Regulatory Affairs of Science: Analysis of Regulatory Methods

This essay delves into the regulatory affairs of science, exploring three key areas: cost-benefit analysis, discounting, and baseline studies. The first section examines the methods used to monetize values in cost-benefit studies, including revealed and stated preference techniques, with examples of how they are applied in different project scenarios. The second section focuses on discounting, explaining its importance in economic evaluations and the mechanics of nominal and real discount rates, along with cautions to consider when applying this method in different scenarios. The final section discusses baseline studies, their purpose in assessing and monitoring project effectiveness, and the elements involved in establishing accurate baselines for impact assessments, including survey design and questionnaire usage. The essay provides a comprehensive overview of these critical aspects within the context of regulatory affairs.

Running head: REGULATORY AFFAIRS OF SCIENCE
Regulatory Affairs of Science
Name of the student
Name of the university
Author note

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Table of Contents
Option 1...........................................................................................................................................2
Option 2...........................................................................................................................................4
Option 3...........................................................................................................................................6
References........................................................................................................................................8

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Option 1
Cost benefit analysis is used for providing a comparison between the benefits and total
costs of executing a project or venture (Boadway, 2016). The technique assumes that monetary
value can be placed on all the benefits and cost of the programs. Discounting is the process that
has been used tocalculate the anticipated costs and benefits of the project throughout the whole
life span of the project for converting the future returns into the present value of money. It has
been assumed in this context that present value of money is higher than the expected financial
returns and value of goods. Therefore, higher the discount rates of a project lesser will be the
future returns and vice versa. The different types of cost-benefit analysis are Benefit cost ratio
(BCR), Net present value (NPV), Incremental Cost Benefit Ratio and the Payback Period
(Hastings, 2015). However, there are different factors considered as benefits to a project. The
benefits are concerned as a well-being to the overall society while quantifying them. Therefore,
project will have to both indirect and direct positive impacts.
The different project scenarios will have different impacts on the society and may or may
not generate revenue. The purpose of a public investment project is to contribute to the society
on the whole. On the contrary, the purpose of a private investment is generating revenue by
selling the organizational products to the consumers (Coates IV, 2014). It is easier to calculate
the direct benefits from the project than the indirect benefits as there are other competitors
offering similar products and services to the consumers. Societal benefits are form of benefits
that not only affects the direct beneficiaries but also the society as a whole. The cost benefit
analysis requires quantification of all types of benefits, even the social benefits for calculating
the viability of a project. Economists have developed artificial prices for different types of
benefits by examining the amount they are willing to pay for them. The two main approaches for

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monetizing values in cost benefit analysis are revealed preference technique and stated
preference technique (Shih & Tseng, 2014).
In revealed preference technique the consumer behaviour comparisons between two
similar instances are drawn as per the scenario of the cost benefit analysis. This technique uses
hedonic pricing where consumers are able to identify the value of different intangible goods and
the values are uncovered using various statistical tools and techniques (Freeman III, Herriges&
Kling, 2014). On the other hand, travel cost method is also used to quantify the intangible
benefits by considering the intangible goods and market as complements to such an extent that
accessibility to intangible goods only possible by making purchase of services and goods in the
market.
On the contrary, the stated preference techniques are based on hypothetical values that
have been acquired from different studies or surveys. The consumers are asked that whether they
are willing to pay for the investment project or not (Springmann et al., 2016). This method is
also known as contingent valuation method as it one of the major tools for measuring and
estimating the economic benefits of protecting the environment and improving the environmental
quality and the consumers’ willingness to pay for improved environment conditions
The major challenge faced by the economist is to identify the appropriate method of
quantifying the monetary values of the projects. In case of projects of improving the quality of
life, the major benefits of the project is reduction in number of days spent in a hospital and the
data from the insurance companies and medical facilitates can be used to monetize the benefits
of reducing the number of days spent in a hospital (Sanders et al., 2016). People are benefitted
as they are able to work for more number of days which can be calculated using the average
labour values and labour costs. Health life expectancy is one of the major benefits of this project

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and it can be calculated using Eurostat and EHLEIS for each countries using the Sullivan
method.
On the contrary, in case of transport investment projects, the major benefits are better
access to different routes and reduction of accidents of different projects (Van der Wee et al.,
2015). In this scenario, the marginal costs of the transporters are multiplied with the hours saved
by distance reduction. The marginal cost will include cost of maintenance of services, labour and
fuel.
Option 2
The economic impact studies require discounting or the reason that the economic
evaluations requires to discount the future costs and the advantages. Discounting makes the
current expenses along with the advantages worth more than those taking place in future as there
is an opportunity expense in spending money now and attaining suitable rate of return in future
(Jit & Mibei, 2015). Moreover, discounting methods are used in carrying out economic
evaluations as it considers pure time preferences that are broadly observed as an empirical
process in identifying catastrophic risks and growth in consumption in an economy. Analyzing
discount rates is deemed to be vital in economics for the reason that it can facilitate in trading off
the present for attaining better future monetary benefits.
The mechanics of discounting includes the “Cost-Benefit Analysis” that facilitates in
analyzing the economic advantages within the public investment projects (Hauk, Knoke &
Wittkopf, 2014). This facilitates in using certain mechanics of discounting method such as
nominal and real discount rates and inflation. Nominal rates are explained as the market rates, for
instance, the yearly percent earning rate of stocks, treasury bills, certificates of deposits and

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bonds. The real interest rate discounting mechanics does not include inflation and they are called
real because they indicate real changes in the economic sector within demand/supply.
There are certain cautions those must be taken into consideration in suing the discounting
method under various scenarios. For instance, at the time of valuating a company through
discounting, the revenue growth rate along with the operating margin at a highest possible level
must be considered in computing the value in better manner within best-case scenario
(Santatiwongchai et al., 2015). Discounting is also used in carrying out multiple scenario
analysis in which the value of risky asset is computed with varying the assumptions regarding
macroeconomic and asset based variables. In such scenario certain cautions must be considered,
for instance, the factors based on which such scenario is built and the number of scenarios in
evaluating each factor. Discounting with the decision tree analysis is used in scenarios where in
evaluating the assets it has to pass through a series of tests in which failure at any point will lead
to total loss of value (Batkovskiy et al., 2015). Discounting in such scenario must also consider
certain cautions, for instance, distinguishing between each node in the decision tree accurately to
attain appropriate valuation of an asset.

