Governance innovations

With an overall focus on ways to manage and care for democracy, The Governance Report 2017 assembles a wealth of democratic (governance) innovations throughout the book, rather than as a set of case studies in a single, dedicated chapter.

These innovations—novel rules and approaches intended to address perceived and actual deficits in democratic institutions and practices—share the ultimate goal of achieving better outcomes and greater legitimacy. They aim to increase active involvement or enhance the voice of citizens, bolster legitimacy and trust in democratic processes, or safeguard institutions and the rule of law. Although most achieve their aims to one extent or another, not all democratic innovations are best practices to be replicated or have purely positive effects on democratic processes.

Download an online compendium of democratic innovations highlighted in the book (PDF).

As part of The Governance Report 2016, six cases of governance innovation were chosen to illustrate how the management of infrastructure-related public problems might be improved. A better spread of governance capacities is needed, but regulatory and delivery capacity may no longer be enough. Better co-ordination emerges as the key capacity for infrastructure decision-making.

The Bus Rapid Transit Standard

Challenge: Bus Rapid Transit (BRT) has become a popular option for mass transit due to its lower investment costs compared to rail-based systems. However, without a common understanding of BRT, planners and decision-makers often do not know which elements are crucial for an efficient and comfortable high-capacity system. This can lead to mislabelling of conventional bus systems or cutting corners during construction.

Innovation: The Institute for Transportation and Development Policy (ITDP)’s BRT Standard classifies and assesses elements essential to a well-functioning system. The Standard can be used to evaluate existing systems, recognise best practices and guide assessment of planned projects. The BRT Standard is based on criteria developed by a technical committee and reviewed on a regular basis.

Impact: The BRT Standard has motivated city authorities to make bold decisions when designing or upgrading systems. However, striving for the Gold Standard defined by ITDP might not always be the best option. By defining clear requirements for meeting different levels of BRT excellence, the BRT Standard allows decision-makers to tailor transport systems to their needs and resources.

Mobile infrastructure sharing

Challenge: The continuing growth in mobile communication use worldwide requires ever greater coverage and capacity to handle the growing number of users. However, high risks and expenses deter mobile telephone operators from entering new markets or rolling out new technology.

Innovation: In some parts of the world, competing mobile telephone operators have turned to mobile infrastructure sharing. Most commonly used, passive sharing refers to sharing space or physical infrastructure: for example, sharing installation sites for antenna. Active sharing encompasses the sharing of transmission and network technology, such as a radio access network.

Impact: In well-developed markets, sharing allows new operators to set up shop more easily, with savings and variety passed on to consumers. Elsewhere, sharing can expand coverage and diversify providers. Sharing can also facilitate faster rollout of technology and has been reapplied to broadband. However, regulatory frameworks are necessary and optimal sharing standards must be enforced to avoid a lack of market competition.

RAKLI procurement clinics (Finland)

Challenge: The procurement and contract design phase is critical for any infrastructure project, especially large and complex ones that involve several providers or new technology. Although public procurement regulations intend to ensure transparency and fairness, they often limit necessary communication between procurers and providers during critical points of the tendering process.

Innovation: The Finnish Association of Building Owners and Construction Clients (RAKLI)’s procurement clinics facilitate dialogue between procurers and potential suppliers before contracts are tendered. During several workshops, participants discuss a project and possible procurement options. With diverse stakeholders, the clinic can also result in alternate concepts for planning or project delivery. Final outcomes are presented to the public.

Impact: Thus far, RAKLI has facilitated more than 20 clinics in Finland. Many relate to infrastructure projects, but others have concerned housing and green urban development. The method is also being applied to a broader set of goals. Some clinics now look at challenges in planning and infrastructure delivery in general and are rather referred to as concept clinics.

Samsø renewable energy transition (Denmark)

Challenge: After winning a nationwide contest, the Danish island Samsø was awarded the title of Denmark's Renewable Energy (RE) Island and committed to switching the entire island's energy supply to 100 per cent renewable within ten years.

Innovation: With a bottom-up approach, Samsø's transition relied on citizens as not only supporters but also active project co-implementers. Two local offices were established to coordinate the process and move the transition forward, while informal citizen groups and organised information campaigns were crucial for building trust. Social pressure also played a role in widening project participation, and invitations to residents to invest and act as technology operators led to a new joint ownership structure for the island’s energy system.

