During 2010-11 the CCRI carried out some work for Defra to explore the potential for improving impact assessment of regulatory change in the agricultural sector. Two sets of regulations affecting the agricultural sector were examined: the 2008 Nitrate Pollution Control Regulations, and the 2006 Agricultural Waste Regulations. The focus of the study was on exploring and understanding the causal factors accounting for differences between predicted impacts in the ex-ante impact assessment, and actual impacts in a post-implementation review carried out between January and April 2011.

In the case of the Nitrate Regulations the estimated total costs and benefits between the two assessments were found to be broadly similar, but there were significant differences between some impact categories (e.g. record keeping; storage costs, spreading costs). In the case of the Waste Regulations the ex-ante impact assessment over-estimated the costs to farmers of compliance with the Regulations. This was largely due to lack of consideration of the value of waste materials and the scope for recycling. In both sets of regulations the key differences between ex-ante and ex-post studies could be largely attributed to ‘assumptions’ underlying predicted impacts, and the low level of ‘sector knowledge’. Assumptions made in the ex-ante impact assessment regarding take-up of various alternative behaviours were not supported in practice, leading to differences in estimated costs to farmers. Linked to this was limited ‘sector knowledge’, which led to some erroneous estimates regarding changes in farmer behaviour.

The research recommended some approaches to improving the regulatory impact process, including the use of workshops/case study methods that would modify assumptions about strategic behaviour that underpin cost and benefit estimates, improved understanding of the potential effects of technological change, scenario modelling to provide insights into the potential impacts of unpredictable external drivers, such as market prices, and qualitative analysis of costs and benefits to improve understanding of the nature of impacts at farm level. Improvements were also suggested for post-implementation review of regulatory change. The research suggested modifications in order to move to a situation where consultation is integrated into a more streamlined ex-ante impact assessment and post-implementation review. The result would be improved understanding of regulatory impacts, which could then feed into the policy review and development stage, as well as inform future impact assessment and appraisal.

The project commenced in October 2010, and was led by John Powell, assisted by Chris Short, Paul Courtney and Jane Mills.

The  final report can be accessed from the Defra website.

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