’ discontent who don’t pay for the services and gradually they renounce to use the central heating system adopting alternative solutions of heating. At the present moment up to 10% from the total number of inhabitants from Chisinau has adopted alternative heating system and their number is rising up. This fact led to a new cost increase of the heating, because the incomes declined and the fix costs remained the same or more they grew up due to operational cost growth. The option doesn’t have and administrative impact, although it has an economic impact, that is represented by the limitation of the private initiative in this field and the introduction of the quota to the number of flats that can be connected to the heating agent. The option has a significant social impact, because the growing price to the heating agent and the offset of a part of it leads the most part of the monthly revenue of the community to pay the heating agent. This refers to pensioners, families with many children, unemployed people, etc. The option has a medium impact on the

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environement, because the major part of the heating plants use natural gas to produce energy and the fume emissions reache 80 meters. There are not frequent investments for the municipal heating system that leads to minor improvements and that dont bring added value to the system. There is the risk that if keeping the situation unchanged, the municipal heating system will significantly worsen. Option 2.The resumption of the municipal heating agent supply system. This option suppose the maintenance of the present heating system and of the institutions involved in the process, the only investments needed are for the infrastructure system renovation. This fact supposes the replacement of 130 km of heating tubes with 96 km of warm water tubes in order to remove the leaking and the heating agent’s losses and the replacement of the wornt out equipment in the heating plants. The option will have a fiscal impact of 1,948 billions lei, only 127 millions are foreseen in CCMT for the first three years of implementing and other 1,811 billion could be negotiated with the international organizations or lent from the commercial banks. Near 30% from the cost is designed for tubes replacement and 70% for the wornt out equipment replacement. The option will imply incomes from the utilization of the heating agent, up to 65, 2 millions lei in the last year of the project accomplishment, but also from the growing payments till a maximum level of 30 % in the last year on implementing, on account of the reduction of losses up to 7% and also the implicit diminution of the heating agent cost supported by the community. The incomes accumulation to the budget isn’t the main prerogative of this policy. The investment regaining and the credit return will be carried out during 12 years. The option doesn’t have both conformity costs and an administrative impact, which deserve to be examined and can influence the decision. The option will have an economic impact on the supply companies with heating agent, who after the equipment is renewed will increase the production competitiveness. At the same time the option could affect the companies dealing with individual heating system, the demand for this type of heating will decrease whilst the central heating system is improved. The option will have a social impact- the consumers will enjoy good quality services without big delays, because enough resources will be in order to keep in good situation the municipal thermal system. This option will generate a diminution of the unemployment through the mean of complex repair and resumption of the heating infrastructure. This option will have a little impact on the environment, due to new equipments used in the heating plants which don’t pollute significantly the environment. Although, there is the hazard for the durability of this option, because the infrastructure repair , the change of the management and allocation of resources to maintain the system could return the former problems after some time. Option 3. District boiler houses instalment This option supposes to replace the urban and suburban heating system with district boiler houses (which includes from 10-15 buildings), that will be connected to natural gas and water pipelines network and will be distributed to the district’s households. This will stop the heating plants work and new tubes will be installed that link both the boiler houses to the natural gas and water pipelines network and the apartment buildings to boiler houses. 190 boiler houses are needed in order to guarantee a good functioning of the new heating system, a boiler house costs 980 thousand lei. The new tubes instalment will be nearly 1,3 billions lei. The total ost of this option is 1,48 billion lei, only 127 millions are foreseen in CCMT for the first three years of implementing and other1,811 billion could be obtained from the international organizations or from the private sector, who could administrate this sector in o-operation with the state. The budget revenues will rise up to 118 billions