Impact: Samsø was able to transition to 100 per cent self-produced RE two years ahead of schedule, affirming the Danish government’s claim that switching was possible on a small scale. Although some elements of the Samsø model might not be replicable in larger communities, its inclusive approach to planning, decision-making and financing can be taken up in other settings.

Southern African Power Pool

Challenge: Bilateral energy trading between utilities can help secure energy supply in the short run. However, short-term contracts and changing contract terms make long-term strategic planning difficult. A key governance challenge is to achieve a balanced mix of energy sources and long-term planning and coordination among various levels of stakeholders.

Innovation: Founded in 1995 as part of the Southern African Development Community (SADC), the Southern African Power Pool (SAPP)’s multi-level governance system brings a new element to power pools by introducing a supranational component. It involves governmental as well as non-governmental stakeholders such as grid operators. Decisions on day-to-day management remain with the utility companies, while decisions on financing are made by national governments. The SAPP Coordination Centre oversees the energy market and coordinates regional projects.

Impact: While the Day-Ahead-Market and Intraday Market move the pool towards competition, bilateral trading through contracts still accounts for roughly 95 per cent of energy traded due to limited transmission capacity. Investment in power generating capacity has increased due to SAPP’s efforts, but meeting the rising demand for energy continues to be a challenge for the pool.

Water Use Master Plans (Nepal/Switzerland)

Challenge: Even when national efforts improve water infrastructure, there may be lack of capacity to maintain facilities, disputes about access at the local level or a lack of ownership for new projects. Such was the case in Nepal, where top-down planning led to under-used infrastructure and limited access for marginalised groups.

Innovation: HELVETAS Swiss Intercooperation’s Water Use Master Plan (WUMP) process brings together all actors involved in water management for inclusive, participatory planning and implementation. The first phase focuses on social mobilisation and raising awareness. In the second phase the WUMP is developed based on thorough inventorying and analysis. Then, a list of priority projects is implemented during the third phase. Measures for trust-building and inclusive decision-making address lack of ownership over and legitimacy for water infrastructure.

Impact: The WUMP process, implemented successfully in several projects in Nepal, has also been expanded to incorporate new concepts. Since 2012 HELVETAS has partnered with the Dutch RAIN Foundation on the WUMP+3R approach to sustainable water supply management, introduced to Ethiopia in 2015.

For detailed case studies of each of these governance innovations, order The Governance Report 2016.

As part of The Governance Report 2014, governance innovations from around the world were selected in order to illustrate how novel approaches to problem-solving interact with administrative capacities in different sectors. These ten cases provide a diverse coverage of geographical regions, policy fields, leading actors and administrative capacities.

Barcelona Social Inclusion Plan (Spain)

Challenge: Nationalised social services may not effectively address diversifying welfare needs. While local authorities may have knowledge of demand for services, they may lack the resources to gather, analyse and manage information; to act autonomously; or to provide services sufficiently.

Innovation: The Barcelona Social Inclusion Plan provides a regulatory framework to strengthen the city’s autonomy and an institutional framework to link local government actors, citizens and civil society organisations. A key element is the Citizens’ Agreement, which organises a range of individual networks and fosters cooperation as well as resource and information exchange.

Impact: Within its first year, 235 private social welfare agencies, charities, businesses and universities had signed the Agreement. Within five years, that number had doubled. During preparation for the 2012–2015 Plan, the city and the Citizens’ Agreement formed a joint strategy to strengthen the capacities of social associations and charities and collaboration between public and private agencies.

Biodiversity Banking and Offsets Scheme (Australia)

Challenge: Biodiversity serves many functions. Nonetheless, conservation of biodiversity is not reflected in the market price of land use, and strict regulation is not always feasible.

Innovation: The Biodiversity Banking and Offsets Scheme aims to counteract development activities that are detrimental to biodiversity by ensuring that they do not incur a net loss. The scheme is unique in that it requires demonstration of measurable outcomes. BioBanking was enacted in New South Wales, Australia in 2008 through an amendment to the Threatened Species Conservation Act of 1995. Credits are created through voluntary, legally-binding agreements between the government and private landholders. Even if registered land is sold, the biodiversity agreement must be upheld.