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Option 3
The main aim of the baseline study is to access and monitor the effectiveness and
progress during implementation and completion of activities. Planning of a baseline study
requires the organization to identify the metrics of evaluation, changes to be measured and the
type of comparison that needs to be made (Rose, Shone &Espiner, 2014). The two different ways
of measuring the change are “before and after activity” and another “with or without activity”.
This method measures the changes during the timespan in a particular activity, on the contrary,
the other method measures the changes in the location of the activity once without the
implementation pf the activity and then with the implementation of the activity.
It is essential to establish accurate baseline situations for impacts in respect to regulations
as it facilitates in defining the scope of the assessment. The scope provides the outline of the
project and the different factors that needs to be considered while evaluating the baseline. The
baseline is developed based on the different regulatory factors that needs to be considered while
developing the assessment tool (Kelleher et al., 2015). The lack of accurate baseline situation
will result in erroneous impact analysis as the regulations have been accounted for in the baseline
study. This also facilitates in developing key indicators that is critical in proper baseline
measurements. The different boundaries and limitation of the project are defined by the
regulations and it facilities in developing an effective baseline model.
The elements of a baseline study are defined on the type of method the study is using and
the result that has to be obtained. The key indicators are chosen based on the objectives and
regulations in impact studies so that accurate baselines can be developed. The different elements
of baseline consists of baseline surveys, performance monitoring, survey design and

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questionnaires (Butt et al., 2014). The survey and questionnaire are the instruments used to
collect relevant data for impact studies, the baseline surveys identifies the different baselines set
as per the regulations of the operating environment and the baseline model are formed by
combining these indicators to monitor and measure impact and performances.

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References
Batkovskiy, A. M., Batkovskiy, M. A., Kravchuk, P. V., Semenova, E. G., & Fomina, A. V.
(2015). Development of Economic Assessment of Technologies. Mediterranean Journal
of Social Sciences, 6(4), 22.
Boadway, R. (2016). Cost-benefit analysis. In The Oxford Handbook of Well-Being and Public
Policy (p. 1569). Oxford University Press.
Butt, T. E., Gouda, H. M., Baloch, M. I., Paul, P., Javadi, A. A., &Alam, A. (2014). Literature
review of baseline study for risk analysis—the landfill leachate case. Environment
international, 63, 149-162.
Coates IV, J. C. (2014). Cost-Benefit Analysis of Financial Regulation: Case Studies and
Implications. Yale LJ, 124, 882.
Hastings, N. A. J. (2015). Cost–Benefit Analysis. In Physical Asset Management (pp. 239-248).
Springer, Cham.
Hauk, S., Knoke, T., & Wittkopf, S. (2014). Economic evaluation of short rotation coppice
systems for energy from biomass—a review. Renewable and sustainable energy
reviews, 29, 435-448.
Jit, M., & Mibei, W. (2015). Discounting in the evaluation of the cost-effectiveness of a
vaccination programme: A critical review. Vaccine, 33(32), 3788-3794.
Kelleher, M., Culliane, C., Galvin, A. D., Murray, D., Hourihane, J. O., & BASELINE Team.
(2015). Early life Transepidermal Water Loss (TEWL) values as a predictor of food

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allergy and sensitisation at 2 years: results from the BASELINE Study. Clinical and
translational allergy, 5(S3), O2.
Rose, J. S., Shone, M. C., &Espiner, S. R. (2014). The relationship between marine tourism and
marine protection: A baseline study of Akaroa, New Zealand.
Sanders, G. D., Neumann, P. J., Basu, A., Brock, D. W., Feeny, D., Krahn, M., ... & Salomon, J.
A. (2016). Recommendations for conduct, methodological practices, and reporting of
cost-effectiveness analyses: second panel on cost-effectiveness in health and
medicine. Jama, 316(10), 1093-1103.
Santatiwongchai, B., Chantarastapornchit, V., Wilkinson, T., Thiboonboon, K.,
Rattanavipapong, W., Walker, D. G., ... & Teerawattananon, Y. (2015). Methodological
variation in economic evaluations conducted in low-and middle-income countries:
information for reference case development. PLoS One, 10(5), e0123853.
Shih, Y. H., & Tseng, C. H. (2014). Cost-benefit analysis of sustainable energy development
using life-cycle co-benefits assessment and the system dynamics approach. Applied
energy, 119, 57-66.Freeman III, A. M., Herriges, J. A., & Kling, C. L. (2014). The
measurement of environmental and resource values: theory and methods. Routledge.
Springmann, M., Godfray, H. C. J., Rayner, M., & Scarborough, P. (2016). Analysis and
valuation of the health and climate change cobenefits of dietary change. Proceedings of
the National Academy of Sciences, 113(15), 4146-4151.

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Van der Wee, M., Verbrugge, S., Sadowski, B., Driesse, M., &Pickavet, M. (2015). Identifying
and quantifying the indirect benefits of broadband networks for e-government and e-
business: A bottom-up approach. Telecommunications Policy, 39(3), 176-191.