Overview of costs and benefits associated with regulation in Scottish agriculture

3. The costs and benefits associated with key regulations in Scottish agriculture and with specified environmental regulations

3.1 Introduction

A series of 12 case studies were undertaken in order to provide evidence on: (a) the overall balance of costs and benefits of key regulations and (b) identify ways in which regulation could be improved. The case studies were selected following the process outlined in chapter 1, and effort was made to have a series of case studies that: included inefficient or problematic regulations; covered a mixture of agricultural sectors and policy areas; included key environmental regulations; included a range of different regulatory measures and reasons for intervention; included a mix of regulation of international and domestic origin. The final list of case studies, and the lead authors are given in table 3.1.

Table 3.1 Case studies and authors
Regulation	Enabling Legislation	Lead author
1. SSI 2004 No. 518 The Common Agricultural Policy Schemes (Cross-Compliance) (Scotland) Regulations 2004	Regulation ( EC) No. 1782/2003 and Commission Regulation ( EC) No. 796	Kev Bevan, SAC
2. SSI 2005 No. 225 The Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005	Council Regulation ( EC) No. 1257/1999(55)	Andrew Moxey, Pareto Consulting
3. SSI 2005 No. 348 Water Environment (Controlled Activities) (Scotland) Regulations 2005	Directive 2000/60/ EC of the European Parliament; Water Environment and Water Services (Scotland) Act 2003	Michael MacLeod, SAC
4. SSI 2003 No. 51 The Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003	EC Directive (91/676/ EEC); Statutory Instrument 1996 No. 1564 (S.137)	Kev Bevan, SAC
5. SSI 2000 No. 323 The Pollution Prevention and Control (Scotland) Regulations 2000	Council Directive 96/61/ EC; Pollution Prevention and Control Act 1999	Michael MacLeod, SAC
6. The Control of Pollution (Silage, Slurry & Agricultural Fuel Oil) (Scotland) Regulations 2001, 2003	UK Control of Pollution Act 1974	Sue Evans, Sue Evans Research Services
7. SI 1989 No. 1263 The Sludge (Use in Agriculture) Regulations 1989	Council Directive No. 86/278/ EEC	Caroline McBain, SAC
8. Disposal of fallen livestock under The Animal By-Products (Scotland) Regulations 2003 ( SSI 2003/411)	EU Regulation ( EC) No 1774/2002	Bouda Vosough Ahmadi, SAC
9. SSI 2007 No. 559 The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007	Council Regulation ( EC) No 21/2004	Caroline McBain, SAC
10. SSI 2005 No. 434 The Tuberculosis (Scotland) Order 2005	UK Animal Health Act 1981	Julian Bell, SAC
11. SSI 2006 No. 530 The TSE (Scotland) Regulations 2006	Regulation ( EC) No. 999/2001 of the European Parliament	Bouda Ahmadi, SAC
12. SSI 2006 No. 606 The Welfare of Animals (Transport) (Scotland) Regulations 2006	Council Regulation ( EC) No. 1/2005	Caroline McBain, SAC

Approach to the case studies

Due to the large number of case studies that had to be undertaken in a short period of time, and the limited resources available for each case study, the approach to each case study was tailored to fit the nature of the regulation in question and the quality of the existing evidence. Assessment of the orders of magnitude of the costs and benefits was based on existing analyses as far as possible. Where there were no existing studies, the overall balance of costs and benefits was assessed subjectively by identifying the main elements of the regulation, and highlighting and estimating the significant costs and benefits.

In order to assist in assessment of costs and benefits, and to identify possible ways of improving the regulations, a series of interviews were held with the NFUS, Scottish Crofting Federation, Scottish Tenant Farmers Association and the SRPBA. In addition, ad hoc discussions with policy official and domain experts were held on specific topics. During this process the following organisations were contacted (figures in brackets are the number of people contacted): Scottish Government (12); SEPA (5); SNH (2); SAC (7); NFUS (4); SRPBA (1); STFA (1); National Sheep Association; SSPCA (1); CIWF (1); DairyCo (1); Scotbeef (1); Welsh Country Foods; Armstrong Hauliers (1); National Fallen Stock Company (1); and one independent vet. Note these figures do not include members of the steering group or the project team. The draft reports were circulated within the Scottish Government, SNIFFER and SEPA, and findings presented to policy officials at a seminar.

