The search for better territorial effectiveness of the Union's policies and sectoral initiatives is confronted with a particular challenge represented by the contrast between the exhaustive, coherent and ambitious - although non binding - character of the provisions of the European Spatial Development Perspective (ESDP) on the one hand and the various intervention and implementation methods of the Union's sectoral policies on the other, not to speak about their evolutionary capacity.

The ESDP as approved by the informal Council of the Ministers responsible for spatial planning in Potsdam in May 1999, although resulting precisely from an informal approach and procedure, rests nevertheless on a number of provisions of the Treaty, and in the first place on the objectives of economic and social cohesion and of sustainable development (Article 2 EU Treaty). It takes account of the concepts of "harmonious, balanced and sustainable development" (Art.2 EC Treaty), "high degree of competitiveness" (Art.2 EC Treaty), "improvement of the quality of the environment" (Art.2 EC Treaty), "raising of the quality of life" (Art.2 EC Treaty).

Considered from that point of view, the ESDP represents in its objectives and policy options, an informal and specialised extension of the Treaty, which details and specifies various of its provisions in an approach where strong coherence arises from territorialisation.

It can therefore be observed that « polycentric spatial development », « urban-rural partnerships », « equivalent access to infrastructures and knowledge », « careful management of natural and cultural heritage », through the numerous policy options specifying them, are nothing else than territorial concepts and instruments at the service of the main objectives of the Treaty.

The policy options of the ESDP, although being numerous, rather substantial and containing very detailed recommendations, constitute a remarkably coherent and ambitious spatial planning doctrine.

Bringing all public policies - and in particular Community policies - with territorial impacts closer to the objectives and policy options of the ESDP, would undoubtedly constitute an effective means of strengthening in a sustainable way their reciprocal coherence and of increasing their mutual synergy. Consequently, territorial coherence is likely to become a powerful vector for better global effectiveness of Community policies.

With regard to this coherent and ambitious framework of reference constituted by the ESDP's objectives and policy options, the intervention and implementation methods of Community policies appear very evolutionary, heterogeneous and fluctuating, both in time and in space. This is clearly indicated by the conclusions of the document «Community policies and spatial planning » presented in February 1999 at the ESDP Forum, which have shown: a) Various methods of intervention of Community policies:

• Financial resource distribution from the Community budget. The territorial impacts are different according to whether this involves: – supports to incomes (price guarantees, market policies in agriculture), which influence regional GDP, purchasing power in rural areas and also contribute to fix agricultural population; – regionalised structural measures, on the basis of economic and social cohesion objectives. The rules of programming under Community responsibility – which influence

6 the size of the geographical areas eligible to structural interventions as well as the criteria for geographic and thematic concentration of financial resources – are not neutral in terms of territorial impact; – horizontal structural measures (orientation measures designed to improve agricultural structures, employment and human resource development measures involving the current Objectives 3 and 4 of structural policies), whose territorial impact depends at the same time upon the contents of the programmes drawn up by regional and national authorities and upon the local initiatives benefiting from these programmes; – sectoral policies, such as the financing of research programmes and initiatives of a cultural, touristic, environmental, energetic or technological nature or relating to education and training . The territorial impact of these sectoral policies is largely tributary to the location of the initiatives that get the funding. In general, the most developed regions are those which have the most dynamic socio-economic actors;

• The provisions of the Treaty, as well as detailed legislation and regulations (e.g. competition rules, market liberalisation, environmental legislation, market- based instruments). These affect the structural context for action, both of public authorities in Member states and of economic and social actors as a whole; • The development of guidelines. This involves mainly the Trans-European transport and energy networks, which provide a long-term perspective. Associated with the financing instruments, they play a critical role in the spatial-economic development. b) the evolutionary capacity of Community policies and the related effects on their territorial impacts

Most Community policies are not at all static, even if the major principles which constitute the basis of the Union are intangible. While becoming richer and more diversified, a number of Community policies are characterised by various changes, if not in their general objectives, at least in their intervention methods and in the detailed rules used for their implementation.

This is particularly true for the CAP which replaced a part of financial supports dedicated to price guarantee by direct payments to farmers and which developed a diversified rural development policy.

The Community Transport Policy, although included in the Treaty of Rome at the very beginning, had a real development only after the assignment of the Council by The European Parliament to the European Court of Justice for reasons of lack of policy. The 1990s were consequently characterised by the adoption of provisions related to liberalisation and to the Trans-European Transport Network.

The Community Environmental Policy, for its part, has a more recent origin and has supplemented the legislative measures with corrective purpose through the addition of a number of provisions of preventive nature. It increasingly moves towards structural measures close to spatial planning.

This development in the contents and intervention methods of Community policies is not neutral in terms of territorial impacts. It is therefore important to investigate the impacts of Community policies not in static terms, but on the contrary in the light of the development of the policies themselves. c) The emergence of territorial concepts in the definition and formulation of Community policies

Such concepts can be classified under several categories:

7 • Delimitation of areas eligible for financial support and modulation of assistance rates.

This category includes the majority of Objective areas eligible under cohesion policy. These areas determine the interventions of territorialised structural policies as well as the possibility of State aids with a regional purpose.

• Improvement of basic infrastructures

Certain Community policies intervene by financing infrastructures and basic equipment, which exert a direct impact on the territory. This is the case, for example, of the Trans-European networks, in particular in the transport and energy sectors, both in their linear (e.g. motorways, high-voltage lines) and location-specific (e.g. intermodality platforms, power stations) aspects.

• Differentiation of policies and measures on the basis of specific territorial criteria

A number of Community policies make use of territorial categories, for example in the case of the implementation of legal provisions in the field of environmental protection (e.g. areas selected for protecting given habitats and species of fauna and flora under the network Natura 2000, vulnerable areas in relation to underground water quality under the “Nitrates” directive), of the attribution of specific aids (e.g. mountain regions, whose agriculture is also supported by a specific directive), of the definition of certain RTD themes (e.g. the “marine ecosystems” and the “city of tomorrow and the cultural heritage”, themes of key-actions of the Vth Framework Programme for Research and Technology Development).

• Development of functional synergies

Within the framework of some Community policies, territorial elements are taken into account to establish functional interdependencies and to emphasise synergies. Thus, research in the field of transport considers interactions between the use of the territory and transport demand or else the relation between sustainable mobility and intermodality; regional policy attempts to promote regional innovation strategies corresponding to local needs; and energy policy is concerned with the development of solar energy in connection with town planning.

• Design of integrated approaches

More ambitious than the simple acknowledgement of functional interactions and the development of the synergies which can result, certain Community activities try to develop integrated and multisectoral approaches with a strong territorial dimension. It is the case of the policy for the integrated development of rural areas and in particular of the Community initiative LEADER (aid for the development and the diversification of agriculture and forestry, SME’s development and development of rural tourism, training measures). The Demonstration Programme on Integrated Coastal Zone Management (ICZM) constitutes another example for cross-sectoral integration and sustainable territorial development. Yet, these integrated approaches are still relatively few. d) A differentiation process of these policies taking place in the vertical progress towards their concretisation and implementation.

Some Community policies, such as for example the Common Agricultural Policy, are now strongly differentiated from one country - and even from one region - to another. Their territorial impacts are as much so. Consequently, the implementation methods of Community policies, being

8 themselves strongly dependent from the general territorial governance, are not neutral as regards territorial impacts. It is therefore important, in the context of this study, to give them a special importance.

1. 2. Objectives, method and structure of the study

• A) objectives:

The study has two main objectives:

- to better understand the impacts of Community sectoral policies on the development and organisation of the Union's territory;

- to identify possibilities of increasing the effectiveness of sectoral initiatives by maximising the benefits of co-ordinating policies and by eliminating the costs originating in non-coordination.

In concrete terms, this involves:

- the refinement of analyses already carried out as regards territorial impacts of Community policies, in particular in the document «Community policies and spatial planning », by considering the individual case of three Community policies: the Common Agricultural Policy, the Common Transport Policy and the Common Environmental Policy;

- the demonstration of interactions, as regards territorial impacts, between these policies and also their respective interactions with the structural policies;

- an estimation of the costs of non-co-ordination between the various Community policies considered;

- the formulation of proposals aiming at stronger territorial coherence of the various Community policies.

• b) Method

At the methodological level, it is important to distinguish clearly the territorial base of the Community policies and the nature and location of their territorial impacts:

- the territorial base refers to concepts such as eligibility areas for the structural policies, the location of the Trans-European Networks (transport, energy), the areas defined by the Natura 2000 network etc. There is a wide variety and significant heterogeneity of territorial bases for the various Community policies. With regard to this diversity of territorial bases, a common denominator does not really seem to exist. A number of territorial bases correspond to the NUTS II or III system (structural policies for example) while others correspond to geomorphological (mountainous regions), geo-biological (Natura 2000 Network) criteria. Others are made of linear or punctual elements (Trans-European Transport and Energy Networks).

- the territorial impacts of Community policies may concern areas rather different from the territorial base. For example, within the areas eligible for structural policies various measures are implemented with a much more punctual nature, which concern in fact only a part of the eligible territorial base. On the contrary, the territorial impacts of the Trans-European Networks cover much broader areas than the simple corridors. The increase in accessibility, or on the contrary the « tunnel » effect generated by a major transport infrastructure can stretch to a whole rural region crossed by that infrastructure.

9 In addition, the study combines qualitative approaches, taking account of numerous evaluation reports and documents related to the various Community policies, and quantitative approaches (specified below), aiming at estimating the costs of non-co-ordination. c) Structure of the study

The study is composed of the following modules:

• Comparison of the objectives and territorial impacts of the Community policies concerned with the objectives and policy options of the ESDP :

- Common Agricultural Policy - Common Transport Policy - Common Environmental Policy

These thematic analyses also emphasise the interactions of a territorial nature between the three Community policies concerned, as well as their interactions with the structural policies. While certain interactions are of an institutional nature (such as for example the financing by the structural policies of transport infrastructures or of environmental protection measures), others are more difficult to estimate (for example the environmental impacts of the Agricultural Policy or of the Transport Policy). They can either consolidate, or thwart the aims of territorial development;

• Deepening of the quantitative analyses. The territorial impacts of certain Community policies in relation to the objective of economic and social cohesion can be demonstrated by means of more in-depth analyses of the distribution of Community expenditure between the regions of the Union and in taking into account their pulling effect on national and regional budgets. In this context, the methodology of Lorenz's curves and Gini coefficients is used to analyse the (positive or negative) contribution of various Community policies to the objective of economic and social cohesion. This module takes account of the research work already carried out on the subject in recent years.

This approach is applied at two different geographical scales: on the one hand at the scale of the EU as a whole, because the Treaty refers to economic and social cohesion at that level, and on the other hand on a regional scale (for some regions only), because intra-regional economic and social cohesion is connected to territorial cohesion. The applied method is of an exploratory type. It aims less at providing exact and irrefutable figures on the cost of non-coordination than at estimating orders of magnitude pertaining to interactions, as well as the (positive or negative) direction of these interactions.

• Analysis of the implementation procedures of Community policies (governance). This field appears to be of particular importance, on the one hand because it has not yet been the subject of analyses at Community level and on the other hand because a strong territorial differentiation in the concretisation and implementation of various Community policies was already identified.

• Carrying out of five case-studies. The case-studies do not constitute any individual module of the study because they bring regional illustrations to all the modules described above. These five case studies, carried out in close co-operation with the Territorial Development Service of the OECD, concern: the Province of Teruel in Spain, the Province of Bergamo in Italy, the region of Champagne-Ardenne in France, the Tsoumerka department in Greece and the region of North-Portugal. For two of these studies (Champagne-Ardenne and North-Portugal), a quantitative analysis using the Lorenz's curves and the Gini coefficients was carried out.

10 2. Territorial impacts of the Common Agricultural Policy and of the Rural Development Policy

2.1. The provisions of the ESDP concerning rural areas

The ESDP stresses that the rural areas of the European Union are characterised by their diversity and their local development potential: they are economic, natural and cultural places, i.e. "complex places" which cannot be characterised by mono-dimensional criteria such as the population density, agriculture or the natural resources. Taking into account this complexity, the document stresses that the only characteristics which are still common to all rural regions are the low population density and a land use of primarily agricultural nature.

The ESDP identifies 4 main rural area categories for which it notes a different socio-economic situation:

- The rural areas which managed their structural changes. This is not only due to location factors such as an attractive site or lower wages, but rather to increasingly determining factors, such as the quality of the natural and cultural heritage, the presence of networks and of partnerships, the democratic character of t decision-making and, not less important factors, the initiative and the commitment of the regional and local politicians as well as of other actors.

- The rural areas which have not yet made a successful structural conversion. They are themselves confronted with considerable economic problems, often connected with their peripheral situation. The structural weaknesses of these areas may have - in addition to the high rate of agricultural jobs - various causes such as, for example, a very low population density, bad accessibility, climatic disabilities, a lack of infrastructures, structural development gaps, an unfavourable sectoral mix or unfavourable agricultural conditions of production.

- rural areas which are subject to new constraints related to the economic growth and pressures caused by the urbanisation process around metropolitan areas and other large cities in the surroundings, as well as

- the areas threatened by the decline of agriculture which also have to cope with considerable challenges.

This diversity of rural areas shows clearly that the spatial development strategies have to be based on the precise conditions, specific characteristics and local and regional needs.

In the ESDP, the demonstration of the endogenous potential is regarded as the key for a future- orientated and sustainable development of the rural areas. Thus, for example in rural areas with unfavourable production structures, activities such as the development of high quality agricultural products and of adapted marketing strategies as well as the rediscovery of the multi-purpose nature of agriculture (diversification of the sources of incomes in the farms) can help agriculture to better cope with international competition. Within this framework, the region is considered as the appropriate intervention level:

- on the one hand for the suitable implementation of a local development policy, based on the diversity and specific performance of different rural areas, as well as for the analysis of a considerable number of questions of spatial development.

- moreover for the development of suitable regional planning policy with regard to land use and to the corresponding measures of environmental and agricultural policy. This can enable to reduction of environmental harmful effects in rural areas, which often originate in increasing pressures from urbanisation, in the increasing number of main and second homes, in the soil, air and water pollution or in mass tourism.

11 It must be ensured that all these political strategies take account of the diversity, as well as of the opportunities and obstacles to development and that the structurally weak regions of the European Union get close attention.

In this context, the ESDP expresses the wish that a new partnership between urban and rural areas based on an integrated vision offers the possibility to reconsider interactions in providing services between city and countryside in the direction of sustainable spatial development. In fact, the small and medium-sized towns and their interactions constitute significant nodes in the spatial structure. Especially in rural areas in difficulty, they are in a position to provide economic activities with infrastructures and services and to facilitate the access to more important labour markets.

An active partnership is expressed by efficient co-operation and co-ordination having to meet certain conditions in the long run: parity and independence of the partners, voluntary character of the partnership, taking into account of the differences in administrative contexts as well as common responsibility and common interest. Besides partnerships between administrative local authorities, networks based on partnership between urban and rural companies can also play a major role in the regional economy.

The provisions of the ESDP concerning the « wise management of the natural and cultural heritage » are also in close connection with agriculture and the development of rural areas.

With regard to the safeguard and development of nature the ESDP stresses that the protected and the threatened zones must be considered as integrally forming part of rural areas. Even if strict protection measures are sometimes justified at the political level, it is often more judicious to include the protection and management of threatened areas into spatial development strategies pertaining to broader areas, such as - for example - the rural areas. Apart from the protective measures, a creative approach is necessary for most of them in order to reverse the tendency to abandonment, deterioration and destruction which prevails in a number of areas, and to be able thus to transmit the cultural heritage to future generations. In a more general way, agriculture and forestry can also contribute to the sustainable development of the European Union: this in particular by means of renewable energy resource production as well as by ensuring optimum use of the forestry resources through sustainable sylviculture (contribution to the reduction of the greenhouse effect by preserving the European forests). Agriculture carries an important responsibility in the destruction of soils, which constitutes another major problem in the environmental field, but agriculture can also - through the biological nature of its activities - contribute to preventing these risks.

With regard to the management of water resources, the ESDP stresses that water represents a vital resource for nature and agriculture. Owing to constant pollution, to overexploitation or to bad management, the quality of water resources also worsened in the rural areas, however with varying extent of the problem from one region to another. Agriculture also contributes to the overexploitation of underground water and encourages the development of drainage projects, which have negative effects on ecologically sensitive areas (large parts of wet biotopes were destroyed, and various wetlands disappeared completely).

With regard to the creative management of cultural landscapes, the ESDP puts ahead the important role that agriculture plays in this context. Through its specific nature, agriculture contributed to shaping the cultural landscapes which contribute to the local and regional identity and represent a considerable value, for example as tourist attractions. The safeguarding of these cultural spaces is important, but it does not have to block excessively or make impossible any economic use. Agriculture also contributes to the constant development of landscapes and sometimes causes a risk of standardisation and of loss of biodiversity. Lastly, the deterioration of landscapes is also due to insufficient human interventions, in particular in places where traditional agricultural methods were given up. The abandonment of farming in sensitive areas such as the mountainous and coastal

12 regions, can have particularly serious impacts, by worsening for example the erosion of soil. In little exploited areas, the reduction in human influence may however result in the regeneration of nature.

Accordingly, agriculture - and therefore indirectly the CAP - are explicitly concerned by a considerable number of ESDP policy options relating to the wise management of natural and cultural heritage.

Policy options of the ESDP relating to rural areas Policy options relating to local development, to the diversity and performance of rural areas •Promotion of diversified development strategies, sensitive to the indigenous potentials in the rural areas and which help to achieve an indigenous development (including the promotion of multifunctionality in agriculture). Support of rural areas in education, training and in the creation of non agricultural jobs. •Strengthening small and medium-sized towns in rural areas as focal points for regional development and promotion of their networking. •Securing sustainable agriculture, application of environmental measures and diversification of agrarian land utilisation. •Promotion and support of co-operation and information exchange between rural areas. •Use of the potential for renewable energy in urban and rural areas taking into account local and regional conditions, in particular the natural and cultural heritage. •Exploitation of the development potential of environmentally friendly tourism

Policy options relating to urban rural partnerships: •Maintenance of a basic supply of services and public transport in small and medium-sized towns in rural areas, particularly those in decline. •Promotion of co-operation between towns and countryside aiming at strengthening functional regions. •Integrating the countryside surrounding large cities in spatial development strategies for urban regions, aiming at more efficient land use planning, paying special attention to the quality of life in the urban surroundings. •Promotion and support of partnership-based co-operation between small and medium-sized towns at a national and transnational level, through joint projects and the mutual exchange of experience. •Promotion of company networks between small and medium-sized enterprises in towns and countryside.

Policy options of the ESDP relating to the wise management of the natural and cultural heritage relevant for agriculture and for the development of rural areas

•Integration of biodiversity considerations into sectoral policies (agriculture, regional policy, transport, fisheries, etc.), as included in the Community Biodiversity Strategy. •Preparation of integrated spatial development strategies for protected areas, environmentally sensitive areas and areas of high biodiversity such as coastal areas, mountain areas and wetlands, balancing protection and development on the basis of territorial and environmental impact assessments and involving the partners concerned. •Protection of the soil as the basis of life for human beings, fauna and flora, through the reduction of erosion, soil destruction and overuse of open spaces. •Improvement of the balance between water supply and demand, in particular in areas which are prone to drought. Development and application of economic water management instruments, including the promotion of water-saving agricultural methods and irrigation technology in areas of water shortage. • Preservation and creative development of cultural landscapes with special historical, esthetical and ecological importance. •Enhancement of the value of cultural landscapes within the framework of integrated spatial development strategies. •Improved co-ordination of development measures which have an impact on landscapes. • Creative restoration of landscapes which have suffered through human intervention, including recultivation

13 measures. •Development of integrated strategies for the protection of cultural heritage which is endangered or decaying, including the development of instruments for assessing risk factors and for managing critical situations

The European Commission, 1999

2.2. Nature and major stages of the CAP

The Common Agricultural Policy (CAP) is the oldest and the most developed among Community policies. Its legal bases were already stipulated in detail in the Treaty of Rome of 1958 establishing the European Economic Community (old title III, Articles 38-43 and 48). The nature of its competences is exclusive and it has at the same time a sectoral and spatial scope, in particular through the rural development policy .1 It guided narrowly the agricultural productive sector in most Member States and holds a strategic place in the regulation of particularly sensitive social, political and territorial balance.2

At the time of the Treaty of Rome and of the first steps of the progressive CAP construction, Community interventions were based on the project of a convergent development of European agricultures which were relatively homogeneous in their forms of production. 3 The main reasons and objectives for the introduction of the CAP4 were (1) priority to ensure supply to the population and reasonable prices for the consumers, (2) the need to consolidate the influence of the agricultural sector in the economy through an increase in agricultural productivity, (3) the will to stimulate the necessary structural changes in agriculture and to ensure a standard of living acceptable for the farming population and finally (4) the introduction of a suitable framework for the common management of the agricultural policies in order to stabilise the markets.

From the end of the 1970s onwards, under the pressure of a fifteen-year lasting crisis, this Community policy was forced to gradually reform itself internally. The main reason was practically continuously the market situation, i.e. the contradiction between the expansion of supply and the stagnation and final demand. The guarantee of carrying out the production "with open counters" led to the inflation of stocks and o support budgets.

Parallel to this internal specialisation and modernisation process, it had to cope with the challenges caused by the dynamics of European integration (successive enlargements, establishment of the internal market, German reunification) and of its interactions with other parts of the world (negotiations within GATT and today within the World Trade Organisation, relations with developing countries and with East-European countries).

The objectives of the CAP are now listed in the title II of the treaty. On the one hand, Article 33 sets the aims which the CAP has to achieve at intra-Community level. They concern at the same time the interests of the producers and those of the consumers, and recognise that it is often difficult to carry them out simultaneously within the framework of stable markets. Moreover, Article 110 sets the aims of the Community commercial policy applicable to the trade of agricultural product. On the basis of these objectives, the CAP gained successively various forms of support: the main forms of support are the « markets and prices policy », based on the common organisation of markets (COM) and the « socio-structural policy », which co-ordinates the adjustment process of agricultural structures (production systems, dimension of holdings, vocational farmer training etc.). But the CAP also uses other forms of support, such as the « foreign trade policy» or «the harmonisation of legislation», in particular with regard to the provisions on health and veterinary

1 European Commission, Cahiers de la PAC : Hors série, "Agriculture et environnement” 2 Perraud, 1995 3 Perraud, 1995 4 European Parliament (Directorate-General for studies), 1999.

14 checks likely to disturb the free movement of goods or to carry out a genuine internal market in the agri-foodstuff field.5 These aspects are the fundamental pillars of the intervention structure of the CAP, for which a specific management and financing instrument was set up: the European Agricultural Guidance and Guarantee Fund (EAGGF), instituted by regulation EEC N 1962 25 and lastly amended by regulation EEC N° 728/70 relating to the financing of the CAP. It constitutes a major part of the general budget of the European Union. The founding principles and the successive diversification of the CAP justified an organisation in two separate sections of EAGGF: one devoted to the Guarantee (of the markets) and another in the Orientation (of the development). 6

The common markets and prices7 policy is based on the freedom of movement of agricultural products within the Community (principle of the single market), the protection of the internal market against uncontrolled import of agricultural products originating from third countries (principle of Community preference) and on joint financing by all Member States through the EAGGF Guarantee Section of the expenditure resulting from the application of the CAP (principle of financial solidarity). The amount of payments realised through the EAGGF Guarantee Section increased from 8.7 billions Ecus in 1977 to 15.8 billions in 1983 , to 22 billions in 1986 , to 33 billions in 1994 and to 39 billions in 1996 . Its volume was therefore multiplied by four during the past 18 years , both for internal (new member states etc.) and external reasons (saturation of world markets) . 8

The common organisation of markets (COM) 9 are the oldest and most important instrument of the CAP, and more particularly of the common markets and prices policy. Used for orientating agricultural production and for stabilising markets, the COM have been established gradually since the creation of the CAP. In a first stage, the COM covered approximately 50% of the agricultural production of the six Member State of the Community, while today they govern approximately 90% of the final agricultural production of the Community of 15. The COM are not all implemented in the same way, they differ according to the nature of products or to the production and marketing conditions, which are not identical in all the agricultural sectors. Moreover, the successive reforms of the markets and prices policy since 1983/84 and in particular in 1992 brought changes in the individual COM, which have modified the respective "weight" of each type of COM within the whole system . 10

After the changes which took place in 1992, the COM can be classified in five categories : those having guaranteed prices with complementary direct support to production , those with automatic support, those with conditional support , those with only direct support to production and finally those without direct support to production . The 1992 reform represents a profound change in the mechanisms of financial support to the agricultural sector, because – in the context of the maintenance of the three founding principles of the CAP - the new management methods of COM related to cereals and beef meat aim at giving an increased role to the market in the orientation of production. 11

Another important instrument of the CAP financing ensured by the Guidance section of EAGGF, the socio-structural policy, was associated progressively to the markets and prices policy. Since its first steps in 1962, it has evolved gradually to become more complex but also more effective. At the beginning of the 1970s, its initial objective was to guide and help the family holdings on the basis of a general principle of development, by improving productivity in order to increase the farmers' income.12 During the 1970s, the policy of the EAGGF Guidance Section as regards structures was

5 European Parliament (Directorate-General for studies), 1999. 6 Perraud, 1995 7 European Parliament (Directorate-General for studies), 1999. 8 European Parliament (Directorate-General for studies), 1999 9 European Parliament (Directorate-General for studies), 1999. 10 European Parliament (Directorate-General for studies), 1999. 11 Colson/Chatellier/Ulmann, 1995 12 European Parliament (Directorate-General for studies), 1999; Perraud, 1995

15 increasingly directed towards a regional policy: it moved from individual guidelines towards specific and regional programmes limited to one, two or three types of intervention and to the integrated development programmes comprising a large number of actions, including non agricultural actions.13 In practice, this involved the financing of a given percentage of expenditure intended to cover the measures, conceived and carried out in a decentralised form, in co-operation with the various Member States, the regions and even private individuals.14

Since the accession of the new Mediterranean countries in the 1980s, the initial aim of convergence between relatively close agricultures had to give way to actions aiming to maintain, or to tighten the cohesion of a Community where various agricultural productive systems coexist which are very different from each other in their development level.

If an assessment of the overall state of the CAP at the end of the 1990s is made, it can be observed that the whole of the reforms implemented since the 1980s radically changed the « traditional » conception of this Community policy as well as the nature of its forms of support:

During the 1980s, the CAP multiplied the actions and constraints connected with the support of the markets and the control of the supply: regulatory determination of the rights to produce (milk quotas) and multiplication of premiums prompting to the reduction of over-productions (programmes for wine growing areas, dairy suspension premiums, support to suckler cows, extensification policies etc.). 15 A remarkable factor in this context is the growing importance of the direct payments in the regulation of the agricultural sector. The use of "direct payments" is not, however, a new phenomenon: Already at the beginning of the 1970s, an attribution mechanism of direct aid for bovine holdings in geographically disfavoured regions had been set up to compensate for their weak incomes. This mechanism widened gradually to all the livestock farms of meat cattle (premium for suckler cows and for male bovine animals) and of sheep. The methods of granting direct aid are not conditioned directly by income criteria. They go in the direction of rebalancing at the benefit of the least profitable holdings in particular on the basis of the productions concerned (ovine, bovine) or because of their location (less-favoured area). Before the CAP reform in 1992, the direct support system was complex and included a number of local, national and European measures. Set up in successive stages and representing only a fraction of all government aid allotted to the agricultural sector, they reflected at the same time the changes in agriculture during the last quarter century and the political will to reduce the income difficulties which several categories of holdings are facing. After the 1992 reform, direct aid to farms became more general, being applied to holdings producing oilseeds and protein seeds (in 1992) as well as cereals (in 1993). 16

By doing this, and in particular by means of controlling the offer, the CAP approached fields which are broader than the markets and which touch the conditions of production and the management of the agricultural territory. This tendency of the CAP was strengthened by the adoption of a policy of rural development at the end of the 1980s, which cuts out the Community territory according to zoning which does not correspond always to administrative limits and which encourages the establishment of direct relations with the regions. Although the reform of the CAP in 1992 transformed completely the economic operation of the holdings, it is only a step forward in a direction already traced during the 1980s.17

13 DATAR, 1987 14 European Parliament (Directorate-General for studies), 1999; Perraud, 1995 15 Perraud, 1995 16 Colson/Chatellier/Ulmann, 1995 17 Perraud, 1995

16 2.3. From a common agricultural policy towards a community of agricultural and rural development policies

Despite its permanent development, the CAP can easily be perceived as a "central policy", the national policies of which would be only decentralised application bodies. Competences allotted to the European Union in agricultural matters through the CAP are very broad. Via the COM and via the EAGGF Guarantee Section, the Union governs the organisation of the main agricultural markets, the fixing of the prices, the protection at the external borders, the aids to exports and manages therefore the Community outlets. In a context of trade globalisation , the European Union determines therefore the general operation framework of agriculture in the Member States.

However, this vision of the CAP as a unified policy is to a certain extent an optical illusion. Through the socio-structural section (EAGGF Guidance Section), the CAP wishes to modulate the conditions of agricultural development by supporting incomes and the modernisation of holdings and by supporting in a selective way regional agricultures. 18 This results in very diversified situations with regard to the implementation of the CAP in the context of national policies: the CAP seems to function as a stock of tools, accompanied with financial resources, from which Member States draw the instruments of intervention on national agricultures. Through this original tool combination and through the intensity of the implementation of the Community interventions, the national policies express their specific character and their autonomy. Analysing the general structure of the total transfers carried out under the Community measures (markets, structures, incomes, direct payments to the products) by country and on average over the period 1979 to 1991, 5 major types of national agricultural policies can be identified (see box). 19

Thus, the implementation of the CAP in the Member States is spread according to national guidelines which express individual problems: from most traditional modernisation in the Mediterranean countries up to the extinction of the socio-structural policy in northern countries of. This diversity is still strengthened by the progress of the agricultural crisis and by the application of the successive reforms of the CAP: the replacement of supports to the markets as technical mechanisms governed by automatisms, by direct support, on which States have larger possibilities of adjustment, also resulted in a renewal of the capacity of action of the national policies. On the whole, the CAP is a system of rules of the game jointly accepted by the States. It plays the role of a heavy constraint on national policies, in particular in the field of prices and of restrictions brought to the range of intervention instruments permitted to the States. In this respect, it plays a fundamental role by making the national policies compatible within the framework of a unified market, but it is not substituted to them. In short, the CAP is less a common policy than a “community of policies”. 20

18 Perraud, 1995 19 Perraud, 1995 20 Perraud, 1995

17 Types of national policies according to the general structure of total transfers from Community measures (markets, structures, incomes, direct payments to the products) over the period 1979 to 1991 Member States • Characteristics Denmark , theAgricultural policies centred on export. The whole support to markets represents more than Netherlands four fifth of transfers (almost 100% for the Netherlands), while direct payments to products and the structural measures remain very subsidiary. France, Germany,Agricultural policies use in a balanced way all Community instruments. France and Belgium Germany have almost identical transfer structures, with an accent slightly stronger in France on direct payments and in Germany on income support . Belgium is close to this model, but with features which bring it closer to the Denmark/Netherlands group (slightly more support to markets and definitely fewer structural aid). The UnitedA small proportion of support to markets, but very high direct payments and support to Kingdom structures and to income is noticed. The structure of the United Kingdom is close to that of Italy with, paradoxically, a more developed socio-structural policy. Mediterranean There is no typical structure of transfers to the agriculture of the four Mediterranean countries countries : the only thing in common is the relative weakness of support to markets, but their share in expenditure largely varies : from 13% in Portugal to 57% in Italy. This reflects the weak presence of the Mediterranean countries on the large supported markets. On the other hand, they are the principal recipients of the socio-structural policy. Agricultural development still is an essential principle of agricultural policy. Ireland Although the general structure of transfers is very close to that of the other northern countries, Ireland benefits from an intermediate position : in particular with a high proportion of market support and an active socio-structural policy (in particular in income support). Source : Perraud, 1995

The last important factor which characterises the vertical articulation of the CAP is the increasing intervention of the regions in this matter. It is a relatively recent phenomenon the progression of which can be explained by two factors:21

- the decentralisation process implemented in several Member States in various forms and to differing degree since the 1980s.

- the multiplication of territorially selective Community measures, from the compensatory allowance to farmers in the less-favoured areas (introduced in 1975), passing through the Integrated Mediterranean Programmes (IMPS created in 1985), up to zoning by objectives of the European Union according to the intensity of regional development problems and to the launching of a rural development policy together with the reform of the Structural Funds in 1988.

Regions play today a role in the CAP, either while taking part in Community programmes, or by developing their own measures. The place of the regions in the context of the CAP22 interventions is diverse according to the national situations, since it is based on the constitution of the State and on the organisation of the territory itself:

- the only things in common are, on the one hand, the privileged responsibility of measures connected with the rural areas (environment, agritourism, infrastructures), and on the other hand, very specific support to limited subsectors of productive agriculture. The examined regions seldom finance heavy sectoral development and rather concentrate their actions on the environment of productive agriculture (infrastructures, marketing, diversification in rural activities).

21 Perraud, 1995 22 Perraud, 1995

18 - otherwise, differences are significant: the German Länder co-finance the major part of the German policy of structures, implement the whole agricultural policy through their local administration and set up agri-environmental programmes broad enough to look like a policy of income support. The Italian regions deal with the majority of the socio-structural measures, but on government stocks. The French territorial authorities (regions and departments) have only much more modest actions: the agricultural measures of the departments, which are apparently more important than those of the regions, account for approximately 2% of the national agricultural budget. The German Länder finance approximately 30% of the structural policy and the Italian regions manage approximately 70% of the Italian agricultural budget.

Even taking into account these differences, « the regional agricultural policy » is therefore always limited and never seizes completely the attributions of the state or of the CAP. To this diversity in the degree of interventions are often added, in the federal or strongly regionalised States, conflicts of competence or of policy orientation, in particular during periods of agricultural crisis or during the debates on the future of the CAP. In this respect, in Italy, the competences in agricultural matters were the subject of very fierce oppositions between the State and the regions, and the socio-structural measures are applied more or less, or not at all, according to the regions. In Germany, the conflicts of competence and of financing are present in the context of the current reorientation of the federal policy, and cleavage appears between the Länder which - according to the political majority which control them - refuse to take part in certain federal agricultural measures. 23

2. 4. Towards a dualisation of the systems of agricultural production in Europe

The observation of the development of the territorial systems of agricultural production during the last two decades reveals a number of major trends within the Union.

Among the 129 million hectares of agricultural land in Europe of the fifteen, more than half were occupied in 1995 by arable land and more than one third were covered with surfaces still in grass (STH). The balance (less than 10%) was devoted to permanent crops (vine, orchards, olive groves) strongly concentrated in certain regions.

Between 1975 and 1990, there was an important modification of the regimes. The traditional agricultural holdings with mixed-farming and livestock-farming moved back to the benefit of specialised holdings, facing the consolidation of the large agricultural basins. An important share of Useful Agricultural Surface (UAA) devoted to self-supply (animal feed, seeds) or to auto- consumption (human consumption) was released and reorientated towards the production of crops intended to be sold outside the holding: cereals (common wheat, grain-maize), industrial crops (colzas, sunflower, soya etc.) or dry vegetables (in particular protein peas). From 32.2 million hectares in 1975, the sale crops reached 37.3 million hectares in 1990, i.e. an increase of 16%.

In most countries, the UAA regressed slightly between 1975 and 1995, but two phases must be distinguished in this evolution:

- from 1975 to 1989, agricultural surfaces regressed in the totality of regions. This fall was particularly important in a number of Italian regions (Piedmont, Lombardy, Emilia Romagna, Umbria, Calabria and Sardinia) but also in Hessen.

- between 1989 and 1995, the tendency was reversed. The UAA increased, in particular in Brittany, in a major part of Spain, in the East of England and in the north of Italy. This rise, which took place rather in the regions of major crops, should be put in relation to the reform of the CAP in 1992 and to the obligation of land set-aside . In the traditional livestock-farming areas, it continued falling.

23 Perraud, 1995

19 During these twenty years, European agriculture seems to have developed on the most productive land while leaving certain less-favoured areas (mountain areas, foothills) or areas traditionally dedicated to livestock-farming. It also gave up to the urban extension a part of its surfaces, among which high quality arable land.

By major types of agricultural activities, the following tendencies were observed: a) Development of major crops

Altogether, the production of major crops did not cease growing in Europe. Community support to cereals, oilseeds and protein seeds as well as the fall of the number of herbivorous animals induced an increase in the crops for sale to the detriment of surfaces still in grass and of other fodder (meadows and coarse grains). The CAP reform in 1992 affected only modestly these major trends. It represented an important, but insufficient step towards the taking into account of the environmental aspects connected with agricultural activities.

The developments in farming technologies and the increase in plant health protection in the 1970s made it possible, in a context of guaranteed prices and of insufficient cereal production in Europe, to increase cereal production quickly (primarily in the plain areas). But the surpluses accumulated in the 1980s caused a regular price fall and therefore a lower gross product per hectare as from 1984. The coarse grains (barley, oats, rye etc.) were then foresaken to the benefit of common wheat and maize, owing to their higher yield potential and price.

At the beginning of the 1980s, dry vegetables (protein seeds) and industrial crops (colza, sunflower, soya), the production of which was insufficient, offered gross products per hectare comparable or higher than those of the cereals. An effective support system allowed the rapid expansion of these crops in all Member States. Thus, the production of sunflower, protein pea and colza made considerable progress. Starting from a few thousand hectares, they covered 4.8 million ha in 1990. The plains with major crops were conquered in a spectacular way.

Within the fodder crops, the predominance of fodder-maize in the feeding of herbivores was another characteristic fact of the 1980s. Owing to this development, fodder-maize was submitted to a redistribution of its surfaces. It foresook the traditional grain production areas in southern Europe and stretched towards major livestock-farming areas of the northern part. This development of maize also contributed to the retreat of meadow surfaces.

Fodder-maize strongly developed in the cattle-rearing areas. The grain-maize remained an important sale cereal in the other producing regions. It remained in numerous regions the main cereal, because it develops better in warm climate and with irrigation.

Numerous natural or permanent meadows were replaced by artificial (made up of legumes) or temporary meadows, the yield of which per hectare was often higher. Traditional crops tended to concentrate in certain regions corresponding to the best pedo-climatic conditions.

New crops, including fodder-maize, developed on the contrary even beyond the areas endowed with the best natural or agronomic conditions: displacement of the production of sunflower, soya, maize and alfalfa to the north of the 45 th parallel, concentration of colza in the continental areas.

This development sometimes led to excess. Certain crops were cultivated almost in monoculture, succeeding one another from year to year. It is also the case for fodder-maize in certain livestock- farming or for wheat in the cereal basins. There is a general trend towards increasing the size of plots in areas of major crops and, locally, to the pulling up of hedges and of insulated trees in order to facilitate the use of more and more powerful agricultural machinery. These changes may have

20 impacts on biodiversity, on the quality of soils (compression, erosion), water and element flows (drainage, infiltration, streaming, wind etc.) and on landscapes. b) Development of permanent crops:

Permanent crops also decreased. The pulling up of vines intended for ordinary wine production was the main reason for this reduction of surfaces between 1980 and 1995 (0.4 million hectares). This results partly from Community support for pulling up. Wine production was concentrated on the name areas (quality wine psr), with a reorientation towards wines of better quality. A part of the plots of torn off vines with a low agronomic potential, probably returned to a waste land state.

The evolution of orchard surfaces was characterised by a high concentration (reduction) of surfaces in the northern Member States and by the maintenance of surfaces in the southern Member States.

Surfaces with olive-trees increased altogether over the period. Greece and Italy increased their plantations while those of Portugal remained stable and those of France decreased by half. In Spain, expansion of plantations was recorded only as from 1995. c) Development of surfaces still in grass:

Between 1975 and 1995, surfaces still in grass decreased by 12% in Europe of the nine. More than 4 million hectares of permanent meadows were turned over. France on its own lost 2.4 million hectares. The cattle and sheep rearing areas in plains were the most affected.

Between 1975 and 1990, the fall was higher than 5% in the West of France, in the South-west of the Netherlands,inamajorpartofItaly,inFlandersandinHesse.ThereductionintheSTHwasless sharp after 1990.

Between 1975 and 1990, only some cattle-rearing areas (Ireland, the Limousin, Umbria) saw their STH increasing and, after 1990, the STH increased by more than 2% a year in particular in Denmark and in some regions of Italy, Spain and Portugal.

The period marked by the milk quotas (1984) and the decline of livestock-farming activities which resulted from it, released surfaces suitable for ploughing. Fodder crops were intensified. During the same period, arable land increased by 12% in Europe of the nine. d) Development of woodlands:

Woodlands, which covered approximately 32% of the European territory in 1997, are very unequally distributed within the Union and correspond to very different situations (forests, maquis etc.). In a general way, woodlands are in slight increase, partly owing to the European measures for the afforestation of land. Council regulation 2080/92 has allowed since 1992 the afforestation of half a million hectares. In Ireland, 60 000 ha of UAA were afforested (+ 16% of all the woodland surfaces of the country). The fire-prevention in southern Europe also encouraged this increase. Lastly, arable land abandonment can lead to waste land and then to natural afforestation. e) Development of irrigation:

The development of irrigation can be regarded as an indicator, although very approximate, of the tendencies of intensification in agricultural production.

The statistical data published by FAO shows a clear rising trend of irrigable surfaces in the Member States of the EU, even if this tendency slowed down appreciably in recent years. In the EU of 15, the increase in irrigable surfaces was of +152 000 Has/year between 1961 and 1980, of +146 000 Has/year

21 between 1980 and 1996 and of +123 000 Has/year in the 1990s. Thus, the irrigable surfaces of the EU doubled between 1961 and 1996, passing from 6.5 to 11.6 million hectares. Tendencies are however very contrasted between the Member States:

- the sharpest increase is noted in France (irrigable surfaces multiplied by 4.5 from 1961 to 1996), with acceleration of the movement, contrary to the general tendencies of the EU (+25 000 Has/year between 1961 and 1980; +59000 Has/year during the 1990s). The record returns to the Poitou- Charentes region where the irrigated surfaces were multiplied by 10 from 1961 to 1996;

- in Greece, the increase in irrigable surfaces has been regular since 1961 at annual rates of +28 000 Has/year;

- in Italy, a statistically significant increase in irrigable surfaces could be demonstrated only for the period 1980-96 (+ 25 000 Has/year);

- in Portugal, the annual increase in irrigable surfaces was limited and remains lower than 1000 Has/year;

- the increase in irrigable surfaces has been important in Spain until 1980 (almost 60 000 Has/year), but was reduced distinctly since. The irrigable surfaces increased by 34 000 Has/year from 1980 to 1996 and no statistically significant tendency could be demonstrated for the 1990s. All in all, irrigable surfaces in Spain increased by 80% over the period 1961-96;

- for the other Member States of the EU, the tendency was clearly towards an important increase in the 1960s and 1970s (+41 000 Has/year). It has been reduced since 1980 to + 12 000 Has/year. Irrigable surfaces have remained stationary since 1990. Nevertheless, the proportion of irrigable surfaces in certain countries of Northern Europe is far from being negligible. It reaches for example 29% of the UAA in the Netherlands.

Maize was the main irrigated culture in terms of surface, but other annual or permanent crops were irrigated in order to regularise or increase the yields. This recourse to irrigation often involved an increase in inputs (fertilisation, plant health protection) and caused a loss of nutrients or of pesticides in the environment.

2.5. A rural development policy in the process of integration

The European Commission used the term «integrated programmes» in its Communication of July 1988, entitled "The future of the rural world" COM (88) 501, with regard to the actions proposed for backward rural areas 24 . In this context, the main issue of "integrated rural development" is to implement a coherent and effective intersectoral policy. On the basis of the concept emanating mainly from the position of the Commission, integrated development can be characterised in the following way:25

- it concerns a specific territory: Unlike the majority of policies implemented, the scope of which is generally sectoral, the operational units of integrated rural development are the regions. They can be more or less broad and are characterised by problems and/or assets which are typical of them.

- it includes all the sectors of the economy (agriculture, industry, services): An integrated policy - implemented in a coordinated and coherent way - aims at promoting economic development in several sectors in order to obtain results as regards diversification of the rural areas.

24 European conference on rural development, 1996 : Mr von Urff's contribution 25 European conference on rural development, 1996 : Mr von Urff's contribution

22 - it constitutes an integrated approach of governmental actions: Integrated rural development requires the application of various types of governmental interventions (instruments at the disposal of public policies), in order to support all private initiatives and to provide infrastructures and public services in the rural areas.

- it is necessarily based on the local potential of the rural areas: If it proves necessary in an initial phase to attract external investors, at a longer term, integrated rural development will have above all to mobilise the existing potential in the rural areas (for example by encouraging the local SMEs, by starting new production lines or by promoting regional or local tourism).

- it is animated by a spirit of partnership and of dialogue between private and public organisations at the regional and national level: integrated rural development calls for the participation and has to be based above all on regional initiatives. To this end, appropriate institutions are necessary to enable the population of the areas concerned to give form to its ideas.

- it is conceived according to the specific requirements and needs of the region concerned: Integrated rural development can be defined as regional and spatial planning in rural areas. It has to lean on the specific strengths of the region concerned and to deal with problems which arise. It is therefore necessary to involve a combination of activities and instruments.

At the end of the initial programming period of the rural development policy (1989-93), it could be noted that the Community had not yet succeeded in conceiving a genuine integrated policy for rural development. Certainly, the evolution at European level motivated national actors to bring sometimes considerable changes in their conception of policies applicable to rural areas. On the one hand, they defined, through their policies and programmes, the development of rural areas increasingly like a general policy goal. On the other hand, the important reorientation by the Member States of the support to the rural sector led to the recognition of the value of integrated rural development at local level.26 But the "Annual reports on the implementation of the Structural Funds" of the Commission, the "Annual reports" of the Court of Auditors as well as a study of the European Parliament and other analyses stress that the implementation of the interventions of the Structural Funds (also as regards rural development) was not done without problems.

The main problems of the initial programming period and their causes can be summarised in the following way:

- in the system of the 1988 regulations, the competence of the Community as regards regional and local development remains of subsidiary nature. The Member States and, in a variable way, the regional and local authorities, draw up and implement policies, programmes and action mechanisms for rural development. The implementation of Community actions for rural development is therefore conditioned directly by the capacity of the national administrations to manage allocated financing and to establish synergies between the various measures.27 Certain Member States had not yet set up any rural development policy, but had rather developed some form of regional policy. In this context, Member States and their institutions used the Community instruments which seemed the most appropriate to them for spatial and regional planning in rural areas.28 While most programmes of the Member States had a positive effect on the rural areas, it must be remembered that a significant number of operational programmes was conceived and was implemented within a sectoral framework, without sufficient reference to the way in which they come, in complement or in opposition, to other sectoral programmes which have an impact on the rural areas.

26 European conference on rural development, 1996 : Mr Mannion's contribution 27 European Parliament, 1996 : pp. 109 ,.119, 118-120 28 Jazra Bandarra, 1995

23 - at Community level, a dispersal of the various instruments for rural development could be observed in practice within the overall mechanism of the various Community policies, which comprised the risk of loss of effectiveness29 .

- the Court of Auditors could note in its annual report (1991) that the structures and the distribution of the national administrative competences often appeared badly suited to the integration system that the multi-funds approach of the programmes required.30

- another important condition for the emergence of co-operation and co-ordination needs in the context of rural development is that this policy had still to find its place vis-a-vis agriculture. In the agricultural environment, it is still difficult to speak about rural development independently from agricultural development. The agricultural world fears that by putting the weight on non-agricultural actions, support to agriculture and to the adjustment of structures passes to the second level.31 Thus, it could be observed that the considerable influence of certain professional organisations representing the farmers, anchored in long productivist logic, has in certain countries (Spain, France, United Kingdom) contributed to the "sectorisation" of the implementation of the programmes. The agricultural sections of the programmes tended to confirm the farmers in their traditional practices rather than prompting them to approach their professional activities, or even their way of life, differently.32

During the preparatory phase of the 1999 reform, the European Commission started from the assumption that at the present time no integrated policy still exists on the matter at the European level. Rural areas remain until now the action ground of distinct interventions of the agricultural markets and prices policy, of the structural policies and of the environmental policy. These interventions are done by rather complex instruments without a global consistency, despite some integrated initiatives such as the LEADER programme. 33 The basic principles of the new policy are as follows:34

- the multi-purpose nature of agriculture, which involves the recognition and encouragement of the range of services provided by the farmers to society. - a multi-sector and integrated approach of the rural economy in order to diversify activities, to create new sources of income and of employment and to protect the rural heritage. - flexibility in the support to rural development, based on subsidiarity and encouraging decentralisation, consultation at regional and local level and partnership. - transparency in the elaboration and management of the programme, based on a simple and more accessible legislation.

2.6. The CAP and the rural development policy in relation to:

a) the objective of economic and social cohesion

The First Cohesion Report showed that the relations between the CAP and economic and social cohesion were far from being simple, in particular because the CAP is the sectoral policy of the Union which causes the broadest income redistribution between European citizens. While transfers in the form of direct payments to the farmers, either in form of compensatory subsidies to the reductions of the price guarantee or of financing of the measures of the Guidance Section, are relatively transparent, transfers connected with the Common organisation of markets (the bulkiest ones in financial terms) obey much more complex mechanisms. It is the case in particular of transfers

29 European Parliament, 1996 : pp. 109 ,.119, 118-120 30 European Parliament, 1996 : pp. 109 ,.119, 118-120 31 Jazra Bandarra, 1995 32 Smith, 1997 33 European Commission, Site-WEB of DG Agriculture (Document : "Agriculture, environment..."), 1999 : Bartholomew/Vidal. 34 European Commission, Directorate-General for Agriculture, 1999 ("Reform of the CAP...")

24 between Member States coming from foreign trade, which cause income redistribution according to their various production and consumption systems.

Whereas studies carried out during the 1980s had shown that financial transfers resulting from the CAP, being proportional to the produced quantities, benefited in majority the most productive and therefore generally the richest regions, the First Cohesion Report shows that the 1992 reform generated a more moderate situation, since in 1994 five Member States (Greece, Spain, Ireland, France, Denmark) benefited from net positive transfers, while seven others had net negative transfers. While it appears logical that all cohesion countries benefit from positive transfers because the number of farmers is proportionally higher, results show nevertheless that this is true only for three of them (Greece, Spain, Ireland). Portugal remained a clear loser of the CAP, even after the reform, in spite of weak contributions to the agricultural budget of the Union. This situation arises from the cumulated effect of several factors: very low agricultural productivity, a specific production structure which generates only weak direct payments and an export structure involving a low level of price protection.

Considering the observation that henceforth three cohesion countries on four benefit from positive transfers from the CAP, it is nevertheless observed that two most prosperous States (Denmark and France) withdraw from the CAP considerable advantages. Expressed on the basis of « agricultural work units » (AWU), the highest support intensity within the Union was found in 1994 in Denmark, in particular on the basis of transfers resulting from international trade, which originate themselves in productive specialisation in the relatively more protected sectors. This is also true for France, but the volume of transfers resulting from direct payments is even higher.

Other aspects related to the relations between CAP and cohesion, are also worthy of attention. Among the aspects rather unfavourable to the objective of cohesion, one can note:

- supports to the markets of major crops, and in particular of cereals, which always seem to cause transfers encouraging more the more developed regions, even if this advantage has been reduced since the 1992 reform. These transfers benefit the major holdings more than the small.

- certain measures of the 1992 reform, in particular the set aside of about 6 million hectares between 1993 and 1994, benefited farm incomes in areas of the European Union which already had an intensive agricultural holding, since the amounts allotted to the farmers were based on the previous income;

- in various prosperous cereal areas, direct payments aiming at compensating for a fall in the price of cereals which hardly occurred, have in fact brought an additional revenue to producers;

- the compensatory allowances to the less-favoured areas are being more used in the countries of Northern Europe, which is likely to have a negative impact in terms of overall cohesion;

- the development of the system of direct support sometimes generates distortions on contiguous territories, a fact which is not very compatible with the principle of territorial cohesion. As an example, in the mountainous and disadvantaged Auvergne region, direct support is estimated at FF 90 000 per holding, while in the neighbour and more developed Centre region, direct support is estimated at FF 170 000 per holding;

- the reduction of production in sectors such as cereals and livestock-farming in the less favoured rural areas also has a negative impact on the processing industries located downstream in the production line, which is felt with more intensity owing to the structural weaknesses of these areas.

The development of the CAP during the past decade nevertheless had a number of positive impacts in terms of cohesion:

25 - the 1992 and 1999 reforms reduced, to a certain extent, the regional distortions caused by the support to major crops;

- the rural development policy contributed to reducing the demographic decline in disadvantaged rural areas.

A quantitative study on the relations between the CAP and the cohesion objective was also carried out (see Chapter 5). b) the development of indigenous resources, the diversity and performance of rural areas

According to the terms of the ESDP, this involves conceiving and applying diversified development strategies adapted to the local development potential of the rural areas. This objective refers necessarily to the rural development policy, and aims at two principal priorities:

The maintenance of the vitality of the agricultural economy

The maintenance of the vitality of the agricultural economy and the need to thwart agricultural abandonment and rural depopulation. This supposes a greater modulation of the agricultural policy and an intensification of the structural policies, in order to take better into account the constraints and the potential of the local contexts;

In 1997, approximately 7.2 million persons worked in agriculture as such within the Union, which accounted for 5% of the Union's employment. Over the period 1975 - 1995, the average tendency of European agricultural employment was clearly on the decline. The reduction affected all the Member States and more particularly the principal provider countries of agricultural jobs (Italy, Spain, Portugal, France). In certain Member States, the drop of agricultural employment was particularly sharp. Thus, in Portugal, over the period 1989-93, the active population share devoting itself to agriculture fell from 20% to only 11%.

In relation to the objective of maintenance of vitality in the agricultural economy, the role of the «Agriculture» measures pertaining to Objective 1 was significant. Data collected for the period 1994- 1999 revealed that Portugal, Greece and Ireland are among the main beneficiary countries of the programmed financing under the EAGGF Guidance Section for Objective 1 and 5a. But the increase in the programmed allocations over the period 1994 to 1999 (in relation to 1989-1993) is proportionally more advantageous to the majority of other Member States than to the three countries considered as the least favoured. This general observation can be illustrated by two indicators:.35

- the programmed financing under the EAGGF Guidance Section put in relation to the number of agricultural jobs (ECU/agr.empl. 1992) increased everywhere very distinctly between the two periods under consideration, while in almost all member states agricultural employment is falling. The increase is particularly marked in the northern countries (Belgium, Denmark, Luxembourg, France), so that the distribution of the EAGGF Guidance Section's allocations per agricultural employee is modified from one period to another. While Greece, Ireland and Portugal still were at the head as recipients during the initial period, they are now joined (and even overtaken as in the case of Greece and Portugal) by Germany and Luxembourg in the list of main recipients . This progression of Germany and Luxembourg is mainly due to the increase in the allocations to the Objective 1 and to the Objective 5a respectively.

- the increase in the programmed financing of the EAGGF Guidance Section by hectare of utilised agricultural area and of wooded surfaces (ECU/ha UAA 1992) from one programming period to another is, here again, directly connected with the growth of allocations in absolute terms, since the

35 European Parliament, 1996 : pp. 89-96

26 agricultural surfaces considered are almost constant. The evolution of the distribution of allocations per hectare of UAA that can be observed between the two periods is practically proportional to that of the allocations in absolute value. The three most disadvantaged countries show the highest coefficients, definitely higher than those of the other countries, but these coefficients are among those which increased the least over the period 1994 - 1999. The coefficients of Germany and Luxembourg are higher than that of Greece, while the differences with some other countries (Belgium, the Netherlands, France) are much less marked.

The EAGGF Guidance Section's financial flows are certainly relatively more important towards Member States with the weakest agricultural structures, or of which the economy depends more on agriculture. But the criteria and the methods of granting Community support are such that the northern countries, the agriculture of which is based on more developed and more productive operating systems, benefit also from significant structural financing, sometimes proportionally more important, in particular when one considers the increase in allocations programmed over the 1994- 1999 period 36 .

For the 1994-99 period, the structure of the main beneficiary countries in terms of allocations to the Objective 5a changed compared to the previous programming period. Two groups of beneficiary countries could be identified: 66% of the funds went to the three main beneficiary countries (France, Germany, Italy) and 20% to an intermediate group (Austria, Spain, Finland). This reveals that outside Spain, the cohesion countries benefitted rather little from allocations to the Objective 5a.

The evaluation reports available at the beginning of the year 2000 contain only few information on the impact of allocations to the Objective 5a on agricultural holdings, on employment or at the level of the economic environment. Some evaluation reports mention an increase in employment. Thus, the evaluation of the Austrian programme gives evidence that 610 new jobs were created, that of the Hessen programme in Germany announces the creation of 153 new jobs. The evaluation of other programmes reveals however job cuts, resulting in particular from investments aiming at rationalising and modernising existing equipment.

The Objective 5b programmes also contain measures in the field of agricultural development. During the 1994-99 programming period, on an average 40% of financing under the Objective 5b concerned the sector "agriculture and forests". It touched not only upon the agricultural infrastructures but more especially modernisation structures of the agri-foodstuff chain. For France, where investments in the primary sector are major, 17% of allocations moved towards this sector, against 20% for Spain. In the northern countries, agricultural financing moved back to the benefit of other sectors. On the whole, traditional actions predominated: plots regrouping and irrigation in Spain, adaption of land, financing of livestock buildings within the framework of production chains and assistance to collective mechanical equipment in France. Agricultural reconversion projects were rather limited and few innovations appeared. On the other hand, the development of quality chains, for example in the meat sector, was a success. The protection and maintenance of forests (2-5% of Community financing) are an important activity in rural areas and the transformation of forestry products continues developing.

LEADER contributed to introducing changes in the reflection on rural development and allowed the emergence of new actions concerning production, the working methods, marketing, the introduction of new technologies, services, communication in a rural environment.

The analysis of thematic measures under LEADER I implemented in the Objective 1 and 5b areas reveals in particular that the enhancement of the agricultural value of products was the most important measure for 19 local Groups of Actions (GAL). In France and in Italy, numerous projects were centred on technical assistance and training. Generally, LEADER I made it possible to manage the actions related to agriculture in the context of a more general territorial project. LEADER II was

36 European Parliament, 1996 : pp. 89-96

27 conceived in the continuity of LEADER I and can be considered as a consolidation of the assets of the first phase.

With regard to the historical context of changes in the rural world, two types of countries can broadly be distinguished according to their way of implementing LEADER II:37

- in the first type of country, the important changes in the rural world date from the beginning of the century or from the 1950s. LEADER benefited regions where the economic, demographic and social situation was relatively stabilised, either in slow decline (France, Denmark, Italy), or in slight improvement (Sweden, south of England). On the whole, the innovation concept and the steps advocated by the initiative caused moderate enthusiasm, at least at the national level. At local level, the initiative was well used, it played a role of strong accelerator in relation to local dynamics.

- in the second type of country, the rural world is or was recently confronted with crises (migration towards the cities, rapid increase in unemployment, accelerated restructuring of production and of holdings). The initiative was received by a population in situation of instability, probably more open to the innovation brought by the methods of this initiative (Spain, Ireland, Portugal, Finland, Greece, but also Scotland and the new German Länder).

• From country to country, rurality and sensitivity to the rural question do not represent the same political issue. A first indicator is the rate of population living in rural areas: it ranges between 15 and 50%. It is not astonishing, except in Ireland, in Finland and in Austria where rural population accounts for more than 40%, that the LEADER initiative - and more generally rural development - are the subject of close attention. With regard to the characteristics of the rural areas and to their main problems (strong natural handicap like latitude or drought, socio-economic decline, periurban situation), one can consider that until now LEADER better corresponded to declining rural areas or to strong natural handicaps. In the countries where rural areas are mainly periurban (Belgium, Luxembourg, Germany, the Netherlands), LEADER has in certain cases contributed in terms of new methods to approach problems; in many other cases, LEADER remained a marginal element.38

Another important aspect for the development of the indigenous potential of rural areas concerns the quality policy of agricultural products. The two pillars of the European quality policy are the regulation on the protection of geographical designations of origin for agricultural products and foodstuffs (EEC regulation N 2081/92) and the regulation on certificates of specific character for agricultural products and foodstuffs (EEC regulation N 2082/92), the detailed rules of which were laid down by the EC regulation N 2515/94. The latter text defines the technical reproduction regulations of a Community symbol and of an indication of guaranteed traditional speciality. To strengthen the credibility of the distinctive sign (mark), Member States have lists of the producers permitted to use it.39

"The territorial base" of the quality policy is strong. With regard to the protected AOP origin designation and geographical designation IGP (EEC regulation N 2081/92,), a framework of Community rules guarantees, through a more uniform approach, equal conditions of competition between the producers. One must understand by "geographical designation" and "designation of origin" the name of a region which is used to designate an agricultural product or food. The regulation also specifies the difference between the two concepts. In the case of the AOP, the product must have the quality or the characters which correspond primarily or exclusively to an individual geographical environment including its natural and human factors. Moreover, the production, processing and

37 European LEADER observatory, 1999 and 2000 : Integrating the LEADER'S lessons into rural policies. LEADER'S contributions - Panorama of national diversities.

38 idem 39 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

28 development have to take place in the delimited geographical area. Regarding the IGP, the product must have the specific qualities, the reputation or other characteristics which can be attributed to this geographical origin. Its production and/or its processing and/or its development have to take place in the delimited geographical area.

The territorial economic impact of this approach is rather indirect but nevertheless existing, because while resorting to a logo used in advertising campains, agricultural producers can make their products dictinct from competititors on the markets. The agricultural and foodstuff producers can thus improve their profile. c) the natural and cultural heritage, including landscapes

Pressures of agricultural and forestry activities on ecosystems, biodiversity and landscapes

In view of the fact that more than 90% of the territory of rural areas is dedicated to agricultural or forestry use, agriculture and forestry play a vital role for the balance of ecosystems and biodiversity. Most impacts on the balance of ecosystems and on biodiversity should be investigated in relation to the bipolarisation «intensification/extension » of the cultivation methods, in particular in the field of major crops and livestock-farming. Other impacts result from modifications in rotation. Certain farming practices like deforestation, intensive pasture, excessive drainage, ploughing of meadows and levelling of hedges contribute to the deterioration of soils and of ecological balances as well as to the reduction of biodiversity. On the other hand, extensive livestock-farming methods, the replanting of hedges and, in numerous cases, afforestation, are as many positive factors. The agricultural abandonment, for its part, can have harmful effects on cultural landscapes, which, consequently are no longer maintained and are transformed into waste land.

Pressures on soil

The main forms of physical soil deterioration due to agriculture are erosion, structure modification, hydrology and compaction. Erosion weakens land productivity and harms the performance and effectiveness of ecosystems by elimination of vegetal topsoils. In the case of wind erosion, the elimination of soil constitutive materials is more selective than in that of hydrous erosion, because only fine particles (clay, organic substances together with absorbed nutrients) are taken away, leaving only impoverished soil particles with coarse texture. Chemical deterioration connected with bad farming practices is characterised by the following processes: leaching, acidification, salinisation, contamination by micro-pollutants like pesticides, heavy metals and fertilizers. The major consequences of these deteriorations are soil toxicity and river eutrophication. Biological deterioration is caused by the importance of humus mineralisation and by changes in biodiversity (contamination by harmful micro-organisms, modification of the natural trophic chain).

