8.1 Diagnosis
8.2 Design
8.3 Setting the scope
8.4 Impact assessment
8.5 Appraisal
8.6 Decision making
8.7 Implementation
8.8 Monitoring and evaluation
A 'policy management system' is a strategic and participatory process in which a core management group develops an institutional framework linking national, regional and local initiatives, as well as government departments, private and research sectors, and community-level organizations Carley (1994, p. 19). This system operates within the context of a national sustainable development strategy, as discussed in section 7 above. The strategy is important because policy must be developed and implemented in an uncertain and changing world. Moreover, good policy making is a learning process, able to encompass adaptation in the light of new information, including information from monitoring and evaluating past initiatives, whether successful or not.
Good policy making for SARD will therefore be an iterative, continuous cycle, with the following stages:
· diagnosis of problems and opportunities
· design of possible interventions
· setting the scope of programs or projects
· impact assessment
· appraisal
· decision making
· implementation (action)
· monitoring and evaluation
then back to diagnosis. Not all steps may be followed on every occasion, and there may be many false starts and loops back, as ideas are developed and new information accumulated.
Each main stage is now considered in more detail.
Comprehensive guidelines for the conduct of an agricultural sector and policy review (ASPR) are provided in FAO (n.d.). While still provisional, and not written with a specific focus on SARD, those guidelines seem relevant for the diagnostic stage in policy making for SARD. They are too comprehensive to be set out here. However, an ASPR entails a critical review of issues, problems and constraints in the agricultural sector.
Such a review will normally begin with a study of the structure and performance of the agricultural sector. Performance would be judged, so far as possible, by the contributions made by the sector to the aspects of growth, equity, efficiency and sustainability. Indicators of the present position and trends with respect to these aspects will be sought.
Commonly used indicators include measures on contribution to national income. In the context of SARD, it is important to be alert to the well-known limitations of national income accounts, particularly the common tendency to omit or undervalue changes in natural resource stocks and environmental quality. So far as possible, traditional national income accounts need to be supplemented with environmental and resource accounting information (Ahmad, Serafy and Lutz 1989; Markandya and Perrings 1994).
A framework for the diagnostic phase that may be found useful is the so-called SWOT analysis. A SWOT analysis entails a thoughtful review of the Strengths, Weaknesses, Opportunities and Threats of the agricultural sector for the attainment of SARD.
By the nature of SARD, the diagnostic task needs to be executed taking as long a perspective as is realistic. Problems of under-development or unsustainability of today will, of course, need to be identified, but the policy group also needs to think carefully about future threats to sustainable development that may not yet be evident.
The design phase will often flow naturally from a successful diagnostic analysis. In terms of the SWOT analysis suggested above, design will build on strengths, mitigate weaknesses, seize opportunities and subvert or overcome threats. For instance, diagnosis may have led to the identification of failures of past policies that need to be corrected. Similarly, where diagnosis has isolated cases of resource degradation or environmental damage due to market failure, it will be natural to look first at opportunities to correct such failure using the policy instruments outlined in sub-sections 6.3.1 and 6,5.3.
Often, but by no means always, policy intervention will require the design of a project or program directed specifically at implementing some initiative to promote SARD. For project design, a range of considerations applies, as set out in detail for irrigation and drainage projects in FAO (1995a). The guidelines provided in that document, and in other sources on project planning, are comprehensive and will not be explored in detail here. Only some aspects of design especially relevant for SARD will be given further attention.
In the design of policy interventions for SARD, especially in the design of projects and programs, consultation with the resource managers, who will often also be the intended immediate beneficiaries, is important, for all the reasons discussed earlier. Of course, selection of goals and objectives are matters for government. However, when it comes to practical matters of what will and what will not work, mistakes can be avoided by proper consultation with those directly affected (Pretty 1995).
Usually, the diagnostic phase will turn up many more problems and opportunities relating to SARD than it is possible to follow through in terms of designing, funding and implementing appropriate policy interventions within a normal planning period. Some priority setting will therefore be unavoidable.