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lei when the project carried out reaches the last period, this growth is based on the gradually payments attending the maximum 100 % in the last year of project accomplishment and due to the reduction of losses up to 5%, what will lead reduction fo the costs for heating agent paid by the population. The recovery of this investment and the return of the credit will be finished in 10 years. This option has an administrative impact, because heating system reform generates on households level the decentralization of the manufacturing and the distribution of the heating agent and implies the exclusion of the urban heating plants, the boiler houses being directly connected to the natural gas and water pipelines network. The boiler houses will be administrated by the tenants who will be helped by the townhall when they will negotiate their contracts with the fuel suppliers . The boiler houses will represent the townhall property that will be conceded to a company for a period of, the latter will obtain 80% from incomes (20% will be offered to the townhall), also the company will have to return the credit. These actions will imply legislation adjustment. The option doest have conformity costs, the tenants will even pay less for the invoices, due to the exclusion of the network losses costs from the paid amount. The option will have an economic impact on the supply companies with heating agent, because the service quality in the central heating system will improve and the individual heating systems will not be bought as before. At the same time the companies will expand their revenues by selling boilers for the new heating system. In order to curb corruption cases it is necessary to ensure the transparency of boiler purchase process and instalment. The option will have a significant social impact because each boiler house will have a flexible schedule to supply the heating agent and to change the temperature, what will not cause discontents among the population. The interruption of the heating plants work will point to 2500 the number of unemployed [people. These workers could work for the system resumption and the boiler’s administration. This option of policy will not have a big impact on the environment because the boiler houses are supplied with new equipment. There is the risk that the decentralization of the administrative power will not be sufficiently absorbed by the associations, their boiler houses management abilities will be limited at the primary phase of the system launch. The reccomanded option All the three option have advantages and disadvantages, and can be valued and pecuniary appreciated or only presumed. The option 2 and 3 involves great financial resources investments, the most of them will be lent, but the Option 1, although it doesn’t imply big investments, can’t be recommended, because the situation will not favour somebody – the final consumers are discontents both with the services quality and their price, the suppliers don’t have profits, the townhall and the Government give money inefficiently expended. Through performance of the heating agent supply system the followed goal is for these categories to enjoy the output, despite the fact this generates additional costs. If we compare the Options 1 and 2, we can conclude that the Option 2 is more expensive than the Option 3 (with 468 billion lei) and produces a broad resumption of the heating network and doesn’t include management changes. The option 2 will contribute to the improvement of the services quality, the reduction of the tenants’ debts and an increase of the budget revenues on account of more tax incomes payments. The same results will have the Option 3. Also, the big change of the system management manner through the decentralization of the administration power, the flexibility in heating agent supply offer sustainability to this option. Furnishing heating energy to a narrow number of persons will allow examination of all cases and will solve the borrowers’ issue. Not only the cost of the Option 2 is biger than the cost of the Option 3 , but also the investments in the Option 2 will be retrieved later, because the incomes are smaller than in Option 3.

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Concluding, the Option 1 is from the beginning excluded because it is not efficient, real and lasting. Comparing the Options 2 and 3, we see that the Option 3 is the most efficient, real and lasting and it is reccomended for implementation. But this will suppose to foresee prevention measures in order to reduce the negatif impact left by this option. Re-employment possibilities for the people who loose their work will be needed, help for the contracts conclusion with natural gas and water supply companies, etc. It is also important that the townhall to support the associations to fulfill the new goals and new system adjustment. Plan of option implementation This option will be realized over the 2009 to 2016 period and will include in it a number of stages. Basic actions for this option realization are illustrated in „logic framework” provided below: The target is to provide to population the heating services of high quality and at a reasonable price. Final objective is rehabilitation of heating supply system in Chişinău municipality. Specific object 1. reducing losses in heating systems from 25% in 2008 down to 5% in 2016. Specific objective 2. assurance till 2016 of full payments for heating consumption by all apartment buildings connected to the central network of heat supply. Action Period of implementation Responsible institution Indices of monitorization Stage 1. Preparing gound for intervention Elaboration and approval of legislation which would enact the heating supply system modification and its management

2009 – 2010 Ministry of Economy and Trade, Ministry of Territory Development, Ministry of Finances, Chişinău city hall

Legislation elaborated and approved

Tender issue for procurement of boilers, pipes and other equipment and for contracting of construction firm

2010 Ministry of Economy and Trade, ARMAPAU, Chişinău city hall

Tender issued

Selection of equipment suppliers and of construction firm


Selected companies

Tender issue for selection of company which will accept to manage the heating supply system in concession terms


Tender issued

Selecting company which will accept to manage the heating supply system in concession terms


Selected company

Pilotation of the system of heating supply by boiler plants for every quarter of all six quaters of the municipality

2010-2011 Ministry of Economy and Trade, Ministry of Construction and Territory Development, Chişinău city hall

Pilotation effectuated

Stage 1. Intervention implementation Construction of boiler plants in sectors Ciocana and Riscani and installation of connecting pipes

2011-2012 Ministry of Economy and Trade, Ministry of Construction and Territory Development, Chişinău city

Constructed boiler plants

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hall Commissioning of boiler plants in sectors Ciocana amd Riscani

2013 Selected company, Chişinău city hall

Operative boiler plants

Construction of boiler plants in sectors Buiucani and Sculeni and installation of connecting pipes

2012-2013 The Ministry of Economy and Trade, Ministry of Construction and Territory Development, Chişinău city hall


Commissioning of boiler plants in sectors Buiucani and Sculeni and installation of connecting pipes



Construction of boiler plants in sectors Centru and Telecentru and installation of connecting pipes



Commissioning of boiler plants in sectors Centru and Telecentru and installation of connecting pipes



Construction of boiler plants in sectors Botanica and Posta Veche and installation of connecting pipes



Commissioning of boiler plants in sectors Botanica and Posta Veche and installation of connecting pipes



Summary of consultation process The consultation process was extensive and included in it 8 basic categories of participants. The summary of this process, including the participants’ points of view and final decision of public authorities are presented in the table provided below.