Brief summaries of the each case study are given below, and the full results are provided in Appendix B.

3.2 Findings in brief

1. Scottish Statutory Instruments 2004 No. 518 The Common Agricultural Policy Schemes (Cross-Compliance) (Scotland) Regulations 2004

In order to receive direct farm support, farmers and crofters must comply with a range of requirements covering environmental protection, public, animal and plant health plus animal welfare. Cross compliance comprises of two sets of regulations - Statutory Mandatory Requirements ( SMR) and Good Agricultural and Environmental Conditions ( GAEC) - with the former covering rules previously in existence. GAEC, however, established new rules for managing soils and protecting landscapes. SEERAD completed a brief RIA in 2005, but this did not assess the costs and benefits of cross compliance. No RIA was deemed necessary for the amended regulation introduced in 2007. However, a number of studies assessing the impact of cross compliance have been undertaken in recent years. These studies generally conclude that cross compliance has a very limited cost for farmers (and crofters). Indeed for many farmers the administrative cost of CAP related form filling has eased for most farmers where a country has decoupled income support from production. A 2007 study for the EC based on five countries, not only confirmed the low cost of cross compliance, but also looked at options for further simplifying associated paperwork. Stakeholders also voiced limited concerns about cross compliance with the exception of duplication of inspections. However, the establishment of SEARS has significantly improved the inspection process. While immediate concerns with cross-compliance legislation is limited, the need for such regulation long term should be based on the direct benefits that arise from this regulation.

2. Scottish Statutory Instruments 2005 No. 225 The Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005

Introduced in 2005 as the Tier II element of Land Management Contracts, the Menu Scheme ( MS) was a non-competitive payment scheme operating under the Rural Development Regulation ( RDR). It has subsequently evolved into Land Management Options under Rural Development Contracts, but still offers some insights as a case study. The MS rationale stemmed from seeking to address various forms of market failure to deliver economic, environmental and social benefits, with the novel non-competitive element potentially easing transition to wider uptake of RDR measures. No RIA was conducted in advance and a formal evaluation of costs and benefits has yet to be undertaken, but the MS appears to have performed reasonably against criteria of transparency, accountability , proportionality, and consistency and, given that individual measures were guided by experience of various previous grant schemes, a degree of effectiveness was anticipated. However, a large proportion of potential applicants never applied and, of those that did, the average claim was only for around 60% of the funding allowance available. Given that guaranteed funding was available via a relatively easy application process, this suggests that perceived proportionality was poor for some measures for some land managers. However, overall budget constraints and RDR/ WTO requirements on payment calculations mean that this would have been difficult to address. Take-up was highest for measures that were perceived as easiest to comply with, raising possible concerns over the degree of additionality achieved through non-competitive public funding.

3. SSI 2005 No. 348 Water Environment (Controlled Activities) (Scotland) Regulations 2005

This case study focused on the Water Environment (Controlled Activities) (Scotland) Regulations as they apply to agriculture. These regulations were introduced in 2005 as part of the process of implementing the Water Framework Directive in Scotland. The regulations establish a framework for the control of the activities impacting on the water environment, notably: abstraction; impoundment; and activities liable to cause pollution. The regulations seek to achieve their aims through three tiers of control: general binding rules; registration; licensing.

The appraisal of the regulations illustrates the difficulty of weighing up the costs and benefits of individual policies. The impact assessment approach treats each regulation as if it were a stand-alone measure, however, the CARs are part of a wider strategy designed to improve the water environment through integrated river basin management. It is therefore necessary to look at the overall performance of the strategy that the CARs are a part of. This will be done with the RBMP which is being subject to an RIA presently and will be published in draft form for consultation at the end of 2008. Early evidence suggests that the regulations are performing well, however they should be kept under review to ensure that any lessons arising can be incorporated.

