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Ex post Evaluation of Cohesion Policy Programmes 2000-2006 co-Financed by the European Fund for Regional Development (Objectives 1 and 2) – Work Package 5b: Environment and Climate Change

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EX-POST EVALUATION OF COHESION POLICY PROGRAMMES 2000-2006 CO-FINANCED BY THE EUROPEAN FUND FOR REGIONAL DEVELOPMENT (OBJECTIVES 1 AND 2) - WORK PACKAGE 5B: ENVIRONMENT AND CLIMATE CHANGE ADE

Final Report – Volume 1 – October 2009 Table of Contents

Table of Contents ACRONYMS

EXECUTIVE SUMMARY I

1. INTRODUCTION: CONTEXT AND SCOPE OF THE EVALUATION 1

1.1 MAIN OBJECTIVES OF THE EVALUATION 1 1.2 SCOPE OF THE EVALUATION: FIELD OF INTERVENTIONS (FOI) RELATED

TO THE ENVIRONMENT AND CLIMATE CHANGE 2 1.3 GEOGRAPHICAL COVERAGE (14 MS + 11 MS) 3 1.4 METHODOLOGICAL APPROACH 4

2. MAIN ISSUES AT STAKE 7

2.1 ENVIRONMENTAL OBJECTIVES OF COHESION POLICY IN 2000 7 2.2 SPECIFIC ENVIRONMENTAL ISSUES: THE INITIAL SITUATION AND MAIN

TRENDS DURING THE PERIOD 8

3. ENVIRONMENTAL EXPENDITURES IN MS, FUNDING STRATEGIES AND THE ROLE OF EU FUNDS 19

3.1 ENVIRONMENTAL EXPENDITURES ACROSS THE EU 20 3.2 NATIONAL PUBLIC INVESTMENT IN THE ENVIRONMENT IN THE EU 23 3.3 PRIVATE SECTOR INVOLVEMENT: SIGNIFICANT EVOLUTION DURING THE

2000-2006 PERIOD 27 3.4 ROLE OF EU FUNDS IN ENVIRONMENTAL INVESTMENTS 28 3.5 MAIN FEATURES OF FUNDING STRATEGIES FOR THE THREE MAIN GROUPS 30

4. OVERALL PICTURE OF THE ERDF SUPPORT TO THE ENVIRONMENTAL SECTOR IN THE 2000-2006 PROGRAMMING PERIOD 35

4.1 GEOGRAPHICAL DISTRIBUTION OF ENVIRONMENTAL MEASURES IN COHESION POLICY PROGRAMMES 2000-2006 CO-FINANCED BY THE ERDF (OBJECTIVES 1 AND 2) 35

4.2 SECTORAL DISTRIBUTION AND REGIONAL SPECIFICITIES 39

5. RATIONALE AND RELEVANCE OF ERDF OPS STRATEGIES IN THE ENVIRONMENTAL FIELD 45

5.1 THEORETICAL RATIONALE FOR PUBLIC INTERVENTIONS IN THE ENVIRONMENTAL FIELDS 45

5.2 RELEVANCE OF THE STRATEGIES REGARDING THE ENVIRONMENTAL ISSUES AT STAKE 50

5.3 INTENDED CONTRIBUTION OF ERDF ENVIRONMENTAL EXPENDITURES TO REGIONAL DEVELOPMENT AND LOGIC OF INTERVENTION 61

5.4 LINKS WITH OTHER MEASURES OF THE OPS- INTEGRATION (REGIONAL CASE STUDIES) 69

6. INSTITUTIONAL SET UP AND QUALITY OF THE PLANNING-SELECTION PROCESS 73



7. ANALYSIS OF THE EFFECTIVENESS OF ERDF ACTIONS 83

7.1 MAIN OUTCOMES: AVAILABLE INDICATORS 83 7.2 IMPROVEMENT IN THE ENVIRONMENTAL SITUATION: POSITIVE IMPACTS AND

MAIN PROBLEMS 86 7.2.1 Water supply and wastewater sectors 86 7.2.2 Municipal solid waste 96 7.2.3 Energy efficiency 101

7.3 CONTRIBUTION TO ECONOMIC DEVELOPMENT 103 7.3.1 General assessment 103 7.3.2 Analysis of the various channels for environmental measures to support

regional economic development 104 7.4 CONTRIBUTION TO STANDARDS OF LIVING 114 7.5 CONTRIBUTION TO BALANCED TERRITORIAL DEVELOPMENT 116

8. ISSUE AT STAKE AT THE END OF THE PROGRAMMING PERIOD: CLIMATE CHANGE 119

8.1 PROFITABILITY OF CERTAIN CLIMATE-FRIENDLY INTERVENTIONS AND THE NEED FOR PUBLIC INTERVENTION 119

8.2 EXPERIENCE WITH THE MANAGEMENT OF CLIMATE-FRIENDLY INTERVENTIONS 121

8.3 ASSESSMENT OF THE POTENTIAL AND REQUIREMENTS OF FORMAL MODELS FOR ASSESSING THE GHG IMPACT OF ERDF INTERVENTIONS 123

9. CONCLUSIONS 129

9.1 IMPORTANT AND JUSTIFIED ROLE OF THE ERDF IN FUNDING ENVIRONMENTAL INVESTMENT 129

9.2 ERDF ENVIRONMENTAL INTERVENTIONS WERE RELEVANT REGARDING MAIN ISSUES AT STAKE IN THE ENVIRONMENTAL FIELDS 131

9.3 REGIONAL DEVELOPMENT WAS NOT A PRIORITY FOR ENVIRONMENT 135 9.4 WEAK INSTITUTIONAL CAPACITIES HAVE HAMPERED THE QUALITY OF

ENVIRONMENTAL INTERVENTIONS AND THE COHERENCE OF THE PROGRAMME 138

10. RECOMMENDATIONS 141

ANNEXES 155

ANNEX 1: BIBLIOGRAPHY 157

ANNEX 2: GLOSSARY 161

ANNEX 3: ADDITIONAL FIGURES AND THE MAIN OUTCOMES OBSERVED IN CASE STUDIES/SECTORIAL PROGRAMMES 163



LIST OF GRAPHS GRAPH 1: WASTEWATER TREATMENT - % OF THE POPULATION RECEIVING

TOTAL TREATMENT 15 GRAPH 2: ENVIRONMENTAL INVESTMENT IN THE EU (2000-2006) –

LEVEL PER CAPITA (IN €) 22 GRAPH 3: GOVERNMENT ENVIRONMENTAL EXPENDITURES (TOTAL) AS %

OF GDP (2000-2006) 24 GRAPH 4: GOVERNMENT ENVIRONMENTAL INVESTMENT AND GDP LEVEL

DURING 2000-2006 25 GRAPH 5: GOVERNMENT ENVIRONMENTAL EXPENDITURES AND GDP

LEVEL 2000-2006 26 GRAPH 6: GOVERNMENT ENVIRONMENTAL PROTECTION EXPENDITURES IN

WASTE AND IN THE WASTE SECTOR (PER CAPITA) – AVERAGE 2000-2006 27 GRAPH 7: INVESTMENTS IN ENVIRONMENTAL INFRASTRUCTURE BY MAIN SOURCES OF

FUNDS (2000-2006) 29 GRAPH 8: MAIN SOURCES OF FUNDS FOR ENVIRONMENTAL INVESTMENT DURING THE

PERIOD 2000-2006 BY GROUP OF EU MEMBER STATES 31 GRAPH 9: WEIGHT OF THE ENVIRONMENT IN ERDF ALLOCATIONS IN THE EU-25 38 GRAPH 10: ERDF ALLOCATIONS TO THE ENVIRONMENT BY FIELD OF

INTERVENTION FOR OBJECTIVE 1 AND 2 REGIONS 39 GRAPH 11: DISTRIBUTION OF ERDF ALLOCATION BY MAIN TYPE OF

ENVIRONMENTAL MEASURES FOR DIFFERENT GROUP OF REGIONS 41 GRAPH 12: ERDF SUPPORT TO ENVIRONMENTAL INFRASTRUCTURE IN THE

14 MS PER CAPITA (2000-2006) 42 GRAPH 13: ERDF SUPPORT TO INTERVENTIONS IN THE FIELD OF CLIMATE CHANGE

DURING THE 2000-2006 PROGRAMMING PERIOD 44

LIST OF TABLES

TABLE 1: ENVIRONMENTAL FIELDS OF INTERVENTIONS DURING THE PERIOD 2000-2006 2

TABLE 2: FOCUS AND APPROACH OF EACH TASK OF THE EVALUATION 4 TABLE 3: CASE STUDIES: ECONOMIC BACKGROUND (IN 2004) AND

ENVIRONMENTAL ERDF FUNDING 6 TABLE 4: SOCIO-ECONOMIC DATA AND MUNICIPAL WASTE GENERATION 9 TABLE 5: POPULATION WITH ACCESS TO IMPROVED WATER SUPPLY 12 TABLE 6: ENERGY INTENSITY AND GHG EMISSIONS 17 TABLE 7: AMOUNT INVESTED IN ENVIRONMENTAL INFRASTRUCTURE BY

