Reactions to the Practitioners' Panel Class?

Here is a spot for you to share any reactions or questions arising from Tuesday's class which featured our two guest policy practitioners.

I meant to put this post up days ago, while it would have been fresher in your minds. Oh well, better late than never I hope.

Policy analysis for our parking example

This post is to provide a place for you to keep thinking about our parking example.

Remember that, strictly speaking, our status quo trend should be considered as an alternative too. Let's call it Alternative Zero. Actually, I was a bit naughty to try to avoid treating it as an alternative today in class. It would need to be evaluated along with the other alternatives, despite not being favoured by the President and her team.

Recall that the President of the University frames the problem with a focus on cars searching for parking as a nuisance (or externality).

"It is important that students, staff and faculty who choose to drive a car to campus are able find a parking place quickly and reliably when they arrive and that the campus roadways no longer be clogged with cars circling for a parking place, delaying everyone, including buses."

Her policy analysis team offered three additional options (in addition to status quo, which is obviously not a favoured option):

• Alternative 1: Expand parking from 2000 places to 3000 and keep parking free
• Alternative 2: Ration demand with priced monthly permits
• Alternative 3: "Performance-based” parking pricing

I suggested that the team also distilled the decision criteria down to three main ones (assuming all are designed to be effective initially at least):

1. Acceptable cost to the University
2. Enduring effectiveness
   
3. Acceptable cost to customers (especially students presumably)
   

We began to simulate 'projection of outcomes' by you asking me questions (pretending that I was going off to do the modelling etc). For example you found out that:

• the cost to build a new parking structure (Alt 1) is claimed to be $2 million (about $2000 per space) with annual enforcement costs of $5,000.
  
• that Alternative 1 is projected to result in a renewed parking shortage problem again within 10 years.
• That revenue from parking in Alt 1 is almost zero (small revenue from fines for haphazard parking or parking in restricted locations). So funds for the parking expansion will have to come from cuts elsewhere in the University budget.

We will continue with this next on 16 October. In the meantime, you may have more questions?

Galloping through the Eightfold Path

Today we will be getting into the section of the course that focuses on the practice of Policy Analysis.

We start by taking a quick gallop through Bardach's "Eightfold Path"

1. Define the problem (as much as possible)
2. Assemble (some) evidence
3. Construct (workable) alternatives
4. Select (reasonable) criteria
5. Project outcomes (to the extent possible)
6. Confront the trade-offs
7. Decide!
8. Tell your story

These are practical steps and they are meant as advice for new policy analysts doing the 'applied research' that we call 'policy analysis'. We will have a few comments on each step and will use a tangible example to illustrate and get you thinking about each step.

The example is "Parking Problems on a Campus".


{By the way, you will notice some similarities between Policy Analysis steps and the Stages Model of the policy process. You might wonder what is the difference. Those stages we saw in weeks 3 and 4 were part of an attempt to describe what happens in the policy making process rather than an attempt to say what should happen (although of course we also saw that sometimes they are used to say what should happen). They also aim to describe the whole policy process, not just the applied research (policy analysis) aspect.}

Thoughts on Memo Feedback?

You might like to have a place to put comments on the memo feedback process and on the first memo more generally.

So here it is.

Judging the proposals from Ms Preacher, Mr Incentive and Ms Rule

You may want to continue the discussions in today's sections class via the comments here.

‘MyCountry’ has decided to try to contain emissions from household electricity consumption but three local politicians are championing rather different instruments.

1. Ms Preacher wants an education, awareness-raising and persuasion campaign to prompt voluntary effort (including installing electronic, instantaneous electricity meters in houses to provide instant feedback on the GHG impact of using appliances).
2. Mr Incentive wants a carbon tax (which would raise electricity bills)
3. Ms Rule wants to enact regulations requiring high energy efficiency for all household electric appliances.

How good do these policy instruments look according to some of the criteria we saw in Tuesday's lecture?

• Efficiency
• Ease of evaluation (was labeled as 'visibility', but this may not be a great name)
• Political feasibility
• Coerciveness
• Targeting
• Equity
• Ease of implementation
• Complexity
• Legitimacy

Policy instruments

This week is Policy Instrument week.