4. Scottish Statutory Instrument 2003 No. 51 The Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003

The 1991 Nitrates Directive aims to reduce the level of nitrates in water that originates from agriculture. The directive has been transposed into Scots law through a number of regulations of which the Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003 is the latest. These regulations cover the actions farmers should take to prevent, or at least minimise, the loss of nitrate from the farm to the water environment. Two Scottish RIAs have been undertaken. While both RIAs try to assess the economic costs, they make no attempt to quantify the economic benefits. As a result, the level of confidence in the usefulness of the Scottish RIAs is at best moderate. The partial RIA completed in 2007 by Defra for England also fails to properly quantify the benefits of lower nitrate levels. The recently published House of Commons review of the Nitrates Directive in England also raises concerns about the analysis underpinning the regulation, though accepts that action must be taken to make England compliant with the directive. Stakeholders differ in their viewpoints on the regulation, with the NFUS mainly concerned with the financial burden on livestock farmers. However, farmers in Scottish NVZ's will be eligible for capital grant support through the SRDP. All stakeholders agreed that given the recent large rise in fertiliser prices, promoting the financial benefits of nutrient management plans should be a priority.

5. SSI 2000 No. 323 The Pollution Prevention and Control (Scotland) Regulations 2000

The Pollution Prevention and Control (Scotland) Regulations 2000 established a new pollution control regime based on the application of Best Available Technology. They apply to what are considered to be the industries posing the greatest risk of pollution, including intensive pig and poultry installations above a certain size threshold. Robust valuation of the costs and benefits of the regulations was beyond the scope of the case study, instead the possibility of using existing Standard Cost Model ( SCM) derived data to assess the admin costs of the PPC regulation in Scotland was explored. The conclusion is that for a regulation such as PPC, which covers a diverse range of industries, the standard cost is likely to lead to significant under or overestimates for some industries. Specifically, it is likely that estimation of the admin costs of the PPC regulations based on unadjusted standard costs from the ABME will lead to significant overestimates for intensive agriculture in Scotland. In order to use the SCM approach, the way in which the standard costs may vary between sectors should be identified and the standard costs adjusted to account for:

• Differences between the agricultural sector being analysed and the overall mix of industries and businesses used to generate the standard cost
• Differences between the same agricultural sectors in Scotland and the rest of the UK

6. The Control of Pollution (Silage, Slurry & Agricultural Fuel Oil) (Scotland) Regulations 2001, 2003

This case study examines the costs and benefits of regulations designed primarily to reduce the number of pollution incidents arising from the inappropriate storage of silage and slurry. Likely costs and benefits have been identified through discussion with Scottish Environment Protection Agency, and by study of the background and development of the regulations. Consideration is given to on-farm compliance, to the distribution of costs and benefits, and to compliance with the principles of good regulation. The 2008 amendment reflects the principles of better regulation by making the regulations more flexible, and thereby more proportionate and better targeted. The main costs are associated with improving storage facilities. Benefits include improved working conditions and significantly reduced pollution incidents due to structural failures. The balance of costs/benefits is difficult to assess, due to the lack of relevant data on the values of costs and benefits.

7. Statutory Instrument 1989 No. 1263 The Sludge (Use in Agriculture) Regulations 1989

The Sludge (Use in Agriculture) Regulations 1989 and The Sludge (Use in Agriculture) (Amendment) Regulations 1990 establish maximum annual applications for metals contained in sludge and set maximum permitted metal concentrations in agricultural soil treated with sludge. They implement the EU Sludge Directive (86/278/ EEC) ( OJ No. L181/6). The European Union regulates use of sewage sludge in agriculture to prevent harmful effects on soil, vegetation, animals and humans.