Pressures on hydrous systems

The evolution of hydrous system has to be taken into consideration in interaction with the evolution of soil. The intensification of agriculture resulted in a significant increase in water consumption leading to the emergence of serious environmental problems (lowering of the ground water level, reduction of river flows, wetland disappearance, oxygen deficit in rivers likely to lead to the extinction of a number of flora or fauna species, progressive salinisation of underground water close to coastal areas, important leaching of nitrates or of pesticides causing pollution of underground water and of rivers etc.). The environmental problems related to the use of water in agriculture concern today a relatively important share of the Useful Agricultural Surface in Europe, quantitative aspects predominating in the countries of southern Europe, while the northern regions are especially confronted with problems of quality arising from water pollution. A wise management of water resources in agriculture is an unavoidable element of any sustainable strategy of development and maintenance of biodiversity.

29 Impact on biodiversity

The farming practices maintain a close relation with the biodiversity level. Traditional agriculture generated during centuries specific forms of biodiversity thanks to the introduction or to the selection of new fauna and flora species or thanks to the creation of new habitats. On the other hand, the intensification of farming practices is at the root of the disorganisation and of the reduction of biodiversity, landscape resources and natural habitats that traditional agriculture had contributed to shape.

Both faces of afforestation

Afforestation, for its part, can play an important role as regards environmental protection and can generate a number of positive externalities, for example by reducing erosion, by having a preventive effect on desertification, by encouraging biodiversity and by having a regulating effect on the hydrous system. However, when the objective is to create economically viable forestry activities, tensions may exist between the need to maximise the return on investment and that to protect significant natural resources.

Other sources of pressures on rural ecosystems

At the margin of agriculture, other activities influenced by public policies, in particular Community ones, may have impacts on the balance of ecosystems and on biodiversity. This concerns for example, in the context of economic development, projects related to large facilities, such as dykes and dams which influence considerably the hydrous system. The development of intense tourist frequentation may exert pressures on natural areas which are likely to damage the flora and to disturb the natural habitats.

Pressures on landscapes

Landscape is the result of geomorphology (relief, hydrography) of ground occupation and of land use (forests, agriculture, urbanisation). Rural landscapes are characterisd by settlements, various types of buildings, transportation routes, monuments, but also by the compartmented mesh of land plots, the types of cultivated plants and by natural areas. Landscape was shaped by human activities and, in particular, by agriculture, which explains why even the natural European landscapes very often are actually semi-natural. Traditional semi-natural landscapes are very often dependent on a sustainable balance between agricultural activities and the natural environment. Europe is characterised by a multiplicity of landscapes, reflecting each its farming and cultural importance and specific character.

Intensive agriculture is prejudicial, in various ways, to landscapes and is often deteriorating outstanding elements that traditional agriculture had contributed to work out in the past centuries. The most striking examples of such impacts are rural land consolidation accompanied by the uprooting of hedges, by the demolition of stone walls, by deforestation, by the correction of the river beds and by the abandonment of terraces. The expansion of arable lands is reflected in terms of landscape by major »openfields extents » leading to open, but increasingly dull and uniform landscapes.

The concept of (cultural and natural) heritage of rural areas goes beyond the landscape concept. It also includes numerous more specific elements such as historical buildings, monuments, biotopes and very characteristic environments. The conservation and enhancement of these various elements of the rural heritage constitute a strategic issue for the environmental quality and attractiveness of rural areas.

30 –o Introduction of environmental requirements into agricultural and forestry activities

The Treaty of Rome provided the foundations of the CAP without mentioning the environment. The aim of increasing agricultural productivity was pursued with indifference in relation to environmental concerns, which inevitably led to various forms of environmental deterioration.

Only about fifteen years later, after the adoption of the First Action Plan for the Environment, a number of inflections were brought to the CAP, in particular with the adoption of the directive on the less-favoured areas in 1975.

Several provisions related to environmental protection were incorporated gradually into the legislation:

- (EEC) Regulation N° 797/85 concerning the improvement of the efficiency of agricultural structures, including a series of measures for environmental protection. Article 19 permits, in particular, the introduction of national support to sensitive areas from the point of view of the environment;

- In 1987, the Council amended (EEC) Regulation N° 797/85 in (EEC) Regulation N° 1760/87 with a view to improving support to areas sensitive from the point of view of the environment, to natural resources and to the safeguard of landscapes;

- In 1991, (EEC) Regulation N° 2328/91 concerning the improvement of the efficiency of agricultural structures, including incentives to agriculture compatible with the environment in areas sensitive from the point of view of the environment and in less-favoured areas.

The Maastricht treaty, which entered into force in 1993, strengthened the environmental policy by stating the obligation to incorporate environmental requirements into all Union's policies. The CAP reform (1992) aimed primarily at restructuring agricultural markets. Among its principal elements, one can quote the farmers' incentive to apply less intensive production methods in order to reduce both their environmental impacts and the constitution of undesirable overproduction. Within the context of the CAP reform , the Union also agreed on a series of complementary measures in the field of agri- environnement and of afforestation. With regard to the structural aspects of the CAP, the environment was also recognised as one of the bases of the Community policy of rural development. The ecological aspects of structural policies were imposed in 1993 when it became compulsory to assess the environmental impacts of activities undertaken .

Regional measures (Objectives 1, 5b, LEADER)

In the Objective 1 regions, the aid granted to rural development has to take account of the situation of the environment: management and use of water resources for the agricultural and human needs, soil conservation , fight against erosion, management of woodlands, maintenance of biodiversity, improvement and protection of the vegetable cover, development and holding of forests and woodlands.

The presence of environmental protection measures occurs more in Objective 5b programmes relating to rural development than in Objective 1 programmes. They cover the protection of landscapes, the creation of natural reserves and the protection of natural areas. These protective measures are a precondition for the development of rural tourism. Over the period 1994-99, the environmental component of the Objective 5b programmes was important, with 8% of resources concerning agri-environmental protection and 4% concerning waste disposal. A part of the environmental actions remained integrated into the accompaniment programmes of the CAP under the agri-environmental measures corresponding to EEC regulation N° 2078/92. The Objective 5b

31 concentrated on collective measures and on actions related to the development of parks and natural reserves (financing of expensive infrastructures related to water purification and to waste recycling in France and in Spain in particular). The environmental component was better incorporated into the programmes of the Netherlands as well as Denmark and in certain areas of the United Kingdom (25% in the Northern Uplands), in particular owing to higher sensitiveness of people for this type of action.

In its opinion given to the Member States (LEADER II), the Commission stated that the eligible measures concerned in particular the safeguard and the improvement of the environment. This design is very broad, because it includes the natural and architectural heritage. Actions cover tourism, organic farming, the reduction of pollution, the management of water resources, alternative energies, the creation of parks, the protection of habitats and the stimulation of awareness-raising to environmental protection problems of landscapes.

Impact of agri-environmental measures

Agri-environmental measures under EEC regulation N° 2078/92 pursue a double objective:

- to combine the improvement of the environment and the reduction of agricultural production and - to contribute to the diversification of the farm incomes and to rural development.

Measures aim at covering all aspects of the interactions between agriculture and the environment. In addition to actions in the field of land management, the regulation lays down training and demonstration projects aiming at promoting the use of techniques compatible with environmental protection and rules of good farming practices.40 To this end, Member States have to elaborate programmes which, on condition that they generate positive effects on the environment and on the countryside, can provide support to farmers. Farmers, who take part on a voluntary basis, have to 41 :

- reduce significantly the use of fertilizers or of plant protection products, - carry out an extensification of crop cultivation, including fields sown with fodder crop, - reduce the amount of cattle or ovine population per unit of forage area, - use other production practices compatible with the requirements of environmental protection, - maintain abandoned arable or forestry land, - carry out arable land set aside for at least 20 years with a view to use it for purposes connected with the environment, - manage land for access to the public and to leisure.

The implementation of agri-environmental contracts, which encourage farmers to undertake environmental activities by paying them the costs and the loss of income, represents a very important step in the field of sustainable development.42

The “territorial“ nature of the programmes drawn up by the Member States at national, regional or local level is strongly influenced by the administrative decentralisation level, the environmental and agricultural characteristics of the regions concerned or by their specific needs.

According to the administrative level, the programmes applied by the Member States can be grouped in the following way: (1) a small degree of regionalisation in Finland, Greece, Ireland, Luxembourg,

40 European Commission, evaluation reports: Evaluation of the agri-environmental programmes. European Commission, Web-Site of the Directorate-General Agriculture (Document "Agriculture and environment" ): Text of F. Fay (Impact of agri-environmental measures)

41 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

42 European Commission, evaluation reports : Evaluation of the agri-environmental programmes. European Commission, 1999 : F. Fay idem

32 the Netherlands, Portugal and Sweden, where programmes provide for general application of measures on the whole national territory. (2) an average degree of regionalisation can be observed in Austria, Denmark, Spain, France and in the United Kingdom, where measures are applicable on the whole territory and to the regional level. (3) a high degree of regionalisation may be observed in Germany, Belgium and in Italy where programmes are almost completely regionalised.43

With regard to the influence of dictinct agricultural and environmental conditions in the Member States (and even at regional or local level) on the "territorial concept" related to agri-environmental programmes, two specific forms can be observed:

- Member States gave priority to the zonal programmes, which are drawn up at various administrative levels (national, sub-national, regional level). They include in theory general measures which concern all farmers of the administrative district and which were admitted, as well as more specific programmes for classified areas. Moreover, the majority of measures apply only to certain types of crops or cultivation of the land and are therefore targeted by topic.

- most Member States adopted horizontal application measures throughout the national territory, in particular with regard to organic farming and to training programmes.44

For most Member States, the first complete implementation of the programmes took place in 1994/95 and 1995/96.45 The data presented in a working paper of the Commission, assessing the implementation of the EEC regulation N° 2078/9246 , provide a good basis to appreciate the territorial impacts of agri-environmental programmes and show the substantial benefit to the environment which results from these programmes.

A first indicator to measure the overall territorial impact of agri-environmental measures is the surface on which programmes are implemented. Currently, programmes cover 27 million hectares, which accounts for 20% of cultivated land (utilised agricultural area, UAA) in the European Union . Until now, the rate of coverage is varied widely. It can be pointed out that some Member States fully apply the programmes and have a territorial coverage in implementation much wider than others, presenting a very low degree of implementation. Three groups of Member States can be identified: 47

- a group which has high participation rates, covering between 42 and 80% of the UAA. The cover in Austria (87%), in Finland (77%), in Luxembourg (76%) and in Sweden (52%) is higher than 50% and is located therefore distinctly above the Community average of 20% in 1998. Germany (39%) is located also distinctly above the Community average, but presents strong variations of application from one region to another.

43 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

44 European Commission : Evaluation reports, 1998, Evaluation of the agri-environmental programmes; Web-Site of the Directorate-General Agriculture (Document "Agriculture environment" etc) 1999, F. Fay (Impact of agri-environmental measures).

45 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

46 The European Commission, evaluation reports : Evaluation of the agri-environmental programmes. The European Commission, 1999 : Fay , idem 47 The European Commission, evaluation reports : Evaluation of the agri-environmental programmes. The European Commission, 1999 : Fay idem

33 - a group in the average, where the rate of coverage oscillates around 20% of the UAA, which represents the average for the European Union. This group includes Ireland (24%), France (23%), Portugal (17%), the United Kingdom (15%) and Italy 14%.

- a group with very poor participation (less than 10%), which includes Denmark (4%), Spain (3%), the Netherlands (2%), Belgium (2%) and Greece (1%). In a number of Member States participation started slowly owing to administrative difficulties and to the failure of launching the promotion of certain programmes (EL, E, I, B). In the Netherlands, the relatively modest participation is ascribable to national policy reasons, while in Denmark participation was extremely poor owing to the farmers' disinterest.

While the rate of coverage of a Member State does not inform on the quality of applying agri- environmental programmes, it can however be noted that weak application in a number of Member States is likely to involve less effective integration of ecological concerns in the CAP. In these Member States, programmes have therefore to be extended before being considered as applying to "the whole territory" according to the regulation. 48

A second indicator to evaluate the territorial impact is the analysis of the environmental and landscape incidences of agri-environmental programmes. To this end, the evaluation of the Commission reveals an overall positive assessment. Results can be presented in the following way:49

- the results of measures concerning the reduction of fertilizers shows a substantial reduction of the overall quantities used there where programmes are largely applied. The effects on production are variable, the impact on income reveals the need to target better the subsidy level according to the region, the sector etc.

- organic production methods are highly beneficial to the environment and generate more agricultural work (which should result in an increase in employment). A number of regions are characterised by very a high rate of increase in acreages cultivated according to biological methods, but they often started from a very low level. Distribution and marketing problems are mentioned in several regions.

- the measures consisting in converting arable lands into pastures, in adopting mixed agriculture and ensuring more lasting rotation, make it possible to better preserve self-propagating vegetation and the quality of soil.

- with regard to fire-prevention measures, results are limited insofar as available data cover a too short period. On the other hand, one has very clear evidence of positive results as regards measures intended to prevent erosion and to reduce nitrogen leaching.

- extensification measures of livestock-farming did not meet wide success in a number of regions, a fact which can be explained in particular by the too low level of allowances proposed. Extensive maintenance methods are an essential element in numerous regions of the European Union. The individual reports mention however an insufficient implementation of the measures in a number of important areas.

- the impact on natural areas is positive, but its evaluation is conditioned by difficulties encountered in the collection of data and in the identification of significant results. The individual reports confirm that management of nature frequently requires the presence of non-intensive pasture .

48 European Commission, evaluation reports: Evaluation of the agri-environmental programmes. European Commission, 1999 : F.Fay idem 49 The European Commission, evaluation reports : Evaluation of the agri-environmental programmes. The European Commission, 1999 : F. Fay idem

34 - although the 20-year duration for the environmental set aside measure is perhaps too long, positive results are obvious for a number of natural areas. Only few data are available to evaluate the measures concerning the maintenance of set aside land. Neglected or abandoned land can lose its interest from an environmental point of view, because fire hazards or avalanches may result from this if the biomass surplus is not subject to grazing. It can be noted that few programmes try to deal with this problem in the areas concerned.

- the implementation of agri-environmental measures to land with high profitability is not satisfactory in the absence of sufficiently high subsidies. More frequent recourse to targeting is generally suggested to ensure the adaptation of subsidies.

The flexible framework of EEC regulation 2078/92 gave rise to a diversity of national programmes, in particular with regard to their design and to the methods of management within the Member States. In conclusion, it should be noted that the evaluation report on the implementation of EEC regulation N° 2078/92 demonstrates the considerable advantages that an integrated territorial approach aiming at the conservation of a landscape system can have in the context of agri-environmental programmes. The landscape approach starts from the principle that a precise observation of the range of needs and of potentialities must logically enable to determine the appropriate measures and objectives. The programmes which tackle the agri-environmental problems through the "landscape system" prospect can therefore be recommended, although the administrative costs seem to be high. Such an integrated and carefully conceived programme, which takes account of all aspects and processes which play a role in a landscape system, can lead to measures of high value from an environmental point of view. In particular, this approach should make it possible to ensure coherence with other policies and to avoid the application of competing or incompatible measures.50

Impact of afforestation measures

The Community support programme to afforestation measures of arable land (EEC regulation N° 2080/92) is mainly based on economic and ecological considerations: it accompanies the Community policy by limiting agricultural production and helping to improve forestry resources. By encouraging alternative uses of arable land through afforestation and development of forestry activities in farms, the programme aims at encouraging forms of management of natural areas more compatible with environmental balance. Financial aid is granted on a contractual basis, with a view to covering the afforestation and maintenance costs, the losses of income arising from the afforestation of agricultural surfaces and from investments concerning the improvement of agricultural woodlands such as measures of forest fire prevention. 51

Several aspects show clearly, that the Community afforestation programme of arable land has a strong territorial base and that its measures have a considerable territorial impact in particular on landscapes:

- more generally, woodlands within the European Union are increasing. This progression is partly connected with the European afforestation measures of arable land: since 1992 one could notice the afforestation of 500 000 hectares of arable land, but interest varied from one Member State to another. In Ireland, 60 000 hectares of UAA were thus afforested, i.e. a rise of 16% of all the woodden surfaces

50 European Commission, evaluation reports : Evaluation of the agri-environmental programmes. European Commission, 1999 : F. Fay idem

51 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

35 of the country. Better maintenance of forests - in particular through the fire-prevention measures in southern Europe - also encouraged this increase of woodlands. 52

- presently, the territory of the European Union is covered by programmes. Although, for the most part, Member States only presented national programmes, regional subprogrammes also exist in Italy, Spain, Portugal and France. In Belgium, the implementation is entrusted to the Walloon and Flemish regions which submitted two different programmes. 53 Arable land afforestation became a full component of agricultural policy. Correctly managed, forestry has significant and positive impacts on landscape and on biodiversity, in counteracting the so-called greenhouse effect. In a number of marginal areas, it contributes even directly to job creation. On the whole, some 80 000 farmers signed. 54

- in the national or regional implementation of the programme, it proved however necessary to apply specific environment protection clauses in order to avoid harmful side effects with regard to the environment or to landscape. Thus, several programmes introduced permission systems with a view to avoiding systematic afforestation. The Italian region of Veneto excludes in particular afforestation in the mountainous regions where the continuity of open agricultural areas has priority. In Lorraine, afforestation is not encouraged in areas which are already largely wooded or closed; in the wet valleys, afforestation may influence negatively the local flora and fauna and generate the closure of landscapes. In the Spanish region of Navarre, several afforestation licences were refused in order to protect the biotopes of birds. 55 d) Urban-rural partnerships

The objectives pursued by the ESDP in this field concern:

- the maintenance of a basic supply of services and public transport in small and medium-sized towns in rural areas, in particular in those in decline;

- the strengthening of functional regions;

- the integration of the countryside surrounding large cities in spatial development strategies for urban regions.

In the same spirit, the Guidelines for the structural programmes of the period 2000-2006 (Structural Funds and their coordination with the cohesion fund) stipulate: « the contribution of the Structural Funds to integrated territorial development should be strengthened by the support of networks of towns and by the improvement of links between rural and urban areas. The objective is at the same time to prevent the duplication of efforts on identical activities and to promote a more effective and environmentally friendly occupation model of the territory. »

52 The European Commission, Web-Site DG Agriculture (Document "Agriculture, environment, rural development...."), 1999 : Caradec/Lucas/Vidal ("Agricultural landscapes...")

53 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

54 European Commission, DG Agriculture : Booklet on "Environment" (2nd ed. . 10/98)

55 European Commission, 1997 : Cahiers de la PAC : Hors série, "Agriculture et environnement”

36 A first detailed study of urban-rural partnerships at Community level was carried out in 1999 under the « Study Programme for European Spatial Development » (SPESP) in preparation of the ESPON. Only the main conclusions are taken up here, in summarised form:

Urban-rural partnerships started to develop within the Union during the past decade. They pursue mainly the following aims:

- realisation of a more balanced settlement structure and the improvement of accessibility;

- diversification and development of the economy in a wider urban-rural context;

- economic enhancement, in particular through tourism, of various natural areas ;

- conservation and development of the natural and cultural heritage of rural areas;

- the promotion of culture and of cultural heritage in economic development strategies for rural areas.

These partnerships, which are still relatively few and often of experimental character, have to cope with a number of constraints, among which:

- competition between local authorities and weakness of inter-municipal organisations;

- regional domination by metropolitan areas;

- lack of knowledge, motivation and awareness;

- insufficient financial support.

Potentialities for their development are far from being absent:

- local development planning, known as « bottom up » or « co-operative planning » approach, involving also private actors and active forces of society progresses rapidly within the Union and can serve as a catalyst to urban-rural partnerships, by transcending traditional cleavages;

- the reinforcement of politico-administrative structures at regional level in various countries facilitates the urban-rural partnerships;

- the renewed interest for territorial planning and sustainable environment acts in the same direction, in particular in the case of rural areas close to metropolitan areas.

As a matter of fact, there are numerous fields where the strengthening of urban-rural partnerships would be beneficial, such as for example:

- intensive agriculture could partly be abandonned to the benefit of “terroir” agriculture and of organic farming within the context of urban-rural partnerships organising the distribution and marketing of products to city residents;

- the indigenous economic potential of rural areas related to their natural and cultural heritage could be more enhanced within the context of urban-rural partnerships, as the example of « community forests » in Great Britain shows;

37 - spatial planning in the rural areas surrounding metropolitan areas could gain a more sustainable character, in particular through the development of public transport to facilitate daily commuting and through better coordination of land use;

- the economic and service functions of small and medium-sized towns in rural areas could be strengthened and revitalised through a better division of tasks based on the search for complementarity and through the reduction of competition between local authorities.

Presently, existing or emerging urban-rural partnerships do not appear to rely sufficiently on Community policies, in particular on those likely to contribute to rural development. It is what comes out from the SPESP study. The reasons for this situation are not obvious and would deserve more deepened investigation.

The Guidelines for the structural programmes of the period 2000-2006 indicate: « the geographical dimension of the regions covered by the Objective 1 is such that it provides an appropriate framework to meet the need for an overall and complementary approach between urban and rural areas. The same approach should prevail for the areas of the Objective 2, more especially as it is made easier by single programming . This situation has to be made profitable to work out strategies aiming at the search for balance between rural and urban areas at the regional level. »

The SPESP study shows that the provisions regulating the LEADER initiative and the Urban initiative hardly allow support to urban-rural partnerships owing to too restricted eligibility areas. LEADER programmes do not make it possible to incorporate cities or even medium-sized towns into the eligible area, while Urban programmes confine themselves to urban areas, without including the countryside.

2.7. Conclusions

Investigating the territorial impacts of the CAP is only possible by taking into account its evolution. The question can be raised of knowing what would have occurred without the 1992 reform. A scenario of this type would most probably reveal in a caricatural way an increase in agricultural overproduction together with high pressure on the Community budget, the continuation of the enrichment of the most fertile regions within the context of intensive and relatively polluting agriculture, concentrating on the protected market sectors, and the acceleration of the agricultural abandonment in the least favoured areas.

If one tries in a quite as caricatural way to describe the current situation and development trends which have been taking shape for a few years, the image is slightly more diversified:

- one can observe a certain limitation of over-production. For example, cereal surfaces fell by 3.4 million hectares between 1990 and 1993 and European cereal production passed from 169 million tonnes in 1992 to 164 million in 1995, i.e. -2.9%. They however did not lower up to the level of set-aside land (15%) owing to exceptional arrangements for small producers, very widely applied in the Member States with small production structures, like Italy and Western Germany. In addition, the output increased. Despite the reduction of exploited surfaces, certain Member States like Germany and the Netherlands, increased their cereal harvest. Others, on the other hand, had their tonnages reduced by more than 10%, such as France and Ireland.

- the fall in intervention prices has, on the other hand, increased the strength of the market. This had at least two consequences. On the one hand, productions with industrial purpose strongly increased, and probably intensified. European colza production strongly fell after 1992, but as from 1993, the increase in world prices revived its production, to exceed its level of before the reform (it is now used for substitute fuel production). European sunflower surface also fell the first year to increase then. Intensification continued in a number of areas (the increase in cereal production and the continuation of the development of irrigation testify it clearly). Moreover, new crops appeared, be it crops with industrial purpose or not protected crops , competitive on international markets. The case studies

38 illustrate this type of development perfectly. In Champagne-Ardenne as in the Bergamo Province, an intensification of cereal cultivation can be observed and at the same time new crops not supported by the CAP are strongly developing (flowers in the Bergamo Province and potatoes and vegetables in Champagne-Ardenne.

- despite a number of obvious improvements, the CAP reform did not change significantly the general orientation which started in the 1980s: annual crops to be sold outside holdings strengthened their position with respect to surfaces still in grass and to perennial crops. Whereas most cultivated surfaces were declining, the surfaces of the most productive crops increased.

- direct payments and agri-environmental measures slowed down the agricultural abandonment in the less favoured areas, without stopping it. In all the case studies carried out, continuation of agricultural abandonment in the least favoured areas is observed. In certain cases, the implementation of direct payments occurred with a considerable delay. Thus, in the Bergamo Province, the first direct payment measures hardly started to be applied in July 2000, i.e. with a delay of more than 7 years.

One can therefore observe, partly under the effect of market forces and partly owing to the supports of the CAP itself, a dualisation of the systems of agricultural production. On the one hand a concentration - and probably an intensification - of production (especially of the major crops) is developing in the most fertile areas and on the other hand more extensive agriculture, and also agricultural abandonment progress in the least favoured areas (bad climatic or pedological conditions, remoteness from markets).

This diagnosis can be more differentiated, but it remains overall relevant. Several production models are emerging, corresponding to different structures, practices and objectives. A first model is "the productivist agriculture", which is directed towards international markets and is increasingly concentrated in certain parts of the member countries. To this model can be opposed the "adaptation agriculture", much more characteristic of individual territories concentrating on identified products and local or even national more targeted and specific markets. This form of «terroir» agriculture finds its legitimacy in the growth of qualitative demand, more and more present in certain groups of society. Beside these two models, one can also find that of "transition agriculture", subject to growing constraints and to permanent questionings. Lastly, one can identify an "agriculture in the process of marginalisation", which corresponds to increasingly unstable and even precarious production structures, which difficulties or incapacity to adapt condemn to disappear in the more or less short term. 56

Putting into perspective these developments in relation to the objectives and policy options of the ESDP, it appears: a) In relation to the objective of economic and social cohesion

A quantitative analysis of the effects of the CAP on economic and social cohesion is carried out in Chapter 5.

Beyond this overall analysis, certain financial instruments of the CAP have a more specific territorial impact. Thus, supports to the markets of major crops always seem to cause, despite the 1992 reform, transfers favouring the more developed regions of the Union. The same is true for the compensatory allowances in the less-favoured areas, owing to their strongest use in the countries of northern Europe. A more detailed analysis is necessary in this field.

The direct payments to holdings and the rural development policy contributed to reducing the demographic decline in a considerable number of disadvantaged rural areas. The tendencies towards

56 Shepherd/Rouzier, 1995

39 desertification in certain areas should however not be underestimated, because several factors contribute to it (abandonment of not enough productive land, ageing of farmers, weakening of services in rural areas etc). b) In relation to the development of indigenous resources, to the diversity and performance of rural areas

In the field of agricultural production, the agri-environmental measures, the quality policy (regional labels, registered origin designations etc.), the support to organic farming etc. are all factors acting in favour of the enhancement of indigenous productions and contributing to somewhat curb down the expansion of major crops. The national and regional differentiation of implementation measures of the major CAP principles («community of policies») also acts in favour of productions more adapted to the respective regional contexts. The existence of certain obstacles to a better consideration of the regional characteristics is nevertheless still noted, as for instance in the case of the “minifundia” structure of rural areas of northern Portugal.

The economic diversification of numerous rural regions is in progress under the effect of the development of SMEs, tourism, of services, accessibility etc. The structural policies in the less- favoured rural areas have noticeable effects on investments and on employment. Operations of integrated local development, promoted in particular by the LEADER initiative, contribute to the local actors' mobilisation.

However, the Community policy of rural development appears to have had so far a rather limited impact on the strengthening of the urban pattern of the rural areas. The allocation of financial resources to the functional development of small and medium-sized towns remained modest.

In addition, economic diversification is facing serious difficulties in progressing into the most disadvantaged rural areas owing to a very low entrepreneurial capacity and to an insufficient attractiveness for external investors. This is particularly true in the Greek region of Tzoumerka, but also in the French departments of Ardennes and Haute-Marne. A particularly significant factor was often the lack of synergy between the CAP and the regional structural policy.

As regards performance of rural areas, one can also observe a territorial dualisation, with on the one hand those territories which are in a position to promote their comparative advantages, whether these are local productions or attractiveness, and those which remain dependent on various forms of assistance and where balance is very unstable. c) In relation to the wise management of the natural and cultural heritage

The major farming transformations connected with the period of strong increase in agricultural productivity were reduced, but not stopped. It can be noticed in particular that the reduction in surfaces still in grass has slowed down since the beginning of the 1990s.

The agri-environmental actions currently apply to 27 million hectares within the Union, i.e. 20% of the cultivated land. They contribute to the maintenance of agriculture in disfavoured areas, they have a positive impact on natural areas, in particular by means of the environmental land set-aside. They also contribute to the reduction of pollution caused by chemical fertilizers and plant health products to the soil, to underground water and to rivers. The measures of extensification of livestock-farming are also contributive. The implementation of agri-environmental measures is very unequal from one country to another and it is generally weak in the highly productive agricultural regions. It is also little developed in the very backward areas (for example the Greek region of Tzoumerka).

40 Afforestation measures have a rather significant impact, since 500 000 ha have been afforested since 1992, which contributes in a considerable number of cases to the regeneration of ecosystems and to the development of biodiversity.

The enhancement of the cultural heritage of rural areas has become rather popular in Europe and the Community funds available in this field are being used with effectiveness.

Nevertheless, the tendencies towards the intensification of agricultural production are not at all stopped. In spite of the policy of land set-aside in the cereal field, certain Member States increased their overall production. This results both from a progression of the UAA and from the increase of yields in the most productive areas. The expansion of irrigation is also a determining factor there. Statistics show up a progression of the UAA in the regions of major crops between 1989 and 1995 as well as the amplification of the progression of arable land after 1990.

Certain specific measures, such as the attribution of support to fodder-maize, encourage intensive cattle-farming and milk production, to the detriment of extensive livestock-farming. The fall in the price of cereals also encourages the intensification of livestock-farming near the cereal areas. One could observe in the Bergamo Province and in Champagne-Ardenne the development of intensive livestock-farming in the cereal areas to the detriment of extensive livestock-farming in the less- favoured rural areas. If the CAP support had to be lowered again in future, it is probable that this tendency would develop further.

In the field of environmental and heritage management , a certain dualisation of the rural areas can also be observed. The implementation of objectives and policy options of the ESDP appears easier to carry out in rural regions where agriculture does not function solely on a productivist model. d) In relation to urban-rural partnerships

Urban-rural partnerships develop gradually within the Union, but they are still hardly incorporated into the programmes enjoying Community support. Until the recent reform of the Structural Funds and the publication of the guidelines concerning them, urban-rural partnerships were not explicitly promoted by the Union's authorities. This explains probably partly the almost-absence of urban-rural partnerships in the structural programmes of the last two programming periods. Other reasons are the territorial restrictions imposed by the Community initiatives LEADER and Urban in eligibility matters and, without any doubt, also the competition between local authorities existing at local level. During the present programming period, urban-rural partnerships should be in a position to progress more.

***

The present conclusions are based on a period of analysis for which field information is available, namely primarily on the period 1992- 1999, during which the significant 1992 reform (Mac Sharry reform) was implemented. However, the CAP and the rural development policy do not remain rigid. The Agenda 2000 introduced a number of additional reforms, the territorial effects of which were not measurable within the context of this study, because their implementation in the Member States and regions hardly began when the study was completed. One can nevertheless recall their most significant principles regarding the issues of territorial development.

EC Regulation N°1257/99 defines the new intervention framework of the EAGGF as regards rural development. In order to carry out an integrated policy of rural development at European level, the following guiding principles will have to be applied during the current programming period:

- multifonctionnality of agriculture, which implies the recognition and encouragement of the range of services provided to the society by farmers.

41 - an multi-sectoral and integrated approach to rural economy in order to diversify its activities, to create new employment and sources of income and to protect the rural heritage.

- flexibility of support to rural development, based on subsidiarity and favouring decentralisation as well as the consultation at regional and local level and partnership.

- transparency in the development and management of programmes, starting from a simplified and more accessible legislation.

In addition, environmental considerations leading to the adoption of new agricultural practices necessary for environmental protection and the conservation of rural areas, are an essential component of the new CAP reform. They concern:

- a more systematic consideration of environmental issues in the context of market policies;

- the generalisation of contractual relations between farmers and the community;

- specific measures in order to promote the extensification of production, organic agriculture, ecological set-aside and the safeguarding of valuable landscape elements (hedges, ditches, woodland).

- further encouragement to the afforestation of arable land through better integration in the rural development programmes.

- maintenance of the existing system of compensatory payments to disfavoured areas, but on the basis of higher compatibility with minimal requirements as regards the environment.

The Agenda 2000 does not mean therefore the final stage of the CAP and of the policy of rural development. Further reflections already started with regard to an in-depth reform, related, among others, to the future Community enlargement. A group of experts (Buckwell Report) formulated a series of proposals defining four new principles on which the future CAP and rural policy should be based:

- market stabilisation, safety net for commodities subject to uncontrollable market fluctuations;

- environmental and cultural landscapes payments, corresponding to services really rendered by the farmers;

- rural development incentives (diversification of rural activities);

- transitional adjustment assistance with the adjustment, facilitating the transition from an agricultural to a rural policy.

These proposals eliminate the direct support to farmer’s income.

It seems important to anticipate the whole range of potential territorial impacts of such proposals, in particular in relation to the diversity of European agriculture, before putting them into practice.

42 3. Territorial impacts of the Common Transport Policy

3.1. Transport and the PCT in the context of the political objectives and options of the ESDP

The problems of transport are directly related to the three fundamental political objectives of the ESDP: economic and social cohesion; the safeguarding of the natural bases of life and of the cultural heritage; a more balanced competitiveness of the European territory.

Transport also plays directly or indirectly an important role in almost all the fields of the first guideline of the ESDP, "polycentric spatial development and new urban-rural relations" (polycentric and balanced spatial development; dynamic, attractive and competitive cities and urbanised regions; indigenous development, diverse and productive rural areas; urban-rural city- countryside partnership). If the transport policies are required to play an important role in the context of a polycentric model, it is clear that they have also to show major flexibility, a desire for co- operation and for co-ordination in order to serve the specific territorial initiatives. As regards transport, the ESDP mentions some fields for such initiatives explicitly:

- with regard to the attachment of the periphery in the economic centres, the policy should propose new prospects in the peripheral areas thanks to a polycentric structure of the space of the Union. Overall and powerful services will have henceforth also to be developed in the metropolitan regions and in the large cities located out of the heart of the European Union.

- political decisions and investments which have a significant spatial impact (which also concerns transport) should be inspired by a polycentric development model. Appropriate political measures, and above all the guarantee of a very powerful infrastructure at transnational, national and regional level, should encourage and strengthen the development of the various integration areas.

- in the context of the functional relations that cities maintain with the territories surrounding them, this interdependence which transgresses the administrative limits requires voluntary co-operation of local authorities in order to strengthen the overall competitiveness of the region (transport of proximity, cross-border networks including the external borders, structuring of the city networks).

- one of the key aspects of sustainable urban development is better accessibility thanks to effective and non polluting means of transports. Accessibility has a notorious influence on the quality of life, on the environment and on economic performance. It has to be encouraged by a location policy co-ordinated with the plans of occupation of the soils and the planning of transport. The objective should be to contain the expansion of the cities and to develop an integrated approach of the planning of transport in order to reduce dependence in relation to the individual car and to promote alternative modes of transport.

In the context of the second guideline, "Parity of access to infrastructures and knowledge", transport is in particular treated from the point of view of the improvement of the accessibility of the territory of the European Union (in the context of polycentric development) and of the role that they have to play in order to achieve effective use of the infrastructures and durable mobility at Community level .

With regard to the promotion of polycentric development, the ESDP mentions certain aspects which could be at the base of improving the co-ordination of policies:

- the policy has to ensure that in a future extension of the TEN-T, the polycentric development concept is regarded as a fundamental guideline at the spatial level. This involves ensuring first of all the servicing of economic integration areas of world-wide importance that one wants to develop and to

43 guarantee the attachment to the world economy. Moreover, increased attention will have to be paid to regions affected by geographical handicaps , especially the distant islands and regions (those being peripheral and ultra-peripheral ).

- it should also be ensured that high level infrastructures, such as high speed /major capacity railway and motorway networks do not aspire resources from the structurally weak or peripheral regions (pump effect) or that they cross them without serving them (tunnel effect).

- the TEN-T policy does not have to be limited to the completion of missing links, but should include supplementary measures in order to develop the intra-regional interconnections and the internal servicing of the regions. Effectiveness and the density of these secondary networks are thus decisive for the integration of regional and urban economies as well as for their competitiveness. This involves modernisation of regional transport services, taking into account the adequacy of the modes of transport according to specific conditions at local and regional level. Moreover, secondary networks can contribute to making traffic flows converge towards the TEN-T and to reach the critical mass required by the connections with long distance.

- the ESDP stresses that the adoption of a European network of large seaports including regional harbour subsystems would serve the interests of all regions. This would encourage at the same time the hinged plates located in the heart of the European Union, some of which suffer from increasing congestion, and the peripheral areas whose economic potential has still to be supported. Moreover, it is also fundamental to promote the connection of intercontinental nodes to the hinterland by railway and by inland waterway transportation in order to be able to achieve the objective of a sustainable communication system.

With regard to the effective and lasting use of infrastructures, and more particularly to the threats emanating from a concentration of transport services and from overloaded corridors in the heart of the European Union, priorities appear in particular in the following fields:

- the strengthening of less polluting means of transports and the encouragement for the development of intermodal transport chains first of all require integration of planning as regards transport and the assignment of soil, which can be particularly effective in large urban regions, where population dependence in relation to the individual car could greatly be reduced.

- the reduction of pressures connected with traffic involves a more effective use of existing infrastructures in particular by integrated intermodal solutions: this requires co-ordinated management of the transport infrastructures and supposes better co-ordination between the modes of transport. Appropriate intermodal connections must, on the one hand, be developed, which requires an offer of points of transshipment and of loading covering the entire territory, and the development of interoperability of various systems as well as improved logistics .On the other hand, those responsible for ports, airports, for the railway and the principal main roads, as well as the operators of the various networks, should co-ordinate - in the long run - their policies and their activities within the framework of integrated multimodal plans (also at transnational level) in order to make potential synergies between the transport systems emerge fully.

Lastly,inthecontextofthethird guideline of the ESDP, "Wise management of the natural and cultural heritage", a small reference is made to take into consideration the maintenance of biodiversity in sectoral policies - and also in transport - as foreseen by the Community strategy on biodiversity.

44 1. Guideline of the ESDP: Polycentric spatial development and a new urban-rural relationship

Policy options: Polycentric and balanced spatial development in the European Union:

• Strengthening of several larger zones of global economic integration in the EU, equipped with high-quality, global functions and services, including the peripheral areas, through transnational spatial development strategies . • Strengthening a polycentric and more balanced system of metropolitan regions, city clusters and city networks through closer co-operation between structural policy and the policy on the Trans- European Networks (TENs) and improvement of the links between international/ national and regional/local transport networks , within the framework of common strategies of spatial development. • Promoting integrated spatial development strategies for city clusters in individual Member States within the framework of transnational and cross-border co-operation, including corresponding rural areas and their small cities and towns . • Strengthening co-operation on particular topics in the field of spatial development through cross- border and transnational networks .

Policy options: Dynamic, Attractive and competitive cities and urbanised regions ,

• Improvement of the economic basis , environment and service infrastructure of cities, particularly in economically less favoured regions, in order to increase their attractiveness for mobile investment . • Promotion of better accessibility in cities and metropolitan through an appropriate location policy and land use planning that will stimulate mixing of urban functions and the use of the public transport.

Policy options: Indigenous Development, diverse and productive rural areas:

• Strengthening small and medium sized towns in rural areas as focal points for regional development and promotion of their networking.

Policy options: Urban-rural partnership:

• Maintenance of a basic supply of services and public transport in small and medium-sized towns in rural areas, particularly those in decline . • Integrating the countryside surrounding large cities in spatial development strategies for urban regions, aiming at more efficient land use planning, paying special attention to the quality of life in the urban surroundings .

45 2.Guideline of the ESDP: Parity of access to infrastructure

Policy options: Polycentric development model: a basis for better accessibility:

• Strengthening of secondary transport networks and their links with TENs, including development of efficient public transport systems . • Promotion of a spatially more balanced access to intercontinental transport of the EU by an adequate distribution of seaports and airports (global gateways ), an increase of their service level and the improvement of links with their hinterland . • Improvement of transport links of peripheral and ultra-peripheral regions, both within the European Union and with neighbouring third countries, taking into account air transport and the further development of corresponding infrastructure facilities . • Improvement of co-operation between transport policies at EU, national and regional level . • Introduction of territorial impact assessment as an instrument for spatial assessment of large infrastructure projects, especially in the transport sector.

Policy options: Efficient and sustainable use of the infrastructure:

• Better co-ordination of spatial development policy and land use planning with transport and telecommunications planning. • Improvement of public transport services and provision of a minimum level of service in small and medium-sized towns and cities . • Reduction of negative effects in areas subject to high traffic pressure by strengthening environmentally compatible means of transport, levying road tolls and internalising external costs. • Promoting the interconnection of intermodal junctions for freight transport , in particular for transport on the European corridors, especially regarding shipping and inland navigation . • Co-ordinated and integrated infrastructure planning and management for avoiding inefficient investments (for example superfluous parallel development of transport infrastructure) , and securing the most efficient use of existing transport infrastructure.

3.Guideline of the ESDP: Wise management of the natural and cultural heritage

Policy options: Preservation and development of the natural heritage •Integration of biodiversity considerations into sectoral policies (agriculture, regional policies, transport, fisheries etc.), as included in the Community Biodiversity Strategy.

3.2. Tendencies and issues of transport in Europe; problems for specific territories

With the increase in the exchanges at the level of the European continent, the question of transport was quickly in the middle of Community concerns and represents at the same time a challenge and an asset for European integration. Since the 1970s, the carriage of goods and passengers' movement have increased at an intensive pace, although irregular, in the 15 Member States of the European Union, and also in Western Europe in general:57

57 Jimenez Beltrán, D. : Durable transport : An urgent need for Europe. In : Fundación Ecologica Y Desarrollo (Editeur). Durable transport in mountain area. The role of the railway for the carriage of goods throughout the central Pyrenees. International symposium ACTE, Jaca, on 8-10 October 1998. Zaragoza, 1999.

46 - the carriage of goods by road in Europe has increased by approximately 54% since 1980. On the other hand, between 1985 and 1995, the rail-bound transport decreased by 20%, partly owing to the economic restructuring of Eastern Germany. Currently, 17% of the carriage of goods is carried out by railway.

- the passengers' movement in Europe continues also increasing. In the European Union, passengers' air transport increased by 82% and the transport of passengers by road from 46% during the ten years previous to 1994, while the use of the bus increased by 15% and that of the train only by 3%. In parallel with the increase in the use of road transport, the network of the European roads was amplified, while the rail network stagnated or was reduced.

- motorways were built throughout the continent, which resulted in a sharp increase in the overall length of the network (more than 200% only in the European Union since 1970). The overall length of the roads has also increased by 17% in the European Union since 1970. These supporting policies to the road generated a gradual reduction in the most sustainable forms of transport from the point of view of the environment, like the railway or urban trips by bicycle and walking.

- the forecasts relating to the increase in transport in Western Europe show that, if nothing changes, the request of the road transport of the passengers and goods could double practically between 1990 and 2010, with an increase in the number of cars from 25 to 30% and of the similar increases in the number of kilometres travelled by each car.

- in the overall functioning of the maritime transport market, numerous European ports were excluded gradually from the principal containerised lines, owing to their offset position or because their commercial volumes do not justify any stopover.

- in practice, the development of combined transport solutions encounters a number of difficulties:

- in the forefront of these appears the relative economic competitiveness of these solutions in relation to market forces . The constant fall in the market shares of the railway mode in the carriage of goods represents a development which is not favourable to combined transport rail-road. In addition, rules of competition which are opposed to the subsidising of the transport services represent a constraint for the levelling of the combined transport with road transport, as regards competitiveness.

- but other factors also entail the development and the acceptance by the market of combined transport to be still very far from the rates that road transport obtains. A first reason is that conventional techniques of combined transport require heavy investments (regarding space and regarding necessary equipment) in the transfer terminals. The slowness of the operation requires land investments for large storage surfaces intended for the immobilised containers piled up on several levels, which asks moreover for mobile cranes for internal movements. Then, there is a problem of resistance to the change: the large operators of international road transport - leader of the market - gave rise to certain inertia towards this means, in a way that the market itself pushes back on principle solutions of a different nature than road transport . Lastly, in certain cases, it is the lack of infrastructures which is a determining factor.58

These major trends of the development of transport reflect themselves unsystematically in space. Thus, it appears essential to briefly study in greater detail some specific problems as regards transport for various territorial categories of the European Union.

58 Fundación Ecologica Y Desarrollo (Ed.). Sustainable transport in mountain area. The role of the railway for the carriage of goods throughout the central Pyrenees. International symposium, Jaca, on 8-10 October 1998. Zaragoza, 1999.

47 Urban areas

Almost 80% of the Europeans live in towns , which makes the European Union the most urbanised region of the world. Currently, the majority of the cities are split up in business districts and residential districts, historical centres and dormitory suburbs, office areas deserted during the night and shopping centres, university districts etc. This fragmentation forced city residents to increase their mobility by using private or public transport. In addition, cities are crossed by expressways which suffocate at peak times. Lastly, transport is at the root of a major part of the air pollution downtown and of disturbing acoustic effects . The suburbanisation also induces an increase in the needs as regards transport and increases dependence on the individual vehicle. These factors are partly responsible for the worsening of traffic congestion , for energy consumption and polluting discharge , including sound. These problems are particularly acute in less dense urban areas where daily activities are strongly dispersed. It is therefore essential to manage better mobility in the urban areas, for the purpose of sustainable development. The challenge to take up is to conceive integrated transport strategies combining alternative solutions likely to replace the individual car with measures restricting the use of the private vehicles, provisions of an economic nature covering for example tariffing, recourse to new technologies (including telematics) and finally a judicious policy as regards assignment of soils to consolidate the mechanism. Actions of this type are likely to increase effectiveness and contribute to reducing the request for transport.

Border regions

Since border regions were not usually the most important economic centres of a country, cross- border infrastructures and connections are often rather little developed. Along borders within the European Union these gaps in the transport systems are still today a source of multiple daily problems and restrict economic development.59 The lack of cross-border connections (cross-border passage points, interconnection of the motorways or of the railway, bridges or ferry connections) represent bottlenecks and cause higher transport costs or long waiting periods. This is particularly true for the external borders of the European Union, where daily problems related to transport are sometimes particularly serious. Generally, the lack of basic infrastructure in border regions is more important in the southern half of the Union than in northern half. Despite these differences, a characteristic applies to all border regions: the overall increase in trade, in particular between East and West, which involves a more intense cross-border traffic. 60

2. Coastal regions

Coastal regions often are areas where particularly dense transport networks are established , whether it is on ground (owing to the narrow coastal plains) or at sea, including certain elements of the TEN-T. The high density of population and economic activity along certain coasts (for example the Latin Arc) causes important saturation of the coastal infrastructures and serious seasonal congestion problems.

Moreover, the peripheral coastal areas (which are often far away from the large seaports) are very often weakly connected to their hinterland and between themselves. This is particularly the case where natural barriers such as wetlands or broad rivers prevent easy geographical connection. These communication barriers between two close regions are particularly strong, if they are in addition located at the border between two states. The Community programme on integrated coastal zone management (ICZM) showed that transport and accessibility were major problems in a large number of pilot projects. 61 The density of transport networks plays in coastal areas an essential and multi-

59 idem 60 idem 61 The European Commission, 1999: The lesson of the demonstration programme of the European Commission on the integrated adjustment of the coastal areas; Institute for European

48 purpose role, and this in particular in islands and remote continental regions where the question of accessibility takes on a strategic importance.

Transport takes on, as recalled by a recent Commission62 Communication, a strategic importance for the most remote regions of the European Union in view of their geographical situation. The maintenance of political, economic and social links with the remainder of the European continent depends closely on air transport and maritime transport services. Moreover, the archipelagic dimension of some of these regions increases their dependence on these services. The transport excess costs due both to the remoteness of these regions and to the need to ensure the regularity of their service road also constitute a major handicap for their economic development. Lastly, air transport is a key element of the development of tourism.

Mountainous regions

Approximately 30% of the Community territory is made up of chains or of mountainous solid masses; in some Member States (I, E, EL, A, P) the mountain areas account for more than 50% of the national territory. Transport in mountainous regions has to cope with two principal problems: the crossing of the obstacle made up by the physical barrier and the major value and ecological sensitivity of the areas concerned. The problem of transit traffic takes on particular importance , which can briefly be illustrated by the example of the Alps and the Pyrenees.

The traffic of goods throughout the Alps almost tripled during the last 25 years. In 1994, about 130 million tonnes of goods crossed the Alps from Vienna to Vintimille, more than 80 million from Mont Cenis to the Brenner, including slightly less than half by the road. In terms of transit, the Alps are reduced to a dozen main roads, which means that the mountain chain, as regards transport, is on the verge of asphyxiation. Thus, in the proposal for a Directive concerning the taxation of heavy lorries for the use of certain infrastructures , the Commission pointed out that the expansion of the Community had major effects on the alpine region. For example, between 1984 and 1994, the number of heavy lorries crossing the region increased twice as quickly as the average increase in transport in the European Union. Independently of the volume of traffic, geography induces particularly high infrastructure and maintenance costs, and the alpine environment is also particularly sensitive to the effects of pollution63 . At the beginning of the 1990s, transit agreements were signed with the European Union for a twelve-year duration. Austria and Switzerland decided in this context for different strategies: Austria negotiated an agreement on the limitation of the number of transiting heavy lorries and the reduction in emissions by a system of ecopoints. Switzerland, for its part, confirmed in its agreement the restrictions already in force concerning the limit of 28 tonnes and the prohibition of traffic during the night and Sunday (this agreement is in revision phase). In Austria, the transit agreement and the Act of accession to the European Union envisaged reducing by 35% the polluting discharges between 1991 and 1995; the reduction was in fact only 8.9%. During the same time, in Switzerland, the number of heavy lorries doubled on the main corridor of the Gothard.64 Objectives were not achieved.

The Pyrenean mountain chain , 425 km long, is the entrance to the Iberian Peninsula and an obligatory passage for the traffic of goods between the countries of Northern Africa and those of the extra-Iberian European Community. Since the entry of Spain and Portugal in the European Community and the entry into force of the single Market, growth of trade has caused a constant

Environmental Policy: Thematic study E: The influence of EU-policies on the evolution of coastal zones. (London, November 1999). 62 COM (2000) 147 final 63 The European Parliament, Directorate-General for studies : Towards a European policy for the mountain areas (1997) 64 Fundación Ecologica Y Desarrollo (Editeur). Durable transport in mountain area. The role of the railway for the carriage of goods throughout the central Pyrenees. International symposium ACTE, Jaca, on 8-10 October 1998. Zaragoza, 1999.

49 increase in the carriage of goods throughout the Pyrenees, with a very individual emphasis on the North-South relations and more particularly on those with Germany. Exports and imports channel themselves at the edges of the Pyrenean chain. In the Pyrenees, the position of the road is the most favoured mode of transport because for numerous years it has been consolidating its dominant position in the land-based international transport of goods to and from Spain and Portugal. On the whole, 91% of the transport of goods throughout the Pyrenees is done by road. The progression is very strong: 3 700 heavy lorries per day in 1984 and 13 000 in 1997. The road traffic multiplied by 3.5 in summer whereas for the same period the French Alps had an international road traffic multiplied by 2.9. On the other hand, the railway holds a very marginal position in the despatching of goods throughout the Pyrenees (less than 10% of the volume of the road traffic).

Wetlands

Transport also plays a specific role in other ecologically sensitive areas such as wetlands. A Commission Communication relating to the wise use and conservation of wetlands65 stresses that the majority of these areas in Europe are in estuaries, valleys, plains, flat and non built areas, in other words places which, from their favourable topography and configuration, can also be chosen as preferred places for the establishment of certain transport infrastructures such as roads, motorways, railways and airports. Modernisation or the construction of inland waterways comprises several dangers to remaining wetlands . The embankment using dredge or excavation spoils coming from drain work and others can destroy completely smaller wetlands. The extraction of gravel intended for the transport infrastructures constitutes another threat for beds of current and old water-courses.

3.3. Nature and major stages of the Community Transport policy

Despite the existence of the provisions envisaged in the Treaty of Rome (Article 74) and in spite of the efforts of the Commission, the results of the Common Transport Policy (PCT) were not very numerous until the second half of the 1980s. The way towards a more elaborate Community legislation in the field of transport was opened by the judgement of the Court of Justice of 22 May 1985 ruling on the appeal of the European Parliament against the Council for defect of adoption of the measures of implementation provided for in the Treaty. The Court condemned the Council not to have implemented freedom of services in the field of international transport and not to have laid down the requirements to allow the admission of non-resident carriers to the national transport operations in a Member State. The Court observed that these measures should have been taken by 31 December 1969 and asked the Council to adopt them within a reasonable time.

Since the entry into force of the Treaty of Amsterdam, the legal basis of the PCT has been made up by article 3f and the title V (articles 70 to 80) of the EC Treaty. The PCT is intended to promote effective and sustainable transport systems, which meet the needs of persons and companies. Under the terms of article 70 of the Treaty of the EC, the fundamental objectives of the PCT are those of the Treaty itself: the promotion of sustainable and non inflationary growth, the respect for the environment, a high degree of convergence of the economic performances as well as of employment , of social cohesion and solidarity between the Member States. Article 71 fixes the contents of the PCT: the common rules applicable to international transport affecting the Member States, the conditions of admission of the non resident carriers to the national transport operations in a Member State and measures allowing to improve transport safety. At these matters, the joint decision procedure is applied (change since the treaty of Amsterdam), except in provisions likely to affect seriously the standard of living and employment in certain regions as well as the operation of equipment, which involves the consultation procedure and the rule of unanimity in the Council. With regard to the trans- european networks, the new title XV (articles 154-156) constitutes henceforth the legal basis for Community activities .

65 COM (95) 189 final

50 From 1985 until the Treaty of Amsterdam, the development of the PCT was marked by a number of stages. The 1985 impulse coincided practically with the adoption of the Single Act which opened the way to the Single Market. The 1985 « White Paper on the completion of the internal market », inter alia, pointed out the guidelines which the PCT should take as a starting point. The main word of the White Paper was the abolition of restrictions on the development of transport, thus taking part in the spectacular growth which has been characterising this sector of activity since that time. In this sense the Council approved three essential guidelines in November 1985: (1) the creation of an open market (without quantitative restrictions) at the latest in 1992; (2) the increase in bilateral contingents and Community contingents and (3) the elimination of competition distortions. The Council also adopted a work programme baptised "Plan Master", setting aims to be achieved before 31 December 1992 for all transport modes (land, maritime and air): the establishment of infrastructures of Community interest, the reduction of controls and formalities at the borders and the improvement of safety. For the period of implementation of the Single Market programme, the PCT was mainly directed towards liberalisation, that is the creation of an open and competitive transport market and towards more effective integration, through the harmonisation of budgetary, social and technical conditions. In accordance with the rules of the Treaty, these measures were supplemented by specific provisions on public service obligations which envisage the needs for transport according to regional and social criteria rather than to those of the market. Free movement of persons and goods are the two "engines" of the Single Market, which, to function perfectly, have to rest on a transport system corresponding to their objectives.

In 1992, the European Commission adopted the Communication on "the future development of the PCT" (final COM/92/492), which marks a fundamental stage of this Community policy: the passage from a sectoral organisation of the various modes of transport towards an integrated design on the basis of sustainable mobility. It mentions, in the centre of the search for overall solutions, the question of the internalisation of external costs, that is of greater visibility for the user of the real cost of transport for the whole of society. The idea is in fact that a payment of the cost of transport that is more direct (more immediate, transparent) and nearer to reality will manifest itself in an overall reduction of traffic and rebalance the modes of transport, thus reducing the excessive share of road traffic. This would result in a reduction of pollution and risks, but also in a greater effectiveness and controlled traffic flows, and therefore greater satisfaction of the consumers and of the economic interests.

The 1990s were for the European Union the occasion to take its first steps in an infrastructure policy as regards transport. If relative Community activities on this subject were first started within the framework of other policies (regional development) or by partial initiatives in the context of the PCT, it is the White Paper of 1992 which defined a policy and a structure for the adoption of a Trans- European Transport Network. The latter had to comply with the following objectives: spatial competitiveness, spatial balance and spatial quality as well as the creation of interconnections in Mediterranean and with Central and Eastern Europe. To benefit best from an integrated transport network , the Commission and Member States sought:

- to better harmonise the national transport policies, - to increase competition between the transport service providers, - to co-ordinate the strategies as regards development of infrastructures, - and to strictly check the State aid granted to national infrastructure owners.

With the entry into force of the Maastricht Treaty in 1993 and its title concerning Trans-European Networks as regards transport, energy and telecommunications (TEN, "old " articles 129B-129D), Community transport infrastructures became a fully fledged policy . This policy is conceived so as to co-ordinate national interventions in an overall vision. Its central objective is to produce the necessary interconnections between national subsystems which, for obvious reasons of economy and internal working procedure of the system, remain the bearing structure of the traffic. In the name of a more modern design of transport, the interconnection and the interoperability of the various modes of

51 transport were found closely connected. The instrument selected to pursue this objective is that of the establishment of Guidelines for a Trans-European Transport Network (TEN-T): this involves an integrated approach with a broader prospect for the entire European Union (and later, even for the entire continent), which keeps to the size of the market and to the political integration process of Europe.66 A first stage in the concretisation of the TEN-T was the selection of 14 priority projects on the basis of recommendations retained at the European Council of Corfu (June 1994) and of Essen (December 1994). A second important stage was the adoption of the decision of the Council and of the European Parliament of July 1996 relating to the Guidelines of the TEN-T, which is intended to establish the broad outline of the actions necessary to realise the TEN-T and to identify "projects of common interest" which have to form part of them.

With the adoption of the concept of sustainable mobility in 1992, the environment became a central concern in the approach taken by the Commission for the PCT. The aspects which take importance in the PCT are henceforth the satisfaction of the request for mobility with definitely less resources, the strengthening of technical standards with regard to polluting discharges, the modification of the demand structure for mobility by integrating spatial planning priorities in the planning of transport infrastructures or by the encouragement of combined transport. In this context, the reduction of the excessive relative weight of road transport became then the central question, the priority to be solved. To this end the Commission considers that the PCT has to revolve around two complementary strategies: on the one hand to reduce pollution by an adapted taxation policy and on the other hand to develop the intermodality in all its forms.

Following the White Paper of 1992, a Commission Communication was issued on 12 July 1995 entitled "The Common Transport Policy. Action Plan 1995-2000", which comprises three fundamental objectives: (1) The improvement of quality, based on the introduction of integrated systems exploiting new technologies which also contribute to environmental protection and to safety. (2) The improvement of the internal market operation, consisting primarily of an encouragement of intermodal competition while preserving social standards. (3) The development of the external dimension, which aims to improve the quality of connections with third countries and to encourage the access of Community companies to external markets.

The promotion of combined transport is considered by the Commission a strategic tool, enabling to envisage that transport follows a system logic, in order to support in particular economic and social cohesion and environmental protection. Combined transport is in itself a transport means different from maritime, road or railway transport. In its benefits it does not constitute a sum of the latter, but it states its originality, which consists in giving high rates of quality in its new establishments, since it incorporates complete transport and logistics chains. Transport services proposed in this context will then be door-to-door connections independent of methods, founded on various viable possibilities of modal transport, representing an original and rational use of the transport system, which reduces costs and generates value added.

One of the strategic objectives of the Commission is to emphasise the multimodal component of the TEN-T - which is currently based on various modes of transport - in a system of combined infrastructures and of integrated transport chains that are also beneficial to distant and peripheral European regions. To this end, one started with the identification of certain essential nodal points for the interconnection of transport modes . Important priority is granted to the interconnection of the TEN-T with the secondary networks . In this context, the Commission submitted on 4 March 1998 a proposal for a decision of the European Parliament and of the Council with regard to seaports, ports of inland waterway traffic and intermodal terminals, amending the decision No. 1692/96/EC as well as the project No. 8 in Annex III of the aforementioned decision ( COM/97/681 final). The network retained in the 1692/96/EC decision consists primarily of a series of various connections, while interconnection points were not identified in the plans except for the airports.

66 The European Parliament, Directorate-General for studies : The financing of the Trans- European Networks (1997)

52 The initiative wanted to correct this situation, by strengthening the position of seaports, the inner harbours and intermodal terminals as interconnection points. Thus, 300 seaports, 210 intermodal terminals and 35 inner harbours are identified in the plan of the TEN-T and are described in the maps appearing in Annex I of the decision. This clarification constitutes a precondition to the integration of the various modes of transport in a multimodal trans-european network.

According to an assessment established by the European Commission towards the end of the 1990s, it observes that considerable progress was made under the PCT. The Commission admits however that, in certain fields, progress was longer than one hoped for . This is particularly true as regards tariffing of infrastructure costs and of external costs, for the social field and as well as the field of Foreign Affairs.

On the basis of these official reports, the 1998 Commission Communication, entitled "The Common Transport Policy. Sustainable mobility: Future prospects "(final COM/98/716, 01.12.1998), develops a new framework of action for the PCT during the period 2000-2004:

53 European Commission communication, "The common transport policy. Durable mobility: Future prospects "(final COM/98/716)

Prospects for the period 2000 - 2004:

1. Access to the market and operation of the market: The advisability and the feasibility of a European data bank on transport will have in particular to be studied. With regard to the transport services, the prospect for possible clarification or revision of the legislative framework has to be evaluated, including guidelines on State aid. In the maritime sector, the development of convergent approaches as regards registers and conditions of registration of the ships under the Community pavilions must be given priority to. 2. Integrated systems: In the field of the integration of the systems, the measures aiming at encouraging the interoperability, in particular in railways, and the adoption of intelligent transport systems, are required to increasingly assume importance, in particular, through the system of positioning and of navigation by satellite and/or other suitable means network. Following the completion of the revision process of the Guidelines for the Trans-European transport network, launched in 1998, it will be advisable to re-examine them in preparation for new changes to be made to it in relation to the forthcoming expansion of the European Union. New initiatives in fields such as the role of the logistical benefits in the economics of transport and collective management of airspace of the Community will have to be taken. 3. Equitable and effective tariffing: The Community framework as regards tariffing of transport, will have to be refined by seeking in particular to strengthen the convergence of the methods used to calculate the various elements of the cost, both internal and external. 4. Economic and social cohesion: It is especially important to improve the convergence of the standards relating to the professional and of training qualifications, in particular in the railway sector. An analysis will have to be carried out of the role of the common transport policy in the new "Plan of development of Community space" (ESDP). 5. Safety provisions: A study of the problems and performances in the various modes of transport should enable the European Union to specify its strategic objectives on the matter. 6. Environment: Close attention will have to be paid to the measures aiming to reduce the state of dependence between economic growth and the increase in the transport activities and, by extension, in the consumption of energy, as well as the search of new less harmful energy solutions for the environment in the transport sector. Reflection should also progress on the particularly sensitive question of alpine transit. 7. Consumer protection and improvement of the quality of transport services: Actions aiming at improving the ensured services in addition to the railway lines can be carried out. The objective would consist in endowing this method of transport with genuine quality of door-to-door services, in setting up cross-border and intermodal reservation and ticket office services and in encouraging the adoption of standards for the improvement of transport conditions with the concern of protecting health and comfort of the passengers using public transport or travelling by air. 8. The external aspect: Actions will be intended for studying in greater detail and implementing the process and will be in the middle of concerns as regards Foreign Affairs, as well as the development of the Pan-European Transport Networks and their articulation with the Trans-European Transport Network. It will also be a question of the role devolved upon the relevant international organisations as regards transport in Europe, in view of the development of the situation. 9. Control of the compliance with the rules: Work will be undertaken with a view to a legislative consolidation and clarification of the existing legislation. Vigilant attention will also have to be paid to the effective operation of any agency or other organisation having elementary competence in the transport sector, in particular in the field of aviation.

