EN Official Journal of the European Union CE 70/66

(2004/C 70 E/069)

WRITTEN QUESTION E-1878/03

by Christopher Huhne (ELDR) to the Commission

(6 June 2003)

Subject: Impact assessment

Will the Commission detail what measures it is taking to improve the quality of the cost and benefit analysis attached to its legislative proposals? What are its objectives in this regard?

Answer given by Mr Prodi on behalf of the Commission

(31 July 2003)

The Commission has introduced an impact assessment (IA) procedure covering both regulatory aspects and sustainable development. The Better Regulation Action Plan and the Communication on Impact Assessment, adopted in 2002, establish a new integrated approach to IA as agreed at the Göteborg and the Laeken European Councils. The Communication (1) foresees that, for all major initiatives included in the Commission's Annual Policy Strategy and Work Programme, an impact assessment be carried out. This covers a preliminary assessment of the main impacts of the proposal.

This year, the Commission will carry out extended IAs (Ex IAs) for 43 of its initiatives. These proposals fall within the three main Commission priorities for 2003, being (1) Enlargement, (2) Stability and Security and (3) Sustainable and Inclusive Economy.

The Ex IAs should evaluate the economic, social and environmental impacts of the proposal concerned. The benefits and disadvantages of the various policy proposals should be described in qualitative, quantitative terms and, whenever possible, monetary terms. This should allow all stakeholders to understand the implications of Commission proposals giving them the possibility to draw their conclusions about the costs and benefits of the proposal concerned.

As can use different methodologies:

— cost-benefit analysis, comparing costs and benefits expressed in the same units, normally money;

— cost-effectiveness analysis, compares the costs of achieving a given objective;

— multi-criteria analysis, compares the costs and benefits expressed in a mixture of qualitative, quantitative or monetary terms.

The cost-benefit analysis that the Honourable Member refers to entails numerous advantages. It provides comprehensive information on all effects of a proposed measure and, by so doing, gives political decisionmakers and indication as to whether this measures can be considered justified or not. However, cost-benefit analyses fail to capture impacts that cannot be adequately quantified and therefore tend to be underestimated. This is for instance the case of social and environmental benefits.

For this reason, cost-benefit analysis is not always the most appropriate methodology to assess the impact of Commission proposals. In these cases, other evaluation methods will have to be applied.

At this stage, three extended impact assessments have been adopted. These are the Commission's Communication on the Employment Strategy (2), the Communication on Immigration, Integration and Employment (3) and the on unfair trade practices (4).

List of extended impact assessments for 2003 is sent direct to the Honourable Member and to Parliament's Secretariat.

(1) COM(2002) 276 final.

(2) COM(2003) 6 final.

(3) COM(2003) 335 final.

(4) COM(2003) 356 final.