At present there are statutory regulations, non-statutory codes of practice and a voluntary agreement (i.e. the safe sludge matrix) governing the application of sewage sludge to agricultural land. The water industry, food industry and other major stakeholders are pressing for the standards to be made statutory in order to increase confidence and to allow them to be brought within the enforcement regime operated by SEPA. Making the standards statutory would also reduce the risk of having to use other, more expensive, and potentially less environmentally sustainable disposal systems (e.g. incineration and landfill). Importantly for farmers in the current environment of rising fertiliser prices, sewage sludge represents a cheap alternative source of phosphorus, potash and nitrogen. Sewage sludge also improves soil structure.

8. Disposal of fallen livestock under The Animal By-Products (Scotland) Regulations 2003 ( SSI 2003/411)

The EU Animal By-Products Regulation based on a wide-ranging review by the European Commission of the Animal Waste Directive (90/667/ EEC), lays down the health rules governing the disposal and processing of animal by-products not intended for human consumption. In Scotland the EU regulation is enforced along with some national requirements reflected in The Animal By-Products (Scotland) Regulations 2003. These regulations make it illegal to bury or burn fallen stock on-farms throughout Scotland apart from areas that are designated remote.

The impact (cost) of fallen stock scheme on farmers in England has been estimated by Defra to be at £14m, £15m and £15m for 2006, 2011 and 2015 respectively. Given the lower animal population in Scotland, the regulation's estimated impact of £11.6m on Scottish farmers seems reasonable. The benefits of this regulation are the reduced risk of disease outbreak of foot and mouth disease and Avian Influenza which can carry very large costs in terms of production losses, movement restrictions and animal welfare levels.

9. Scottish Statutory Instruments 2007 No. 559 The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007

These regulations implement EC Regulation ( EC) No. 21/2004 which establishes a system for the identification of sheep and goats through double tagging. The previous UK national system had benefits in terms of traceability but compliance was an issue and this led to the loss of a previous derogation for double tagging. The new system has benefits in terms of decreased cost as movement tags are no longer required and record keeping is simpler. The full benefits of the scheme will not be realised until linked to a system for monitoring movements, for example electronic identification (currently set for implementation in 2010). Industry views have been mixed and the NFUS is currently petitioning for the removal of the requirement to double tag. The Scottish Government will need to ensure that further proposed animal identification measures are practical and useful within the Scottish agricultural system.

10. Scottish Statutory Instrument 2005 No. 434 The Tuberculosis (Scotland) Order 2005

This legislation is based on EU Directive 1964/432 as amended. Additional controls in terms of pre and post movement testing were introduced in SSI 2005 No.434 the TB (Scotland) Order as part of the strategic framework for the control of b TB the aim being to reduce the risk of spreading disease through the movement of cattle. Only minor changes were introduced in the 2007 Order and the RIA for the 2005 Order therefore remains the point of reference in this case study.

In Scotland the legal requirement is that no one should accept onto a holding any cattle from a high risk area unless the cattle have been tested within the 60 day period prior to movement. Despite several breakdowns, Scotland has so far prevented the development of any high disease incidence areas, unlike the situation elsewhere in GB where the incidence of disease is increasing. While the introduction of this legislation is believed to have helped limit the incidence of the disease other factors such as changes in the pattern of trade between England and Scotland, may be partly or wholly responsible. The introduction of post movement testing has brought additional direct costs for the Scottish Government and Scottish farmers but has also brought benefits. In particular additional cases of b TB have been detected by the post movement test. Industry views on post movement testing have been positive as it is considered essential to protect the health status of Scotland and stakeholder support is strongly in favour. The costs of implementing the legislation are estimated to be low compared to the benefits to the Scottish industry. In view of the continued escalation of TB in England and Wales, the Scottish Government needs to keep the legislation under review to ensure that it continues to provide effective safeguards.