Here are a few policy objectives. For each of these can you think of SEVERAL possible policy instruments that could be used to tackle them? (bring your short list to class tomorrow)

1. To reduce domestic violence?
2. To improve equity of access to higher education?
3. To improve road safety?
4. To increase the extent of competition in the software industry?
5. To tackle over-fishing in the Gulf of Thailand?
6. To slow the spread of HIV infections?
7. To address a dangerous form of pollution?

How could we judge each instrument?

Also please try to take a peek at W&V's chapter on this and Bardach's 'Things Governments Do' (Bardach's is shorter and easier, so it is a good place to start).

Link to climate change basic information

Some of you have been asking where to look for basic information on climate change.

Don't go overboard in reading up on the issue, since we are only using it as an example. It is not the primary focus of the course!

Nevertheless, here is a link to quality introductory information on the basics of climate change science and policy discussion.

Global Warming Basics (from the Pew Center on Global Climate Change)

There are various articles at this site. Some should suit your needs, depending on the specific issue you want and how deeply you want to go.

Their 'Climate Change 101: Overview' document provides a concise and non-technical introduction to the whole issue (both science and policy basics).

The Pew Center is not necessarily 'neutral' (whatever that could mean on this issue) but they do seem to be mainstream in their approach and to be fairly careful in their citing of sources and evidence.

In the interests of avoiding information overload, I think I will leave it at that for now.

Week 5 is Market Failure Week

Difficult decisions: to cooperate or defect?

This week we have tried to raise your awareness of 'market failures' as a rationale for government action (public policy).

It has just been a little taste and to understand these ideas better you will need to do some reading and thinking. There will also be more chances to apply these ideas in the weeks ahead.

To trust or not to trust?

You should also be aware that, even within economics, there is some debate about 'market failures'. For example, some folks in the 'transaction cost analysis' school of thought have attacked the whole notion. Others join Milton Friedman in disputing that market failure is sufficient justification for government action (saying that any attempt to do so introduces 'government failures' that are even worse than the market failures they are meant to cure) .

If you 'google' the term, market failure, you will also see that various sources list a slightly different set of such failures (although there are some items on the vast majority of the lists, such as public goods, externalities, monopoly power or market power, and information problems). This can be a bit confusing.

Nevertheless, the notion of market failure is the mainstream way of explaining why government needs to act in many situations. So you will need a working knowledge of the idea's basics.

Many of the policy instruments next week will be about correction one or more of these market failures.

How could they do that to us?

Decisions, implementation and evaluation

Decisions, decisions ...

This post provides a place for comments, if any, on the material in week 4's lecture summarised below:

Decision making

• Drawing on H&R’s review of perspectives on how decisions get made
• How do Stone’s arguments in her Ch. 10 fit?

—Implementation

• What is it, and why is it difficult?
• Perspectives on possibly doing better

—Evaluation

• Various kinds (not always what they seem)

An example to help us think about policy 'stages'

Penny Wong, Australia's Climate Change Minister


This week we will be learning more about decisions, implementation and evaluation. The emphasis will mainly be on decisions probably.

Some of the theories on these can be a bit abstract. So it will be useful to have a concrete example to refer to.

The Federal Government in Australia has recently released (in the form of a "Green Paper') its preferred approach to reducing climate change. The following articles provide insight into the process now unfolding in Australia.

• The first (easier) one is from Oxford Analytica reprinted by IHT.
• The second (more challenging) one is an OpEd from one of the academics mentioned in the first article. It was published in the Australian Financial Review in March (so it is 5 months older than the IHT article).

Let's play "spot the public policy concept" (from weeks 2, 3 and 4) with both articles!

Can you find a way to apply any of the following:

• a 'policy window' (or windows) which allowed this issue to move from 'agenda setting' to 'policy formulation' and then 'decision' stages
  
• influence of an 'international policy regime'?
• a policy goal?
• a set of policy alternatives (do they fit with a 'rational model' perspective?)
• a role for 'the battle of ideas' or worldviews in arguments for each alternative?
  