Persons/institutions consulted Participants’ point of view Authority’s decision

Associations and inhabitants Agreed, with condition of consolidation of management capabilities

Consolidation of management capabilities with central heating starions staff

Consumer organizations Agreed, with condition of level up of price on heating supply for population

The prices will not increase. These could be even lower thanks to the elimination of energy loss. The authorities make commitments to provide support to vulnerable categories of population

Environmental organizations Agreed, with condition of use of high performance technologies allowing to minimize the environmental impact

Use of high performance technologies

S.A. Termocom and central heating starions

Not agreed. The new system will not be operative thanks to the absence of managements capabilities. Do not want to lose their work.

The authorities assure the reemployment of discharged people in implementation of new heating system

„Apa-Canal” company Agreed. The option will not generate significant debts to company, as actually

- Agreed. Expect to be involved in all The authorities will assure the

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stages of process implication of private sector to the process of system rehabilitation and to the management of this

Central public authorities Agreed. The Ministry of Finances is exercised about the modality of credit reimbursement by City Hall with support of private company of management

The city hall will remit to private company the system of management in terms of concession and the reimbursement of debt during 20 years

Chişinău city hall Agreed.

Appendixes: Here should be included the results of every option fiscal impact evaluation of the detailed analysis. Optionally here can be included the tables filled with suitable data synthesizing the evaluation results of every stage, which are included at the end of sections of this guide.

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Appendix II. Problem tree: The quality of public policy documens and of regulatory acts elaborated by CPA is not adequate

The quality of public policy documens and of regulatory acts is not adequate

Public policies are not co-related with financial resources frimework

The staff has not sufficient abilities

Limited financial resources

Lack of fixed requirements and regulations for decision-making process implementation and

public policies elaboration

The delegation of functions is not adequate

Low-quality public services

Lack of motivation system for public officials

Understaffing

Public officials realize current goals rather than an adequate strategic planning

Inefficient expense of financial resources

Unsuccessful implementation

Nonachievement of anticipated objective

Public policy documents and regulatory acts are not

interdependent

Elaboration of corrective public

policies

Overload of public officials with an excess

of reports

Strategic planning is not realized

Dissatisfaction of population

The ex-ante policy impact evaluation is not realized

Deterioration of Government reputation

Effects

Problem

Cause

CPA reform, fiscal and administrative decentralization are

not implemented

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Analysis of problem tree: The quality of public policy documens and of regulatory acts elaborated by CPA is not adequate. An indicator of efficiency of decision-making act within the Government constitutes the quality of public policies elaborated, which are materialized in public policy documnts and regulatory acts. Actually, for various reasons, the quality of public policy documents and regulatory acts is not adequate, thus transforming the entire decision-making process in a „vicious circle”, where the inefficient public policies generate other public policies, the lasts having similar deficient formulation and direction. Such an activity of public administration could rather be considered the ad hoc solution of problems, than a strategic planning. The analysis performed using the „problem tree” approach allows the identification not only of a single problem, but also of multiple reasons generated ant effects produced by this. For a start, it is important to determine the causes of problem arising, because without identification of causes and realization of rigorous actions for elimination of these, the respective problem will persist. The basic reasons, which generate public policy documents and regulatory acts of inadequate quality are of financial, functional and methodologic character. The slow progress of the reform in central public administration, of administrative and fiscal decentralization does not allow the establishment of an efficient public administration which would clearly delimitate the functions and attributions of every authority. This leads inter alia to inadequate use of financial resources, thus preventing the edification of a durable system of motivation for public officials. The lack of such a system prevent the attraction of qualified specialists with suitable skills for adequate implementation of decision-making process in general and of preliminary ex-ante eveluation of public policies in particular. At the same time, the preliminary assessment of public policies can not be performed adequately, particularly for reason of lack of a regulatory-methodologocal framework which would establish the common transparent rules and procedures wor the entire decision-making process. As a concequence, in most cases the public policies ar multiple, declarative as content and ineffective in essence. The generation of such a set of public policies within the public administration contributes to the arising of a range of adverse effects. Above all things, the inferior quality of public policies right from the start compromises the process of implementation of public policy documents and regulatory acts, thus preventing the achievement of fixed objectives and/or provision of public policies of high quality. In the first instance there are required public policies destined to correct the failure of precedent policies, but which will probably overload the decision-making process in general and the reporting process in particular. These activities performed by public officials do not offer opportunity of strategic planning. In the second instance, the inadequate quality of public services arises the population dissatisfaction and, as a result, the deterioration of Government reputation. In both cases the financial resources in any case limited are expended inefficiently, thus constraining the next cycle of decision-making process. Note: After this method application, the problem should be adjusted according to the regulations fixed in section 2.1. Problem identification.

