Which analytical tools are suited to transformative change?

Highlights

This research:

• is motivated by growing interest in policies aimed at addressing climate change and other long-term challenges and opportunities and related questions about which analytical tools are most suitable
• uses the term ‘transformative change’ to describe this focus on forward-looking and transformative policies involving changes to the structure of the economy
• examines the question: Which analytical tools are suited to transformative change?
• is based on a literature review and discussions with some New Zealand government agencies.

The research finds that:

• transformative change tends to involve deep systemic changes which unfold over a long time and have a distinctively non-linear pattern
• given the complexity, risk and uncertainty involved in transformative change, it is challenging to assess the impacts of policy options in advance
• relevant analytical tools include ones which reflect the features of transformative change – goal-oriented, future-focused, systemic, involving risk and uncertainty
• cost-benefit analysis (CBA), while a valuable tool in many contexts, does not appear to be well suited to transformative change. This reflects CBA’s limitations in this specific context – a status quo bias, narrow focus, and tendency to underplay environmental and other non-market impacts.

The research implies that:

• improving analyses about transformative change might involve broadening the toolkit and exploring newer/under-utilised analytical tools, weighting more heavily tools most suited to transformative change, and improving analytical capability.

Background

Addressing climate change will involve significant changes to where and how New Zealanders live, the infrastructure that is built, how people are transported around, what we produce and consume, and so on. Policy needs to shape and support this transformation in a way consistent with New Zealand’s climate goals. Climate change and other long-term challenges and opportunities have led to a growing focus on systemic, forward-looking and transformative policies. This paper uses the term ‘transformative change’ as a shorthand for this type of policy focus and associated changes to the structure of the economy.

Questions are being raised, both internationally and in New Zealand, about which analytical tools are most suited to transformative change. In particular, the role of the current dominant tool CBA is being debated. These questions provide the motivation for a paper which is summarised here. The paper considers analytical tools that may help inform policy decisions about transformative change in the early stages of the policy cycle. The paper is based on a literature review and discussions with some New Zealand government agencies. The ultimate purpose is to stimulate debate about the selection of appropriate analytical tools and to support efforts to improve analytical capability.

In this section 

What is transformative change?

Analytical tools suited to transformative change

How well suited is cost-benefit analysis to transformative change?

Conclusions and implications