Impact: Although it is too soon to measure their success, biodiversity offsets are increasingly popular instruments. As of 2014, they have been adopted in 40 countries worldwide and are being developed in 27 others.

Broadband crowdfunding (Germany)

Challenge: High-speed broadband coverage is of both political and economic concern. However, private providers lack incentives to establish adequate coverage in less populated areas with lower returns on investment.

Innovation: Broadband crowdfunding, a community-led initiative, advances broadband expansion by supporting the creation of infrastructure independent of telecommunications service providers. By keeping infrastructure, i.e. the cable, and telecommunication systems separate, communities are able to invest in the infrastructure itself. Cables are then rented out to service providers for usage fees that finance the investment costs. To ensure an investment pays off, a minimum share of community members must sign up for a connection before a grid is expanded.

Impact: So far, broadband crowdfunding has been successful in the German states of North Rhine-Westphalia and Schleswig-Holstein. More than 50 communities and 900 individual and community business partners are currently funding such schemes.

Climate investment programmes (Sweden)

Challenge: While local sustainability projects may contribute to the creation of a more sustainable society, individual efforts often lack the resources necessary to make a significant impact.

Innovation: The Swedish climate investment programmes use economic policy instruments to analyse and invest in local sustainability projects. The strategy emphasises protection of the environment, efficient use of resources and reduction of reliance on fossil fuels, and assurance of a sustainable supply of resources.

Impact: Local grants appear to be producing results where other climate policy instruments have been too weak, unfeasible and/or ineffective. The Swedish case is unique in terms of its level of funding, at 180 million euros, and its specific aim, i.e. greenhouse gas reductions. Its combined approach of decentralised regulation and collaborative management demonstrates how sustainability projects at the local level can be effective when proper analytical and delivery capacities are also in place.

Integration of Renewable Energies and E-Mobility (Germany)

Challenge: As part of the Energiewende, the German government is seeking to increase its renewable energy share to 80 per cent by 2050 by relying on small-scale electricity plants, wind turbines and individual households’ photovoltaic (solar) panels. However, the country is now faced with potential energy supply volatility and supply-demand mismatches.

Innovation: The Integration of Renewable Energies and E-mobility (IRENE) pilot project uses smart grid technology to identify technical solutions and to feed power from decentralised renewable energy sources into the grid. In short, it optimises the timing of power generation from small-scale producers, aligns consumption patterns with availability and stores any surplus.

Impact: Despite high demand, projects like IRENE are extremely costly and depend on a strong state both willing and able to co-ordinate actors and incentivise participation. While too early to comment on IRENE’s performance, the replicability of such a project will require significant capacity and funding. Nonetheless, IRENE’s technological advances are likely to be valuable as well as transferable.

Mobility partnerships (EU)

Challenge: Circular migration, or the temporary movement of individuals, has become an important focus of European Union external policy-making for addressing worker shortages. But as labour migration-related immigration policy remains a competence of states, European policy has been incoherent and has lacked enforcement measures.

Innovation: Mobility partnerships use soft law-based bilateral agreements to share responsibility and management of circular migration. After a memorandum of understanding between EU member states and a third-party state is signed, non-EU citizens are granted better access to work opportunities in the EU.

Impact: In 2008, agreements were signed with the Republic of Moldova and the Republic of Cape Verde. In 2009, Georgia became the third country to be included, partly in response to the country’s conflict with Russia. Armenia followed in 2010. Negotiations have also taken place with Ghana, Egypt, and Tunisia. A fifth partnership was established with Morocco in 2013.

Personal budgets (UK)

Challenge: Social welfare services planned on a national level might not be able to address the individual needs of beneficiaries. Budget cuts in social care may restrict nationalised welfare programmes further from delivering adequate services.

Innovation: The United Kingdom has taken up the ‘personalisation’ approach in an effort to provide sufficient services. Personal budgets are provided through a point system for measuring a person’s level of dependency and awarding a monetary value accordingly. Planning and delivery are based on a seven-step approach designed by the UK non-profit In Control. The goal is to give individuals greater control over how they receive support.