SOURCES (IN MILLION €) 21 TABLE 8: ESTIMATED NEEDS FOR NEW EU COUNTRIES – ANNUAL AVERAGE –

(IN M €) 32 TABLE 9: ENVIRONMENTAL MEASURES BY GROUP OF COUNTRIES AND TYPE

OF REGIONS (OBJECTIVE 1 AND OBJECTIVE 2) 36 TABLE 10: ERDF DEVOTED TO ENVIRONMENTAL MEASURES PER CAPITA 37 TABLE 11: CHARACTERISTICS OF THE MAIN KINDS OF ENVIRONMENTAL

INVESTMENTS FUNDED THROUGH THE ERDF 47 TABLE 12: ERDF ROLE COMPARED TO OTHER FUNDING SOURCES 57



TABLE 13: MAIN ENVIRONMENTAL ISSUES AT STAKE AND USE OF THE ERDF IN THE ENVIRONMENTAL SECTOR 58

TABLE 14: STATED ROLE OF ENVIRONMENTAL MEASURES IN REGIONAL DEVELOPMENT 62

TABLE 15: LOGIC OF INTERVENTION: MAIN OBJECTIVES GIVEN TO ENVIRONMENTAL MEASURES. 68

TABLE 16: ROLE OF MUNICIPALITIES/OF REGIONAL AUTHORITIES/AT CENTRAL LEVEL AND BOTTOM UP VERSUS TOP DOWN APPROACH 76

TABLE 17: SELECTION PROCESS: LINK WITH SECTORAL/TERRITORIAL PLANNING, LINK BETWEEN STRATEGY AND ACTIONS AND MAIN PROBLEMS ENCOUNTERED 81

TABLE 18: MAIN INDICATORS BY FIELD OF INTERVENTION 83 TABLE 19: INDICATORS PER FIELD OF INTERVENTION AND PER COUNTRY

FOR THE 14 SELECTED MEMBER SATES 84 TABLE 20: % OF ERDF EXPENDITURES IN THE FIELD OF WATER RELATED TO %

OF ERDF ENVIRONMENTAL EXPENDITURES 87 TABLE 21: MAIN OUTPUT AND RESULTS FOR THE 14 SELECTED MS IN THE FIELD OF

ENVIRONMENTAL INFRASTRUCTURE FOR THE 2000-2006 PROGRAMMING PERIOD 89

TABLE 22: MAIN OUTPUT AND RESULTS PER COUNTRY FOR THE 14 SELECTED MS IN THE FIELD OF WASTEWATER FOR THE 2000-2006 PROGRAMMING PERIOD 90

TABLE 23: NUMBER OF ADDITIONAL POPULATION SERVED BY WASTEWATER PROJECTS BY REGION IN GERMANY, SPAIN, ITALY AND PORTUGAL 91

TABLE 24: INDICATORS ON CONNECTION TO THE WASTEWATER SYSTEM IN THE FIELD STUDY REGIONS 91

TABLE 25: INDICATORS IN THE WASTEWATER SECTOR FROM THE ANALYSIS OF THE EFFECTIVENESS OF MAJOR SECTORAL PROGRAMMES 92

TABLE 26: MAIN OUTPUTS AND RESULTS AND ERDF FUNDING PER COUNTRY FOR THE 14 SELECTED MS IN THE FIELD OF WATER SUPPLY FOR THE 2000-2006 PROGRAMMING PERIOD 95

TABLE 27: MAIN OUTCOMES IN WATER SUPPLY SECTOR 96 TABLE 28: % OF ERDF ENVIRONMENTAL EXPENDITURES IN THE FIELD OF WASTE 97 TABLE 29: MAIN OUTPUTS AND RESULTS AND ERDF FUNDING PER COUNTRY FOR THE 14

SELECTED MS IN THE FIELD OF SOLID WASTE FOR THE 2000-2006 PROGRAMMING PERIOD 98

TABLE 30: MUNICIPAL SOLID WASTE COMPARED TO GDP IN THE 3 WASTE CASE STUDIES 100

TABLE 31: MAIN INTERVENTIONS SUPPORTED BY THE ERDF IN THE THREE CASE STUDIES DURING THE 2000-20006 PROGRAMMING PERIOD 102

TABLE 32: THE CASE OF THE RECYCLING INDUSTRY 106 TABLE 33: CONTRIBUTION OF ERDF ENVIRONMENTAL MEASURES TO ECONOMIC

DEVELOPMENT 112 TABLE 34: INTERNAL RATE OF RETURN OF CZECH PROJECTS UNDER THE 2004-2006

INDUSTRY AND ENTERPRISE OPERATIONAL PROGRAMME 121 TABLE 35: MAIN INTERVENTIONS SUPPORTED BY THE ERDF IN THE THREE CASE

STUDIES DURING THE 2000-20006 PROGRAMMING PERIOD 126 TABLE 36: INDICATORS AT PROGRAM AND POLICY LEVELS 152


Final Report – Volume 1 – October 2009 Acronyms

Acronyms

Bn BillionC&D Construction & DemolitionCC Cohesion Country

CF Cohesion Fund CGE Computable General EquilibriumCSF Community Support FrameworkCO2 Carbon dioxide

DG Directorate-General DG Regio Directorate-General Regional PolicyEAP Environmental Action ProgrammeEBRD European Bank for Reconstruction and DevelopmentEIB European Investment BankEC European CommissionEDA Azorean Energy AgencyEEA European Environmental AgencyEEC European Economic CommunityESIOP Economic and Social Infrastructure Operational ProgrammeERDF European Regional Development FundETS Emission Trading SystemEU European Union Eq. Equivalent ES Energy Savings FDI Foreign Direct InvestmentFOI Field of interventions GDP Gross Domestic Product GHG Greenhouse Gas GJ Gigajoule GVA Gross Value Added IRR Internal Rate of ReturnISPA Instrument for Structural Policies for Pre-Accessionkg Kilogram



kWh Kilowatt hour MJ Mega joule MoE Ministry of EnvironmentMS Member State MSW Municipal Solid Waste

MW Megawatt MWh Megawatt hour MWh Megawatt hour n.a. Not available n.c. Not calculable NDP National Development PlanNFCF Net Fixed Capital FormationNRC National Research CouncilNEP National Environmental ProgrammeNGO Non-governmental organisationO1 Objective 1 O2 Objective 2 OP Operational ProgrammeOECD Organisation for Economic Co-operation and DevelopmentOPBI Operational Programme Basic InfrastructurePE Population EquivalentPES Primary Energy Sources

POLIS Programme for Urban Improvement and Environmental Enhancement of Towns and Cities PPP Polluter-Pays-PrincipleQE Question R&D Research and DevelopmentRES Renewable Energy SourcesSME Small and Medium Enterpriset Ton ToR Terms of Reference UPP User-Pays-Principle U.S United States UWDS Unauthorised Waste Disposal Sites UrbanUWWTD Urban Wastewater Treatment Directive



WFD Water Framework DirectiveWHO World Health OrganisationWP Work Package WWD Waste Water DirectiveWWTP Wastewater Treatment PlantWWV West Wales and the Valleys

Member State acronyms

AT Austria

BE Belgium

CY Cyprus

CZ The Czech Republic

DK Denmark

EE Estonia

FI Finland

FR France

DE Germany

GR Greece

HU Hungary

IE Ireland

IT Italy

LV Latvia

LT Lithuania

LU Luxembourg (Grand Duchy of)

MT Malta

NL The Netherlands

PL Poland

PT Portugal

SK Slovakia

SI Slovenia

ES Spain

SE Sweden

GB or UK United Kingdom


Final Report – Volume 1 – October 2009 Page i

Executive Summary Goal: Evaluating ERDF Contribution to EU Environmental Strategies

This goal of this study is to evaluate the contribution of the European Regional Development Fund (ERDF) toward the implementation of EU environmental strategies between 2000 and 2006. During this programming period, 21% of the overall ERDF budget was allocated for environmental interventions, with ERDF environmental support in the EU-25 totalling €25.5 billion between 2000 and 2006. Among the most important fields of ERDF interventions during that period, equalling €11.3bn, were developments related to environmental infrastructures. These principally comprise water supply networks, wastewater collection and treatment systems and solid waste collection and treatment infrastructures. They are at the core of this evaluation. The study also addresses a related issue: The contribution to regional development attributable to ERDF’s investments in environmental infrastructure.