54 3.4. The methods of Community intervention as regards transport and the implementation of the PCT in the Member States

Currently, one can observe two main intervention categories of the PCT which contribute to the carrying out of its objectives:

- interventions directly connected with the PCT: the drafting of legislative texts (liberalisation, safety) and the technical harmonisation, the development of guidelines for the TEN-T and the selection of the projects of Community interest, the Community cofinancing of pilot-programmes related to the promotion of good practices and of references as regards transport or specific activities in respect of the TEN-T.

- interventions in the context of other Community policies contributing directly to the carrying outoftheobjectivesofthePCT:the co-financing of the Structural Funds or of the Cohesion Fund relating to investment in transport infrastructures in general and more particularly in the context of the TEN-T, the activities of the European Investment Bank or of the European Investment Fund in this context as well as the research and development programme on transport.

The Commission takes initiatives for proposals for legislative texts concerning the PCT. Most directives and regulations aim at harmonising the tax, technical and social provisions of the Member States which block the competition between the companies of the transport sector. The legislation concerning transport is largely carried out according to the co-decision procedure, which enables the European Parliament to amend the Commission proposals. The Council of Ministers can nevertheless reject the amendments. The majority of the decisions on PCT are adopted within the Council of Ministers by a qualified majority, except when they go against the Commission proposal.

The development of the internal transport market is carried out mainly by an approach that can be described as "controlled liberalisation of markets", which combines Community legislative measures having at the same time a nature of liberalisation and reglementation . Although it seems to be a contradiction , the elimination of regulations related to market access , capacity of transport or tariffs inevitably requires a careful definition of "common rules of the game" which have to prevail, i.e. meticulous regulation which prevents that increased competition becomes an instrument of creation of inequalities in society and in territories. In addition, the Community adds to this approach the activities of harmonisation of regulations in force in the various Member States, because very significant differences between the countries can still be observed and one doubts that harmonisation could be the result of the only liberalisation. The European Union carried out a great effort of harmonisation of technical regulations, while tax and social conditions of competition progressed much weaker.67

The transposition and/or application of the Community legislation is done then in the context of each Member State. Since the system chosen for the development of competition in the internal transport market was that of harmonisation, i.e., the achievement of only one standard in the same measure, the application of already emitted harmonising provisions must be ensured at all costs.68

The role of the Community was strengthened with the planning of the Trans-European Transport Network (TEN-T)69 . With the entry into force of the Maastricht treaty in 1993 and its title XII on the Trans-European Networks (TEN), new functions were attributed to the Community as

67 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998) 68 idem 69 The European Parliament, Directorate-General for studies : The financing of the trans- european networks (1997); Vinois, J.A. : The Trans-European Transport Network : after the legal decisions, financing remains (Review of the Common Market and of the European Union, September- October 1996)

55 regards transport, energy and telecommunication infrastructures. In the context of the TEN, the principle of subsidiarity is applied with particular strength because the Community can intervene only if it can bring an added value on the individual action of the Member States. Despite these limitations, by conferring these new functions, one went through a decisive stage which is for the Community the pledge of a potential strengthening of its political legitimacy. In the context of the infrastructure policy as regards transport, the situation occurs in the following manner:

- Article 1(2) of the decision EC N° 1692/96 concerning the Guidelines for the TEN-T leaves no ambiguity on the scope of the provisions appearing in the aforementioned decision. It indeed is specified that Guidelines constitute a general framework of reference intended to encourage actions of the Member States and, if necessary, of the Community, for the realisation of "projects of common interest" which ensure coherence, interconnection and interoperability of the TEN-T as well as access to this network. In summary, Guidelines are detailed maps which present missing links, cross- border projects necessary to complete the TEN-T by connecting infrastructures used for road, railway, air, maritime and river transport. Within the framework of the drawing up of the Guidelines concerning the TEN-T, the co-decision procedure stipulates that Parliament and Council reach a consensus. They also aim to facilitate the engagement of the private sector.

- a first innovative aspect is the role of planning or of orientation according to the terminology of the Treaty, attributed to the Commission, which is broader than in other Community policies. The guidance function comprises accordingly two separate phases for the establishment of public policies: the definition of the strategy and the planning of interventions within the framework of only one act, the TEN-T Guidelines. The development of the strategy consists in defining the objectives, priorities and the broad outline of actions envisaged for the TEN-T. The "projects of common interest" constitute the planning phase as such which consists in identifying the specific infrastructures or the intervention which, co-ordinated with others, makes up the network. Nevertheless, the Guidelines and projects of common interest which concern the territory of a Member State require its approval.

- closely connected with the task of identification of the "projects of common interest" is a second innovative aspect: the different relation which is established between the Community intervention and the implementation project. The projects of common interest constitute a common objective, while their realisation depends on their degree of maturity and on the availability of financial resources, without prejudging the financial commitments of a Member State or of the Community. These projects have to be financed by the Member States, and the Community supports these financial efforts. This involves innovation of the Community financing system, because the definition of the project, under the TEN, is reserved for the Union while the national administration prepares and ensures the implementation . This particular position of the Community in the TEN differs basically from that of the interventions within the framework of the Structural Funds: in the latter case, projects are left to the initiative of the Member States and of public or private bodies eligible for the Funds; the Community examines the coherence between the projects and the Community objectives and their conformity to the other legal and economic criteria and makes therefore figure of third party in the decision-making process, restricting itself to granting Community aid.

- the guidance function (development of strategy and identification of the implementation projects) is logically connected with that of the harmonisation provided for in old article 129C paragraph 1 2nd indent, which confers on the Union the power to implement any action encouraging the interoperability, by referring more particularly to the harmonisation of the technical standards. This is in substance a specification of the general power of approximation of legislation provided for in old Article 100 of the Treaty.

On the whole, all these new tasks place the Community in a position which is not absolutely that of a state, which also deals with the carrying out of the infrastructures, but which exceeds that of a simple financing body. The Union plays henceforth a decisive role in the decision-making process that the public works involve on all levels of government of the Member States. It is this individual position which confers it an increased political responsibility regarding the final result of its action.

56 The Commission manages the Community financing of transport projects under the budget of the European Union. The provision of Community financial resources for activities as regards transport can generally take two shapes, namely:

- co-financing coming from the Community budget connected with the PCT or - (co-) Community financing coming from other sources such as the Structural Funds, the Cohesion Fund, the European Investment Bank or the European Investment Fund.

With regard to own financial means of the PCT contained in the Community budget, the forms of financial contribution are as follows:

- on the one hand the means of the Community budget (B5-7 chapter) relating to financial support for the infrastructure projects of transport, governed by the ad hoc financial regulation EC no.2236/95. The latter determines the granting of financial aid in the field of the TEN-T and made available 1.798 billion ECU between 1995-1999, of which 1.350 are intended for the Essen priority projects. Having regard to the modesty of resources available, the Commission considers that the cofinancing of feasibility studies constitutes the most effective use one can make of it . The financing of construction falls on the promoters who can possibly benefit from interest rebates or from subsidies intended to cover the guaranty fees.

- on the other hand, the support programme for pilot actions in the field of combined transport (PACT) created in 1992 with the decision EEC No. 93/45. It helps operators to launch innovative projects in the field of combined transport (rail, road, inland waterways and coastal navigation) adapted to the requirements of the market . Towards the end of first PACT programme (1992-1996), the Commission proposed that the programme be extended until 2001. The Council of Ministers adopted the regulation EC No. 2196/98 which is the new legal basis for this extension until 31 December 2001.

With regard to Community financial support relating to infrastructures of transport (TEN-T and others) coming from other sources, such as the Structural Funds, the Cohesion Fund, the European Investment Bank or the European Investment Fund, one can observe the following elements:

- the Structural Funds - and in particular the ERDF - applied through the Objective 1 Community Support Frameworks about 8 billion ECU (1994 prices) to investments in transport infrastructures (almost 50% out of a total of 16.2 billion ECU applied to investments in the basic infrastructure). For the programming period of 1994-1999, about 13.7 billion ECU were allocated to investments in the transport sector in Objective 1 regions . 70% of this amount was applied to roads and motorways, 16% to the railway, 3% to airports, 5% to seaports and 4.5% to other actions connected with the transport sector (development of intermodal transport, of public transport, as well as of studies relating to transport).

- with regard to the Cohesion Fund, about 50% of the resources available support projects intended to improve transport infrastructures and the accent is particularly placed on the TEN-T, in accordance with the provisions of the treaty. The Cohesion Fund intervenes currently in 4 countries (Greece, Spain, Ireland and Portugal) and invested 5 billion ECU between 1993 and 1999 for the development of important connections of the TEN-T (69% for roads and motorways, 23% for the railway, 4.4% for airports, 3% for ports and 0.5% for organisation systems of the maritime traffic).

The European Investment Bank (EIB) contributes in particular, via its loans, to transport. Two thirds of the Bank’s loans (individual loans and appropriations on global loans) concern regional objectives, of which approximately one third is intended for the financing of transport infrastructure projects. The action of the Bank is taken in close co-ordination with the Structural Funds, the cohesion Fund and the budget of the TEN-T.

57 The European Investment Fund (EIF), created in 1994, has for purpose to grant guarantees to loans required for the financing of major projects of infrastructure and for the development of small and medium-sized enterprises. The Fund is an autonomous organism the capital of which is subscribed by the Community, by the EIB and by other public or private financial institutions.

The Commission supports the market of transport by means of targeted projects in the framework of research and technological development policy. In the context of the 4th Research Framework Programme (1994 to 1998), the Commission co-financed a number of major projects of the transport sector in various fields. In the 5th Framework Programme, the Commission proposed covering research in the field of transport through two broad topics: "growth and sustainable development" and "introduction of a user-friendly information society". The programmes are generally centred on the application of new technologies from numerical information technology to the management of road, railway, air and maritime traffic, in order to improve safety and the convenience of displacements, and to reduce the damage that they cause to the environment. Other fields of research and development concern technologies of equipment, energy efficiency, electric vehicles and "black boxes" used in boats as well as on aircrafts.

3.5. The common Transport policy in relation to: a) economic and social cohesion, accessibility and polycentric development

Territorial impact of the deregulation actions of the PCT between 1985 and 199970

Road haulages

From 1 January 1993, a carrier established in a Member State of the Community can transport goods to another Member State freely. The cabotage regime was introduced into several transitory stages until the final entry into force of the cabotage arrangement on 1st July 1998. The Council created a supervision system which can lead to safeguard measures in case serious disturbances were to occur in the market of transport.

With regard to the effects on the economic structure, the deregulation of international transport encourages competition between European companies of road transport. There is a clear tendency for the carriage of goods by road to be divided in two subsectors: on the one hand a reduced number of major companies which offer logistical services and on the other hand a large number of small enterprises which provide only transport services. One expects consequently a strengthening of transport companies in countries where the participation in international transport is most important, such as the Netherlands, Germany and France and a reduction in the number of companies in other countries, at least in the long run, especially in Spain and Italy where the number of companies is very high and very atomised. However, owing to the wage cost differences, the relocation of companies towards countries applying lower wage costs is a possible risk. In this context, the future Community enlargement to Central and Eastern European countries could have a significant impact on the relocation of road transport companies. With regard to the effects of liberalisation on secondary lines, it is probable that companies established in peripheral regions or areas generating weak traffic flow see their transport costs increasing. However, it does not seem that chargers be losers in the liberalisation process, although phenomena of relocation can occur.

Passenger transport by road

The liberalisation of passenger transport services by road at Community level is limited for the moment (waiting for the implementation of the Regulation in process of adoption ) to some

70 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998).

58 individual fields, so that one cannot deduce significant lessons from it at the territorial level. On the other hand, an interesting lesson can be withdrawn from the British experience of deregulation of passenger transport by road (ACTS Transport of 1980 and 1985). Competition mainly occurred on the routes and hardly was of any importance to the price fall. Productivity strongly increased, which results in a strong increase in the travelled kilometres, although with important disparities in space and in time. There was greater vehicle x km production but concentrated on a smaller network and resulting in particular from better adapted vehicles, particularly from the use of minibuses. The increase in the service level mainly occurred on the principal radial lines, while on certain less attended lines, a fall of the real number of travelled kilometres was noted. For the secondary lines, one had to resort increasingly often to the introduction of the subsidies within the framework of public service. The greatest failure of liberalisation in the United Kingdom lies in the decrease of the number of users, which is higher than before deregulation. One reason was certainly the rise of tariffs .

Rail-bound transport

The majority of national railway networks of the European Union are controlled by national owners under a monopoly arrangement. The services of rail-bound transport in Member States are characterised, to differing degree, by national regulations and by a certain importance of public service obligations. The European Union developed an activity intended to facilitate the adaptation of the Community railways in accordance with the requirements of the single market and in order to increase their effectiveness. The Community provisions concern in particular management independence of railway companies, separation between the infrastructure management and the transport activity, conditions of access to railway infrastructure, the granting of licences to railway companies, the establishment of common standards for certain combined carriage of goods between Member States etc. Generally, measures proposed for the liberalisation of the railway sector will have more limited foreseeable consequences and longer-term effects than those referring to road transport:

- the railway sector could develop towards an oligopolistic market, to a certain extent similar to the air transport market, with the permanence of a number of exclusive railway companies and a number of small enterprises specialised in specific aspects. In such a context, one can expect a selective rise of the transport capacity on certain territories and in certain relations and certain services. In other cases, the offer will tend to be reduced. A great drop of the overall level of employment in the railway sector is also probable.

- with regard to the effects of liberalisation on secondary lines, one can note that for the carriage of goods, the questioned administrations and companies do not predict negative effects on the economic activities established in peripheral regions. Their transport costs should not increase and their needs would not be neglected. Trade unions think the opposite. As for the transport of passengers, administrative authorities do not envisage the abandonment of the passengers' secondary lines, neither their operation with lower quality standards , nor the need for more public funds for their maintenance.

What is obvious is the fact that the railway needs important flows to become an effective mode of transport and that secondary lines need the appearance of operators at low costs to be able to remain open as numerous examples are known that railway links were closed to the traffic, even within the framework of supervised management models supported by important subsidies. The deregulation of the sector could facilitate the appearance of this type of operator.

In a context of free competition in Europe between various modes of transports, it is interesting to know up to what point the ban on no longer being able to subsidise publicly freight transport by railway contributed - in terms of territorial effects - to increase the cost of transport or to encourage

59 a transfer of transport towards the road. A survey carried out with European regions shows71 that the measure had in certain cases an indirect and negative territorial impact. In some cases, it caused a refusal on the part of the national railway companies to accept individual waggons, which resulted in disadvantaging rural regions (that depend on transport of products with small value added but requiring space) and to increase the share of road transport (Aquitaine and Haute-Normandie in France). In other cases, it contributed to making the rail-bound transport less attractive in relation to the road (the Aosta Valley in Italy) and to deteriorating further the already negative situation of the regional rail-bound transport (Galicia in Spain) or to increasing the transport cost for local companies and to worsening the negative effects connected with the increase in road transport in the region (Shropshire and Staffordshire in the United Kingdom).

Air transport

The Community policy of liberalisation of air transport includes four major fields: access to the market, the control of capacities, the tariffs and the granting of the use licence of the companies. The process started in 1980 and was carried out in three stages, the third of which entered into force on first January 1993. The cabotage regime for air traffic was liberalised definitively on first April 1997. The liberalisation of air transport within the European Union advances at slow and unequal intervals, in relation to the vertiginous modifications that the North-American market tried out. The general effects of this policy on the economic fabric, employment, secondary lines, infrastructure services and the environment can be summarised in the following way 72:

- following the successive liberalisation of the national airspace in Europe, a significant increase in competition occurred in countries like Spain, Germany or France, due to the appearance of a number of small independent companies. This phenomenon had first of all occurred in the United Kingdom because its market had been liberalised before the entry into force of the third package of Community rules. In a more general way, the increase in the size of companies and the consolidation of co-operation mechanisms between companies appear probable. The number of large European operators should decrease in future, whereas the number of small airlines which exploit certain specific gaps could increase.

- one can point out that, in all companies belonging to the European Association of Aviation (AEA), personnel reductions since 1990 have been of approximately 40 000 persons. A part should be put on the account of the crisis of the air transport companies, caused by the Gulf war. The national airlines have all reduced their manpower on a more or less large scale, with certain exceptions like British Airways or Luxair.

- following the concentration of operations of large companies in their "hubs", one can observe line abandonment and variations in the quality of use of other lines (for example by replacing direct flights in jets by flights with stopover in turbopropellers) while trying to adjust the characteristics of supply to the volume of demand. Consequently, it seems that secondary lines are exploited with less quality standards. The use of a number of them is maintained within the framework of public service, in particular in Ireland, Sweden, France and the United Kingdom.

- the majority of air transport operators stress the negative impact of the lack of infrastructures on the activity of the sector in general and on correct development of competition in particular, so much even that airport capacity is regarded as being the key of progress in liberalisation. The multiplication of connections and frequencies, combined with the "hubs" policy developed by airlines, caused a growth of the number of passengers lower than that of the movement of planes. This resulted in a saturation of airports, which has implications for air transport itself and for the

71 Assembly of European Regions, 1996 : Regions and Territories in Europe. The Region’s View of the Territorial Effects of European Policies. 72 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998)

60 environmental quality of the areas located around these airports. This tendency also encourages over-sized investments in certain airports.

The liberalisation of the sky in Europe has been in a large measure unaware of its territorial impact , although changes induced by this policy have very diverse structural consequences for regions concerned. Thus, a first survey carried out among European regions in 1994/95 reveals an ambiguous evaluation of the situation: a number of peripheral regions in relation to the centre of Europe are satisfied with the liberalisation measures, while others take a much more hesitant position with respect to this policy73 . The case study of Bergamo demonstrated the strong increase in air services, in particular international, which has occurred after liberalisation.

A recent Commission Communication (COM/2000/147 final) stresses that most remote (ultraperipheral) regions have very largely benefited from the impact of liberalisation measures of air transport in the Community. The principle of tariff freedom for the Community airline companies performing on the intra-Community connections , established by the Council regulation EEC No. 2409/92 , indeed resulted in a considerable reduction of tariffs in force on connections between these regions and the European continent. Thus, connections between France and the Antilles appear currently among the least expensive intercontinental connections in the world. The principle of freedom to provide services on intra-Community connections , implemented by the Council regulation EEC No. 2408/92 encouraged for its part competition between airlines and the emergence of new transport services, in particular between the canary archipelago and Spain. In addition, the regulation concerning transport tariffs and access to the market enables Member States to impose public service obligations on the scheduled air services towards an airport serving a peripheral area. Such obligations were imposed on the connections between France and the overseas departments, between Portugal and Madeira and the Azores as well as on the internal connections to the department of Guyana, to the Azores and to Madeira.

Maritime transport 74

According to the nature of maritime transport one can distinguish generally two major segments: deep sea transport, which corresponds to international trade, and coastal navigation or short sea shipping , which refers to the transport of passengers and goods between national or European ports.

International deep sea transport is an activity liberalised by definition and its development prospects are closely connected with those of international trade, and in particular to the exchanges with non-European countries. This segment of the sector is therefore not subjected to competition within the internal market, but to competition on a worldwide scale where one has to cope with carriers of least cost, like that of the Far East. In this context, shipowners and operators under Community flag pavilion went towards free ship registers where the conditions are less strict and normally generate less costs. Consequently, the situation is such that as the fleet sailing under flags of Community countries hardly reaches half of the fleet belonging to Community shipowners. The principal consequence of this development is that the number of Community sailors has been reduced by more than 50% since the beginning of the eighties and that one must expect the continuation of this decline which accompanies the transfer of flagging by the ships. This development affects particularly the peripheral maritime regions which were traditionally sailors' providers for the European fleets.

73 Assembly of European Regions, 1996 : idem 74 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998) and the European policy of the seaports (1999); The European Commission 1996 : First Report on Cohesion; CPRM, March 1998 : For a contribution by the European Union to port development on European seaboards.

61 With its Communication "Towards a new maritime strategy" ( COM/96/81 final), the Commission aims at giving capacities to the Community sector of maritime transport to cope with world competition. For this, it envisages a new strategy with two aspects: an action aiming to establish a Community framework to strengthen competitiveness of the maritime transport sector and another action aiming to guarantee safety and fair competition in the open international markets.

At intra-European level, Community measures of a regulatory nature (transport of the dangerous products, social conditions of work, maritime safety) or of liberalisation have only very limited impact on the sector, except for the countries affected by the liberalisation of coastal traffic (in particular the countries of Southern Europe). The liberalisation of coastal traffic occurred step bystep as from first January 1993 with periods of exemption from certain traffic for Portugal, Spain, France, Italy and Greece. In certain geographical areas, such as in the arc between Le Havre -Hamburg, where competition for certain traffic (in particular that of the containers) is strong, the liberalisation of coastal traffic can involve the loss of traffic of small ports for the benefit of larger ones . But, an active development of short sea shipping can also contribute to revitalising the activities of average and small ports.

Regarding the consequences of the liberalisation of short sea shipping for the traffic with islands, the almost exclusive way of movement of goods, these seem to depend on the type and the conditions of the regulation which, finally, applies (standards of the pavilion country or standards of the host country) as from 1999 to the positions concerning consecutive coastal traffic (the services which also make stopover in the non national ports and assisted coastal traffic and assisted services which only and exclusively devote themselves to national coastal traffic).

With regard to the most remote regions of the European Union, it should be noted that the regulation concerning maritime transport services takes account of their specific situation, allowing the conclusion of public service contracts.

The growth of short sea shipping can stimulate job creation, in particular in the sectors of shipbuilding and in the administration. The latter aspect is stressed by a 199675 study which demonstrates that the short sea shipping sector within the Community is mainly composed of small and medium-sized enterprises, which employ a broad part of European sailors on board of European flagged ships , contrasting with the situation of international maritime transport where shipowners - while choosing flags of convenience - dramatically reduced the number of European sailors on board their boats.

Inland waterway transport 76

The activity of carriage of goods by inland waterways concentrates in its immense majority on rivers and channels in Belgium, the Netherlands, Luxembourg, Germany, France and Austria. In Italy, Sweden, Finland and the United Kingdom, there is inland waterway traffic, however less important and more limited to the national context.

Activities on the waterways network of the Rhine market (which represents roughly three quarters of the total activity of the sector) are governed by the Mannheim Convention (except Luxembourg, which did not sign), by the Rhine Licence and, with regard to social questions, by the ”Social Agreement of the Rhine boatmen", the interpretation and application of which are treated by a tripartite administrative centre. This legal basis takes precedence over Community instruments. The Mannheim Convention (1868) guarantees freedom of movement on the Rhine and its tributaries

75 Stumm/Seidel 1997 : The role and significance of small and medium sized enterprises in the maritime sector. Aachen, 1997. 76 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998)

62 with all the ships under flag of the signatory countries (Germany, France, the Netherlands, Switzerland, Belgium and the United Kingdom). Therefore the liberalisation measures of the European Union did not affect a market which was open to competition. On the contrary, the removal of the frontier controls had a considerable impact.

The principal Community measures in the sector of the inland waterway traffic concerned access to the occupation as inland waterway operator , the structural reform of the inland waterway traffic aiming to reduce and modernise the fleet, the cabotage regime and the removal of the “tour de role” freighting system.

It is probable that liberalisation measures, henceforth entered into force, will strengthen the already most competitive operators, in particular the Dutch, Flemish and German ones. It does not seem that the size of the companies is the determining factor of competitiveness. Carrier groupings set themselves up, managed by groupings of economic operators, which produced a synergy in the offer of inland waterway transport , without resulting as much in trusts, mergers or acquisitions.

The liberalisation of transport markets and public service as regards transport77

The Communication of the Commission on "Cohesion and transport" (COM/98/806 final ) recognises that the liberalisation of the transport sector of the European Union, under the terms of which the CTP aims to create an open and competitive market, has to be inserted within a legislative framework that endeavours to establish conditions likely to ensure availability and financial accessibility of public transport to all the European citizens. The absence of such an appropriate regulatory framework could have as a consequence that service liberalisation generates insufficient supply of services in regions with low population density, in rural or remote regions, and, moreover, create a preference system between the modes of transport which would be neither effective nor viable in the long run . Such a situation could also seriously endanger efforts made by the Union in its regional programmes with a view to creating new possibilities for these regions.

At present, a specific Community legislative mechanism permits to apply public service obligations to more than 120 individual routes (Council regulations EEC No. 3577/92 on the maritime sector, EEC No. 2408/92 on air transport). The public service as regards transport of persons on land is also important for certain types of territories: for example in the urban areas where it exercises a social and environmental function or in border areas which have lacks in this field.

The practice and the development of public service within a competitive framework needs therefore to be evaluated attentively from the point of view of their territorial impacts. This more especially as the Union recognised explicitly with the new treaty of Amsterdam that the functions of the market are not always sufficient in itself and included a reference to the importance of services of general economic interest in the promotion of social and territorial cohesion. On the basis of these official reports, the Commission recommends maintaining less profitable transport services in purely financial terms, but presenting a high socio-economic value. More precisely, the Commission continues its efforts with a view to introducing new contractual provisions for public services in order to grant government aid for non profitable services which are of importance for regional or social reasons without transgressing the rules concerning government aid (by updating the previous agreements and by allowing tax exemptions for the granted State aid to support obligations of public service conforming to Article 77 of the Treaty) and study the manner of widening the use of this approach to land bound modes of transports.

77 The European Parliament, Directorate-General for studies : Social consequences of deregulation and of liberalisation in the transport sector of the EU (1998)

63 Territorial impact of the development of infrastructures and transport systems

Transport and polycentric development networks

There is a close relation between polycentric development and accessibility. It is advisable first of all to concentrate on two essential factors that determine accessibility, namely "distance" and "ease of displacement" (the latter factor is strongly influenced by the existing density as regards transport in a region concerned).78

With regard to distance, one will be limited to a general reference made on this subject in the Fifth Periodic Report on Competitiveness and Cohesion (1994): The Commission stressed that, apart from the large capitals, all regions of the Southern and Western edges of the Community, as well as almost all its islands, remain handicapped with regard to overall access to the 194 growth centres identified by an accessibility study. In these regions, often sparsely populated, the economic repercussions of heavy investments in the transport infrastructures are often insufficient to justify private or public expenditure,. However, minimum accessibility is necessary to support the economic activity of these peripheral regions.

Density can perhaps be simply explainedbyitsassociationwithaconcentrationofdemand,which facilitates either the introduction of a higher frequency of transport services, or the adoption of more powerful technologies for transport over a given distance. Thus, internal density is necessary so that the demand for transport reaches the critical mass guaranteeing sufficient economic and financial yield to justify the expenditure involved within an acceptable time. 79 This aspect can be brought into close relation to the accent put in the ESDP on a polycentric development model, considered as an antidote to an excessive concentration, and on the crucial role that secondary connections play.

For geographically peripheral regions, density becomes an essential factor to reduce their economic remoteness. It can be carried out in two manners: an internal densification by means of improvement of links with the local networks and an external densification by means of an increase of "gateway" functions (generation of a demand for transit which is not originating in the region). In this context, an important role of the TEN-T is to ensure the fluidity of access to regions suffering from geographical handicaps due to remoteness. A specific case is that "of peripheries in the periphery", which can be isolated rural areas or even urban areas being aside from major transport axes. For them, the improvement of the local networks is doubly great: on the one hand to improve their links with the capital city of the region and on the other hand to generate a local density which allows improvement of access to more distant cities.80

Based on the comments made above as regards "density", one can arrive, concerning the potential contribution of investment in infrastructure to a polycentric development model, at the following conclusions:

- on the one hand, the identification of principal urban centres has to form the basis for a selection of principal transport axes inside Europe (trans-european dimension) and of anchoring points for external connections of the European space. This is particularly important for peripheral regions, having regard to the potential that this can generate for their "external densification ". This approach will enable to identify investment projects favourable to polycentric development.

78 Viegas, J.: Transport and telecommunications: territorial integration. Document prepared for the conference "Towards a policy Strategy for the European continent". Berlin, April 1998 79 Viegas, J. : idem 80 Viegas, J.: idem

64 - on the other hand, it is important that interurban connections of a given region produce the density necessary to become a « centre » in a polycentric model, which could justify then investment in a long distance transport connection of a higher order.

As regards the impact of individual transport projects , one should note that:

- changes in the field of the productive effectiveness of the transport subsystem aimed by the project occur rather quickly, normally after the achievement of the project (simple direct impact). On the other hand, modifications as regards integrated effectiveness of the system as a whole occur more slowly and are realised with more difficulty. Obtaining results in this field involves very often co-ordination with other projects, because those could fall within the competence of other administrations concerned. Lastly, changes in relation to the materialisation of the infrastructure in terms of profits for the economy appear only after the market reacted on the previous impact, which means as from the moment when earnings connected with system effectiveness are perceived by the potential customers.

- an obvious reason for the investment preference in road transport infrastructures is that impacts of the first degree are realised almost immediately when the new road section is built. All what is necessary to arrive at the impact of the second level is the connection of the road to the existing network. This simple plan does not recur in the context of railway or harbour projects, where the appearance of second (and third) degree impacts largely depends on additional actions or on changes of intermediaries' behaviour. Thus, for example, for railway infrastructure projects, the customer will react only when the railway company (intermediary) has adjusted a number of its operations or of its schedules. In the case of harbour projects, the situation is even more complicated because one is facing a highly complex system. The number of professional intermediaries between the infrastructure and the final recipient is there larger, which sometimes means that they do not have always the same visions and interests with regard to the provision of services that the customer wishes.

Territorial impacts of the adoption of the Trans-European Transport Network

Each country of the EU conceived and built its infrastructures quite naturally according to its own needs and priorities, which gave birth to a European transport system resembling more a mosaic than a coherent network. The configuration of national transport networks is such that European traffic proceeds more according to national subsystems put in communication the ones with the others than according to a genuine functional European system adapted to the Single Market.

The EU transport infrastructure is adapted to national state borders and forms a close network inside the states, tending to concentrate the traffic with other states on cross-border passages that prove relatively small in number in comparison with national transportation routes and suffer more than these from morphological limits of the territory. The increase in traffic, partly connected with the successive increase in international and intra-European trade, clarified rather quickly the limits and the malfunctioning of this overall situation.81 The number of the bottlenecks to the cross-border passages multiplied.

The TEN-T must not only remedy imbalances and duplication due to a purely national optic by means of investments in infrastructures, but also provide a contribution specific to the economic and social cohesion of the Union, by a process of elimination of bottlenecks and by a process of construction of missing links,. The objective of the TEN-T Guidelines (European Parliament and Council Decision EC No. 1692/96 of 23 July 1996) is to establish the broad outline of envisaged actions to carry out the TEN-T and to identify projects of common interest the realisation of which has to contribute to network development . According to this decision, the network has (1) to

81 The European Parliament, Directorate-General for studies : The financing of the Trans- European Networks (1997)

65 ensure mobility of persons and of goods , (2) to offer to users infrastructures of quality, (3) to be based on all modes of transport, (4) to allow optimum use of existing capacities and (5) to cover the entire Community and to envisage its extension towards Member States of the EFTA and countries of Central and Eastern Europe as well as Mediterranean countries. Article 3 of the Guidelines defines the extent of the TEN-T as being composed of transport infrastructures as well as systems of management, of positioning or of navigation relating to traffic. The "infrastructures" aspect covers road networks, railway and inland waterways , seaports and inner harbours, airports and other interconnection points. The aspect "systems of management, of positioning or of navigation" comprise technical, computer or telecommunication facilities which contribute to a harmonious operation of the network and to effective management of the traffic.

The priorities of Community action concentrate on the realisation of primary and secondary connections required to facilitate transport, on the connection of peripheral and insular regions via creation or improvement of infrastructures, on optimisation and effectiveness of existing infrastructures, on the realisation of interoperability of network elements, on the optimisation of capacities and effectiveness of existing infrastructures, on the integration of the environmental dimension in the network and on the development as well as the introduction of systems of management and of control for the traffic in the TEN-T.

On the same day of the adoption of the TEN-T decision, a Council Directive of 23 July 1996 concerning the interoperability of the European high speed train network was approved. It aims to encourage the interconnection and the interoperability of national high speed train networks in order to realise a European network, the national components of which will be managed by the Member States with common requirements to be respected.

In the light of the forthcoming enlargement of the Community, the Commission works, in collaboration with the applicant countries, on the development of the future TEN-T in these countries on the basis of Pan-European Transport Corridors. This involves in particular defining projects, priorities and financing (TINA Project).

In terms of overall impact on employment, the final document COM/98/614 provides some information: according to the estimates, it should allow the creation of 600 000 to 1.7 million permanent jobs. Regarding the temporary jobs connected with the construction of the network, they are quantified for the years 1996 and 1997 between 270 000 and 460 000 men per year.

For an evaluation of the impact of infrastructure projects on the socio-economic development of cohesion countries , the Commission recently developed an approach at methodological level with the support of the London School of Economics, which endeavours to supplement the traditional micro-economic impact analyses and to evaluate the long-term contribution that infrastructure investments bring to the development of regional and national economies in which they are carried out. The most significant results of this approach reveal:

- a narrow and positive relation between investments in public infrastructures and private investments as well as between investment and long-term employment in the countries benefiting from the interventions of the Cohesion Fund;

- important effects on regional income; - important repercussions on regions and countries neighbouring the location of projects concerned.

While recognising the beneficial contributions of the TEN-T to territorial cohesion of the European Union, the "Europe 2000+" document of the Commission has already stressed in 1994 a number of potential problems which can emerge in this context:

66 - the TEN-T can have a potentially positive effect with regard to the general improvement of accessibility of peripheral regions. The document admits however, while referring to simulations established in 1994 for peripheral regions of the Atlantic Arc, that inside this transnational area this process can adopt a very selective way.

- the analysis also demonstrates that a too long distance between points of access to the TEN-T can create " empty" or "deserted spaces", if the secondary network is not improved in parallel. The problem of secondary networks and their connection to the principal network are considered a subject of major importance for regional planning. A first strategy to be pursued will be the construction of a trans-European network with more dense links, which will be in the immediate future too expensive and only possible in a long-term prospect. Another possibility consists in supporting specific actions (infrastructure projects framed by a spatial development plan), in order to obtain maximum earnings of the principal network by increasing the access points.

- the document stresses that even regions covered by the TEN-T, but which do not have a point of access, risk being disadvantaged and threatened by stagnation in their development process.

- a last danger is that the process of strengthening spatial concentration of economic activities induced by the TEN-T could contribute, on some transport axes or in certain regions, to a worsening of congestion problems or of negative effects for the environment.

This diversity in the evaluation of potential territorial impacts of the TEN-T is also confirmed by a survey carried out to the regions of Europe:82 it revealed duality in the opinions and expressed concerns as well as another vision with regard to the nature of the projects to be carried out: On the one hand, regions economically disadvantaged hope for a reduction in their isolation , while the prosperous regions wish a reduction in congestion of their transport axes . On the other hand, if one observes the priorities formulated by the regions in the survey with regard to "their" TEN-T projects to be carried out, one can note that they are far from the big visions and far from the large working sites of the Essen priority projects . For the regions, it is therefore legitimate to raise the question whether the economic development of territories in Europe would not be better supported by a larger number of more modest (regional) projects than only by some large working sites.

The Commission’s first Report on Cohesion of 1996 and the Communication of 1998 (final COM/98/806) provide some information of a general nature on the potential impact of the carrying out of the TEN-T as regards cohesion and accessibility. The documents stress that the completion of the TEN-T is, obviously, a necessary condition for spatial integration and for the improvement of accessibility. However to make the best use of the TEN-T, its development has to integrate into a broader strategy. The conclusions relating to effects of accessibility are as follows:

- a number of territories of the cohesion countries (in particular capitals and the large cities located near the new infrastructures of the TEN-T) will withdraw advantages of the TEN-T as regards accessibility in absolute terms. Thus, the needs of the peripheral regions were taken into consideration in the TEN-T design. In consideration of the fundamental role played by air transport in the distant regions, close attention was paid to the airports of more reduced size located on the islands, in particular those which depend on tourism, and in the regions far away from the Scandinavian countries and the Member States of the south. Many peripheral regions present a long coast and islands and, therefore, the integration of maritime transport in an integrated overall transport grid takes on a great deal of importance. However, the lack of effectiveness in the ports of the TEN-T where intermodal connections take place constitutes a weakness.

- another conclusion is that the bad quality of secondary networks in cohesion countries constitutes a fundamental handicap in relation to the profits that the territories of these countries could withdraw

82 Assembly of European Regions, 1996 : Regions and Territories in Europe. The Region’s View of the Territorial Effects of European Policies.

67 from the carrying out of the TEN-T. The TEN-T has therefore to be supplemented by simultaneous improvement of secondary networks , otherwise a strong dualisation of territories in the cohesion countries will occur with, on the one hand, strong congestion in metropolitan regions served by the TEN-T and economic weakening and depopulation, or even desertification, of the most rural and least accessible regions of the Union’s territory . Accordingly, in order to make the best possible use of the TEN-T for peripheral and distant regions, complementary investments in secondary networks will be necessary.

- numerous more central territories (and even those where the urban fabric is based on average cities) will see their accessibility improving in relative terms, which constitutes a significant comparative advantage. Medium-size cities located in central regions, to the crossroads or on corridors of the TEN-T, tend to draw most advantages as regards accessibility. Numerous cities located on high-speed train networks and motorways can hope for clear improvement of their physical accessibility. Moreover the principal metropolitan regions are the large beneficiaries of the implementation of the TEN-T, but to a lesser extent the medium-size cities. This testifies the presence of a transport infrastructure already well developed in these regions.

With regard to territorial effects that can result from the recent integration of the transport nodes and the interconnection points (intermodal transport) in the TEN-T, the observations of a French analysis of 1991 deserve to be retained:83 The rapid connections are all characterised by the growing importance of nodal functions (airports, motorway nodes, TGV interconnection station etc.), and the same is true as regards carriage of goods with the strong development of logistical functions. In terms of spatial effects, it is advisable to explore even more in this context what are the genuine economic issues connected with proximity and with the importance of these functions ? Far from these nodes, that is in empty spaces, the accessibility deficit is still relative. Will one be able to encourage, by integration of the chains or a combination of transport modes, a certain capillarity of rapid services and thus to reabsorb this deficit partially? New problems will arise which are only a new form of the traditional problem transport versus spatial planning . This time, they cannot be summarised by dualities such as strong regions - weak regions, neither dominant main transport axes-hinterland connection , nor centre-periphery, but by the duality network poles- empty spaces . If one makes the simplifying but worrying assumption, according to which all dynamic activities will tend to concentrate around poles close to a TGV station, to an airport of good level or of a motorway node, one can expect a strong and durable differential growth between these favoured poles and the remainder of the territory which is inside the large links. More generally, a dualisation process can result from it, maintained in particular by demographic migrations towards the poles. This disaster-scenario has to be opposed by co-ordinated transport and spatial planning policies in the empty spaces concerned, but it must be admitted that the methodological basis of such policies is not clearly established. A study of the European Parliament84 provides a first coherent analysis of the territorial base of the 14 TEN-T priority projects. These projects, which generally interest several Member States, will be gathered in 6 "major areas" defined only on the basis of the geographical location of the projects. The definition of these areas shows that the whole system of priority projects revolves around a central area and that certain projects of the other areas have a vocation more specifically internal to the area in which they are located. On the basis of this spatial visualisation of the Essen priority projects , one can observe that no project was adopted for the centre and the south of Italy, for the west of France beyond a Paris-Lyon axis, for Spain in the south of Madrid as well as for the Scandinavian countries in the north of a line between Stockholm and Helsinki. Thus, it is obvious that requirements to remedy the

83 Bonnafous, 1991 : Transport axis : the point of reflection. (DATAR, Files on prospective studies and territory) 84 The European Parliament, Directorate-General for studies : The financing of the trans- European networks (1997)

68 congestion of prosperous regions prevailed on the objective of reducing the isolation of peripheral regions.85

Another study of the European Parliament ( 1996) on the regional impact of Community policies tried to establish –among other aspects an analysis of the regional repercussions of the financial volume devotedtotheEssenprojects.86 One can observe that one of the absolute priorities of the TEN-T programme is the improvement of the high-speed train network throughout Europe. Thus, the overall cost of the completion of the TGV-PBKAL network amounts to 15.8 billion ECU. This network connects the principal European centres and is in the middle of commercial and prosperous Europe. Other large scale railway projects such as the German TGV, the TGV-East in France and the axis of the Brenner, connecting Bavaria to Verona via Austria, are in the same spirit. In this context one can note that the principal recipients will remain the major centres, and if one considers only the impact on regional disparity , it will depart from convergence rather than approaching it. At the other end of the scale, one finds projects which concern exclusively the countries of cohesion: the Greek East-West and North-South motorway network amounting to 6.4 billion ECU, the Lisbon-Valladolid motorway and the rail link Cork-Stranraer.87

With regard to the territorial impact arising from the geographical location of the TEN-T priority projects, the fact must be invoked that their repercussions can also benefit countries and regions on the territory of which the project is not located. Thus, a network of high-speed trains established in the centre reduces the general duration of ways of those of the periphery going to the centre or passing through it. Moreover, it could be that terminuses and the other principal stations, in view of previous experience, continue attracting the main economic advantages. A detailed evaluation of each project is therefore necessary to be able to grant an alternative allocation in all confidence.88

With regard to the evaluation of the territorial impacts of overall expenditure devoted to the TEN-T priority projects (by allocating investments to the regions according to the geographical location of the projects), the study notes that the Italian region of Trentino-Alto -Adige is at the head of the recipient areas with the strongest allocation of investment volume per capita under the TEN-T programme. Two projects justify this first place: the pass of the Brenner which connects Germany, Austria and Italy and the construction costs of the tunnel under the Alps. Another region of the north-east of Italy, the Friuli- Venetia-Giulia, also appears in the first recipient areas, accompanied by the Belgian Brabant. All these regions have a GDP/ per capita between ECU 19,200 and 19, 900, which is above the Community average (15 692). Two other recipient areas deserve to be quoted: it is Aragon in Spain (GDP/ per capita ECU 13,287) and Thuringia, one of the new German Länder (GDP/ per capita 5,450): Aragon benefits from the Spanish section of the HST line Madrid-Montpellier. Thuringia is also found in the centre of the German HST-network Berlin-Munich (connected to the Brenner axis). The town of Erfurt, located in the region of Thuringia, is a key element of this network, but here again the major economic centres of the north and the south are likely to share themselves the profits. Indeed, although being the fourth richest region in terms of GDP/ per capita , Upper-Bavaria (of which Munich forms part) is one of the principal recipients of the TEN programme. Thus, the TEN-T programme summarises perfectly the dilemma between, on the one hand, the desire to give to the companies ideal conditions to thrive by means of the entry into force of the European Single Market and, on the other hand, the desire to maintain economic and social cohesion.89

85 Assembly of European Regions, 1996 : Regions and Territories in Europe. The Region’s View of the Territorial Effects of European Policies. 86 The European Parliament, Directorate-General for studies : The regional impact of the Community policies (1996) 87 The European Parliament, idem 88 The European Parliament, idem 89 The European Parliament, Directorate-General for studies : The regional impact of the Community policies (1996)

69 In conclusion, the analysis shows that investments in the field of transport encourage prosperous central regions, where economic activity and the demand for transport are the strongest.

Territorial impact of the promotion of intermodality

In order to cope with future challenges, the Commission published in May 1997 a Communication entitled "Intermodality and intermodal freight transport in the European Union" ( COM/97/243 final). The aim of this Communication is the creation of a system guaranteeing optimum integration of the various modes of transport, so as to give continuous door-to-door services and meeting the needs of the customers, and therefore, to allow effective and profitable use of the transport system, while encouraging competition between the operators. The document indicates four strategies which will provide the impulse necessary for the development of the intermodal transport under the PCT:

- a European strategy for the infrastructure (network and trans-European nodes of transport). - the single market of transport (harmonisation of the regulatory conditions and of the rules of competition). - the identification and the elimination of obstacles and associated friction costs. - the carrying out of the information society in the transport sector.

In this Communication, the Commission considers that intermodality has normally to strengthen cohesion and to retain or attract industrial investors, services and jobs, if regional or local nodes incorporate the market of supply and consumption in broader structures. In this connection, the document underlines:

- that it is important to invest in intermodal transfer points and in modes (for example by better incorporating short sea shipping with rail-bound transports), - that the planning of intermodal infrastructures has to take account of interactions between nodes and terminals, transport flows, industrial relations and the size of regional markets, on the one hand, and of the effects on the regional and local environment, on the other hand, - that research should formulate new approaches for the location of nodes and terminals and improve knowledge of interactions between sites and industrial activities, transport systems and regional markets.

With regard to the spatial impact of intermodal transport, the First Report on economic and social cohesion of the European Union of 1996 stressed the strategic importance that combined transport has for the cohesion countries. Their geographical position requires basically the combination of several modes of transport: for the transport of freight, effective combinations between the road and maritime transport or between the rail and maritime transport are needed; the quality of the system is however determined by the weakest link in the chain.90

In 1992, the Commission established by the decision EEC No. 93/45 a support programme for pilot actions for combined transport (PACT). The latter helps operators to launch innovative projects in the field of combined transport (rail, road, inland waterways and coastal navigation) that are adapted to the requirements of the market . The first PACT programme (1992-1996) made it possible to part-finance 66 projects on 33 connections in all the Member States. The Commission proposed an extension of the programme until 2001 and added short-sea shipping to the eligible modes of transport . The Council of Ministers adopted the regulation EC No. 2196/98 which is the new legal basis for the extension of the PACT programme until 31 December 2001. But by analysing the geographical distribution of projects implemented in the context of the PACT programme between 1992 and 1996, one can observe that the majority of supported projects concentrate in the economic heart of Europe. With regard to the geographical distribution of the 22 projects selected for 1997, one can notice a certain attempt to rebalance the distribution of the

90 The European Commission 1996 : First Report on Cohesion

70 projects geographically.91 However, within the two phases referred to above one can observe that, generally, the Mediterranean space is under-represented distinctly in all the projects. A considerable exception - with regard to the number of projects implemented in recent years - is the intermodal complex Port Bou/Cerbères at the Franco-Spanish border. Another interesting aspect is that the transport links covered by PACT projects concentrate only on the major North-South axes but never on the East-West links, which will contribute nevertheless to better integration between the Member States and the regions of the Mediterranean basin, and more particularly of the Latin Arc (Spain, France, Italy).92

Potential territorial impacts of tariffing transport infrastructure

Under the hypothesis of a long term and constant growth of traffic, the transport area in the 2000s should be marked by major congestion . It is advisable therefore to envisage the hypothesis according to which a massive investment effort could not be enough to reabsorb this growth. From a theoretical point of view, the problem can be resolved, or at least managed, by the set of tariffings at the social marginal cost likely to induce re-balancing between the modes of transport.

At Community level, a wide-ranging discussion on the tariffing of transport was launched in December 1995 with the publication of the Commission Green Paper entitled "Towards fair and efficient pricing in Transport Policy" ( COM/95/691 final), which should reflect real costs and therefore include costs for the society . Being based on the results of discussions on the Green Paper and taking into account the results of reports of various "high-level working groups " (on joint investment between the public and the private sector , on tariffing of transport infrastructures), the Commission submitted in July 1998 a White Paper entitled "Fair payment for infrastructure use: an approach in stages to a common framework as regards transport infrastructure tariffing in the EU” ( COM/98/466 final). This White Paper summarises current problems related to the tariffing of infrastructure, presents the principles of tariffing at Community level, illustrates their repercussions, indicates the broad outline of a plan for the implementation of these principles in all modes of transport (road and railway transport, maritime transport and ports, aviation and airports, inland waterway traffic) and examines the repercussions of the proposed tariffing arrangement. The Commission proposes a three-phase approach for the institution of equitable and effective tariffing in transport. This strategy will guarantee the adoption of a coherent approach between now and 2004 for the priority modes, and shortly after for all the other modes of transport. Ensuring that fees are based on specific costs defined by mutual agreement, the Commission hopes to reach a general consensus regarding the need to connect tariffing of infrastructures to their use, and thus to improve the effectiveness of the European transport sector .

According to the position of the Commission, this Community framework for tariffing of infrastructures based on marginal costs will correct the principal existing weaknesses of the Community transport market , by encouraging more effective use of transport, will probably generate important general advantages which will also benefit the economically less developed regions. Evaluating the socio-economic effects of its strategy, the Commission thinks that an improvement of technological, operational and organisational effectiveness, a reduction of costs for certain producers and a slight modification - in the desirable direction - of modal balance and a slight fall in the demand for mobility should result in particular from it.

Thus, the White Paper of the Commission endeavours to take account of potential cohesion problems that effects of a modification of transport prices can have on peripheral regions or least developed

91 CPMR, March 1998 : For a contribution by the European Union to port development in the European seaboards. 92 Association of European Border Regions/General Council of the Maritime Alps, 1999: Towards integrated and sustainable development of the Latin Arc : Thematic stakes and co-operation options for Interreg III "Transport and Communications".

71 regions . Accordingly, the document stresses that these effects have to be studied and proposes - on the basis of some working hypotheses - several solutions to eventual problems:

- in rural or peripheral regions, where infrastructure is developed little and obstructions are not very numerous, taxes reflecting these costs will be low. Thus, there is no reason to think that in general, peripheral and less developed regions will be affected negatively by the application of a new tariffing system.

- if there were reasons to fear that a raising of transport prices could obstruct the economic development of peripheral regions or of economically less developed regions, it can prove desirable to carry out a flexible and very progressive tariff reform, in as far as that does not distort competition.

- the introduction of differentiated tariffing systems will also be reflected by a reduction in the direct costs for certain producers. Although the costs of transport generally represent only a small proportion of production costs, certain producers established in peripheral regions are however particularly likely to be touched (those who depend on a single transport mode, who travel long distances to sell on the principal central markets and who are in competition with the local producers). Such a situation can justify that specific provisions aiming to deal with this problem are introduced within the Community framework and that - in compliance with the rules concerning State aid - peripheral regions take measures with a view to promoting the competitive position of producers, by helping them to adapt their production structures towards products endowed with a value higher than the weighting coefficient and by improving the quality of the diversity of principal transport systems, if necessary with the support of the Structural Funds and of the Cohesion Fund.

Potential territorial impacts of a European sea-port policy

Despite the importance ports have in the regional economy and in the European transport system, they were involved only late in the middle of a European debate in the context of the CTP. After several attempts, the Commission submitted a " Green Paper” concerning ports and maritime infrastructures (COM 97/678 final), which presents the recommended policy guidelines. The "Green Paper” aims to launch a broad discussion on questions concerning ports and on future possible policies which will contribute to improve the effectiveness of ports and of port related maritime infrastructures. It submits a number of measures applicable within the framework of existing policies and identifies other fields, in particular harbour fees and access to the market, for which it is important to envisage new initiatives.

At several occasions, the document takes account of specific spatial conditions. Thus, the Green Paper recognises the specific situation and the problems of islands in the European Union, which depend almost entirely on their ports for communication with the outside world. Moreover, when analysing the role of ports in the economy of the European Union, the document proceeds to a geographical differentiation according to four large maritime areas , namely the Baltic, the North Sea, the Atlantic and the Mediterranean. In this territorial context, the document analyses the role of maritime transport and of ports and thus stresses the diversity of development prospects for the European port sector. Finally, with regard to proposals concerning the use of infrastructures and the internalisation of infrastructure costs through a Community framework, the document stresses that the adopted method should apply gradually and make an exemption for Objective 1 regions . A position document of the CRPM relating to the GreenPaper93 underlines however that under no circumstances a future directive concerning the implementation of this Community framework should disadvantage islands and the most remote regions of the European Union. It relates to provisions contained in the Amsterdam treaty which will enable to form a legal basis in order to allow certain exemptions.

93 CPMR, March 1998 : idem

72 With regard to the factor "development of transport and technological transformation of this sector", the various Community policies concerned (the PCT, the structural policies, the research and development policy as regards transport) have a potentially strong impact on the ports which depends nevertheless on their geographical location.

Potential territorial impacts of intelligent traffic management systems

The European Commission recognised rather early that the completion of the CTP priority objectives (and in particular that of durable mobility) as well as the effectiveness of the TEN-T in terms of interconnection, interoperability and accessibility strongly depends on intelligent traffic management systems (ITS). Accordingly, it integrated instruments relating to ITS as an entire part of its transport policy and developed for each mode of transport a series of top priorities (road transport, rail, inland waterway traffic, maritime transport, air traffic control, navigation positioning).

Since the beginning of the 1990s, the Community research policy as regards transport has endeavoured to develop and set up information and traffic management systems , in particular in the context of the Community research programme DRIVE II (Dedicated Infrastructure for Vehicle Safety in Europe, 1992-1994) and under the subprogram on "telematic applications" for the intelligent management of the traffic (1994-1998). Experiences demonstrated that certain aspects of the use of telematics for integrated traffic management acquired maturity, which allows henceforth an implementation at broader scale. In this context, European cities and regions were particularly active and have already created in 1989 a network named POLIS , which actively promotes the application of advanced telematics in order to improve regional and urban transport and environmental conditions.94

For the period 1994-1998, the Community research sub-programme "Telematics applications" co- financed more than 90 projects connected with transport or with the environment, a majority of which were implemented in an urban environment. The main fields are services to travellers, the management of the carriage of goods, network management, the promotion of non motorised modes of transport, new systems of tariffing and of financing urban public transport, the development of poles of exchanges for passengers, operational traffic control etc. This programme allowed the constitution of a series of urban validation sites in about fifty cities where demonstration projects proceed. In addition, the telematics application programme allowed the regrouping of a series of urban networks within a project named "European Digital Cities Project" which involves 4 city networks and counts more than 100 cities and regions. Its aims are the distribution and the exchange of technology as regards public transport as well as the use of the common telematic potential. 95

Concerning the active promotion of ITS under the TEN-T, the European Union has made significant progress while using financial assistance coming from the TEN-T Community budget. The part reserved for road transport management and for services to users in the context of the TEN-T budget was approximately 80 million Euros during the period 1995 - 1999. The concrete aspects covered by projects concern variable message signals (VMS), road information systems (RDS-TMC), electronic toll or information before the beginning of a trip. With regard to the geographical scale, one can distinguish three types of projects: projects of a European size, projects of a euro-regional size (set up of interoperable services in broad border areas while being based on

94 The European Commission, Web Site DG Transport, 2000; DG Regio : Europe of the Cities. Community actions in an urban environment; Final COM/98/614 95 The European Commission, Web Site DG Transport, 2000; DG Regio : Europe of the Cities. Community actions in urban environment; Final COM/98/614

73 cooperation) and national and regional projects with general interest. A territorial impact is particularly obvious in the case of the last two types of projects.96

The adoption of such intelligent systems can ensure better fluidity and safety of transport (freight and passengers) and contribute to reducing the pollution connected with the increasing congestion of transport. The active development of ITS can generate positive macroeconomic effects such as a reduction in costs connected with transport or a contribution to increase overall competitiveness of the European Union. But the adoption of such systems can also generate a considerable beneficial spatial impact, depending nevertheless on the geographical dimension of projects. A territorial impact is obvious for urban areas or for strongly congested transport axes, but also for isolated and peripheral regions which are particularly poor in navigation infrastructures (coastal islands and regions). This spatial dimension of ITS was, until now, very little taken into consideration in the analysis of territorial impacts of the PCT. b) the development of sustainable mobility

Environmental aspects of the Common Transport Policy are henceforth taken into account in the Treaty. This involves consequent political priority, because the negative impact of the transport sector on environment is generally important. In addition, they often have a very localised impact (consumption of space caused by infrastructures, urban environmental problems, negative impact on ecologically sensitive areas etc.).

Impact of the liberalisation of transport on the environment

In the field of road haulages, deregulation of transport seems to be one of the factors which contribute to the increase in congestion and to the deterioration of the environment. In addition, the fall in tariffs which results from it does not enable combined transport to widen its market share significantly. Measures that are more frequently proposed are the promotion of intermodal transport, the improvement of telematics use and the internalisation of the external costs. In the field of passenger transport by road, one can expect no advantageous effect on the congestion level on European lines. Congestion will increase or, in the best of cases, will be maintained. Since rail-bound transport is more favourable to the quality of environment than road transport, the environmental impact will be in direct relation to possible revitalisation of rail-bound transport under the effect of more thorough liberalisation. This will also depend on the development of policy guidelines with regard to the internalisation of external costs of each mode of transport. Since inland waterway traffic probably is the mode of transport of goods which has the less ecological impact, any relaunching of inland waterway traffic which can result from the liberalisation measures and from the structural reform measures, can be considered only positive from the environmental point of view.

Environmental impacts of the development of infrastructures and transport systems

There are numerous interactions between the quality of the environment and the infrastructures and systems of transport, whether it is the modal split of traffic or the location of transport infrastructures in relation to centres of population and in relation to natural spaces etc.

The environmental impact of the TEN-T constitutes a major field of concerns and of studies. In its report of 1998 on the implementation of the future Guidelines and priorities for the TEN-T (COM/98/614 final), the Commission recognises the need to better take into account the environmental dimension of the TEN-T. On the one hand, it mentions the actions undertaken following the obligations of Article 8 of the guidelines (development of a “tool box” handbook on strategic evaluation methodologies, the application of these methods on pilot corridors in five Member States, research with a view to future application of methodologies for an analysis of the network as a

96 The European Commission, idem

74 whole) and stresses the activities undertaken together with the European Environmental Agency or under the Community research programme. The TERM indicator programme, currently being developed, is the concrete manifestation of the new concerns. However, at its present stage of development, it is not yet of major operational usefulness to evaluate from the environmental, and especially territorial, point of view the located transport policies.

Some examples enable to illustrate the issues in question. In parallel to the Community process of a development of TEN-T guidelines, the non governmental association "BirdLife International" carried out an evaluation of the environmental impact of the network (from 1994 to 1995) by means of an environmental strategic analysis and of a corridor analysis.97 At European level, the result of this analysis was as follows:

- 3.8% of all the ”bird protection areas” are inside a broad corridor of 2 kilometres along the railways and roads planned in the context of the TEN-T. Approximately 21% of the “bird protection areas” are inside a broad corridor of 10 kilometres along the TEN-T road network.

- 11% of all the natural protection areas are inside a broad corridor of 10 kilometres along the planned road network and 2% inside a broad corridor of 2 kilometres.

Some examples also illustrate specific situations. In France, for example, 19.8% of the « birds » protection areas are in a broad corridor of 10 kilometres along the planned railways and roads and 4.1% in a broad corridor of only 2 km. But also both case studies at national level on the fix Oeresund link between Denmark and Sweden and "Via Egnatia" in Greece demonstrated serious gaps with regard to the potential environmental impact .

The territorial impact connected with stimulation of short sea shipping can at the same time be positive and negative.98 One can note beneficial effects on the environment in general and on the economy of coastal areas. Owing to the generally not very polluting nature of short sea shipping with regard to the NOx and CO2 emissions, its encouragement can contribute to limiting the negative impact of road transport on the environment. The practice shows that an intensification of short sea shipping can also cause negative effects. It is probable that marine pollution caused by the ships (accidental spill of oil and fuel or cargo as well as other waste) increases. An intensification can also increase the need to adapt the navigable access road of ports by means of dredging, which can also involve environmental risks (see box). Finally, the port authorities can be obliged to extend their infrastructures/harbour superstructures (enlargement of the quays and increase in storage facilities), which results normally in increased consumption of non built space and can generate a loss of natural habitats or a disturbance of coastal geophysical conditions.

Other activities developed in the framework or close to the CTP have an important environmental dimension. This involves in particular the promotion of the intermodality, that of intelligent traffic management systems and of the introduction of tariffing of infrastructures. Intermodal systems have the role, inter alia, to withdraw from the road a part of the traffic and to defer it, for a part of the way, on other modes of transports more favourable to the quality of the environment. The tariffing of infrastructures, by internalising social costs generated by the various modes , should also cause a transfer of road traffic towards other less polluting modes . The development of intelligent traffic management systems has the main role of making traffic more fluid and reducing congestion, therefore encouraging the environmental impact.

97 BirdLife International : The impact of Trans-European Networks on Nature Conservation : A Pilot Project, January 1995 98 Institute for European Environmental Policy: Thematic study: The influence of EU-policies on the evolution of coastal zones. (London, November 1999)

75 The main environmental problems generated by the transport sector Acid rain and air pollution: The transport sector became the principal source of nitrogen oxide emissions, producing thus 60% of the total in 1995. Transport is an important source of other atmospheric pollutants, such as carbon monoxide, carbon dioxide, volatile organic particles, some of which have high toxicity. Impact on the biodiversity: The expansion of urban areas and of transport infrastructures is an important cause of the deterioration of biodiversity. The development of transport infrastructures can have a series of negative effects on biodiversity: The most tangible ones are the direct threats on the integrity of important areas of nature conservation by an inappropriate localisation of roads, railways, ports and associated facilities. Roads and other ways can split up habitats, thus reducing the diversity of species and allowing the flow of other species. But roads make also obstacle to the movement and to the genetic exchange between species, especially vertebrates. The survival of certain animal species is likely to be affected by traffic. The indirect effects on habitats and species include disturbances caused by noise and light, which can reduce the population and the reproduction of certain animals. Despite the designation of areas for nature conservation , which is one of the most sustainable measures and one of the most applied measures to protect the natural environment, it happens regularly that regulations of nature conservation are violated by transport infrastructure projects. Despite the existence of the obligation for an environmental impact assessment for large-scale transport infrastructure projects (directive EEC No. 85/337), the current practice shows that the EIA - for the infrastructure projects - still accuses serious limitations (for example, it seldom considers modal and location alternatives). Climatic change and emissions of greenhouse gases: Between 1980 and 1995, energy consumption in the transport sector of the European Union increased by 44%, which reflects an increase especially in the subsector of road transport. The full growth of traffic caused an overall increase in the CO2 emissions. One expects an overall increase in the emissions in case of a growing use of transport, however it is difficult to envisage the importance of the increase. Deterioration of the urban environment: The increase in traffic in European cities, in terms of number of displacements and of distance covered, is caused at the same time by urban development, the change of life style (more intense use and consumption in resource suppose an increase in transport of assets) and by a higher vehicle ownership. The most significant effect is the drastic increase in displacements between the place of residence and the place of work and one forecasts that they will continue increasing. In numerous cities, cars account henceforth for more than 80% of transport and the bicycle does not seem to count on general support. In certain cities bicycles are however regarded as an alternative method: thus in Copenhagen (DK), Groningen (NL), Munster (D) and Vasteras (S) this means of displacement constitutes more than 30% of all displacements. Motor vehicles are the principal source of air pollution and transport is also determining in periods of tropospheric ozone concentration , which pose a problem in certain cities during the summer. Traffic is also one of the principal sources of sound pollution : approximately 450 million persons in Europe (65% of the population) are exposed to a high environmental noise level (above 55 db) and approximately 9.7 million persons are exposed to the unacceptable level of noise (above 75 db). Source: Jime'nez Beltrán, D.: Durable transport: An urgent need for Europe. In: Fundación Ecologica Y Desarrollo (Editeur). Durable transport in mountain area. The role of the railway for the carriage of goods throughout the central Pyrenees. International symposium ACTE, Jaca, on 8-10 October 1998. Zaragoza, 1999.

