Environmental Engineering Reference
In-Depth Information
Another way to come to ex-ante predictions of the likely impacts of policies or
projects is to implement alternative versions of the policy in an experimental situa-
tion and to compare their relative impacts and effects. Despite the fact that such an
experimental approach is often too costly and time consuming to be feasible for
policy design purposes, in some cases experimental data has been used successfully
to validate forecasting model outputs (e.g., Todd and Wolpin
2006)
. A particular
form of these experiments is the 'natural experiment' (Rosenzweig and Wolpin
2000)
, a method where treatments are purposively randomised to overcome the
problem of self-selection that often leads to misinterpretations.
This brief overview shows that there is a lack of methods and procedures of
institutional ex-ante evaluation of policies, let alone, reliable and good indicators.
However, effectiveness and cost-effectiveness (including transaction costs for
design and implementation) of a particular policy depend, among other things, on
the institutional environment and the institutional arrangements in place. There will
be high transaction costs of implementation if the institutional context does not
'fit'. Given the strengths and weaknesses of the different approaches, there is a need
to triangulate methods and to complement the tool box for ex-ante policy analysis
from an institutional perspective.
The Concept of Institutional Analysis for Ex-ante
Policy Assessment
In this section, we outline the basic assumptions underlying the concept of institutional
analysis for ex-ante policy assessment. After sketching out briefly our understand-
ing of institutions as the fourth dimension of sustainability we particularly highlight
the importance of compatibility between policy instruments and the respective
institutional contexts.
Institutions for Sustainability
Institutions are defined as the formal and informal rules of a society or of organisations
that facilitate co-ordination among people by helping them form expectations. They
also function as constraints that shape human interaction and the enforcement
characteristics of these constraints (North
1990
: 3).
2
In the course of evaluating the progress of implementing the United Nations
Program of Action 'Agenda 21', the Commission on Sustainable Development of the
United Nations (UNCSD) defined sustainability as having four dimensions. Besides
the economic, social, and environmental dimension, institutions are defined as the
2
Institutions do also define certain organisations, but these organisations are best thought of as not
being institutions, but as being defined by institutions (Bromley
1989
: 43).