Review: Main Issues at Stake

At the beginning of the period, the primary goal of environmental infrastructure intervention was to limit pollution and mitigate the negative impact of economic and human activities on the environment and human health. The European environment was perceived as under threat and guidelines for programmes during the 2000-06 period1 put the clear priority on “assisting compliance with the environmental standard established in the relevant Community directives in particular with regard to water and waste management”. Less clear, however, was the expected role of environmental infrastructure in regional development and economic growth. It was underlined only in broad terms: “Environmental infrastructure needs to be constructed or upgraded, especially in the less developed regions, not least because high quality environmental infrastructure constitutes an important factor for regional socio-economic development”. In economic terms, the guidelines mainly emphasised the employment opportunities stemming from environment-related products. On the other hand, the guidelines envisaged environmental infrastructure positively affecting territorial development, by influencing the balance between rural and urban areas. At the beginning of the period, sectoral considerations guided cohesion policies in the environmental fields. But the concrete goals differed greatly from one sub-sector to another, requiring specific policies and instruments, with significant variance across the Member States. 1 The Structural Funds and their coordination with the Cohesion Fund. Guidelines for programmes in the period 2000-

06. Communication of the Commission. Version 1.7.99


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Still, some common features included the obligation to fulfil the requirements of the EU directives, largely in the fields of waste management (notably the directives on waste and on landfill) and of wastewater collection and treatment (EU Wastewater Treatment Directive). The directives set ambitious objectives that required high resource commitment. The situation across the EU was far from homogenous, with three groups of countries in evidence:

the EU-10, which were lagging behind requirements and needed to accelerate investment to meet “acquis communautaire” compliance;

EU-15 countries that needed to complete their sewerage networks in order to fulfil EU requirements. These are the 4CCs (Ireland, Greece, Portugal, Spain) and some parts of Italy;

the rest of the EU, where in some cases long-established pipe networks needed reinvestment.

Climate change didn’t occupy the core of the political agenda in the beginning of the programme period as it does today. But the ERDF was called upon to support climate-friendly interventions amidst the ratification of the Kyoto Protocol, which came into force in February 2005. The development of an efficient, diversified and competitive energy sector was also promoted. In less-developed regions, structural funds’ investment priorities targeted energy networks, energy efficiency and renewable power sources. In the other regions, the focus settled on small-scale but innovative infrastructure projects.

Context: Funding Models and The Role of Public Money

In Europe, the polluter pays principle (PPP) and the user pays principle (UPP) are the basic funding models for environmental services. Where UPP is applied in its entirety with the price charged covering the cost of infrastructure, maintenance and operations, public funds are not necessary except in ensuring social equity, such as supporting users who cannot afford connection costs. There is a gradual transition underway from public subsidy schemes to financing of user charges. Public environmental expenditures are part of this transition, which is well advanced in countries such as France, Germany and the Nordic nations. In countries where GDP is low and the ability of households to fund these services is limited (EU-10 and 4-CC), public funds are needed to support investment programmes that preserve the environment and the quality of natural resources. In these countries, external public funds have played a significant role in supporting environmental investments. In the EU-10, EU funds such as ISPA, CF and ERDF contributed nearly 30% of all resources while the share of CF and ERDF reached 38% in 4-CCs.


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In the EU-15, where national resources provide most of the funds, the contribution of EU funds has been small - only 3.2% of the whole range of investments. Private investment and the use of EIB loans have been crucial to coverage of environmental investments. Finding the right modalities for public financial support has evolved into a complex exercise that depends on specific national context. Adding new dimensions are the entry of profit-minded private operators into environmental services including waste and water management. While private sector involvement in environmental services varies greatly from one EU-MS to another, business opportunities are growing all over the EU, leading to a greater regulatory role by the authorities.

Findings: ERDF Environmental Sector Support Between 2000-2006 Concentrated on Objective 1 Regions and on Water Treatment

ERDF environmental measures of €25.5 billion have been concentrated in total volume as well as per capita expenditure across Portugal, Spain and Greece, followed by Italy, Ireland, Germany and France. This reflects the role of Objective 1 regions as leading areas for ERDF application and also to the greater environmental priority in ERDF budget usage by some of those countries, like Spain and Portugal. The case of the EU-10, ERDF environmental outlays in concrete and per capita terms have been small compared with those in the EU-15, partly explained by the shorter 2004-2006 programming period. As expected, the need to comply with environmental standards established in the relevant Community directives, particularly with regard to water and waste management, has been the main driver for using the ERDF in environmental interventions. These obligations have driven a significant amount of resources towards water infrastructure, especially in Objective 1 regions that lagged behind EU requirements. Some 40% of environmental expenditures in Objective 1 regions went to this area. The use of the ERDF in the waste sector has been more limited in both regions. Several factors have hampered ERDF support in this sector, including the lack of clear targets (the WWD was a heavier constraint in that respect), the development of a market for waste and the growing role of the private sector. Planning and rehabilitation operations have been considered as environmental measures and have absorbed a large part of the ERDF environment allotments, or €11.5 billion. Territories seeking to attract more-qualified workers and new investment allocated significant resources to rehabilitation of urban and industrial areas. Nevertheless in many cases the interventions in question were not real environmental measures. Finally, climate-friendly interventions of €2.3 billion have represented 9% of the whole environmental package and land protection, a tiny 2%. More than 60% of the ERDF allocation to climate change was aimed at supporting private companies’ investment in environment-friendly technologies as well as clean and economic energy technologies. Nevertheless, incentives provided directly to the private sector for installing environment-


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friendly technologies as well as for improving energy efficiency and renewable energy support were quite small in the global context. This was also the case with public interventions in the fields of renewable energy sources and energy efficiency. These climate-change ERDF allocations followed the same pattern as environmental infrastructures: 80% for in Objective 1 regions, split evenly between the four main ERDF beneficiaries of Greece, Ireland, Spain and Portugal and the rest of the EU-15.

Findings: ERDF’s Main Environmental Contributions

The main contribution of the ERDF environmental measures are improvement of public services, mainly in the field of wastewater collection and treatment and to a lesser extent in the field of waste treatment. The main results have been observed in the extension and modernisation of wastewater treatment and collection. The European population has seen improvements in the collection and treatment of wastewater, with clear progress towards meeting EU requirements. The most-marked effects are visible in Objective 1 areas where coverage was previously low. According to estimates from the indicators mentioned in the OPs, more than 20 million additional people may have benefited from wastewater projects, with 15 million of those people living in Objective 1 regions. More complex is the assessment of the impact of interventions on water quality, such as river water, bathing water and lakes, and on public health. A link could be established between some localised ERDF interventions and improvements in water quality, but a clear correlation is difficult to locate. This is due to three factors: in some places, water quality was not a real problem at the beginning of the period; information on water quality was not available; or because a complex analysis to establish the links between ERDF interventions and water quality is required. The issue of water supply was not a priority except in some Member States, such as in Spain and to a lesser extent in Latvia. The results there are also difficult to assess, especially regarding installation of desalinisation plants and diversification of water supply. The situation remains technically complex those choices don’t fall under the scope of this report. In the waste sector, the ERDF has focused mainly on treatment modalities. ERDF interventions here were relatively small compared to ERDF interventions in the water sector, as well as in comparison to overall public interventions in the waste sector. Nevertheless, the ERDF has been used to address some specific issues with good results, namely:

securing and closing old landfills; contributing to waste management plans through micro investments, mainly in the field

of sorting centres and composting; supporting the recycling sector through private or public operators; treating some high priority waste.


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In the fields of energy efficiency and renewable energy, the share of the ERDF devoted to reducing GHG emissions and for improving energy was more exploratory. Some interesting results, however, can be highlighted relating to modernisation of heating systems, increasing use of RES, and support for private investments for improving energy efficiency. However, some problems have limited the effectiveness of the environmental measures. These include oversized investments that led to overcapacity and difficulties in ensuring future financial viability as well as a lack of demand from households that were not ready to pay for improved environmental services.