76 3.6. Conclusions

Until 1985, the PCT was very slightly anticipatory of effects of European integration as regards transnational trade. It was dominated by protectionist policies of the Member States in relation to their transport operators and by strong liberalism as regards modal distribution of flows which very largely benefited the road, the whole accompanied by the absence of a major European programme of transnational infrastructures. The efforts made since could not fill the delay accumulated for more than 25 years, in a context where public finance rarefies and where gigantic needs as regards infrastructures formalise in the Central and Eastern European countries. In addition, the strongly sectoral dimension of national and European policies as regards transport inhibited a number of potential synergies which could have contributed more to the economic development of the territories and to the quality of life. The problem of transport in Europe can be summarised in three essential99 points :

- the first concerns the increase in road transport of any nature (persons and goods, short and long distances) and the congestion of the road network as a whole (urban networks, motorway, minor roads).

- the second concerns the strong rise of serious ecological problems connected mainly with this increase in road transport (energy, pollution and harmful effects, accidents).

- the third is connected with the growing and determining weight of transport in the economy.

The Community, as well as national governments , is therefore confronted with contradictory requirements to satisfy at the same time the needs of economic development and to reduce the malfunctioning and the negative impact on safety and environment.

From a territorial point of view, certain interventions such as the TEN-T have a precise territorial base. The territorial base of the TEN-T is composed of linear (motorways, railways, inland waterways) and specific punctual elements (internal seaports, airports, intermodal terminals and other interconnection points). Because of the interdependence between the CTP and the Structural Policies, the territorial base of the latter (eligibility areas at NUTS II and III level) also concerns the CTP . In practice , however, one can find in the framework of eligible projects for financing territorial elements of a linear or specific nature, whether those are elements of the TEN-T or of secondary networks . Other aspects, such as liberalisation or the future tariffing of infrastructures, act as general principles without precise territorial base, which does not prevent them from having a considerable territorial impact.

Concerning the territorial impact of liberalisation, it is difficult to emit a valid overall judgement due to the fact that the degree of liberalisation and basic conditions for each sector (tax systems, legislation of work, or of manpower) vary still rather widely from one Member State to the other. In addition, at the time of the entry into force of Community liberalisation measures , the starting position of each Member States was different, certain countries having anticipated by several years liberalisation, while others still practised a high degree of protectionism. These differences continued in certain fields: certain countries already practise intramodal competition in the transport of railway freight, while others still keep to situations of exploitation monopolies . It is also difficult to distinguish to which point the development observed in a given sector is directly connected with the liberalisation measures implemented. Certain specific comments emphasise however a contradictory territorial impact. The case study of Bergamo showed clearly that the liberalisation of air transport had had an extremely positive impact on the development of the Bergamo airport, in

99 The European Parliament, Directorate-General for studies: Towards a European policy for the mountain areas (1997)

77 particular with regard to international connections. At the opposite, the British experience of liberalisation of passenger road transport showed that private companies « selected » the most profitable connections and neglected secondary connections and socially difficult districts. This forced to introduce on these connections public service, paid by the taxpayer and not by profits generated by the most profitable connections. Financial equalisation between attended lines and less attended lines does not seem to function in a context of total liberalisation.

With a view to the ESDP, the contribution of transport policy to a polycentric development of Europe is essential. It must be remembered that necessary strategies in this field, based on a network design generating, on the one hand, an effect of density and a concentration of demand and, on the other hand, an increase in « gateway » functions (generation of a request for transit), are neither explicitly part of the TEN-T design nor of the majority of regional programmes. It will be in future necessary to conceive more sophisticated and more integrated approaches to achieve the expected results. The role that certain aspects of the CTP can play in the field of polycentric development, such as the budget heading of the TEN-T and actions for combined transport, will have to be reconsidered in order to benefit more the regions of the periphery. The data available reveals in fact a rather high concentration of expenditure in the central part of the Union’s territory . In relation to polycentric development, liberalisation has differing effects. The liberalisation of air transport undoubtedly benefited the development of international air links from secondary airports, sometimes located in distant regions, as well as the development of the most remote regions. The liberalisation of road haulage and short sea shipping can, on the other hand, have certain negative effects on peripheral regions, in particular in terms of jobs or of cost of transport. One cannot however generalise this conclusion, because, in certain cases, powerful services can develop which did not exist before.

Co-ordination between the primary and secondary transport networks, however strongly stated in the priorities of the CTP, shows deficiencies as regards the practice. The case study of Tzoumerka showed that the construction of two motorways (being a part of the TEN-T) throughout the Epirus necessarily did not lead to better accessibility in the internal mountain areas, by lack of connections with these motorways. The case study of North-Portugal pointed out a very high concentration of investments in transport infrastructure in the area of large Oporto, to the detriment of internal areas of the hinterland. This shows that territorial impacts also depend on the institutional context and on the type of Community financing. Transport infrastructures carried out within the framework of the regional policy benefit, in theory at least, from a more thorough territorial and regional integration than certain segments of the TEN-T conceived from a much more sectoral and centralised point of view.

The introduction of environmental concerns into the CTP , required by the Treaty, strongly developed in recent years, in particular by means of the promotion of intermodality and by the introduction of tariffing of infrastructures, the common objective being to reduce, as far as possible, the influence of road transport. It is a field of the ESDP where priorities strongly converge with those of the PCT. This involves networking of intermodal nodes of carriage of goods (European corridors, sea and inland transport). The emphasis put in recent years on the development of intermodality in the implementation of the TEN-T and within the PACT programme, points out an important field of convergence between the CTP and the ESDP.

More importance should be devoted in future to an important field of interface between the TEN-T and regional planning, which is that of the corridors. So far, corridors were envisaged almost primarily from the point of view of transport. The practice of the Interreg IIC programmes reveals the need to approach corridors from the point of view of regional planning, by taking account, in addition to major transport infrastructures, of the urban structure , natural spaces, the cities- countryside relations, the recycling of waste lands of any nature, the secondary transport networks , harmful effects due to transport etc. In this way a more integrated approach for territorial entities could be developed, which are required to play an increasingly strategic role on the European territory.

78 Moreover, the objectives of sustainable mobility of the CTP argue in favour of a modification of the demand structure for mobility by the integration of spatial planning priorities into the planning of transport infrastructures. For its part, territorial planning is also able, by better integration of functions (in particular of employment and of the residences), to contribute in the long term to a fall in the demand for mobility.

79 4. Territorial impacts of the Common Environmental Policy

4.1. The environmental dimension in the objectives and policy options of the ESDP

In the first guiding principle of the ESDP "polycentric spatial development and new urban-rural partnership", the ESDP stresses that the policies of the Community and of all Member States have to take account of the sustainable development of towns and that the implementation of the political options agreed upon on a world-wide scale at Rio Conference in 1992 (Agenda 21) and at the Istanbul Conference (Habitat Agenda) requires a multi-sector and integrated strategy. The decisive environmental aspects put ahead by the ESDP are (1) the control of urban development, (2) an intelligent and wise management of the urban ecosystem resources (in particular water, energy and waste) and the safeguard of nature as well as (3) better accessibility thanks to effective and non polluting transport systems. In this context, the document is also linked to the Community action framework in which the European Commission put forward policy objectives and measures for urban areas which are in line with the ESDP objectives.

Concerning the rural areas of the Union, the ESDP approaches the environmental dimension in particular through the identification of various existing environmental harmful effects and of a presentation of the environment as a potentiality for the local and diversified development of these areas. The integration of the environmental dimension in the context of an integrated development strategy for rural areas or for urban-rural partnerships will require increased co-ordination efforts between the various policies applied in rural areas.

Policy options of the ESDP relating to the environment in the context of the first guideline

Polycentric spatial development and new urban-rural partnership •Improvement of the economic basis, environment and service infrastructures of cities, particularly in economically less favoured regions, in order to increase their attractiveness for mobile investment. •Promotion of a wise management of the urban ecosystem. •Promotion of better accessibility in cities and metropolitan regions through an appropriate location policy and land use planning, that will stimulate mixing of urban functions and the use of public transport. •Support for effective methods of reducing uncontrolled urban expansion; reduction of excessive settlement pressure, particularly in coastal regions. •Securing sustainable agriculture, application of environmental measures and diversification of agrarian land utilisation. •Use of the potential of renewable energy in urban and rural areas taking into account local and regional conditions, in particular the natural and cultural heritage. •Exploitation of the development potential of environmentally friendly tourism.

In the context of the second guiding principle " parity of access to infrastructure and knowledge", the environmental dimension is approached in particular in the context of an effective and sustainable use of infrastructures. The ESDP stresses in this respect that the current increase in the traffic of persons and goods (particularly in the field of road and air transport) threatens more and more the environment and the effectiveness of transport systems. Integration of the environmental dimension in this context also requires increased efforts as regards co-ordination between the actors concerned:

- a first important aspect concerns the integration of transport and land use planning, which can be particularly effective in large urban regions, where dependence of the population in relation to individual cars (and thus the harmful environment effects) could strongly be reduced.

- another aspect concerns the measures to be taken to promote the non polluting transport modes, because this requires an intermodal approach as well as the co-ordinated management of transport infrastructures.

80 Policy options of the ESDP relating to the environment in the context of the second guideline

Parity of access to infrastructures and knowledge 2.Better co-ordination of spatial development policy and land use planning with transport and telecommunications planning. 3.Improvement of public transport services and provision of a minimum level of service in small and medium-sized towns and cities. 4.Reduction of negative effects in areas subject to high traffic pressure by strengthening environmentally compatible means of transport, levying road tolls and internalising external costs. 5.Co-ordinated and integrated infrastructure planning and management for avoiding inefficient investments (for example superfluous parallel development of transport infrastructure), and securing the most efficient use of existing transport infrastructure.

European Commission, 1999

In the context of the third guideline "wise management of natural and cultural heritage”, environmental initiatives are contained in particular in the provisions relating to nature safeguard and development, to the management of water resources as well as the creative management of cultural landscapes.

In the European Union, the development of natural resources is based on the management of environmental factors (air, water, soil) and on a targeted protection of certain areas (protected areas, environmentally sensitive areas). In spite of the fact that the extent of protected areas increased during the last ten years, these areas remain in majority small protected islands. Based on the fauna, flora and habitat directive (FFH Directive) and on environmental directives, the creation of a " Natura 2000" network of protected areas throughout the Community territory represents a relevant approach which should be harmonised as quickly as possible with the regional development policy. An ecological corridor system and the "Natura 2000" network can enable to preserve and develop a number of valuable biotopes worth being protected. Major importance falls on the connections and corridors which link these protected spaces, because they play a very important role by encouraging migrations and genetic exchanges of plants and wild animals. In addition to protected areas, various categories of environmentally sensitive areas witness major biological diversity, such as for example mountain areas, wetlands, coastal regions and islands. Since there are less and less biotopes of this type still largely intact, the protection of their most significant parts from the point of view of ecological value must also be ensured. But here too, protection is not enough to preserve these areas; their least sensitive parts should be economically developed while taking into account their ecological functions.

81 Policy options of the ESDP relating to the preservation and development of the natural heritage •Continued development of European ecological networks, as proposed by " Natura 2000", including the necessary links between nature sites and protected areas of regional, national, transnational and EU- wide importance. •Integration of biodiversity considerations into sectoral policies (agriculture, regional policy, transport, fisheries, etc.), as included in the Community Biodiversity Strategy. •Preparation of integrated spatial development strategies for protected areas, environmentally sensitive areas and areas of high biodiversity such as coastal areas, mountain areas and wetlands, balancing protection and development on the basis of territorial and environmental impact assessments and involving the partners concerned. •Greater use of economic instruments to recognise the ecological significance of protected and environmentally sensitive areas. •Promotion of energy-saving and traffic-reducing settlement structures, integrated resource planning and increased use of renewable energies to reduce CO2 emissions. •Protection of the soil as the basis of life for human beings, fauna and flora, through the reduction of erosion, soil destruction and overuse of open spaces. Development of strategies at regional and transnational levels for risk management disaster-prone areas. European Commission, 1999

Water represents a vital resource for nature, agriculture, households, industry, leisure, energy production and transport. An ambitious policy for water protection and for the management of water resources has therefore become essential. At political level, it is necessary to act, in the context of spatial planning at European level, on several aspects (see also box):

- co-operation beyond administrative borders proves essential to manage the water resources, in large river valleys, both for protection against floods, drought prevention and for the protection of underground water and of wetlands.

- policies relating to surface and underground water have to be linked to the spatial development policy, in particular while choosing preventive measures which reduce the volume of waste water as well as overexploitation and pollution of water resources. In this context, appropriate planning of the territory and of land use can contribute in a decisive way to the improvement of the water quality. Moreover, this involves promoting cross-border and transnational spatial development strategies as a basis for the development of a better management of water resources.

- with regard to the reduction of flood risks or the fight against drought, transnational approaches, already experienced under Interreg IIC, can represent a first possible approach, which has nevertheless to be re-orientated and studied in greater detail.

82 Policy options of the ESDP relating to the management of water resources Improvement of the balance between water supply and demand, particularly in areas which are prone to drought. Development and application of economic water management instruments, including the promotion of water-saving agricultural methods and irrigation technology in areas of water shortage. Promotion of transnational and interregional co-operation for the application of integrated strategies for the management of water resources, including larger ground water reserves, in areas prone to drought and flooding, particularly in coastal regions. Preservation and restoration of large wetlands which are endangered by excessive water extraction or by the diversion of inlets. Concerted management of the seas, in particular preservation and restoration of threatened maritime ecosystems. Strengthening of regional responsibility in water resources management. 5.Application of environmental and territorial impact assessments for all large-scale water management projects. European Commission, 1999

By their specific character, cultural landscapes contribute to the local and regional identity and reflect the history and interactions between man and nature. They represent consequently a considerable value, for example as tourist attractions. The safeguarding of these cultural areas is important, but it does not have to block economic use excessively, or even make it impossible. A common characteristic of a number of European landscapes is their constant development. This involves however a risk of standardisation and of loss of biodiversity. Certain cultural landscapes should be protected as unique examples of historical cultural landscapes. Protective measures are also necessary for certain typical elements of old landscapes, such as for example the "open fields" systems in which localities of historical interest emerged.

At policy level, the following measures can ensure a creative management of cultural landscapes:

- in certain cases, the targeted protection of cultural landscapes and of exceptional sites is necessary (as unique examples of historical cultural landscapes). In other cases, entire landscapes have to be preserved, although creative rehabilitation and planning of landscapes can often prove more important than the safeguarding of the present situation. The types and cultivation methods of agricultural holding often are the key factors to prevent the destruction of cultural landscapes.

- in a considerable number of regions, an individual and creative landscape policy, i.e. a policy based on integration, open to new developments, can contribute to the creation or rehabilitation of attractive landscapes.

- with regard to the deterioration of landscapes, the promotion of traditional methods of landscape management, the development of tourism and afforestation can, for instance, represent alternatives to integral waste land.

Policy options of the ESDP relating to the creative management of cultural landscapes •Preservation and creative development of cultural landscapes with special historical, esthetical and ecological importance. •Enhancement of the value of cultural landscapes within the framework of integrated spatial development strategies. • Improved co-ordination of development measures which have an impact on landscapes. Creative restoration of landscapes which have suffered through human intervention, including recultivation measures. European Commission, 1999

83 4.2. Environmental trends and issues on the European territory

Analysing the recent reports of the European Environment100 Agency and of various other sources, 6 broad environmental priorities can be identified, which are particularly significant for the territorial development policy.

Air pollution and related environmental consequences with a territorial dimension.

The main problems associated with air pollution are damages caused to human health, acidification and eutrophication of water and soils, as well as damages caused to natural ecosystems, to the cultural heritage and to agricultural crops.

Short-term air pollution exceeds the quality standards defined by WHO at least once a year in most European large towns. More than 100 million persons suffer from too high ozone concentrations in summer and a substantial part of the population living in the Member States is exposed to ozone concentrations which are above the tolerable thresholds. The main emissions responsible for acid rain and for acidification of soil and water (NH3, NOx, SO2), originating mainly from energy, industry and transport, have been reduced significantly since 1980 in the Member States. In the Member States (EEA), areas concerned with exceeding critical acidification levels of water and soil (nitrogen and sulphur oxide deposition) have been reduced by 40% since 1985. But critical acidification levels are still exceeded on more than 60% of the European territory. Exposition to ozone may cause damage to the foliage of plants and reduce the crops production or forestry yields. A substantial part of forests and crops in the Member States (EEA) is exposed to ozone levels higher than the critical thresholds recommended by the European Union.

Threats on fresh water resources and on coastal water:

Environmental pressure increased on fresh water resources and their deterioration has numerous consequences. It affects natural or semi-natural habitats, and in particular wetlands, and may cause contamination or scarcity of surface water and of ground water, which is in turn responsible for soil deterioration, increase in salinity or desertification. Numerous relatively poor southern regions are missing water and seasonal fluctuations in supply and demand can be observed. The risk of contamination of water reserves is there higher than elsewhere. Tensions between water supply and demand may also appear in the northern parts of the Union where an apparently sufficient water supply may be constrained because of high population density or high agricultural and industrial consumption.101

A "tension" indicator is the national relationship between the total amount of renewable pure water resources and the EU average. The situation varies widely in the EU: Sweden and Finland have six times more water available than the average of the Union, while 7 Member States (Belgium, Denmark, Germany, Spain, France, Italy and the United Kingdom) have water supply lower than Community average. In the northern regions, tensions have their origin in particular in high population density combined with a high level of industrial development. In the South, tensions are originating from weak rainfalls, associated to strong evaporation and high agricultural consumption (irrigation). In Portugal and Greece, however, water is relatively abundant in spite of weak rainfalls

100 European Environment Agency, WEB Site, Environmental Themes : Report on the environment in Europe; Environmental Signals 2000 - Air Pollution; Environment in the EU at the turn of the century.

101Commission Européenne : Sixième rapport périodique sur la situation et le développement économique et social des régions de l'Union européenne , 1999.

84 owing to important contributions coming from rivers having their source in the neighbouring countries; same goes for Austria.102

In the European Union, the number of strongly polluted rivers was significantly reduced in particular owing to the quantitative reduction of rejected organic and phosphoric substances. These improvements were less significant in the South and in the East of Europe and nitrogen concentrations in the Union’s rivers have not significantly changed since 1980. In most parts of Europe, the nitrogen and pesticide content of surface water is higher than Community recommendations on drinking water. Eutrophication of rivers and lakes is very widespread. Acidification of fresh water is a serious problem in numerous Scandinavian countries, and in particular in most southern regions of Scandinavia.

With regard to connection to sewage treatment facilities, it can be observed that almost all households in Denmark and more than 85% in Germany, Luxembourg, the Netherlands, Sweden and the United Kingdom are connected . At the other extreme, only slightly more than 20% of households in Portugal and 34% in Greece have access to sewage treatment facilities and the figure is less than 50% in Spain and in Ireland. In the countries applying for accession, 40% of the population is not connected to sewage treatment plants and 18% of waste water is discharged without having been treated.

Numerous environmental problems of the main European seas ( Mediterranean, Barents Sea, Norway Sea, Baltic, Black Sea, North Sea and northern Atlantic) are of telluric origin. Their common problems are the absence of effective water extraction management, the pollution of coastal areas, eutrophication of coastal water, conflicts between activities in coastal areas, the introduction of non-domestic species, the lack of control of marine activities, the overexploitation of fishery resources (in particular in the Mediterranean and in the North-eastern Atlantic) and the rise of the sea level due to climatic warming.

Threats related to the various forms of soil deterioration and to land use conflicts:

Various forms of soil deterioration (which can be of physical, chemical or biological nature) and even soil destruction are the result of complex influences, originating at the same time from physical factors (relief, weather) and competition between the various forms of land use as well as from harmful effects of certain human activities (agriculture, industry, urbanisation, road construction etc.).103

Critical thresholds as regards acidification are exceeded on 75 million hectares of forestry soil in Europe. Generalised excessive use of fertilizers, combined with leaching and streaming, generates eutrophication and contamination of drinking water by nitrogen.

Soil erosion is a major socio-economic and environmental problem in Europe. It weakens land productivity and harms the performance and effectiveness of ecosystems. More than half of the land in Europe suffers, to varying degree, from hydrous erosion, and approximately one fifth from wind erosion. The erosion process is particularly acute in the countries of southern Europe, where it reaches often catastrophic levels. According to the results of CORINE (1992), approximately 66% of rural areas are subject to a moderate up to extremely high risk of hydrous erosion. The disappearance of soil is also caused by coverage through urbanisation and infrastructure. The daily disappearance

102Commission européenne : Sixième rapport périodique sur la situation et le développement économique et social des régions de l'Union européenne , 1999. 103 The European Commission, WEB Site DG Agriculture (Document « Agriculture, environment, rural development.... »), 1999 : Vidal (« Du sol au paysage... ») and Montanarella (« Le sol à l'interface... »)

85 rate reaches currently approximately 36 hectares in the Netherlands, 120 hectares in Germany, 35 hectares in Austria and 10 hectares in Switzerland.

Threats resulting from non suitable waste treatment:

In the Member States of the European Union and of EFTA, the total volume of waste increased by almost 10% between 1990 and 1995 while economic growth was only about 6.5% in constant prices. In spite of modern techniques and stricter regulations, waste disposal is causing multiple pollution: it pollutes the soil and ground water by a relaxation of heavy metals, nutrients and other toxic substances (discharges) and produces carbon dioxide, methane and other polluting gases. It is responsible for dioxin, hydrochloric acid and mercury emissions at the stage of waste incineration. Rubbish tips are the cheapest elimination method of waste and represent a special form of land use (in Europe, rubbish tips cover between 1 200 and 1700 km²). This form of elimination is used in most cohesion countries, the proportion going from 85% in Spain to 100% in Ireland. Because of this elimination practice, the spatial development strategies for cities, metropolitan regions and even rural areas are often increasingly facing individual problems. More than 55 000 contaminated sites in only 6 European countries were identified, and the total contaminated surface in Europe represents between 47 000 and 95 000 km², including 1000 to 3000 km² contaminated by rubbish tips.

Threats on natural, sensitive and wild areas and problems of loss of biodiversity:

The European ecosystems comprise more than 2 500 types of habitats and approximately 215 000 species, including 90% of invertebrates. Practically all European countries shelter species that are not found elsewhere (endemic). The Mediterranean basin forms part of the major European biodiversity centres. Peat bogs, marshes and wetlands largely disappeared in western and southern Europe.

The «environmentally sensitive areas» (ESA) are defined as areas having a significant inherent value exposed to pressures coming from their location as well as from their external relations or from their physical characteristics. Generally, several main ESA categories can be distinguished, namely sensitive areas connected with the specific conditions of coastal and mountain areas, wetlands, lakes and rivers, reserves of fresh water, forests and cultural landscapes.

In the context of the European Union, the threats and changes to which biodiversity is generally exposed (genetics, species, ecosystems and habitats) will remain high until the year 2010 and beyond. This pressure is originating in various inter-connected sources such as changes in land use, pollution and introduction of non-domestic species. At European scale, between one third and half of all fishes, reptiles, mammals and batrachians are threatened. In the context of the European Union, the most generalised and robust species as well as the invading species will consolidate their position and their distribution on the territory, while the more specialised or endemic species will further decline. The total surface of protected sites in Europe has tripled since 1972, but the majority of these sites are small and fragmented, and financial resources as well as personnel often lack to ensure effective protection.

Deterioration of landscapes and loss of landscape diversity:

Landscapes fulfil three main functions: a social/cultural function, an economic function and an environmental function.104 Apart from the effects that environmental pollution generates, the typical pressures on landscapes are connected in particular with the rationalisation and intensification of agricultural production, with the abandonment of extensive agriculture in certain regions and with the

104 European Commission, WEB Site -DG Agriculture : Document : « Agriculture, environment and rural development » : (Montanarella : the soil at the interface of the environment and agriculture; Vidal : From soil to landscapes »)

86 expansion of towns and isolated settlements (holiday residences) as well as with the development of transport infrastructure.

Environmental issues for specific territories

Coastal and island105 regions

From an environmental point of view, coastal areas are characterised by the presence of very fragile and vulnerable marine and land ecosystems, which are often threatened. The concrete development of environmental threats in coastal areas takes various forms such as the deterioration of the coast and of natural areas, coastal erosion, overexploitation of fresh water resources and desertification of the coastal strip as well as pollution of coastal water and reduction of marine resources.

Numerous coastal areas are characterised by an over-concentration of population and human activities, which radically changed their original balance. Demographic pressure is often reflected in these areas through processes like unorganised urbanisation and strong concentration of modern infrastructure, associated with non-controlled growth in sectors like tourism, industry, agriculture and fisheries. Demographic pressure and changes in economic activities accentuate the deterioration of the coast as well as the reduction in diversity and in biological quality of coastal landscapes. It modifies coral reefs, sea-beds, sea fronts and often contributes to the destruction of important coastal natural habitats and of wetlands in particular. Thus, from the 700 000 hectares of coastal marshes existing in Italy at the beginning of the century, only 192 000 hectares remained in 1972 and less than 100 000 hectares in 1994. In 1976, bocage in Normandy still covered 1018 km² on a 5 kilometre wide strip from the coast. In 1981, only 892 km² remained. In southern Europe (from the Straits of Gibraltar to Sicily), 75% of the dune systems have disappeared since 1960. This modification of ecosystems has already caused local disappearance of certain species and continues threatening biodiversity.

Numerous coastal areas are confronted with management problems of fresh water resources, in particular with regard to the difficulty of balancing supply and demand. These problems concern with particular intensity the coastal areas of southern Europe where coastal agriculture and tourism may generate a water demand largely higher than supply possibilities. Coastal erosion, which can be defined as an inland movement of the coastline, concerns more than 5 200 kilometres of coasts and of beaches in Europe, i.e. 30% of the total. Deterioration in the quality of coastal water and reduction in marine resources are another major concern. The factors generally responsible for this situation are chemical and thermal pollution, the excessive increase in nutritive elements in coastal water being also particularly alarming.

Islands in the European106 Union require close attention as regards the environment. This is, on the one hand, due to individual problems posed by the fragility of their ecosystems and by the geological and climatic context which accentuates the risks of natural disasters. On the other hand, positive

105 European Environment Agency, WEB Site, Environmental Themes: Environment in the EU at the turn of the Century. Rolandi/Seidel: The European integrated policy for coastal areas. Study prepared for the Alliance of Maritime Regional Interests in Europe, AMRIE. October, 1997. European Commission: Final COM/95/511; Better management of coastal resources. A European programme for integrated management in coastal zones. Brussels, Luxembourg, 1997. Lessons from the demonstration programme of the European Commission on integrated management in coastal zones (IMCZ). Luxembourg, 1999. Capobianco: Peculiarities of the Coastal Zone. Document prepared for the EU-Demonstration Programme on Integrated Management in Coastal Zones. Venezia, 1998. European Parliament, Directorate-General for studies: Coastal and Island Regions of the European Union. Luxembourg, 1996. The socio-economic impact of coastal erosion on the development of coastal and island regions of the European Union in relation to the island of Sylt. Final report, April 1997 (Working Document of the STOA Panel). 106 Final COM/2000/147; European Commission, EUROSTAT/Directorate-General for regional policy : Portrait of the islands. Luxembourg, 1994.

87 interactions exist between the environment and various aspects of the socio-economic development as well as efforts which are still necessary to upgrade these territories to Community environmental standards.

The rural regions and mountain areas of the European Union

The ESDP stresses that rural areas are increasingly exposed to environmental pressure often dependent from economic growth, which takes various forms: increasing pressure from urbanisation on open spaces in areas close to the cities, increasing number of main and second homes, negative impacts of new leisure activities, pollution of soil, air and water resulting from waste storage and from intensive agriculture etc. Additionally, endangering of cultural landscapes is often observed as the result of intensive agriculture and of mass tourism. Agriculture may, on the one hand, act in favour of safeguarding the environment in several respects: landscapes were shaped by human activities and in particular by agriculture. Certain semi-natural spaces, characterised by traditional agricultural systems, are considered worthy of protection. On the other hand, examples where agriculture contributes to environmental pollution in rural areas are also numerous. It must however be stressed that its impact is variable, because farming activities and practices vary widely from one region to another and agricultural activities may have different effects on the environment according to local conditions.

Forest areas107, which roughly cover one third of the Union’s territory, contribute to the protection of water and soil resources and, in many cases, to the beauty of landscapes. They also are an important life environment for the flora and fauna, and a place of relaxation for people. However, forests are exposed to serious threats coming at the same time from air pollution, fires, attacks from insects and mushrooms, from a reduction of the diversity of species and from forestry overexploitation.

Approximately 30% of the Community territory is made up of mountain chains and massive108 and in certain Member States these account for more than 50% of the national territory (Italy, Spain, Greece, Austria, Portugal). The mountainous natural environment is fragile and is based on a on complex balance. In general, mountain areas are characterised by major complexity of the natural environment and of the landscape system. Mountain areas play an important role in the context of water resources management (many regions depend directly on water from mountain areas), of natural risks prevention (floods) and safeguarding of landscape and biological diversity in Europe. Nowadays, mountain areas in the European Union contain a population of 30 million inhabitants. During last decades, mountain areas underwent considerable changes in demographic terms which had direct impacts on the safeguarding of their numerous ecological functions. At the root of these changes, we find both out-migration of a part of the active population who worked there and a flow of persons coming for tourism (introducing seasonal demographic variation) or of retired people who prefer to live there.

The ecological functions of mountains and their sensitive natural areas are on the one hand, directly dependent upon human activities and, on the other hand, deteriorated by conflicts of interests connected with the various forms of human activities ( agricultural and forestry production, industrial activities, leisure and rest, water resources and wood reserves). This complex (and sometimes conflicting) interaction between human activities and the environment in mountain areas is

107 European Environment Agency, WEB Site, Environmental Themes : Report on the environment in Europe; Environment in the EU at the turn of the century. 108 European Environment Agency, idem ; Lasanta Martinez, T.: The Pyrenees, humanised space of major environmental and cultural value. In: Fundación Ecologica Y Desarrollo (Editor). Sustainable transport in mountain areas. The role of railways for the carriage of goods throughout the central Pyrenees. International symposium ACTES, Jaca, 8-10 October 1998. Zaragoza, 1999. European Parliament, Directorate-General for studies: Towards a European policy for mountain areas. Luxembourg 1997. European Commission, 2000 : Structural policies and territories of Europe : The mountains.

88 particularly strong in the sectors of agriculture and forestry, tourism and transport. European mountain areas crossed by major road axes (in particular the Alps and, to a lesser extent, the Pyrenees) undergo directly negative environmental impacts connected with traffic increase in Europe such as noise, air pollution increase and increase of ozone and lead concentrations.

The main environmental challenges in mountain areas are the following. On the one hand, there is a need to cope with increasing pressure on sensitive areas originating in the abandonment of land, in the bad management of water resources, in tourists' seasonal flows and in road network congestion. On the other hand, new opportunities created by the new technologies (in the field of renewable energy, multimodal transport and geographical information systems) have to be used and it is advisable to move towards a dynamic partnership between the environment and the development prospects, rather than staying in a static opposition.

Wetlands109

It must be acknowledged that numerous wetlands are irremediably lost. For wet meadows, flooded lawns and marshes with temporary fresh water, annual losses could be identified which reached since the 1970s approximately 2 400 hectares in Denmark, between 4000 and 8000 hectares in England and in Wales and 10 000 hectares in France. The region of the Wadden sea lost 20 000 hectares of salt marshes between 1950 and 1984, in the Rhone delta the extent of salt marshes decreased from 23 900 to 10000 hectares between 1942 and 1984. Northern Germany lost half of its peat bogs and the United Kingdom now has only 6% of the initial peat surface. Problems of this kind also exist in the Mediterranean. Although the rhythm of destruction decreased, drainage, and filling to satisfy the needs of agriculture or to meet development programmes still constitute permanent threats for the remaining wetlands. A 1995 Commission Communication points out the primary issues concerning wetlands, namely: the discontinuation and inversion of draining and devastation, reduction of water pollution, restoration, the environmentally friendly exploitation of resources and in particular of water resource and the integration of management of wetlands functions.

Urban areas110

The state of the environment in the Union’s urban areas is a subject of concern which has repercussions at local and European levels. The progression of urbanised surfaces (urban proliferation), together with deconcentration of employment, commercial infrastructure and leisure facilities, but also with the evolution of consumption models and residential preferences, reduces for an indefinite period the ecological value of broad territorial extents. Urban proliferation also induces an increase in transport needs and increases dependence upon individual cars. This results in a worsening of energy consumption and of pollution, including noise. The disappearing of green areas both in and outside urban areas threatens biodiversity, but also the quality of life of the population. A considerable number of European cities have broad polluted and abandoned areas (industrial waste lands). The tolerated maximum concentration of "winter smog" affects about 71 million persons when conditions of dispersal are bad. In certain cities like Milan, Turin, Stuttgart, Belfast, Dublin or Berlin, concentrations sometimes reach double the tolerated standards. Summer pollution is especially connected with high ozone concentrations. About 80% of city residents are exposed to this risk at least once a year. Regarding the proportion of city residents exposed to excessive noise levels (more than 70dB), it is, according to a report of the OECD of 1992, twice to three times higher than national averages, while disturbing acoustic pollution (55 to 65 db) concerns an increasing number of city dwellers.

109 European Commission: COM (95) 189 final; Skinner/Zalewski: Functions and values of Mediterranean wetlands. Project "Conservation of Mediterranean wetlands, MedWet". Arles, 1995. European Parliament, Directorate-General for studies: Towards a European policy for the wetlands. Luxembourg 1998. 110 European Commission : COM (97) 197 final; COM (98) 605 final; DG Regio : Europe of the Cities. Community actions in urban environment.

89 Cities have also to cope with permanent worsening of problems inherent to the mass, diversity and danger of solid waste and to the quantities of sewage which has to be efficiently purified. Deficiencies in waste management have damaging consequences in the field of landscape deterioration, water and soil contamination, creation of conditions favourable to the proliferation of vermin and illness propagation. Waste disposal and sewage treatment are increasingly confronting the spatial development strategies for cities and metropolitan regions with particular challenges. Lastly, cities have to reduce and manage environmental risks such as landslides, earthquakes and floods, as well as technological risks connected for example with major industrial plants or with nuclear power stations.

4.3. Major stages of the CEP111

The Treaty of Rome of 1957 did not contain legal provisions enabling the European Community to establish an environmental or sustainable development policy. The fact that the importance of the environment was neglected probably encouraged, as from the 1960s, certain forms of environmental deterioration caused by Community sectoral policies, such as the CAP. It is only in the early 1970s, at the time of the Club of Rome’s activities, that political interest for environmental problems emerged. The Heads of State and Government declared at the Paris Summit in 1972 that economic growth did not constitute any end in itself and considered essential the launching of common actions as regards the environment. This new political awareness was at the root of the first Action Plan on the Environment (APE), adopted in 1972 for the period 1973-77. This was a political document stating major principles and objectives in the field of the environment. The two first APE defined a series of guidelines which formed the basis of the Community project for the environment (preventive protection of the environment, appropriate intervention level and subsidiarity, polluter-payer principle). The third APE aimed at supplementing these principles with the requirement of integration of environmental protection in the context of other Community policies and formulated some concrete priorities for their implementation.

Parallel to the introduction of the first APE, the concrete environmental initiatives between 1973 and 1986 were based on the implementation of legislative acts such as the environmental directives. Legislative acts tended to concentrate on specific pollutant emissions such as for example the lead contentofpetrolortheharmfulnoiseeffectsofaircrafts.

From the middle of the 1970s until the middle of the 1980s, the Community environmental policy developed both through the following APE (1977-81, 1982-86) and - especially - thanks to the active role played by the Court of Justice of the European Communities which, within the context of jurisprudence, extended its sphere of activity and improved its statute.

This development opened the way to the decision taken during the second half of the 1980s to introduce an explicit competence of the Community as regards environmental policy in the Treaties. All guidelines developed hitherto and the jurisprudence experiments were introduced into the coding of the Community policy as regards environment by the Single European Act (SIA), entered into force in July 1987. The Single Act conferred a legal basis suitable for the environmental policy and also established the vote by a qualified majority for certain ecological questions in order to accelerate the process of development of policies. It asked for, without however making it compulsory, integration of environmental objectives in the other fields of Community action.

In parallel, a fourth APE (1987 to 1992) started which concentrated more particularly on the control of the implementation and application of Community measures on environmental protection in the Member States and which strengthened the integration approach. The same period was also marked by

111 European Parliament, Directorate-General for studies: Data sheets on the European Union. Luxembourg 1999. European Commission: Cahiers de la PAC: Hors serie: L’Agriculture et l’Environment; Caring for Our future. Action for Europe's environment. Brussels, Luxemburg, 1997.

90 important political changes: measures were taken with a view to controlling agricultural production, while stimulating environmental protection, and the Structural Funds were reformed in order to improve their coherence and effectiveness. In 1990, the European Environment Agency (EEA) was created.

At the beginning of the 1990s, the debate on the environment concentrated on the principle of sustainable development, fixed at the international level by the Rio Conference of June 1992. At the level of the European Union, the Maastricht treaty, which entered into force in November 1993, strengthened most measures established under the terms of the Single Act (introduction of the objective of sustainable development) and forced the integration of environmental requirements in all policies of the Union. It also extended the decisions by a qualified majority to all fields of the environmental policy, except for those connected with regional planning, energy supply and with the budgetary policy.

In parallel, the scope and nature of the APE also developed. At the beginning of the 1990s, a new transversal approach was launched with the fifth EAP (1993-2000), published by the Commission in 1992. It provided a new political impetus and aimed not only at controlling specific actions or matters, but also at influencing production and consumption modes within the context of promotion of sustainable development within the European Union. With the aim of concentrating on the improvement of the conception, implementation and application of legislative instruments, the APE proposed widening the range of political instruments in order to exert an influence on a larger number of actors and to incorporate measures connected with the operation of the market, of financial support mechanisms, of voluntary mechanisms as well as the organisation of information, education and training. Lastly, the APE stressed insufficient consideration of environmental concerns in the definition and implementation of other Community policies and recommended more effective incorporation of environmental objectives in sectors such as industry, agriculture, transport and tourism.

Three years after the setting up of the new APE, the Commission drew up a first report on the state of progress of its implementation and on the recorded112 successes, which stresses the need to make changes for reasons of effectiveness. The fields where drastic improvement is necessary (in particular owing to not very efficient policies) and where it is advisable to ring "the alarm bell" are as follows: emissions of carbon dioxide, problems associated with traffic (NOx and noise emissions), extraction and quality of water, role of the chemical substances in the environment, integrated management of coastal areas and aspects of erosion and desertification. The Commission underlines also the absence of progress with regard to the integration of environmental requirements in the sectors of agriculture and tourism. And as regards transport, it notes that the increase in the motor car park reduced to nothing the improvements resulting from the quality of fuels and the development of cleaner technologies.

In order to react to the deficits identified as regards integration of the environment in the Union's policies, the Commission published in 1998 a Communication entitled "Integration partnership: a strategy to incorporate the environment into the policies of the European Union "113 . It consolidated the new transversal approach taken by the fifth APE and designated, inter alia, the priority sectors on which to concentrate efforts (energy, transport and agriculture). The Cardiff Summit in June 1998 approved this Commission Communication and the European Council of Vienna in December 1998 confirmed that the integration of environmental issues in the other policies became an obligation for the Community Institutions.114

Trough the entry into force of the Treaty of Amsterdam (1999), the key role that the CEP should play in the context of the European Union's policies was still accentuated. On the one hand, the

112 COM (95) 624 final 113 COM (98) 333 final 114 The European Commission, 2000 : WEB Site Directorate-General "Environment"

91 principle of sustainable development was strengthened by modification to the preamble and to Article 2 of the Treaty on the European Union: it constitutes henceforth one of the main objectives of the European Union and a subject common to all Community policies. Moreover, the integration of environmental protection in all Community sectoral policies is explicitly mentioned in Article 6 of the EC Treaty: "the requirements of environmental protection have to be incorporated into the definition and implementation of the policies and actions of the Community, in particular in order to promote sustainable development". This new provision is of general application and, while moving it from the article on the environment to an important place at the beginning of the treaty, the leaders of the European Union wanted to stress their support to the objective of sustainable development.

4.4. Intervention methods of the CEP and its implementation in the Member States

After the successive reforms of the Treaty of Rome by the Maastricht (1993) and Amsterdam (1999) treaties, the legal basis of the CEP is now composed of Articles 174-176 of the EC treaty. The scope of the CEP is horizontal (integration of these principles in all other Community policies) and the nature of its competence is subsidiary: thus, the European Union acts as regards environment only insofar as problems can be better dealt with at Community level than at the level of Member States and regions. Under the terms of Article 174 §2 of the EC treaty, these principles are precaution, prevention, correction at the source and the polluter pays principle. Its objectives are (1) safeguard, protection and improvement of the quality of the environment, (2) human health protection, (3) careful and rational use of natural resources (4) and the encouragement of measures at international level. The decisional procedure related to the action plans is the joint decision and co-operation for implementation measures (exceptions: tax measures, land use, management of water resources, energy supply where unanimity rule applies, except if the Council decides to choose the qualified majority).

The interventions of the CEP take shape primarily in the normative field by the application of regulatory instruments. The aim is to establish a general framework to ensure a high level of environmental protection (intervention in the main components of the natural environment like water, air and soil or as regards biodiversity) and to guarantee the operation of the internal market. In the context of the legislative field, the Community set up a horizontal instrument which is the "system of evaluation of environmental impact of public and private projects ». Progressively, with the development of the CEP, the range of environmental instruments diversified, in particular owing to insufficiently effective application of environmental legislation. The effectiveness has to be improved partly by the introduction of incentive measures to companies and consumers (environmental accountancy, voluntary agreements, eco-label); but recourse to environmental taxes is also encouraged (polluter pays principle).115 Beyond the regulatory instruments, an instrument to finance interventions for the environment (LIFE) was set up. As a whole, the share of the CEP in the budget of the European Union is modest, owing to subsidiarity and to its horizontal regulatory character.

The main realisations of the Community Environmental Policy pertains to the normative and regulatory field. During the 1980s and 1990s, the European Union followed a vigorous policy of protection of soils, water, climate, air, fauna and flora. By 1998, the Community Environmental Policy had produced almost 550 Community legal texts, including more than 200 directives, almost 100 regulations and more than 230 decisions.116 It follows clearly from this assessment that the preferred instrument for the implementation of the CEP in the context of the legal system of each Member State is the directive. It allows certain flexibility and takes better account of the systematic integration of environmental standards in the context of the legal framework of the Member States. Owing to this preponderance of the regulatory field, a particular characteristic of the CEP is that it is very dependent on the Member States as regards its implementation.

115 European Commission, 2000 : WEB Site Directorate-General "Environment" 116 European Parliament, Directorate-General for studies : Data sheets on the European Union. Luxembourg 1999.

92 In practice, delays can very often be observed in the application of environmental directives in the context of national law in the Member States. But problems at the stage of transposing the directives into national law are not specific only to the CEP, they are a rather generalised phenomenon.

The first financial Community contributions as regards the environment date back from 1979 and the European Parliament succeeded in 1982 and 1983 in introducing a small line into the Community Budget specifically on this subject. Since 1984, the Community has had a financial instrument to support projects of nature conservation. The two regulations on "Community Actions for the Environment" CAE (1984-1987, 1987-1991) made it possible to finance small pilot projects. In parallel, a number of other specific instruments for environmental interventions were created, such as the MEDSPA (environmental projects in the Mediterranean) and NORDSPA (environmental actions for the maritime regions of Northern Europe) programmes.

At the end of the application period of the second Regulation CAE in 1991, and taking into account the fact that the Community was widening its competences as regards nature conservation (Directive on "Habitats"), a new Regulation was adopted in 1991 for the creation of a separate nature conservation fund, entitled "Community Actions for Nature Conservation" (CANC). This fund made available financial resources for projects in the field of management of environmental resources and made it possible, for example, to finance the initial phase of the MEDWET programme (1992-1995), a co-ordinated action for Mediterranean wetlands.

In 1992, the financial instrument for the environment LIFE (EEC Regulation N° 1973/92 of May 1992) replaced and extended the old Community programmes like MEDSPA, NORDSPA or CANC. The aim of LIFE is to contribute to the development and implementation of the Community policy and legislation in the field of the environment. Since its creation, LIFE has been implemented in two stages (LIFE I: 1992-1996; LIFE II: 1996-1999), the Regulation for the third stage is in the process of adoption (LIFE III, 2000-2004).

Since the initial programming period (1989-1993), the Structural Funds have contributed directly to carrying out the numerous environmental projects at the level of Member States and regions. However, the relation between cohesion policy and environmental objectives was often characterised by a conflict of interest, which had its roots both in more general considerations and in very practical concerns:

- on the one hand, numerous conflicts have their roots in the argument of absence of convergence between regional development and the environment. The argument is that regional development is often detrimental to the environment because it aims explicitly at a better spatial distribution of development, i.e. in practice at spreading out in space certain problems which are related to it.117

- on the other hand, and despite the main responsibility of Member States, numerous infringements and complaints could be observed pertaining to the violation of environmental regulations by the implementation of projects funded by the Community Funds.

The year 1993 marks a considerable turning in this relation because a narrower interrelationship between the two policies takes place: 118

117 Prud'homme, R. : Quelle convergence entre aménagement et environment ? In : Environment et aménagement du territoire (Ed. J.-P. Gaudemar). DATAR, Paris, 1996. 118Commission Européenne : COM (95) 624 final ; Umwelt und Regionen : für eine nachhaltige Entwicklung (DG-Regio) ; Jahresbericht des Kohäsionsfonds (1998) ; Rapports annuels sur les Fonds structurels (1995 , 1996 , 1997 , 1998).

93 - firstly, the reform of Structural Funds (July 1993) stipulated that plans presented by the Member States to the Structural Funds would have to contain an obligatory evaluation of the environmental situation of the region concerned, an assessment of the environmental impacts of the measures proposed with respect to sustainable development and of the respect of Community legislation as well as of specific (also quantifiable) objectives as regards environment.

- secondly, the entry into force of the Treaty on the European Union (Maastricht) at the end of 1993 introduces the obligation of taking into account both the environmental dimension and the dimension related to cohesion in the formulation and implementation of Community policies. The Treaty stresses that the environmental policy has to take account of the diversity of situations in the various regions of the Community.

- finally, the creation of the Cohesion Fund added an additional environmental dimension to the Community policy as regards cohesion. Since then, this fund has constituted the most important instrument to meet the environmental needs of the 4 Member States concerned, and particularly as regards the protection and management of water resources, as well as the collection, treatment and recycling of waste.

4.5. Territorial impacts of Community legislative acts relating to environmental protection a) Activities of the CEP for the protection of the natural and forest heritage

The Community policy as regards nature conservation is primarily based on the directive on wild birds conservation (EEC directive No. 79/409, called "Birds" directive) and on the directive on the conservation of natural habitats as well as of wild fauna and flora (EEC No. 92/43, called "Habitats" directive).

Until the entry into force of these two directives, the regulations of the European Union on nature conservation concerned primarily the protection of species. The innovation that both directives introduced into the European law of nature conservation is the relatively consequent territorial dimension of the protection areas of Community interest, defined on the basis of precise criteria established for the selection and evaluation of the areas. Both directives regulate now the protection of areas and have therefore significant territorial impacts. Among the legal provisions appear the prohibition of deterioration of the areas concerned, an impact analysis of projects and plans as well as the protection of the surrounding areas.

The « Birds » directive (EEC No. 79/409) also aims at protecting the areas which are of particular importance for the protection of birds. With regard to the criteria used for the selection of areas laid down for the protection of wild birds (special protection, areas SPA), the directive does not contain any precise framework for the evaluation of the areas concerned. But the Commission proceeded in 1989 to the inventory of "Important Bird Areas" on the basis of criteria defined by the ORNIS committee. The wetlands of international importance identified in the « Ramsar Convention » are of a special importance in this context. The SPA generally are large areas with a surface of several thousand hectares. Many of them have been delimited and recognised by the Commission for more than fifteen years.

Since the adoption of the "Birds" directive , twenty years have gone and more than 2400 SPA with an extent of 162 000 km² were delimited on the European territory. However, it can more generally be concluded that almost all Member States still have to take further sometimes considerable measures to complete their national networks before one can really speak about a firmly established SPA network. This represents a rather disappointing assessment after twenty years of legislation.

The « Habitat » directive (EEC No. 92/43) entered into force on 21 May 1992 and contains Community regulations concerning the designation of areas to be protected for the conservation

94 and for the development of the European natural heritage. With regard to the selection of areas planned for the conservation of natural habitats and of wild fauna and flora (special conservation areas, SCA), Member States have some little room for technical adaptation, but no arbitrary selection power. Bases are defined in Annexes I and II relating to the habitats and species. The selection criteria contained in Annex III are very differentiated and have to be implemented in two stages:

- the first stage consists of an evaluation at national level of the relative importance of the sites for each type of natural habitat of Annex I and each species of Annex II, on the basis of precise criteria stated in Annex III. According to these criteria, Member States classify the sites that they propose on the national list as sites likely to be identified as being of Community importance according to their relative value for the conservation of each natural type of habitat or of each species mentioned respectively in Annex I or II concerning them.

- the second stage concerns the evaluation of the Community importance of the sites included in the national lists. All sites identified in the first stage which contain natural types of habitats and/or of priority species are regarded as sites of Community importance. The evaluation of the Community importance of other sites included in the Member States lists (contribution to the maintenance or re- establishment, in a favourable state of conservation, of a natural habitat or of a species, and/or to the coherence with Natura 2000) is based on a list of complementary criteria.

With the «Habitat» directive (EEC No. 92/43), Member States also committed themselves to setting up a coherent ecological network of individual areas to be protected, under denomination Natura 2000. The objective of the network is the protection of species in the process of disappearance, both of fauna and flora, and therefore the protection of biological diversity. The basic principle of the ecological network is to avoid situations of insularity of protected areas by the designation of corridor areas enabling the interconnection of natural spaces. Thus, under the terms of Article 4 of the directive, the Commission has to adopt the list of areas forming the European ecological network. In terms of geographical coverage, the network comprises:

- areas of special protection (ASP) classified under the provisions of the "Birds" directive - special conservation areas (SCA), i.e. sites comprising types of natural habitats and habitats of species to be designated under the provisions of the "Habitat" directive.

In the realisation of Natura 2000, long delays occurred reflecting various constraints and difficulties in the application of the directive. Until the beginning of 1999, more than 8800 sites of Community interest were submitted to the Commission, which cover approximately 320 000 km² i.e. an equivalent of 10% of the Community territory. Towards the end of 1999, one could make the following assessment of the state of progress:119

- with the new transmissions during 1999, the number of CIS proposed now reaches almost 10 000 sites. Germany, France and Ireland in particular added new sites to their national lists, still insufficient, and which increased respectively by 339 sites (+1157 km²), 215 sites (+5890 km²) and 35 sites (1090km²).

- there was no progress concerning the new designations in SPA, except for Italy which classified 41 additional sites (1089 km²) and Portugal which, by classifying 11 new sites, more than doubled the already designated surface.

- finally, the quality of data transmitted for the SPA and the CIS by the Member States improves, but for many sites forms and maps, and in particular the computerised version, are still missing.

119 European Commission, Directorate-General Environment : Natura 2000. Information on Nature letter, no.10, November 1999

95 The designation of the areas gave rise, in certain cases, to important conflicts at regional and local level. It was the case for example in Northrhine-Westphalia. Complementary criteria had to be worked out for a more objective selection. Individual problems concern the relation between the Natura 2000 protection areas and the protection areas with national or regional statute. In Northrhine-Westphalia, the Land authority proposed a surface of 266 000 hectares (8% of the surface of the Land) corresponding to the protection areas of the "Habitat" directive.

The official publication of the protection areas of Community interest, on the basis of the two previous directives, has important legal consequences:

- for the SCA of the «Habitat» directive, Member States draw up the necessary conservation measures comprising, if necessary, suitable management plans specific to the sites or integrated into other spatial plans and the administrative, regulatory or contractual measures, which fulfil the ecological requirements of the types of natural habitat of Annex I and of the species of Annex II present on the sites;

- Member States take the appropriate measures to avoid, in the SCA, the deterioration of natural habitats and of species habitats as well as disturbances regarding the species for which areas were designated;

- any plan or project not directly connected to or necessary for the management of the site, but likely to affect significantly this site, individually or in conjunction with other plans and projects, is the subject of a suitable evaluation of its impacts on the site in relation to the conservation objectives of this site. The competent national authorities give their agreement to the plan or project only after having made sure that it does not affect the integrity of the site concerned and after having sought, if necessary, the public's opinion.

- if in spite of negative conclusions of the impact assessment on the site and in the absence of any alternative solution, a plan or project has nevertheless to be carried out for imperative reasons of major public interest, including those of social or economic nature, the Member State takes all compensatory measures necessary to ensure that overall coherence of Natura 2000 is protected. The Member State informs the Commission of the compensatory measures adopted.

- when the site concerned is a site comprising a type of natural habitat and/or a priority species, only arguments can be taken into consideration which are connected with human health and public safety or with major beneficial consequences for the environment or, following the Commission’s opinion, with other imperative reasons of major public interest;

- where they consider it necessary, within the context of their spatial planning and regional development policy, and in particular with a view to improving the ecological coherence of the Natura 2000 network, Member States aim at encouraging the management of the landscape elements which have a major importance for the wild fauna and flora. These elements are those which, from their linear and continuous structure (such as rivers with their banks or the traditional systems of delimitation of fields) or from their role of relays (such as ponds or small forests), are essential for migration, spatial distribution and the genetic exchange of wild species.

- Member States take the measures necessary to establish a strict protection system of the animal and vegetable species appearing in Annex III of the directive.

Moreover, a decision of the European Court of Justice concerning the "Birds" directive stipulated that socio-economic factors should absolutely not intervene in the designation of the SPA for birds, but only in their later management.

From the previous paragraphs it follows clearly that the spatial impacts of both the «Birds» and «Habitat» directives as well as of the establishment of the Natura 2000 network are real,

96 heterogeneous and sometimes rather localised. This is confirmed by an overall evaluation which can be made for the areas mainly targeted by the ESDP:

In view of the fact that a major part of rare species and of sites protected by the "Habitat" and "Birds" directives are located in rural areas, the establishment of the "Natura 2000" network has direct impacts on agriculture, on the one hand with regard to the management plans which can force to restrict certain agricultural activities and on the other hand as regards the protection of species insofar as certain agricultural activities may be incompatible, in particular owing to the disturbances they cause. Nevertheless, Member States can benefit from an exemption, such as to avoid undermining agriculture seriously, in particular for crops and cattle.120 The identification of a large number of sensitive species and habitats and the establishment of the Natura 2000 network concern directly the mountain areas. Indeed, a large number of protected species are in mountains and almost half of parks, natural reserves and protected areas - elements of regional attractiveness but also objects of expensive ecological management - are located in these areas. A recent publication of the Commission stresses in particular that the "Habitat" directive offers new possibilities for nature conservation in coastal areas and corresponds perfectly to the approach taken within the context of the integrated management of coastal zones (IMCZ). Wetlands are a category of areas on which the above- mentioned directives certainly have a very significant territorial impact. Thus, the "Birds" directive mentions the important wetlands for migratory birds, without defining the term of "wetland". The "Habitat" directive makes an additional step by drawing up a list of wetland types of Community interest which require a special conservation.

The application of the « Birds » and « Habitat » directives sometimes have important local effects on economic activities on the territory surrounding the areas concerned, which can be reflected in a direct socio-economic territorial impact. b) Activities of the CEP for the water resources and soil protection

The Community policy on water is based directly or indirectly on several directives as well as on obligations decided within the Union under several international conventions. Numerous directives were adopted in order to set up quality standards for water and to control the emissions of polluting substances. The most important examples are those relating to the quality of surface drinking water (1975), to the quality of drinking water (1980), to the quality of bathing water (1975), to the required quality of conchylaceous water (1979), to "Nitrogen" (1991) and to the treatment of urban waste water (1991).

The directive on the protection of ground water against pollution caused by certain dangerous substances (EEC N° 80/668) intends to protect the quality of ground water against potential sources of pollution, mainly of punctual origin. The directive is based on a system of permits required for installations and activities which proceed to indirect or direct discharge of a precise number of substances into the ground water. In November 1996, the Commission adopted a decision proposal for an action programme on the protection and integrated management of ground water (COM 96/315 final).

The directive on the quality of water intended for human consumption (EEC No. 80/778) sets quality standards which have obligatorily to be respected on the whole Community territory. In total, there are 67 water quality parameters listed in the annex to the directive. A revision of the directive was proposed. In relation to the existing directive, this proposal aims at guaranteeing greater flexibility likely to improve its effectiveness, in particular in the field of agriculture.

The EEC No. 91/676 ("Nitrogen") directive aims at reducing water pollution caused or induced by nitrogen from agricultural sources and to prevent any new pollution of this type. It concerns the water reached by pollution and that which is likely to be, if appropriate measures are not taken. Member

120 European Commission :Cahiers de la PAC . Hors série : Agriculture et environnement.

97 States had a 2-year deadline to designate as vulnerable areas all the areas known on their territory to which the following criteria apply:

- surface fresh water which contains or is likely to contain more than 50 mg nitrogen per litre. - ground water with a nitrogen concentration higher than 50 mg per litre - natural fresh water lakes, other fresh water masses, estuaries, coastal and marine water which underwent or are likely, in the near future, to undergo eutrophication.

Member States proceed to the necessary co-operation to identify the sources concerned and the measures to be taken in favour of polluted water in order to ensure its conformity with the directive. With a view to ensuring, for all water, a general level of protection against pollution, Member States:

- draw up one or more codes of good agricultural practice, which will voluntarily be implemented by the farmers (contents listed in Annex II); - draw up a programme envisaging farmers' training and information with a view to promoting the application of the code (or codes) of good agricultural practice; - submit to the Commission the methods of their codes of good agricultural practice.

For the designated vulnerable areas, Member States draw up action programmes (one or more programmes by country). These action programmes, to be implemented within four years as from their development, contain the following obligatory measures:

- the measures referred to in Annex III (primarily the methods of spreading fertilizers); - the measures that Member States adopted in the code of good practice.

Member States draw up and implement appropriate monitoring programmes to evaluate the effectiveness of the action programme and re-examine and, if necessary, revise their action programme every four years at least.

The EEC No. 91/271 directive ("Treatment of urban waste water") concerns the collection, treatment and discharge of urban waste water as well as of water coming from certain industrial sectors. It aims at protecting the environment against deterioration due to the discharge of waste water referred to above. Member States have to ensure that all agglomerations are equipped with collecting systems of urban waste water at the latest on 31 December 2000 for those the inhabitant equivalent of which (IE) is higher than 15 000 and at the latest on 31 December 2005 for those the inhabitant equivalent of which ranges between 2 000 and 15 000. For urban waste water discharges in receiving waters considered as "sensitive areas", the date fixed for the installation of collecting systems was on 31 December 1998 for the agglomerations the inhabitant equivalent of which is higher than 10 000.

The regulations concerning the systems of collection and treatment are described in Annex 1 of the directive. Regulations are more rigorous in the event of discharges in sensitive areas. Criteria are also listed for the identification of the "sensitive areas". This concerns in particular:

- fresh and coastal water threatened by eutrophication - aquatic systems where a phenomenon of accumulation may occur - fresh surface water used for collecting drinking water.

The list of sensitive areas has to be re-examined at least every four years.

In February 1997, the Commission submitted a proposal for a Directive "instituting a framework for Community action in the field of water" (final COM/97/49) . The objective of the directive, adopted in 2000, is to establish a Community framework, based on common approach and objectives as well as on common principles and standard measures. The "outline directive" concerns fresh and surface water, estuaries, coastal and ground water in the Community. It sets environmental quality standards at Community level for a number of pollutants but it does not fix limit values for emissions

98 of these pollutants. Co-ordinating the application of other legislative provisions, it aims at long-term protection of water resources. This approach has an obvious territorial dimension because it is based among other things on:

- water management by catchment area, - an assessment of the characteristics of each hydrographic district, - monitoring of the protected areas in each catchment area, - the indication of all elements in a management plan for the catchment area - and a public consultation about this management plan.

The management plans can be supplemented by more detailed programmes and by management plans concerning specific aspects of water management. In this respect, the outline directive lays down a procedure of notification and of exchange of information between the Member States and the Commission as well as the European Environment Agency. In this context, the management plans, the management plan projects and the other programmes mentioned above have to be communicated. Moreover, the text permits the Commission to rationalise and co-ordinate its plans of water pollution abatement and, if necessary, to adopt new environmental quality standards or to undertake suitable actions. Lastly, the text announces for December 2007 the abrogation of a number of directives (EEC Directives No. 75/440; 77/795; 78/659; 79/869; 79/923 and 89/6).

A key point of the outline directive on water, as regards cohesion, is the requirement according to which it is necessary to increase refunding by the users of the costs of water services. Currently, the refunding of the costs is weak, especially in the cohesion countries and more particularly with regard to agricultural producers. The refunding of the complete costs by households would reduce their income by a rate estimated at 1.7% in the cohesion countries, against an average of only 0.2% in the other Member States. However, the directive does not imply the complete refunding of costs and the cohesion fund will cover a large part of investment costs by improving the water supply and main drainages. It is probable that refunding of the complete costs by industrialists will increase the costs of industrial water consumption in the cohesion countries, but without considerably affecting their competitiveness. It is in the case of agricultural users that the refunding of supply costs is currently the weakest and very few countries impose them refunding of the complete cost, especially with regard to public irrigation systems. It is therefore probable that the impact on rural areas where agriculture is irrigated, will be important121 .

The current policy in the field of water resources has a direct impact on agriculture and therefore on rural areas, in particular through the directives on ground water, on drinking water and on nitrogen. Although the directive on drinking water does not concern directly agriculture, the directive on ground water concerns certain forms of agricultural pollution and the directive on nitrogen concentrates on farming practices. The broad range of legal provisions governing pollution and the quality of water certainly also contributed to improving the coastal environment 122 .Inparticular the directive on the treatment of urban waste water gave rise to significant progress in the field of water quality in numerous coastal areas.

The aim of the EEC directive No. 86/278 concerning «the protection of the environment and in particular of soil related to the use of purification sludge in agriculture" is to regulate the use of mud in agriculture resulting from sewage treatment dealing with domestic or urban liquid waste or from other sewage treatment so as to avoid harmful effects on soil, vegetation, animals and man, while encouraging their correct use. Member States prohibit the use of purification mud when the concentration in one or more heavy metals in the soil exceeds the limit values that they fix in accordance with Annex 1 A of the directive and they take the measures necessary to ensure that these

121 Second report on Economic and Social Cohesion. 2001. 122 European Commission : Lessons from the demonstration programme of the European Commission on the integrated management of coastal zones (IMCZ). Luxembourg, 1999.

99 limit values are not exceeded because of the use of mud. Member States regulate the use of mud so that the accumulation of heavy metals in the soil does not lead to an overshooting of the fixed limit values. Mud has to be treated before being used in agriculture. Under certain conditions, mud spreading is prohibited in the case of pastures or fodder crops as well as vegetables and fruits. c) Activities of the CEP in favour of the reduction of air pollution and harmful noise effects

The Community legislation on air123 pollution has as top priority to fight against emissions resulting from industrial activities and from freight vehicles. As regards transport, the strategy is based on several elements: reduction of the polluting emissions of vehicles, reduction in the consumption of private cars and promotion of clean vehicles. The strategy of the European Union as regards acidification is part of this context, namely reduction of emissions of main gases responsible for acid rain (NH3, NOx, SO2).

