Policy coherence

What Is Policy Coherence?

Policy coherence refers to the systematic alignment and integration of different government policies and actions across various sectors and levels, aiming to achieve mutually reinforcing objectives and minimize conflicting outcomes. Within the broader field of Economic Policy and Governance, policy coherence emphasizes that decisions made in one policy area, such as trade policy or fiscal policy, should not inadvertently undermine goals in another, like economic development or environmental sustainability. It seeks to foster synergies and ensure that a government's overall policy framework operates as a unified whole, rather than a collection of isolated initiatives. This integrated approach is crucial for effective decision-making, particularly when addressing complex, interconnected challenges such as achieving Sustainable Development Goals.

History and Origin

The concept of policy coherence gained prominence in international discourse, particularly concerning development aid effectiveness. The Organisation for Economic Co-operation and Development (OECD) and its Development Assistance Committee (DAC) played a pivotal role in popularizing "Policy Coherence for Development" (PCD) in the early 1990s. This initiative arose from a recognition that developed countries' domestic policies, beyond direct aid, could significantly impact developing nations. The core idea was to ensure that these non-aid policies—ranging from agriculture and migration to trade and finance—supported, rather than undermined, international development goals.

The emphasis evolved with the adoption of the 2030 Agenda for Sustainable Development, which introduced the concept of "Policy Coherence for Sustainable Development" (PCSD). This broader approach acknowledges the integrated and indivisible nature of the Sustainable Development Goals (SDGs), requiring countries to balance economic, social, and environmental dimensions in their policymaking. The¹⁵ UN System Staff College highlights that policy coherence is essential to integrate the SDGs, align actions across local, national, and international levels, and overcome fragmented policy actions. The¹⁴ OECD continues to champion this, offering guidance and principles to help member and non-member countries implement the 2030 Agenda coherently.

##¹³ Key Takeaways

• Policy coherence ensures that government policies across different sectors and levels work together towards shared objectives.
• It aims to identify and minimize conflicts or unintended negative consequences between policy areas.
• The concept evolved from "Policy Coherence for Development" (PCD) to "Policy Coherence for Sustainable Development" (PCSD) to address the integrated nature of global goals.
• Achieving policy coherence is a continuous process requiring political will, coordinated institutional structures, and shared information.
• Effective policy coherence is vital for addressing complex global challenges, promoting financial stability, and fostering sustainable development.

Interpreting Policy Coherence

Interpreting policy coherence involves evaluating the degree to which different policies are aligned and mutually supportive. This is not about a single metric but rather a qualitative assessment of how well various government actions contribute to overarching strategic goals without creating contradictions. For example, a nation's energy policy should be coherent with its environmental policy, and its investment strategies should align with its long-term economic development objectives.

A high degree of policy coherence indicates that policies are designed with an understanding of their interconnectedness, leading to more efficient resource allocation and predictable outcomes. Conversely, a lack of policy coherence can result in policy failures, wasted resources, and even counterproductive efforts, where progress in one area is offset by setbacks in another. It underscores the need for policymakers to break out of "silos" and consider the wider implications of their decisions, encompassing domestic, transboundary, and long-term effects.

##¹² Hypothetical Example

Consider a hypothetical country, "EcoNation," which aims to boost its agricultural exports while simultaneously reducing its carbon footprint.

• Incoherent Approach: If EcoNation's Ministry of Agriculture implements subsidies for high-carbon farming practices to maximize crop yield for export, while its Ministry of Environment simultaneously imposes strict carbon taxes on industries without offering alternatives for farmers, this demonstrates a lack of policy coherence. The agricultural policy, focused solely on production, directly conflicts with the environmental policy's goal of decarbonization. This might lead to increased exports but at the cost of worsening environmental degradation and potentially jeopardizing long-term sustainability.

• Coherent Approach: With a focus on policy coherence, the government would instead implement an integrated strategy. The Ministry of Agriculture might provide incentives for sustainable farming methods that enhance soil carbon sequestration and reduce emissions, while concurrently supporting agricultural research into climate-resilient crops. The Ministry of Trade would then actively seek markets for these "green" agricultural products, leveraging their sustainability as a competitive advantage. Furthermore, the Ministry of Public Finance could allocate funds to support farmers in transitioning to more sustainable practices. This coordinated effort ensures that both economic and environmental objectives are mutually reinforcing, leading to sustainable growth and a reduced carbon footprint for the agricultural sector.

Practical Applications

Policy coherence is a vital principle in numerous real-world contexts, extending beyond national borders and into international relations.

In international development, policy coherence for sustainable development (PCSD) is paramount. It ensures that policies related to trade policy, migration, security, and investment in developed nations do not negatively impact developing countries' efforts to achieve the SDGs. For example, trade agreements should be structured to benefit, rather than disadvantage, emerging economies. The¹¹ United Nations Environment Programme (UNEP) underscores that enhancing capacities and mechanisms for policy coherence at all levels is critical for addressing global challenges, including the "three planetary crises" of climate change, biodiversity loss, and pollution.