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Appendix III. Objective tree: Elaboration of public policy documents and of regulatory acts is of adequate quality

The quality of public policy documens and of regulatory acts is adequate

Public policies are co-related with financial resources

framework

The staff posess sufficient skills

More available financial resources

Presence of fixed requirements and regulations for decision-making process implementation

and public policies elaboration

The delegation of functions is adequate

High-quality public services

Presence of motivation system for public officials

The staff is sufficient

Public officials are concentrated on strategic planning and do not dedicate the major part of

their tyme to current goals

Efficient expense of financial resources

Successful implementation

Achievement of anticipated objective

Regulatory acts derive from public policy

documents

Elaboration of public policies with ex-ante impact assessment

Reduced number of reports and their quality increase by introduction

of ex-post impact evaluation

Strategic planning is realized

Satisfaction of population

The ex-ante policy impact evaluation is realized

Government reputation improvement

Target

Objective

Tools

CPA reform finalization, fiscal and administrative decentralization

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Analysis of objective tree: Elaboration of public policy documents and of regulatory acts is of adequate quality. The analysis of decision-making process performed by using the „problem tree”approach, allows the establishment of objectives by use of similar method named „objective tree”. Thus the objective is formulated on the base of identified problem. In this context, proceeding from the considered problem, the objective consists in elaboration of public policz documents and regulatory acts of an adequate qualitz. At the same time, according to this approach, the causes which have generated the considered problem should be reformulated as means for established objective realization, and the effects produced will be transformed in final goals. In the context of facilities or actions oriented on achievement of established objective, above all things is required an essential reorganization of central public authority, as well as the administrative and fiscal decentralization. This will assure a clear delimitation of functions of all public authorities involved into the decision-making process and into the strategic planning. At the same time, the definitizing of the reform of public authority will make possible the discharge of certain financial resource previously expensed inadequately. These resources will be used for creation of an efficient system of public officials motivation and for extending of capabilities of perfoming preliminary analysis of public policies which often require significant financial resources. The existence of a durable system of motivation will offer to certain qualified officials the ability to cover all the stages of decision-making process much more efficiently. Also, for realization of the established objective it is necessary to elaborate a regulatory-methodological framework which would fix clear rules and procedures and provide to public officials the tools required for implementation of entire decision-making process. As concerns the goals followed in the aspect of realization of fixed objective, the Government tries firstly to assure a successful implementation of established public policies. A better quality of public policies is a precondition for successful process of implementation, for which are proper the accomplishment of fixed objectives and/or providing of public services of high quality. The accomplishment of the establishment objectives is the final instance of decision-making cycle, after this starts another cycle, which, on condition of adherence to specifications setup for the stage of public policy elaboration will lead to a similar success by simplifying the reporting process and providing the possibility to dedicate all time and resources to the process of strategic planning. The provision of public services of high quality assure the satisfaction of population and leads to the improvements of Government reputation. A successful implementation of public policies does not assure an efficient use of financial resources, but instead generates funds, which could be useful in the next cycle of decision-making process. Note: After this method application, the objective should be adjusted according to the regulations fixed in section 3.1. Objective setup.

