Knowledge Exchange Platform (KEP) Workshop 2 - Kirsten Jensen.pdf

OECD Knowledge Exchange Platform on Well-being Metrics and Policy Practice (KEP): Virtual Workshop 2, 3 October 2024

Integrating multidimensional well-being evidence and principles in policy decision-making tools

1. CBAx, New Zealand CBA tool
3 OCTOBER 2024 OECD WISE VIRTUAL WORKSHOP
Kirsten Jensen, New Zealand Treasury
Board Director, International Society for Benefit-Cost Analysis

2. SECTION 1 WHY? CONTEXT
•Why? Context
•What? Functionality
•How? Application
•Take-up? Barriers & success

3. Wellbeing Value for Money
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4. Why we developed the CBAx tool
•How do we lift CBA practice?
•How do we make it easier for
agencies to do CBA?
•How do we make CBAs more
comparable?
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5. CBAx encourages wider and longer view
•CBAx takes a broad perspective on impacts and makes different
initiatives comparable, thereby facilitating trade-off discussions.
•CBAx encourages longer-term view e.g., intergenerational impacts.
•CBAx encourages agencies toidentify impacts comprehensively,
including:
•fiscal impacts for government, such as hospital cost savings, and
•wider wellbeing impacts, such as less physical pain.
Fiscal and wider wellbeing impacts
•CBAx is pluralistic and does not constrain the user’s choice of impacts,
measurement or valuation methodology.
•It does, however, require the user to be transparentabout these and the
assumptions.
•CBAx values
•cover different types of impacts and
•are derived from different methodologies.
Pluralistic measures
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6. SECTION 2 WHAT? FUNCTIONALITY
•CBAx – Why? Context
•What? Functionality
•How? Application
•Take-up? Barriers & success

7. The 7 steps of a CBA and inputs to CBAx
1. Clarify the problem
or opportunity
2. Identify possible
policies, projects or
solutions
3. Evaluate the
policies, projects, or
solutions
4. Check skills and
budget for
procurement and
project management.
Policy evaluation using CBA on each feasible option
Inputs to CBAx Step 1: Define policy and counterfactual
Step 2: Identify those who gain and those who lose
Step 3: Identify the benefits and costs; allocate to time periods
Analysis in CBAx Step 4: Quantify the benefits and costs within ranges
Step 5: Discount to a common period, compare benefits and costs
Outputs from CBAx Step 6: Is the result clear enough? If not, consider whether it is worth investing in more research, repeat previous steps
Step 7: Write report
Using CBAx is a 7-step evaluative process as follows:
CBA is part of the evaluation stage of the policy development process. It is a method for assessing
proposed options that have been developed to respond to a policy problem
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8. WhatisCBAx?
CBAx is an Excel-based spreadsheet model to make it easier and faster to complete a CBA for
policy decision-making. It helps to:
•Monetise and discount impacts of an initiative
•Take a long-term and broad view of costs and benefits
•Rigorously assess these by monetising impacts, where possible
•Be transparent about the assumptions and evidence base
The CBAx tool:
•provides an impacts database to consistently value impacts
•links the impacts database throughout the model to easily perform a CBA
•produces information that can be used in CBA advice
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9. NavigatingCBAx
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10. What is the Impacts Database?
CBAxprovides a database of values to monetise impacts the "Impacts Database"
There are more than200 monetised impactsin theImpactsDatabase.
All impacts arepublicly available, and the source is provided in a column in the worksheet.
Focus on quantifying and monetisingsignificantimpacts, rather than allimpacts.
The values are adjusted to reflect a common period (adjusted values).
If you have a relevant impact thatis notin the database (and that hasamonetaryvalue), you
canadd an impactat the bottom of the database foruse inyouranalysis.
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11. SECTION 3 HOW? APPLICATION
•CBAx – Why? Context
•What? Functionality
•How? Application
•Take-up? Barriers & success