Wi¹⁰thin macroeconomic management, policy coherence is crucial for maintaining macroeconomic stability. The International Monetary Fund (IMF) emphasizes policy coherence in its Integrated Policy Framework (IPF), which considers the joint role and interactions of monetary policy, exchange rate policies, macroprudential tools, and capital flows management. This framework aims to guide policymakers in selecting an appropriate mix of instruments to achieve stability in the face of domestic and external shocks. Wit⁸, ⁹hout coherent policies, actions by one central bank or ministry could undermine efforts by another, leading to increased volatility in exchange rates or hampering efforts to control inflation.

In regulatory frameworks, policy coherence helps in creating a consistent and predictable environment for businesses and citizens. For instance, financial regulatory frameworks should be coherent to prevent regulatory arbitrage or unintended consequences that could undermine market efficiency or pose systemic risks.

Limitations and Criticisms

Despite its theoretical importance, achieving true policy coherence faces significant practical challenges and criticisms. One major limitation is the inherent complexity of governance structures, where multiple government departments, agencies, and levels (local, national, international) often operate with distinct mandates and objectives. This can lead to "siloed" policymaking, where individual entities focus on their specific goals without adequately considering broader implications or interdependencies.

Po⁶, ⁷litical considerations also pose a significant hurdle. Policy coherence requires strong political will and a willingness to compromise or re-prioritize conflicting interests. Domestic political pressures, short-term electoral cycles, and competing stakeholder demands can often override the long-term vision required for coherent policymaking. Fur⁵thermore, there can be disagreements among experts on what constitutes "good" development policy or the true long-term interests of a nation.

An⁴other criticism points to the difficulty in measuring and monitoring policy coherence effectively. While frameworks and indicators exist, translating the concept into concrete, measurable actions and outcomes remains a complex task. Identifying and resolving policy incoherencies often involves navigating significant trade-offs, where positive outcomes in one area might necessitate sacrifices in another. For³ example, a policy promoting rapid industrial growth might conflict with environmental protection goals, forcing difficult choices for policymakers. A 2010 paper from ResearchGate discusses these challenges, including opposing interests and difficulties in identifying true development interests, particularly in the context of Policy Coherence for Development.

##² Policy Coherence vs. Policy Coordination

While often used interchangeably, "policy coherence" and "policy coordination" represent distinct but related concepts in economic and public policy.

Policy coordination refers to the deliberate process of aligning the actions and decisions of different policy actors or institutions to achieve specific, shared goals. It focuses on the mechanics of working together—establishing communication channels, joint planning, and agreed-upon procedures. Coordination can be tactical and short-term, aimed at preventing immediate conflicts or enhancing the efficiency of specific initiatives. For instance, a central bank and a finance ministry might coordinate their monetary policy and fiscal policy responses to a recession.

In contrast, policy coherence is a more fundamental and strategic concept. It implies a deeper, systemic consistency across the entire policy landscape, ensuring that all policies, regardless of the agency or level responsible, inherently support a broader, overarching vision or set of objectives. It's about the consistency of the content and intent of policies, not just the process of their interaction. Policy coherence seeks to eliminate structural contradictions and foster inherent synergies, moving beyond mere synchronized actions to a state where policies are naturally reinforcing. While coordination is a tool to achieve specific alignment, coherence is the desired state of systemic consistency, often requiring institutional reforms and a shared long-term vision.

FAQs

What is the main goal of policy coherence?

The main goal of policy coherence is to ensure that all government policies, across different sectors and levels, work together harmoniously to achieve shared strategic objectives, minimizing conflicts and maximizing synergies.

Why is policy coherence important for sustainable development?

Policy coherence is crucial for Sustainable Development Goals because the SDGs are highly interconnected. Without coherent policies, actions taken to achieve one goal might inadvertently undermine progress on another, leading to inefficient resource use and hindering overall sustainable development.

What are some challenges in achieving policy coherence?

Challenges include fragmented government structures, conflicting political interests, lack of shared objectives across departments, insufficient data for holistic analysis, and difficulties in identifying and managing trade-offs between competing policy goals.

¹Does policy coherence only apply to national governments?

No, policy coherence applies at multiple levels of governance: local, sub-national, national, regional, and international. It also extends across different policy domains, such as economic, social, and environmental policies.

How does policy coherence relate to risk management?

Policy coherence can significantly aid risk management by reducing policy-induced uncertainty and unintended consequences. When policies are coherent, the likelihood of one policy creating unforeseen risks for another sector or objective is reduced, leading to a more stable and predictable environment.