• policy 'instruments'?
• would the 'mixed scanning' model fit here perhaps?
  
• roles for 'rational policy analysis' (eg predictions of outcomes under each alternative) in the debate?
• political support as central not peripheral to the decision?
• relevance of broad goals, such as 'efficiency' and 'equity', and disputes over them
  
• pleas for the decision-making to be more rational and less political?
  
• they seem to be in the 'decision' stage of the stages model... but do you think they have been moving through the stages step-by-step?

FIRST ARTICLE:
International Herald Tribune

AUSTRALIA: Climate change policy momentum builds

Oxford Analytica

Wednesday, July 23, 2008

AUSTRALIA: Climate change policy momentum builds

Climate change policy was central to Prime Minister Kevin Rudd's election campaign last year. While his ratification of the Kyoto treaty in December was a symbolic reaffirmation of his commitment to reduce carbon emissions, the July 16 release of a government Green Paper on a proposed emissions trading scheme (ETS) represents a more concrete step in implementing radical change.

Political climate. The long drought in the Murray-Darling river basin, and its attribution to climate change, has increased Australian sensitivity to climate-related issues. Flows in this region -- which supports 70% of Australia's irrigated agriculture -- have deteriorated considerably.

Nevertheless, passage of legislation is likely to be challenging. The Rudd government has also committed to broad-ranging reform of the tax and welfare system over the next two years. Since this is also likely to create winners and losers, it appears to have been politically expedient to insulate households from the full effects of the ETS in the early years. Even so, the Treasury estimates that if the permit price per tonne is 20 Australian dollars (19.4 US dollars), the inflationary impact is likely to be a one percent increase in the consumer price index in the scheme's first year

Cap and trade? Debate has centred on the choice between a cap and trade scheme, as proposed by Australian National University (ANU) Professor Ross Garnaut and a hybrid scheme proposed by the ANU's Professor Warwick McKibbin.

The McKibbin scheme is a hybrid between a carbon tax in the short run, and cap and trade in the long run:

· The government would allocate, for free, tradeable long-term permits consistent with reaching a desired level of emissions in 2050.

· The government would also sell extra annual permits at a predetermined price.

· Emitters could choose their optimal adjustment path to the desired long run position.

By contrast, under cap and trade, the government sets the transition path of emissions, and it is the traded price of the emission permits that adjusts to market conditions. It is generally recognised that a carbon tax, or the hybrid scheme proposed by McKibbin, has efficiency gains relative to a cap and trade. However, Garnaut and the Rudd government appear to prefer the cap and trade so as to align it with the UN framework and to ensure earlier emission cuts.

Strategy. The government wants the ETS scheme in place as soon as possible so as to provide a longer-term framework for investment decisions and allow Australia to participate more forcefully in post-Kyoto negotiations. However, the political challenges presented by simultaneously implementing two major reforms -- the ETS and broad-ranging reform of the tax and welfare system -- are significant. While the public will generally be supportive of the former, it is likely that the latter will be deferred until after the next election, due in 2010.

Copyright © 2008 The International Herald Tribune | www.iht.com

SECOND ARTICLE: Climate change policy built on shaky foundation Warwick McKibbin
The Australian Financial Review
28 Mar 2008, P. 83

The Garnaut draft report on a national emissions trading scheme is a good summary of a debate that has been under way in Australia for more than a decade.

Unfortunately it is not clear that the review's proposed approach is what the country needs to tackle climate change.

Its basic premises are a matter of considerable debate. The Garnaut review starts from the same basic assumptions as the Stern review: that the science of climate change is almost completely resolved, and that there should be a global binding carbon target or - in the case of the Garnaut review - a global carbon budget that should be imposed on Australia. Given this target, the role of economics is to deliver this target at low cost.

If the premise on scientific certainty is correct, then the approach of the Garnaut review is reasonable. However, most experts in the climate change area acknowledge the science is still uncertain on what the precise target for greenhouse emissions should be. The Garnaut review also acknowledges this, but critically fails to adequately incorporate it into designing the policy response.