According to FAO (1991a), special attention should be given to situations where conflicts between demands for environmental protection and agricultural development are most acute. Environmentally endangered agro-ecosystems may often be found to correspond with the loci of most severe rural poverty. However, in setting final priorities it will be necessary to consider:
· the severity and urgency of the actual or threatened problem of poverty and/or resource degradation;· the feasibility and costs of designing policy measures that will solve, or at least significantly ameliorate, the problem;
· the likely scale of the benefits to be expected from successful intervention; and
· the scope for extending intervention to other areas.
More generally, priority setting for policy interventions needs to based on the extent to which the alternative possible interventions are judged to contribute to the SARD goals of growth, equity, efficiency and sustainability.
Within that broad framework for priority setting, attention needs to be directed to critical areas within the major agro-ecosytems where problems are most likely to arise. The den Bosch Conference outlined a series of priority measures applicable for each of the major agro-ecosystems where critical situations mostly occur. The nominated ecosystems were: drylands and other areas of uncertain rainfall; irrigated lands; humid and per-humid lowlands; mountain and hilly areas; and coastal zones and small islands (FAO 1991a, 22-23 and Appendix 2). A fuller consideration of the types of action required within each of these major agro-ecosystems was provided in the Conference document: Strategies for Sustainable Agriculture and Rural Development in Areas with Different Resource Endowments (FAO 1991f). Readers are referred to this source.
An important issue in the design of any project or program is the choice of the scale at which it is to be implemented. There may be a tradeoff to be resolved between opting for a sufficient scale of operation to reap economies of size, and the administrative capacity of the organization responsible for implementation. In addition, there is the possibility that the scale will be constrained by limited funds.
For some policy interventions, nothing short of national-level implementation may be practicable. For example, a substantial increase in the resource taxes that loggers are required to pay would not work if implemented in only one part of the country. Under such arrangements, the logging operators would simply move elsewhere where the taxes were lower. A policy restricting access to a marine fishery may need to be implemented on an international scale to be effective.
At the other end of the scale, local initiatives based on the strong participation of a highly motivated community group may only work if kept to a small scale. In the past, efforts in many parts of the world to expand dramatically the scope of successful local rural development initiatives have often proved disappointing.
Almost any policy initiative directed at SARD will have consequences for resource quality and the environment. Some will have significant social impacts. It therefore makes sense to require most such initiatives to undergo an impact assessment before they are adopted. The natural resource impact of some policy measure may be defined as consequences that affect the productivity in agricultural use of land, water, and plant and genetic resources. The environmental impact refers to consequences that affect the quantity or quality of resources not used in agriculture (Crosson and Anderson 1993, p. 13). The social impact of some policy change may be defined as consequences induced in the behaviour and way of life of people affected by the change.
Losses in soil productivity due to erosion are an example of negative natural resource impact. Damage to non-agricultural ecosystems due to uses of agro-chemicals is an example of an environmental impact, and a reduction in the quantity and quality of food consumed is an example of a social impact.
In the case of many policy initiatives, it will not be a trivial task to identify merely the nature of the various impacts of some prospective policy change, ley alone their extent. The difficulty will be greater for general policy measures, such as changes in monetary or fiscal policy, since the impacts of such measures may be quite far-reaching. It is because the implications for sustainability of macro-level policies are so hard to trace that the importance of their impacts is too often overlooked.
Even for policies targeted on SARD, the full implications may be hard to discern. Assessing the magnitudes of the possible impacts of interventions is even harder than merely identifying where the main consequences will arise. Nevertheless, the ability to make good estimates of these impacts is important to the design of sound policies for SARD. A good understanding of the ecology of the farming systems, or of forest of fishery ecology, is obviously vital. While, in most cases, the results of scientific study of the systems will be an important contribution to this knowledge base, the understanding of the people inhabiting the systems will often be at least as important. Certainly, it will be necessary to account for their responses to policy initiatives in impact assessment.