The EC Directive No. 96/62 of September 1996 concerning "the evaluation and management of the quality of ambient air" aims at the establishment of basic principles for a common strategy to define and set aims concerning the quality of ambient air, in order to avoid, prevent or reduce the harmful effects on human health and on the environment. Another objective is to evaluate the quality of ambient air in the Member States and to inform the public (through warning thresholds).

Although the directive prescribes that the quality of air has to be checked on the whole territory of Member States, it contains a number of provisions for specific areas:

- an evaluation is obligatory in agglomerations of more than 250 000 inhabitants or in areas where concentrations are close to the limit values.

- the directive contains an obligation for Member States to draw up a list of areas and agglomerations where pollution levels are higher than the limit values. It prescribes an obligation to inform the public in the event of exceeding the warning thresholds and to forward to the Commission any relevant information.

- in the event of exceeding the legal limit values, Member States have to draw up a programme allowing to reach the limit values within a fixed time. This programme, accessible to the population, has in particular to contain information on the place of exceeding thresholds, the nature and evaluation of pollution as well as on the origin of pollution.

- in the case of geographical areas and agglomerations with a pollution level lower than the limit values, Member States are required to maintain the levels below these values.

- the deadline for the implementation in the Member States was 21 June 1998. Since then, the Commission has presented new initiatives (directives in the context of the outline directive) which concern the limit values of certain specific substances and ozone in ambient air.

Through its provisions, the "outline directive" will certainly have direct and indirect impacts on urban areas, because it moreover enables the Commission to publish annually a list of cities which would contravene these provisions, it may even contribute to tarnishing the “image" of the certain cities.124

The spatial impacts of a reduction of emissions mainly responsible for soil and water acidification (NH3, NOx, SO2) will certainly be positive, both on an overall level and at the level of areas particularly concerned with this problem. Geographical visualisation of the strongest excesses of critical thresholds in terms of acidification (5th percentile, eq/ha per year) shows that these areas

123 European Commission, : WEB Site Directorate-General "Environment" 2000 124 COM (98) 605 final

100 generally are in the centre of the Union (south of the United Kingdom, Benelux countries, Germany, Austria, North of Italy, north and south-east of France, southern part of Scandinavia). But a substantial reduction of these gases will also have as a consequence considerable improvement of the environmental conditions of ecosystems strongly affected by acidification: on the scale of the Union it is estimated that ecosystems with an acidification level beyond the critical values will fall from 25% in 1990 to only 7% in 2010, which will have as a result that ecosystems in several countries will literally no longer be exposed to critical charges.

The essence of the Community strategy relating to the reduction of harmful noise effects consisted for a long time in the adoption of minimum noise levels coming from certain machines (lawnmowers, motorcycles or more recently planes and equipment used outside buildings). In a Green Paper (COM/96/540 final), the Commission proposed extending this strategy:

- by reducing the emissions at the source (road and railway traffic, air transport, machines functioning in open air), - by developing exchanges of information - and by strengthening the coherence of the programmes of noise abatement.

These measures will doubtless have a favourable (indirect) territorial impact on urban areas in Europe and they will contribute to improving the quality of life. Indeed, harmful noise effects developed especially in cities and are today a source of public concern. According to an estimate, almost 20% of the population of Western Europe (i.e. 80 million persons) suffers from noise levels considered unacceptable by the experts. d) Activities of the CEP in the field of waste management

The Community policy relating to waste125 management is based on three complementary strategies:

- preventing the production of waste by improving the conception of products, - developing recycling and re-use of waste, - reducing pollution caused by waste incineration.

TheECdirectiveNo.1999/31("wastedisposalinrefusedumps")aims at preventing or reducing as much as possible the negative effects of rubbish tips on the environment, and in particular on surface water, ground water, soil and air pollution, and on the global environment as well as the risks which result from it for human health during the lifetime of the rubbish tip. To this end, the directive aims:

- the reduction of the volume of biodegradable waste put in rubbish tip; - the non-setting in rubbish tip of certain waste (dangerous, hospital, worn tyres etc.); - the preliminary treatment of certain waste put in rubbish tip; - the contents of permit requests for tip operation; - the conditions of admission of waste; - the control and supervision procedures in the operation phase; - the procedures of closing down rubbish tips and of their management afterwards; - the regulatory management of existing rubbish tips.

Annex 1 contains general regulations for all categories of rubbish tips and, in particular for the location of tips in relation to residential and leisure areas, to waterways and water areas, to agricultural or urban sites.

125 European Commission, : WEB Site Directorate-General "Environment" 2000

101 The directives on waste, and in particular those which impose on Member States the obligation to establish management plans revealing the quantity and origin of the various types of waste as well as the methods of waste treatment, have a particular impact on the cities. The adoption of new directives or the revision of existing directives will compel increasingly the Member States to program selective waste collection and to develop solutions for specific types of waste, for example certain worn consumer goods and organic matter.126

The potential implementation costs of the waste policy are proportionally lower in the cohesion countries, because waste production is there lower for the time being. But the cohesion countries are late with regard to waste processing (more important share of rubbish tips, lower share of recycling) and the standard of living - therefore waste production - increases quickly. It is therefore probable that the costs to be borne to achieve the Community objectives of waste management will also be high and even higher in the cohesion countries (except for Spain which progressed much) than throughout the Union. e) Strategy of the CEP for prevention and integrated reduction of pollution

The EC directive No. 96/61 "relating to the prevention and integrated reduction of pollution" aims at reaching a high level of protection of the environment considered as a whole by prevention or reduction of emissions in all natural environments (air, water and soil) and by measures regarding waste production. Prevention and integrated reduction of pollution concern activities with high pollution potential, such as energy industries, production and transformation of metals, mineral industry, chemical industry and waste management. The directive is applicable to new facilities from the end of October 1999 and to existing facilities starting from the end of October 2007. The directive defines the fundamental obligations which any new or existing industrial plant has to respect. These fundamental obligations serve as a base to the establishment of “operation permits» intended for industrial facilities. The directive establishes a procedure of request, issuing and amendment of the operation permit and fixes the minimum requirements to be included in any permit. It imposes on Member States the obligation to ensure that pollution emanating from large industrial facilities is reduced to the minimum and that the sites concerned are satisfactorily cleared after closing down. The legislation of which the Commission will propose the adoption in the White Paper on environmental responsibility will introduce measures intended to ensure prevention, specify the precautions to be taken and establish the principle of polluter-payer, while specifying on whom the responsibility for decontamination of polluted areas falls and by envisaging the provision of financial allowances for clearance and cleaning operations.

The geographical location as well as the degree of importance of industries targeted by the directive in the regional or local economy will strongly determine the territorial impacts of these measures. But it can be noted that this instrument already constitutes a powerful mechanism of prevention and of fight against pollution in urban areas, because a considerable number of industries mentioned above are located in cities or in their vicinity. This directive, although mainly directed towards industrial areas, also concerns up to a certain extent rural127 areas. Indeed, the scope of the directive includes the facilities used for the intensive rearing of poultry or pigs with more than 40 000 units for poultry, 2000 units for pigs (of more than 30 kg) or 750 units for sows. f) Community legislation on the evaluation of environmental impact (EIA) and of strategic environmental assessment (SEA),

The EEC directive N° 85/337 established a system of preliminary assessment, by the Member States, of the impacts that public and private projects may have on the environment.128 The scope of the directive on assessment of environmental impacts («EIA directive») covers the carrying-

126 COM (98) 605 final 127 European Commission :Cahier de la PAC. Hors série : Agriculture et environnement. 128 European Commission, : WEB Site Directorate-General "Environment" 2000

102 out of construction works and other installations and facilities or equipment, as well as other interventions in landscapes or in the natural environment. An EIA counts, describes and measures the direct and indirect impacts on factors such as man, fauna and flora, the natural environment (soil, water, air), climate and landscapes, interactions between the factors referred to above as well as the material assets and the cultural heritage. The directive also established a consultation procedure for projects likely to have considerable impacts on the environment of one or more other Member States.

In 1993, the Commission proposed a revision of the EIA directive in order to guarantee a more uniform implementation. This amendment of the EIA directive entered into force in March 1999 and extends the application of the impact assessments to a larger number of projects.

Although territorially non specified, the EIA directive has considerable spatial impacts.

In cities, the EIA constitutes presently the essential tool to ensure that new urban development projects respect the environment and that a public consultation is carried out before the development projects are approved. The Commission explored ways which make it possible to improve their implementation.129

The rural areas of the Union are also directly concerned with the EIA directive, because Annex II concerns agricultural projects in particular in the following130 fields :

- rural land regrouping, - assignment of non cultivated land or of semi-natural areas to intensive agriculture, - hydraulic equipment of arable land, - the first afforestation when it is likely to cause negative ecological transformations and clearings intended to allow conversion towards another type of soil exploitation, - facilities for the rearing of poultry, fish-farming of salmonidaes - soil reclaim on the sea.

The revision of the EIA directive also brought changes to agricultural projects in particular with regard to rural land regrouping, irrigation and drainage, afforestation, reafforestation and deforestation, intensive stock breeding, production of exogenous flora and fauna species etc. In the context of rural areas, agricultural projects co-financed by the Structural Funds under the Objectives 1 and 5b (new Objective 2) have also to be the subject of an EIA if they appear in the list of Annex II.

The EIA directive has a direct impact on mountain areas, because certain projects defined in the directive, which require an EIA, concern directly these areas: these are the main communication networks and infrastructures, reafforestation, the construction of dams, hydroelectric facilities, hotel complexes or holiday villages, ski-lifts and - after the revision of the directive in 1993 - of ski and bob sleigh tracks and of artificial snow equipment.131

Lastly, the EIA directive has also a considerable impact on the coastal areas and wetlands of the Union, because the current annex to the directive mentions projects of transport infrastructure and refers to projects located in coastal areas such as offshore oil extraction or coastal and maritime works likely to modify the coast. It must however be mentioned that the coverage does not stretch systematically to the projects located beyond low sea.

The draft amendment of the EIA directive widens the field of transport infrastructures classified in Annex I, which will have important spatial impacts on the marshy and coastal areas. These areas belong to sensitive spaces needing particularly an EIA with regard to the establishment of new

129 COM (98) 605 final 130 European Commission :Cahiers de la PAC. Hors série : Agriculture et environnement. 131 European Parliament, Directorate-General for studies : Towards a European policy for the mountain areas. Luxembourg 1997.

103 infrastructures (narrowness of the often already overloaded coastal strip; ecological value of wetlands). The impacts of new transport infrastructures have therefore to be carefully estimated in advance and the solutions selected have as much as possible to make use of the best techniques available. Thus, the EIA represents in these areas an essential progress in the decision-making process concerning infrastructural development and the way of carrying it out with a minimum of repercussions. But it is also essential that this appraisal carefully examines alternative solutions; this way of proceeding is also capital for development projects which affect sites covered by Natura 2000.132

But in a more general way, the EIA directive is also regarded as an instrument likely to promote the integrated management of coastal areas. The demonstration projects of the Community programme IMCZ133 identified however various problems arising from the implementation of the EIA directive at Member States level, which means that it does not deploy all its support potential in the coastal areas. It was noticed that the application of the directive varies from one Member State to another and that it is, in certain cases, applied in the letter but not in the spirit. The responsibility for an EIA in coastal areas is not always clearly allotted and the maritime aspect is often left apart from the context of this type of study. The EIA is still too often lacking objectivity and reliability and the fact of awaiting project applications to assess the impacts is detrimental when the spatial plan constitutes the legal framework.

The proposal for a Council Directive concerning "the evaluation of the impacts of certain plans and programmes on the environment"134 aims at supplementing the existing system of environmental impact assessment of projects (EIA directive) by measures facilitating the environmental impact assessment of plans and programmes having a link with spatial planning as from their design. The future directive on strategic environmental assessment (SEA Directive) lays down an evaluation and consultation procedure which is similar to that established by the directive of 1985. It applies to sectors such as transport, energy, waste management, management of resources, industry, telecommunications and tourism, as well as to the significant modifications of such plans and programmes.

In this context, the competent authority in the Member State concerned will be required to carry out an environmental assessment and to write (after consultation with the organisations responsible for the environment) an environmental statement before the adoption or the submission to the legislative process of these plans or programmes. This statement should contain:

- the content of the plan or the programme and its main goals. - the environmental characteristics of the area likely to be affected by the plan or by the programme. - any relevant existing environmental problem for the plan or the programme, - the national, Community or international objectives of environmental protection which have a relevance for the plan or the programme. - the environmental impacts likely to arise from the implementation of the plan or the programme. - any possible replacement solution.

Moreover, the authorities or organisations responsible for the environment and also the public concerned will have the possibility of expressing their opinion on the draft plan or programme before its adoption or before the submission to the legislative process. Lastly, the Member State responsible for drawing a plan or a programme will be required to send a copy, accompanied by the statement concerning the environment, to other Member States (1) when it considers that the plan or the programme is likely to have environmental impacts on the territory of other Member States (2) or at the request of these other Member States.

132 COM (95) 189 final 133 European Commission : Lessons from the demonstration programme of the European Commission on the integrated management of coastal zones (IMCZ). Luxembourg, 1999. 134 COM (96) 711 final

104 Because of these provisions, the SEA can be regarded as a strategic instrument which enable to incorporate environmental considerations into the decision-making procedures of other sectors of the economy.

4.6. Territorial impacts of the financial contributions of the Community Environmental Policy a) Direct interventions through the financial instrument LIFE135

The legal basis of the financial instrument for the environment LIFE is the EEC regulation N° 1973/92 of the Council of May 1992, amended by EEC regulation N° 1404/96 of the Council of July 1996. In 1992, LIFE replaced and extended the old Community programmes like MEDSPA, NORDSPA or ACNAT. The aim of LIFE is to contribute to the development and implementation of the Community policy and legislation in the field of the environment. LIFE co-finances actions for the environment in the Community as well as in certain third countries and was implemented in two stages:

- the first stage took place from July 1992 to 31 December 1995 with a budgetary allocation amounting to ECU 400 million (LIFE I).

- the second stage (LIFE II) began on 1 January 1996 and finished at the end of 1999 with an indicative budget of ECU 450 million. For the second stage the distribution of subsidies was split by action and financial support was specified. Eligible actions concerned in particular nature conservation (LIFE-Nature), the promotion of sustainable development in industrial activities and the integration of environmental considerations in spatial planning and waste management, air pollution and the management of water (LIFE-Environment) as well as actions related to technical assistance for third countries (LIFE- third countries).

A third LIFE stage (2000-2004) had normally to begin on 1 January 2000 and was the subject of a draft regulation, currently in the process of adoption. During this new period, it is proposed that actions within the Union concentrate in particular on nature conservation (LIFE-Nature) and on the environment (LIFE-Environment). At the time of the revision of the LIFE regulation, the Commission also studied the broadening of the scope of urban136 projects, especially by multiplying innovative and demonstration actions which encourage integrated approaches and contribute to sustainable development. These actions aim at measuring and at reducing environmental pressures on urban areas, at restoring the urban quality of the areas having suffered from disorganised urbanisation (urban reconquest) and at reducing the transport demand in urban areas.

At first sight the territorial base of the financial instrument LIFE is not very significant, because its direct interventions for the treatment of environmental problems can take place throughout the whole European territory. However, the current LIFE regulation (1996-1999) lays down support for preparatory actions aiming at contributing to the protection and rational management of coastal areas, of rivers having their mouth in these areas, and, if necessary, of their wetlands and to the sustainable management of these areas and rivers. The financial contribution of the Community is fixed at a maximum of 50% of total costs, but in exceptional cases it may reach 75% (natural habitats or priority species according to the "Habitat" directive ). Although the resources made available by LIFE are limited, they can contribute significantly to the expansion of technical knowledge. Some fields, which currently benefit from co-financing have a direct relation with the sustainable development of the territory. They concern in particular:

- the safeguarding of nature, - innovative demonstration actions intended to promote sustainable development in industry, - the taking into consideration of the environment as regards land use and regional planning,

135 European Commission, 2000 : WEB Site Directorate-General "Environment" 136 COM (98) 605 final

105 - the preparation of operations to be carried out within the management and protection context of coastal areas, - the reduction of waste production, - the protection of water resources and the fight against air pollution.

The following sections try to establish a «territorialised assessment» of actions financed in various fields of activities as regards the promotion of sustainable development (LIFE-Environment) and of nature conservation (LIFE-Nature).

The section on LIFE-Environment137 is intended to promote sustainable development in the context of industrial activities, to help local authorities to incorporate environmental considerations into the context of spatial planning as well as to strengthen the links between environmental legislation and Community financial assistance provided by the Structural Funds. Eligible actions concern in particular,

- innovative and demonstration projects in industry, such as for example clean technologies or recycling processes etc.,

- demonstration, promotion and technical assistance for local authorities in order to incorporate environmental considerations into the context of their spatial planning as well as into their activities as regards the treatment of waste water and water management,

- preparatory actions in relation to Community legislation or in relation to European policies being defined or revised, in particular in the context of coastal areas and in the fields of waste, water and air.

During the period from 1992 to 1998, LIFE-Environment supported more than 600 innovative and demonstration projects likely to serve as examples for other actors in Europe, having to cope with similar problems as regards the environment. Many of these projects proved at a later stage to be commercial successes and others helped in guiding the future development of initiatives as regards the environmental policy or the financial allocation coming from the Structural Funds. In promoting projects initiated by industries and by local authorities, and while working in close partnership with the project sponsors, the Commission is rather confident in the capacity of local actors to find and adopt solutions to the environmental problems they have to cope with.

A large number of LIFE-Environment projects implemented during the period from 1992 to 1998 have a significant territorial dimension and take place very often in rural areas or in less-favoured regions of the Union. This is particularly obvious when projects are initiated by local authorities. Certain projects financed by LIFE-Environment concern the urban environment specifically. 138 Various aspects of the management of the urban environment are approached: clearance of contaminated factory sites, management of motor car traffic, control of the water quality, reduction of traffic jams by means of teleworking, etc. While financial investments remain relatively modest (the share of the LIFE contributions varies between ECU 250 000 and 1 800 000 per project), the demonstration character of the projects represents a significant contribution to the know-how available for the cities. The Commission also supports the transfer of good practices as regards the integration of environmental concern into urban planning and accessibility.

In 1999, 151 eligible projects were selected in the LIFE-Environment section for the three priority fields.Withregardtotheirspatialimpacts,itcanbesaid139 that:

137 European Commission : LIFE in Action : Demonstration Projects for Europe 's Environment. 96 Success Stories. 138 European Commission, DG Regio : Europe of the Cities. Community actions in an urban environment. 139 Own calculations based on information of the European Commission, WEB Site Directorate-General "Environment" (2000).

106 - almost a quarter (24%) of the total resources available from LIFE-Environment in 1999 (Euros 65 million) were allotted to projects which take place in the four cohesion countries (in decreasing order according to the amounts: Spain, Greece, Ireland, Portugal). If, in addition, account is taken of projects which take place in other Objective 1, 2 or 5b regions, it can be said that LIFE-Environment projects strongly contribute to the objective of economic and social cohesion.

- with regard to the sectors concerned, detail reveals that 59 projects are initiated by industries (clean technologies, recycling) and 84 projects by local authorities (waste policy, urban and regional policy), while 9 projects take place in the field of the preparatory actions (waste, water). The projects initiated by the local authorities are not only predominant in number, but also in terms of allotted financial resources: they amount to Euros 38 million out of Euros 65 million available for LIFE-Environment in 1999.

Nature conservation became an important component of the financial instrument LIFE (LIFE- Nature Section)140 , with annually Euros 40 to 50 million to co-finance actions targeting the sites proposed under the "Habitat" directive (SCA), the sites designated under the "Birds" directive (SPA) and the species when their survival does not depend only on the protection and conservation of their habitats. Since its creation in 1992, LIFE has co-financed until now 347 projects on nature conservation in the European Union for almost Euros 283 million.

Under LIFE I (from 1992 to 1995), when the implementation of the "Habitat" directive was at its beginnings, it was essential not only to finance actions on sites, but also preparatory measures in various Member States to support the development of the national list of sites for the "Natura 2000" network. With LIFE II (1996 to 1999), priority was given to projects comprising concrete conservation actions on natural sites in view of the fact that Member States entered the following stage of the establishment of the Natura 2000 network.

Almost all the major categories of habitats and species were targeted by the projects, although a special importance was given to projects concerning types of habitats or priority species corresponding to the "Habitat” directive . A significant proportion of projects concerns sites containing a number of habitats and species of common interest. Generally, an particular type of approach or the ecological integrity of a whole site are targeted instead of simple components. This means that the various forms of land use in a given surface are apprehended globally and not on a fragmented basis. When a project contributes to creating possibilities for additional income thanks to increase in tourism, to the adoption of agri-environmental measures or to job creation, it proves naturally beneficial for the local population. In other circumstances where conservation had priority and often represented the only option, the purchase of land was supported by numerous LIFE-Nature projects.

The project sponsors often are public bodies, in particular of the municipalities or regional authorities as well as of the administrations of natural reserves, which have a responsibility in the implementation of the Community legislation on conservation. But non-governmental organisations (NGO) also represent a significant proportion of recipients, because they have necessary field competences to bring successful implementation of actions on the sites.

A concrete example which illustrates well the territorial dimension of the LIFE-Nature interventions is related to the activities in favour of peat bogs.141 Peat bogs are particularly well represented in all parts of mainland Europe, but some are also located on islands, such as for example

140 COM (98) 605 final , European Commission, Directorate-General Environment : Natura 2000. Natural information letter, no.8, February 1999. 141 European Commission : Conserving mires in the European Union. Actions financed by LIFE-Nature. 1999.

107 the Azores. However, their decline causes serious concerns because 70% of their extent has already disappeared. b) Contribution of the Structural Funds and of the cohesion Fund to the implementation of Community objectives as regards the environment

Despite the conflict and sometimes ambivalent relation that the Structural Funds maintain with the environment, it must be remembered that their financial contributions contribute in a direct way to the carrying out of certain objectives of the CEP:

- this is in particular the case for interventions which have "a direct or intentional environmental impact" such as for example the construction of a sewage treatment plant.

- but also for other activities in the context of the Funds, which have rather indirect or side effects (for example measures of awareness-raising or of improvement of the follow-up), and have to be taken into consideration in this context.

During the initial programming period (1989 to 1993), approximately 7% of the total budget of the Structural Funds was assigned to actions concerning directly the environment in the Objectives 1, 2 and 5b regions (2.751 billion ECU). The programming documents adopted for the second programming phase (1994 to 1999) reveal an appreciable increase in the total amount of allocations committed by the Structural Funds for the environment. For the Objective 1 regions, the programming documents envisaged about 8.9% of the total budget of Structural Funds (8.328 billion ECU) which were expressly assigned to investments of an environmental nature. For the Objective 5b regions, approximately 11.7% (more than ECU 720 million) of the total budget was assigned to environment protection and development. In the Objective 2 regions, approximately 5.7% (ECU 397 million) of the budget available for the first programming phase (1994-1996) was devoted to environmental measures. It should be noted that various Community initiatives (LEADER, ENVIREG, INTERREG etc.) also stress innovative environmental measures.

A main aspect of Objective 1 regions is often the lack of environmental infrastructures, in particular in the most backward regions. These infrastructures are not only a necessary tool to better protect the environment, but they also constitute a considerable contribution to economic activities in the regions and communes concerned. Another important environmental question in many Objective 1 regions is the protection and safeguarding of water resources (coastal and inland water, municipal waste water, natural water) as well as the management of waste coming from households and industries or the management of dangerous waste. The provision of support to productive investments is also beneficial to the environment, in particular in the sectors of public transport, “green” tourism etc. In the agriculture section of the programmes, numerous actions concern the environmental protection or safeguarding of landscapes in rural areas. Accordingly, the allocations of the Objective 1 programmes for the period 1994-1999 were mainly intended for various actions as regards water management and sewage treatment (6.9705 billion ECU), for measures in the context of industrial or urban areas as well as in favour of the protection of the natural environmental (1.0576 billion ECU), for measures on waste processing (0.225 billion ECU) and the remainder for research and training. According to the relative importance of measures for the environment in relation to the total expenditure of the programmes in the various Member States, one can establish the following grouping:

- a group with a percentage above 10%: France 15% (ECU 323 million), Belgium with 13% (ECU 92 million), Italy with 12.6% (1.87 billion ECU), Spain with 11.5% (3.03 billion ECU).

- a group with a percentage below 10%: Germany with 8% (1.1 billion ECU), Portugal with 7.6% (1.06 billion ECU), the United Kingdom with 5.2% (ECU 64.1 million), the Netherlands with 5% (ECU 3 million), Greece with 4% (ECU 624 million) and Ireland with 1.4% (ECU 78 million),

108 The main problems of the Objective 2 regions (1994-99) are environmental damages in relation to the current or previous industrial activities. This concerns in particular the pollution of soil or of ground water originating in industrial activities or in a non suitable management and elimination of waste as well as problems related to industrial and urban derelict land. Taking into account the fact that the regional economies are strongly industrialised, support for more environmentally friendly production methods as well as awareness-raising prove particularly useful activities. Accordingly, the allocations of the Objective 2 programmes for the period 1994-1996 were mainly devoted to the cleaning of soil and to waste management, as well as to clean technologies (ECU 210 million), to the repairing of factory sites and urban areas (ECU 162 million) or to training and other related activities. The new Objective 2 programmes for the period 1997-1999 emphasised more preventive measures for the environment such as ecological products or research connected with the environment. The 9th annual report of the Structural Funds underlines however that the quality of the environmental dimension still varies appreciably between the various programmes. A characteristic of the Objective 2 programmes was better horizontal integration of the environment in various non environmental measures. Although this situation is aimed at, it will create in future a paradox regarding knowledge that will be available about the environmental role of Structural Funds: the more environmental actions will be incorporated into the different measures, the less visible their presence will be.

In the Objective 5b regions, the quality of the environment is an important factor for regional and local development. It has constituted the basis for numerous projects as regards agriculture or tourism, which in turn can contribute to improving the environment. The resources of the programmes were used mainly for:

- measures concerning the management of natural areas or landscapes as well as measures preserving ecological diversity (ECU 400.5 million), - measures as regards cleaning and waste management (ECU 216.2 million), - measures for the forests (ECU 103.8 million).

As regards effects on employment, a 1997 Commission Communication stresses that support of the Structural Funds for sustainable development, for example in the context of urban renewal or rural areas, gives good prospects for creating more local jobs in the sector connected with the environment. Concerning the measures of awareness-raising or improvement of the follow-up as regards the environment undertaken in the context of the Structural Funds, a remarkable growth of these activities could be observed in particular since 1995.

In November 1995, the European Commission adopted a communication entitled "The cohesion policy and the environment" (COM/95/624 final), which presented the main options to carry out a greater synergy between the two Community policies. To strengthen these synergies, the Commission proposed, in the case of Structural Funds, to improve the monitoring and evaluation of the environmental impacts of the programmes and to strengthen the selection criteria of projects, in order to give them an significant scope at economic, social and environmental levels. Moreover, it planned to launch new environmental pilot projects and supported the establishment of a dialogue between all actors involved, including the non governmental organisations. During the following years, the implementation of the key actions identified in this Communication continued, in particular as regards the monitoring and evaluation but also in the context of increased awareness-raising.142 In this context, one can notice the creation in 1997 of a new budget line (B2-1600) on the initiative of the European Parliament endowed with a budget of Euros 3 million, dedicated to sustainable development in the Structural Funds. It aims at improving the integration of the environment and of sustainable development in the interventions of the funds and concentrates on the financing of actions in three fields:

- development of methodologies and data to enable better evaluations,

142 Commission européenne : COM (95) 624 final ; Umwelt und Regionen : für eine nachhaltige Entwicklung (DG-Regio) ; Jahresbericht des Kohäsionsfonds (1998) ; Rapports annuels sur les Fonds structurels (1995 , 1996 , 1997 , 1998).

109 - awareness-raising of all actors concerned to sustainable development and environmental protection (diffusion of good practices), - support to the implementation of these principles within the context of planning and of implementation on a regional and local scale.

The Commission set up a network of pilot studies in 12 Objectives 1 and 2 regions to check the applicability of the results of regional studies financed on the new budget heading B2-1600. In 1997, the Commission launched also a thematic evaluation covering the Structural Funds and the environment, which aimed at developing adapted tools to better estimate, including quantitatively, the overall and specific environmental impacts of structural interventions.

The aim of the interventions of the cohesion Fund as regards the environment143 is to improve the environmental conditions in the four 4 cohesion countries and to contribute to the implementation of the objectives of the Treaty, namely (1) the safeguarding and protection of the environment as well as the improvement of its quality, (2) human health protection and (3) the careful and rational use of natural resources. Accordingly, the investments supported by the Fund concentrate mainly on:

- the improvement of water quality and the distribution of drinking water, - the treatment of municipal sewage and the waste processing, in particular in urban areas, - interventions which contribute to saving or improving the environmental situation, human health and encourage reasonable use of natural resources, - interventions which contribute to the carrying out of the objectives of the fifth action plan of the Community for the environment.

According to the initial guidelines of the Commission, the distribution of the overall total allocations available from the Fund - approximately 16 billion ECU between 1993 and 1999 - had to be done on an equal basis between the transport and the environment sections. In its Communication of November 1995 entitled "the cohesion policy and the environment" (final COM/95/624), the Commission stressed that efforts are still necessary to achieve the aim of a 50-50% distribution between the subsidies granted to transport projects and those granted to projects connected with the environment. Since then, the situation improved progressively to reach an overall balance by the end of 1998. During the period 1993-1998, the Fund devoted 50.1% of granting to the environmental aspect and the Commission attempted to reach a 50/50 balance, also at the level of each Member State, by the end of 1999.

In 1998, the Fund concentrated its resources on interventions regarding water management, and in particular on the generation and distribution of drinking water and on sewage treatment. 50.1% of the resources available from the Fund for environmental measures were invested in 1998 in projects relating to sewage treatment.

In Greece, 12 environmental measures were approved in 1998 which covered 40.6% of the resources available for this country. The projects contribute to filling the lack of available infrastructures as regards water distribution, sewage treatment and to the environmental protection (protection of forestry resources against fires, preventive actions as regards soil erosion). Projects on fire prevention have a major economic importance for Greece in view of the fact that 68% of the surface of the country is covered by forests or wooded areas. For the period 1993 to 1998, the environmental part covered 51.4% of the expenditure of the Fund in this country.

Spain accentuated more the importance of environmental interventions in 1998, for which the cohesion Fund made ECU 871 million available. As a whole, the projects supported by the Fund concern mainly the realisation of infrastructures for the distribution of drinking water to households,

143 European Commission : COM (95) 624 final; Umwelt und Regionen : für eine nachhaltige Entwicklung (DG-Regio); Jahresbericht des Kohäsionsfonds (1998); Annual reports on the Structural Funds (1995, 1996, 1997, 1998)

110 sewage treatment, the management of dangerous urban waste, reafforestation, the protection and repairing of the coast as well as the improvement of the urban environment. In general, the Spanish projects can be grouped in two categories: those which form part of a sectoral plan at national level (drains and sewage treatment) and those which are proposed and implemented by the Autonomous Communities (urban waste management, sewage treatment). For the period 1993 to 1998, the environmental part accounted for 49.8% of the Fund’s expenditure in this country.

In Ireland, the activities of the Fund concentrated in 1998 on the implementation of the priority measures launched the previous years. In terms of intervention priorities, the projects concentrated in particular on sewage treatment, distribution of drinking water and technical assistance as regards solid waste management. For the whole period 1993 to 1998, the part of the environment sector reached 48.7% of the Fund’s expenditure in this country.

In Portugal, environmental projects concentrate mainly on the realisation of infrastructures in the priority sectors so that the country may be in a position to conform to the Community legislation (distribution of drinking water, sewage treatment, solid waste management). With regard to sewage treatment, the Fund intervenes almost in an exclusive way in the three major urbanised areas of Portugal, namely Lisbon, Oporto and Algarve. The cases which constitute the exception to this geographical concentration, are concerned with projects targeted at solving serious environmental problems through heavy interventions. For the period 1993 to 1998, the environment part amounted to 50.3% of the expenditure of the cohesion Fund in this country.

During 1998, the first ex-post project evaluations of the "environment" aspect of the Cohesion Fund started in the 4 Member States. The first conclusions show that the analysed projects had a positive impact on the environment and the population of the area concerned. Owing to their positive environmental impact, certain projects also had a positive impact on the economy. Thus, some projects had as an effect the raising of land prices in the areas concerned and thus generated economic development which was at the root of the creation of new activities and new jobs.

Regarding the territorial impacts of the interventions of the cohesion Fund as regards environment, it is also worth stressing its positive involvement in the most remote regions. On the Canary Islands (E), the interventions of the Fund were directed towards projects on drinking water supply and towards sewage treatment. In the region of Madeira (P), the Fund also financed projects in drinking water supply and discussions are in hand concerning a project for the realisation of a waste management system, centred on the construction of an incineration plant. In the Azores (P), a project proposal concerns urban waste management.

Lastly, on the basis of the budget heading B2-1600, information seminars on the activities of the cohesion Fund as regards environment were organised in the 4 cohesion countries: 2 in Greece, 6 in Spain and one respectively in Portugal and in Ireland. 144

4.7. Conclusions

From the three Community policies studied (CAP, transport, environment), the Community environmental policy is probably the one which presents the highest degree of convergence with the objectives and policy options of the ESDP.

Concerning the objective of cohesion underlying the ESDP, the financial instruments which contribute to implementing the objectives of the CEP (a part of the Structural Funds and of the cohesion fund, LIFE) are applied in a largely convergent and non contradictory way (which does not mean however that structural measures all have positive aspects on the environment).

144 Commission Européenne : COM (95) 624 final ; Umwelt und Regionen : für eine nachhaltige Entwicklung (DG-Regio) ; Jahresbericht des Kohäsionsfonds (1998) ; Rapports annuels sur les Fonds structurels (1995 , 1996 , 1997 , 1998).

111 Concerning the territorial impacts of the Structural Funds and Cohesion Fund interventions contributing to the implementation of the objectives of the CEP, the current situation can be summarised in the following way:

- the programming documents contain numerous measures which have a direct and intentional environmental impact. Financial support intended for the projects and for productive investments with favourable impacts on the environment directly improves the quality of the environment of less- favoured regions. In this context, some examples of concrete measures can be quoted: the construction of a sewage treatment plant, support for environmentally friendly products and techniques, the promotion of renewable energy and of techniques saving energy and water, of initiatives regarding public transport, of activities regarding research and development, of actions for "green" tourism, for organic farming and for nature conservation. In a thematic evaluation of the Commission on the interventions of the Funds and their contribution to the environment, it was nevertheless observed for the cases examined that activities such as the use of cleaner technologies or the adoption of new approaches as regards transport and energy have weaker impacts on the environment and appear less frequently in the programmes. On the whole, the direct spatial impacts of these interventions appear therefore mainly in eligible regions, but possibly also in other neighbouring areas not eligible for the Structural Funds.

- the financing from the Structural Funds enables the regions covered by the programmes to conform to European legislation, in particular in the fields of waste and sewage processing, and thus contributes directly to the implementation of the Community directives in these fields. The territorial impact of this aspect is more complex: by increasing the investment capacity, the interventions of the Funds make it possible for the administrations and for the companies in less-favoured regions to take up the challenges and constraints of a territorial nature which arise from the application of the Community legislation (budgetary constraints, lack of expertise etc.).

- finally, one can also generally observe that the environment is increasingly incorporated into the non-environmental actions of the Structural Funds. Although positive, this development will create in future a paradox regarding knowledge about the impact of Structural Funds on environmental quality: the more the environmental actions will be incorporated into the different measures, the less visible their presence will be.

The financial contributions of the CEP through the financial instrument LIFE (individual projects or contribution within the framework of integrated actions) have a direct and quantifiable territorial impact, but also one of a qualitative nature (experience sharing, transfer of good practices). The financial volume of LIFE I and II (1992-1999) amounted to Euros 850 million, which is virtually comparable with the expenditure of the Structural Funds for the environment for the Objective 5b during the second programming period of 1994-1999 (ECU 720 million). Although the interventions of LIFE are not spatially specified ( the whole Community territory is eligible), it could be showed that their contribution to economic and social cohesion is considerable. Indeed, a large number of projects take place in less-favoured regions where they bring an added-value by diffusing know-how as regards administrative practices or environmental techniques.

The impact of the legislative and regulatory measures of the CEP on economic and social cohesion on a European scale is much more difficult to determine. On the one hand, the improvement of the environment in the less favoured regions increases their attractiveness for external investors and for tourism and contributes to the strengthening of regional identities. But on the other hand, the economic and financial implications arising from the legal provisions of the CEP can prove constraining , at short and medium term, as regards development. In order to better identify the nature of the possible socio-economic effects which may result from a regulatory intervention of the CEP, it is useful to briefly summarise the results of a survey on the territorial impacts of the CEP carried out

112 among the European regions.145 In this context, 3 major and sometimes contradictory aspects appeared which are worth to be detailed through some additional considerations:

- some regions fear the disappearance of certain economic (in particular industrial) activities located on their territory, which face difficulties in adapting to the high standards resulting from environmental legislation. Industries strongly concerned with the rise in environmental standards are those which have, from the nature of their activities, an unfavourable environmental impact. Some examples can be quoted such as intensive stock breeding, the raw material extraction industry (coal, gas, oil), some sectors of the agri-foodstuff industry in general, as well as specific sectors such as chemical and petrochemical industries, paper and cellulose industry, energy industry or textile industry. Generally, it can be observed that an increase in the environmental standards can inhibit certain economic activities if it has an unfavourable impact on the competitiveness of companies. Therefore, a direct territorial impact connected with an environmental measure in this direction certainly appears in regions where these industries play an important role in the economic fabric (restrictions in terms of new investments, no new jobs created or even job losses).

- other regions fear "environmental dumping" and a relocation of economic activities towards areas having more flexible environmental standards. In the context of the European market, only uniform application of the Community legal provisions on the whole territory of the Union can avoid the creation of artificial comparative advantages and of effects of market distortion. Conversely, erroneous interpretation or incomplete application of the Community provisions in the different Member States will have as a consequence to open the door to "environmental dumping" practices within the Community. The territorial impacts appear therefore mainly as a consequence connected with a possible relocation (job losses on the one hand and job creation on the other hand). But with regard to the concrete fears about relocation, numerous regions identify the countries of Central and Eastern Europe as the first category of potential recipients of such a process.

- finally, certain regions hope that more strict standards as regards environment will be able to encourage their overall competitiveness and therefore also their development potential. Although the cases where environmental protection could constrain regional development actions are frequent (location of transport infrastructures or of the economic activities), this positive argument is based on the fact that the environment plays a new key-role as a production and/or location factor. Indeed, several evidences show that the increase in environmental standards and the improvement of the environment in an area may contribute to its economic development:

- firstly, there are areas specialised in productions for which the quality of the environment is to some extent a direct production factor (tourism, fisheries and certain forms of agriculture).

- secondly, there are areas in which the quality of life is likely to encourage indirectly the location of economic activities, by attracting manpower, investors or consumers. This is due to the fact that activities are increasingly mobile, less and less constrained by traditional location factors; they can therefore be directed towards areas where people wish to be located for environmental reasons.

- thirdly, it should be kept in mind that the sector connected with the environment is very dynamic and employs at least 3.7 million people in Europe in the sectors of clean technologies, of renewable energy resources, of waste recycling, of nature and landscape conservation, of environmental modernisation in urban areas or in the sector of eco-industries.146 .

An important convergence with the other policy options of the ESDP can be noted in connection with most fields of intervention of the CEP, like the improvement of the environment of cities (control of

145 Assembly of European Regions : Regions and territories in Europe. The regions' view of the territorial effects of European policies (1996). 146 COM (97) 592 final

113 air pollution and of harmful noise effects, better waste management), the promotion of sustainable agriculture (control of nitrogen, of pesticides, of pollution through intensive stock-breeding), the development of the ecological network (Natura 2000), the integrated management of water resources (outline directive) etc.

The difficulties which may occur in the field of coherence between the CEP and spatial planning carried out according to the principles of the ESDP are located much less at the level of objectives than at that of concrete applications. Taking the example of the categories of operational protection and intervention areas which arise from the provisions of the CEP, it can be immediately observed that they are very numerous (special protection areas and special conservation areas for Natura 2000, vulnerable areas designated according to the directive on Nitrogen, sensitive areas according to the directive on the treatment of urban waste water etc.),and to some extent juxtaposed and superimposed. Spatial planning, which is largely implemented at regional and local level, needs, in order to be effective, a good legibility on the part of all actors and all citizens. The complexity of zonings arising from the regulations of the CEP, being added to zonings resulting from legal or regulatory provisions of national or regional levels (landscape protection areas, national and regional parks etc.) do not strengthen transparency and legibility in the eyes of the general public and even of administrations, because the designation and management of the areas concerned involve very often different administrations.

The case studies (in particular Champagne-Ardenne) showed that the Natura 2000 programme meant mobilising all financial resources available for the protection and enhancement of natural areas. This may result in stopping assistance to natural or semi-natural areas not classified under Natura 2000 which are nevertheless of unquestionable interest for biodiversity and cultural landscapes. This is also likely to strengthen the dualisation of the territory in rural areas, where biodiversity will be treated in the form of "all or nothing".

While the CEP supports a policy of adaptation of the environmental measures to local conditions, the diversity, heterogeneity, complexity and constant development of the instruments that it uses hardly appear favourable to an integrated bottom-up policy of sustainable development. The question which arises then is to know how to facilitate the integration of the legal provisions of the CEP which have territorial implications, so as to strengthen the taking into consideration of local and regional contexts and to increase the acceptance and participation of all actors concerned with environmental problems of territorial development.

Another significant aspect of instrumental nature lies in the importance of not yet resolved environmental problems on the territory of the Union. Despite the existence of numerous instruments used by the CEP, it seems that a more territorialised approach, involving spatial planning according to the principles of the ESDP, would be likely to increase its overall effectiveness as well as environmental synergies.

114 5. Quantitative aspects of interactions between sectoral policies and regional policy: the cost of non-co-ordination

5.1. Methodology for quantification a) Funding versus impact

The cost of non-co-ordination can be estimated in various ways, notably by looking at the overall impact or by the funding level. Even though impact assessment of policies is theoretically preferable for estimating the costs of non-co-ordination, its execution is very complex in practical terms, due to the occurrence of indirect and spill-over effects. Impact assessments of several policies at the same time is even more complex, and exceeds the scope of this exercise.

The cost of non-co-ordination will therefore primarily be estimated by taking the funding level as a starting point for the quantitative analysis of the costs of non-co-ordination. A disadvantage of this approach is that funding levels can only be a rough indicator. The impacts of a Community policy do not necessarily and fully benefit the region that receives the funding (e.g. the economic effects of the construction of a High Speed Train are concentrated around the railway stations, not along the whole line). Other drawbacks of the ‘funding approach’ are the disregard of efficiency of measures, the exclusion of absorption capacity of regions and the ignorance of the fact that additionality of EU funding can differ among regions. These limitations call for caution in interpreting the results.

The Common Transport Policy (CTP) and the Common Agricultural Policy (CAP) have been selected as representatives of EU sectoral policies because they each have a substantial funding element that allows for such a quantification. Even though these Community Policies are to be seen primarily as sectoral, they also have a strong territorial character, thus allowing for a confrontation with the Cohesion and Structural Funds, the main instrument of Community territorial policy.

The main challenge of this contribution therefore lies in the comparison of funding levels between Community territorial and sectoral policies. These funding levels will be expressed in terms of funds per capita compared to the EU average. Co-ordination or synergy is then to be understood as a situation whereby the sectoral policy supports the aim of territorial policy. For instance, a region with a GDP below the average EU level is likely to receive above-average Structural Funds, that would raise the GDP level. A synergy with sectoral policy is then defined as a situation where the average sectoral funding levels for that region is also relatively high, thus raising the GDP level for that region as well. In this case, both Community policies would contribute to economic and social cohesion.

Non-co-ordination is then defined as a situation whereby sectoral policy does not support the aim of territorial policy. For instance, a region with a GDP below the average EU level receiving above- average Structural Funds but below-average sectoral funding. In this situation, the incentive from the Structural Funds will be dampened, neutralised or off-set by the sectoral policy concerned. As a consequence, this sectoral policy works against economic and social cohesion. b) The Lorenz curve as a tool

The Lorenz curve has been selected as the frame of analysis for tackling the above question. The Lorenz curve is frequently used to present graphically the size of inequalities, using incomes as a basis (see Figure 1.1). To this end, all EU regions can be arranged in ascending order according to their GDP per head; poorer regions on the left side and richer regions on the right side of the graph. The regions are represented in the graph by relating their cumulative share of total GDP to their cumulative share of the total population. This enables assertions of the type: ‘the poorest x% of the population earny%oftheGDP147’.

147 Of course, x > y.

115 Although not politically accepted, the theoretical aim of economic and social cohesion would be to have a situation of full equity. In such a case, all regions have exactly the same GDP per head, as represented by the equity line. An unequal income distribution is then represented by a GDP line that is far beneath the equity line.

Figure 1: Lorenz curves on GDP and Regional Policy funding

Regional policy 4

Equity line 3 GDP

1 Cumulative percentage of income and funding

Cumulative percentage of population (from low to high GDP/head)

Another line can be drawn for the funding levels of EU Regional Policies (Structural and Cohesion Funds). This approach has been applied in earlier studies, e.g. commissioned by the European Parliament148. Using the same ranking of the regions, the regional policy line demonstrates the percentage of total funding received by the poorest x% of the population. By nature of the Structural and Cohesion Funds, the poorest regions will receive more than the richest ones149. The Regional Policy curve is therefore by definition to be place above the equity line (see again Figure 1.1).

According to the same line of reasoning, Sectoral Policy Funding can be depicted. Drawing Sectoral Policy (SP) lines in the graph enables estimates about the effects of such sectoral policy on economic and social cohesion. In theory, the Sectoral Policy line can be positioned in four different ways, thus having four different consequences for economic and social cohesion.

1. The SP line is situated below the GDP line; this implies that the existing inequalities in terms of GDP per head are aggravated by this EU sectoral policy and is unfavourable for addressing economic and social cohesion.

2. The SP line lies between the GDP and Equity lines; this implies that the poorer regions receive less sectoral policy funding than their richer counterparts when expressed in funding per head. However, poorer regions are better-off when sectoral funding is expressed in a percentage of GDP per capita. The implications of such a line are therefore ambiguous.

148 i.a. DG Research (1996) 149 For Objective 1 funding, for example, eligibility rules state that for a region to be able to receive support it must have a GDP per head that is lower than 75% of the Community average.

116 3. SP between the Regional Policy (RP) and Equity lines; sectoral policy funding certainly contributes to economic and social, but not to the extent that Regional Policy does.

4. SP above the RP line; sectoral policy is even more pronounced in favouring the poorer regions than regional policy itself150. In practice, this case is unlikely to occur and would y point to the ineffectiveness of EU Regional Policy itself to contribute to economic and social cohesion. c) The Gini coefficient as an additional tool

A numeric expression of the Lorenz curve is the Gini coefficient, measuring the surface of the area between the equity and the GDP line. It is assumed that the contribution of Sectoral Policy to economic and social cohesion is positive when the related Gini coefficient is below zero.

The cost of non-coordination can be estimated by taking the total impulse of both strands of policy, that is Gini (RP+SP), and relating it to the impulse of regional policy Gini(RP). The quotient of the two is an indicator of the ‘costs’ caused by non-coordination. The (financial) weight of each of the policies is taken into account as the combined Gini is drawn towards the Gini of the policy that has the biggest weight.

In theory, three situations can emerge:

The Gini (RP+SP) is zero; all the Regional Policy funding has been neutralised by Sectoral Policy. In other words, the combined (financial) impulse given to economic and social cohesion is zero. The cost of non-coordination from a regional policy point of view is equal to the amount spent on regional policy.

The Gini (RP+SP) is positive; both policy strands combined contribute to economic and social cohesion. The cost of non-co-ordination are between zero and the amount spent on regional policy, depending on how much of the regional policy effect has been counteracted by sectoral policy.

The Gini (RP+SP) is negative; the combined (financial) impulse is negative in terms of combating disparities. The positive impulse of regional policy is more than neutralised by sectoral policy. The cost of non-co-ordination rise above the level of regional policy funding. d) Approach at the regional level

A crucial element of this study lies in the analysis of case study regions. The proposed method therefore needs to be made applicable not only at the EU level, but also at lower regional levels. To this end, a distinction has been made between the external and the internal positioning of a region. Investigating the regional impact of sectoral Community policies requires first of all that the external positioning of the region is clear in a basic manner. How does income relate to the EU as a whole, both in absolute figures and per inhabitant? Is the situation problematic or is the region sailing ahead without much problems? And what sectoral and territorial support is being provided to the region? And how do they relate to each other? This information can be provided by identifying the case study region within its broader context, literally by positioning the region in the Lorenz-curve.

The internal positioning of the region will then need to be investigated. The central question that emerges at this level is how the impact of territorial and sectoral Community policies can be perceived, and how sectoral policies contribute to territorial cohesion. To this end, the ‘regional box’ needs to be opened in terms of sub-regions or areas. Information is thereto required about the distribution of sectoral and regional funds to specific areas, per inhabitant (usually at NUTS 3 level). The above information then provides a basis for calculating cumulative percentages that are required for constructing Lorenz curves. These curves give a visible answer to the question what is the

150 While the primary goal of regional policy is to reduce income disparities and that of sectoral policy is not.

117 territorial impact of sectoral policies and to which extent they contribute to territorial cohesion. In essence, the exercise and its interpretations are then similar to the analysis carried out at European level e) The Use of Data

In this study, data on income inequalities have been derived from the REGIO database by Eurostat. Funding information on Structural and Cohesion Funding was obtained by analysing financial tables from the Programming Documents (CSF, OP and SPD) across the EU. For the sectoral policies, we drew upon Commission data (DG Transport for CTP and DG Agriculture for CAP). In addition, a number of OECD and Eurostat data were used.

The regionalisation of sectoral funding data has not been easy in the case of the Common Agricultural Policy (CAP) and the Common Transport Policy (CTP). In some cases proxies had to be constructed by attributing NUTS II funding on the basis of national allocations.

Structure of this study

In Chapter 5.2, income disparities among EU regions are regarded as a basis for further analysis. A brief assessment will focus on the extent to which regional policy enhances cohesion.

Chapter 5.3 deals with two strands of Sectoral Community Policy (Transport and Agriculture), presenting the methods to arrive at regionalised funding data, the resulting Lorenz curves, the calculations leading to the Gini coefficients and the conclusions to be drawn upon them. On the basis of this analysis we will estimate the costs of not co-ordinating these regional and sectoral policies.

Chapter 5.4 presents the findings from the case study research. This quantification exercise will focus on Champagne-Ardenne in France and the Portuguese Norte region. The position of these regions’ position will be depicted within their respective countries. The internal cohesion and co- ordination of policies will be handled on the basis of funding information.

Chapter 5.5 presents the main conclusions of this quantification study.

5.2. Cohesion and regional policy a) Economic and social cohesion

In the past, numerous reports have been prepared on social and economic cohesion. A key question is to which extent regional income disparities are subject to convergence. Commonly known is the First Report on Economic and Social Cohesion, published by the European Commission in 1997. The report states that the inequalities between Member States in income per head have decreased considerably during the period 1983 – 1995. For the bigger part, this is attributed to the catching up of the Cohesion countries, whose average income per head rose from some 66% to 74% of the EU average. Income disparities between regions, however, have not changed very much during the same time span: differences between the richest group of regions and the poorest ones have roughly remained the same. An important observation is that income inequalities within Member States increased from ’83 to ’95. The geographic level of analysis is therefore a crucial determinant in measuring cohesion.

Figure 2. presents an overview of regional income disparities (in PPS per head) among all NUTS2 regions in the 15 Member States in 1996, by means of the Lorenz curve. On the horizontal axis the cumulative proportion of the population is presented, whereas the cumulative percentage of total income is measured on the vertical axis. In order to be able to assess inequalities graphically, the 45o ‘equality line’ has been presented. It turns out that the poorest 30% of the EU population together earn

118 some 20% of the total income in the EU. The richest 20% of the EU population together account for 30% of the income (point (80,70) in the graph).

One way of presenting this situation quantitatively is to compute the Gini-coefficient by measuring the size of the surface between the Income and Equality lines and dividing by ½151,whichresultsina score of 0.17152. To put this figure into perspective: regional income disparities are at 17% of their theoretical maximum, whereby all EU income would be generated in one region. Although the EU Parliament study does not present any Gini coefficients, it does construct a Lorenz curve for income disparities in EU12 for NUTS II regions. The slope of two curves (one for 1988 and one for 1992) is similar to the one as constructed above. The combination of curves in the Parliament study shows a very slight improvement of cohesion, mostly caused by more ‘flatness’ in the upper income regions (top half of the curve).

Figure 2. Income disparities within the European Union of 15 ( at NUTS II level)

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151 We divide by one half (or multiply by 2) because the Gini coefficient is a quotient of the area between 45 degree and Lorenz lines and the area above the 45 degree line. The latter has a surface of ½ * 100% * 100% = 50% = ½ 152 The underlying data were taken from the REGIO database by EUROSTAT. Due to incompleteness of data on agricultural production (for the UK, only NUTS1 level data were available) and the need to take the exact same regions into account in analysing disparities in GDP, Regional policy funding, CAP and CTS, there may be slight deviations from results earlier published in this respect.

119 Figure 2. Income disparities within the European Union of 15 ( at NUTS II level)

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b) Introducing Regional Policy

As described earlier, the curve of Regional Policy is expected to be above the equity line as, by nature, the Structural and Cohesion Funds aim their funding at the poorest regions. To draw the Lorenz curve all expenditures from the SCP should be known in all NUTS II regions of the EU. In composing this curve, several problems were encountered.

Limitations and assumptions

A first limitation relates to the fact that in principle only four of the seven objectives covered by the Structural Funds are spatially targeted; objective 1, 2, 5b and 6 are established as ‘regional’ objectives while objective 3, 4 and 5a are horizontal by nature. Table 2.1 gives an overview of the expenditure in each Member State for the former and the latter category. We state that, during the 1994-99 programming period, only commitments under 1, 2, 5b and 6 can be regarded as Community Regional Policy.

Table 1: Expenditure 1994-1999 from SF

B D DL GR E FR I IT L NL A P S SW UK Objective 1 40% 0% 70% 100% 84% 16% 100% 74% 0% 7% 22% 100% 0% 0% 21% Objective 2 19% 16% 8% 0% 6% 28% 0% 8% 18% 31% 14% 0% 13% 13% 41% Objective 5b 4% 7% 6% 0% 2% 17% 0% 5% 7% 7% 55% 0% 14% 11% 7% Objective 6 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 33% 20% 0% Total 64% 23% 84% 100% 92% 61% 100% 86% 25% 44% 91% 100% 60% 44% 68%

Objective 3 22% 35% 9% 0% 5% 19% 0% 7% 25% 43% 0% 0% 18% 28% 28% Objective 4 4% 5% 1% 0% 1% 5% 0% 2% 3% 7% 8% 0% 6% 14% 2% Objective 5a 11% 36% 6% 0% 1% 15% 0% 5% 48% 5% 0% 0% 15% 15% 2% Total 36% 77% 16% 0% 8% 39% 0% 14% 75% 56% 9% 0% 40% 56% 32%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Source: CEC, Ninth annual report on the Structural Funds, 1999

120 Further analysis of SCP funding reveals that, while spatially targeted in nature, the expenditures under Objective 1 are partly delivered through so-called Multi-regional or Sectoral Operational Programmes. These OPs fund to a large extent national sectoral objectives such as human resources, infrastructure and environment. This means that next to specific regional programmes for NUTS II regions, some countries make use of horizontal programmes, that tend to be executed at national level. Again, this issue underlines the importance of the geographic level. At the (sub- )national level, such SOPs are to be seen as sectoral policy. However, the same SOPs are to be seen as regional policy at the EU-level.

Table 2: Regional and Multi-regional OPs under Objective 1

BDDLGREFRIITLNLAPSSWUK Objective 1 40% 0% 70% 100% 84% 16% 100% 74% 0% 7% 22% 100% 0% 0% 21% ROPs 100% 91% 32% 62% 100% 0% 48% 100% 100% 20% 100% MROPs 9% 68% 38% 100% 52% 80%

Source: CEC, Ninth annual report on the Structural Funds, 1999

At the EU level, it is assumed that all expenditures under Objective 1 should be regarded as regional policy. The multi-regional programmes cover various regions in the Objective 1 countries. Given the fact that the Lorenz curve to be constructed is based on regional expenditure at NUTS 2 level, there is a need to distribute the funds of multi-regional programmes over the respective regions per country. This regional breakdown has been estimated by using the proportion of the regional GDP in national GDP as a proxy for the real division of funds. In some countries such as Germany, regional OPs cover only NUTS I regions. The distribution of the funds over the NUTS II regions within this NUTS I region is also based on the regional proportions in GDP.

A third limitation lies in the fact that four countries are beneficiary of the Cohesion Fund, in addition to the Structural Funds. The funds can be used for either environmental or transport projects. Given their nature, the Cohesion Fund contributions have been distributed over the regions according to regional proportions in national GDP.

Regional Policy: Strongly Favouring Economic and Social Cohesion

Based on the above limitations and assumptions, the expenditures on regional level (NUTS II) from the Structural and Cohesion Funds were established for the EU-15. Not surprisingly, the picture arises of a Community Regional Policy that strongly favours economic and social cohesion;. The Regional Policy line is located far above the 45 degree line. It should be noted here that this outcome holds true for the EU-15 as a whole, and not necessarily for all regions individually. Minor disruptions of the pattern are being caused by the need to maintain the same order of regions (that is increasing in terms of GDP per head).

More precisely, a steeply rising curve can be noticed in the poorest regions. This group of regions receives relatively high amounts of support through their Objective 1 status. As a result, the poorest 20% of the regions accounts for almost 60% of total Community Regional Policy funding. The richest 40% of the NUTS II regions together attract no more than 10% of the funds, while the richest 10% receives no funding at all. This pattern translates into a Gini coefficient of -0.48153, close to half of the maximum value of inequality (i.e. 1.00). This value hints to a strong contribution to economic and social cohesion, for which the Community Regional Policy has been exactly designed. This strong is slightly reduced by excluding the Cohesion Fund. to a Gini coefficient of -0.45. This change is not surprising as the Cohesion Funds are only deployed in the poorest member states.

153 This number is smaller than zero because of the graph’s location above the Equity line (see chapter 2).

121 Figure 3: Lorenz curve for regional policy

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The above findings are in line with the previous study commissioned by the European Parliament: the poorest 20% receive 60% of the funding and the richest 40% only 10%. The Parliament study concludes that this pattern stems entirely from eligibility criteria. However, it also concludes that there is not a strong relationship between (low) income and SCP support within the regions supported. This element will be further investigated when addressing the case study regions (see Chapter 4).

It would be temping to conclude that the regional income curve would shift upwards as a result of Structural and Cohesion Policy. However, such a conclusion would be too far reaching for several reasons. The main limitation lies in the fact that total Community Regional Policy funding makes up roughly 0,3% of GDP: the total SCP support of 22,300 MEURO a year (1997) represents only a portion of total GDP (PPS) of the EU15 amounts roughly to 6,750,000 MECU (1996).

5.3. Sectoral Policy and the cost of non-co-ordination a) Common Agricultural Policy (CAP)

CAP reform and existing studies

Our starting point for the CAP analysis has been derived from a study by the College of Europe 154 that has looked into the impact of the Agricultural Price Policy (APP) on cohesion. Such APP policy turns out to have a positive interregional impact. On average, APP transfers income from rich urban and industrial regions to poorer regions with a high proportion of agriculture in GDP, which enhances cohesion. This effect was even enhanced by the 1992 CAP reform.

Pre-reform CAP consisted of import levies, export subsidies, price support, quotas and land set-aside. In general, consumers pay higher (internal EU) prices as these are fixed at a higher level than world prices. Thereto, tax payers contribute to EU export subsidies on the world market. The net regional transfers to a region are then obtained by subtracting the outflows from consumers and tax payers from the inflows to the producers. The CAP reform of 1992 had a significant influence on the funding

154 College of Europe: The impact of Community policies, other than the Structural Policies, on economic and social cohesion, 1997

122 disparities, disconnecting farmers’ support from the quantity of commodities produced. New funding flows were computed on the basis of pre-reform years, related to the cultivated area and constrained by regional ceilings.

Towards a targeted approach

According to the European Parliament study, following funding flows is not a feasible analytic method in the case of CAP. Production data will rather have to deliver a proxy for the subdivision of funds over the constituent regions. The result is that only gross tendencies can be discerned. A similar approach has been selected in this study. To this end, use was made of an appropriate OECD publication 155. In this OECD study, estimates of support to agriculture are made by introducing an indicator called Producer Support Estimate (PSE). This indicator incorporates the monetary value of transfers associated with all policy measures affecting agriculture: market price support, direct payments, reduction of input costs and general services. Currently, the definition of PSE is as follows: “the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, arising from policy measures which support agriculture, regardless of their nature, objectives or impacts on farm production or income”.

The OECD publication presents PSEs for the whole of the EU for a wide variety of commodities. In this study, the 1997 tables were related to the production data from the REGIO database (EUROSTAT). In this database, for every NUTS II region156 the production data for a range of commodities is presented. The product mixes in the EUROSTAT and OECD publications are not the same. The ‘overlap’ comprises only the following products: Cereals, Milk, Beef & Veal, Pig-meat, Poultry and Sheep-meat. These products have been used in this study. The main limitation of these product groups lies in the absence of sugar, oilseeds and a more refined distribution among cereals.

Agriculture and Cohesion: A mixed pattern

The results of our calculations leading to a regional division of CAP ‘funding’ lead to a mixed pattern (Figure 3.1). A slight negative effect of CAP on cohesion can be noticed for the 20% or so poorest regions (in terms of population). The Lorenz curve is here just below the Equity line. After this point, the curve catches up with population and remains on the ‘positive’ side of the Equity line. Overall, the Gini coefficient for CAP amounts to –0.16, which hints to a modest contribution of the Common Agricultural Policy to cohesion. Despite the overall contribution to cohesion, it seems that the poorest regions do not benefit from the cohesion effect of the CAP. The regions between the 20th and 60th percentiles (in terms of income) gain most from the CAP.

The overall contribution is relatively modest in comparison to Regional Policy (-0.48). Yet in absolute terms, it should be noted that the total estimated amount (on the basis of PSEs) of funding stemming from agricultural policies is some 54,200 MEURO a year, more than twice the Cohesion and Structural Policy support (22,300 MEURO per year in 1997).

155 OECD: Agricultural Policies in OECD countries, monitoring and evaluation, 1999. 156 Except for those in the UK, where the analysis is limited to NUTS I level.

123 Figure 4: Lorenz curve agricultural policy funding

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The above finding can be supported by an additional analysis that was carried out on the basis of data obtained from DG Agriculture. These data provide information about the composition of total transfers to the agricultural sector; price support plus direct and other payments, broken down by NUTS2 regions. The Gini coefficient for the DG Agriculture based Lorenz curves is also –0.16.

