Why Do Policies Fail?
A 3-ingredient recipe for successful Green policymaking.
Before COVID-19, the mayoral candidate of New City had a vision: walk and bike only streets at the core of New City. The plan included replacing streets with tree-lined pedestrian boulevards and comfortable bicycle paths. As COVID-19 happened in early 2020, the now mayor took a swift approach to implement the plan. Soft temporary barriers, plants and benches were placed, and former car lanes were repainted and repurposed.
A few months later, the results were disappointing. Post-lockdown meant an increase in traffic which resulted in increased congestion. The paint on the street lanes wore off and was soon overtaken by parked automobiles.
The opposition criticised the government for fast-tracking the project without proper planning considerations. The project ended up being viewed as a personal project of the Mayor. Local ‘green’ champions rued the loss of opportunity of an initiative that, at first, held all the characteristics to improve the lives of citizens and reduce car emissions.
The fictitious story of ‘New City’ above can serve as a cautionary tale to any government aiming to reduce carbon emissions. Unfortunately, climate scientists are clear: we have ten years to avoid worst-case scenarios. We need to decisively transform the world economy — there is no margin for costly mistakes.
So why even well-intentioned, well-designed policies fail?
An answer may come from the development community. According to the World Bank, we should be looking at how ‘aligned’ a country’s institutions are with the policy and how it reflects the interests of the majority of the population. Both help explain why some policies are badly designed, not adopted, or badly implemented, such as the case of “New City.” By “Institutions,” I mean the rules and organisations that guide our actions, including informal norms and traditions that are embedded in one’s culture. For example, all these different types of institutions tell us how accepting we are of LGBT rights, not only the law.
In short, successful policy requires a determined set of conditions — a three ingredient recipe, if you will.
Ingredient 1. A favourable institutional framework
In general, the change to a greener economy has been focused on innovative projects and up or reskilling. We hear about these projects frequently in the news: green hydrogen-based entirely on wind or solar; New urban models, such as Paris mayor’s 15-min city project, developed primarily to reduce car traffic; and new community initiatives such as urban vegetable gardens, Repair Cafés or free markets.
Arguably, we tend to see projects, and particularly technological ones, as kind of a magic bullet that can change an entire economy[1]. What we hear less frequently about is the issue of institutional reform — by and large, a neglected part of such investments. Indeed, most projects are developed under the assumption that adequate ‘institutional setting’ is in place or is always benign. But most of the time, that is not the case, and certainly not for the Green Transition.
Undoubtedly, the adoption of the Paris Agreement in 2015 was an important milestone in ‘setting in stone’ an international climate institutional framework. The first climate directive has been proposed in Europe: the 2050 climate-neutral target is now “enshrined in law.” There are also limits to the amount of Greenhouse Gases that the European economy can emit. Unfortunately, as the European Environment Agency suggests, that is still insufficient, and our actions are defined under a ‘Brown Economy’ umbrella:
“Society’s resource use and pollution are tied in complex ways to jobs and earnings across the value chain; to major investments in infrastructure, machinery, skills and knowledge; to behaviours and ways of living; and to public policies and institutions.”
Long-term sustainability considerations are a still problem of isolated environment ministries and agencies — mostly derided technocratic institutions responsible for ensuring protective requirements are in place.
To achieve zero carbon in 2050, decarbonisation will have to touch every single corner of our economies. This will only be possible if the green pathway is enabled through a favourable institutional framework. Such a green framework would mean laws and organisations specifically geared to factor in ecological, social, and economic priorities. This also includes values, shared narratives, and beliefs that guide our behaviour and how we use resources (anyone involved in public policy will tell you these are often the most important barriers to change).
Regrettably, there is no ideal form of institutional framework. They differ widely throughout the world with different levels of success; hence it has not been possible to identify the perfect arrangement. Solutions must be developed within each specific context.
Directions: Develop tailored favourable laws and organisations and support the adoption of favourable social norms.
Ingredient no. 2. Change-friendly institutions
Of course, one may ask: if we know what to achieve, why do we still design ineffective policies? Like a skewed compass, if policymaking is not aligned with the setting, it will face significant barriers. In the current ‘brown’ institutional framework, green policy collides with the incumbent ‘way of doing things.’ We need to know how we can make our institutions ‘change-friendly’ so that broad policy reform is possible.