Impact: Aspects of the model, already in use in Austria and Sweden by the early 1990s, have spread to Germany, Finland, the United States and other OECD countries. New data from the UK, whose usage of the model is especially far-reaching, has raised concerns about resulting lack of choice, increased inequality, deterioration of working conditions for caregivers and problems associated with using performance information.

Regional Greenhouse Gas Initiative (US)

Challenge: Slowing global warming is complicated by heavy reliance on fossil fuels, and regulatory solutions often conflict with economic growth and are therefore not always feasible.

Innovation: The Regional Greenhouse Gas Initiative (RGGI) emerged in 2003 as the first mandatory, market-based system to reduce greenhouse gas emissions in the United States. As of 2014, nine states are participating. A supply-side cap and trade scheme, RGGI aims to reduce emissions by 10 per cent before 2020 by regulating over 200 power plants. Each quarter, plants purchase allowances for every ton of CO2 emitted. The price is determined at each auction, with the total number of allowances decreasing over time to incentivise the reduction of emissions.

Impact: RGGI demonstrates that well-designed cap and trade schemes supported by administrative capacities can potentially provide the private sector with more flexibility than other sustainability solutions. Auction proceeds are invested in programmes targeting energy efficiency or providing direct bill assistance. Moreover, the slight increase in electricity prices decreased consumer demand and resulted in 2 billion US dollars saved during RGGI’s first three years.

Toronto Region Immigrant Employment Council (Canada)

Challenge: Skilled immigrants often face significant challenges when trying to enter local labour markets. Common barriers include lack of recognition of foreign credentials, insufficient information about opportunities and requirements, lack of professional networks, lack of local language skills and lack of targeted training programmes.

Innovation: The Toronto Region Immigrant Employment Council (TRIEC) brings local leaders together in a multi-stakeholder approach to improving recruiting mechanisms, building professional networks and campaigning for public awareness. TRIEC also connects companies to programmes that improve recruitment and retention of immigrants, help immigrants build professional connections and engage in policy development.

Impact: According to its website, TRIEC has matched over 5,000 skilled immigrants through mentoring partnerships. Seventy per cent of those found employment within six months of completing the programme. TRIEC has also been adapted in Calgary, Edmonton, and Niagara.

Transport 2035 (US)

Challenge: Delivering efficient and sustainable transportation infrastructure is increasingly complicated by rapid urbanisation. Due to a projected 26 per cent increase in population by 2035, the San Francisco Bay Area’s transportation network is in need of widespread maintenance, repairs and expansion.

Innovation: Transport 2035 outlines a new performance-based project assessment process for transportation infrastructure investment plans. By explicitly addressing the economic, environmental and equity aspects of investment plans, Transport 2035 aims to achieve improved affordability, safety and performance while reducing vehicle miles travelled and emissions produced.

Impact: Although too soon to assess outcomes, the plan itself is both policy-oriented and performance-based, offering a systematic method for supporting the region’s land use strategy in a way that should stimulate job growth by using existing infrastructure more efficiently.

For detailed case studies of each of these governance innovations, order The Governance Report 2014.

As part of The Governance Report 2013, ten especially noteworthy governance innovations from around the world were selected based on a rigorous research process and with input from an international steering group. These innovations were assessed for their scalability, replicability and promise as solutions to public problems and governance challenges.

Charter cities

Challenge: Rules that incentivise adoption of more advanced technologies and institutions are critical for promoting progress, especially in developing countries. However, transitioning to more conducive rules is difficult due to rigid patterns of behaviour and political roadblocks.

Innovation: Introduced by Paul Romer in 2008, the charter city concept enables changes in rules to be driven by the migration of people who voluntarily opt in or out of an entity. Established on uninhabited land, designated as special reform zones and governed by their own unique charters, charter cities are intended to attract investment towards becoming engines of regional growth.

Impact: In the wake of political crisis, the Honduran government passed in 2011 a constitutional amendment and a statute that paved the way for creating the world’s first attempt at a charter city. Nonetheless, the concept remains controversial, criticised as being undemocratic and neo-colonial. Although advocates dispute such claims, many uncertainties remain, and it is unclear how the concept will play out in practice.