In addition to the above analysis, consumer effects as opposed to producer effects can been brought into the fray. The OECD-made Consumer Support Estimates (CSE) gives information about the extent to which consumers living in a region have to pay higher prices for the agricultural products or taxes in order to enable the producer support. These CSE are all negative figures since they refer to the ‘loss’ of wealth for a region, and therefore require that the Lorenz curve has to be read as the mirror image of a ‘normal’ curve: the disadvantages of having to pay higher prices are spread unevenly. Therefore, the higher above the Equity line, the more advantageous the situation for the poorest regions and hence for cohesion. The constructed CSE curves in this study run above the Equity line, but only to a slight extent: the corresponding Gini-coefficient is negative but small in size at –0.015. This means that consumption patterns across the EU are such that the poorer regions profit slightly from CAP income redistribution.

The total combined effect of PSE and CSE is again rather mixed. The Gini coefficients points to –0.26, and the combined CAP seems to really add to contribute to cohesion from this perspective. However, a more detailed analysis shows otherwise: the Lorenz graph shows that the benefits are mainly felt in the middle ranges (from some 30% to about 65%). The poorest 20% are very much worse off. The ‘combined’ curve is below the equality line for the first quintile or so157.

157 The combined Lorenz curve is not presented for methodological reasons; the combined curves can either have a positive or negative slope at any point.

124 Effects of the 1992 CAP reform

The 1992 CAP reform resulted in a reduction of certain types of support (e.g. price support) and at the same time an increase in other types (income support). This might have influenced the division of ‘funding’ over the regions and hence the cost of not co-ordinating CAP with regional policy. Pre-1992 PSE figures result in a curve that is above the Equity-line, indicating a benefit to cohesion. The corresponding Gini-coefficient is –0.14158, which is slightly smaller than post-1992 (-0.16). In this sense, the productive element of CAP slightly improved its cohesion-related effect. In absolute terms however, the size of PSE-type support was reduced from 68 billion ECU to 54 billion ECU. Only limited differences were found between the OECD (PSE) and the DG Agriculture data.

Variation for different products: cereals and rice

An attempt to look at individual products proved difficult due to the lack of quality of the underlying data. Nevertheless, it was possible to construct Lorenz curves for cereals and rice, leading to Gini coefficients of -0.12 and +0.03 for cereals and rice respectively, both quite modest in size. The cohesion effect of Cereal-support is a little under the CAP effect as a whole, while Rice-support is not beneficial for cohesion. Yet, the results for rice are strongly influenced by a few single regions, in particular the North-Italian production regions

Cost of non-co-ordination

Translating the Gini values to amounts of money expressing the cost of non-co-ordination leads to the following conclusions. Calculating the combined effect of Regional Policy and CAP (in PSE terms) leads to a Gini coefficient of –0.24 for both the pre-1992 and post-1992 situations. This implies a beneficial effect on cohesion. The costs of non-co-ordination would therefore only arise as a result of CAP being less ‘effective’ in combating inequalities than regional policy. The combined Gini coefficients are exactly half of the regional policy Gini coefficient, implying that half of the regional policy spending was ‘wasted’. The PSE-related costs would therefore amount to 0.5 times 22,300 MEURO or 11,150 MEURO. b) Common Transport Policy (CTP)

Elements of Transport Policy

In the first report on Cohesion it is stated that transport plays a key role in efforts to reduce regional and social disparities in the European Union and in strengthening of its economic and social cohesion (1996). Such a statement could be confirmed with the use of the Lorenz curve for transport policy. This requires a careful definition of the words ‘sectoral policy’. I.e. which elements of the European transport policy are taken into consideration constructing the Lorenz curve? The Common Transport Policy consists of a number of elements, covering amongst others transport infrastructure, public transport, liberalisation, pricing and transport system integration and inter-modality.

The territorial dimension of these policy fields is best entered in the case of transport infrastructure. This includes roads and motorways, railways, airports, ports and other transport related actions. It also includes the TEN-14 priority projects in road and railways, endorsed on the Essen summit in 1994. Sectoral policy with respect to transport is defined as all expenditures on transport infrastructure. The complexity of the territorial dimension of transport policy lies in the funding of infrastructure; five financial sources contribute to the construction of roads and railways. These are the TEN budget-line, the ERDF, the Cohesion Fund, the EIB and the EIF. The latter two provide loans and guarantees, which we will not be considered in this study.

158 For the DG Agriculture data, the pre-92 Gini coefficient is –0.13.

125 In 1997, about 4 billion Euros were invested in transport infrastructure through the first three funds (TEN, ERDF, CF). The TEN budget-line accounted for 10% of this amount. Based on the current data no national breakdown of the TEN budget-line could be established and therefore the funds under this budget-line are not included in the transport policy funding. The TEN-budget-line had to be excluded from the calculations, although it certainly deserves special attention.

From the ERDF (by nature a spatially targeted fund) considerable amounts were committed to transport projects. A number of steps were followed to reach a regional breakdown of expenditures from this fund in transport infrastructure. First of all we calculated which part of objective 1, 2 and 5b funds financed transport infrastructure in each Member State (source DG Transport). The funds for each Member State were then distributed over the regions following regional proportions in national GDP.

In addition to ERDF funding, around 50% of the Cohesion Fund is invested in transport infrastructure, amounting to one third of the total funding in transport. By definition the Cohesion Fund projects are limited to Ireland, Greece, Portugal and Spain. The funding per country is distributed over their respective regions based on regional proportions in GDP.

The Lorenz curve for transport policy

Having established the estimations of regional transport policy expenditure, the Lorenz curve can be constructed as follows:

- “Transport” component in the structural funds - “Transport” component in the cohesion fund - TEN-T budget line - Transport total

Transport policy appears to be extremely biased towards the less favoured regions. The poorest 20% receiving close to 80% of the funding. The richest 40% only receive a minor share (1% or so). The resulting Gini coefficient amounts to –0.63 (almost two thirds of maximum inequality), which is even more than the figure for regional policy itself. This demonstrates that a great part of CTP is financed from Cohesion and ERDF and thus that there is a substantial degree of overlap between regional and transport policies.

126 Figure 5: Lorenz curve transport policy disparities

100%

90% 1

2 80%

70% 3 4 60%

5 50%

6 40%

30%

20%

10%

0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Curves: 1 = Transport Cohesion Fund, 2 = Transport Structural Funds, 3 = Transport Total 4 =equity line, 5 = TEN, 6 = Income (GDP).

Next to the fact that transport policy looks very beneficial for cohesion, there are some strong discontinuities in the graph. Looking at the results in more detail, this is due to a disproportionately high share of total transport policy expenditure concentrated in just 7 NUTS II regions, together covering no less than 51% of all funding:

• Andalucia (Spain, 11% of total EU expenditure); • Galicia (Spain, 5%); • Valencia (Spain, 8%); • Castilla y Leon (Spain, 5%); • Attiki (Greece, 8%); • Lisboa e Vale do Tejo (Portugal, 5%) • Ireland (as a whole, 9%)

Costs of non-co-ordination

It seems that CTP strongly contributes to economic and social cohesion as its Gini coefficient in the Lorenz curve above is far below zero. When taking the interaction of CTP and regional policy into account, we find that the Gini coefficient of the combined CTP and regional policy funding amounts to some -0.51. This is a larger value in absolute terms than the Gini coefficient for regional policy alone. Therefore, the estimated costs of non-co-ordination in this methodological framework are zero. Clearly, this finding demonstrates the difficulties in separating transport and regional policy. Despite the specific transport policy aims, Community Transport Policy heavily dwells on the Structural and Cohesion Funds.

127 5.4. Case-study regions a) Champagne-Ardenne

From 157 regions in the EU, Champagne-Ardenne is 87th in terms of income per head at a little over 17,000 Euro in 1998. The region is indeed average in income as it accounts for 0.36% of population and 0.37% of total GDP in the EU. Total GDP equals 25,300 MEURO.

The rural character is underlined by the large amounts of CAP support, at a level of about 800 MEURO annually in terms of producer support (PSE), equalling 1.2%, about three times more than its population share. The main reason for this large support lies in the high share of cereal production in the region. For this product range, Champagne-Ardenne receives 2.5% of all EU support, seven times more than its population share. These levels of support were even higher prior to the 1992 reforms.

Champagne-Ardenne receives much smaller amounts from Community Transport policy. The annual contribution is 5.3 MEURO (0,12% of the EU), most of which is made available through the TEN budget line (for preparation work of the TGV Est).

In the previous programming period, Champagne-Ardenne received annually 54 MEURO of Community Regional Policy, which is some 0.26% of the total Structural and Cohesion Fund budgets (situation for the period 1994-99). This funding was channelled through the region by four Objective 2 programmes and one Objective 5B programmes.

Champagne-Ardenne, with its average income levels, has only limited Community territorial policies at its disposal. However, it receives very considerable agricultural support which is largely related to the cereal production. The Community Transport support will not be considered here due to its low level of funding. Environment policy will not be considered in a quantitative manner because this policy is enforced by legislation rather than by funding.

Concerning the internal positioning of Champagne-Ardenne, the population is spread rather unevenly over the departments. Marne, with its population centres of Reims and Châlons, includes over 40% of the population. All other departments include around 20% of population.

The differences in income position are rather striking. Although the region has an average income position compared to the EU, there are distinct differences by department. The Marne department (GDP of Euro 21,000 per capita in 1996) has a fairly high income, comparable to regions such as Saarland (D) or the Vlaams Gewest (B). The Haute-Marne and Ardennes departments have incomes that are about 30% lower (GDP per capital of about 16,300 per capita), floating at levels comparable to the Auvergne or Drenthe (NL). The incomes in the Aube department, including Troyes, are slightly higher but remain under the average for the Champagne-Ardenne (18,000).

The division of Community Agricultural funds by department can only be indicated. It is difficult to make a precise regional breakdown of such supports, as the regional split of part of this support (e.g. export restitutions) can only be estimated. Most specific are the operating subsidies (1996), that represent 71% of all public support and 65% in Champagne-Ardenne. In the year 1996, for which precise data are available, total public agricultural support amounted to Euro 716 mln. Euro, of which 93% came from Community sources (Euro 667 mln.). The Community component in the total agricultural funding is considerably higher than in France as a whole (84% of all agricultural funding in France comes from Community sources)159. Total agricultural Community funding in Champagne- Ardenne (1996) amounts to Euro 493 per inhabitant. Support levels are relatively high in the Champagne-Bassin, notably in Aubes (Euro 583 per inhabitant) but also in Marne (Euro 501 per inhabitant). These levels can be related to the large-scale, extensive forms of production, particularly cereal production (the champagne wine production is not eligible for support). The Haute-Marne and

159 Source: Conseil Economique et Social Champagne-Ardenne (1998) “Emploi en Agriculture”, 1er Partie, p. 99.

128 especially the Ardennes region (Euro 482 and 402 per inhabitant respectively) receive less support than for the region as a whole. The productive capacity of these regions, relatively small entities with a focus on dairy products, is clearly lower than in the more prosperous Bassin.

The distribution of Structural Funds over Champagne-Ardenne (1997-1999) has been primarily based on the Objective 2 and 5B programmes, with an average annual commitment of Euro 39 mln. and Euro 11 mln of Community funding respectively. The total average spending on Structural Funds (including Community Initiatives) amounted to Euro 54 mln. per year in the 1997-99 period, amounting to Euro 40 per capita per year. For Champagne-Ardenne as a whole, this level of support is over ten times lower than the per capita spending on agricultural funding.

The impact of the Community Agricultural and Structural Funding can now be summarised as follows (see table 3). The more populated and prosperous part of the region (Marne) receives at least average amounts of Agricultural funding. Aube, average in terms of population and income, benefits most of the Agricultural funding and receives some Structural Funding as well. Haute-Marne, relatively poor and with a low population density, is able to attract its share of both Agricultural and Structural Funding. The Ardennes department, with a relatively low GDP as well, attracts a rather low level of Agricultural funding. This limited funding is only partly compensated by Structural Funds allocations.

It turns out, as far as Champagne-Ardenne is concerned, that the Structural Funds dampen the income effect of the Common Agricultural Funding that have a tendency to favour the more productive agricultural areas. However, the Structural Funds amount concerned are relatively low compared to the Agricultural Funding. Finally, it should be mentioned that these calculations have been made on the basis of Structural Funds commitments only. Indications hint to absorption problems that can be quite serious in the implementation of the programmes, thus resulting in possibly lower disbursement rates. In practice, the capacity of the Structural Funds to contribute to economic and social cohesion at this low geographic level therefore appears to be limited.

The above information provides a basis for calculating cumulative percentages that are required for constructing Lorenz curves. These curves give a visible answer to the question what the territorial impact of sectoral policies is and to which extent they contribute to territorial cohesion. In essence, the exercise and its interpretations are then similar to the analysis carried out at European level.

129 Figure 6: Lorenz curve for Champagne Ardenne

Upper dotted line: Regional Policy, Straight line: Equity, Lower dotted line: CAP, Yellow line: Income

100,0%

80,0%

60,0%

40,0%

20,0%

0,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0%

The Lorenz curve for Champagne-Ardenne more or less confirms the above-described pattern, even though it remains possible to assess the results in various ways. Although the number of observations is only limited, the Regional Policy curve clearly demonstrates that the Structural Funds contribute to economic and social cohesion between the various departments within the region (Gini is -0.09). The CAP line, however, is to be found slightly underneath the equity line and does therefore not contribute to economic and social cohesion within the region (Gini is +0.01). This implies that the spending on CAP per capita is slightly lower for poorer Departments than for more prosperous Departments. Although the Lorenz curve is not helpful in reaching an equal income position among the Departments (as expressed by the equity line), it is neither significantly contributing to a more unequal income distribution, due to the existing income situation among the departments (Gini is +0.03).

Cost of non-coordination

The combined Gini coefficient of CAP and Regional Policy is almost zero (+0.004). This means that the combination of the two policies gives no impulse to income disparities. The beneficial effect of Regional Policy (Gini of -0.09) is broken down entirely. The cost of non-co-ordination are therefore a little over 54 MEURO160 a year. b) Região Norte

The administrative context

In a number of ways, Regiao Norte has a number of characteristics that have serious consequences for the analysis of the cost of non-co-ordination of sectoral and regional EU policies at this level. For one thing, Portugal has no regional administration and, especially in the period that this study is dealing

160 (0.09+0.004)/0.09 times 54 MEURO to be precise, which makes 56.4 MEURO.

130 with (1994-1999), almost no regional policy, at least not in the sense that it is referred to generally in the EU and in many of its member states.

It all comes down to a very powerful position of sectoral Ministries, especially in the regions. Most of them have so-called ‘deconcentrated offices’, responsible for the regional translation of centrally designed guidelines and strategies for the sector. At regional level, so-called Commissions for Co- ordination in the Regions (CCRs) exist. These Commissions have modest power; they can bring together developmental parties, such as the rather powerful and relatively large municipalities and the deconcentrated sectoral ministries. However, executing this moderating role is very difficult without any formal power (the creation of regional administrations was voted away in a referendum in 1998) or real funding.

The situation is slowly changing for the better, as the central government sees the need for a strengthened regional co-ordination. The third CSF (2000-2006) distributes deliberately a considerable part of the funding explicitly over the 5 continental NUTS-2 regions (and related ROPs).

Nevertheless, the regional dimension has been only weakly developed in the Structural Fund framework of Portugal. The second CSF was dominated by a large number of heavy SOPs, co- ordinated from Lisbon and carried out almost without any real involvement of the regions, on the basis of nationally designed strategies.

Transport policy is a field with a particularly strong sectoral dimension. This area has clearly not benefited from co-ordination at the regional level. As a result, there appears to be a rather serious disconnection between national and local infrastructural networks. The case of agriculture is less severe since this sector already had a quite positive experience in deconcentration to the regions and involving the regional (and rural) development needs into their national policies. In essence, however, the Structural Fund interventions in this field were fully sectoral in nature as well.

This administrative context is essential for assigning different EU policy related programmes to the regional and sectoral angles. From the regional (NUTS 2) perspective, the Cohesion Fund (dominated by large Transport and Environment projects) should be viewed as ‘sectoral’. The same holds true for the SOPs in the Community Support Framework, that tend to have a strong emphasis on Transport and Agriculture. The ROPs can be called regional.

Translated to our methodological framework, the above structure implies that no explicit co-ordination of regional development aims has taken place in the CSF. This complicates the discussion about the cost of non-co-ordination, due to the unclear policy stance.

Key features of Regiao Norte: external positioning

With its 3,540,000 inhabitants on 21,200 km2, Regiao Norte is relative densely populated (166 inh./km2). The region is industrial in character, belonging to the top regions in Europe in terms of the share of industry in employment.

From 157 regions in the EU, Regiao Norte is 18th in terms of income per head (starting at the lower end) at some 11,300 Euro in 1996 (on a PPP basis). The region is indeed below average in income as it accounts for 0.95% of population and 0.59% of total GDP in the EU. Total GDP equals 39,946 MEURO (Purchasing Power Parities).

The industrial character of the region is underlined by the relatively small amounts of CAP support, at a level of about 326 MEURO annually in terms of producer support (PSE). This support equals 0.48%, about half its population share. One of the reasons for this small support lies in the low share of cereal production in the region. For this product range, Regiao Norte receives only 0.1% of all EU support, far less than its population share. The region’s most intensive agricultural product

131 is milk, which does result in a fair share of CAP support, but this only goes for a relatively small area of land on the coast.

Regiao Norte gets (relatively) much larger amounts from EU Transport policy, especially through SOPs and the Cohesion Fund. The annual contribution is 331 MEURO all together, only a fraction of which is made available through the TEN budget line (mainly for the HST Vigo-Porto).

The region receives annually 842 MEURO of Community Regional Policy (that is a total of Cohesion and Structural Funds), which is some 4% of the total Structural and Cohesion Fund budgets (period 1994-99). This funding was channelled through the region the national SOPs, the Cohesion Fund and (for slightly over 10%) the ROP.

A conclusion from this preliminary exercise is that Regiao Norte, with its relatively low income levels, has quite extensive Community territorial policies at its disposal. However, the picture is somewhat different looking at the nature of this ‘territorial policies’: most of it turns out to be distributed by means of the Cohesion Fund and the SOPs, which are really sectoral in nature. It does not receive sizeable agricultural support. The Community Transport support is large, but not through the TEN budget line. Environmental policy will not be considered in a quantitative manner because this policy is enforced by legislation rather than by funding.

• Key features of Regiao Norte: internal positioning

Going one step lower, we arrive at the NUTS 3 level. The internal positioning of Norte becomes clear if we look at the relative positions of the 8 NUTS3 regions. Table 4.4 shows the internal positioning of the region.

Compared with its share of population, Community Agricultural Policy in Norte is dominated by three regions: Minho Lima, Alto Tras os Montes and Douro. It must be stressed however, that these data are based upon a qualitative assessment of the situation, among others taking into account the production mix in the NUTS3 regions of Norte.

Transport policy seems to land mostly in the Grande Porto area, even if we correct for this region’s high share of the total Norte population. Regional policy, in contrast, seems to be quite equally distributed across the 8 sub-regions.

Costs of non-coordination

A first impression of the relation between sectoral and regional policies is given by the Lorenz curves for Norte. The graph below shows the inequalities of the three strands of policy (regional, transport and agriculture), relative to the income inequalities and the equality situation.

132 Figure 7: Sectoral and regional policies in Norte

Straight line (Equity line), Upper dotted line (Regional Policy), White line (Agricultural Policy), Lower dotted line (Income), Lower black line (Transport policy)

100%

80%

60%

40%

20%

0% 0% 20% 40% 60% 80% 100%

The main conclusion from this analysis is that Community transport policy is unevenly distributed in the Norte region, clearly favouring the richest regions (Porto). The other two policies are more beneficial to cohesion: regional policy is clearly above the equity line, although not pulling at its maximum for reaching economic and social cohesion. Agricultural policy has a mixed impact on cohesion, not unlike the pattern that was established at the EU level; for the poorest area, this policy is counterproductive in terms of its contribution to cohesion, while it supports cohesion in all other cases.

These graphical observations can be quantified by means of their respective Gini coefficients. Regional income differentials within the Norte region are about as large as at the European level (Gini = +0.08). Transport policy results in a Gini coefficient of +0.16, twice as large. Regional and Agricultural policy have coefficients of –0.14 and –0.09 respectively. Compared to the European-wide situation, Transport policy works completely in the opposite direction (large positive contribution to cohesion in EU). Agriculture does more or less the same and Regional policy is considerably less effective in Norte as compared to the EU level.

The costs of not co-ordinating the two strands of sectoral policy with regional policy stem from the fact that they seem to ‘break down’ the beneficial effects of regional policy. This is especially true for transport policy, as the combined effect of regional and transport policy is negative (that is, with a positive Gini of 0.10), which means that the effects of regional policy are completely annulled, and even worse than that. In case of agricultural policy, the situation is not as dramatic as the combined effect is still beneficial (combined Gini of –0.10).

The interpretation of the above is that the combination of transport and regional policy in Norte leads to a relatively high level of costs. This is of course heavily influenced by the fact that regional policy is so modest in size (90 MEURO a year) and therefore has little weight in the combined distribution of funding. At the same time, this means that the absolute value of the costs cannot be that large as there

133 is not a great deal to be ‘wasted’. The combination of Gini’s above leads to a cost of 72 MEURO annually for agricultural policy and to 154 MEURO161 for transport policy.

5.5. Conclusions

The quantification of the costs of non-coordination between territorial and sectoral Community policies is experimental by all accounts. The methodological limitations and data problems require substantial scope for further improvements. A particular challenge lies in moving from funding levels to impact assessments.

Nevertheless, the main finding of this research is that sectoral and territorial policies have various interactions at various geographic levels. At the EU level, Common Agricultural Policy and Common Transport Policy appear to have relatively mild effects on cohesion – and are not to be regarded as disruptive towards achieving economic and social cohesion. The exception to this rule is that the Common Agricultural Policy is not beneficial to the income position of the poorest 20% regions.

Yet, the results turn out to be sharply different at the regional level (NUTS 3). In Champagne- Ardennes, the Common Agricultural Policy tends to favour the more productive agricultural areas, working slightly against the intentions of the Structural Funds programmes, that are considerably smaller in size here. In Norte, it is the Common Transport Policy that has a strong tendency away from economic and social cohesion. Clearly, the lower the geographical scale, the more costs of non-co- ordination are likely to be found. It is therefore not possible to simply add up the costs of non-co- ordination found in each and every NUTS2 region in the EU to come up with the total costs of non-co- ordination.

The main policy question that seems to emerge from this exercise is: at what level and to which extent is economic and social cohesion to be strived for? Throughout this study, the term economic and social cohesion has been regarded as a theoretical notion, namely perfect income distribution across the EU, as represented by the Equity lines in this report. One key policy question is whether this is indeed the precise goal that Community territorial policies should be heading for.

Another key question is at what level economic and social cohesion should be applied; at national, NUTS 2, NUTS 3 level or even at lower levels? In a dynamic regional context, differences in income and GDP are a common result from diverging economic and spatial patterns of production and urbanisation. Regional economic development can only be expected to result in high income and GDP levels in a favourable environment. Surrounding areas can benefit from these growth centres, as long as they belong to the same labour market areas. Yet, the delineation of Structural Funds zones (particularly in Objective 2 regions) often takes place at much lower geographic levels, sometimes even at the level of local communities.

A more elaborated view on the concept of economic and social cohesion, including the geographic level to which it applies, is therefore needed. Such a more explicit concept would deepen the understanding and the need for territorial policies, and thus encourage sectoral policy makers and practitioners to seek for improved co-ordination mechanisms as well.

161 This amount is larger than total regional policy funding as transport policy not only breaks down the entire beneficial effect of regional policy in funding terms but makes it (in combination) negative at an almost equal level (+0.10 in stead of –0.14). This almost doubles the cost of non-co-ordination.

134 6. Governance and territorial coherence of Community policies

6.1. Development of inter-institutional relations in relation to territorial development

During the 25 years which followed the second world war, one could assist nearly everywhere in Western Europe to the adoption of a providence state policy specific to each political system, aiming at guaranteeing a minimum of material safety and of equality in the distribution of wealth. In parallel, and in order to be able to cope better with the complex problems which emerged in daily life, central administrations developed medium and long term planning approaches which experienced - according to the political systems - a variable intensity and administrative articulation162.

Confronted with the first major economic crisis of the beginning of the 1970s, the regulating function of the national state and its overall and/or sectoral policies gradually entered a major crisis:

- on the one hand, the national/central level very often became a «too large» scale to ensure a differentiated and appropriate regulation of the societal problems. The interventionist determination of the central state often tended to generate new tensions, for example at regional and local level, instead of eliminating the problems. In addition, the new "horizontal" and complex problems which emerged constantly (for example the restructuring of the traditional industries and the conversion of the regions concerned) transgressed increasingly the functional specialisation established within the politico- administrative system.

- on the other hand, the state became a «too small» regulating scale, less and less in a position to tackle alone and successfully increased socio-economic interdependence. This interdependence is the result of the rapid globalisation of our society and more particularly of the economic and financial systems, driven in particular by increased liberalisation of world trade. In this context, a national public intervention is less and less in a position to tackle the genuine origins of many problems (environmental problems, influence of world markets in the crisis of traditional industries such as shipyards, textile, iron and steel industry).

Facing this dilemma, most West-European states took a very specific development course which can be described as a «double differentiation of political systems», and which is composed - in a simultaneous way of:

- an increased territorialisation process of public interventions (decentralisation, delegation of operational responsibilities and clearer distribution of governmental functions between the various organisations and/or administrative levels) and

- of a process of increased Europeanisation of the national public policies163.

These major adaptation trends resulted in that any public action is henceforth conceived and implemented in the context of networks of actors, at the same time polycentric and highly complex, characterised, inter alia, by strong inter-organisational dependence and creating accordingly an increasing need for co-ordination between the actors involved.

In this general context, it can be observed:

- that the regulating intervention concentrates more on structuring the "contextual conditions" and that the tendency towards detailed regulation of societal aspects is decreasing. A contextual intervention aims at changing the overall parameters and at drawing "development corridors", which - in their

162 Stumm, 1999 : Staatstätigkeit in Frankreich im Spannungsfeld innerstaatlicher Dezentralisierung und europäischer Integrationsdynamik. Selbstverlag, Tübingen 1999. 163 Stumm , Th. :1999.

135 concrete definition - are left to the initiative of the actors who have qualifications or notorious creativity in the matter (combination of official regulation with the principle of self-management).

- that authoritative or purely regulatory policies are gradually replaced by other "softer" forms of assistance. These methods generally rest on consensual decisions and involve an increased effort with regard to co-ordination and co-operation, participation, motivation or communication164.Their objective is to accumulate strategic knowledge or know-how in relation to the problems to be dealt with, to work out alternative solutions or to increase the acceptance of the concrete measures to be taken.

- that "soft" intervention methods become increasingly important at the first stages of the general political cycle (recognition of a problem, evaluation of its relevance, analysis of the relations between causes and effects in relation to the intervention, development of solutions, definition of a political intervention, implementation and evaluation of the measures, corrections). These changes in the methods of public intervention allot to the state new functions which were not envisaged in its old hierarchical design. The state must take over165 :

- more co-ordination, organisation and moderation tasks in order to promote a solution to the problems jointly with other social actors,

- more mediation functions between conflicting interests in order to increase the self-management capacity of the systems (to avoid blockings) and to facilitate the development of common objectives,

- more control functions as a consequence of the delegation of public tasks to private or non-official institutions (checking of the success of the measures), more initiation or guidance functions in order to promote the taking into account of future interests at the time of current activities,

- more correction functions in order to strengthen (financially or by institutional support) the capacity of the societal actors' self-management.

But inter-organisational dependence also increases with the progressive development of existing international organisations and the creation of new structures, which requires an increased capacity of co-ordination at the same time in the national and international context. Effective internal management of Foreign Affairs at the level of each state plays an essential role: on the one hand, it ensures the coherent representation of national interests, and on the other hand, it supports the operation of the international political process as a whole. In practice, governments frequently underestimate the resources necessary to manage the international co-ordination of policies, which is paradoxical if one considers the widespread concerns relating to national sovereignty. The progressive increase of matters being governed by Community law during the last 15 years brought on increasingly numerous occasions of contact between the Community administration and the national administrations at various levels. This situation is strengthened by the increased institutional complexity of the system of the Union itself, which can be observed in particular since the entry into force of the Maastricht treaty in 1993166. A specific character of the European Union is that the development process of its policies is not a simple matter of negotiations which lead to a final decision drawn up once for all. On the contrary, European policies are continuously elaborate and

164 Stumm , Th. : op.cit.1999.

165 Messner, D.: Die Netzwerkgesellschaft. Wirtschaftliche Entwicklung und internationale Wettbewerbsfähigkeit als Probleme gesellschaftlicher Steuerung. Köln, 1998. 166 Franchini , C. : Les problèmes de relations entre l'administration communautaire et les administrations nationales. In : Revue Politiques et management public , Vol. 9 , no. 2 , 1991.

136 revised167. As a whole, Community integration caused an increasing « Europeanisation » of national public policies168:

- on the one hand, one can notice that a European dimension is inherent to almost every national policy, which also widens the field of those involved who have an influence on their definition and their implementation. - on the other hand, and in particular owing to a lack of executing functions of the Community administration, the implementation of Community policies largely depends on the administrative activity of the national administrations.

While the intensification of inter-institutional relations between Community authorities and Member States specialised, and therefore became more sectoral, other factors contribute to an increased taking into account of the territorial aspects:

- generally, it can be observed that modern societies are characterised by a general scarcity of available resources, both with regard to territorial and environmental resources and to financial and personal resources in the context of public services. - these restrictions and the increased economic competition between the regions (direct result of globalisation) cause a major diversification and reorientation of territorial development strategies, which are even more directed towards the development of local potentials, better use of synergies or a more sustainable development.

The challenge, reflected by the development of the ESDP and included in its recommendations of implementation, consists therefore in giving back a coherent territorial dimension to the complex procedures and processes that the Europeanisation of public policies generated.

6.2. Development and implementation procedures of Community policies in relation to territorial issues

6.2.1. General aspects

Since the end of the 1980s a "complex Community system of multi-level governance ", with semi- state characteristics emerged gradually and is characterised by the joint use of public intervention instruments in the context of specific participative procedures ("fusion").169 The operation of the European politico-administrative system is particularly complex, probably more complex than that of any Member State, for the simple reason that it incorporates not only the institutions of the European Union with their administrative services, but also all the politico-administrative systems of the Member States.170

At the root of this "fusion", we find the multiplication of various co-operation forms and, in particular, the development of a broad fabric of inter-organisational relations, going from the development and implementation phase of Community decisions as far as the control phase of their application. All these phases are characterised by a continuous dialogue between the representatives of the Community institutions and those of the Member States (see box), and are sometimes marked by confrontations pertaining to the differences in national and Community interests. Thus, the national administrations became co-participants to the development of Community decisions. Their interventions in the phases of negotiation, implementation and

167 Metcalfe, L : The international co-ordination of the policies and the reform of public management. International review of administrative sciences No. 2/1994. 168 Stumm , Th. : op.cit.1999.

169 Wessels, W: Staat und (westeuropäsiche) Integration. Die Fusionsthese. In: Politische Vierteljahresschrift, Sonderheft "Integration Europas". Opladen, 1992. 170 Franchini, C : op. cit.1991.

137 application control of Community policies materialise in direct and indirect mechanisms, which, although different from each other, aim all at stressing the interests of Member States.

Inter-administrative relations at various stages of the cycle of Community policies Preparation of decisions, regulations, directives and other assimilated Community acts:

This first phase proves to be of extreme importance, because it makes possible for Member States to intervene in the shaping procedure of Community decisions, thus compensating, at least partly, the sovereignty limitations determined by the European integration process.

Participation in this phase is in substance reserved to the administrative authorities of Member States competent on the matter. It takes place at two levels: the first being that of national authorities and the second that of Community authorities.

- at national level, this implies in particular the selection of competent or interested administrations (this task falls normally on the Permanent Representation of the Member States) and, if necessary, the shaping of a unified negotiating position during the technical examination of the issue.

- at Community level, this implies in particular a standing participation of national administrations in a long series of working parties and committee meetings, composed of both representatives of national administrations and officials of the Community administration and which become an important place for the improvement of Community options.

Procedure of application of Community decisions:

This second phase comprises normally two different stages:

- the first application stage takes place at Community level and consists - if necessary - of the adoption of measures aiming at defining the broad outline of a uniform arrangement for all Member States, in relation to act provisions produced by the supranational institutions. Despite the Community nature of the measures, their implementation sometimes requires a close cooperation with the national administrations in order to obtain better knowledge of individual situations.

- the second application stage is national, but it largely varies:

• according to the intervention method of the national administrations concerned, which is determined by the constitutive structure of each state (unitary, regionalised, federal) and by the nature of internal application standards, • according to the nature of Community acts to be implemented and to the methods of action of the Community administration (it can ensure the implementation of its own measures directly by relegating the national administrative authorities to a role of simple executive support, it can also act via the national administrations).

Implementation control of Community acts:

In this context, the European Commission plays an important role which is defined by the Treaties. Taking care to respect the provisions of Community law, it is not always easy or possible for the Commission to acquire essential information in an autonomous way. Thus, the Commission has to resort to the competent administrations of Member States, which means again that the national administrations take part in a Community activity through direct meetings or contacts.

Despite the « vertical share of responsibilities » at the implementation stage of European Union’s policies, certain observers note an increasingly obvious "management deficit" at the level of the

138 Community administration. But the major origin of this deficit is often the fact that national governments enter into symbolic commitments and grant new legal competences to the Community level (for example through the Single Act and the Maastricht or Amsterdam treaties), without however envisaging the management capacity necessary to implement them.

As for the Community approach regarding co-ordination, and in particular that practised by the European Commission, it is completely different - and sometimes too different - from many national co-ordination cultures. Within the context of the European Union, neither the President of the Commission, nor the President-in-Office of the Council hold an arbitration power, whether it is from a formal or informal point of view. In the event of disagreement between administrative services or between countries, it is useless therefore to negotiate bilaterally with the President, all attention must be turned towards the inter-administrative negotiation.171

Within the European Commission, co-ordination is one of the essential tasks of the Secretariat-General which is under the responsibility of the President.172 It organises and co-ordinates the Directorates- General's work by ensuring the overall collegial structure and coherence of the Commission’s action in the respect of political priorities defined by the President. Certain aspects of the horizontal co- ordination by the Secretariat-General concern activities related to territorial development: on the one hand, a team of the Secretariat-General manages the work of an interdepartmental group which aims at co-ordinating Community action with regard to the most remote regions of the Union. On the other hand, an adviser was instructed to follow the conception and implementation of structural policies and, in particular, of those supported by the Structural Funds. This activity concerns in particular the interaction of these funds among themselves and between those and other financial policies and instruments having a significant structural impact. The aim is at the same time to ensure the overall coherence of Community interventions within the framework of priorities and objectives pursued by the Commission.173

Nevertheless, it remains true that the politico-administrative culture of the Community authorities is of sectoral nature.

6.2.2. Merits and limits of integrated rural development

At Community level, the policy aiming at developing the rural areas changed its orientation in the context of the CAP restructuring and of the first reform of Structural Funds towards the end of the 1980s. In its Communication of 1988174 , the European Commission proposed « integrated programmes » to implement actions for backward rural areas. Henceforth, the main issue of the community concept of "rural development" was to implement a coherent, effective and integrated intersectoral policy.

171 Ziller , J. : Vers une culture européenne. La culture des cadres nationaux et l'adaptation à l'Europe. In : Revue francaise d'administration publique , no. 70 , avril-juin 1994. 172 Its mission is to take care of the collegial structure of the Commission’s work, while fulfilling the tasks of technical secretariat, advising, interaction, mediation and co-ordination tasks (both on form and content), upstream and downstream from decisions taken by the college, from activities of the services and relations with other institutions.

173 Commission Européenne, Sécrétariat général : Information contenue dans le Site WEB , mise à jour du 06.04.2000 et du 08.06.2000. 174 European Commission, "The future of the rural world" COM (88) 501.

139 • The community concept of "integrated rural development" On the basis of a conception emanating mainly from the European Commission’s position, integrated development may be characterised in the following way:

• It is related to a specific territory: Unlike the majority of policies implemented, the scope of which is generally sectoral, the operational units of integrated rural development are regions. They can be more or less broad and are characterised by problems and/or assets which are typical for them. • It includes all sectors of the economy (agriculture, industry, services): An integrated policy - implemented in a coordinated and coherent way - aims at promoting economic development in several sectors in order to obtain results as regards the diversification of rural areas. • It constitutes an integrated approach of governmental actions: Integrated rural development requires the application of various types of government intervention (instruments at the disposal of public policies), in order to support all private initiatives and to provide infrastructures and public services in the rural areas. • It is necessarily based on the indigenous potentialities of rural areas: If, in an initial phase, it can prove necessary to attract external investors, at longer term, integrated rural development will have above all to mobilise the potentialities existing in the rural areas (for example by encouraging the local SMEs, by starting new production lines or by promoting regional or local tourism). • It is animated by a spirit of partnership and of dialogue between private and public organisations at regional and national levels: integrated rural development calls for the participation of and has to be based above all on regional initiatives. To this end, appropriate institutions are necessary so that the population of the areas concerned can give form to their ideas. • It is conceived according to the specific requirements and needs of the region concerned: Integrated rural development can be defined as spatial and regional planning in rural areas. It has to lean on the specific strengths of the region concerned and deal with the problems arising. A combination of activities and instruments is therefore necessary. Source : European Conference on Rural Development (Cork, 7-9 November 1996) : Discussion/intervention paper in the workshops. “Integrated rural development : the concretisation of the concept” (Prof Dr. W. von Urff).

This Community approach of « integrated rural development » was implemented during the two programming periods of 1989-1993 and 1994-1999 mainly in the context of the Objective 5b programmes and within the context of the Community initiative LEADER I and II. In the context of the Objective 5b programmes (like in the whole Structural Funds system), the competences of the Community as regards regional and local development remain of subsidiary nature. A significant part of responsibilities as regards co-ordination and co-operation is in the hands of the Member countries, in particular at regional and local level. The institutional intervention context, the capacity of national and regional administrations to manage allocated financing and establish synergies between the various measures as well as the quality of co-ordination between all actors condition definitely the effectiveness of the implementation.

The overall evaluation of the Objective 5b programmes for the period 1994-1999 reveals some progress in relation to the previous programming period, because the programmes enabled the adoption of a broad partnership at regional level which facilitated increased co-operation between hitherto partitioned institutions. While the programmes of the second programming period constituted a lever for the less dynamic areas, the use of financings and their effectiveness can nevertheless still be considerably improved. This is due in particular to the persistence of a number of administrative difficulties: 175

Commission Européenne, rapports d'évaluation: Evaluation intermédiaires des programmes de 175 développement rural (Objectifs 5a et 5b) , janvier 1999.

140 - the implementation system is generally considered by the regions as being too slow, too complicated and absorbing too much time and energy. This occurs at the expense of the quality of actions and the responses to the needs. There are too many counters, each administration dealing with a measure has its own, and administrations often work in a partitioned way.

- while the implementation of European programmes compelled regional administrations to establish a special system for the management of allocations, it should be noted that the monitoring committees, which supervise all actions and enable the participation of representatives of the various actors involved in the programmes, are heavy and not very operational structures. Ultimately, decisions are taken by more restricted committees which are competent in the various fields. In order to make the situation more fluid, a number of regions created networks of development or co-ordination agents, in charge of disseminating information, helping in elaborating and forwarding the applications for support, providing technical advice and ensuring a reassuring presence to the recipients.

- it seems that the synergy between rural development actions is still partial and could be improved. But it is difficult to carry it out at regional level, it should be done at a narrower located level, where the participation of those involved is also more effective.

- the implementation of Objective 5b programmes is generally characterised by a lack of co-ordination with other European programmes implemented on the same territory and which, often, overlap. The case-studies show in particular that in weak rural areas, there is no real synergy between the agricultural policy of support to productions (the support methods are moreover often weakly adapted to the characteristics of agriculture of these areas) and the promotion of other economic activities within the context of rural development. In the absence of sufficient private initiatives, the allocations to rural development are then used to develop not very productive public infrastructures (forest roads, rural roads etc.). But administrations are nevertheless obliged to ensure synchronisation with the national or regional programmes which have to bring the public financial counterpart necessary for the application of European programmes.

The territorial and participative approach of local rural development, practicised within the context of the Community initiative LEADER I and II, is an innovative experiment which enabled the European Union and each Member State to better adapt the rural development policy to the diversity of local contexts. For the new « LEADER + » phase (2000-2006), a number of problems not resolved in the context of LEADER II will have to be taken into consideration by the national actors:176

- a territorial approach opposite or in complementarity to a sectoral approach. Today, sectoral policies are still delivered in a too standardised way and meet with difficulty the specific development needs of the territory. The LEADER's lessons demonstrate the importance of a selection of the territory according to its relevance for development, rather than as an administrative entity (local action plan conception at the level of a small rural territory). The potentialities would therefore consist in widening the territorial approach to sectoral policies. This implies co-operation in implementing these policies between the local level and the other levels.

- a decentralised and ascendant approach opposite or in complementarity to a centralised and transversal approach. It can be observed that the role allocated to local partnerships is sometimes badly recognised by the regional and/or national administrations. The LEADER's lessons demonstrate the introduction of vertical co-operation methods, the introduction of flexibility necessary to meet local financial needs, the creation of a local attraction capacity of new financing and the effectiveness of the

Observatoire européen Leader , 1999 et 2000 : Intégrer les enseignements de Leader dans les politiques 176 rurales. Les apports de Leader - Panorama des diversités nationales. Conférence européenne sur le développement rural à Cork 1996 : Partenariat , participation et formation : le développement rural basé sur les stratégies locales «ascendantes» (J. Mannion).

141 application of public financing. A transfer element will therefore be to introduce consultation and co- operation methods between local partners and the other administrative levels.

- a horizontal partnership approach opposite or complementary to more individual approaches. The LEADER's lessons demonstrate the need for introducing public-private co-operation methods into the context of a territorial strategy. The LEADER groups most innovative and most successful in relation to the integrated development of their territory are those which could gather a group of actors sufficiently representative of the various local socio-economic sectors (local population, elected representatives, associations, sectoral bodies, private companies etc.). An element of transfer consists in setting up the local partnership as an institution active in the taking of strategic decisions at territorial level.

- a multi-sector approach opposite or complementary to sectoral planning at local, regional or national level. Too often, integration concerns only a part of activities; services to the population and sometimes to agriculture are not enough involved. The LEADER's positive lessons demonstrate the importance of a better integration at various levels of production and service activities, in order to create a new critical mass and to carry out a regrouping of local offer on the basis of territorial approaches and labels. It proves therefore useful to improve the conditions for a more consistent multi- sector approach, open to all activities of the territory.

- intangible investments (co-ordination, training, technical assistance, implementation of collective approaches, development of the local identity) complementary to material investments (infrastructures, equipment, etc.). Too often, investments in infrastructure and facilities do not take account of the specific territorial characteristics. The LEADER's lessons show the importance of a development of indigenous resources and of the specific territorial characteristics as well as of intangible investments. The transfer potential for the rural development policy would therefore be an increased development of the specific territorial characters as a driving element of investments for rural development.

It follows clearly from previous experience that the adoption of a truly integrated rural development policy for the new programming period of Structural Funds (2000-2006) in the Objective 2 context or of the LEADER + programmes is far from being obtained. The persistence of problems as regards co- ordination and co-operation shows that considerable efforts are still necessary at all levels (Community, national, regional, local) and between these administrative levels. In this context, actors will have to take account of several aspects:177

- it is obvious that institutional readjustments at Community, national and regional levels will be necessary, given the way in which the essence of current policy is presently defined and carried out. The establishment of a correct balance between the various administrative levels associated with the sectoral and territorial policies affecting rural areas, takes a crucial importance. Indeed, the weakness of institutional links and of the capacity of the institutions themselves will limit the degree in which Member States and rural areas will be able to benefit from Community support to rural development.

- in this context, the need for flexibility will also have to be more stressed in the way in which operational programmes and Community initiatives, and even certain aspects of the CAP, are applied in rural regions. This flexibility in the detailed rules for the application of programmes is necessary to take account of the various realities. The main challenge henceforth faced by those who have the task to conceive policies and to implement them, consists in allowing this necessary flexibility, in particular in the most fragile rural areas.

- while rural development is by nature geographically based and connected with the natural resources as well as with the potentialities of the area, such a policy cannot disregard the local communities which compose them. They are the actors of any development strategy, the recipients of policies or of

177 European conference on rural development in Cork 1996 : Partnership, participation and training : rural development based on local « ascending » strategies (J. Mannion).

142 programmes and without them, the need for a vision or the definition of objectives only have a limited interest.

- at the operational level, all requirements referred to above could be framed by "partnership arrangements": the accent should be put on mechanisms which will be used to guarantee an institutional framework for integrated rural development, both at the horizontal and vertical level. This institutional framework has to take account of the contributions to rural development of the national and regional governments, as well as of those of local authorities. Partners, endowed with an authority between the sectoral institutions concerned, will be necessary to co-ordinate the activities and to overcome the gravities which could block the conception and implementation of an integrated rural policy, centred more on territorial than sectoral aspects.

6.2.3. The Trans-European Transport Network between sectoral logic and contribution to the development of the territory

There has always been an obvious conflict between the main goal of transport policy, which consists in satisfying the needs for the mobility of goods and persons at the least cost for the community, and that of a regional policy, which consists in seeking balanced territorial development. The first of these objectives is all the better satisfied when flows are bundled because the transport activity is characterised by increasing scale outputs. This traditional conflict between transport and regional/spatial planning also appears in the context of the TEN-T and more particularly at the planning stage of new high-speed transport infrastructures.

The eminently sectoral character of the approach taken for the TEN-T and for its revision is illustrated by the procedure adopted. Member States communicate regularly to the Commission their national plans and programmes for the TEN-T development, in particular concerning the projects of common interest. The Community decision established a "Committee of the Trans-European Transport Network" which examines this information and carries out the exchange of information on plans and programmes communicated by the Member States as well as on any question concerning the development of the network. This advisory committee, composed of Member States representatives and chaired by a Commission representative, is however not empowered to decide amendments of the guidelines and in particular of the network plans appearing in the annexes. Any modification has to be the subject of a Commission proposal with a view to a decision of Parliament and Council.178 Whether these are members of the advisory committee or of the decisional authorities, they only pertain to the transport sector.

A survey carried out in 1994/95 among European regions shows that at the time of the TEN-T179 development, two separate approaches for designing the network were potentially thinkable: the first consisted in taking as reference the regions of Europe and thus to draw up a list of the needs in transport infrastructures in order to improve territorial integration within the European Union. The second option more functional than territorial, which prevailed in practice for the design of the TEN-T, was to work out an overall vision, accompanied by criteria of a general nature for the further selection of projects. These criteria were the intensity of traffic, cohesion of the European territory and balance between the respective national requirements.

In the selection process, the criterion of traffic intensity seems to have been the most important one. This predominance is not called into question, but through its specific vision it does not contribute to territorial balance. On the contrary, in general the regions already having an elaborate infrastructure system were selected to receive more. The territorial cohesion criterion of the European Union was applied in order to eliminate the existing bottlenecks which result from the existence of borders within

178 European Parliament, Directorate-General for studies : The financing of the Trans-European Networks (1997); Vinois, J.A. : The Trans-European Transport Network : after the legal decisions, the financial issue remains (Review of the Common Market and of the European Union, September-October 1996) 179 Assembly of European Regions, 1996 : Regions and Territories in Europe. The Region's View of the Territorial Effects of European Policies.

143 the European space. It contributed to better "cohesion of the European territory", but in general at the benefit of already well developed regions. But the functional approach bears the risk of creating new imbalances within national territories and thus of contributing to increasing the economic disparities between regions (dualisation of the territory).180

It is henceforth recognised that the success or failure of the TEN-T policy does not depend only on the number of kilometres of motorways or of high-speed railway lines built in the context of the main network, it also depends on a more effective use of infrastructures already in place and of a better interconnection between the TEN-T and the secondary networks and between the various transport modes involved in the TEN-T. The ESDP stresses that the secondary networks can contribute to making traffic flows converge towards the TEN-T and to reaching the critical mass required for profitable long distance connections. Investments in secondary networks and connections to the TEN-T are however likely to be carried out with delay, or even not at all, if a higher priority is always granted to the completion of major networks.

This is of particular importance for less developed regions, because the shortcomings of secondary networks are more important there and constitute a serious obstacle to territorial development. Although the Commission’s guidelines for the programming of Structural Funds (2000-2006) as regards transport explicitly mention that “in addition to interventions aiming at the completion of the Trans-European Transport Network in eligible areas, it is advisable not to neglect the secondary connections", the case-studies carried out in the cohesion countries (Greece, Portugal) showed clearly that the financing of infrastructure and transport systems by means of the Structural Funds and of the Cohesion Fund was based primarily on a sectoral and not on a territorial approach. In particular, the study of the region of Tzoumerka (Epirus) , showed the persistence of shortcomings of the district networks despite an ambitious policy for the development of the main corridors. It seems that in such a context, only decentralisation in the decision-making process and confrontation with the reality of the territory would make it possible to promote more balanced accessibility.

In order to satisfy the objective of sustainable development contained in the Treaty, the Community and national officials responsible for the transport sector developed efforts in recent years to strongly promote intermodality. In a so complex field, the Commission has already explicitly recognised for years the need to better co-ordinate all Community policies with a significant impact as regards transport. In its Communication of 1997 on “Intermodality and intermodal transport”, it stressed that the relationships between the CTP and other Community policies had to be demonstrated clearly, which would require new "cross fertilisation" efforts and an in-depth study about coordination between the following fields : the information society, regional development and cohesion, the integration of the small and medium-sized enterprises and the environment.

Thus, in 1995, the Commission created the Task Force on "Intermodal Transport" with a view to a coherent effort in the field of intermodal transport.181 It brought together the Commissioners responsible for research, transport as well as for industrial affairs, information technologies and telecommunications. The initiative aimed at co-ordinating at European level the various research and technology development programmes in this field and at creating bridges between research and the needs for the policies and the economy.182 Numerous consultations with all parties concerned with intermodality made it possible to ensure that the Task Force's work and priorities as regards research and development meet the needs of the market.

180 Assembly of European Regions, 1996 : op. cit. 181 European Commission : Document : Task Force on "Transport Intermodality"; Final COM/97/243 182 The Task Force's priority actions concentrate on intermodal freight terminals, the development of a network and of a logistic transport system, the development of multimodal urban systems, the promotion of services for the users of public and interurban transport systems, the development of added value services to reduce the barriers to the modal change of travellers, on studies and on support activities.

144 A persistent problem, which inhibits more particularly the development of rational solutions for intermodal transport, is the competition existing between local authorities in the development of intermodal platforms and freight centres. This practice, often connected with a regional or local development approach, leads on the one hand to over-investment with often rather low return rates and, on the other hand, to the proliferation of single-mode freight centres dedicated to the road only. This is evidently a field where decentralised territorial competition manages to inhibit the general interest as regards territorial development. This arises from shortcomings in the vertical relations, both in the field of transport and in that of territorial planning.

The problems related to the sectoral approach of the TEN-T are particularly obvious for sensitive areas, in particular for the coastal areas and mountain regions.

Concerning the coastal areas, the lessons from the demonstration programme of the Commission on the integrated management of coastal areas (AIZC) showed183 that the guarantee of a sustainable accessibility represents an essential stage of the general improvement process of the coastal environment and of maintenance of its economic viability. But it requires, to satisfy both the objectives of environment and of transport, an integrated approach covering the planning of transport, of the environment and of space. But regions with completely integrated systems are still rare and most current actions for sustainability in this field seek above all to reduce traffic and congestion by encouraging the citizens to leave their private cars to the benefit of public transport, or even by encouraging them to ride bicycles or go by foot. Such actions are undoubtedly important but they do not constitute as such genuine sustainable development measures.

In practice, institutional aspects are often at the centre of issues concerning the coastal areas. Difficulties come in general from the sectoral administrative structures which operate in an isolated way and which face, moreover, certain difficulties in setting up the mechanisms intended to manage the non-infrastructural aspects of transport planning. An illustrative example is the railway track which follows the Adriatic coast of the Italian peninsula: construction took into consideration only the transport needs and followed the cheapest design, i.e. that which comprises the minimum number of tunnels and bridges. This option creates today enormous constraints as regards the use of coastal space and cause, at numerous places, important erosion problems.

The projects implemented under the Community programme on the integrated management of coastal areas enabled to draw a number of conclusions related to the co-ordination potential as regards transport:

- transport planning has to adopt a holistic strategic approach under the terms of which decisions are taken with knowledge and optimum anticipation of their implications. Transport has to be perceived as an instrument making possible the achievement of other societal objectives and not as an end in itself. This requires consequently the abandonment of strategies by "scraps and pieces" targeted on individual projects and transport modes. The promotion of multimodal transport systems has to be an integral part of this new approach, as well as joint transport and spatial planning.

- the main obstacle to this holistic approach is the lack of co-ordination: dialogue must absolutely be created between those responsible for transport planning at various administrative levels and pertaining to the land , maritime and air "sectors", as well as between those responsible for transport planning and those responsible for spatial planning

- it is advisable to encourage an approach of proactive planning based on strategic environmental assessment and to promote a series of guidelines regarding the major options as regards transport and mobility, including the TEN-T. These guidelines could recommend in particular keeping the major railways and highways as far as possible from the coast.

183 European Commission, 1999

145 - the transport network has to be planned so as to meet all the users needs and to adapt to the fluctuations of needs according to seasons.

- the local transport needs and the proposed solutions have to be incorporated into the planning process even if the decision power is at a higher level, because this step probably allows to achieve more realistic solutions. Local authorities associations would be a means for local governments to have their voice heard at the stage of the planning process.

- the suppression of monopolies in the (public road and railway) transport sector and of maritime lobbies, as well as the introduction of mechanisms compelling service providers to provide certain services even if they are not profitable for the companies, would undoubtedly make it possible to better meet the needs of the local population.

- the adoption of radial or transversal transport systems rather than longitudinal ones gives possibilities of access and development without opening the coastal area to massive land use of the coastal strip (these transport systems preserve better the areas of natural vegetation).

In the case of mountain areas, improvement of the transport situation and in particular of transit problems inevitably requires a more integrated and more territorialised approach. For example, the number of trucks crossing the Pyrenees was multiplied by 3.5 between 1984 and 1997. According to available forecasts (trend hypothesis), this number should increase from 13 000 per day in 1997 to 30 000 in 2017. The development of a more sustainable approach necessarily implies the combination of a large number of measures including tariff and tax measures, measures favourable to alternative modes, in particular railway and maritime modes, local planning measures to reduce the harmful effects (by-passes, tunnels etc.). Such a strategy should involve a considerable number of actors belonging to the various levels and sectors.

Conceived originally from a primarily sectoral point of view, the TEN-T will have to gradually incorporate territorial logics, which will have important consequences in terms of governance, in the field of vertical and horizontal inter-institutional relations, of relations between public and private transport operators or even relations with local communities.

6.2.4. Capillarity of the Community environmental policy

The Community environmental policy, in addition to the fact that it has diversified means of intervention (primarily legislation, but also financing through the Structural Funds and approval for the designated areas of the Natura 2000 network) is probably the one, among the policies studied, which involves in its implementation the largest number of actors throughout the Union’s territory. It involves on the one hand institutional actors of all levels (Community, national, regional and local) as well as private actors of very different sectors (industrial companies, farmers, transport companies etc.). Consequently, the governance of the PCE is particularly complex.

The very capillary structure of its governance system explains to a large extent the success of the CEP during the past two decades. The thematic study on the territorial impacts of the CEP (chapter 4) showed in addition that, of the three studied policies, the convergence of the CEP with the objectives and policy options of the ESDP is the most substantial one. The activities of the CEP concern indeed broad environmental topics which are particularly important for a sustainable territorial development policy.

Concerning horizontal interactions at Community level, the Communication of the Commission to the European Council of Cardiff (1998) indicated that the Community environmental strategy, based on a vertical approach and consisting in the adoption of environmental regulations, certainly had good results, but it has only partially tackled existing problems. It recommended incorporating environmental concerns into the other Community policies, which was made in the Treaty of

146 Amsterdam. This integration of environmental priorities into other Community policies is generally used to synchronise the growth of the various sectors with the requirements of the environment, but it can also contribute to meet a considerable number of challenges in the context of sustainable development of the Community territory.

With this in mind, it is interesting to briefly examine how the environmental provisions of the Treaty are applied in the transport policy and in the CAP. In both cases, it can be observed that inter- institutional relations at Community level were effective and gave rise to explicit measures (for instance: promotion of intermodality in transport, «nitrogen» directive in agriculture etc.). Nevertheless, this horizontal approach is facing a number of limits:

- in the first place, the market forces. In the case of transport, the growth of road transport is such that the environmental provisions of the CTP only succeed in reducing somewhat the increase in harmful effects. In the case of agriculture, despite regulations and the promotion of agri-environmental measures, intensification of production in the most fertile areas can very broadly be observed;

- in the second place, the imperfection of certain instruments used. Three examples will enable to justify this statement:

- in order to check the impact of transport on the environment, a system of indicators (TERM) was developed at the horizontal level jointly by the Directorate-General «Transport and Energy» of the Commission, the European Environment Agency and Eurostat (Cardiff mandate).Up to now, about thirty indicators were produced, the majority of which concern the causes of pollution generated by transport (development of flows, energy consumption etc.). Only a small number of them concern territorial aspects (space consumption by transport mode, impact of infrastructures on ecosystems and habitats etc.). This corresponds for the moment to an aggregated information system making it possible to fill in a periodic report on the impact of transport on the environment at Community or even at national level. However, it is not a support instrument to decision-making, although indispensable to determine territorial choices pertaining to concrete projects, like for instance those related to the TEN-T. An appropriate mobilisation of Community (or even national) territorial information sources, would however make it possible to progress much beyond. Such an observation is currently being made in the context of certain transnational Interreg IIC co-operation projects (for instance the NWMA freight corridors project);

- the management of land set-aside within the CAP, considered from the angle of territorial development concerns, is far from being optimum. Conceived to induce a reduction of overproduction in the field of main crops, it could have made it possible to achieve simultaneously much larger progress at environmental level, although the land set-aside programme imposed the respect of minimum standards as regards the environment. The rigidity of the adopted system necessarily led to territorial dysfunctions. Thus, the implementation of the «environmental» set-aside was so far very weak (in particular because of the contractual constraints). In addition, intensification of agriculture in the most fertile areas and the development of waste land in less productive areas can be observed (as was showed by the case study on Champagne-Ardenne). These dysfunctions, implemented on the ground, result to a large extent from an inadequate design of instruments at Community/national level and from a low anticipation capacity within inter-institutional bodies. A more flexible and more adapted system could have made it possible to promote the creation of semi-natural areas or of alternative extensive agriculture, both being beneficial to the improvement of landscapes.

- it was noticed that the limited application of regulation 2078/92 and of agri-environmental measures in certain countries (Spain, Italy, Ireland) was explained by the support to afforestation provided for by regulation 2080/92. If, on the same area, both measures are possible, it is necessarily that which allows the most productive activity, and generally the least favourable to the environment, which will be chosen.

147 In the field of vertical interactions, the CEP has mainly a regulatory nature and depends much more than other Community policies on Member States. Non-application or non suitable application of Community law as regards the environment may generate a multiplicity of perverse effects at territorial level.

As regards the transposition of environmental directives into national law, rather considerable delays are noticed in certain countries. Thus, the «nitrogen» directive, which is likely to have an important impact against intensification in agriculture, hardly starts to be put into practice in certain countries.

The vertical relations are also an important issue in the field of interactions between the cohesion and environment policies. In its Communication « The cohesion policy and the environment » (1995), the Commission demonstrated that the success of better integration largely depends on the co-operation of Member States and, subsidiarily, of the regions concerned. Previous experience showed several times that legal provisions contained in the "Habitat" and "Birds" directives were often only partially respected and that the quality of environmental impact statements (EEC directive No. 85/337) was often poor and lacking transparency.

Integrated development measures, in particular those for environmentally sensitive areas, require a high degree of horizontal and vertical co-ordination and co-operation from the part of all actors involved. Such an approach, which has the task of making compatible and acceptable interferences between agriculture, forestry, industrial activities, urbanisation, transport and tourist development is, by nature, a territorialised approach. The specific Community action for integrated management of coastal areas (AIZC) revealed the validity of an integrated management approach. After a few years of implementation, experience from the programme184 confirms the hypothesis according to which most conflicts and physical problems observed in coastal areas in Europe are due to shortcomings at the level of procedures, of planning, of actions and institutions, these shortcomings being themselves connected with frequent ignorance of the economic and social importance of the sustainable management of coastal areas.

These pilot experiments as regards integrated development, prefigure more elaborate and generalised forms of coherent territorial development on which all public policies concerned , including Community policies, will be centred and which will also serve as a catalyst for the private actors' mobilisation.

6.2.5. Paradoxes in the governance of the regional structural policy

The regional structural policy is by nature a territorial policy. This is at least what the Community authorities wish that it should be. For many years, by means of regulations related to the Structural Funds implementation, the Commission has been promoting an integrated multi-funds action for the eligible areas, likely to generate territorial synergy effects. In addition, the Commission published several Communications ("Cohesion and transport", "Cohesion and environment") which testify a concern for coherence in relation to the provisions of the Treaty and provide guidelines of horizontal nature for the implementation of structural policies. During the present programming period, the Commission moreover requires that the operational programmes respect the objectives and policy options of the ESDP.

Even if it can generally be observed that the structural programmes of the second programming period (1994-99) were more integrated than those of the previous period (1989-93), the evaluations of the programmes carried out during the past two programming periods, the special185 reports as well as the official statements recorded at the "Cohesion Forum" (organised by the European Commission in

184 European Commission: Lessons from the demonstration programme of the European Commission on the integrated management of coastal areas (AIZC). Luxembourg, 1999. 185 European Institute of Public Administration: Improving the management of European Regional Development Policy. Final Report of the EUROMANAGERS programme. Maastricht-Athens-Copenhagen- Brussels, 1996.

148 April 1997)186 nevertheless revealed numerous "inflexibilities" and "perverse effects" which appeared at the concrete implementation stage of such a territorial programming approach. The problems identified as regards integration and co-ordination concern the Community level as well as that of Member States and regions. One could observe for example187 :

- divergent political objectives and interests from the various Directorates-General of the Commission concerned as well as a lack of collaboration between the services which sometimes delayed negotiations or the process of programme adoption.

- sometimes a too bureaucratic approach from the part of the Commission in relation to the programmes (in particular from the part of the Directorate-General responsible for financial control).

- sometimes a lack of clear position from the part of the Commission at the stage of negotiations with Member States.

- too different political prospects from the part of the Community, national and sub-national actors which generated tensions and sometimes jeopardized the smooth operation of the partnership.

- deficiencies in the quality of contractual procedures and in the respect of control procedures.

It was noticed that the territorial dimension of operational programmes appears most distinctly at the level of the Objective 2 and Objective 5b programmes of the previous programming period, even if these operational programmes, in their substance and in their formulation, remain medium-term programming documents and cannot be assimilated to real integrated and long-term spatial development plans. The territorial and multi-sector character of the Objective 2 and Objective 5b programmes arises primarily from two factors:

- eligible operations do not comprise heavy infrastructure investments; they are necessarily numerous and dispersed and require a more or less formalised territorial base for their coherence and synergies;

- the countries and regions eligible to these Objectives have in general a rather advanced practice of territorial planning.