11. Scottish Statutory Instrument 2006 No. 530 The TSE (Scotland) Regulations 2002

In 2002, the Scottish Parliament introduced the TSE (Scotland) Regulations in response to the introduction of the Community TSE Regulations (Regulation ( EC) 999/2001) and to strengthen domestic legislation issued in response to the BSE epidemic in UK. In 2006, the Scottish Regulations were revoked and replace by SSI 530/2006. The total costs of enforcing the TSE regulations in Scotland and GB have been estimated at £30.27 million and £125.22 million per year respectively. Record keeping of the activities is the main cause of high administration costs. Besides that, testing and inspection activities which include over thirty months cattle scheme, laboratory approval, meat hygiene inspection, over 24 month fallen cattle, national Scrapie plan and rams genotype scheme are the main cost generating items. The benefits to industry from disease control include avoided production and market losses, improved food safety and associated improvements in public health and confidence. Available data suggest that keeping the TSEs level at its minimum level (minor outbreaks) in Scotland will continue demanding a high cost until Scotland and eventually UK become definitely free of the diseases. Both the government and private industry will benefit from achieving disease free status. However, little has been done to quantify those benefits. Thus, a detailed cost-effectiveness analysis of the TSE regulations should be undertaken, which takes into account wider impacts, including the benefits to the industry, such as eradication of TSEs in farmed livestock as well as its impact on the public health.

12. Scottish Statutory Instrument 2006 No. 606 The Welfare of Animals (Transport) (Scotland) Regulations 2006

The Welfare of Animals (transport) (Scotland) Regulations 2006 make provision for the administration and enforcement of Council Regulation ( EC) No. 1/2005. The Regulation aims to improve animal welfare through raising transportation standards, and provides for greater enforcement capability in respect of all species. The new rules were generally supported by farming industry and welfare groups. However, several are potentially burdensome on farmers and commercial transporters. The Scottish Regulation attempted to strike a balance between animal welfare benefits, cost and ease of compliance/enforcement, primarily through the use of derogations. Key areas unchanged by the EC Regulation - journey time, rest periods and space allowances - will be reviewed by the EC by 2011. The EC launched a public discussion on these areas on 23 June 2008.

3.3 Conclusions

Tables 3.2 and 3.3 summarise the findings of the case studies and make suggestions as to how they could be improved. While some of the studies show that the benefits were likely to outweigh the costs, overall the results are characterised by uncertainty. This in part reflects the difficulty of valuing costs and benefits. There were limited resources available for each study; more in-depth analysis may enable this uncertainty to be reduced and any trends identified. It also reflects the lack of evidence that exists, particularly regarding the impacts of regulation. While most had been subject to some form of impact assessment, none of these assessments contained a rigorous attempt to quantify the benefits. Furthermore, only around half had quantified the costs of the regulation in question. While undertaking valuation, particularly of non-market costs and benefits, can be difficult and expensive, its absence makes it difficult to be sure of the overall efficiency of a regulation, and makes it more difficult to counter criticism that the costs of regulation are disproportionate. The NFUS six point process for implementing EU legislation recognises this weakness and calls for "a full cost-benefit analysis, open to public scrutiny, prior to implementation" ( NFUS 2006). However, as the Better Regulation Executive (2008a) IA guidelines note: "The effort applied at each step should be proportionate to the funds involved, outcomes at stake, and the time available." While noting the lack of quantification of environmental and social impacts in ECIAs, Nielsen et al (2006, p7) concur with this: "Impact Assessments can be expensive and time consuming…This means that effort put into Impact Assessment needs to be proportional to likely impacts.".