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Appendix IV. Public policies tools explanation 16

This appendix offers an overview of the public policies tools that the Government disposes, which were mentioned in the chapter III. Point 4. Options identification. The four types of tools are:

1. Information tools 2. Financial tools 3. Administrative tools 4. Regulatory tools

1. Information tools Information campaigns are the most largely used alternatives for the traditional regulation in the OECD countries (Organization for economic cooperation and development) (OECD 2002, p. 54). These campaigns are used in order to redress the informational skewness and to allow the consumers to make informed choices. While information campaigns have as a target only to inform the citizens and to extend their consume area, some information campaigns have a more explicit target to change the behavior. As a rule, this form of campaigns is used when the behavior which is proposed to be changed has an important effect on the whole society, for instance, the smoking and driving practices. There are many approaches to inform and to educate, and namely: Dissemination of information The information can be offered to the individuals and to the firms hoping that these will change their behavior in the wanted way. Usually the information has a general nature whose role is to increase the population knowledge so that the last could make informed choices. The information can be disseminated via mass-media by promoting documentary, television program or by specialized institutions, for example, schools, which could elaborate a new curriculum or to educate the children in certain aspects. Nowadays the practices to educate the citizens about the environment problems are very widespread, being, as well, cultivated habitudes at the preschool age children how to separate recycling waste. Scientific fairs, exhibitions and museums are also used in the information dissemination. Information campaigns The information can be offered by a more concentrated and conjugated effort to change human preferences and actions, and not only by their simple information about the situation. Information campaigns examples include publicity which calls the people to lead a healthy life, information campaigns concerning the problems with regard to the family violence, or the advertising spot on the TV about malefic effects of the dopes. Because the information, as a rule, is not efficient in the absence of other actions, this type of tool is usually auxiliar or it represents the engine for other tools. For instance, the protreptic against the violence on the women, in absence of other punishment tools for the trespassers, can have a slow effect. Quality evaluation This tool consists of the publishing of the lists in which the products and services are arranged – those that have the highest quality are rewarded. The general information with regard to the products which are characterized by important aspects can be prepared, as the innocuity,

16 Această componentă este inspirată din Instrumente de Politică (Staroňová 2002). A se vedea de asemenea Ameliorarea Instrumentelor de Politică prin Evaluarea Impactului (SIGMA 2001) şi Control prin reglementare. Lista de puncte pentru legislatori (Oficiul Cabinetului Suedez, 1995).

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design, quality and price. Organizations, as schools or hospitals can offer to their services consumers “evaluating lists” which contain comparative information concerning the accorded services performance. This information helps citizens to make informed choices.

Table 1: Information tools evaluation Advantages Disadvantages These tools represent a good bases for a Government which takes up problems for which there do not exist sure solutions Easy to establish If a better tool is found, the public persuasive policy can be changed or left without too much difficulty Dose not involve financial and stuff considerable costs (insignificant financial commitment) Compatible with the democratic values and arguments (for instance, individual responsibility, freedom)

These tools are inefficient if immediate results are expected, as in the case of a crisis situation In the absence of positive or negative situations, the majority of persuasive efforts have a small success probability or a relatively short lifetime It is better to use in combination with other tools

2. Financial tools Financial tools include charges, taxes, subsidies and budgetary allocations. From economic perspective, this market stimulus can be cost-effective; they can encourage the innovation and to attract players in a sector or other. Ill successful direction could lead to opposite effects. The typical market mechanisms which are the part of economic tools are: Grants/subsidies These represent financial transfer forms to individuals and legal bodies. The target of the transfer is to offer a reward for the desired activity, so as carrying out or consumption of a good or service. The subsidy or the grant has the role to influence individuals’ or legal bodies’ decisions. While the choice depends on the individuals and firms, the probability that the desired choice will be maid increases at the same time with the growth of the offered subsidy. Grants and subsidies examples include budget funds given to schools and for extra-curricular activities, for researches activities in universities, theatres, public transport, as well as for researches and development. Insurance arrangements Insurance arrangements certificates represent documents with monetary value offered by the state to the consumers of a certain good or service. Further the consumers can use them to acquire goods or services from the favorite provider which, in turn, presents to the state the insurance arrangement for the redemption. The insurance arrangements, as the grants, have the role to increase the consumption of goods and services that the state wants. But opposite to the grants, which are given to the producers and restrict the consumer’s choice, the insurance arrangements system subsidize the consumers and allows them to make a relatively free choice on the market. This system promotes the competition among the providers, which in disputable way increase the products and services quality and reduces the state costs. Taxes Taxes are compulsory payments for state done by an individual or legal body. As a rule, the main target of taxes is to increase the revenues used to finance the direct expenses of the state. Taxes also can be used as public policy tool in order to impose a desired behavior or in order