We can take inspiration from a number of countries that have successfully managed broad transitions throughout history. These processes are, though, usually painstakingly slow. Let’s look at the example of Finland.
“God did not create hurry”
Old Finnish proverb
In the 1800s Finland was a peripheric Swedish colony. It was among the poorest places in Europe. A hundred years later, Finland was among the top global developed nations.
Two root causes probably played a determinant role in overturning the destitute conditions of the XIX century (Pertti Haapala). Firstly, the Finnish started placing modernisation at the centre of public debates. A nation-wide consensus was gradually formed and, for the most part, institutionalised in legislation. The second cause is attributed to a transformation in world view and of the individual’s role in society (i.e. individual responsibility, equality, gender roles, parent-child relationship, religion).
From then on, consecutive policies managed to take advantage of favourable commercial ties with Russia and Western Europe. Policy design was so grounded that the country was prepared for disrupting events. In the early 90s the government institutionalised easy access to the Internet for all and the development of information systems. As soon as Finland was hit by the 1991–1993 depression, the country was already in a position to take advantage of suddenly open global markets for communication technologies. Nokia was just around the corner.
In a democratic society, policymaking is always the result of reaching agreements between people (‘interests’) who have diverse or even conflicting preferences. This dynamic — I shall call it a figurative negotiation table — is also defined by a country’s institutions.
When the level of polarization is high, as we have been witnessing in the United States, agreements are seldom reached, and the outcomes are disappointing, i.e., any policy designed for change will be an isolated attempt. Where positive interests dominate, decisions are likely to be more adapted to actual circumstances, and they work!
This was the case in Finland. The intention of successive Finnish governments to carry out policies to modernise the country had the initial support of the population. Their stake in inclusiveness and equality was also fundamental in the long run. With supportive conditions in place, citizens voluntarily contributed to the policy’s implementation, even as results were apparent only after World War II.
This dynamic understanding of how policymaking actually works helps understand what status quo agreements are possible (in the ‘brown economy’). It also shows that we need to change the ‘negotiation table’ if we are to get different results. This is possible if we:
- Add new interests groups to the ‘table,’ i.e., if governments start taking into account the preferences of new groups (ex. green or future-looking organisations);
- Modify the beliefs of existing social or business interests; or,
- Modify current economic incentives to business interests, such as launching a carbon tax.
Public pressure (e.g., the world youth’s demonstrations for climate action) or political leadership are generally the triggers that can set in motion these changes. As each country’s institutions gain a change-friendly quality, the state can then leverage the power of citizens, communities, and businesses to put in practice effective policies.
Leadership based on moral choices is key. Without it, the change that we need will just not happen fast enough.
Directions: Design inclusive decision-making processes for best alignment between the public and policy-makers.
Ingredient no. 3. Effective Institutions
Now that we hopefully have a favourable setting, we can start designing successful policies. But what do successful policies look like? Well, we go back to the World Bank once again. Institutions achieve intended outcomes when they deliver policy that is: a) consistent, b) allows individuals to coordinate with each other, and c) prevents free-riding.
Firstly, policies yield the desired outcomes when they show the government is consistently committed to achieving intended goals.
Secondly, if individuals and business leaders believe the policy will actually be delivered even beyond the political cycle, they will coordinate their actions and get the best results. A good example is the promotion of electric car use. We are only interested in buying them if car manufacturers, battery and charging station developers, and city planners all work together to deliver the necessary technology and infrastructure.
Thirdly, effective policies limit opportunistic behaviour (free-riding) — often by rewarding compliance or penalising transgression. An example is tax evasion. Not paying taxes does not prevent the enjoyment of public services but is detrimental to the system’s sustainability (and so akin to free-riding).
In a nutshell, consistency and trust are key. Circumstances may change, resources may be withdrawn, but policy objectives must remain stable. These three winning features promote voluntary compliance by individuals and hence increase the impact of a policy.
Directions: Design consistent policies and build trust in policy-makers