Chiang Mai Initiative Multilateralisation

Challenge: Current account imbalances can seriously threaten financial stability. In the aftermath of the 1997 Asian financial crisis and resulting IMF bailouts, countries in the region have sought mechanisms to protect against future crises and contagion through cooperation.

Innovation: In 2010, the Chiang Mai Initiative Multilateralisation (CMIM) replaced the previous network of bilateral swap arrangements among ASEAN+3 members. By pooling their resources in a common fund, the 13 CMIM members can draw from a foreign currency pool worth 240 billion US dollars (in 2012). However, countries must be in negotiations with the IMF for stand-by agreements if requesting access to more than 30 per cent of their maximum credit.

Impact: Whether the CMIM can be effective depends on how well it balances the limitation of moral hazard with sufficient liquidity. With the CMIM’s surveillance mechanism, the ASEAN+3 Macroeconomic Research Office, still in development stage, prevention of moral hazard via enforcement of conditionality has been outsourced to the IMF. While the CMIM remains nested in a global institution for now, the intent to continue the de-linking process is apparent.

Debt brakes

Challenge: Since current account deficits often emerge in response to fiscal expansion, governments should subject themselves to stricter budgetary discipline. However, institutional constraints such as fiscal rules are effective only as long as governments comply with them.

Innovation: The “debt brake”, a new type of fiscal rule,  went into effect in Switzerland in 2003. Anchored in the constitution, it stipulates a structurally balanced federal budget with a binding expenditure ceiling that permits cyclical fluctuations but includes an obligation to offset the deficit in times of economic upswing. A separate compensation account in which unanticipated deviations are registered, i.e. an ex post control mechanism, represents the debt brake’s main innovation. Any negative balance on this account must be eliminated, removing any incentive for the government to spend more in a current year.

Impact: The ratio of central government public debt to GDP declined after the debt brake became fully effective in 2007. Germany adopted a similar mechanism in 2009, and proposals to implement similar fiscal rules in the United States and on a global level have also been made.

The Government Pension Fund Global (Norway)

Challenge: Because investment strategies tend to focus on financial returns, conflicts between profit-making and social goals may arise. Sovereign wealth funds, which are state-owned, are especially dependent on public support for their investment strategies.

Innovation: The Norwegian Government Pension Fund Global (GPFG), established in 1990, is a prime example of bringing socially responsible investment to the public sector. Introduced in 2004, its ethical investment guidelines stipulate that companies manufacturing certain products or contributing to grossly unethical conduct will be excluded from the fund’s portfolio.

Impact: The sheer size of the GPFG is testimony to its potential for influence. The GPFG has also become a model of socially responsible investing for sovereign wealth funds in countries such as Canada, France, Ireland, Sweden and New Zealand, which have incorporated similar criteria into their investment policies or parts of their portfolios.

Low-profit, limited liability companies (L3C)

Challenge: Despite their potential benefits for society, hybrid organisations, which aim to further social goals while generating modest financial returns, often face significant barriers to attracting necessary capital. In addition, tensions between social and economic goals exist when such organisations are subject to traditional corporate law.

Innovation: A new form of business entity, the low-profit, limited liability company (L3C) was first introduced in the state of Vermont (US) in 2008. It builds on the structure and flexibility of a for-profit company but emphasises social objectives in its statutes, making it potentially more attractive to social investors. The L3C also translates require­ments for a particular financing tool, programme-related investment, directly into statutes in order to reduce transaction costs.

Impact: There are indications that the format could become successful in the long term. The L3C’s flexible ownership structure allows for tailoring shares according to combinations of reward and risk as preferred by different groups of investors. A social investor can become involved early on, paving the way for traditional investors to participate later. In that sense, a multiple-tier investment structure enables hybrid organi­sations to set up, expand and scale up over time.

mySociety

Challenge: Declining voter turnout, civic participation and trust in political institutions are all indications of the democratic malaise. E-government attempts to re-engage citizens have mistakenly tended to focus on the needs of governments as opposed to those of citizens.