Findings: Regional Development Not a Priority, Contributions Limited

The contribution of ERDF environmental measures to economic development appears to have been rather limited and, when observed, has mainly affected local areas without spillover into the regional economy. It is not surprising that environmental measures have had such a limited direct effect on regional economic development, given the guidance at the beginning of the programming period and the low emphasis in the literature on how to address the issue, at least until recently. As underlined above, ERDF environmental measures were managed mainly through sectoral approaches and an eye toward meeting EU directives. The environment was a priority for Structural Funds investment but its contribution to regional development was never worked out at EU, national or regional level. As a result, regional development was not a priority for environment-related actions. EU directives have monopolised the debate. The rationale for a strategy based on EU directive compliance must be increasingly debated. Up to now, the need to comply with EU directives was rarely integrated into a more open discussion on how best to allocate resources to the specific problems of a region. Prioritizeing EU directives and sectoral approaches have not been met with strong integration of environmental measures with other parts of the Ops or inclusion of environmental infrastructures in regional development strategies. A clear and precise analysis-based understanding between environmental challenges and the growth process did not underpin the ERDF environmental strategies for the 2000-2006 programming period. Highlighted links were mostly basic and rarely supported by a clear analysis of the main constraints, or of the main benefits that environmental improvements could yield in regional development. Objectives were laid down broadly and articulation between general objectives, specific objectives and related activities were difficult to discern. Managing tensions between among objectives such as growth, environmental protection and standards of living were most often not taken into consideration. The main documented positive effects on regional development arose from specific projects that directly involved the private sector, such as environmental technologies and the provision of incentives for the implementation of clean technologies in SMEs. But overall these effects were of limited size and were observed only in specific cases.


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Some positive effects have been observed in the environmental sector, mainly in the water and waste sectors. But overall, except in a few successful cases, the ERDF has not been used to support the development of innovative environmental activities. While it is still too early to assess a full effect, the contribution of environmental measures to the development of other sectors such as tourism or agriculture is far from obvious. Environmental measures have not been reported as a decisive factor on improved regional competitiveness. Any positive effects in that area were mainly observed at very local level, such as parts of cities attracting more shops or some specific renovated locations attracting more tourists. There is no evidence that environmental infrastructures set up during the programming period have laid down the conditions for long-term economic growth, except perhaps when it has contributed to upgrading infrastructure in one specific area. Case studies of efforts undertaken to rehabilitate industrial sites or coastal, urban and rural areas have shown poor results, except where measures addressed specific problems such as coastal rehabilitation in areas of strong economic activity. In other cases, the resources used for rehabilitation were often spread across many small interventions and their impact on economic performance was at best limited to the local area concerned. However, environmental measures had a significant contribution to living conditions and the quality of life and this was frequently considered the most important effect. It confirmed that the quality of the environment as a component of overall well-being, which is being increasingly recognised by experts and decision-makers alike.

Findings: Weak Institutional Capacities Help Explain Difficulties

Institutional arrangements and weak capacities often hindered development of a more-integrated programme linking environmental measures with other actions. This adds to difficulties originating from the complexity of the problems targeted, along with an absence of clear guidelines at the outset. As a result, programmes covered a wide array of environmental projects. These may have been coherent with sectoral plans, but geographically dispersed and showing poor integration with other measures or axes of regional policies. Projects implemented were not all of good quality.

Recommendations: New Approaches Required

The overall assessment of the contribution of ERDF environmental measures to environmental situation and to regional development is mixed. Regarding the fulfilment of European directives requirements, it is mainly positive. But weaknesses were identified in the ERDF’s contribution to sustainable regional development.


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If the ERDF is to be used to address the important environmental needs, a new approach is required. Public support demands in the environmental fields are indeed huge and they are now a shared among all institutional levels. A consensus is emerging on the need to integrate environmental issues into economic growth strategy. As an instrument offering such integrated vision at various territorial levels, the ERDF can play a significant role in pushing the new strategy, but a deep revision of the ERDF approach in this field is required. Priorities must be changed and must address the more urgent needs for public support in the environmental sector, including innovation and development of new technologies, incentives for private green investment and for changing consumer and producer behaviour regarding the use of natural resources. The effectiveness of the programme must be enhanced by reinforcing strategic and management capacities. To ensure a successful transition towards more integrated strategies and to maintain coherence with the whole policy mix at various levels, institutional capacities need to be considerably improved. Monitoring and follow-up of results also need improvement. If these conditions are met, the ERDF budget for environmental measures could grow in importance -- and possibly even increase compared to the previous programming period.


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1. Introduction: Context and scope of the evaluation

1.1 Main objectives of the evaluation

The main aim of the study was “to evaluate the contribution of the European Fund for Regional Development (ERDF) to the implementation of environmental strategies in the European Union (EU)” between 2000 and 2006. The study covers ERDF interventions in the environmental sector in general, and climate change mitigation in particular. To assess how ERDF environmental measures have contributed to environmental policies, the evaluation considered issues such as:

the challenges in the environmental sectors, as well as the key features of environmental strategies in Member States;

the role of the ERDF in supporting environmental strategies;

the theoretical interactions between environmental investment and regional development;

relationships between environmental investments funded by the ERDF and regional development;

the quality of the decision-making process for allocating ERDF; the results achieved, in terms of environmental improvement and socio-economic

regional development;

the contribution to the implementation of Community acquis. The evaluation is intended to provide recommendations for guiding the use of the ERDF in the environmental sector. Interesting issues for the future may be summarised as follows: When is the ERDF an appropriate instrument for intervening in the environmental

sectors? How to integrate environmental measures into regional development and how to

provide case studies of successful integration? What elements must be taken into consideration in designing a relevant strategy and

action plan for public structural funds in the environmental fields? What conditions must the decision-making process fulfill to ensure effective integration

in sectoral and territorial policies? How to monitor such measures and how to assess their contribution to environmental

policies and regional development?



1.2 Scope of the evaluation: Field of Interventions (FOI) related to the environment and climate change

The first step of the evaluation was to define the scope in terms of fields of interventions2. Table 1 (below) presents the selection of interventions to be covered as environmental measures. These can be divided into four groups:

I. environmental infrastructure (water supply, wastewater, solid waste, related to air and noise) which at the core of the evaluation;

II. promotion of renewable energies, energy efficiency and interventions related to climate change which have also been specifically focused on;

III. other measures related to environmental protection (upgrading and rehabilitation of sites, protection of the natural environment …);

IV. planning and rehabilitation of urban areas and the maintenance and restoration of the cultural heritage whose links with the environment are less direct.

Table 1: Environmental fields of interventions during the period 2000-2006

Code Fields of interventions related to environment and climate

change Types of interventions

127 Improving and maintaining the ecological stability of protected woodlands Environmental protection (III) 1312

Preservation of the environment in connection with land, forestry and landscape conservation as well as with the improvement of animal welfare

152 Environmentally-friendly technologies, clean and economical energy technologies (large business)

Energy efficiency and climate change related

interventions (II)

162 Environmentally-friendly technologies, clean and economical energy technologies (SMEs and the craft sector) 33 Energy infrastructure (production, delivery)

332 Renewable sources of energy (solar power, wind power, hydro-electricity, biomass) 333 Energy efficiency, cogeneration, energy control 34 Environmental infrastructure (including water)

Environmental infrastructure (I)

341 Air 342 Noise 343 Urban and industrial waste (including hospital and dangerous waste) 344 Drinking water (collection, storage, treatment and distribution) 345 Sewerage and purification 35 Planning and rehabilitation Others (IV)

351 Upgrading and Rehabilitation of industrial and military sites Environmental protection (III) 352 Rehabilitation of urban areas Others (IV)

353 Protection, improvement and regeneration of the natural environment Environmental protection (III)

354 Maintenance and restoration of the cultural heritage Others (IV)

2 Fields of Interventions (FOI) is the thematic classification category for ERDF expenditure, see Annex 4 of

Commission Regulation 438/2001



The evaluation covered the entire set of interventions but specific attention was given to environmental infrastructure and climate change interventions. A general definition of infrastructure is provided by the U.S. National Research Council (NRC), which adopts the term “public works infrastructure” to include “both specific functional modes (highways, streets, roads, and bridges; mass transit; airports and airways; water supply and water resources; wastewater management; solid-waste treatment and disposal; electric power generation and transmission; telecommunications; and hazardous waste management) and the combined system these modal elements comprise. The term infrastructure spans not only these public works facilities, but also the operating procedures, management practices, and development policies that interact together with societal demand and the physical world to facilitate the transport of people and goods, provision of water for drinking and a variety of other uses, safe disposal of society’s waste products, provision of energy where it is needed, and transmission of information within and between communities”3. The environmental infrastructure which are dealt with in this evaluation are: water supply including collection, storage, treatment and distribution; urban (mainly municipal solid waste) and industrial waste covering collection and

treatment including recycling; wastewater collection (sewerage) and treatment (purification).