What matters for climate change is the concentration of carbon in the atmosphere from all sources - not the emissions in a particular period from Australia. No one knows if the concentrations should be 400, 450 or 550 parts per million. The problem is one of managing the risk associated with various outcomes over time.

The economics literature establishes that under uncertainty, the appropriate policy response is to set a clear price on carbon (through a tax or a hybrid approach such as the McKibbin-Wilcoxen Blueprint), which reduces emissions gradually at low but rising cost. A less desirable approach is to have a precise carbon target for each year with a cap-and-trade emission trading system delivering an uncertain price, since we have little idea what this cap should be and there are many target paths that can deliver the same concentration level at some future date.

The best way to proceed is to choose a path that can be transparently adjusted over time to achieve a concentration level at lowest economic cost. An inflexible quantity target for each year is not good policy. A quantity target expressed as a carbon budget (as in the Garnaut review) is better policy but still subject to the same basic criticism.

The second major issue in the draft report is the question of permit allocation. Garnaut is correct that the allocation does not change the economics associated with a carbon price. It is a philosophical decision on wealth transfers.

Under a review set up by state Labor governments, of course the report would give all the revenue from permits to the government, which would then wisely spend this on the best programs to reduce emissions. Although theoretically a reasonable idea, I fundamentally disagree with this philosophy because of the revealed inability of governments to use this potentially large revenue wisely in practice. The permits should be bundled and allocated once off to all citizens and affected companies, as compensation for short-term economic pain and to create a political constituency in support of the policy. Once these property rights are trading in a well-designed
long-term permit market, the market will direct revenue into the areas that give most carbonreduction bang for the buck. Giving the revenue to government to be reallocated each year is a recipe for rent-seeking and mismanagement.

Transparency provided by a well-designed market trading in long-term carbon assets is, in my view, a better way to proceed, with a small volume of short-term permits auctioned to generate some government revenue over time when needed to stabilise fluctuations in the short-term carbon price.

The similarities between the Stern review, which emerged from the politics of the European Union, and the Garnaut review, which was born in the heat of a federal election campaign, are unfortunate. Under the circumstances of its creation, the Garnaut review could not endorse the more sensible approach of the Prime Minister's Task Group on Emissions Trading.

That is the basic flaw in the process that needs to be corrected. The politics of climate change is clear but the Rudd government should be careful not to expose the Australian economy to the risks of short-term economic volatility that may ensue from the proposed approach of the Garnaut review.

The review is correct that short-term carbon price volatility can be handled by industry - but this will be at a cost. Why impose a cost when the volatility can be removed in the design of the system?

Climate policy should be run like monetary policy; a clear long-term goal for policy with a central bank of carbon in control of the short-term price of carbon, just like the Reserve Bank controls the short-term price of money.

While part of this is endorsed by the Garnaut review, the core part - on managing the price of carbon in the short term - is rejected outright. This is a mistake with potentially significant consequences for the Australian economy.

It is time that politics was excised from the climate debate. Bipartisan support for a sensible climate policy is what is needed. Sensible climate policy is only partly found so far in the deliberations of the Garnaut review.

Warwick McKibbin is an international expert on climate change, a professor at the ANU College of Business and Economics and a fellow of both the Brookings Institution and the Lowy Institute.

Agenda setting, policy formulation and lecture/readings connections!

[After a few glitches and hiccups, the presentation from Boyd for this week is now accessible via the workbin. Sorry for the confusion earlier.]

This post makes space for some week 3 commenting. This week's lecture and some activities on Thursday are focused on "Agenda Setting" and "Policy Formulation" as stages in the policy process.

But I also want to say a few words about the links between classes and readings.

Please don't expect that lectures and classes will always match the assigned readings exactly! Classes are meant to add value to the readings and vice-versa. You need to pay attention to both.

You don't necessarily have to "rote learn" all these frameworks in detail (or who proposed them). The idea is to be able to use them in some way, as well as to be questioning them, playing around with them, and in the process gradually building up your own solid sense of the policy process and your potential roles in it.

For example, last week both Ann Florini's class and the main reading (Ch 3 of Howlett and Ramesh) discussed actors and institutions but they did so in somewhat different ways. Understanding both and comparing their perspectives should allow you to think more deeply about the issues. (And Ann also helped preview some ideas that we will get back to in week 5).