Innovation: In 2003, Tom Steinberg launched mySociety, an independent venture that empowers citizens to connect with and improve their societies through online tools designed for offline impacts. Each website, based on open-source technology and usually run by volunteers, serves a single purpose, but the majority are dedicated to providing or sorting relevant information and facilitating dialogue between citizens and representatives.

Impact: Among the most visited mySociety websites, TheyWorkForYou.com received 3.5 million visits in 2010 alone. FixMyStreet.com, a street problem reporting service in the UK, processed 200,000 reports in its first five years. As of 2012, mySociety-affiliated sites have been launched in New Zealand, Norway, Kosovo, Brazil, the Philippines, Australia, Ghana, Uruguay and various European Union countries.

The Open Government Partnership

Challenge: In 2009, US President Barack Obama issued a call for more transparency, participation and collaboration in government. But ensuring open government at all levels and around the world is complicated by the need for political leader­ship, technical knowledge, sustained investment and collabora­tion between governments and civil society.

Innovation: The Open Government Partnership (OGP) was founded as a multi-lateral, multi-stakeholder initiative in 2011. It aims to secure country commitments to engaging in efforts to promote transparency, empower citizens, ensure professional integrity and harness new technologies to strengthen governance. In order to join, countries must meet minimum eligibility criteria, develop national action plans with consultation from the public and endorse the Open Government Declaration.

Impact: As of August 2012, the OGP included 44 member countries, with eight of those being founding members. Nonetheless, it remains to be seen whether the OGP will meet expectations and if its leadership role will be maintained despite changes in political leadership in the future.

Social impact bonds

Challenge: In certain situations, non-profit organisations may develop proven solutions to public problems but may lack resources to scale up operations. Meanwhile, governments are usually reluctant or unable to risk financing preventive or early intervention programmes.

Innovation: Social impact bonds (SIBs) are based on contracts between intermediary organisations and government agencies that clearly define targets reflecting significant social improvements. The intermediary selects service providers, raises capital by issuing SIBs, monitors progress and receives payment if a target is met. The concept was first taken up by Social Finance, a UK-based non-profit.

Impact: An initial pilot building on a six-year prisoner rehabilitation contract between the UK Ministry of Justice and Social Finance was launched in September 2010. Social Finance was able to raise 5 million pounds by issuing SIBs to investors. At least three factors are likely to contribute to the future uptake of SIBs in general: their relation to the growing trend of public-private partnerships, their inherent redistribution of risk, and their mutual accountability mechanisms.

Transition initiatives

Challenge: Global governance systems are not yet up to the tasks of reducing dependence on fossil fuels and tackling the effects of global warming. While grassroots initiatives have sprung up across the globe, their impact has been rather small-scale.

Innovation: The Transition movement is based on the idea that citizens must take immediate, collective action to prepare for less oil dependence by strengthening community resilience. The first Transition town was implemented by Rob Hopkins and Naresh Giangrande in Totnes, England in 2005. Today, the Totnes-based Transition Network Ltd. works with national and subnational hubs to provide training and advice to local initiatives that organise according to the Transition model and its common principles.

Impact: As of 2012, the model has spread to more than 400 registered initia­tives in some 40 countries, suggesting the movement’s potential to eventually catalyse a global response. Whether the movement’s growth continues at this pace depends on its capacity to continue to mobilise people and resources and its ability to handle its own transition to a global movement.  

Ushahidi

Challenge: In crisis situations such as violent conflicts or natural disasters, lives depend on timely and accurate information. However, in light of the chaos that prevails in such situations, only limited information is available at the outset.

Innovation: Ushahidi (“testimony” in Swahili) is an open-source software that emerged out of the efforts of Ory Okolloh, a citizen journalist in Kenya. The software enables eyewitnesses to submit real-time reports of incidents that are then aggregated, visually documented and made available to the public. Emergency notifications can also be transmitted via SMS to registered users.

Impact: Ushahidi has evolved into a staffed non-profit organisation that is expanding its offerings for people with limited access in hard-to-reach places. The organisation has been instrumental in supporting innovation in East Africa and has also begun partnering with companies and foundations to customise the original Ushahidi software for other purposes.

For detailed case studies of each of these governance innovations, order The Governance Report 2013.