8.5.1 Extended cost-benefit analysis
8.5.2 Cost-effectiveness analysis
8.5.3 Multi-criteria analysis
The main formal tools for the appraisal of policy interventions for SARD are extended cost-benefit analysis, cost-effectiveness analysis and multi-criteria analysis. Each is considered in turn below.
Conventional cost-benefit analysis (CBA) will be familiar to project economists. However, the basic method has been extended to accommodate concerns about sustainability. Descriptions of extended CBA are to be found in such sources as Dixon and Hufschmidt (1986), Markandya and Pearce (1989), Markandya (1991) and Munasinghe (1993), so that only a brief overview is presented here.
The key concept of extended CBA is the valuation of costs and benefits in terms of total economic value, defined as the sum of use value, option value and existence value. Use value is the normal economic value assigned to a commodity such as a natural resource. Option value is the difference between the discounted expected future use value of an item and the value that the relevant group or society is willing to pay for it today to conserve it for future use. Existence value is the measure of value assigned to a commodity by the relevant group to keep it in being, regardless of any possible value the commodity may have in the future.
Valuation methods to assess these various components of total economic value have been developed. Where there is no observable market price, valuation methods must be used. These mostly rely on assessments of 'willingness to pay' for certain features of a commodity or resource, or 'willingness to accept' compensation for the loss of access to those features. These measures may be assessed by reference to related markets, or they may be obtained by various experimental methods.
In the first category, hedonic pricing techniques have been applied to relate prices of a resource or commodity, such as residential land, to observable features of that commodity, such as amenities. Then it is possible to identify the values placed on those amenities in the market, and to extrapolate those value estimates to other situations. An alternative approach is to assign a value to an amenity such as a national park by observing what people actually pay to gain access to that amenity. This usually means measuring their expenditure on travel. Yet a third possibility is to assess the opportunity cost of replacing the resource or amenity with a similar one, or of rehabilitating a damaged or degraded environment. Using this approach, the costs of a forest that is cut down may be valued in terms of the costs to replant and develop another forest that would match the one lost. Similarly, the costs of pollution may be assessed by the costs of clearing up the damage.
Experimental approaches to valuation are based on contingent valuation methods. In applying these methods a sample of respondents will be asked hypothetical questions about how much they are willing to pay for a particular commodity, or how much they would need to be paid to accept its loss.
All these methods of valuation have been, and remain, topics for contentious debate amongst economists and others (Carson, Meade and Smith 1993; Desvousges, Gable, Dunford and Hudson 1993; Randall 1993). The same is true of the practice of discounting as normally used in CBA. As discussed earlier, extended CBA is based on discounted costs and benefits, but augmented with a sustainability criterion. This criterion specifies either that the project or program is designed to avoid any overall depletion of the value of the affected resources, or, where this is not possible, that a compensatory investment is made elsewhere to leave the total stock of capital intact.
It is not always possible to use the valuation methods outlined above. The methods may not be applicable, or may be judged to be too unreliable, to be used in every situation. In such cases it may be possible to define explicit objectives for the proposed intervention and then to consider the alternative ways in which those objectives might be achieved. Alternatively, a political decision may be made about the objective to be reached, such as stopping damage to the ozone layer, but again alternative ways of attaining that objective exist. In such cases it is possible to compare the alternatives in terms of their costs and determine which is the most cost-effective. Sometimes it may be possible to extend the methods to generate meaningful cost-effectiveness ratios that can be used to aid choice. For example, there may be a number of alternative ways of reducing soil erosion in a particular area that vary in the amount of soil loss that may be prevented. They could be compared in terms of cost per 1000 tonnes of soil loss prevented.
The obvious limitation of cost-effectiveness analysis is that it does not allow comparison of interventions directed at different objectives, so that its applicability in appraising a range of policy measures is very limited.
The reality is that most policy interventions for SARD will be directed at the attainment of multiple objectives. Consequently, it will often be difficult, if not impossible, to establish convincingly the required valuations to convert all the attributes of some possible intervention to money costs and benefits (van Pelt 1993). Then there is nothing for it but to assess the alternatives by some form of multi-criteria analysis (MCA) (Pétry 1990).