1.3 Geographical coverage (14 MS + 11 MS)

The evaluation focused on the contribution of the ERDF to environmental strategies in 14 Member States while the 11 remaining MS were taken into consideration for more general purposes. These countries have been classified into three groups as indicated below.

3 (NRC (1987), page 4, quoted by Ottaviano (2002), page 18)

Group 1: EU-10 (MS joined

in 2004)

Group 2: EU-15 without Cohesion 4 (MS joined before

2004)

Group 3: Cohesion 4 (MS eligible for

CF in 2000)

Czech Republic, Hungary, Slovakia, Latvia, Poland

Germany, Finland, France, UK, Italy

Ireland, Spain, Greece, Portugal

Estonia, Lithuania, Slovenia, Malta, Cyprus

Austria, Belgium, Denmark, Luxembourg, the Netherlands, Sweden

14 MS under review



1.4 Methodological approach

The final report addresses the main issues raised at the beginning of the process and is based on all the elements that have been discovered throughout the various tasks. But to get a more detailed view of what has been done at each step of the process, the reader should refer to the intermediate reports and the case study reports. The approach followed was organised around different inter-related tasks that have been carried out over the last 12 months. As described below, each task had its own entry point and followed a specific approach. A large set of analyses at different levels based on different sources of information (literature review, database with indicators collected by managing authorities, desk research and interviews with many stakeholders during field visits and with the support of local experts) were produced and presented in the different intermediate reports and case study reports.

Table 2: Focus and approach of each task of the evaluation Task Focus Approach

Task 1 Conceptual basis Environmental infrastructure

Theoretical analysis of the contribution to regional development

Task 2 Features of Environmental Strategies in MS

Water supply, wastewater collection and treatment, collection and treatment of municipal solid waste Focus enlarged to the whole environmental situation (energy and climate change)

Overview of the situation in each field at national level. Overview of environmental challenges, policies and institutional set up.

Case studies Task 4.1 Regional case studies Environmental

investments enlarged to the whole set of environmental measures funded by the ERDF

Overall assessment of the contribution of ERDF environmental measures to regional development

Task 4.2 Case studies on waste prevention and management of waste

Waste prevention and management of waste (centred on solid waste)

Assessment of the ERDF contribution to the regional/national waste strategy

Desk analysis of OPs Task 3.1 Main outputs and results indicators from ERDF interventions

Water supply, wastewater, municipal solid waste

Collection of output and results indicators related to interventions in the covered fields

Task 3.2 Effectiveness of major sectoral programmes

All environmental fields covered by the sectoral programme

Analysis of achievements of targets and of how strategic objectives have been reached



Task Focus Approach Focus on climate change Task 5 Climate change Use of renewable energies,

regional strategies and improvement of energy efficiency

Analysis of the contribution of these interventions to the reduction of Greenhouse Gas (GHG)

Assessment based on information collected Task 6 Contribution of ERDF to the implementation of environmental strategies in the EU

Role and contribution of the ERDF to national and EU environment strategies

Summary of the findings from all tasks and recommendations for the future and current programming periods

Source: ADE, 2008.

A large share of the analysis presented in the next chapters rest on the findings gathered through the case studies. As indicated in the table below, 16 case studies were carried out:

10 regional case studies ; 3 case studies on waste ; 3 case studies for looking more specifically at climate change issues. The choice was made with the aim of having a representative set of regions in terms of Gross Domestic Product (GDP)/capita, economic activities and rural/urban characteristics. Regions were also selected according the importance given to the environment in the ERDF programme. The range of situations met through the case studies was quite large and has provided a good overview of how the ERDF has been used in the environmental fields. Nevertheless, the number of OPs that have been more deeply analysed (22) remains low in comparison to the 238 programmes implemented during the 2000-2006 programming period. This is of course one of the limits of the evaluation. However, many of the regions visited and related OPs share common features that have permitted to draw interesting conclusions. As far as possible, findings from case studies are presented in the text with the aim also to point out regions’ specificities.



Table 3: Case studies: economic background (in 2004) and environmental ERDF funding

Member State

Region or thematic

programme Obj.

Level of GDP/capita

in PPS (Index, EU-

27=100)

Population density

(hab/km²)

Share (%) of employment

% of environment in

ERDF4

Agri. Industry Services TOT env.

FOI 345

Regional case studiesGreece Central

Macedonia O1 68.2 101.2 12.6 24.9 62.5 20.3% 6.7%

France Midi-Pyrénées

O2 100.2 59.9 6.4 22.6 71.1 n.a n.a

Spain Comunidad de Valenciana

O1

93.9 191.7 3.8 34.3 61.9 35.2% 26.1%

Portugal Norte O1 58.8 174.8 12.8 39.6 47.5 32.8% 13.2%UK West Wales

& the valleys O1 80.3 142.8 2.6 23.0 74.4 19.8% 4.0%

Italy Lazio O2 131.8 310 1.5 18.7 79.8 n.a n.aFinland South

Finland O2 102 22.8 6.2 30.5 63.3 24.5% 6.6%

Latvia O1 45.5 37.1 11.8 26.5 61.7 12.9% 7.7%Slovakia Eastern

Slovakia O1 42.3 99.5 4.6 40.1 55.3 23.1% 21.7%

Poland Podkarpackie O1 35.4 117.5 25.6 28.3 46.0 n.a n.a (integrated regional development OP) 29.3% 15.3%

Waste case studiesSpain Catalonia O2 120.5 209 2.9 22.5 63.6 n.a n.aHungary O1 64 108.6 4.9 32.5 62.7 n.a n.aGermany Brandenburg O1 81.4 87.2 3.6 25.6 70.8 n.a n.a

Climate change case studiesCzech Republic

O1 75.2 132.1 4 39.5 56.5 n.a n.a

Portugal Azores O1 65.9 103.6 12.4 25.5 62.1 n.a n.aGermany Sachsen-

Anhalt O2 81.3 122.7 3.2 27.6 69.2 n.a n.a

Source: Eurostat – main regional indicators. Financial information from WP1 The report is organised as follows: main issues at stake at the beginning of the period are first highlighted in chapter 2. Responses given by EU-25 in terms of environmental expenditures are discussed in chapter 3. The ERDF support to the environmental sector during the programming period 2000-2006 is then more deeply analysed in chapter 4 while chapters 5 and 6 present the main findings regarding the relevance and coherence of OPs strategies in the environmental field as well as the institutional set up. The contribution of environmental measures for improving environmental situation and regional development is assessed in chapter 7. A focus on climate change issue which has gained of importance during the period is made in chapter 8. Conclusions and recommendations of the evaluation are finally presented in the last two chapters (9 and 10).

4 Based on all programs containing an environmental dimension. 5 FOI 34: environmental infrastructure



2. Main issues at stake

2.1 Environmental objectives of cohesion policy in 2000

The environment became an explicit consideration of cohesion policy during the period 2000-2006. Under the Treaty of Amsterdam (1999), the EU’s financial instruments needed not only to shape long-term economic growth and social cohesion, but also to prioritise equally the protection of the environment. Moreover, the European Council at Vienna (1998) had already confirmed the political priority of integrating the environment into structural and agricultural policies. Thus, the environment had reached the top of the political agenda.

At the beginning of the period, environmental infrastructure interventions were encouraged mainly to limit the adverse effects of pollution and to mitigate the negative impact of economic and human activities on the environment and human health. The European environment was perceived as being under threat (water, soil and air) and the priority was clearly put on assisting compliance with EU environmental standards. As mentioned in the Guidelines for programmes in the period 2000-20066: “environmental considerations, and in particular compliance with Community environmental and nature protection legislation, must be incorporated into the definition and implementation of measures supported by the Structural Funds and the Cohesion Fund. That will also help the Union comply with its international commitments such as those concerning climate change given at Kyoto”.

