Brussels, Theme D Workshops Wednesday 7 October 2009 Ex-post Evaluation : Is building environment infrastructure supporting growth in Europe? This document is designed as support to the oral presentation and is not intended to be used separately Open Days 2009 – Global Challenges, European Responses

2 Agenda of the workshop Presentation of the findings and conclusions of the part of the ex post evaluation of the Cohesion Policy devoted to environment and climate change –Why to evaluate the role of environmental measures in the context of regional development (Objectives 1 and 2)? –Environmental issues at stake as main drivers –Environmental expenditures in the EU during the period (including the ERDF support) –Main contributions of the Cohesion Policy to support EU regional development –Challenge for the future Discussions with the participants to the workshop

Why to evaluate the role of environmental measures in the context of regional development ? (1) 3 Global picture of the ERDF support to the environment in the EU-25 over the period: 25.5 bn, which is equivalent to 21% of the total ERDF budget for all the fields of intervention Environnemental infrastructures 11.3bn Planning and rehabilitation 11.5 bn Energy infrastructures 1.7bn Land protection 0.2bn Env-friendly technologies 1.5 bn Climate- friendly interventions

Why to evaluate the role of environmental measures in the context of regional development ? (2) 4 Expected role in terms of regional development? Neither clear at the beginning of the period nor clear in the literature –Priorities at the beginning of the period: The Structural Funds and the Cohesion Fund should, as a priority, assist compliance with the environmental standards established in the relevant Community Directives, in particular with regard to water and waste management.

Environmental issues at stake were the main drivers for allocating ERDF resources to the environment Public intervention are justified in the environmental field because –Environmental quality on a broad sense is a public good –Environmental infrastructures generate positive externalities on public health, environmental quality and economic growth potential ERDF intervention in the environmental fields (except urban rehabilitation) were overall relevant compared to the needs and issues at stake –Water supply: quality of drinking water and sustainable source of supply –Wastewater treatment and collection: weak connection rate in Objective 1 regions and WWD requirements –Waste: Decoupling growth and waste generation and improving waste management and treatment –Climate change: not at the core of the political agenda but concerns about efficient and diversified energy sector 5

Environmental expenditures in the EU during the programming period (1) 6 Total funds in environmental infrastructures (mainly solid waste, water supply, and wastewater) for the period: 211 bn Source: Eurostat, computation by ADE 2009 Funding models: Gradual transition from subsidy schemes to financing user charges ERDF : 11.3 bn

Environmental expenditures in the EU during the programming period (2) 7 All the funds devoted to the environmental sector: by group of EU MS

8 ERDF support to the environmental sector: by field of intervention and Objective Environmental expenditures in the EU during the programming period (3)

9 ERDF support to climate-friendly interventions: by field of intervention and groups of MS Environmental expenditures in the EU during the programming period (4)

Main contributions of the Cohesion Policy to support EU regional development (1) Main contribution: improved wastewater treatment and collection in lagging MS Main results: extension and modernisation of wastewater treatment and collection network enlarging the coverage of population having access to such services (=> contributing to compliance with EU directives ) 10 IndicatorUnitObjective 1Objective 2Total Projects in water supplyNumber165, ,731 Projects in wastewaterNumber5, ,211 Additional population served by water supply projectsInhabitants13,593,695508,13414,101,829 Additional population served by wastewater projectsInhabitants14,929,5825,517,45520,447,037 Problems related to wastewater treatment and collection: –Oversized investment in some areas? –Final connection not ensured –Financial viability Impact on quality of water (rivers, aquifers, coastal waters) not established

Main contributions of the Cohesion Policy to support EU regional development (2) Other contributions to the environment Water supply: –more oriented to solve the problem of sustainable supply but complex issue with results being not clear at this stage Solid waste: focus on treatment modalities and not on waste generation. Financial contribution was low but interesting results : –the strengthening of the waste sorting and recycling capacities –closure/rehabilitation of landfills Climate change: no significant impact in terms of the reduction of GHG emissions but interesting specific results: –heating systems more energy-efficient –energy savings in entreprises –increased renewable energy 11

Sectoral approaches followed as required at the beginning of the period (mainly compliance with WWD and various waste directives) No clear understanding of interactions between environmental challenges and the growth process Intended role of environmental measures in territorial development not very explicit Objectives broadly laid down and logic of intervention difficult to highlight Weak integration of environmental measures with other parts of the OPs. Some good cases but mainly for small interventions 12 Weak integration of environmental measures into territorial development strategies Main contributions of the Cohesion Policy to support EU regional development (3)

As a demand side effect, by increasing investment, internal demand and domestic product (but may be mitigated by crowding out effects) As a supply side effect, by increasing the production capacity of the environmental sectors (mainly related to water and waste collection and treatment as well as in the renewable energy sector) As an external input into production functions that can enhance the attractiveness of the region for direct investment and for qualified workers By contributing to a better quality of factors of production (mainly natural resources) for specific sectors such as tourism, agriculture, etc. By supporting a technological push that may increase innovation capacity within the region 13 How environmental infrastructures could support regional economic growth ? Main contributions of the Cohesion Policy to support EU regional development (4)

Overall: limited contribution to regional economic development Positive effects affecting mainly local areas without spillover effects on the regional economy Environmental sectors: improvement of labour productivity in the water sector more direct effect on recycling activities (growing sector in terms of employment) Missed opportunity in terms of developing a green economy (even if interesting experiences) Some expected impact on tourism and agriculture Not a decisive factor for improving regional competitiveness : mainly rehabilitation measures that have an impact on local sites attractiveness Has permitted macroeconomic adjustment: the ERDF has provided resources to local authorities while budget constraint obliged central government to limit investment 14 Assessment is based on 10 regional case studies (combining Objectives 1 and 2 regions – rural/urban) What have been the main results in terms of contribution to regional economic growth ? Main contributions of the Cohesion Policy to support EU regional development (5)

15 NB: « + » = small effect, « ++ » = medium effect and « +++ » = significant effect Contribution of the ERDF environmental measures to economic development Main contributions of the Cohesion Policy to support EU regional development (6)

Significant contribution in terms of standards of living Impact on spatial cohesion and location of population and economic activities Main tradeoffs: –More populated areas/ less populated –Potential centres of growth/areas under risk of marginalisation 16 Other effects on territorial development Main contributions of the Cohesion Policy to support EU regional development (7)

Challenge for the future Environmental stakes are growing To address them will require significant amount of resources that should not be managed separately from public intervention dedicated to support economic growth Trade-offs between short-term /long-term objectives: (1) more productive investment today means more wealth tomorrow, but also potentially more pollution; (2) investment in cleaner technologies today means less pollution tomorrow but also potentially less wealth. How can the ERDF contribute to –to make environmental investments more productive ? –to make other investment less polluting ? 17 How to better integrate environmental investment into regional development strategies ?