The paradox of structural policies lies in the very high degree of sectoralisation which prevails in the countries and territories eligible to Objective 1. The case-studies relating to Portugal and Greece showed with unambiguous clearness that the largest part of available Structural Funds (approximately 80%), representing moreover a very high volume in absolute terms and having unquestionable territorial impacts, is allocated essentially on the basis of sectoral programmes. These programmes are drawn up at the national level by separate ministries (transport, agriculture, research and technology, social affairs, education and training, environment etc.). They are characterised by a very low degree of territorialisation and the regional authorities' consultation is far from being systematic. Co- ordination between the ministries concerned is very weak, apart from the strictly budgetary aspects, so that synergies are difficult to generate and inconsistencies are not to be excluded. Regarding the evaluation reports concerning these programmes, in as far as they exist (which does not seem to be generally the case), they are not accessible. The territorialised or regionalised operational programmes of the Objective 1 areas represent in volume only approximately 20% of the total financial amount available and their degree of territorialisation is not excessively elaborate, because the activities of regional planning pertaining to these areas are still rather weakly developed, even if current progress does not have to be underestimated.

186 European Commission: Europäisches Kohäsionsforum. Niederschrift der Reden und Stellungnahmen. Brüssel, April 1997. 187 European Institute of Public Administration: idem. 1996.

149 It is therefore in the Objective 1 areas that coherence between the objectives and policy options of the ESDP on the one hand and the structural policies on the other hand needs to be strengthened, which does not necessarily mean that this coherence reached its optimum in the other eligible areas.

6.3. Co-ordination procedures and instruments used in the territorial development policy of Member States

In practice, Member States set up formal co-ordination structures and procedures according to their constitutive regulations (institutional and territorial organisation) or to their administrative traditions. These structures aim at enabling a better territorial coherence of public policies.188

• At national level, certain countries formally established inter-ministerial committees or other administrative structures specific to the national government, which have the task of encouraging inter-sectoral co-ordination. Examples of such structures are the "Rijksplanologische Commissie" in the Netherlands, the "Directorate-General for physical planning and for urban development" (DGOT) in Portugal and the "Comité Interministériel d’Aménagement et de Développement du Territoire" (CIADT) as well as the "Comité Interministériel de la Ville et du Développement Urbain (CIV) in France. In theory, the Member States which produce spatial plans at national level or which have an explicit territorial policy also have a strong capacity to reach a high degree of inter-sectoral co-ordination. A main reason for this is that these documents, which are in general based on a formal adoption procedure, normally contain an integrated development prospect for the whole country and priorities for public investment (infrastructures and other public investments). In this context, a number of countries have thematic territorial plans which are in fact the spatial translation of a number of sectoral policies and which are worked out jointly by the spatial planning administrations and by those responsible of the sectoral policies concerned. This is for example the case of the "Structuurschemas" in the Netherlands, the "Schémas de services collectifs " in France or of the "Fachpläne" in Germany.

• At regional level, numerous countries have bodies or procedures which attempt to co-ordinate territorial development both in a horizontal and vertical dimension. It is at regional level that in recent years an increase and/or a significant change of intersectoral co-ordination mechanisms and procedures could be observed. An important condition to this is nevertheless the existence of a sufficient degree of decentralisation of responsibilities, which is the case for numerous Member States. In a number of countries, this task is dealt with by decentralised state bodies: in Portugal this function is (partly) achieved by the regional Co-ordination Commissions (CCR) and in Greece by the Secretaries-General for the regions. In France, the regional prefectures play a considerable role in the territorial co-ordination of the state policies in the region concerned, but the Regional Councils co-ordinate their own policies. The problem is then rather a problem of co-ordination between the policies of the state and those of the Region implemented on the same territory. The strategic plans at regional level can play an important role for vertical co-ordination within the regions, because they have a "guidance" function for activities at lower administrative levels such as those of provinces, départments, cities and municipalities.

• At local level it can be observed that the mechanisms of inter-sectoral co-ordination of policies are less formalised. The local planning instruments have to be in accordance with the plans of higher administrative levels and often depend in their implementation upon other specialised agencies.

Apart from the existence of these more or less formal procedures, increasing concern can be observed in the Member States which attempt to better incorporate and co-ordinate their sectoral policies. This willingness " to better coordinate" also justified a number of reforms in the context of the decision- making process and had as a consequence the setting up of " more integrated policy packages ", in particular in the context of closely dependent policies (for example the groupings land use-transport-

188 European Commission, Directorate General of Regional Policy and Cohesion : The EU-compendium of spatial planning systems and policies. Luxemburg, 1997.

150 environment or protection/enhancement of the natural and cultural heritage- tourism - economic development-). These "policy packages" can also be useful to achieve certain objectives of territorial development or to influence the spatial coverage of certain plans (targeting on a specific aspect).189

Various national examples suggest that the success of any effort of territorial coherence of public policies is mainly conditioned by a series of factors:

- a first condition, essential to any co-ordination effort, is the existence of a basic agreement (established at political level) with regard to the broad objectives to be pursued.

- the territorial coherence of public policies depends narrowly on the “institutional anchoring" of the territorial planning policy within the politico-administrative system and on the quality of the procedures established to regulate conflicts or to create a consensus.

- a last condition is the provision of political and financial means necessary to organise the communication and to set up processes aiming at searching consensus and compromises.

This explains that considerable progress still has to be achieved in a large number of Member States in the field of territorial coherence of public policies. It was observed that in a number of countries, the political position of the central spatial planning bodies is relatively weak, compared with that of other sectoral ministries. Moreover, the vertical relations between the various levels are not always very harmonious, so that the principle of "reciprocity" (bottom up and top down), understood as a process enabling to gradually and continuously harmonise the policy priorities and their territorial impacts, do not function generally without friction.

189 European Commission, Directorate General Regional Policy and Cohesion: The EU-compendium of spatial planning systems and policies. Luxemburg, 1997.

151 7. Conclusions and recommendations

7.1. Territorial impacts of Community policies and cost of non - co-ordination

The implementation of the objectives and policy options of the ESDP concerns a large number of actors. At Community level, it is related to the need for a better perception of the territorial impacts of the various Union policies, enabling a more effective co-ordination of these policies.

The present study, which has an exploratory nature, aims at identifying the territorial impacts of a few Community policies (CAP, CTP, CPE and structural policies) and at quantifying the costs generated by the absence of territorial co-ordination of the various policies. The procedures used for implementing the Community policies and in particular the interaction between the Community authorities and the national and regional levels are also examined.

Such a study has to cope with numerous methodological limitations and with constraints related to the access to information. While it is rather easy to identify spatial trends, it is much more difficult to identify causal links and to differentiate, for instance, the impacts of market forces and the territorial effects of an individual policy. Regarding the quantification of the costs of non-coordination of various policies, this is a very ambitious exercise, which is treated here only from the point of view of Community financing in relation to economic and social cohesion and to territorial cohesion. The pulling effects on the private economy, in particular, which represent a much larger volume than that of public financing, are not investigated here, but their direction should not be divergent from the latter.

Despite these limitations, the study managed to highlight a number of major trends, confirmed at the same time by information available at Union level and by the five case studies carried out in the regions. On this basis, it is possible to envisage on the one hand more refined investigations and on the other hand mechanisms and procedures making it possible to incorporate the territorial dimension gradually into the various Community policies.

While in the various thematic chapters, the territorial impacts were treated policy by policy, it is attempted here to summarise them starting from a classification close to the objectives and policy options of the ESDP.

Economic and social cohesion at Union level

Concerning the CAP budgets, the corresponding Lorenz's curve reveals that, as a whole, the CAP is not contrary to the aim of economic and social cohesion, except for the 20% (in demographic terms) of poorest regions. However as a whole, the CAP allocations contribute much less to regional rebalancing than those of the regional policy itself. This « lost profit » in terms of regional rebalancing at Union level can be estimated at 11.15 billion Euros a year.

The Common Transport Policy is being financed through several sources corresponding to various logics. If one leaves aside loans and loan guarantees (EIB, EIF), the financing sources are on the one hand the ERDF and the Cohesion Fund (90% of the subsidies) and on the other hand the TEN-T budget line. It is logical that the transport allocations of the ERDF and of the Cohesion Fund strongly contribute to economic and social cohesion at Union level. Their impact even largely exceeds that of the regional policy taken as a whole. On the other hand, the allocations from the TEN-T budget line are counter-productive in relation to the objective of economic and social cohesion. In terms of Community subsidies, the negative impact is modest, but the subsidising rate being weak (about 10%), the pulling effect on other public financing and on private financing is important and the volume of the TEN-T budget line is increasing. It would be therefore useful to carry out more detailed, updated and consolidated overall calculations of the impact of the TEN-T budget line on cohesion.

No Lorenz curve was worked out for the Common Environmental Policy, since this policy does not have a specific budget (apart from the LIFE instrument, the volume of which is modest) and it acts

152 primarily by regulatory way through numerous directives. The main Community source of financing benefiting environmental protection comes from the ERDF and from the Cohesion Fund. Their positive impact on economic and social cohesion at Union level cannot be questioned. It also seems that the allocations from the LIFE instrument also benefited, if not in majority, at least equitably the less favoured regions. On the other hand, the impact of some directives is likely to pose some problems in terms of economic and social cohesion at Union level . It is the case for instance for the implementation of the new framework directive on water, because the recuperation of water supply costs is still modest in the less favoured regions, in particular in regions with irrigated agriculture.

Territorial cohesion within the regions

There is for the moment no universally recognised indicator enabling the measurement of territorial cohesion. As an approximation, the attempt was made here to measure, in two regions selected in particular for their broad territory and for their internal diversity (Champagne-Ardenne and North- Portugal), the impact of two sectoral policies (agriculture and transport) in relation to intra-regional income disparities. It follows from this analysis that the negative impact of certain Community policies (or of their specific implementation methods) on territorial cohesion can prove much stronger at the level of a region than at the level of the European Union. Thus, in Champagne - Ardenne, the CAP allocations favour considerably the most developed areas of the region and withdraw practically the rebalancing effect of the regional policy within the region, which corresponds to a « lost benefit » in terms of intra-regional policy of territorial cohesion of about 54 million Euros /year. In the case of North-Portugal it is especially the concentration of Community investments (ERDF, Cohesion Funds) in the area of large Oporto which not only withdraws the effects of the regional policy within the region, but even strengthens the existing imbalance, corresponding to a « loss » (in terms of territorial cohesion) of 154 million Euros a year, while that generated by the CAP is 72 million Euros. Obviously, these calculations have a very theoretical connotation and the objective of territorial cohesion corresponding to such an indicator, is not necessarily politically validated in the region concerned. It is nevertheless true that these calculations enable to clearly demonstrate the existence of a co-ordination problem and of a lack of synergy which requires a political answer.

Polycentric development at European level

The transport strategies necessary in this field are founded on a design of networks likely to generate on the one hand a density effect and a concentration of demand and on the other hand an increase in the « gateway » functions (generation of a transit demand), which is explicitly met neither by the design of the TEN-T, nor by the majority of the regional programmes. It will be, in future, necessary to conceive more sophisticated and more integrated approaches to arrive at the expected results, because available data reveal on the one hand a rather high concentration of transport investments in the central parts of the Union and on the other hand, a rather weak co-ordination between the development of the primary and secondary networks in the regions benefiting from the ERDF and from the Cohesion Fund.

In relation to the aim of polycentric development, the liberalisation of transport has differing effects. The liberalisation of air transport undoubtedly benefited the development of international air links from secondary airports, sometimes located in distant regions, as well as the development of the most remote regions. The liberalisation of the road haulage and of maritime coastal traffic may, on the other hand, have certain negative effects on peripheral regions, in particular in terms of jobs or of transport cost. One cannot however generalise this conclusion, because in certain cases powerful services which did not exist before can also develop.

Dualisation of the territory

Several elements connected with the studied Community policies, appear to contribute to a strengthening of territorial dualisation.

153 One can observe , partly under the effect of market forces and partly owing to the CAP support itself, a dualisation of the systems of agricultural production. On the one hand, a concentration and probably an intensification of productions (especially of the major crops) is developing in the most fertile areas and on the other hand, more extensive agriculture and also continuation of the agricultural abandonment is progressing in the least favoured areas (unfavourable climatic or pedological conditions, remoteness of markets). Despite a number of obvious improvements, the CAP reform has not significantly changed the orientation towards a territorial dualisation in rural regions which started a long time ago. Looking at the future, if the level of agricultural support has again to be reduced in the context of the forthcoming reform of the CAP in connection with the next Community enlargement, it is probable that the agricultural abandonment in the less favoured areas will continue and that the activities of extensive livestock-farming will disappear and will be replaced by forest or by a natural uncontrolled afforestation, while activities of intensive stock breeding would develop in more favoured areas, in particular in the cereal producing areas. The first reason for such a development is that agricultural support is much more connected to types of production than to types of territories. It appears urgent to investigate the possibilities of introducing in future stronger territorial components into the conception of the agricultural policy so that it becomes a true rural development policy.

A similar effect can be observed in the field of the development of transport systems, with a concentration of investments on major corridors and on the most important (often metropolitan) nodes and, on the other hand, a very slow improvement of the transport systems in the more backward areas. This development results in an increase of the gap in attractiveness and therefore in economic competitiveness. The case-studies (in particular Tzoumerka in Greece and North-Portugal) showed that the coordinated development of the primary and secondary transport networks is not carried out systematically and satisfactorily.

There also are different forms of dualisation of the territory in relation to the development of natural areas and of biodiversity in rural areas. The adoption of the Natura 2000 network constitutes a very ambitious operation which mobilises very significant resources. Since no specific Community budget is associated with the operation, almost all financial resources available at national and regional level for the protection and development of natural areas , is mobilised for Natura 2000. The counterpart is that natural areas not designated in Natura 2000 or important semi-natural areas as cultural landscapes are facing a strong reduction of resources necessary for their protection and their development. This is likely, in the long term, to lead to two types of natural spaces in rural areas: those which form part of Natura 2000, of which the biodiversity will strongly be protected and the enhancement will benefit from significant resources, and others which, even by having a considerable natural potential, will be recuperated by productivist agriculture or will be subject to protection without means, i.e. of mediocre effect.

Natural and cultural heritage

With regard to agricultural activities, the major farming transformations connected with the period of strong increase in agricultural productivity were reduced but not stopped. The intensification of certain agricultural productions, in particular in the field of cereals, is still topical and the expansion of irrigation contributes to it . The development of intensification of livestock-farming in or near the cereal areas, encouraged by various factors (fall in cereal price, support to fodder-maize) is also noticed. In certain regions concerned with this type of development (for instance the chalky plain in Champagne), environmental consequences, in particular on underground water, are perceptible. The delays taken in implementing the «nitrogen Directive» partly explain this development.

In opposition, a number of positive developments in environmental matters can be observed in the agricultural field. The agri-environmental actions apply currently to 27 million hectares within the Union, that is 20% of cultivated land. They contribute to the maintenance of agriculture in backward areas and have a positive impact on natural areas. They also contribute to the reduction of soil pollution and of underground water and river pollution. However, the implementation of agri-

154 environmental measures is generally weak in highly productive areas, as well as in very backward areas. The afforestation measures have a rather significant impact, since 500 000 ha have been afforested since 1992, which contributes, in a considerable number of cases, to the regeneration of ecosystems and the development of biodiversity. The development of the cultural heritage of rural areas has become rather popular in Europe and the Community funds available in this field are being used efficiently.

The introduction of environmental concerns into the CTP, required by the Treaty, strongly developed in recent years, in particular by means of the promotion of intermodality and by the introduction of infrastructures tariffing, the common objective being to reduce, as far as possible, the influence of road transport. There is a field in the ESDP’s policy options where priorities are strongly convergent with those of the CTP. This concerns the networking of freight intermodal nodes (European corridors, sea and inland transport). The emphasis put in recent years on the development of intermodalism in the implementation of the TEN-T and within the PACT programme shows an important field of convergence between the CTP and the ESDP.

More importance should be devoted in future to an important interface field between the TEN-T and spatial planning, which is that of corridors. So far, corridors were envisaged almost primarily from the angle of transport. The practice of the Interreg IIC programmes reveals the need to approach the corridors from the point of view of spatial planning, by taking account, in addition to the major transport infrastructures, of the settlement systems , natural areas , urban-rural relationships, the recycling of derelict land of any nature, the secondary transport networks, the harmful effects of transport etc. In this way a more integrated approach could be developed for territorial entities which are likely to play an increasingly strategic role on the European territory.

The system of transport/environment interface parameters (TERM) should still be worked out so as to integrate more indicators of territorial nature and become a genuine system of support to decision- making applicable to concrete and localized projects, which it is not currently.

Concerning the environmental policy itself, it is important to distinguish its direct impacts which are exerted primarily through the implementation of the directives, from its indirect impacts through other policies, and primarily through the financing of the Structural Funds and of the Cohesion Fund. As regards direct impacts, the Community environmental legislation incorporated in recent years more territorial components than previously, in particular with Natura 2000, the « nitrogen» directive and the framework directive on water protection. Legislation produces nevertheless a significant diversity and heterogeneity as regards zonings which have different legal and economic implications. Spatial planning, which is largely implemented at regional and local level, needs for its effectiveness, to be easily understood by all actors and citizens. The complexity of zonings arising from the CPE regulations, being added to zonings arising from legal or regulatory provisions of the national or regional levels (landscape protection areas, national and regional parks etc.) does not contribute to transparency and legibility for the general public and even for administrations, because the designation and management of the areas concerned involve very often different administrations.

The indirect impacts of the CPE through the financing of the Structural Funds and of the Cohesion Fund correspond to the financial volumes attributed, that is they are very substantial. It could however be observed, in particular in the cohesion countries, that the Community funds were used primarily to finance costly environmental infrastructures (for instance sewage treatment plants) beside economic development operations which could be rather detrimental to the environment. The integration of the environmental dimension in economic development actions is progressing, but still in a unequal way.

7.2. Sectoral culture and territorial expectations

Community culture, in terms of politico-administrative practices, is excessively sectoral. This results above all from history. At the time when the Treaty of Rome was adopted, the aim was to bring the European states and people closer by means of a limited number of major common

155 policies. The impacts of these common policies and of economic integration which resulted from it, took a long time to be perceived. Almost twenty years were needed before a European Regional Development Fund was created with the aim to reduce the regional imbalances generated by integration, and almost 30 years, before environmental considerations, as a prelude to sustainable development, could find a place in the Treaty.

Curiously, the progress of European integration and the deepening of common policies which resulted from it were expressed in hyper-specialisation of functions and competences within the Community authorities, and in particular within the Commission. One can observe this specialisation not only at the level of each Directorate-General, but also at the level of each direction, of each unit and even at the level of groups of officials or of individual officials.

The Commission having the monopoly as regards the right to take initiatives, its political proposals are necessarily reflecting its own sectoral specialisation culture. Thus this model has been almost identically reproducing itself for several decades. The changes as regards public interventions which occurred at Member States level (decentralisation, territorialisation, mediation, co- ordination etc.) hardly penetrated the Community authorities. Certainly, a number of horizontal initiatives emerged (integrated rural development, integrated development of coastal areas etc) and territorial concepts are gradually appearing in various sectors of Community policies. The effects remain for the moment rather limited and attempts towards cultural change are far from being strong enough to generate a breakthrough in the dominant stream which remains sectoral.

European integration has however reached a stage where the juxtaposition of two logics which ignore each other cannot any longer be continued without crystallising tensions with detrimental effects on integration and on the European identity itself. Parallel to the continuation of the Community sectoral model, a strong structuring of territories can be observed throughout the whole Union which mobilises not only the public and semi-public structures, but all the dynamic forces of society. This dynamics is particularly strong in the field of local development, but it is also existing, in various forms, on other scales. The organisation of cross-border areas, the wide communities which organise their destiny on broad territories (such as those bordering the Baltic or the Mediterranean, those including the alpine regions or those of North-west Europe) and benefit from Interreg support, need other European approaches than those which result from hyper- sectoralisation.

The concomitance of very sectoral and specialised Community policies on the one hand and increasingly territorialised dynamics within European society on the other hand, generates various types of problems:

- a number of Community sectoral measures cause « asymmetrical shocks » on the territory, similar to those generated by global economic changes demonstrated by the economic theory. In certain cases, these asymmetrical shocks may be strong enough to destabilise the economic base of entire regions. It is for instance the case of the regulatory provisions on meat marketing which (without disputing their cogency) strongly strike the regions of Northern Finland and Sweden, the economy of which relies on reindeer meat export.

- a sub-optimum allocation of the Community resources which is likely to counteract the objectives of economic and social cohesion and of territorial cohesion. The study showed that contradictions and the lack of synergies have a more important breadth at decentralised (for instance intra- regional) level than at the global level of the Union. In certain cases, these contradictions are strengthened by a very sectoralised implementation at national level of Community policies having rather territorial inspiration (major part of structural policies in the cohesion countries);

156 - the emergence of major crises with sectoral appearance, but which arise from the fact that the territorial dimension was not incorporated into the policies. The BSE crisis for instance results largely from a lack of regulatory correspondence between a certain quantity of livestock and a sufficient agricultural territory to ensure irreproachable meat quality. The unrestrained search for productivity increase with total screening of the territorial components led to the current situation. The saturation of the motorways and main roads within the Union, which jeopardises not only the transport and exchange function itself, but also the quality of life and the attractiveness of areas concerned, has as main cause the lack of anticipation of the territorial effects of European integration, which prevailed for three decades until the beginning of the 1990s. It is only now that an awareness emerges of the fact that a different location pattern of economic activities and the implementation of alternative and better integrated transport systems would have enabled more sustainable forms of development. Further, the strongly liberal and deregulated character of the context in which maritime transport was allowed to develop to the detriment of safety led to ecological disasters without precedent in certain coastal regions of the Union.

The demonstration of the territorial dimension of these problems leads today to a broad consensus, both of public opinion and of political leaders, regarding the need to act quickly and effectively and to adopt decisions the (political and financial) scope of which goes often well beyond the recommendations of the ESDP. Several things can be deducted from such a development. First of all the territorial dimension is often taken into account in major sectoral policies only at a stage when problems reached a worrying size. Secondly, the taking into account, both in an anticipatory and structural way, of the territorial dimension, as the ESDP recommends, is likely to lead to substantial economies.

7.3. The wrong solutions

A large number of Community policies do have territorial impacts, even if these impacts are not presently demonstrated by existing information systems and circuits. The reason why issues of territorial impacts are today in the middle of topicality, while they in fact always existed, is that a much higher degree of awareness now appears, on the part of local communities and public authorities of the regional and sub-regional levels, concerning the appropriation and the decentralised management of the territory.

As for Community interventions, it is also important to consider that they do not correspond to static situations. In addition to the fact that new problems and issues continuously appear, which have to be treated, including in their territorial dimension (in the past the energy crisis, nowadays the environment, in future the increasing importance of climatic changes), the way Community policies are acting has to be considered in a dynamic prospect. Numerous Community measures and initiatives are conceived to have a didactic and pedagogic effect towards the improvement of territorial development and management methods. Often, Community regulations are inspired by innovative practices identified in certain member countries and regions and generalise them, while adapting them, to the entire Union. For instance, certain measures contributed to generalising the medium-term regional programming, other approaches to promoting local development, others to promoting the integrated management of coastal areas, others again to implementing a European ecological network. Owing to the fact that these Community initiatives and measures act in fact as instruments of know-how transfer, it is not surprising that a number of countries or regions find them superfluous, because they are nothing new for them, while other countries and regions benefit very largely from them and owe to them a good share of their progress in terms of cohesion and sustainable development. On the eve of the enlargement to Central and East-European countries, it is not doubtful that this type of approach will further be useful.

It would therefore be useless to believe that a new regulation concerning the vertical division of competences (by drawing a horizontal judicial-political line) would be sufficient for the

157 Community policies to stop having territorial impacts. The problem is in fact to develop a better management of such impacts, which has to involve all the actors and partners concerned.

7.4. Practical recommendations for better integration of the territorial dimension in Community policies

The improvement of the common management of the territorial impacts of Community policies can be based on a number of techniques which will be examined hereafter, but this concerns a cultural problem which will require a considerable length of time to succeed. It is clear that not only the political and administrative culture of the Community authorities is eminently sectoral, but also that the links between the Community authorities and the Member States are themselves of deeply sectoral nature (vertical channels).

7.4.1. Towards the improvement of the spatial coherence of the Union’s policies at the stage of their elaboration at Community level

The analysis of the national spatial planning policies demonstrated that they have specific instruments (plans and co-ordination procedures) which make it possible, to a certain extent, to develop a spatial coherence of sectoral policies. At Community level, on the other hand, the situation occurs differently. In practice, the degree of horizontal co-ordination between the various Community Institutions is relatively low and no procedure exists which aims at creating spatial coherence between all Community policies. This deficit is also clear within the European Commission, because with the exception of certain punctual co-ordination or collaboration activities at the development stage of specific initiatives (programme for the integrated management of coastal areas, drafting of horizontal thematic communications such as, for example, that on cohesion and transport), no permanent activity in this direction exists.

As from the middle of the 1990s, the European Parliament and the Committee of the Regions were in favour of a more formalised approach regarding the spatial coherence of Community policies and a better co-ordination of Member States policies. In a report of the Institutional Commission of the Committee of the Regions dating from 1995, the Committee wished explicitly the spatial dimension of Community policies to be systematically taken into account and that better co- ordination between these policies take place. To this end, the Committee of the Regions proposed an amendment to the Treaty in order to introduce an obligation of co-ordinating Community policies and to set up a formal and specific instrument to evaluate the territorial impacts of the various Community acts.190 These proposals were also included in the final statement of a conference of the European Parliament in 1996, which brought together the delegates as well as the representatives of the Committee of the Regions and of the regional and local authorities of the European Union.191

In 1999, a study of the European Parliament which examined the institutional prospects for European spatial development planning stressed that the application of the policy options of the ESDP required a clearer improvement of the horizontal co-ordination of Community policies having significant spatial impacts. To this end, the authors of the document proposed an inter- institutional informal co-operation model to improve the horizontal co-ordination of Community policies having spatial impacts. This informal model concentrates mainly on the development phase of Community policies and envisages the participation of all institutional actors at European level, while preserving their current competences as regards the development of Community policies.192

190 CdR/282/96. final 191 EP 219 693/.final 192 Stumm, Th./Nötzel, R. : Die Europäische Raumentwicklungspolitik. Luxembourg, 1998 (Hrsg. Europäisches Parlament, Generaldirektion Wissenschaft).

158 If one agrees on the fact that the creation of a genuine spatial development policy of the European Union, which will have amongst other tasks that of creating better spatial coherence between all Community policies, does not represent a realistic option for an immediate future and even for a medium-term prospect, any improvement in this direction has necessarily to be inserted as much as possible within the framework of the Community institutional context. A possible option is to set up a co-operative model of inter-institutional co-ordination for the spatial coherence of Community policies. This co-ordination process would take place during the preparatory phase of proposals for Community acts (therefore before the legislative process as such which starts with the presentation of a proposal) and would be composed of several elements (FigureDiagram 1), the contents of which will be detailed hereafter. a) A procedure: the Strategic Spatial Impact Evaluation (SSIE)

Inspired by the basic idea underlying the strategic evaluation of the environmental impact of national and regional plans, a SSIE should enable the systematic appraisal of potential spatial effects arising from :

- Community legal acts likely to have considerable spatial impacts (liberalisation and deregulation measures, environmental laws, competition laws, guidelines in the field of the Trans- European Networks etc.), - major projects financed by the cohesion Fund or the Structural Funds as well as the programming documents drawn up in the context of the Structural Funds policy, - multi-annual action plans or specific support programmes in the context of other policies of the Union (CAP, transport policy, enterprise, environment, energy policies etc.).

The drafting of an SSIE and the related debate in the inter-institutional structures would have as a fundamental objective and direct benefit:

- to make the various Community actors (technical institutions and bodies, services of the Community administration) aware as from the development stage of the possible territorial impacts which may arise from a Community activity, - to establish a permanent debate on the technical challenges presented by spatial coherence of Community policies, - to clarify the debate within the legislative process which leads to the adoption of the act concerned, - to provide orientations to national actors so that they envisage appropriate co-ordination or accompanying measures for the later implementation of the Community act concerned.

The practical drafting of a SSIE requires nevertheless a homogeneous and elaborate Community reference framework to examine the Community activities (political spatial objectives, concrete evaluation criteria). The political spatial objectives can be derived from the thematic priorities and policy options contained in the ESDP and also from the objectives defined for already existing integrated approaches at community level for a number of priority types of areas explicitly considered by the ESDP (such as the coastal areas, the urban areas, the rural areas) or for new Community integrated approaches (for example for the mountain areas etc.). On the basis of this system of spatial objectives defined for the SSIE, a number of operational criteria will be worked out to evaluate concretely the impacts of a Community activity.

In its result, each SSIE should contain at least (1) a prospective analysis of the potential territorial impacts of the measure concerned, (2) an identification of the interactions existing with different Community policies acting in the same field or spatial context with the related supporting measures (in order to identify the potentialities for synergies) and finally (3) recommendations with regard to possible improvements of the measure envisaged in order to increase the efficiency of the Community project as a whole. A SSIE should also provide a first orientation with regard to the co-

159 ordination effort to carry out at the stage of practical implementation of this Community measure in the national context, without prescribing legal obligations for the Member States. b) An inter-institutional co-operation structure

The co-ordination procedure will have to bring together all institutional bodies directly involved in the Community legislative process (Commission, Council, Parliament, Committee of the Regions, Economic and Social Committee) and specify the precise role that they will have to play. It will also have to enable specialised Community bodies (for example the European Environmental Agency, the Joint Research Centre etc.) as well as other non-Community bodies to be heard and can bring their know-how on the matter. This co-operative co-ordination procedure requires nevertheless a minimum of stability.

To this end, it is desirable to create an "inter-institutional Co-ordination Committee" responsible for the spatial coherence of Community policies. This permanent structure would constitute the stable link between all actors concerned and could have (if necessary) as legal basis an inter-institutional agreement signed by the European Commission, the Council of Ministers and the European Parliament. The Co-ordination Committee would have a permanent secretariat which could be established within the European Commission, and more precisely within the Directorate- General REGIO. All concrete co-ordination activities would take place at the drawing-up stage of Community act proposals in order to avoid an overload of the legislative process as such, which begins with the publication of a formal proposal by the Commission. The secretariat of the inter- institutional Co-ordination Committee would have the task to draw up an SSIE project for the Community act concerned, which would then be discussed within the inter-institutional Co- ordination Committee for the spatial coherence of Community policies.

The inter-institutional co-ordination model for the spatial coherence of Community policies also requires a number of adaptations that each actor will have to carry out in his own context:

The Council of Ministers and the European Parliament as legislative and budgetary authorities, but also the advisory Community bodies such as the Economic and Social Committee and the Committee of the Regions should establish or designate among them - and in agreement with the mechanisms contained in their rules of procedure - "structures" in charge of spatial coherence matters of Community policies. These structures will represent the institutions and Community bodies in the inter-institutional Co-ordination Committee.

Concerning the European Commission which draws up the Community policy proposals and bears the responsibility for their implementation, a number of internal changes would be necessary:

- a first series of modifications should enable the improvement of horizontal co-ordination between the various Commission departments: an essential role in this matter could be played for example by the Secretariat-General of the Commission (which is already in charge of a number of tasks as regards horizontal co-ordination) or by a new "Task Force" composed of representatives of the various services.

- additionally, each service would establish or designate a "nucleus" in charge of the spatial coherence of Community policies, which would send representatives to the inter- institutional Co-ordinating Committee.

- the drafting of a "spatial impact sheet"193 should become obligatory for each service drawing up proposals for Community legislative acts. It would be comparable with the already

193 In the context of the internal procedure of the Commission, these impact sheets play an important role because they represent an essential precondition for the adoption of a draft proposal by the Commission.

160 existing impact sheets (for example the impact sheets on budgetary consequences or on SME which are annexed to the proposals etc.). The sheet would constitute a significant instrument likely to encourage closer internal co-operation as regards better spatial coherence of Community policies. The sheet would contribute to the development of the SSIE. c) An information and observation network

The study emphasised clearly that the anticipation of the territorial impacts of the various Community policies, and of their interactions, can hardly be carried out in a context of abstraction. It requires on the contrary references to a concrete territory. The study also showed that the same Community measure may have very different territorial impacts according on the one hand to the characteristics of the territory and on the other hand to the way in which this measure is being implemented.

The anticipation of the territorial impacts of Community policies requires consequently the opinion of observers and/or actors close to the territory, located in (geographical and institutional) contexts very different from each other. This would therefore call for setting up a European observation and information network, the members of which should have good knowledge of the operation of Community policies (as well as of their national or regional translation) on the related territory and should be in a position to react quickly to the requests of the Commission. The synthesis of their respective opinions should be carried out by the secretariat of the inter-institutional Co-ordination Committee and should be used to elaborate the SSIE. d) A periodic progress report on the spatial coherence of Community policies

This periodic progress report on the spatial coherence of Community policies would be drawn up by the secretariat of the Co-ordination Committee and would be discussed within the Committee, and its final version would then be forwarded to the other institutional actors who take part in the inter- institutional co-ordination process. The periodic report should contain a survey of concrete activities undertaken as regards spatial coherence, both:

- by summarising the contents of the various SSIE elaborated during the reference period; - and by critically reviewing the follow up given to the recommendations made in each SSIE by the actors concerned.

7.4.2. Towards the improvement of co-ordination and of co-operation in the context of the implementation of Community policies a) Implementation of Community policies within a country or within a region

The issue consists in creating coherence between the implementation of the various Community policies and the regional and spatial planning objectives, plans and programmes in force in the country or region concerned. It is hardly possible to propose a precise methodology valid for all Member States, owing to the heterogeneity of the contexts. Only a number of general guidelines can be proposed such as:

- the strengthening of interactions between the sectoral vertical channels connected with Community policies and the horizontal coordination structures used by spatial planning. It happens frequently, within Member States, that the implementation of Community policies is ensured by specialised services represented at national and regional level and which benefit from broad decisional autonomy. It could be observed in various case studies that the introduction of Community policies in a new member country strengthened the sectoral approaches which existed before. These specialised services are coordinated among themselves at budgetary level, but seldom at territorial level. This therefore requires inserting them gradually in the horizontal coordination structures and procedures set up at various levels for the needs of spatial planning, there where such structures and procedures exist. In a

161 more general way, two levels are currently emerging as regards territorial organisation, which are particularly suitable for coordinating the various policies influencing the territory:

- the regional/interregional level, for issues related for instance to exchange and integration corridors, to urban settlement, to the protection and development of major natural areas,

- the level of local development («pays», « comarcas » etc.) for the mobilisation of indigenous resources, the interface between public and private actors, the integrated development and spatial planning strategies etc.

- the improvement of the spatial planning culture in a number of Member States. It is clear that the consideration of territorial dimensions in the implementation of Community policies at national and regional level is strongly dependent upon the spatial planning culture prevailing in the various Member States. In this field, an important North-South gradient can be observed within the Union. The implementation of structural policies by means of national sectoral operational programmes in the cohesion countries is a significant indicator of this gradient. The development of the spatial planning culture in certain parts of the Union probably constitutes a part of the response to better co- ordination of Community policies. b) Co-ordination of the various Community policies in the service of transnational co-operation as regards spatial planning

Transnational (and cross-border) co-operation as regards spatial planning is currently at an experimental stage, thanks in particular to the support of the Interreg Community initiative. This cooperation is for the moment juxtaposed with the structural policy operational programmes existing in the various eligible areas within each Member State. Owing to the very recent introduction into Interreg of transnational co-operation in spatial planning, interactions between these two fields are very weak, or even non-existent, during the current programming period. It will be different after 2006, since the Community authorities have already announced that current transnational co- operation in spatial planning prefigures the conception of structural policies after 2006, a transformation made necessary inter alia, by the next Community enlargement. In such a context, territorial co-ordination of the various Community policies will become a major issue, because the future structural policies will be more marked by spatial planning and by transnationality.

At this stage, only the contours of changes to be made can be outlined. First of all, the contents and procedures of transnational co-operation as regards spatial planning will have to evolve in a substantial way. In view of the fact that the current programmes (Interreg IIC, Interreg IIIB) have only a subsidiary role in relation to structural policies and in relation to national and regional spatial planning programmes and plans, they are directed towards a plurality of individual projects of very unequal quality. The authorities responsible for these programmes (management and monitoring committees) manage them administratively and financially. They are in no way bodies where discussion and debate take place on vital, prospective and strategic issues of the territory concerned by the programmes. Even if territorial visions are elaborated in the context of certain programmes, these are generally still very academic and are not very suitable for political validation. The transition from the current practice of structural policies to a new transnational practice of spatial planning, taking more account of individual and collective aspirations of regions and territorial communities, represents in its nature something similar to a cultural revolution. Such a change should in fact be carefully prepared during the years ahead, by recentring the Interreg III programmes on a limited number of major strategic issues for the territory concerned and by avoiding a too strong dispersal of individual projects. An essential condition would be that, beside the programme management authorities, a high level political committee be established, devoting itself to the definition of priority strategic and territorial issues and contributing to the orientation of the individual projects towards these issues.

162 The setting up of such a structure would have an unquestionable driving effect on the vertical channels connected with the various Community policies and would lead them to take more account of territorial issues. After 2006, however, it will be necessary to connect more systematically a number of Community sectoral policies to the major transnational and interregional territorial co-operation strategies. This could be carried out by means of a systematic participation of the authorities and services responsible for the preparation and implementation of sectoral policies in the committees responsible for transnational and interregional territorial co-operation.

163 Figure 1 : MODEL OF INTER-INSTITUTIONAL CO-ORDINATION FOR HIGHER SPATIAL CONSISTENCY OF COMMUNITY POLICIES

Proposal of Community EUROPEAN legislative act Spatial COMMISSION impact sheet Other DG DG REGIO

Secretariat of the SSIE Committee

Periodic INTER- progress INSTITUTIONAL CO- report ORDINATION COMMITTEE

Information and observation network

Economic and Comittee of EUROPEAN COUNCIL Social Comittee the Regions PARLIAMENT OF MINISTERS

Legislative procedure

Elaboration and co-ordination

164 SPATIAL IMPACTS OF COMMUNITY POLICIES AND COSTS OF NON-CO-ORDINATION

APPENDIX

CASE STUDIES

Agence Européenne "Territories and Synergies" (Strasbourg) – Co-ordination Nederlands Economisch Instituut NEI (Rotterdam) Quaternaire Portugal (Oporto) PRISMA (Athens)

June 2001

TABLE OF CONTENTS

165 CASE STUDY FOR THE PROVINCE OF BERGAMO (ITALY) 1

o 1. Geographical and socio-economic characteristics of the Province of Bergamo 1 o 1.1 Population and settlements 1 1.2. Economic structure 2 2. Territorial impacts of EU policies 7 2.1. Territorial impacts of the Common Agricultural Policy 7 2.1.1. Main characteristics of agricultural areas in the Province of Bergamo 7 2.1.2. Characteristics and recent trends of agricultural production 7 2.1.3. Implementation and territorial impacts of the CAP 10 2.2. Infrastructure, accessibility and transport policy 12 2.2.1. Motorways and regional roads 12 2.2.2. Railways 12 2.2.3. Air transport 12 2.2.4. Prospects for the modernisation of infrastructure and transportation systems13 2.3. Environmental issues and policy 14 2.3.1. Wildlife, geological and archaeological amenities 14 2.3.2. Environmental problems 15 2.3.3. Elements of environmental policy 17 3. Regional structural policy in the Province of Bergamo 18 4. Territorial governance and spatial planning 21 4.1. Institutional framework 21 4.2. Forms of multi level governance 21 4.3. Reform process of the institutional and financial settings 22 4.3.1. Division of responsibilities 22 4.3.2. National and regional equalisation system 23 4.3.3. Degree of autonomy in the local system 26 4.3.4. Forms of public-private partnership 26 5. Conclusions 28

CASE STUDY CHAMPAGNE-ARDENNE (FRANCE) 30

1. Geographical and territorial characteristics 30 2. Socio-economic characteristics 31 3. Territorial impacts of Community policies 34 3.1. Agriculture and the Common Agricultural Policy 34 3.1.1. Characteristics and trends in the agricultural production of Champagne-Ardenne 34 3.1.2. Territorial impacts of the CAP and of its reforms 35 3.2. Transport policy 36 3.2.1. Situation of infrastructures and transport systems in Champagne-Ardenne 36 3.2.2. Territorial impacts of the Community transport policy 38 3.3. Environmental policy 39 3.3.1. Main environmental issues of the Champagne-Ardenne region 39

166 3.3.2. The environmental policy and its territorial impacts 41 3.4. Regional structural policies 42 3.4.1. Rural development 42 3.4.2. Transport infrastructure 45 3.4.3. Operations of environmental protection 45 4. Territorial governance and regional planning 48 5. Quantitative analysis of the impact of Community financing on the internal cohesion of the region 50 6. Conclusions 54

CASE STUDY: THE REGION OF NORTH-PORTUGAL 56

1. Characteristics of the Region of North Portugal 56 1.1. Territorial development typologies and co-ordination of policies 56 1.2. Institutional and organisational aspects which relativise the lessons to be drawn from from the experience of North Portugal 56 2. Procedures of elaboration of the EU structural policies 57 2.1. How the CSF contributed to the emergence the regional policy in Portugal 57 2.2. The double and unequal logical of the CSF 57 2.3. How the CSF contributed to the strengthening of a sectoral logic at the expense of a territorial logic 58 2.4. How the CSF did not create the requirements for institutional training in co-operation-co-ordination by regional development objectives 59 2.5. National and territorial impacts of projects and of sectoral programmes 59 2.6. National objectives and regional issues 60 2.7. Questions raised by the 3 th CSF 61 3. The field of non-structural Community sectoral policies 62 3.1. The territorial impacts of the liberalisation of transport 62 3.2. Territorial impacts of the CAP reform on the development of the rural areas 63 4. Quantitative analysis of the impact of Community financing on the internal cohesion of the region 66

4.1. Administrative context 66

4.2. Key features of the region of North Portugal: external positioning 67

4.3. Key features of the region North Portugal: internal positioning 68

4.4. Cost of the non-co-ordination 69

5. Conclusions 70

167 CASE STUDY TERUEL-ARAGON 73

1. Characteristics of the case study 73

2.The mission in the region 73

3. Main structural characteristics of the territory object of the case study 73

4. The practice of implementation of Community policies 78

5. Environmental policies 82

6.Transport and communications policies 85

7. Rural development policies 89

8. The questions of governance: the policy of setting up « comarcas » 94

CASE STUDY FOR THE REGION OF TZOUMERKA (GREECE) 100

1. Overview and geographical context 100 2. Demographic and socio-economic indicators 101 3. Territorial impacts of EU policies 105 3.1. Agriculture and common agricultural policy 105 3.1.1. Main characteristics of agricultural production 105 3.1.2. Territorial impacts of Community Agricultural and Rural Policy, including the LEADER Initiative 106 3.2. Impacts of structural and cohesion policies (programming period 1994-1999 and outlook for 2000-2006) 109 3.3.Transport policy 111 3.3.1. Level of infrastructure and accessibility 111 3.3.2. Elements and procedures of the transport policy 113

3.4. Environmental heritage and policy 115

4. Territorial governance, spatial planning and co-ordination of policies 116

4.1. Institutional context and territorial allocation of responsibilities 116 4.2.Allocation of responsibilities for the structural funds 117

5. Co-ordination of policies 119 5.1. Spatial planning and development programmes 119 5.2. Co-ordination of EU policies and programmes 120 6. Conclusions 121

168 169 CASE STUDY FOR THE PROVINCE OF BERGAMO (ITALY)194 o o 1. Geographical and socio-economic characteristics of the Province of Bergamo o 1.1 Population and settlements The province of Bergamo is situated in the centre of the Lombardy region. It is a little less than 50 km. distant from Milan and is therefore strongly influenced by that large metropolitan area.

Numerous water courses run through the province, the major ones being the Brembo and Serio rivers. The province has a surface area of 2,722.86 sq. km., 63.5% of which is mountain, 11.8% hill and the remaining 24.7% plain. It can be divided into three distinct zones, given the physical geography of the province, which are also homogeneous in terms of settlement and economy:

1) theHighlands,whicharemadeupoftheValleImagna,ValleBrembana(withits numerous lateral valleys, such as the Val Brembilla, Val Taleggio and Val Senna), the Val Seriana, Val Cavallina and Val di Scalve. 2) The Foothills, including the upper part of the Lombardy plain (with the Val San Martino and Val Calepio). 3) The Plains which make up the southern part of the province

The province has an officially resident population of 949,862 inhabitants (1997). Population growth is positive both in terms of birth and death rates (+1.424) and net migration (+5.159 including 2.328 from abroad) and the trend is basically stable. Population growth is higher than that of Lombardy and Italy and also higher than in most regions of Europe. This is due to a «younger» population which guarantees considerably higher population growth than the Italian and European average. The numbers of people entering the labour market in the province have been higher than those leaving it for at least ten years. • • Population rates and indexes Bergamo Lombardy Italy

Birth rate (1) 10,1 9,0 8,0 Death rate(1) 8,7 9,8 10,0 Social Balance(1) 3,3 1,4 0,0 Ageing (2) 1,01 1,29 1,19 Dependence (3) 41,5 44,2 47,1 (1) Births, deaths, immigrants and emigrants every 1000 inhabitants. (2) Ratio between population over 64 years old and under 15 years old. (3) Ratio between non working-aged population and working aged population Source: ISTAT (Banca Dati Demos) and CCIAA (Annuario Statistico Provinciale). Average population density is high - 348.8 inhabitants per square kilometre - especially if the mountainous nature of the area is considered. In the central zone the density is as high as 871.1 inhabitants per square kilometre.

194 This report is a compilation of extracts from the study “Regional Review on Bergamo – OECD Territorial Development Service” edited by the Istituto per la Ricerca Sociale (Bergamo) and of information resulting from interviews conducted by J. Robert

170 Local authority population size (1996)

Bergamo Lombardy Italy %% % % %% Local authorities size Less than 1,000 inhabitants 25.8 3.7 23.9 2.3 23.9 1.9 Between 1,000 and 5,000 52.5 37.3 51.5 22.3 48.4 16.7 Between 5,001 and 20,000 20.5 41.8 20.8 32.6 21.9 28.7 Between 20,001 and 0.8 4.8 2.8 14.9 4.1 17.3 Over 50,000 inhabitants 0.4 12.4 1.0 27.9 1.7 35.4

Source: ISTAT (Banca Dati Demos) and UPI (Atlante delle Province Italiane).

1.2. Economic structure

In the valleys, the mountain and tourist economy (quite weak) coexists with some old industrial districts (generally in decline) along the major rivers and close to the plain. The central zone is richer, more densely populated and industrial with the single exception of the City of Bergamo which - in recent years and clearly «behind» other cities - is acquiring a distinct service industry vocation (the proportion of workers employed in manufacturing industries in the provincial capital is one of the lowest in Italy, lying in 99th place, despite the city being in second place for secondary sector employment). The plain in the south contains a large industrial area (especially towards Milan) and an agricultural area that is still economically important (towards Brescia).

The different economic structures and the differences in geography further widen the gap between the richer areas in the south and centre and the poorer mountain areas in the north of the province. The province of Bergamo has the largest per capita income gap in Italy (the top ten local authorities have per capita incomes almost ten times higher that those of the bottom ten), even if this indicator tends to exaggerate the differences.

Commuting to and from work in the province is extremely important both internally (from the valleys to the central zone) as well as to the Milan area.

171 • • The three geographical bands (1996) Valleys Central band Plain

Resident population 237,259 481,396 288,55 Surface area 1,716.8 500.6 612.7 Density 138.2 961.6 471.1

Activity rate 34.4 45.6 34.2 % employment in agriculture 2.3 0.9 3.7 % employment in industry 55.7 45.7 52.5 % employment in services 42.0 53.4 43.8 % unemployment 4.0 3.0 5.8

Source: ISTAT (Sistemi Locali del Lavoro) e Provincia di Bergamo.

• Labour market

The labour market in Bergamo is characterised by strong contradictions. While on the one hand there has been for many years an unemployment rate that may be defined as frictional, on the other hand there has always been a low propensity for women to enter the labour market. Furthermore, the economic success of the province, of which the low unemployment rate is only one of many indicators, has always been accompanied by rather low levels of education and training in the active population. These low levels of education, however, have not prevented the province from producing one of the most successful systems of technological innovation in Lombardy.

The labour market is also highly mobile and flexible. Demand is traditionally oriented towards low profile figures and unemployment has very specific characteristics (above all young women and victims of restructuring processes difficult to retrain) which leaves ample room for phenomena like hidden or black market labour.

The picture of the provincial labour market outlined by the latest available data shows participation higher than that for Lombardy for the first time (64.3% against 63.6%195), a much lower unemployment rate (2.9% against 4.8%) and an employment rate higher than the average regional rate (62.4% against 60.5%196).

Since 1993197 there has been:

195 Calculated on a population of working age between 15 and 65 years 196 Calculated on a population of working age between 15 and 65 years 197 The change to standard EU calculation of the labour force figures that occurred in 1992 does not permit valid comparisons of figures before 1993.

172 1) growth in participation produced by the massive entry of women which compensated for the fall in male participation.

2) significant growth in employment corresponding to an expansion of the female employment while male employment remained basically stable.

3) a decrease in persons seeking work: the sustained increase in the supply of female labour did not lead, in the medium term, to growth in total unemployment and unemployment is actually falling (from 3.5% in 1993 to 2.8% in 1999). This trend is very significant if one considers that the situation has worsened at national level (from 10.2% in 1993 to the more recent 11.4%).

The demand for workers with low qualifications clearly conflicts with mismatch problems: employers in Bergamo complain that they are unable to find 40% of the personnel they seek - above all skilled factory workers - due to a lack of such personnel and because candidates do not have the necessary qualifications and experience.

In this context there is growing resort to labour from countries outside the European Union. In 1998 they accounted for 7.6% of new workers on employment registers in the province - a figure which increased to 8.7% in the first nine months of 1999 - and according to forecasts will satisfy 22% of the demand for labour in 1999-2000, filling jobs which do not «appeal» to the local labour supply.

The employment structure in Bergamo also shows a clear preference for younger workers (workers between the ages of 15 and 24 years accounted for 15.2% of total employment in 1998, against a more modest 11.9% in Lombardy) and the proportion of these has grown over the last five years. The preference for younger workers is probably the result of a combination of two factors: a demand for unskilled workers and the opportunity to exploit tax incentives for taking on trainees (contratti di formazione e lavoro)orapprentices. Forecasts do in fact show that 37.7% of new workers were employed under these two special types of employment contract.

The unemployment rate in Bergamo is very low (2.9%) even when compared to the already quite low figure for the region (4.8%). Since the first half of the 1990’s the already frictional unemployment has fallen further, although the number of registered unemployed each quarter is growing. These trends can be explained in the light of participation indicators, as the activation of a part of the potential labour supply which passes from a state of «hidden» unemployment to official unemployment when the labour market is on the upturn and is therefore quickly absorbed by the demand for labour. The phenomenon should therefore be interpreted as a sign of a new capacity of the local economy to draw on potential labour as compared to the traditional difficulty of the Bergamo labour market to make «hidden» potential employment emerge.

Economic sectors (industry and services)

The Bergamo economy possesses a high capacity to generate wealth. In 1997 the per capita GDP per head of resident population was over 34 million Lire (16 thousand euro) making it the 35th richest province in Italy, 10% above the national average and 14% above the European average. The rate of growth of the Bergamo economy over the last 10 years is in line with the national average.

The main distinguishing feature of the Bergamo economy is its strong industrial vocation. There are few areas in Italy and Europe where manufacturing is as important as it is in Bergamo: it produces over half the province’s total wealth (50.4% in 1997) while in Lombardy it generates only 37% of total value added and 28.7% in Italy.

173 In 1996, there were 66,000 firms and 70,000 local units of production operating in Bergamo employing a total of 318,000 persons. 19% of local units operate in industry (excluding construction) accounting for 50.2% of total employment. The construction industry accounts for 20.2% of local units and 12.3% of employment; approximately 60% of local units operate in service industries accounting for 37% of total employment

The Bergamo economy is strongly oriented towards sectors characterised by high economies of scale, while high-tech sectors are very weak. Sectors with high economies of scale absorb 46% of the total labour force and this percentage is higher than that found in Lombardy and Italy. Thirty six percent of the labour force is employed in traditional sectors (higher than in Lombardy but lower than in Italy) and 13% in specialist sectors. High-tech sectors are very weak in Italy anyway and are even weaker in Bergamo where they employ only 5% of the labour force compared to 13% in Lombardy and 8% in Italy.

A considerable proportion of provincial output is also produced by very small manufacturing firms and craftsmen which account for a high percentage (20%) of total added value, higher than that found in other provinces in Lombardy (13%) and in Italy (12%).

Those sectors in which the province specialises traditionally have so far managed to maintain high levels of competitiveness due above all to intense customer-supplier relationships and a widespread incremental capacity to innovate. Nevertheless some of these sectors (textiles, machinery) are definitely under pressure from growing competition by countries in which labour costs are low and it is to be expected that these industries will delocalise with substantial implications for employment.

The lack of high-tech manufacturing in the province is worrying; not only has the province failed to develop these sectors itself but it has to some extent failed to attract foreign investment that might have stimulated the development of a home grown sector.

Services industries provide a smaller proportion of employment in Bergamo than in Lombardy and Italy (37.4%, 48.5% and 53.6% respectively). This is not surprising given the greater importance of industry and construction and a conclusion that services are under developed would be hastily drawn. If one looks at the number of persons employed in service industries compared to the resident population, a more accurate picture is obtained of the degree to which the province has changed from manufacturing to services: the number of persons working in services per 100 inhabitants is in line with that for the country as a whole (12.8 in Bergamo and 12.9 in Italy) and lower than that in Lombardy (16.4). Nevertheless the importance of service industries in Lombardy is due exclusively to the Milan economy. Milan is very definitely a special case since it constitutes a centre of specialist skills and capabilities in advanced industrial services that has no equal in Italy.

That the ratio of industry to services in Bergamo seems out of proportion in favour of industry is due not so much to any presumed underdevelopment of services as to the strong industrialisation of the province.

While one may speak of strong development of service industries in Bergamo (the service sector grew most between 1981 and 1996 for a total of +34%), it is not possible to speak of deindustrialisation: employment data does in fact show that industry has held its ground in the 80s and 90s. Growth rates for employment in the services sector appear higher that those for Lombardy and Italy, while numbers of persons employed in industry have fallen only slightly compared to substantial drops in numbers for Lombardy and Italy.

174 A look at the geographical distribution of economic activity shows that manufacturing is strongly concentrated in the foothill-band of the province while construction is more developed in the valleys and service industries in the City of Bergamo.

The Bergamo production system is highly competitive on foreign markets. The volume of Bergamo exports accounts for 11.75% of regional exports; the Bergamo quota of regional exports increased constantly between 1989 and 1996 and this trend has only been interrupted in the last two years. At a national level, Bergamo is at fifth place among provinces for international trade accounting for 3.4% of total exports. As regards the markets on which Bergamo exports, these are mainly western European markets which absorb a higher proportion of total Bergamo exports than total Italian exports (66% of total Bergamo exports in 1998).

175 2. Territorial impacts of EU policies

2.1. Territorial impacts of the Common Agricultural Policy

2.1.1. Main characteristics of agricultural areas in the Province of Bergamo

The high degree of industrialisation in the province of Bergamo means that agriculture plays a more modest role economically than in Italy as a whole accounting for only 1.4% of total added value and around 2% of employment. Nevertheless, it would be reductive to view Bergamo agriculture in these terms alone, especially in the light of the geography of the Province.

The geography of the province is characterised firstly by considerable differences in altitude, with a strong predominance of mountain areas. In terms of area, 24.7% of the province is plain, 11.8% hill and as much as 63.7% mountain. Geography is the main determining factor for agriculture in Bergamo and it should not only be considered in terms of its contribution to the creation of wealth in the province but also in terms of the geographical, environmental and social effects.

Perhaps the most appropriate indicator for measuring the importance of agriculture in Bergamo is the «rate of rural activity» indicator. It measures the proportion of the rural population of working age that has a direct connection with farming as a percentage of the total resident population of working age (this excludes persons under the age of 15 years). The regional average for this indicator using the last census figures (ISTAT, 1991), is only one percent different from those actively employed in agriculture, although it varies greatly according to the altitude of the area. In fact this indicator brings out «hidden» agriculture, found above all in the Alpine mountain districts. The «rate of rural activity» in the province of Bergamo lies at around 5% in the plain and on the hills, but hits levels as high as 15% in the mountains where there are a number of local authorities with «rural activity rates» considerably higher than that.

The geography of the province has resulted in very different types of agricultural development. Agriculture in the plain is modern and competitive, based heavily on intensive cattle raising (dairy and meat), pigs and cultivation of cereals. In the hill band, where the demand for land is greater, arboreal use (vine, fruit orchards and olives) is particularly strong as are industrial products (flowers and garden vegetables) and there is also progressive development of typical local products. Finally, in the mountain areas we find dairy farming (cattle, sheep and goats) with limited but high quality (prized local cheeses) production. In these areas, agriculture is characterised above all by the considerable social and environmental benefits provided by an agricultural system consisting of myriads of small and very small farms.

2.1.2. Characteristics and recent trends of agricultural production

The area of the province is 272,286 hectares, 213,954 of which are used for agriculture and forestry. Woodlands account for 78,500 hectares and specific agricultural use (SAU) accounts for 106,872. hectares. The vast majority of SAU land (64%) is for fodder use and the trend is on the increase for dry meadowlands and pastures, but strongly negative for well-irrigated meadowlands which fell from 3,300 to 1,150 hectares between 1993 and 1999. The remaining part of SAU land is for 40% planted (cereals, industrial cultivation and rotating meadlowlands) and 1.6% arboreal (vines, olives and fruit).

176 Table 5.2 Land use and main crops

Inc. % T.a.v. % 1993 1999 1999 1993-99

Maize 10 000 13 350 12.49 5.58 Barley 8 000 3 100 2.90 -10.21 Wheat 2 300 1 830 1.71 -3.41 Soya 1 750 2 430 2.27 6.48 Horticultural 280 475 0.44 11.61 Flower coltivation 48 112 0.10 22.22

Rotating headows 4 900 2 900 2.71 -6.80 Grasslands 30 464 13 900 13.01 -9.06

Vined 1 669 1 569 1.47 -1.00 Olived 87 88 0.08 0.19 Fruit 58 98 0.09 11.49

Headows: 26 800 32 150 30.08 3.33 dry 23 500 31 000 5.32 irrigated 3 300 1 150 -10.86

Pasture land 22 300 26 500 24.80 3.14 Other 8 397 8 370 7.83 -0.05 Agriculture surface used 117 053 106 872 100.00 -1.45 Foresty 73 300 78 500 73.45 1.18 Source: Regione Lombardia

In terms of area, the main crop is maize, which accounts for 13% of SAU land and shows average annual growth of 5.6% in the period. It should be kept in mind that maize crops occupy a greater area in the form of rapid growing forage for farm fodder (silo maize). SAU land for winter and autumn cereals and barley in particular fell sharply by more than half from 8,000 hectares in 1993 to just 3,100 hectares in 1999. The proportion of industrial cultivation is limited but growing strongly due to the strong increase in soya which increased from 1,750 hectares in 1993 to 2,430 in 1990. Finally the importance of rotating forage (rotating meadows and grasslands) fell considerably with a decidedly negative trend especially for the grassland component ( -9.2%). If they are not due to statistical error, these changesinlandusewouldseemtobepartlyduetochangesincommonagriculturalpolicy introduced by the 1992 reform. As is known, the Mac Sharry reform introduced specific subsidies per hectare which had a direct effect on farmers decision-making, encouraging maize and soya crops.

Finally horticultural produce and flower cultivation above all, though occupying only marginal areas of land, show the most positive trends for production in the period considered (11.6% and 22.2%) offering lucrative alternative income above all in the hill areas around the city of Bergamo.

The gross saleable production (GSP) in agriculture in Bergamo for 1999 was estimated at 670 billion lire at current prices (Table 5.4). Recent trends, again at current prices, show an annual increase of 2.8% in the 1993-99 period. Nevertheless, after reaching a peak of 677

177 billion lire in 1996, there was a fall-off caused mainly by a drop in wholesale prices rather than an actual decrease in quantities produced.

Table 5.4 Gross saleble production

Inc. % T.a.v. % 1993 1996 1999 1999 1993-99 Vegetable GSP 106 216 139 962 175 350 26.1 10.8

Ceareals 21 852 18 465 30 050 17.1 6.3 Horticultural and flower production 76 548 109 344 132 000 75.3 12.1 Arboreal produce 7 816 12 153 13 300 7.6 11.7

Livestock GSP 466 955 537 509 495 550 73.9 1.0

Dairy 200 765 219 140 224 219 45.2 1.9 Meat 212 947 239 498 207 135 41.8 -0.5 Egg 50 873 76 273 61 226 12.4 3.4 Other 2 370 2 598 2 970 0.6 4.2

Total GSP 573 171 677 471 670 900 100 2.8 Source: 1993 and 1996 years D.G. Agricoltura, Regione Lombardia; 1999 Stima della C.C.I.A.A. di Bergamo

Vegetable produce accounted for approximately 26% of provincial GDP in 1999. Most of this was accounted for by horticultural and flower production (approximately 70%), which is expanding rapidly above all on the outskirts of urban areas. The recent trend in flower production is particularly interesting. Bergamo is now one of the leading flower producers in Lombardy in terms of sales in this segment. These are followed in importance by cereals, especially maize, accounting for 17% of GSP vegetable produce. The GSP from arboreal produce (7.6%) is less important consisting mainly of vineyard produce.

Livestock products accounts for approximately two thirds of GDP in agriculture, divided equally between dairy and meat (cattle, pigs and poultry) which, as already mentioned, are the main lines of agricultural production in Bergamo. As is known, the meat industry above all has undergone a difficult period of crisis recently causing a drop in the importance of the livestock component of provincial GDP. In 1993 for example, livestock produce accounted for 81% of provincial GDP, which had fallen to around 74% by 1999. The crisis in the meat industry was caused above all by the fall in wholesale prices to which both the B.S.E. affair and the crisis in the pork markets certainly contributed. More recently, however, there does seem to be some glimpse of an upturn. Despite all this, no decrease in the quantity of livestock has occurred and in fact it seems to be increasing constantly.

The dairy component of GDP on the other hand appears much more stable, despite the fall in prices that began in 1996. Actual physical production of milk is on the upturn with the result that the province produced 8.4% of milk in Lombardy in 1998 . It should also be considered that because of the recent delicate negotiations over the problem of milk quotas, the provincial and regional data may substantially underestimate actual production. Approximately 82% of milk produced in the province is used for dairy processing while the rest is consumed directly.

for almost all mountain local authorities, average incomes from agriculture are less than 10 million lire per annum, and therefore insufficient to maintain a family working a farm themselves. In these areas agriculture is therefore mainly a supplementary activity, at least

178 as far as income is concerned. The picture changes considerably in the hill and plain areas, where average incomes reach much higher levels of between 20 and 40 million lire per annum and are often higher.