Environmental infrastructure interventions were seen as an integral part of the cohesion policy aiming at creating the basic conditions for regional competitiveness. However, the potential role of environmental infrastructure as a factor of regional economic growth and as fulfilling cohesion policy objectives was not explored even if it was mentioned as one of the benefits that could be expected: “environmental infrastructure needs to be constructed or upgraded, especially in the less developed regions, not least because high quality environmental infrastructure constitutes an important factor for regional socio-economic development”7. The guidelines for 2000-2006 programmes highlighted two main fields of intervention related to the environment: on the one hand, the need to develop an efficient, diversified and competitive energy sector. In the less developed regions, the Structural Funds were to concentrate on energy networks, energy efficiency and renewable energy sources while in yet other regions, investments were to focus on small-scale innovative infrastructure projects. On the other hand, high quality environmental infrastructure were considered as an important factor for regional socio-economic development in a context of growing pressure on water, air and soil quality. Here, the priority was clearly put on the compliance process: “The Structural Funds and the Cohesion Fund should, as a priority, assist compliance with the

6 The Structural Funds and their coordination with the Cohesion Fund, Guidelines for programs in the period 2000-06,

Communication of the Commission, 1/7/1999. 7 Idem 5



environmental standards established in the relevant Community Directives, in particular with regard to water and waste management”. The guidelines emphasized also more as an open option, the opportunity that environment-related products could provide a source of employment. Environmental interventions were also considered as an important element of a more balanced regional development at two different levels:

In urban areas, the protection and improvement of the urban environment was seen as a means of improving the quality of life, protecting human health and safeguarding local and global ecosystems.

In rural areas, the maintenance and protection of the environment was considered as a major rural policy priority including the preservation of the countryside and natural resources, traditional rural areas, the promotion of agricultural tourism and the renovation of villages.

Thus, there were two different approaches guiding environmental interventions: on the one hand, a sectoral approach based on fulfilling sectoral policies and on the other hand, a regional development approach, more integrated into a regional development strategy.

2.2 Specific environmental issues: the initial situation and main trends during the period

Sectoral considerations were the dominant feature in guiding cohesion policies in the environmental fields at the beginning of the period. The stakes were very different from one sector to another, requiring specific policies and instruments. The initial situation and the policies to be implemented also varied significantly across the Member States. This section highlights the initial situation and main objectives that EU countries and in particular the 14 MS under review pursue in three of the priority environmental fields: waste, water supply and wastewater treatment, and climate change. Main trends observed during the period are also described.

Collection and treatment of waste8

The main problem in relation to safe and sustainable handling of waste concerns the potential impact from inappropriate waste management on human health and on ecosystems (soil and water contamination, negative impact on air quality, land use and landscape). The target to decouple economic growth and waste generation was one of the main objectives during the 2000-2006 period together with the shift in waste management towards contributing to the sustainable use of resources. 8 This concerns the management and disposal of solid, urban, industrial and hazardous waste.



At the beginning of the period, priorities for funding waste infrastructure were (by order of importance): prevention of waste production and its harmful impact, recovery of waste by means of recycling, reuse or reclamation and safe final disposal limited to waste for which no possibility of recovery exists. The problems of contaminated sites such as old landfills and unauthorised discharges of waste which constitute a considerable threat to the environment and to human activities were also at the agenda.

Table 4: Socio-economic data and municipal waste generation

Indicator Municipal waste generation

Unit Million tons Per unit of GDP

(ton/million € constant) Kilogram (kg)/capita

Year 2000 2005 /06 Growth 20002005 /06 Growth 2000

2005 /06 Growth

Czech Republic 3.4 3.0 -13.2% 55.6 40.2 -27.8% 333 290 -13%Hungary 4.6 4.6 1.7% 87.6 72.3 -17.5% 446 459 3%Slovakia 1.4 1.6 13.7% 62.1 55.6 -10.5% 254 289 14%Latvia 0.6 0.7 11.3% 75.7 56.8 -24.9% 271 311 15%Poland 12.2 9.4 -23.3% 65.6 43.3 -34.1% 317 245 -23%Germany 50.1 49.6 -1.2% 24.3 23.3 -4.1% 610 601 -1%Finland 2.6 2.4 -5.7% 19.7 16.4 -16.7% 502 467 -7%France 32.2 35.2 9.3% 22.3 22.5 0.6% 530 560 6%United Kingdom 33.5 35.1 4.6% 20.9 19.3 -7.5% 569 582 2%Italy 28.6 32.3 13.0% 24.0 25.9 8.1% 502 551 10%Ireland 2.3 3.0 34.0% 21.7 22.2 2.2% 598 733 23%Spain 26.3 25.7 -2.4% 41.8 34.7 -16.9% 654 592 -9%Greece 4.5 4.9 8.9% 32.3 28.8 -10.8% 408 437 7%Portugal 4.8 4.7 -3.2% 39.5 36.6 -7.3% 472 443 -6%

Source: Eurostat Reduction of generated waste through waste prevention was one of the priorities of the new and recently reinforced Waste Framework Directive9. The EU environmental legislation concerning waste is summarised in the box below.

9 2008/98/EC of 19 November 2008



EU Waste Directives

One of the key Directives related to waste at the beginning of the 2000-2006 programming period was Directive on waste 75/442/EEC which was the framework for coordinating waste management in the Member States in order to limit the generation of waste and to optimise the organisation of waste treatment and disposal. This Directive was clarified and replaced by the Council Directive on waste 2006/12/EC which was recently amended by the Directive 2008/98 EC (this latter with effect from 12 December 2010) establishing the legislative framework for the handling of waste in the Community. It aims to promote a new approach to waste management based on prevention, respect for human health and the environment, and limiting the production of waste, as well as encouraging the use of waste as a resource by recycling and recovery. It is based on a five-stage waste hierarchy establishing an order of preference for waste operations: waste prevention, preparation for re-use, recycling, other recovery operations and, as a last resort, safe and environmentally-sound disposal. Various other specific Directives were in place to establish categories of waste according to their toxicity, to set reuse and recycling objectives for different types of waste (packaging, electric and electronic wastes, batteries, end-of-life vehicles), and to impose strict conditions for waste incineration and landfills. In this legislative framework, a set of requirements and quantitative targets are laid down. For example, Directive 99/31/EC on landfill of waste, amended in 2002, sets a variety of technical standards of operation for landfill and sets out a timetable for existing sites to be brought up to standard. This had to be achieved as soon as possible and not later than 31 March 2007. Sites that cease to operate must be closed as soon as possible and by 16 July 2009 at the latest. Furthermore, this Directive requires that no later than five years after its date of adoption (i.e. 16/07/2006) by the MS, biodegradable municipal waste going to landfills must be reduced to 75% of the total amount (by weight) of biodegradable municipal waste produced in 1995 (no later than 8 years i.e. 16/07/2009, to be reduced to 50% and no later than 15 years i.e. 16/07/2016 reduced to 35%). Directive 2008/1/EC on Integrated Pollution Prevention and control (IPPC) which replaces Directive 96/61/EC establishes a procedure for authorising industrial and agricultural activities with a high pollution potential and sets minimum requirements to be included in all permits, particularly in terms of pollutants released. Also, through Directive 2004/12/EC on packaging and packaging waste (amending Directive 94/62/EC) MS must introduce systems for the return and/or collection of used packaging to attain a set of targets, as for example, by no later than 31 December 2008, recycling targets by material (glass, paper min. 60%, metals 50 %, plastics 22,5 % etc) and at least 60% by weight of packaging waste has to be recovered. MS are also required to establish consistent waste management plans including application of the polluter pays principle as well as development of waste prevention policies.



Waste generation Both the amount and composition of municipal waste10 vary widely among EU countries, these variables being directly related to levels of consumption. It should be underlined that the term “municipal waste” has different definitions and is based on different calculation methodologies. In this evaluation, OECD/Eurostat definitions and figures have been used. Figures should be interpreted with caution and comparison can only be made within the same source11. As shown in table 4, a significantly lower level of waste generation per capita characterises the EU-10, except Hungary, which has already reached the level of the EU-15 with a municipal waste generation of 459 kg per capita. At the OECD level, the generation intensity per capita rose at a lower rate than private final consumption and GDP and, more significantly, slowed down in recent years. The generation of municipal waste per capita in Western European countries has stabilised, albeit at a high level. Among the nine old MS under review (except Ireland), the generation intensity shows more of a stabilising trend, four of them showing a slight increase and the other four a slight decrease. The case of Ireland is unparalleled, with a growth in municipal waste of 23% mainly due to a booming economy. At the same time, the generation of municipal waste per capita has decreased in Central and Eastern Europe12. Nevertheless, among the five new EU countries under review, the situation is contrasting: Poland13 and the Czech Republic have recorded a significant reduction14 in the volume of municipal waste per inhabitant while Slovakia and Latvia have continued to register an increase. No real conclusion can be drawn in that respect. The average municipal waste generation in the OECD reached 560 kg per inhabitant in 2006. Five countries among the 14 MS are still above that level (by decreasing order, Ireland, Germany, Spain, the UK and France). Waste treatment and landfill closures Regarding waste treatment, countries successfully increased the proportion of solid waste recycled. However, despite a reduction of its relative share, landfilling remains the predominant treatment for municipal waste. By the end of 2005, 49% of EU municipal 10 When interpreting these indicators, it should be kept in mind that municipal waste is only part of the total waste

generated. Others are industrial waste, hazardous waste and nuclear waste. 11 The data come from Eurostat and OECD databases. Consequently the data can be differently constructed according

to the database. 12 Sources : Eurostat, national data and EEA 13 In Poland, the decreasing trend in municipal waste generation observed during the early 2000s reflected the economic

slowdown recorded in the years 2002-2003 as well as the mass migration in the years 2004-05 but also some disputes between property owners and companies engaged in municipal waste collection, which resulted in the management of waste by households themselves and the development of illegal landfills.