This week Boyd drew on various sources for his lecture material, including parts of the Howlett and Ramesh book that are not assigned reading. {If you do take a look at them you may appreciate that it was kind of us not to assign those particular chapters!! ;-)} Boyd also mentioned key ideas from the Mark Moore reading, which is an easier read and highly recommended for close attention. Finally, the Stone reading complements our classes this week and in recent weeks and also sets the scene for some issues which will come up in the next few weeks (and throughout the module and your careers in fact!). The issue of 'framing' mentioned by Boyd is also highly relevant to her arguments.

Mark Moore's "Strategic Triangle" (using an image he used for ANZSOG Public Lecture Series - Ch 8)

[Update: Here is a link to an interview with Mark Moore discussing his strategic triangle and the concept of public value. Thanks to Saad for the link.]

Reflections on actors and institutions?

Here is a very brief post to give you a place to make comments, reflections or questions about the issues in week 2: actors and institutions.

You will recall we had Ann Florini helping on Tuesday. The key reading was Chapter 3 of Howlett and Ramesh. You worked in groups on Thursday to generate lists of actors in our hypothetical MyCountry.

Al Gore's movie and his recent speech

[UPDATE: Here is a little tip to keep our conversations about climate change focused and relevant to the course. Let's try to use this as an example to help us better understand the policy process. It is natural to begin to focus our minds on the merits of Gore's case, but (for the moment at least) let's not dwell too much on that. You could either agree or disagree 100% with what he says and still be able to analyse it in terms of the policy process and (even better) relate it to ideas in the readings. Paul.]

So we have seen An Inconvenient Truth now. Maybe some of you have already watched or read Gore's recent "challenge" speech (assigned for next week). This post will give you a place to continue the conversation about them.

Both of the two Gore examples (the movie and the new speech) make nice case studies that we can use in order to reflect a little about public policy processes. [Maybe you learnt something about the climate change issue too.]

We had some discussion in class which encouraged you to think of Gore's slideshow as part of one or more of the stages in the policy process. We'll be learning more about that over the next few weeks.

Other angles?

Your discussions in class on Thursday may also have started to touch on some other angles that are relevant to our course, including:

• an 'Actors and Institutions' angle (relevant to next week's classes): Who is Gore? What role is he playing? Is he a one-man show, or are there organisations in the background? Who (or what) is he seeking to influence? Would it matter if he were mainly speaking to people who already agree with him? What institutions does he mention as relevant?
  
  
• Is there 'rational policy analysis' here or are these primarily political communications? Is he being too emotive? Would he be more or less effective if he presented the data more carefully and scientifically and refrained from implying that correlation equals causality? Is he talking to our heads or our hearts mainly? And is there anything wrong with that? Notice that he accuses his opponents of being misleading in the ways that they seek to 'reframe' the issue. How does he 'reframe it'? Deborah Stone's book is helpful for thinking about these angles.
  

Image by Robert A. Rohde for Global Warming Art (via Wikimedia Commons)

Quick explanation

Hi class

If you have been following the blog this evening you might have noticed something odd. A post from one of you appeared and then disappeared. And many of you signed up to be authors today ... and then disappeared again.

Sorry to be a party pooper! I decided to call "time out" on student posting so that Boyd and I have time to make some quick decisions about policies for the blog before things get too busy here.

Many apologies especially to Zhong Yi who took the initiative to post here earlier. I have not deleted your post, but have just 'unpublished it'.

More announcements on this soon. In the meantime comments are still open of course. Zhong Yi, perhaps you might like to repost your contribution as a comment for now?

See you tomorrow.

Welcome to the PP5111 Class Blog

As promised, I have created our class blog.

I hope this will become a collaborative space to share ideas, links, news, questions etc that are relevant to the course.

Everyone in the class is invited to check in here regularly and to make comments.

If you don't sign in with your own name then please do sign your comments at the bottom so we can acknowledge your efforts.

Why not try it right now with a comment on this posting? Any thoughts on the course so far?