MCA may be done informally or by using more formal methods. In the latter category there is a range of methods available along with computer software for applying some of them. Typically, MCA involves the following steps:
· Identify the objectives or criteria that are to be allowed to influence the final choice. These should be clearly specified, ideally measurable, and, so far as possible, mutually independent.· Forecast, for each policy option, the expected levels for each decision criterion. Eliminate any dominated options at this stage. (An option is dominated if it is inferior to some alternative option in terms of all the choice criteria to be considered.)
· Assign a preference measure to each of these criteria levels for each policy option. The preference function may be a proportionate score (that is, a linear preference function), or a utility value (that is, a nonlinear preference function).
· Assign weights to be applied to the preference measures for the different criteria. The weighting function may be linear and additive or of some other form. The interrelated nature of the different objectives for SARD may make a linear and additive model misleading, yet the added complexity of non-linear models may limit their appeal.
· Calculate the measure of overall value or merit to determine the best option.
While MCA is a flexible method that appears to be well adapted to analysis for policy planning, the complexity and the demands it places on decision makers to be explicit about their objectives and values may limit its use. This is especially so for the theoretically more valid non-linear functional forms. As a result, it may be that only the first three steps above are formalized, followed by intuitive assessment of the alternatives.
Choice of the best policy option might seem to follow logically from the previous step of appraisal of alternatives. Yet in practice, the decision maker must confront such difficulties as:
· considerable system complexity;
· imperfect information and hence high uncertainty;
· often, significant downside risk;
· the need to balance several objectives, such as efficiency and resource conservation;
· the need to account for the often conflicting interests of different groups; and
· the need for coordinated action to make solutions work, including actions by others over whom the decision maker has little or no control.
In the face of such difficulties, it is not surprising that some decision makers will seek to 'dodge the issue' by deferring a decision. Unfortunately, inaction is as much a choice as action, and will have its own costs but few benefits. Decision makers must confront the unavoidable complexity of their situation, be prepared to make an informed choice and then be willing to accept responsibility for that decision.
They can often reduce, if not eliminate, the difficulties they face by being clear about objectives, by selecting appropriate criteria to judge the attainment of those objectives, and by getting the best possible forecasts of the values of those criteria under the alternative options. Formal or intuitive assessment of the multiple criteria may then be used to reach a conclusion about what is best, as described in 8.5.3 above.
After a choice, implementation of the decision should follow. Yet difficulties in implementation often arise due to lack of the needed financial or human resources, to imperfect understanding of what needs to be done by those charged with doing it, to failures of inter-agency cooperation, or to many other causes.
Successful implementation of policy decision requires a clarity of purpose, determination by the key decision makers and, above all, adaptability. If impediments cannot be surmounted, maybe they can be circumvented. The notion of SARD as a learning process has already been emphasized, and decision makers must be prepared to make use of what works and to change what does not.
The successful implementation of many SARD policy initiatives requires cooperation among government departments, NGOs and other local organizations, and rural people. Cooperation works best if there has been full participation of all the parties throughout, which is seldom easy to achieve. Cooperation can be encouraged, however, in a number of innovative ways. For example, it is possible to pay funds, not to some central coordinating body, but direct to the parties in return for specified contributions to the cooperative effort. Only small amounts should be allocated at once, with continued funding depending on continued cooperation.
Policies, programs and projects for SARD need to be monitored to see how well they are achieving the objectives set for them and to identify changes needed to enhance progress. Similarly, periodic evaluation of what has been achieved is necessary in order to learn from past successes and failures. Again, the notion of SARD as a learning process emphasizes the need for proper monitoring and evaluation.
Management information systems for monitoring and evaluation need to be developed, consistent with the needs of the case and with the capacity to collect and process information. As in the diagnostic phase, a mix of methods from simple and participatory through 'high tech' may be appropriate.