Table 3.2 Summary of the case study RIA's
Regulation	Origins: EU or domestic?	Scottish RIA done?	Does the RIA quantify:
			Costs		Monetised Benefits
			Policy	Admin
1. SSI 2004 No. 518 The Common Agricultural Policy Schemes (Cross-Compliance) (Scotland) Regulations 2004	EU	No	N	N	N
2. SSI 2005 No. 225 The Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005	Domestic legislation designed to meet EU obligations	No	N/A	N/A	N/A
3. SSI 2005 No. 348 Water Environment (Controlled Activities) (Scotland) Regulations 2005	Domestic legislation designed to meet EU obligations	Yes	No	Partial	No
4. SSI 2003 No. 51 The Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003	EU	Yes	No	No	No
5. SSI 2000 No. 323 The Pollution Prevention and Control (Scotland) Regulations 2000	EU	No ( UKRIA)	Partial	Partial	No
6. The Control of Pollution (Silage, Slurry & Agricultural Fuel Oil) (Scotland) Regulations 2001, 2003	Domestic	Yes	Partial	No	No
7. SI 1989 No. 1263 The Sludge (Use in Agriculture) Regulations 1989	EU	Yes	Yes	Yes	No
8. Disposal of fallen livestock under The Animal By-Products (Scotland) Regulations 2003 ( SSI 2003/411)	EU	Yes	Partial	No	No
9. SSI 2007 No. 559 The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007	EU	Yes	Yes	Yes	No
10. SSI 2005 No. 434 The Tuberculosis (Scotland) Order 2005	EU and domestic	Yes	No	Yes	Partial
11. SSI 2002 No. 255 The TSE (Scotland) Regulations 2002	EU	Yes	Partial	N/A - v. small	No
12. SSI 2006 No. 606 The Welfare of Animals (Transport) (Scotland) Regulations 2006	EU	Yes	Yes	Yes	No

Table 3.3 Assessment of costs and benefits and regulation-specific suggestions for improvement