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to discourage another undesired behavior. For example, taxing goods, services, or activities, the state discourages indirectly their consumption or the achievement of one activity (for instance, the alcohol consumption, tobacco or lucky games). Taxes can be also applied as positive stimulus, for instance, deductions from the taxing revenue, sparing, preferential quotas, etc. Thus stimulus by taxing can encourage some kinds of behavior. For instance, legal bodies which intend to modernize the producing process or to instruct the stuff can be convinced to action if fiscal stimuli are applied. Fiscal expenses do not involve direct expenses and thus there do not exist coercions concerning means availability to satisfy this target, but the fiscal expenses use impedes people to do other expenses which can be more important or useful. Fiscal expenses are easy to administrate and to apply because there is no need for special bureaucratic procedures. Users taxes and commissions Users taxes represent a combination between financial and regulatory tools. The regulatory aspect consists of the establishment by the state of a tax (commission) for an activity without forbidding or limiting it, depending on individuals or legal bodies to decide what activity volume to perform. Supplementary costs will determine individuals or legal bodies to analyze their costs and benefits in order to decide if the respective activity must be totally interrupted or at a level where the benefits overstay the costs. The efforts to reduce costs can encourage the seeking of other alternatives (less expensive) which will limit the activity for which the tax is collected. For instance, to reduce traffic jams in the city center, commuters must pay a tax to enter the center zone during the peak-hour. This makes peoples to compare costs to enter the zone with their own vehicles with the costs of using the public transport for which the respective tax is not perceived. Another frequently used example is the pollution tax, named also tax for release of wastes. If a tax for release of wastes is imposed, the contaminant will reduce continuously the pollution level until the point where to reduce pollution become cheaper than simply to pay the tax for release of wastes. Thus, the contaminant will seek in permanence ways to minimize the tax that he is paying, by reducing the pollution level that he produces.

Table 2: Financial tools assesment Advantages Disadvantages They are flexible tools in the sense of administration Administration and application costs are reduced Encourage the innovation allowing individuals or legal bodies to have a suitable reaction More acceptable from the political point of view, because the benefits are concentrated on some categories, and costs and results reverberate on the whole population Easier to establish if a harmony exists between what the state wants people to do and what want the lasts

The establishment is usually difficult because it needs financing from the new or existing sources of revenues (except the fiscal stimulus) Costs of gathering the information concerning the subsidies amount which will be necessary to obtain a desired behavior can be great From the part of providers a distinct behavior could exist (for instance, if a firm is waiting a subsiding program to be implemented, it could temporarily change its behavior in order to get greater subsidies) Because these mechanisms function indirectly, a period of time exists until the effects are tangible They can be superfluous in cases when the activity could be performed even without subsiding

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They are difficult to eliminate because of the opposition from the part of existent beneficiaries who remain in damage in the case of those mechanisms elimination The fiscal stimulus will impede other public expenses

3. Administrative tools Administrative tools are used by the state in order to direct the function of organizations which carry out services, including non-governmental organization and the private sector. Often, in order to perform certain public policy objectives, the activity of organizations which carry out services is financed from public funds. The program directing lines establish parameters or requirements for the goods or services which will be carried out by these agencies or organizations, preserving, at the same time, a certain degree of local independence and flexibility. Thus, the choice between the public or private carrying out of goods or services has two basic dimensions. The first dimension consists of financing. Should citizens pay for a good or service individually, from their own funds, or collectively, from funds collected by taxing? The second dimension consists of performance. Should be a good produced or a service carried out by a state organization or a non-governmental organization, or by the private sector? In many existent or potential public activity fields choices concerning the alternatives of financing and performance are to be done. The main administrative tools are: Carrying out directly by the state Typical examples of direct carrying out of goods and services by the state are the national defense, diplomatic relations, police, anti-inflammatory activities, social insurance, education, environment preservation and ways keeping. Some services are carried out directly by local authorities who get transfers from the central authority. These transfers need rules and regulations which concretize their adequate distribution in the society by indicating the level and the standards of services which are to be carried out. The contraction from the exterior The contraction from the exterior can be divided in many categories, and namely the goods and services contraction from the firms of the private sector and services contraction which are offered by the non-profit organizations. In the range of public services often carried out by the firms from the private sector in the case of governmental contracts the evacuation of wastes is included. The non-profit organizations, on the other hand, offers as a rule health services, education and other social and human services. On a larger scale, the governments collect services carried out by commercial firms and services carried out for clients by the non-profit organizations. The arguments in favor of these tendencies are the efficiency growth and the limitation of the opportunistic behavior. At the same time, to asses the products quality offered by the contractors, the Government must to dispose of monitoring and final assessment procedures. The family and the community In all societies the satisfaction of family members’ and parents’ requirements is regarded as an individual’s essential responsibility. So, in all societies parents, friends and neighbors offer many goods and services and the Government could take measures concerning their role extension in the way that fills its target. This can be done by promoting their implication. Many governments choose as option the grants or subsidies giving for these efforts (even without calculating these services non-monetary value), for instance, the children, old and ill persons care.

