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Evaluating benefits and costs of food regulation:a scoping study

March 2002

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The Australia New Zealand Food Authority commissioned a scoping study to examine the feasibility of developing an econometric model (or suite of quantitative techniques) that would quantify the impact of food regulation on the economy. The Authority was particularly interested in the inputs to an econometric model and quantitative methods to measure the benefits of food regulation.

The scoping study contains a proposal for an integrated framework, in preference to a single econometric model, for reasons of transparency and flexibility in choosing quantitative techniques appropriate for each regulatory change. The integrated framework comprises five steps, in sequence, where each step adds depth to the analysis and builds the essential inputs to an econometric model. The five steps of the integrated framework are:

1. A scientific risk assessment that generates information about the reduction in morbidity and mortality rates likely to be achieved by a regulatory option.

2. Calculate the compliance and other costs associated with the regulatory option.

3. Calculate the stream of benefits associated with the reduction in morbidity and mortality, as measured by the effect on human capital and cost of illness.

4. Calculate the of the direct effect of changing regulation by combining the outcomes of previous steps, measured by the present value of benefits and costs.

5. Evaluate the full impact of regulatory change in an economy-wide model, incorporating the outcomes of previous steps.

Full version [ PDF 237 kb ]

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