Regulation	EU or Domestic	Comments on overall size and balance of costs and benefits	Recommendations
1. SSI 2004 No. 518 The Common Agricultural Policy Schemes (Cross-Compliance) (Scotland) Regulations 2004	EU	Studies generally conclude that cross compliance has a very limited cost for farmers, associated with co-operating with inspections. Benefits include compliance with good farm practice (resulting in potentially lower costs and extra revenue) and potential improvement in public goods provided by agriculture over and above that provided by regulations that underlie cross-compliance.	A study quantifying the present and future benefits could be undertaken, but with potential methodological challenges.
2. SSI 2005 No. 225 The Land Management Contracts (Menu Scheme) (Scotland) Regulations 2005	Domestic legislation designed to meet EU obligations	Subjective assessment indicates that overall costs and benefits are likely to be low. Admin costs are associated with: applying; record keeping and inspections; processing applications; compliance monitoring. The main policy costs arise from: income foregone/costs incurred and deadweight losses. Benefits include: access to modulated funds; on-farm improvements; improved farm/chain efficiency; environmental improvements	Additionality of benefits (i.e. the benefits over and above those that would have been realised without the regulation) needs to be determined, although low share of Pillar II budget perhaps lowers the priority of assessing this. Possible need to improve targeting and uptake, although constraints on budget levels and payment calculations will hinder this.
3. SSI 2005 No. 348 Water Environment (Controlled Activities) (Scotland) Regulations 2005	Domestic legislation designed to meet EU obligations	Difficult to quantify benefits from avoided water pollution as the CARs will have significant (indirect) benefits in the medium-long term.	Early evidence suggests that the regulations are performing well, however they should be kept under review to ensure that any lessons arising can be incorporated.
4. SSI 2003 No. 51 The Action Programme for Nitrate Vulnerable Zones (Scotland) Regulations 2003	EU	Low admin costs expected from completing manure management plans and co-operating with inspections. Main policy costs associated with upgrading storage. Benefits include reduced fertiliser purchases and the range of benefits arising from reduced pollution. Uncertain magnitude of benefits, due to debate surrounding the underpinning science and the economic benefits of cleaner water, makes overall balance of costs/benefits difficult to determine.	More accurate figures on the economic costs and benefits of previous action are required may be possible through development of the current monitoring system. Look at opportunities for persuading the EC to revisit the scientific basis of the Nitrates Directive, in line with recent UK House of Commons committee recommendation. Revisit the current approach used to change farmers' (mis)use of fertiliser and manures.
5. SSI 2000 No. 323 The Pollution Prevention and Control (Scotland) Regulations 2000	EU	Main costs arise from applying for permits, record keeping and upgrading facilities. Magnitude of costs uncertain but with recognised environmental and societal benefits, such as reduced pollution incidents and NH3 emissions	The PPC case study examined the potential for adapting existing SCM data to estimate admin costs in Scotland. It found that existing standard costs would need to be adapted with caution if applied in Scotland.
6. The Control of Pollution (Silage, Slurry & Agricultural Fuel Oil) (Scotland) Regulations 2001, 2003	Domestic	Costs associated with improving storage facilities. Benefits have been improved working conditions and significantly reduced pollution incidents due to structural failures. Balance of costs/benefits difficult to assess, due to the lack of relevant data on the values of costs and benefits	Effort should be made ex ante to put in place provisions to assess the regulations effectiveness ex post, so that post-implementation reviews can be undertaken. Quantification of costs and benefits could be developed further.
7. SI 1989 No. 1263 The Sludge (Use in Agriculture) Regulations 1989	EU	Costs (of record keeping and treatment) likely to be outweighed by the benefits (provision of low cost alternative nutrient source; avoidance of disposal costs and associated environmental impact).	There are no urgent problems to be remedied and planned amendments are to be made according to the legislative timetable.
8. Disposal of fallen livestock under The Animal By-Products (Scotland) Regulations 2003 ( SSI 2003/411)	EU	Costs (compensation payments, and waste treatment and disposal) likely to be outweighed by the benefits (avoiding and preventing highly costly animal disease outbreaks; reducing TSE spreading risk; improving public health with respect to incidence of human vCJD cases).	Any possible change of the Regulations should be carefully investigated and communicated with the stakeholders in advance. A review of the parent EU Regulation, 1774/2002 is now under way, with the intention of securing a more risk based approach.
9. SSI 2007 No. 559 The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007	EU	The change in tagging and record keeping requirements led to cost savings. However the full benefits of the scheme in terms of traceability will not be realised until linked to a (potentially expensive) system for monitoring movements. Potential costs associated with a lack of traceability in the meantime (e.g. a disease outbreak) are difficult to quantify.	Need to focus on ensuring that the regulations are implemented effectively, and that future regulations are balanced with ongoing industry concerns about cost, proportionality and practicality. This will be particularly important if the EC continues on the path towards introducing EID in 2010. As with the current Regulation, it is imperative that the Scottish industry is able to cope with the physical and financial implications in order to comply.
10. SSI 2005 No. 434 The Tuberculosis (Scotland) Order 2005	EU and domestic legislation	Costs arise from testing /inspection and movement restrictions, while the benefits accrue from the avoided costs of greater incidence of b TB. The overall benefits of the 2005 Order in Scotland have not been quantified in a monetary sense and it is therefore not possible to compare this directly to the monetary costs. Benefits are expressed therefore in terms of expected false negative tests. Based on industry comment, the level of cost to benefit is generally seen as favourable since the Order has helped prevent the spread of TB in Scotland.	Industry views on post movement testing have been positive as it is considered essential to protect the health status of Scotland and stakeholder support is strongly in favour. In view of the continued escalation of TB in England and Wales, the Scottish Government needs to keep the legislation under review to ensure that it continues to provide effective safeguards.
11. SSI 2002 No. 255 The TSE (Scotland) Regulations 2002 Now replaced by 2006 SSI	EU	The main costs are record keeping, over thirty months cattle scheme, laboratory approval, meat hygiene inspection, over 24 month fallen stock, national Scrapie plan and rams genotype scheme. The benefits to industry from disease control include avoided production and market losses, improved food safety and associated improvements in public health and confidence. Keeping the prevalence level at its minimum level in Scotland entails a high cost. The total benefit of the regulations needs to be quantified	A detailed cost-effectiveness analysis of the TSE regulations could be undertaken, which takes into account wider impacts, including the benefits to the industry, such as eradication of TSEs in farmed livestock.
12. SSI 2006 No. 606 The Welfare of Animals (Transport) (Scotland) Regulations 2006	EU	Costs arise due to transporter authorisation, and vehicle specifications and inspection. The overall balance of costs/benefits is uncertain, due to the difficulties associated with monetary valuation of improved animal welfare.	Key focus areas are: rest times, journey length and space allowances. Close consultation with industry and research partners could help to draw out any differences between perceived and actual animal welfare benefits.