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Voluntary organizations Contemporaneous states collaborate with the voluntary sector or public organizations, as preferred mechanism to carry out public services in many fields. Voluntary organizations can personalize the services carrying out, can function on the smaller scale than bureaucratic state organizations, can reduce the dimension of necessary public institutions and can adapt the care services to the clients’ requirements and not to the state agencies structurization, but also can allow the competitiveness among those who carry out services. More mechanisms allow the Government to assist public organizations. These include direct financial support (the Government creates public organizations), indirect subsidies by local authorities (grants given to local authorities, and these must decide if they will carry out the subsidized services, or if they will contract public or private organizations), or via individuals (insurance arrangements type mechanisms).

Table 3: Administrative tools assesment Advantages Disadvantages Direct carrying out by the Government

Easy to establish because informational requirements are reduced The agencies dimension allow resources formation, habituations and information Avoids the problem with the indirect carrying out, as negotiations, discussions and greater information requirement Efficient tool in situations when a needed social good or service is not produced by the private sector.

Inflexibility (inevitable if the law supremacy will be respected) Political control on the agencies and officials promote the political intrusion in order to strengthen the Government for its re-election and not for serving public interests (an extreme case can be the failure to carrying out the service/product as the result of political power changing) Contradictory pressures can lead to incoherent directives Cost-inefficient, resulting in long retards, resources wasting (are not under the competitiveness) Programs implementation can bear because of a) conflicts between and inside the agencies b) difficulties in general rules application in specific situations

Contraction from the exterior

Easy to establish and control Efficient and responsible It is possible to control the opportunistic behavior

Difficult in the case of some more complex situations It can be difficult for the Government to stimulate the creation in the cases when non-profit organizations do not already exist

Public organizations

Flexibility in the range of carried out services (important in cases when service beneficiaries have heterogeneous preferences) Reservoir of innovative or unpopular ideas and actions as the agent of social and political changing Fast reaction Equitable tool (directed only towards those who need) Promotes community spirit and the citizens participation Cost-efficiency (reduced administration and a certain degree of competitiveness) Allows voluntary contributions

It is not feasible for ample activities (for instance, education field services) Limited resources Low probability to function out of the specified field The third sector is financially dependent on the private resources or public funds Services superposition or serious lacunas can appear

Family/ Community

Cost-efficiency Reliable (emotional assumption, insurance) Agreement with cultural norms Support for the family and

Insufficiently prepared for taking up complex economical problems Inequitable for those who insure the care (emotional impulse) Inequitable for those who have no one

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relations in the community Large political support for this type tools

3. Regulatory tools The regulatory tools include legal framework, which is often used for problems solution. Most commonly the legislation concerns the regulatory and legal acts which regard the market rules study and application, of individual rights, penal justice, administrative procedures, role of municipalities, NGOs and other organizations, etc. Traditional prescriptive legilation The traditional reglementations make part of operational administrative system, by means of which is instituted the regulatory framework materialized by regulatory and legal acts in combination with administrative apprication. The regulations are generally applied by means of directives, of which observation is monitored, and the nonobservance puniched. It means, that the regulations can by very expensive thanks to the required monitoring of their observation. The incorporation of obligatory standards in legislation (regulations, laws or decisions) is a frequently used public policy solution. EU framework directives A lot of EU directives are comon by their nature and include objectives, periods of validity and essential aspects of legislation, whether the technical and detailed formalities are measures of execution or given over to member-states in course of harmonization of their legislation with the legislation of EU. Self-Reglementation In many countries such professions as lawers, doctors and teachers are self-regulative. Frequently the standards proper to certain industries which significantly influence the public interests – such as advertising, mass-media or cinematography industry – are self-regulative, i.e. created by the industry itself. Such a consideration can be very suitable in case when an external body with regulative role disposes of expertise is lacking by the state. The rules are observed easily if these are created by the persons from the sectors of destination; furthermore, these can be rapidly updated. Although, the state could be not able to controle the observation of regulations and should action carefully to assure in the first instance the observation of public interests after which of those private (for example, the self-reglemetnation can be used by persons involved in the fields for creation of barriers for market penetration, or persons could protect the interests of their members and not public interests). Thus, if the self-reglementation practice is not sufficiently effective, the state could examine the variant of legal act proposal. Regulations on the base of performance The Regulations on the base of performance implie the specification of results or anticipated objectives rather than specification of mechanisms for their realization. The performance could be imposed by means of self-reglementation. Thus, the degree of state intervention is reduced. The firms and indifiduals can chose themselves the modality of law observation. The regulation is concentrated on the results or products rather than on the resources.

