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Developing a baseline scenario

The problem definition must include a clear baseline scenario as the basis for comparing policy options.
The aim of the baseline scenario is to explain how the current situation would evolve without additional public intervention – it is the ‘no policy change’ scenario. A clear baseline scenario also provides the basis for comparing policy options. The baseline scenario depends on whether there are already national and EU policies in place:

  • if there is no EU policy, the baseline means the continuation of ‘no EU policy’. The ‘no EU policy’ includes the expected effects of legislation which has been adopted but not yet implemented
  • where there is already an EU policy, the baseline is the continuation of the current policy without any change, i.e. without any new or additional EU intervention
  • if the existing EU policy foresees a change (e.g. abolition of the milk quota in 2015), or a sunset clause, then the baseline can over time lead to a ‘no EU policy’ scenario. For practical reasons, you may use the existing policy without the 'sunset' as the baseline, provided you have an option only reflecting the introduction of the sunset clause.

For these reasons it is important that you explain clearly the policy context of the initiative in an introductory chapter of the IA report. To develop the ‘no policy change’ scenario, you will also need to consider a wide range of factors other than EU intervention. These include:

  • member State policies/regulations already in place
  • actions already decided or proposed by third countries, industries and other parties;
  • evolution of relevant markets
  • recent trends in the problem and likely changes to the causes of those trends.

A good baseline should have a strong factual basis and, as far as possible, be expressed in quantitative terms. It should also be set for an appropriate time horizon (neither too long nor too short). The baseline projection has to provide a clear indication of how serious the problem is, or to what extent it would become more serious without immediate intervention, and whether there are irreversible consequences.

The baseline scenario should take into account the expected results of relevant legislation which has been adopted but not yet fully implemented. While the baseline should not include developments that depend on political decisions that have not yet been taken, there is one important exception to this: if the initiative is linked to other policy proposals already put forward by the Commission but not yet adopted by the legislator, these proposals need be assumed to be part of the baseline.

In describing the baseline scenario – as when assessing the impacts of any policy option – you may face the challenge that the projections are uncertain or that there is a risk attached to them, i.e. that an undesired development may – or may not – happen. Sensitivity analysis and risk assessment are tools to respond to these challenges in your problem description.

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