14 The reduction could be artificial due to statistical problems as some types of waste which have been taken charge of by the private sector are no longer integrated into official statistics.



waste was disposed of through landfill, 18% was incinerated and 27% recycled or composted. There were wide discrepancies between MS. Some landfilled 90%, others only 10%. The most spectacular change was in Germany, where the amount of urban solid waste landfilled decreased by 98% (to 4kg/capita) while the waste managed by means of incineration increased by 37%. Investments in mechanical-biological treatment plants received high priority as did investments in landfill remediation and securing. However, this is still a severe challenge in the five new federal states because of the relatively high number of old landfills that do not fulfil environmental requirements. Overall, the problems of landfill compliance with EU regulation are more acute in the EU-10. In the EU-15, prevention, separate collection and recycling are more advanced even if the level of waste per capita remained high.

Water supply

Table 5: Population with access to improved water supply

Indicator

Unit % in urban areas % in rural areasYear 2004 2004 2000/01 2005/06 Growth rateCzech Republic 97 91 66 75 14%Hungary 95 91 46 60 30%Slovakia 99 93 51 55 8%Latvia 93 59 67 67 0%Poland 99 96 54 60 11%Germany 100 97 93 94 1%Finland 100 92 80 81 1%France 100 100 79 80 1%United Kingdom 100 98 95 97 3%Italy 100 96 69 n.a. n.a.Ireland 99 96 70 89 27%Spain 99 99 88 92 5%Greece 91 73 56 n.a. n.a.Portugal n.a. n.a. 57 65 14%Sources: Eurostat, OECD

%

Population with access to improved water supply

Population receiving total treatment as defined by the Urban Waste Water

Treatment Directive



In most OECD countries and thus in EU countries, drinking water supplied to the main centres is bacteriologically safe. According to WHO data, only a few countries (such as the Czech Republic, Hungary and Poland) had still to connect a part of their population to safe water supplies15 (14% in the Czech Republic, 1% in Hungary and 11% in Poland16). This must also be the case for Latvia where the ground water is of poor quality and only 59% of the rural population is connected to an improved water supply17. Nevertheless, in some countries infrastructure are old and need to be modernised. The main challenge is now to provide safe water which means treating it to avoid viruses, parasites, nitrates and pesticides. New concerns are emerging in this field, notably due to the tightening of drinking water standards. Another growing challenge especially in Southern Europe is to guarantee sustainable sources of supply.

Wastewater treatment The main concerns relate to the negative impacts of water pollution on both human health and aquatic ecosystems,18 and to the cost of waste water treatment. The central challenge is to ensure a freshwater quality that protects and restores all bodies of surface and ground water by reducing pollution discharges, notably through appropriate treatment of wastewater. The demand for environmental improvement within the EU is driven by the need to comply with EU law (see box on next page).

15 It must be mentioned that connection rates do not have to reach 100% to ensure access to safe water. In rural areas,

parts of the population will have direct access to water supply. The safety will mainly depend on groundwater quality. 16 Source: OECD, Water: the Experience in OECD Countries, 2006. 17 In Latvia, the overall quality of ground water is good with the exception of elevated concentrations of iron,

manganese and sometimes excessive sulphate concentrations. To comply with drinking water quality standards, abstracted groundwater will be treated particularly in order to remove iron. Although the quality is adequate after treatment, the drinking water quality provided to the final consumer is often worsened due to the poor condition of water supply networks.

18 Cfr OECD 2008, Key Environmental Indicators.



EU wastewater treatment directive One of the key Directives related to wastewater treatment is the Council Directive 91/271/EEC concerning urban wastewater treatment, which was adopted in 1991 and amended in 1998. The objective of this Directive is “to protect the environment from adverse effects of the discharge of urban and certain industrial wastewater”. It concerns the collection and treatment of urban wastewater and contains various obligations for the Member States and notably the following:

The obligation to designate “sensitive zones” according to the state of the surface waters (eutrophication or risk of eutrophication);

The obligation to collect and treat the discharged wastewater by specific deadlines and with specific emission standards19 depending on the sensitivity of the zone and on the number of inhabitants of the agglomeration under consideration.

These obligations are summarised in the following table:

In the EU-15 MS all deadlines in the Directive have expired by end 2005 and waste water collection and treatment therefore has to be in place for all agglomerations within the scope of the Directive. However, some breaches are still observed in these countries. In the remaining MS some transitional periods have been granted for specific agglomerations on the basis of the load, the size of agglomerations or the nature of the discharge area. For example, in Czech Republic, a transition period until 2010 was given to comply with the Directive. This period ends the 31 December 2015 in Hungary with intermediate targets in December 2008 and 2010.

Source: European Commission Directorate-General (DG) Environment website20

19 From “appropriate”, primary (chemical/physical treatment focused on suspended solid matters and limited treatment

of biological and chemical pollution), secondary (same as primary but improved performances) to “advanced” treatment (same as secondary + nitrogen and phosphorus additional treatment)

20 http://ec.europa.eu/environment/water/water-urbanwaste/legislation/deadlines/summary3457_en.htm

Population equivalent

0 - 2000 2000-10,000 10,000-15,000 15,000-150,000 >150,000

Sensitive areas

If collection by end 2 005 Appropriate

treatment

Collection by end 2005 Secondary treatment

Collection by end 1998

More advanced treatment


More advanced treatment


More a dvanced tr eatment

Normal areas

As for sensitive

zones

As for sensitive

zones




Less sensitive & Coastal zones

As for sensitive

zones


Appropriate treatment


Primary or secondary treatment


Primary or secondary treatment

Collection by end 2005 Primary

(exceptional) or secondary

treatment



The indicator presented below shows the percentage of the national population connected to public wastewater treatment plants at the beginning of the period. The extent of secondary (biological) and/or tertiary (chemical) treatment provides an indication of efforts made to reduce pollution loads.

Graph 1: Wastewater treatment - % of the population receiving total treatment

Note: detailed data on types of treatment are not available in Italy, Portugal and Slovakia Source: Eurostat, OECD The situation in water infrastructure was far from homogenous in the MS at the beginning of the 2000-2006 period. Three different situations can be highlighted:

Countries that completed their sewer systems long ago and now face considerable investment challenges to renew and to rehabilitate (Western Germany, France, the UK and Italy).

Countries that have recently finished the expansion of wastewater treatment capacity and their expenditure has shifted to operating costs (Ireland, Finland and Eastern Germany21).

Countries that must still complete their sewerage networks in order to fill the EU directive requirements (the EU-10, Portugal and Greece22).

21 In the five new federal states, improvement in wastewater treatment and collection infrastructure had been a

challenge. Around 850 km of freshwater pipes were installed in the five new federal states during the 2000-2006 period.

22 In Greece, it can be estimated that in 2007 around 70% of the population was connected to a wastewater treatment system. The improvement has been significant, but around 1.7million people still require at least secondary treatment plus the associated sewerage.



The share of the population connected and the level of treatment varies significantly among the 14 MS under review. At the beginning of the 2000-06 period, five countries were lagging behind in terms of the percentage of the population connected to wastewater treatment plants: Hungary, Poland and Slovakia as well as Portugal and Greece. Primary treatment remains the most significant feature in countries such as the Czech Republic, Greece and Ireland, while in most of the EU-15, its share was less than 10%. Progress has been significant during the period, especially in those countries: Ireland shows a growth of 27% and a spectacular growth of 30% was observed in Hungary notably thanks to the implementation of a national programme (Urban Waste Water Treatment Programme) following the EU Directive. In the Czech Republic, Poland and Portugal, the percentage of the population connected to wastewater treatment has increased by more than 10%.

Climate change and energy resources

Climate change was not on the top of the political agenda when the Cohesion Policy programmes 2000-2006 were negotiated and adopted. The EU – which was composed of 15 MS at the beginning of the programming period – ratified the Kyoto Protocol in May 2002. However, the Kyoto Protocol really entered into force in February 2005, after the Russian ratification. Under the Kyoto Protocol, the EU has agreed by 2008-2012 to cut its Greenhouse Gas (GHG) emissions by 8% compared to the Kyoto base year (1990).