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Table 4: Evaluation of regulatory tools Advantages Disavantages Change the population behavior Assure the correctness by treating the similitudes in the same way A higher anticipation for citizens meaning the supremacy of law Eliminate the arbitrary behavior of oficials Data required for the institution of regulations are not complete because the Government should not know in advance the subject preferencies Efficient in cases when certain activities are absolutely undesirable (for example child pornography) The administration should not comply with incertitudes Attractive public policies when the public expects to see a rapid and confident action of the Government

Do not change values and attitudes of population Do not assure the correctness because the regulations do not allow the receptivity to contextual and individual differencies Nonflexible and do not allow the examination of individual circumstances, consequently generating the unintended regulatory decisions and results (perversive stimulants) Could distort the voluntary activities or activities in private sector and could promote economic inefficiencies Could inhibit the innovation or technological advance because of limited opportunities of experimentation As concerns the administration, it is impossible to institute regulations for all undesired activities The applicable costs could be higher (charges for information, investigation and criminal prosecution) The costs of negative effects could be high (for example, high taxes on smokables could generate the contraband and other forms of fiscal evasion)

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Appendix V. Evaluation and eligibility criteria of public policy Proposal

(These criteria are used by subdivisions for public policies analysis, monitoring and evaluation of central public authorities and by the Bureau for policies coordination and external assistance of Gorernment in evaluation of quality of public policy Proposals elaborated by relevant subdivisiona/authorities).

Name of public policy Proposal Institution which has elaborated the public policy Proposal Date of presentation of public policy Proposal

Subdivision which has evaluated the public policy Proposal Date of evaluation of public policy Proposal

Criteria Points٭ Comments 1. Problem identification

The problem is clearly-worded The program is actual The problem is confounded with its causes and effects

2. Objective setup The objective is SMART The objective is not confounded with target The objective is co-related with national priorities stipulated in basic strategic documents

Have there been identified the beneficiaries and categories affected by the policy

3. Identification of the options of problem solution There are three or more formulated options There is included a status quo option The options are realistic and feasible The tools of options implementation have been considered

4. Options analysis The options are realized in the aspect of all five types of impact generation The risks and incertitudes have been analysed The relevance, efficiency, effectiveness and durability of options have been estimated

The analysis is consistent and reasoned The analysis contains both quantitative and qualitative data

5. Comparison of options and selection of recommended option There have been used the same criteria of options comparison The recommended option is optimal

6. Implementation Plan Formulation The actions on the prevention, minimization or counteraction to negative impacts of policy have been formulated

The indicators of monitoring and determination of institutions responsible for implementation have been setup

The period of actions execution has been fixed

7. Consultation The interested parties, experts and/or large public have been consulted The points of view expressed by the consulted parties have been taken into account

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The summary of consultations including the participants’ poins of vew is presented

The reasoning was offered to interested parties in case when their proposal has not been accepted

8. Presentation of information The information presented is consistent and reasonable The formate proposed for formulation of public policy Proposal has been respected

There are references to information sources The conclusions are drawn from the performed analysis The technical data are combined with non-technical information The technical terms, acronyms and abbreviations are defined The analysis is objective one and does not promote a particular point of view. The adverse impacts are not disguised of underappreciated

The stages and principles proposed in Methodological guide for public policy elaboration have been respected

There are indicated the difficulties and information gaps faced by the authorities in the process of analysis

Score < 90 > Final decision Accepted/ Rejected

The score of all 36 components of evaluation should be established on a 0-5 scale. The highest score٭will indicate the correspondence of analysis contained in public policy proposal to the regulations established in Methodological guide on public policies elaboration. The points assigned have the following signification:

5 = The basic aspects have been covered, no one of important aspects did not remain uncovered 4 = Generally satisfactory and complete, implying minor omissions and unconformities 3 = Can be considered satisfactory despite certain omissions and/or unconformities 2 = Certain aspects are relatively good, bu taken all round is considered unsatisfactory because of omissions and unconformities 1 = Is not satisfactory, implies significant omission and unconformities 0 = Very unsatisfactory, the important aspects have been realized inadequately of omitted If total score representing the amount of points by every criterion of evaluation is under 90 points, the public policy Proposal should not be accepted and will be returned to subdivision/institution for revision and completion.

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