12. Why do CBAx?
CBAx should be used specifically to
strengthen value for money and wellbeing
analysis with CBA.
When you’re seeking to understand the
monetised impacts in a CBA to support public
sector policy decision-making.
If there is very little information or evidence
available, an option is to use CBAx to prepare
a reverse analysis.
Identify wellbeing impacts in
the LSF (and other frameworks
e.g. He Ara Waiora)
Quantify the wellbeing impacts
using clear assumptions and
evidence base
Value key impacts on a
comparable basis
Ifyoumonetise impactsuseCBAx to
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13. CBA using CBAx: IQM
Identify wide – identify impacts broadly,
using wellbeing frameworks like the Living
Standards Framework.
Quantify where possible – quantify impacts,
the initial CBA steps and CBAx input
assumptions.
Monetise selective – monetise impacts,
where possible, using CBAx and focus on
key impacts with good evidence.
Only monetise a
subset of impacts
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14. How do I interpret this?!
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15. Impact Summary
This table summarises the impacts and the net values across 5-year, 10 year and 50-year time horizons in
today’s dollars. The table also highlights the quality of the evidence. The table gives a quick sense of
which impact is driving the bulk of the overall return on investment. Here hospital visits have the highest
net value ($54 and $21 million over the period compared with other impacts), evidence quality for this
impact is also high so we can have some confidence in the results.
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16. Visualising the outputs
The dashed line shows theNet Present Valueper year /
value of an initiative over time, in today's dollars. It is the
sum of the green impact and red cost bars.
In the first five years, thenet impactsare $17 million,
and the cost of the initiative is also $17 million. So, the
net present value for that period is $0.
From 2029 onwards, the net benefits (green bar)
outweigh the costs (red bar), so the dashed line shows a
positive Net Present Value until 2073.
The solid line shows theCumulative Present Value
over time.
This chart shows the profile of the impacts (net
positive and negative), the cost of the initiative,
the net present value and the cumulative net
present value.
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17. SECTION 4 TAKE-UP? BARRIERS & SUCCESS
•CBAx – Why? Context
•What? Functionality
•How? Application
•Take-up? Barriers & success

18. How CBAx lifted quality of CBAs
Budget requirements
•First, mandatory CBAx
•Then, focus on CBA front end, rather
monetisation - CBAx not mandatory
•Practice: Agencies submit CBAx when
required
•Future expectations?
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19. CBAx Communityof Practice
•Empoweryoutofeelconfidentinprovidingwell-considered,
evidence-basedadvice
•Provide you with the tools and support to do a CBA using CBAx
•Create a space for conversation on using the tool
•Answer your questions and to share insights
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20. Wide mix of agencies
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21. RŌPŪRĀRANGI TAKE | GROUP AGENDA 2023
SEE MS TEAMS FOR SLIDES AND RECORDINGS
Topic Date
1#1 Learn and develop:CBAxupdate for Budget 2024,
Budget2023 CBAs experiences and intervention logic.
2 October
2#2 Evaluation:What is CBA, when to do it, why – how to evaluate
outputs and what other methods complement a CBA?
9 October
3#3 Value for Money in CBA:Applying value for
money.GuestPanel – insights into how Treasury looks at CBA
submissions
18 October
4#4 Different aspects and approaches to CBA:Guest panel
onLiving Standards Framework, He Ara Waiora, Social
Investmentand Outcomes / Performance Reporting
24 October
5#5 Worked example of CBA: Guest panel with a Transport
intervention and building CBA capability in your agency
30 October
6#6 Sensitivity analysis and reverse analysis:When do we do
it,why do we do it, howdowe do it?
6 November
7#7 Impacts –how to use the impacts database, how to include non-
monetisedimpacts, andhow to add new impacts
13 November
8#8 Environment, climate and transformational change
Guest panel from MfE, PCE, MBIE, DOC and TSY
20 November
9#9 Ex-post analysis and CBAGuest speakers panel 27 November
Email [email protected] with session topic suggestions.

22. CBAx developments and where to?
Issues
•Non-market valuation – subjective wellbeing
•Long-term, resilience and environment
•Distribution
•Discount rate
•Evaluation and ex-post
Updating CBA/CBAx guidance
•User friendly
•Expectations – Fit-for-purpose
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23. Kirsten Jensen (she/her)
Principal Advisor|CBAx lead |Te Tai Ōhanga – The New Zealand Treasury
Email/IM: [email protected] |LinkedIn
Visit us online at https://treasury.govt.nz/
Paper: Valuing Impacts | Policy Quarterly (victoria.ac.nz)
Board Director, Society for Benefit-Cost Analysis
Thank you!
- CBAx empowers policy people
- Valuing impacts
- Identify, quantify and monetise impacts
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24. Cross-cutting issues
What training or skills development are needed for different types of well-being-informed policy tool?
•Economic, evaluative and quantitative skills
What type of data and evidence are needed to underpin well-being-informed policy tools?
•Population surveys and admin data, eg, subjective wellbeing information
•Effectiveness, allocative efficiency and equity evidence
Which areas of government decision making could benefit from a more widespread use of well-being-
informed policy tools?
•Take CBA beyond transport and infrastructure investments, eg, social and environmental
What is the need for/role of co-appraisal/co-evaluation that engages non-government actors?
•Voice and engage to understand the problems and options, as well as impacts
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