DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

170 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS
timate of how effective the policy intervention would be in addressing the barrier,
given existing initiatives, over two time periods, equally weighted:
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Short-term effectiveness (by 2020) with higher scores given to economic/
fiscal incentives (subsidies, taxes, guarantees) and lower scores to information
or R&D interventions.
Long-term effectiveness (by 2035) with the same scores for economic/fiscal
incentives and those for information or R&D increased or decreased where
relevant.
Scoring of cost dimension
The ‘cost’ score of a policy is the product of two equally weighted factors: ‘administrative
and transaction costs’, determined by estimates and expert consultation; and wider
economic costs of the intervention. The methodology, described in detail below, was
systematically applied to arrive at a first set of cost scores, which were discussed and
iterated in sector ‘deep dive’ sessions with multiple stakeholders.
• Scoring the ‘administrative and transaction costs’: Based on an expert-guided
estimate of the combined cost incurred by government to set up and operate the
policy and the cost to the private sector of complying with it.
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Cost incurred by government refers to any foregone revenue or additional
spending commitment entered into by the government by virtue of the policy.
Cost to the private sector refers to one-off adjustment costs and any increase
in the cost of doing business caused by the policy.
• Scoring the ‘wider economic cost’: based on an expert-guided estimate of the
cost–benefit trade-off between economic advantages and disadvantages in a
sector created by the policy across government, businesses and consumers.
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An example is a policy that reduces market competition creates advantages
for businesses, but disadvantages for consumers. Similarly, a subsidy creates
an advantage for its recipients, but disadvantages for the government.
The ‘economic advantage and disadvantage’ component focuses on each
particular sector. The scoring has not taken into account the intrinsic benefits
of the policy supporting circular economy activities, since they are addressed
in the ‘impact’ score.
The ‘balance across the economy’ component looks at the average net disadvantage
in other parts of the economy due to a sector-directed policy, but
not on the distribution of advantages and disadvantages, which belongs to
the political viability sphere.
The assessment does not incorporate the economy-wide computational general
equilibrium modelling of the impact of circular economy opportunities.
The total impact and cost scores are combined to provide a rank between 1 and 3:
1. Impact and cost are both greater than 50 (out of 100), putting the policy on the
short-list
2. One or other of the impact and cost scores is 50 or above, putting the policy in a
‘supporting policy’ category
3. Neither impact nor cost score reaches 50, putting the policy in the unattractive
category.
Figure D2 shows a worked example of how the tool was used to provide an initial score
for a particular policy option. All of these individual scores that comprise the total impact
and total cost scores were subsequently discussed with the project team and Danish
government stakeholders and adjusted accordingly.