Policy formulation Flashcards
Steps in policy formulation
- Problem Identification and Agenda Setting
- Policy Analysis and Research
- Developing Policy Alternatives
- Consultations and Stakeholder Engagement
- Policy Instrument Design
- Decision-Making and Policy Adoption
- Implementation Planning
- Monitoring and Evaluation Framework
- Communication and Public Engagement
what is cost-benefit analysis?
Cost-Benefit Analysis is a quantitative method that compares the expected costs (financial, resource, opportunity) against the expected benefits (economic gains, social improvements) of a proposed policy or project. It expresses both costs and benefits in monetary terms to gauge net value.
core principle of cost-benefit analysis
If the sum of benefits outweighs the sum of costs, the policy is considered economically viable.
Objectives of cost-benefit analysis
Determine efficiency: Is the policy likely to maximize net gains to society?
Provide a uniform measure: Converting diverse effects into monetary values allows straightforward comparisons.
Key steps in cost-benefit analysis
Defining the Scope and Time Horizon
Identify who will be affected (stakeholders) and over what timescale the costs and benefits should be tallied.
Example: For a hydro project on the Indus River, does the analysis span 10, 20, or 50 years? Are local communities, environment, and future generations accounted for?
Identifying and Valuing Costs
Direct Costs: Construction, equipment, labor, operation, and maintenance.
Indirect Costs: Displacement, environmental degradation, lost recreational areas, or health impacts.
Opportunity Costs: Other projects or uses of funds that must be foregone.
Identifying and Valuing Benefits
Direct Benefits: Increased revenues, job creation, improved infrastructure services.
Indirect Benefits: Social welfare gains, multiplier effects on local economy, intangible benefits (e.g., improved literacy or reduced disease rates).
Discounting Future Benefits: Because a rupee today is worth more than a rupee tomorrow, discount rates are applied to future values.
Calculating Net Present Value (NPV)
NPV = (Present Value of Benefits) – (Present Value of Costs).
A positive NPV indicates that the project is worth undertaking from a purely economic standpoint.
Sensitivity Analysis
Alter discount rates, cost assumptions, or benefit projections to see if conclusions still hold under varying scenarios.
Example (Pakistan): For a metro rail project in a large city, changes in ridership estimates or inflation rates might drastically affect the cost-benefit ratio
strengths of cost benefit analysis
Clarity, Efficiency Focus, Transparency
limitations of CBA
Valuing Intangibles, Distributional Issues, Sensitivity to Discount Rates, Risk of Oversimplification
What is multicriteria analysis
Multicriteria Analysis (also known as Multi-Criteria Decision Analysis, MCDA) accounts for multiple dimensions of policy alternatives—economic, social, environmental, political—that may not be easily combined into a single monetary measure. Instead, MCA uses weights or scores assigned to different criteria.
What are primary stakeholders?
Definition: Individuals or groups who are directly affected by a policy, program, or organizational decision—either as beneficiaries or as those bearing direct costs/risks.
Example:
In a health insurance policy rollout, primary stakeholders would include enrolled citizens who receive coverage and patients who directly benefit from reduced healthcare costs.
what are secondary stakeholders?
Definition: Individuals or groups who are indirectly affected or have a less immediate stake in an outcome. They influence or are influenced by the policy, but to a lesser or more peripheral degree.
Example:
In a public transportation expansion project, secondary stakeholders could be local businesses near the route. They may see changes in foot traffic, yet are not the primary users of the service.
what are key stakeholders?
Definition: Individuals or groups with significant influence, authority, or resources. Their endorsement or opposition can shape the success of a policy, project, or decision.
Example:
Ministers, high-level bureaucrats, or major funding agencies who control budgets and approvals are key stakeholders in a large infrastructure project.
what are rigid stakeholders?
Definition: Stakeholders who hold firm, non-negotiable stances. They are resistant to change or compromise, regardless of new data or persuasion efforts.
Example:
A traditionalist group opposing any amendments to a longstanding cultural practice might be a rigid stakeholder in a legal reform debate, refusing to consider alternate views.
What are pressure stakeholders?
Definition: Those who actively apply pressure (political, social, or economic) to steer policy outcomes in a particular direction. They can organize protests, mobilize public opinion, or lobby decision-makers intensely.
Example:
A labor union pressuring the government with potential strikes or mass demonstrations over a new labor law is a pressure stakeholder
What are distract stakeholders?
Definition: Individuals or groups whose actions or messaging divert attention away from the core policy issue. They may bring side controversies or irrelevant debates that complicate the policy dialogue.
Example:
A fringe political faction raising conspiracy theories about a vaccination drive, thereby consuming media airtime and government effort, acts as a distract stakeholder.