The reduction of GHG emissions – also called mitigation – and adaptation to climate change gained importance in the political debate during the programming period and constitutes a challenge for many EU regions for current and future programming periods. The main problem in relation to the effects of energy production and use concerns greenhouse gas emissions and local and regional air pollution. The main challenge is to decouple energy use and related air emissions from economic growth, through improvements in energy efficiency and the development and use of cleaner fuels. The indicators in the table below relate to the intensity of use of energy (in terms of GDP), the share of renewable electricity/energy on total electricity/energy produced and to the GHG emissions per capita.



Table 6: Energy intensity and GHG emissions

Indicator

Share of renewable energy in primary energy

consumption

Share of renewable

electricity in total electricity consumption

Trends in total energy

intensity GHG emissions

Unit % % 1995=100 million t CO2

equivalent

t CO2 equivalent/

GDP (%)

T CO2 equivalent/

capita Year 2000 2005/06 2000 2005/06 2000 2005/06 2000 2005/06 2000 2005/06 2000 2005/06EU-27 5.8 6.7 13.8 14.0 90 87.4 5,065.5 5,142.8 0.055% 0.044% 10.5 10.4Czech Republic 1.5 4.1 2.7 4.0 91.8 85.3 129.4 125.9 0.21% 0.13% 12.6 12.3 Hungary 2.1 4.2 0.5 4.6 79.4 71.7 59.2 61.5 0.11% 0.07% 5.8 6.1Slovakia 2.8 4.3 16.9 16.5 83.4 74.0 39.3 39.9 0.18% 0.10% 7.3 7.4Latvia 34.3 36.3 47.7 48.4 63.8 51.4 7.1 7.6 0.08% 0.06% 3.0 3.3Poland 4.2 4.8 1.7 2.9 69.8 62.2 334.5 328.2 0.18% 0.13% 8.7 8.6Germany 2.8 4.8 6.5 10.5 91.0 89.6 879.7 874.2 0.04% 0.04% 10.7 10.6Finland 23.9 23.2 28.5 26.9 88.9 83.3 57.5 57.2 0.04% 0.04% 11.1 10.9France 7.0 6.0 15.2 11.3 94.0 92.9 407.0 414.6 0.03% 0.02% 6.7 6.6United Kingdom 1.1 1.7 2.7 4.3 90.6 80.5 547.7 560.3 0.03% 0.03% 9.3 9.3 Italy 5.2 6.5 16.0 14.1 97.4 101.8 461.2 492.3 0.04% 0.03% 8.1 8.4Ireland 1.8 2.6 4.9 6.8 83.3 68.3 44.9 47.4 0.04% 0.03% 11.8 11.4Spain 6.6 n.a. n.a. n.a. n.a. 97.9 306.0 368.9 0.05% 0.04% 7.6 8.5Greece 5.0 5.2 7.7 10.0 98.3 88.0 103.7 112.2 0.08% 0.06% 9.5 10.1Portugal 15.4 13.4 29.4 16.0 100.6 107.2 63.4 67.5 0.05% 0.05% 6.2 6.4

Source: Eurostat and EEA. According to OECD, variations in energy intensity among the 14 MS are still significant. These depend mainly on national economic structure, geography (e.g. climate), energy policies and prices, and a country’s own energy resources. In 2006, the highest levels of energy supply intensity per unit of GDP were observed in the Central European countries (the Czech Republic, Slovakia, Poland, Latvia and to a lesser extent in Hungary) where energy intensity was significantly higher than the EU-25 average. Conversely, the Mediterranean countries (Greece, Italy and Portugal) have much smaller energy needs in terms of GDP produced. As indicated in table 6, since 2000 and until 2005/2006, energy intensity per unit of GDP has continued to decrease. Progress in per capita terms has even been slower, reflecting an overall increase in energy supply and increasing energy demands for transport activities.



The fuel mix is also changing: the share of solid fuels and oil is falling, while those of other sources including renewable energy sources are rising. The share of renewable energy in primary energy consumption in 2000 was particularly high in three countries (Latvia (34.3%), Finland (23.9%) owing to wood energy and Portugal (15.4%, thanks to the use of wind energy) but remains low in the main countries under review. The GHG emissions per capita remained stable during the 2000-2006 period due to the changes in economic structures and energy supply mix, energy savings and in some countries of decreasing economic activity.

Conclusions ERDF investment in environmental infrastructure was mainly encouraged in 2000 to limit negative externalities produced by pollution and mitigating the negative impact of economic and human activities on the environment and human health. The priority was clearly put on “assisting compliance with the environmental standard established in the relevant Community Directives in particular with regard to water and waste management”. Objectives were:

‐ Waste management: to decouple growth and waste generation and to improve waste management and treatment

‐ Water supply: to improve the quality of drinking water and to ensure a sustainable supply in the long term

‐ Wastewater treatment: to install/modernise infrastructure in view of fulfilling the WWD requirements

‐ Climate change: this issue was not at the core of the political agenda at the beginning of the period and gained more importance after Kyoto protocol ratification in February 2005. Nevertheless, the objective aiming at developing an efficient, diversified and competitive energy sector was clearly set up in 1999.



3. Environmental expenditures in MS, funding strategies and the role of EU funds

This chapter presents an overall picture of the environmental expenditures in the 25 MS based on various sources of data. This remains estimation due to the lack of comprehensive and harmonised data. The chapter’s aim is to describe the main sources of funding and how these various sources were used by the MS during the 2000-2006 programming period. The main issues here are to clarify the funding strategies that were applied by the MS and who bore the ultimate cost of the environmental infrastructure. The data used for estimating environmental expenditures include expenditures related to the waste management, the wastewater management, the pollution abatement, the protection of biodiversity and landscape, the R&D environmental protection and the environmental protection n.e.c.23. Expenditures are of two types: 1) investment expenditures covering the cost of infrastructure construction and if any of immaterial investment (such as R&D) and 2) current expenditures covering operational costs and soft actions. Total environmental expenditures are the sum of these two components. Environmental expenditures can be financed through three main funding sources: the MS own national resources, the external funds (mainly EU funds) and resources coming from the private sector. First, a country can use a proportion of its own national resources to support these expenditures. The first pillar for financing environmental expenditures in Europe comes from the application of financial mechanisms based on two key principles: that those responsible for pollution and those using natural resources should bear the full cost of their actions. 1) The Polluter-Pays-Principle (PPP) requires that the costs of pollution be borne by those who cause it; and 2) the User-Pays-Principle (UPP) states that costs related to the use of a natural resource or the treatment of pollution should be covered by revenue generated by users. These principles are not applied similarly in all MS and the level of revenues gained through this channel may vary significantly between MS (most often depending on the users/polluters capacity to pay for environmental services/damages). Traditional public revenues must then be used as a second pillar to cover the remaining part of environmental expenditures. These resources are traditionally based on the level of public resources levied through taxes paid according to the national revenue. There are positively linked to GDP level. Secondly, the external funds may represent an important source for funding environmental investments. They mainly include the grants allocated to the MS through the ERDF, the CF and the ISPA. Furthermore the loans provided by the IEB and the EBRD are also used

23 According to the COFOG classification



to finance projects that protect and improve the environment and promote social well-being in the interests of sustainable development. Funds may also come from other donors (such as bilateral donors or non European donors) but have not been covered here due to a lack of available data. Thirdly, the private sector is more and more involved in environmental expenditures, either by ensuring direct environmental services to population (in this case the revenues from the application of the UPP may be directly caught up by private providers), either by investing in environmental protection for their own purposes which will reduce their pollution.

3.1 Environmental expenditures across the EU

To assess funding strategies across the EU, it is first necessary to have a comprehensive picture of all the resources devoted to the environment. Investment costs do not include planning and rehabilitation and urban rehabilitation activities although it is considered as environmental expenditures in ERDF. The analysis of funding strategies will focus mainly on investment expenditures as external funds mainly serve to cover investment costs. Per capita environmental investment varies widely across the EU

The table below summarizes the amounts that were spent during the period 2000-2006 on environmental infrastructure in each of the 25 MS, showing a wide range of situations.



Table 7: Amount invested in environmental infrastructure by sources (in Million €)

Sources of investments

(in mio €; 2000-2006)

The government

ERDF ISPACohesion

Fund EBRD EIB The industry

Total investments in environmental infrastructure

Czech Republic 2.830,50 91,34 258,38 580,25 0,00 673,40 1.602,35 6.036,23

Hungary 1.933,50 60,80 323,66 734,40 12,30 374

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