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Comparing the Ex ante and Ex post Costs of Complying with Regulatory Changes - SD14011

Phase 1 of this study is a literature review of the evidence for the cost disparity. While few ex post analyses are available, there are several good publications that do scope the issue and evaluate hypotheses about the disparity. The literature review will draw on international evidence. The most informative study that will be used is that by Harrington et al (op cit.), which considers a range of cases and provides several hypotheses about why a cost disparity occurs. Similar evidence is presented in ICS (2004) , which concentrates on implementation of REACH, the new EU chemical strategy. As part of their case in favour of this legislation, the report sets out evidence from five case studies from the EU and the US that suggest systematic over-estimation of ex ante costs. Bailey et al (2002) explore the reasons for disparities between ex ante and ex post cost estimates further and highlight potential problems in “closing the gap” between the two.

The literature review will seek out other grey literature that deals with estimates of compliance costs for regulations that also have a government RIA. These estimates might be produced by industry, by NGOs and by academic sources. The focus will be on detailing the cost categories used and the potential sources of disparity between an RIA and the estimate.

Phase 2 of the project is a Case Study approach. A case study approach will be most informative for drawing up a valid evidence base from this project. There are several criteria that can be used to select cases from across the range of Defra responsibilities. The two basic criteria should be that: a) there is a robust RIA document and that a sufficient amount of time has elapsed for the main body of each regulation to be implemented; b) there is some form of ex post compliance costing, preferably estimated or compiled by an independent analyst such as a university researcher.

An attempt to find any existing cost estimates for compliance with the regulation will be done. Such studies may be located in a range of sources and relate to different parts of the regulation. If necessary a standard comparison will be built up by focussing on specific technologies or administrative practices as subsets of the overall compliance regime.
Project Documents
• Final Report : Comparing the Ex ante and Ex post Costs of Regulatory Changes   (1237k)
Time-Scale and Cost
From: 2005

To: 2006

Cost: £36,942
Contractor / Funded Organisations
SAC Commercial Ltd
Corporate Issues              
Economic Policy Evaluation              
Economic Research              
Overall Evaluation