Gross agricultural income per production unit in the local authorities of Bergamo

Income classes (milions)

<10 10 - 20 20 - 40 >40

Note: The index is a proxy of the agricultural income for employee. To calculate the index 275 working days were computed according to EU standard. Source: ISTAT and INEA data.

2.1.3. Implementation and territorial impacts of the CAP

Public policies concerning the agricultural and food sectors in the province of Bergamo operate at different levels and use various instruments. The main agricultural policies, at least in terms of direct funding to the sector, derive from the Common Agricultural Policy followed by a series of regional instruments,198 which are themselves bound by national and regional legislation which, although providing no specific funding, is of vital importance in the reorganisation and modernisation of the fabric of the provincial economy.199

198 For example Regional Laws No. 31/91 on enterprise improvement plans, No. 29/91 on co- operation and transformation bodies, No. 3/92 on agri-tourism, No.37/83 on livestock wastes, etc. these and other regional policy instruments have been recently rationalised and unified in a single law (L.R. No. 7/2000). 199 These measures include, for example, «production services», for hygiene, health control and environmental cleanup and very many measures aimed for example at recording genealogies in livestock breeding, at improving the genetic heritage and the quality of milk. These measures are implemented by the A.P.A. (Provincial Association of Livestock Farmers), by the Chamber of Commerce and other local bodies. For a detailed discussion of these measures see Maggioli (1998).

179 Agricultural measures of the first type are mainly transfers and income compensation provided for by CAP. They are funded mostly from EU budgets and to a lesser extent by central and regional government finance, at least as far as production units are concerned, based on a philosophy of joint Union-State-Region funding.

As far as CAP subsidies for crops (cereals, oil producing crops) are concerned 1998 estimates put transfers at 32 billion lire, to which around 7 billion lire relating to agri- environmental measures under regulation No. 2078/92 must be added. Given the simplicity of the application procedures for the latter, it has encountered growing success in the province especially with regard to measure B on the conversion of crop land to permanent meadowlands or pastures and their upkeep.

The second type of measure involving structural policies includes numerous provisions, the most important of which are subsidies for farm investments, income supplements for disadvantaged and mountain districts, subsidies to young farmers (EC Regulation 950/97), and then subsidies for the processing and sale of produce (EC Regulation 951/97), not to mention measures for particularly disadvantaged areas such as the 5b areas (EC Regulation 2091/91)200. Actual funding provided by these measures has been very low when compared to that provided by direct CAP transfers. This is at least partly due, among other things, to the complexity of the regulations and bureaucratic procedures involved in the actual implementation of the measures which often require excessive administrative work by local bodies and the farmers themselves.

The Approval of Agenda 2000 has resulted in most of these measures and the agri- environmental and forestry measures of EC regulations No. 2078/92 and 2080/92 being inserted in the new Rural Development Regulation (EC Regulation No. 1257/99) which requires regions to implement a Rural Development Plan (RDP), the new instrument for Agenda 2000 planning and implementation. It is important to point out that the 2000-2006 budget for the new RDP (EU+State+Region) for Lombardy (currently receiving final approval in Brussels) is set at 1,480 billion lire which is on average lower than funds used in the past. If it is considered that a substantial amount of this budget will have to be used to finance funding commitments already made, it follows that incentives for rural development will be considerably less than in the past. In this situation, the role of planning at provincial level will tend to be of vital strategic importance for the sector if RDP funds are to be employed rationally.

With the implementation of regional Law No. 11 of 4th July 1998, «Reordering of regional responsibilities and assignment of functions in agriculture», the provincial administration of Bergamo took on a strategic role in agriculture in the Province. This concerned (a) administrative functions relating to Union-State-Regional regulations and funding which was almost totally delegated or transferred to it and (b) planning in the province for which starting this year it is called on to draw up and implement a Provincial Agricultural Plan.

2.2. Infrastructure, accessibility and transport policy

200 With the approval of Agenda 2000, objectives 5b and 2 have been unified in the new objective 2 on industrial and rural areas in decline. The areas in Lombardy which fall within the scope of the new objective 2 were made public with the approval of Resolution No. 30/07/99 of the Lombard government. Nevertheless, the dispute between the Region and the EU Commission is still unresolved. The EU raised questions over the method Italy used to select the areas based on the «Local Labour Systems» (SLL), territorial units that are not recognised in Brussels. The SSLsinthe province of Bergamo that would constitute the «rural districts in decline» of objective 2 are those of Vilminore di Scalve and Zogno, which contain 32 local authorities and 26,431 inhabitants (1997) accounting for 2,7% of the resident provincial population.

180 The problem of passenger and goods transportation is considered as the greatest threat to the competitiveness of the local economy. Approximately half a million people travel to work or school and some 200,000 tonnes of goods are transported every day. The main problems are the congestion of traffic (in particular on the A4 motorway) and the insufficiency and obsolescence of infrastructure (railway Bergamo-Milan for instance).

2.2.1. Motorways and regional roads

The cornerstone of transport for Bergamo, as for the whole of northernmost Italy is the A4 motorway which is, with more than 120,000 vehicles per day in the Bergamo-Milan stretch, the most congested motorway in Europe (100,000 vehicles per day pass through the toll gates of the province alone) and it is in second place for the number of accidents. Twenty five percent of the traffic consists of heavy goods vehicles. Traffic is increasing at 1.5 times the rate of GDP growth. In general all transport across the province's borders is along the A4 motorway, to the west for Genoa, Varese and Como and to the east for Venice, the Brenner Pass, Bologna and central and southern Italy. The A4 motorway is also the main transport axis to the regional capital Milan.

Other transport flows across provincial borders use a road system that is almost always inadequate; for example all the bridges across the river Adda are pre-Second World War. The amount of traffic using these roads is of the same density and composition as that of the traffic using the A4 motorways, and it is showing the same level of growth. The inter-urban road network in the province extends to a total of 1,570 km., equivalent to 4.5 metres per vehicle with a Bergamo number plate.

2.2.2. Railways

Railway transport to the regional capital Milan takes place mainly along two railway lines, the Bergamo-Treviglio-Milan line and the Bergamo-Carnate-Milan line, both with travel times of around one hour. The second line also connects Lecco and Brianza, and Brescia to the east. With the exception of the Bergamo section of the Turin-Trieste line, all the railway lines are single track

Around half of the 47,000 commuters who travel to work outside the province (37,000 towards Milan) use public transport, which is penalised by difficulty of access, lack of parking at railway stations, unpunctuality and slow speeds (often less than 40 km.p.h). Those who commute into the province are considerably less (20,000) and 70% travel by car.

Only 5% of the over 40 million tonnes of goods transported every year travels by rail.

2.2.3. Air transport

The Bergamo-Orio al Serio airport, together with Milan-Linate and Brescia-Montechiari airport, forms part of the Malpensa hub and has undergone intense development, doubling passenger numbers to well over one million per year since the opening of Malpensa 2000 and the running down of Milan-Linate. Liberalisation of air transportation at EU level has enabled the creation of numerous international air connections to and from the airport of Bergamo. Goods traffic is high and increasing (almost 90,000 tonnes, +17%, in 1999), based essentially on courier flights. The importance of the airport depends however on decisions by SEA which runs all Lombard airports except Montechiari and is conditioned by the lack of connections with other airports: Malpensa is about 2 hours from Milan by road and the railway is practically unused since there is at present no direct line to the airport.

2.2.4. Prospects for the modernisation of infrastructure and transportation systems

181 a) Improvement projects

Numerous plans have been drawn up to make up for the transport infrastructure deficit and full or partial funding is already in place for many of them:

- the fourth lane of the A4 motorway (for which construction should start this year), - the Milan-Brescia direttissima motorway link, - the ‘North Western Lombardy Relief Road System, Pedegronda, which should connect Bergamo with Brianza, Malpensa, Varese and Como, - the high capacity Turin-Trieste railway line, - the doubling of the Bergamo-Treviglio railway line and the northern railway line (run by Ferrovia Nord) linking Brescia, Bergamo, Malpensa airport, Varese and Novara.

All these infrastructure projects face opposition from the local authorities through which territory they pass. It is estimated that more than half of the time needed for completing a major road project must often be spent on acquiring permission.

On a smaller scale, the "Tram delle Valli" (a light - rail project for commuters) and the Bergamo-Montello interport, recently halted by a local authority veto, have been planned and partially funded.

Beside the large projects mentioned, the whole network, both road and rail, is in dire need of modernisation and extraordinary maintenance. b) Financial needs

The financing required to modernize the transport infrastructure is estimated at between L. 3,400-3,600 bn. This figure does not account the Pedegronda, the Milan-Brescia direttissima motorway connection and the «High capacity» rail line (which are inter-provincial/regional projects). It is estimated that 1,997 billion lire of this sum is needed for state roads (soon due to be transferred from A.N.A.S.201 to the Region), approximately 300 million lire for provincial roads (including new roads, modernisation of existing roads, urgent repairs and safety measures) and another 300 million is hypothesised for local authority road systems, but where administrative responsibility is at a higher level, such as Bergamo's eastern by- pass.

Railway modernisation again requires a figure close to 300 billion lire, 100 billion for doubling the tracks on the Bergamo-Treviglio line (already budgeted for) and the rest for renovation to the Paderno bridge and for modernizing railway lines and stations infrastructure.

Futhermore, there is also the cost of construction of the "Tram delle Valli" light-rail project (connecting Bergamo with Albino and Villa d’Almè) estimated at L.400 bn, as well as the cost of providing more parking at railway stations and improvements to the goods transport infrastructure.

The sums required have soared because of the failure to invest in past decades and consequently the standard of infrastructures has, on the whole, worsened even though 1,200 billion lire was invested in the 1990s. If the transport system is to be brough up to anywhere

201 A.N.A.S.: "Azienda Nazionale Autonoma delle Strade". The National Roads Board. Run by the Ministry for Public Works, it is a public body responsible for the maintenance and upkeep of major roads and highways.

182 near the present level of demand and if current deficiencies are not to worsen any further, it is estimated that about L. 2,000 bn. will need to be spent over the next five years.

c) Planned investments

Planned investment at the moment is less than 600 billion lire and although it is expected that additional funds will become available, the final total is far from sufficient. It is therefore to be expected that the efficiency of transport infrastructures will further worsen in the near future.

Planned investments include 222 billion lire for the Bergamo Ring Road. The first stretch from Villa d’Almè to Treviolo and from Stezzano to Zanica, has already been decided and confirmed in the general plan, «Modernisation and improvement of the motorway system and major road system of the Region of Lombardy» signed on 3rd April 2000 by the Minister of Public Works Willer Bordon and by the president of the Region of Lombardy, Formigoni. This agreement does not include funding for the Treviolo-Stezzano stretch. It is important, on the other hand, for priority to be given to the «North Western Lombardy Relief System» and the «Milano-Brescia Drettissima motorway link». These projects will be awarded to private contractors by means of project financing which is particularly important in the case of the Milan-Brescia Direttissima motorway link where the contract for the project has been awarded to BREBEMI, a company set up by the Chambers of Commerce of Bergamo, Brescia and Milan in which the Province of Bergamo has a minority stake.

2.3. Environmental issues and policy

• 2.3.1. Wildlife, geological and archaeological amenities

Thanks to the extraordinarily diverse geography of the province, equalled only by the Province of Brescia in Lombardy, and the highest biological diversity in the entire central western River Po valley/Alpine region, the province has many natural amenities subject to scientific study by universities and museums. The botanical and zoological diversity of the Lombard Pre-Alps and the number of endemic species is among the highest in central northern Italy and in the whole of Europe (equalled only by the Maritime Alps). The archaeology and geology of the province is equally significant: its fossil and sediment remains are of international importance. Museum-related initiatives are currently in progress (the Cene palaeontology park is soon to open). The Leffe and Pianico lacustrine series in which abundant remains of stone age lake dwellers have been found are locations of great geological and archaeological interest, attracting international excursions and congresses. The province was once famous for its production of whetstones, now subject to museum- related initiatives.

The «Catalogue of natural and cultural attractions in the province of Bergamo» includes 184 nature attractions with tourist potential. Of these 108 do not appear in any tourist brochures and therefore represent a tourist resource as yet not known. The attractions are of many different types: routes for mountain/country walks/tours, caves, springs, etc. These natural attractions are concentrated in the mountain and foothill districts where the diversity of the environment is greater and the original features of the landscape are better conserved.

2.3.2. Environmental problems

a) Hunting and fishing

For the purposes of fauna management and hunting, the province is divided into 4 Alpine Districts (AD) and two Hunting Districts (HD). Game comprises migratory and non- migratory birds (partridge, pheasant, red-legged partridge), specifically alpine birds (rock

183 partridge, grouse) and hares, foxes and ungulates (roe, deer, chamois, boar). Seasonal hunting policy is based on an annual census of each hunted species. There are 15,000 hunters for the 1999-2000 season. The species of ungulates currently hunted have a fair population density as a result of planned and selective hunting and game management. Only the boar, which has rapidly spread in the area between the Edine and Iseo lakes, gives cause for worry over its impact on forest ecosystems and agriculture.

The province is divided for fishing purposes into: main waters (Lake d’Iseo); prized secondary waters (major rivers and relative tributaries; water courses running into lakes); normal secondary waters (remaining water courses and lakes). There are also 22 recognised areas where fishing is regulated, 14 of which protected or being repopulated. The province has issued 4 professional and 3,500 amateur licences for fishing. There are close seasons for each species of fish and certain methods of fishing are forbidden.

The conflicts between intensive hunting, conservation requirements and the substantial anthropic-related transformation of some natural environments cause frequent social tension. b) Alteration of forest ecosystems

According to the State Forestry Corps, the main cause of disturbance to forest ecosystems is fire (2,033 forest fires in the 1980-1999 period) and to a lesser extent, avalanches and landslides, which together account for less than a quarter of total damage. Avalanches can cause more damage than fires in some years according to climatic conditions. One type of damage widespread in Bergamo woodlands is remodelling by man: woodlands of locust trees, poor in flora and often rich in exotic elements yielding little are the most typical example. Prevention and recovery measures for woodlands subject to alteration by man have only been adopted for some protected areas and in limited areas are subject to forestry regulation. As far as fire prevention is concerned, no surveys have been performed to evaluate the relations between physical geography, the use of woodlands, biological, geological and chemical cycles and the propensity to catch fire. c) Atmospheric pollution

The main atmospheric pollutants are by-products of fuel combustion produced by motor vehicles. The pollutants measured by 27 monitoring stations, distributed only over some urban areas of the province are nitrogen oxides (NOx), airborne dust particles, lead (Pb) carbon monoxide (CO), ozone (O3), and sulphur dioxide (SO2). Concentrations are generally subject to strong seasonal fluctuations and in recent years a fall in annual average levels of some pollutants has been measured (SO2, Pb and dust particles). The S. Giorgio monitoring station in Bergamo (subject to intense traffic) has measured the highest number of days with levels of carbon monoxide above danger limits (11 days in the period 15.12.98 - 25.01.99). Ozone levels have increased in recent years. The Bergamo-Goisis station measured levels above recommended limits on 126 days. Improved rail transport together with measures for more efficient road transport should reduce atmospheric pollution.

d) Pollution of water courses and lakes

Monitoring of water quality in the catchment areas of the Rivers Brembo, Serio, Oglio and Cherio is performed by provincial offices. Biological parameters are measured (based on the presence of diagnostic species) to produce indicators of the state of sewer discharge and chemical parameters for indicators of industrial contamination. Biological indicators are generally worse than chemical indicators. In fact all catchment areas show poor to extremely poor quality for biological indicators while there is no or only slight pollution for chemical

184 indicators. The PTC of the Province of Bergamo (1994) found a lack of sewage systems and sewage treatment plants, which explains the levels of discharge of biological pollutants found by monitoring. The situation varies according to the season and tends to worsen as one goes downstream. The number and distribution of points where water flow and quality is measured is insufficient for monitoring and regulation of inland waters and inadequate for meeting environmental objectives (Legislative Decree 152/99 and 91/676/EEC). e) Pollution and agricultural land use

The ERSAL (Regional Organisation for Agricultural Development in Lombardy) produced a pedological and soil use map for the entire plain region of the province. According to the Land Capability Classification, the class II is the most encountered in the province, mainly in the plain area. In the foothill areas, the soil is very poor (classes IV, VI and VII). Waste products from livestock raising is normally used as fertiliser on agricultural land. This practice can, however, pollute surface and groundwater. Consequently 19.3% of land is judged suitable for manuring and the majority of the plain (56.9%) is judged moderately suitable for manuring.

Soils have also been classified for suitability for receiving urban sewage. Very little of the soil in the province is suitable (4.6%), while most (50.2%) is moderately suitable. Soil which is little suited and unsuitable is limited by gradients and the danger to groundwater.

In the sphere of soil and groundwater pollution on agricultural land, there is still a lack of legislation and information on local areas concerning the use of fertilisers and chemical herbicides, as well as the use of corrective fertiliser from the treatment of organic waste. f) Polluted sites

Numerous post-war industrial areas may today be classified as potentially polluted. Recent legislation on the environment has in fact lowered contamination thresholds considerably below levels once tolerated. The obligation to bring these areas within current limits of acceptability requires a substantial financial commitment and the development of specific expertise currently lacking. Ministerial Decree No. 471/99 requires mapping and estimation of the pollution of these sites, still not well-known in the province g) General contamination

The presence of uranium deposits and recent mineral exploration caused a certain degree of radioactive emissions in a limited area of the province. Research on concentrations of radon performed by the Area Health Board found high emissions of this gas connected with particular geological conditions.

h) Manipulation of water courses and hydrogeological problems

Water courses are subject to numerous civil engineering works (dams, barriers, canals) designed to exploit water supplies; other works (dykes, embankments) are designed to control water courses and protect banks given the high degree of settlement in the Bergamo valleys. Mention should be made here of a particular type of environmental problem connected with water, which is the instability of slopes and the danger of landslides which occur when there is intense precipitation. A list of risk situations identified by the Region of Lombardy as provided for by a recent landslide prevention law has been elaborated. Other legislation in force requires classification of local authority territory according to hydrogeological conditions. i) Uncontrolled suburbanisation and weakness of spatial planning

185 A particular characteristic of the province of Bergamo, shared also with other provinces of the Po valley, is the extremely dispersed settlement structure and advanced suburbanisation level. This concerns mainly the plain areas surrounding Bergamo as well as the lower alpine valleys. This is the result of a very low spatial planning culture and practice. There is so far no spatial development plan at provincial and at regional level. A territorial development plan for the province is now being prepared.

2.3.3. Elements of environmental policy

• a) Protected areas

The Province contains 12 protected areas covering 29.6% of the Province (813 sq km). They were all set up by Regional Laws and do not therefore constitute national parks. They are run by consortiums consisting of local authorities, the province and the mountain communities which jointly draw up plans for co-ordinated regulation of urban and country landscape, and to set budgets for investing in nature protection. Protected areas are divided as follows:

ü Regional Parks, areas with uniform environmental protection, cultural and recreational requirements and governed by the same policies for the development of agriculture, forestry and grazing, and for traditional activities designed to encourage the economic, social and cultural growth of the resident communities. There are 5 such parks in the Province of Bergamo (two completely within the province and 3 shared with neighbouring provinces). Total land area (812 sq. km.) covers 29.5% of the province and 99% of total protected areas.

ü Local parks of inter-local authority interest, protected areas of small size which function to link larger parks. There is only one park of this type in the province (1.52% of protected areas, 0.05% of the province).

ü Nature reserves, areas specifically destinated to nature conservation and the maintenance of ecosystems cover a total area of 3.70 sq. km (0.13% of the province). Some of these lie within Regional Parks. b) Differentiated refuse collection and treatment

The province of Bergamo boasts the highest percentage of differentiated waste collection in Lombardy (and in Italy) at 42% of a total of 364,477 tonnes collected in 1998. Planning in the sector seems to be correct. The province produces 1.04 kg, of waste per person per day, a figure an amount which has increased slightly but constantly in recent years. There are many sealed landfill sites and sites for inert waste and two treatment plants in operation, but only one plant for treatment of special industrial waste. For more than 20 years there has also been a disposal site for harmful-toxic waste. The provincial plan for waste management (1997) makes no provision for waste treatment to be given priority by local governments, despite specific indications in legislation. The situation requires emergency intervention and prevents the application of appropriate criteria for safeguarding the environment. Rigorous decentralised and integrated planning based on the use of different types of refuse treatment plant for waste which cannot be recycled could prevent frequent local disputes.

c) Protection and recovery of the environment

Policing of the environment in the province is performed by Provincial State Police and by Voluntary Ecology Guards (V.E.G), who are selected according to the provisions of regional laws and must pass an examination. Thirty seven VEGs police refuse disposal, hunting and fishing and all other abuse of the environment. Numbers are due to increase shortly. On the whole, regulation of activity that impacts the environment is in fits and starts and does not permit proper conservation of the natural heritage.

186 3. Regional structural policy in the Province of Bergamo

The 5b areas in the province: main programmes and instruments

The local authorities in the province that fell within the scope of objective 5b (Development and structural improvement of rural areas) for the planning period 1994-1998 consist basically of three valleys: Val Brembana, Valle Imagna and Val di Scalve. The high Val Brembana, high Val Imagna and high Val di Scalve are classified as eco-tourist areas on the basis of economic vocation, population and accessibility202, while the lower part of Val Brembana and Low Val Imagna are industrial-services areas. These areas have a total of around 56,000 inhabitants, accounting for 6% of the total population of the province.

The Single Programming Document (S.P.D.) “Objective 5b Lombardy” specified interventions for a total cost of 485 billion lire, but budgets were reprogrammed when a «Solidarity Fund» was set up for reconstruction in the Regions of Umbria and Marche hit by earthquake in September 1997. Consequently this sum was reduced by a little more than 55 billion lire, 11% of the total initial cost. The cuts also naturally involved all the subprogrammes; allocation of budgets for individual projects however was done rationally being decided on the basis of specific requirements, the state of progress of projects and spending.

S.P.D. projects concern the following: 1. Development of agriculture (sub-programme 1) by means of:

ü Supply chain measures: dairy-livestock measures in alpine districts (measures 1.1. and 1.6), meat and wine/grape growing in Apennine districts (measures 1.2., 1.3 and 1.6); ü agricultural income supplement measures (measures 1.2, 1.3 and 1.6); ü rural infrastructures and protection of agricultural/forestry areas (measures 1.7, 1.8 and 1.9).

2. Intervention concerning production activity (sub-programmes 2 and 3):

ü subsidies and infrastructures for craftsmen and SMEs (measures 2.1, 2.2 and 2.5); ü tourism, the environment and the quality of life (measures 2.4, 3.1 and 3.2).

3. Human resources measures (sub-programme 4).

At 31st December 1998, according to monitoring data at final beneficiary level, practically 100% of total S.P.D. funds had been allocated, while the state of progress of the programme (payments/cost) remained at 50% of the total. It is worth noting that these results are, in reality, very different for each individual project.

Up until the end of 1998, a total of 324 projects had been financed in areas in the province of Bergamo and they had received subsidies/grants of almost 90 billion lire (Table 2.1). A total of 174 projects had been funded under the production activity sub- programme for a cost of 55 billion lire.

Eighty four projects were funded in the agriculture sector most of which concerned livestock-dairy supply chain projects (measure 1.1) and complementary agricultural

202 The eco-tourist areas have a decidedly agricultural and tourist character, low population density and poor accessibility, while the industrial-services areas have a higher density of non agricultural economic activity, larger population levels and a high degree of accessibility. In some of these areas tourism is also of some importance (Evaluation report S.P.D. Obj. 5b Lombardy).

187 production (measure 1.5). Occupational training/education intervention under sub- programme 4 was also of importance (612 projects funded for a cost of 13 billion lire).

The individual sub-areas are as follows:

• The High Val Brembana has significant projects in progress under measure 1.1 (dairy/livestock supply chain) including: a substantial number of farm projects, projects for renovating dairies and two modernisation projects. Funding is also being received under measure 1.6 connected with the supply chain objective, for mountain grazing, improvement of milk quality and cheese-making. All projects are handled through the Zogno Service centre.

• The cultivation of small fruit (berry farming) in Valle Imagna (in the low Valley) has turned out to be quite interesting. Diversification under measure 1.5 seems to be concentrated in this sector. Once again a fundamental role is being played by the Zogno Service Centre. The technical assistance project it started in 1997 does important work to improve production. The work of the Cooperativa Piccoli Frutti (Small Fruit Co-operative) located in the area is also significant, acting as a catalyst to the success of the initiatives.

• The response to diversification intervention in the Val di Scalve, however, was negative.

• The response to incentive measures in the low Val Brembana for craftsmen and

Table 2.1 Implementation of cofinanced projects in objective 5b areas: 31/12/98

MeasuresNumber of projects Total cost Milions %

1 Developement of agriculture 84 20 025 22.4 Qualitative improvements of dairy-livestock supply 1.1 20 2 958 3.3 chain 1.2 Qualitative improvements of meat supply chain 0 0 0.0 1.3 Qualitative improvements of wine/grape supply chain 0 0 0.0 1.4 Developement of agritourism 8 1 267 1.4 1.5 Diversification of agricultural production activities 21 2 445 2.7 1.6 Support measures to agriculture 5 5 873 6.6 1.7 Rural infrastructures 11 2 730 3.0 1.8 Improvements of pasture structures 7 1 540 1.7 1.9 Protection of agricultural/forestry areas 12 3 212 3.6

2 Production activitty 174 55 023 61.4 2.1 Subsidies to craftsmen 144 29 682 33.1 2.2 Subsidies to SMEs 15 20 447 22.8 Improvement of real services supply to SMEs and 2.3 11 2 532 2.8 craftsmes 2.4 Tourism 4 2 362 2.6 2.5 Accessibility infrastructure 0 0 0.0

3 Natural and cultural amenities 5 1 417 1.6 3.1 Reclamation of storic-cultural amenities 5 1 417 1.6 3.2 Environment 0 0 0.0

4 Human resources 61 13 080 14.6 4.1 Support to industrial reorganization 29 6 982 7.8 4.2 Entrepreneurhip training 17 3 177 3.5 4.3 Improvement of orientation systems 15 2 922 3.3 188

Total 324 89 545 100.0 Source: Rapporto di Valutazione annuale Docup obiettivo 5b Lombardia (1998), SMEs (measures 2.1 and 2.2) on the other hand was excellent.

• At individual sector level involvement of the timber working and building industry both inValleBrembanaandValleImagnawassignificant.

189 4. Territorial governance and spatial planning

4.1. Institutional framework

The Province of Bergamo consists of 246 local authorities and 8 mountain communities (Valle Imagna, Valle Brembana, Alto Sebino, Basso Sebino and Monte Bronzone, Valle Cavallina, Valle Seriana superiore, Valle Seriana, Di Scalve). The mountain communities are local bodies consisting of mountain or partially mountain local authorities belonging to the same province. Their purpose is to promote the interest of mountain areas and joint management of local authority functions.

From an administrative viewpoint the province is extremely fragmented. There are in fact 244 "comuni" (hereafter referred to as "local authorities") within the province, only one of which has a population higher than 50,000 inhabitants (being Bergamo with 117,619 inhabitants). As the capital city of the province, the “comune” of Bergamo is one of the smallest in Italy (it is in 95th place out of 103 nationally) with a ratio of one resident in the city to 12.4 in the province.

There are 9 administrative bodies above local authority level: the 8 Mountain Communities and one voluntary body - the "Consorzio dei Comuni dell’Isola" (the Isola Local Authorities Consortium), is made up of the comuni on the plain between the rivers Adda and Brembo. There are also many inter-local authority consortiums which run public services.

4.2. Forms of multi level governance

The so-called «negotiated planning» instruments constitute an example of co-operation between public and private bodies in the field of spatial planning policies. A few «Territorial Pacts» have been experimented with in the province of Bergamo (social partnership instruments for joint planning of local development projects in a sub-regional context). To create these «pacts», one or more local administrations at different levels promoted co- operation between public and private sectors to identify development projects both agreed on.

The Territorial Pact in Val Brembana was created in an incremental manner on the basis of an initial agreement which then developed into a more structured and wider framework of involvement helped also by the encouragement of the Region. It started with an initiative taken by the local authority of Brembilla for an integrated project to use and recover its water resources which then resulted in a «Protocol Agreement» with the Regions of Lombardy and was finalised in a «Programme Agreement» (an instrument for operational co-ordination provided for in national legislation in public-public partnerships) between the local authorities of Brembilla, Zogno, Sedrina, San Giovanni Bianco, Camerata Cornello, San Pellegrino Terme, Lenna and Ubiale Clanezzo. The Programme Agreement then resulted in a joint committee which created the Territorial Pact. In addition to the local authorities mentioned, the Province of Bergamo, the Mountain Community of Valle Brembana and the Chamber of Commerce as well as business associations and workers representatives also participated in the Territorial Pact.

The Territorial Pact in the Sebino, Val Camonica, Val Cavallina area, on the other hand was achieved by horizontal agreements between administrations on the same level (the provinces of Bergamo and Brescia) with the creation of a company - the Valle Camonica and Sebino Development Company (SECAS) in which holdings are possessed by the provinces of Bergamo and Brescia, by the mountain communities of Valle Camonica, Sebrino Bresciano,

190 Alto Sebino and Valle Cavallina and by other public and private sector operators - to manage the pact.

Apart from these «negotiated planning» experiences and the stimulus to local development described above, there are other interesting instances of network creation between public administrations at different levels like that of the Orio airport. A syndicate agreement was signed between the local shareholders (mostly local administrations, but also banks and the Unione Industriali with a minority holding) of the company that runs the airport (SACBO) to increase the power of the Bergamo shareholders with respect to the majority shareholder in the company (SEA, Societa Aeroporti Milanese - the Milan Airports Company) and therefore to orient the future development of the airport more towards the needs of the province.

Finally, and again from the viewpoint of multi-level governance, mention must be made of the very recent «General Agreement» between the Ministry of Public Works and the Regions of Lombardy to finance a series of infrastructure projects signed in April of this year. The Province of Bergamo was awarded 230 billion lire, most of which destined to the city of Bergamo outer ring road. The agreement also contains an indication of finance for future works including the Pedemontana and the Brescia to Milan Direttisima.

4.3. Reform process of the institutional and financial settings

4.3.1. Division of responsibilities

The legislative decree No 112 of March 1998 specifies the functions and responsibilities kept by central government and those delegated to regions, provinces and local authorities, dividing them into four main policy areas:

ü economic development and business: handicraft, industry, single window for businesses, energy, mining and geothermal resources, trade fairs and commerce, tourism; ü land, environment and infrastructures: urban planning, regional planning and landscape, public sector residential housing, land registration, protection of the environment, pollution and refuse management, public works, road traffic and transport, civil protection; ü community and personal services: health, social services, schools, occupational training, culture and cultural heritage, sport; ü administrative policing and authorisations. In January 2000, the Region of Lombardy passed Regional Law No. 1 on the reorganisation of local administrations in Lombardy in order to implement the above mentioned central government decree. In addition to detailing the individual duties transferred to provinces, local authorities, mountain communities and autonomous operational bodies (chambers of commerce) in terms of the four policy areas listed above, it introduced important new elements with respect to the decree 112/1998:

- the first new element was the setting up of the «Regional Conference on Autonomous Bodies», a permanent body in which local administrations can participate in regional policy making. Members of the Conference include the mayors of the provincial capitals, presidents of provinces, eight mayors of local authorities with more than 15,000 inhabitants, 12 mayors of local authorities of less than 15,000 inhabitants and four presidents of mountain communities. The conference expresses opinions on important matters such as changes to the regional constitution, regional budgets and finance laws, bills for regional laws on regional planning, etc. It also expresses opinions on regional policies for economic development and planning and on changes and additions to the Regional Law No. 1/2000 itself.

191 - the second new element lies in the introduction of new instruments for implementing negotiated regional planning: the development contract and the economic recovery contract. The first is an agreement between the Region, local administrations, business associations, trade unions and public and private bodies interested in economic development policies and the creation of new employment by means of high tech investment projects and increased infrastructures. The second is an agreement between the Region, local administrations, autonomous operational bodies, workers representatives and other public and private bodies to implement economic recovery projects of large social impact. This instrument is for use in areas hit by economic decline or to implement investment projects to absorb unemployment caused by redundancies.

- the third new element is the setting up, in each province, of a Local Authorities and Mountain Communities Conference to discuss and put forward proposals on all matters transferred to provinces in the field of spatial planning.

- the last important new element is the transfer to local authorities of the power to approve urban plans (master and implementation plans). The plans are sent to the province which checks them for compatibility with the provincial co-ordination plan which constitutes general planning policy and defines strategic planning aims. It is drawn up with the active participation of local administrations.

o 4.3.2. National and regional equalisation system

The Laws No. 59/1997 and No. 127/1997 (the so-called «Bassanini « and Bassanini bis laws») transferred duties and responsibilities to regions and local administrations in order to allow the maximum possible federalism to be achieved with, «the Constitution remaining unchanged». By means of «intensive application» of articles 118 and 128 of the Constitution (still substantially not implemented), the two laws attempt to create maximum decentralisation and autonomy already laid down in the constitution but mostly never implemented. They complete the work started in 1977 with the Presidential Decree of the Republic of the 24th July.

Article 4, section 3 letter i of Law No. 59/1997 establishes «the principle of financial and capital provision to meet the costs of performing the administrative functions transferred». This principle is intended to guarantee that regions and local administrations receive the funds they need to allow them to perform the functions and duties previously guaranteed by central government. This allocation of financial resources must be performed with full respect for the decision-making autonomy of the recipient, an essential feature for any federal model of government that allows decisions concerning which needs to meet to be decided at local level.

a) Fiscal federalism

The Bassanini law 1 laid the foundations for a redefinition of local finances and underlined the need to accompany greater administrative and operational autonomy, and therefore greater costs, with wider fiscal autonomy. This led to a radical overhaul of the system of financing regions and local administrations.

• Regions

Profound changes were introduced to the regional tax system with the introduction of IRAP, a regional tax on production (similar to a regional corporation tax) and the regional addition to income tax (IRPEF) provided for by Legislative Decree No. 446/1997 already in effect since 1998. In addition to these there was the automobile tax, while the reform of regional equalisation mechanisms was left since it is dealt with by Law No. 133/1999.

192 The Delegated Decree to implement article 10 of Law No. 133/1999 defines the following changes and features of the new system of finance for the «ordinary statute» Regions:

ü the abolition of central government revenue transfers previously received by regions, including those destined for specific use such as transfers from the National Health Fund. Transfers destinated for use in spheres where there is a predominant national interest, like the IRCS (Residential Care Institutions), however are not abolished; ü replacement of these transfers with a share in revenues from certain taxes. Determination of the amount of this share is to be calculated on the basis of regional tax base indicators; ü the measure must not involve any additional cost to state finance; ü regions will obtain a share in VAT revenues.

The transfers concerned are replaced with: 1. an increase (from 0.5% to 0.9%) of the regional addition to income tax (IRPEF) revenues; 2. an increase in the regional excise duty on petrol (from 242 lire to 250 lire per litre); 3. a 25.7% share in VAT revenues collected in each region.

Revenues from the above mentioned share in additional income tax are allocated to each region on the base of the address used for tax purposes by each individual taxpayer, while the excise duty on petrol is allocated to each individual region on the basis of consumption.

The increase in additional income tax (IRPEF) and the share in VAT were decided and calculated to ensure that the total revenues received by each region is exactly equal to the amount received by the transfers that were abolished. The decree also states that spending on health by regions as determined by the National Health Plan must be on a per capita basis during the transition period from the old system to the new which must not last longer than three years. This per capita obligation will then be lifted to be replaced by procedures for monitoring and verifying actual levels of health services provision by each individual region.

• Provinces and local authorities

Starting in 1997 measures were taken to transfer central government revenues and financial resources due to them, directly to provinces and local authorities by means of the annual Finance Law. The most important means here was the additional income tax paid to local authorities and provinces. Other recent measures on finance for these local administrations are contained in articles 10 and 12 of the Collegato Fiscale (attachment) to the 1999 Finance Law and concern:

ü setting new percentages for additional local authority and provincial quotas on energy consumption; ü allocating a share of extra revenues from the central government tax on electricity consumption to local authorities which previously went to central government.

The previous system of provincial and local authority taxation in which the most important role is clearly played by the local authority tax on property (ICI) remains unchanged.

193 b) Regional equalisation system • • Regions

Finally the Delegated Decree that implements article 10 of Law No, 133/1999 introduces a system of regional equalisation which must:

ü equalise differences in terms of the revenue raising capacity of each region; ü permit sufficient funding to maintain essential and uniform levels of services (with particular reference to health, as defined in the National Health Plan); ü ensure adequate consideration of past expenditure.

Equalisation, which must implement the principle of solidarity/altruism, must be financed by drawing on shares in VAT revenues and if necessary on those in petrol duties.

It is interesting to look more closely at the essential parts of the rules for distributing shares of VAT allocated to regions for equalisation purposes. As has been said, two main groups of criteria have been adopted:

ü the criterion of equalisating the revenue raising capacity of individual regions; ü the criterion of need.

According to the first criterion, equalising the revenue raising capacity «means equalising the regions local revenue calculated on the basis of a uniform tax rate for all regions»203. This mechanism also allows increased revenues for regions where regions have decided to levy increased rates to be excluded from the calculation for the equalisation scheme.

The objective of equalisation set out in the Delegated Decree is to reduce the difference between standardised revenues per inhabitant of each region and average standardised national revenues to 90% (this is for «ordinary statute» regions only).

According to the second criterion, the financial resources must be allocated considering selected indicators of need based on demographic factors, on differences in the cost of service provision and on particular needs expressed by local communities.

• Local authorities and provinces

An overhaul of the system of central government revenue transfers for equalisation purposes is in the pipeline. It will take account of the greater autonomy afforded to local authorities in their powers to raise taxes, of the revenue raising capacity of local authority property tax (ICI) and of additional income tax (IRPEF). Equalisation must be effected on the basis of per capita quotas calculated on the basis of geographical, demographic and infrastructure factors and of the economic situation of each individual authority. It was also decided that, at least at the beginning, equalisation may be implemented on the basis of past transfers. These measures are to be implemented within nine months of the date on which Law No. 133/1999 came into effect, as indicated in article 10 of that law.

o 4.3.3. Degree of autonomy in the local system

203 Il federalismo fiscale in attuazione delle legge n.133/199: aspetti tecnici, ragioni e problemi aperti» (revised edition), 1.2.2000, paper presented at the Conference «Il Federalismo fiscale dopo la riforma - Perequazione e finanziamento della sanità», organised by ECONPUBBLICA of the Università Bocconi, 3 March 2000.

194 The province of Bergamo seems to be going through a phase in which it is reconfiguring its forms of governance. As with other areas in North Italy with a strong Roman Catholic culture, the disappearance of the Christian Democrat party - a party which positioned itself historically as the main intermediary for expressing local interests in the national political arena - caused the entire framework of political alliances to break up.

On the one hand local interests, deprived of the mediating function of the old «party to consult», seem to be in search of a new political base on which they can rely. The current one sided political situation on the local government scene in which Region, Province and the Municipality of Bergamo are all governed by the right wing coalition, in addition to favouring a climate of co-operation in local government also seems to have triggered a process or reorientation in the choice of partners for political alliances. This process, however, is not completely finished: proof of this is seen by the fact that some business associations (such as the largest of the commerce- retail and wholesale - associations) have clearly sided with the right wing coalition, while others (such as the industrial associations) have preferred to remain neutral. It is, nevertheless, only a situation in which local administrations are all politically on the same side, which is clearly quite different from a situation in which a stable and unified coalition of local interests has been built, capable of generating new ways of territorial governance.

On the other hand, given the disappearance of the political «party to consult», local actors have been forced to take responsibility themselves, to move autonomously and to try to take a common stand on the important local policies.

One example of this is the association Polis. It was founded in February 1997 and its membership consists of the main business associations in Bergamo: industrial, craftsmen, commerce, agriculture and co-operatives. Its objective is to promote local economic policies to relaunch the basis of development through the growth of competition in the Bergamo economy through constructive dialogue with the authorities, the representatives of collective interests and local administrations in particular. In its first phase Polis concerned itself with the interport, the trade fair, the university and infrastructure and other projects related to the development of the Bergamo city centre, but it also took a stand on political matters such as the referendum and local administration elections. Its guiding principle is to try to unify the various associations of which it is composed on important local policy questions and then to support that united position until it is put on the agenda by local governments. Its function is to lobby and, in the future, to build a cohesive policy making community capable of acting as a partner for local administrators and politicians.

4.3.4. Forms of public-private partnership

Some initiatives of co-operation between public and private sector operators on projects of common interest are currently underway in Bergamo. These projects represent an interesting sign of the establishment of a style of building urban policies that is increasingly oriented towards developing forms of partnership between public and private sectors. It should in fact be noted that for many of these projects mixed ownership companies have been specially set up (or are being set up) with the task of implementing projects or running services.

One project of great importance is that of the new university premises. Debate on the question of the university has so far been focused on location and on the size of the project (additional new space for the university or a genuine full blown campus). Recently a proposal was made to set up a new body to take responsibility for designing and building the new university premises, a mixed public-private sector association, the form of which (consortium, stock company) has yet to be decided in which the participants, the Province,

195 the Chamber of Commerce, the Unione Industriali, local banks, the university, and so on each have an equal holding.

The Dalmine POINT project - Pole for Technological Innovation of the Province of Bergamo - was started in 1996 after a preliminary study organised by the Chamber of Commerce by means of a Programme Agreement (an instrument for operational co- ordination provided for in national legislation in public-public partnerships) signed by the Province, the local authority of Dalmine, the Chamber of Commerce and the university.

Two companies with different functions operate to serve this POINT project: Tecnodal and Servitec. The former - a company jointly owned by the Province, the local authority of Dalmine and the Chamber of Commerce - is essentially the property company for the project. The latter is a business services company which should become a sort of area agency for marketing in the province, i.e. a company with the task of promoting local development. It is a significant transformation, which points to the possibility of consolidating existing networks of local actors around important local development objectives by identifying an operational arm - like Servitec - capable of pursuing them.

The objective of the new trade fair project is to provide Bergamo with a larger exhibition space capable of organising more exhibitions. Total planned investment are likely to amount to 35 billion lire, 9 provided by the Region, 9 by the Chamber of Commerce and 6.5 by the municipality of Bergamo. Here too, as in the POINT project, two companies operate. The first is entirely public sector owned (Chamber of Commerce, Province, Municipality of Bergamo and local authority of Seriate) and has the task of building the trade fair. The second - called Promoberg - is to run the trade fair and is jointly owned by the Chamber of Commerce and also by business associations (the Commerce Association in particular).

Another interesting case of public and private sector partnership is the so-called «Brescia- Bergamo-Milan Diretissima», a new motorway connecting the capital of the region with the very important urban centre of Brescia and passing through the province of Bergamo. A company named Brebemi was set up in which the Bergamo part of the ownership consists of the Province, the Chamber of Commerce and the Unione Industriali.

Brebemi presented design specifications to the Ministry of Public Works requiring an investment of 1,650 billion lire, 80% of which to be found through project financing; for the remaining 20% the bank CARIPLO (a major Lombard Bank) has declared its willingness to invest. The interesting aspect of this case is that is that it shows a propensity for local private sector actors to take on problems of a public interest nature, experimenting with instruments like project financing still practised very little in Italy.

One last case that should be mentioned is that of the interport. The decision-making process behind this project has come to a halt due to the opposition of the local authority of Albano Sant’Alessandro in which territory the infrastructure was to be built. The citizens of the town voted against the project in a referendum and an attempt is now being made to move a substantial part of the interport within the borders of the local authority of Montello.

This project also contains interesting forms of private and public sector partnership conceived of to create and run the interport, with the proposal of separating the real estate part from actual management to achieve a better definition of the current structure of the company SIBEM.

5. Conclusions

196 Agricultural activities and conditions of production in the province of Bergamo are very diversified. Various types of trends and territorial evolutions can easily be identified. The determining factors underlying these trends are mainly the internationalisation process, the evolution of the CAP as well as specific production crises related to health problems (meat production in particular). In this respect, the following trends and territorial impacts can be identified:

- the strong development of some EU supported productions like maize (production increase of 20% in the past 10 years), soya beans and colza (production increase of 50%), while the production of other cereals decreased by 50% in the same period and wet meadows surfaces in the plain decreased by 60% between 1993 and 1999. The strong development of maize (grain and fodder) has to be seen in relation with cattle breeding (substitution of maize to imported fodder). What is particularly striking in the implementation of the CAP reform, is the fact that direct payments to farmers (concerning mainly the cereal producers of the plain) made possible by the 1992 reform, were not yet implemented in 2000 (8 years delay), because of regional bureaucracy.

- the post-1992 period is also characterised by the development of new types of cultures which are not EU supported. The most important is the cultivation of flowers which are sold on international markets at world level. Another type of new production is ostrich breeding (for meat, feather and leather production).

These trends are typical for the most fertile parts of the province (the plain in particular). In the hilly and mountainous parts of the province, the general trend is towards the development of quality products, some of which have the D.O.C. label, like cheese (Formai de Mut, Taleggio), wine (Valalepio), olive oil etc. A large part of the mountain area, because of low productivity and farm structure, is subject to the decline of agricultural functions and to the abandonment of farms. In some parts, the development of agri-tourism generates complementary income which enables the maintaining of agricultural functions.

These trends are in line with those observed at European level: the process of internationalisation of agriculture and the CAP reform lead to a spatial concentration of highly productive agricultural functions in the most fertile areas at the expense of those where soil quality and productivity are lower. In this last category, the survival of agricultural functions is very much linked to the level of public support. If future CAP reforms simply reduce the level of public support, it is likely that agricultural functions of the mountain areas will be given up or partly transferred to the plain. Such a process will inevitably favour intensive agriculture and reduce the quality of products.

In the province of Bergamo, the transport policy of the EU has a low level of visibility, in particular because the province does not benefit from EU funding for the development of infrastructure. Although the province is crossed by a major element of the TEN, the East- West transport axis Trieste-Venice-Milan-Turin (both motorway and railway), this axis is considerably congested and investments aiming at increasing transport capacity progress very slowly. The reason for this is not only a financial one. Environmental constraints and acceptability of new major infrastructure projects by the population and by the local authorities play also an important part. Beside major networks, obsolescence and deficiencies characterise also the regional networks of roads and railways.

Because of the recent development of the airport of Malpensa, west of Milan, the national transport ministry and the regional administration of Lombardy tend to favour the modernisation of road and railway networks between Milan and the new airport. Bergamo being located east of Milan, the province is less favoured by the national and regional transport policy.

197 There is however an element of the EU transport policy which has considerably favoured the province of Bergamo; the liberalisation of air transport resulted in substantial increase of traffic at the airport of Bergamo and in particular to the development of numerous international connections which did not exist before liberalisation.

The implementation of EU legislation on environmental protection is generally delayed in Italy. The Nitrogen Directive, for instance, was introduced into Italian legislation as late as 1999, which explains that sensitive areas were not yet identified and designated in the year 2000. In some fields of environmental protection, the situation in the province of Bergamo is rather satisfactory: this is the case in particular for waste collection and treatment. In other fields, for instance in water protection, much remains to be done. The implementation of the Natura 2000 Programme is progressing slowly. Precise strategies for the management of designated areas are not yet adopted. The lack of comprehensive spatial planning in the province has caused so far serious damages. This explains largely why the development of new transport infrastructure and industrial sites is so difficult. The absence of comprehensive spatial planning explains also largely why sectoral policies are so weakly co-ordinated.

198 CASE STUDY CHAMPAGNE-ARDENNE (FRANCE) 204

1. Geographical and territorial characteristics

The region of Champagne-Ardenne forms part of the large Paris basin. It is bordered in the West by the regions of Ile-de-France and of Picardy, in the south by the region of Burgundy, in the east by the Lorraine region and in the north, it is bordering Wallonia.

With a surface of 25 600 km², it has a length of 350 km from north to south, while its maximum breadth hardly exceeds a hundred kilometres. Four departments ( Haute-Marne, Aube, Ardennes, Marne), fifteen districts and 1945 municipalities constitute its administrative structure.

The region of Champagne-Ardenne constitutes a demographic “hollow area” within a large group of urbanised territories. Highly developed regions and economic decision centers such as Ile-de-France and Brussels are located within a radius of 100 km around the region. Within a ring distant between 300 and 450 km from the regional capital Chalons-en- Champagne, very large metropoles like Greater London, the Randstad Holland, the Ruhr, Lyon, Frankfurt and Basle are to be found.

Champagne-Ardenne is a slightly urbanised region. It comprises only 24 agglomerations with more than 5000 inhabitants among which only nine reach or exceed the threshold of 20 000 inhabitants. There are in Champagne-Ardenne only two agglomerations (Troyes and Reims) the total population of which exceeds 100 000 inhabitants.

Urbanisation is unequally distributed on the territory of the region. It is more developed in the Ardennes (Meuse valley) and especially in the Marne. The Haute-Marne is, on the other hand, very rural and its population is today lower than that of the Reims agglomeration.

The heterogeneous character of the urban settlement structure of the region results from the fact:

- that a large number of regional cities (Reims, Troyes, Charleville) have more intensive relationships with the other regions than with the interior of the region;

- that the major regional cities have relatively few links between them;

204 This study is based on the analysis of following documents as well as on the results of interviews carried out during two missions in Châlons (July and November 2000). The quantitative part (Chapter 4) was carried out by NEI (Rotterdam):

- "The Champagne-Ardenne region : audit, diagnosis and strategic tracks ". Service of the territorial Development of the OECD. October 1999

- Atlas of Champagne-Ardenne Region. Prefecture and Regional Council of Champagne-Ardenne.

- Plan Regional d’Aménagement et de Développement du Territoire 2000. Adopted on 16 October 2000. Regional Council of Champagne-Ardenne

- SPD Objective 2 Champagne-Ardenne 2000-2006

- Objective 2 Programme 1997-99 Champagne-Ardenne. Report of activities 1999

- Objective 5b programme and LEADER II Champagne-Ardenne. Report of activities 1999.

199 - that this weakness is worsened by the absence of an semi-urban fabric between the cities;

- that the economic capital (Reims) is not the administrative capital (Châlons) and that it is peripheral in relation to the territory of the region. There is no large city located in the centre of the region.

The examination of the labour market areas consolidates the impression of a weakly integrated multipolar region. While Troyes in the Aube département and Charleville in the Ardennes represent a real departmental city, in the Haute-Marne, three cities share among themselves this function and in the Marne, even if Reims dominates, two or even three other cities polarise employment.

As regards urban attraction areas, the following can be observed:

- the strong influence of Troyes on the department of Aube; - the influence of Reims beyond the Marne into the department of the Ardennes, but also towards the Aisne; - the extreme south-west of the Marne influenced by Romilly-sur-Seine and by Provins in Seine-et-Marne; - the high attractiveness of Dijon on the south of the Haute-Marne.

2. Socio-economic characteristics

The region of Champagne-Ardenne counts 1.347 million inhabitants. The average population density is lower than 60 inhabitants per square kilometre. In 44 of the 146 cantons of the region, the population density is lower than 20 inhabitants per square kilometre. Between 1990 and 1999, the region lost more than 5000 inhabitants and available demographic projections show that this tendency should continue during the decades to come. The “départments” of Marne and Aube experienced a slight demographic increase mainly « pulled» by the Reims and Troyes agglomerations, while other cities like Châlons and Épernay lost inhabitants. The “départments” of Ardennes and Haute-Marne had their population globally decreasing, including in the case of cities.

The regional population decrease is not caused by the natural balance which remains positive in the four “départments”, but by the deficit of the migratory balance. Not the rural areas are losing inhabitants, but especially the cities, which reflects economic weakness in the industrial and tertiary sectors.

The industrial sector (26% of total employment) is more strongly represented than in the national average (21%). The industrial tradition of Champagne-Ardenne is based on forge, foundry, packing - conditioning, agri-foodstuff and textile industries. The industries, which are rather well distributed throughout the regional territory, were not free from crises and from significant restructuring. These concerned the whole industrial base of the region, the main weaknesses of which are as follows:

- weak entrepreneurial dynamics and rates of creation of companies lower than the average. Champagne-Ardenne has a rate of creation of companies among the weakest of all French regions, whatever the indicator considered. The weakness in the creation of companies in Champagne-Ardenne does not result only from the strong rural character, a situation similar to most rural areas in the northern half of France, but also from poor performance of the regional metropolis in this field.

- a domination of the industrial base by (regional, national or foreign) groups pertaining not to high-tech sectors, but to traditional sectors. The major enterprises tend to close plants and to compress manpower in the subsisting units, without creating new locational dynamics.

200 The region has not benefited from the territorial redeployment of investment for twenty years. On the one hand, the region underwent fully the reduction of employment in the major industrial plants and on the other hand the development of the new towns of the Paris area deprived the other cities of the large Paris basin from the benefits of the deconcentration of activities from the Paris area. The new town of Marne-la-Vallée functioned in this respect like a screen, in particular for the area of Reims.

- a limited attraction capacity of industrial plants from the Paris area and from other regions. Champagne-Ardenne attracts far fewer industrial plants from Ile-de-France than other regions of the Paris basin, although it is an industrial region and has well developed infrastructures. Transfers benefit especially the labour market area of south-west Champagne, but less than in the case of south-Picardy area. Champagne-Ardenne looses with the other regions what it gains from the Ile-de-France.

- a limited capacity of innovation resulting:

- from a modest research potential. Champagne-Ardenne appears in last position among French regions, with only 9 full time equivalent research workers for 10 000 inhabitants against 66 for French province. The same is true for national research expenditure. The region has been largely ignored in the location of large public laboratories. It almost did not benefit from the transfer or from the creation of research units of large organisations;

- from a deficit in higher education (highschools and universities). The region is rather powerful as regards technical education and vocational training, but it is much less so in the field of higher education. This insufficiency is explained by the under-representation of highschools in the region and by the existence of a young university which suffers from the Paris proximity (competition in advanced education programmes).

- from insufficient R&D efforts on the part of companies. There are 2.4 times fewer research workers in industry in Champagne-Ardenne than in Picardy, and 3.3 times less than in the Centre region mainly because the regional industrial structure is dominated by major enterprises the headquarters and R&D centres of which are located outside the region, and by small enterprises which do not have a sufficient size to allocate resources to R&D and which are themselves in the majority confined in subcontracting work.

The service sector appears quantitatively and qualitatively insufficient in the regional economy, in particular in the field of « higher » services. In the field of service providers to companies, the region has less than 2% of the national potential. For the services rendered to individuals, the region also suffers from a certain under-equipment.

Services to companies (advice and assistance, operational services) are very unequally distributed on the territory of the region. They are generally located near the industrial and commercial centres: the labour market area of Reims concentrates nearly one third of these firms, that of Troyes 20% and the Meuse valley 14%. These job intensive activities increased their manpower by 7% on annual average between 1993 and 1996, against 3.2% at national level. The gap is to some extent being bridged.

Endowed with a consequent natural heritage, Champagne-Ardenne has important potential as regards discovery and nature tourism. It also accumulated during the centuries a significant historical heritage. However, tourist frequentation is weak: the number of foreign tourists does not exceed 2 million a year. This is mainly due to the weakness of the accommodation infrastructure. The hotel park and that of the campsites are insufficient. Consequently, the sector of tourism provides for only 16 000 jobs in Champagne-Ardenne and accounts for 2.7% of the regional GDP, against 6 to 7% at national level.

201 In recent years, efforts covered the development of the public tertiary sector. Higher education and research were regarded as priority investments. From 1988 to 1998, higher education gained almost 10 000 students. New training centres were created (Technology University in Troyes, ESIEC in Reims). As regards research, the region benefited from a few research units of the large national organisations (INSERM, INRA). The main research domains and poles (like Europole Agro) are promoted. Others are in emergence, for instance in the field of packaging - conditioning (Packaging Valley on the Reims-Troyes-Langres main axis ). The success of the pole «processing of metals» in Charleville must also be pointed out, the influence area of which stretches largely over the borders of the northern Ardennes.

202 3. Territorial impacts of Community policies

3.1. Agriculture and the Common Agricultural Policy

3.1.1. Characteristics and trends in the agricultural production of Champagne-Ardenne

Contributing to 7.5% of the added value of the region (against 2.5% at national level) and to 7.5% of exports, Champagne-Ardenne’s agriculture is an important component of the regional economic activity. Although the number of holdings continues decreasing (from 35 000 in 1988 to 28 000 in 1995), agriculture still provides 18% of employment in the region. Champagne-Ardenne’s agriculture stretches over 1.6 million ha, i.e. 61% of the regional territory. It comprises 26.200 holdings including 16 900 full-time ones and 39 000 agricultural work units.

The variety of agricultural production corresponds to that of very typified geological and landscape areas: wine-growing around Epernay and Reims occupies the first place in terms of added value; major crops (cereals, oilseeds, beets) dominate in chalky Champagne. Livestock-farming, directed towards milk beef and veal productions, remains very present in the Ardennes and in Haute-Marne.

The gross income by holding is twice higher in the region than in metropolitan France, because of the dominating characteristics of certain productions. Wine and cereals,with 64% in 1996, represent the major part of productions. In addition, industrial beets occupy 6% of the UAA and ensure the supplies of the sugar refineries of the region. Champagne-Ardenne is ranking second national region for beet and cereals production. Other crops, such as potatoes, develop and contribute to the diversification of farming activities.

The wine-growing zone “AOC Champagne” covers the slopes and feet of slopes and in particular the Reims-Épernay area and does not have any major geological unit. It is the economy of the Champagne-wine which structures the regional agricultural economy: the turnover for 1999 reached 24 billion francs for 327 million bottles. The 13968 owners share among themselves the 28 000 ha of vineyards (7632 holdings have less than one hectare)

The area of major crops covers 1/3 of the regional territory. The production systems are based on cereals (wheat, barley), sugar beets and oilseeds as well as alfalfa (de-hydration). This concerns the chalky plain developed since the years 1960/70 after deforestation. The chalk thickness reaches approximately ten metres, the bottom of which being close to the ground water level. This region became then prosperous. The UAA average by holding ranges between 115 and 135 ha. The region has agro-industries but limited primarily to the first transformation. Production chains are very integrated (sugar beet, alfalfa, potato for starch production or human consumption, cereals). Higher reactivity and technicality of farmers would make it possible to attract companies of second transformation. The region has, moreover, the “Europole Agro” 'which promotes the non-food processing of the agricultural products.

The geographical area of the Marne and Aube valleys is made up of alluvial flat and easily flooded areas on large surfaces. Endowed with interesting agronomic potential, they are the subject of three types of development: easily flooded meadows (declining), maisiculture areas and poplar plantations. They replace the old alluvial forests. Poplar plantations were very touched by storm of the end of 1999 (losses corresponding to fifteen years of production). Moreover, the permeability of grounds makes the ground water much more sensitive to surface contaminations .

203 The plateaux of medium altitude (Barrois in Aube and Haute-Marne, Langres plateau), karstic and fissured are at the same time a “water tower” and an area sensitive to nitrated pollution and to bacterial contaminations. The Barrois, in Aube, has intensive cereals and oilseeds agriculture and is facing a significant decline of the livestock-farming. The Champagne vineyard of 6700 ha is located on the slopes. The Barrois and the plateau of Langres in Haute-Marne have intensive and more diversified agriculture in mixed-farming / bovine livestock-farming systems (milk and meat), generating compartmentalised and varied landscapes where the forest is very present. A characteristic of this region is the strong holding structure in companies, with very important average holding surfaces (from 160 to 200 ha for full-time holdings).

The massif of the Ardennes is a high plateau, with a cold climate, the development of which is primarily based on forestry. Agriculture (900 holdings in 1988) remains in a residual way in the form of small holdings (approximately 30 ha on average), often part-time (60%), grassland (80% ) devoted to the dairy cattle farming.

The region of Champagne-Ardenne also comprises several important grassland areas. In the pre-Ardennes peaks and the Thiérache, valleys (Meuse, Chiers) have agriculture with grassland as main characteristic (65% with permanent grassland) with medium-sized holdings (approximately 80 ha) specialising in bovine productions (milk and meat), on relatively extensive systems, but comprising small islands with intensive agriculture. On the whole, this area comprises 3200 holdings including 65% full-time ones. The Argonne is agronomically poor and largely wooded. Agriculture associates systems of crops/cattle farming and dairy/cattle farming. The 400 full-time holdings have a medium-sized or large structure (approximately 130 ha). The Grand Bassigny is a «peripheral» territory with significant meadows areas (75% of surfaces are exploited as permanent grassland) and cattle farming. The holding structure in the form of companies is largely widespread and the average size of holdings is important (approximately 160 ha).

Numerous fragile rural areas are characterised by an extremely low population density (less than five inhabitants per square kilometre in certain cantons) and by an important decline of the agricultural activity, which constitutes the basis of the economic fabric. Three areas are more particularly affected by the agricultural and rural decline: the south of Haute-Marne, the whole pre-Ardennes peak area together with Argonne and the south and west of Aube. In Champagne-Ardenne, forests covers 675 000 ha, including 83% of broadleave trees. They cover more than a quarter of the regional territory, but the share of forest areas in Haute-Marne approaches 40%. The industrial processing of wood occupies 6500 employees and produces almost 5% of the regional added value. Since the storm of December 1999, the wood production chain has been very strongly disorganised.

3.1.2. Territorial impacts of the CAP and of its reforms

Because of the diversity of agricultural productions in Champagne-Ardenne, the territorial impacts of the CAP and of its reforms (1992, 1999) are themselves diversified.

In the area of major crops, concerns on the development of farm income connected with the reform of the CAP (modulation, fall in the price of cereals) induce an increasingly important search of quality and of diversification. Despite the introduction of direct payments to farmers, the reduction of price guarantee for cereals results in a decline of incomes. Alfalfa production also constitutes an individual problem. Champagne-Ardenne produces 85% of national alfalfa production. This production is meant for industrial use (biochemistry, oil cake production for animal feed). The reduction of Community support is likely to call into question the whole production chain.

204 Consequently, numerous farmers plan to enlarge their holding to mitigate the effects of the tariff modulation and are ready to invest on equity capital in intensive stock breeding. The development of cattle and poultry farming in the cereal area can already be observed ( animal proteins generate a higher added value than cereals, the guaranteed prices of which are falling). There are also out projects for intensive porcine livestock-farming. Environmental constraints are however such that this type of livestock-farming should not experience very strong development.

One can also observe strong development of vegetable crops not supported by the CAP. Potatoes surfaces have tripled since 1988. This results mainly from a relocation of productions from Picardy (more favourable conditions of production in Chamagne- Ardenne).

Agricultural production in the chalky area is rather inclined to become intensive. To cope with the Community constraints of land set aside, a number of farmers of this area bought badly fertile land in the Ardennes or in Haute-Marne and set it aside.

In the “départments” of Ardennes and Haute-Marne, by opposition, agricultural abandonment is going on, mainly owing to insufficient recognition by the CAP of extensive production systems and to too weak support schemes for sheep productions. The cheese sector is in addition affected by the listeria crisis.

In the hypothesis of a continuation of the current CAP or, a fortiori, of a future reduction of CAP supports in the context of the next Community enlargement, the risk of a slip of the extensive livestock-farming from the fragile areas towards intensive stock breeding in the cereal area is real. The fragile areas of the north and south of the region would then be subject to further afforestation and uncontrolled brushwood development. To avoid such a drift, a number of regional officials consider that in future, the CAP should become more territorialised.

3.2. Transport policy

3.2.1. Situation of infrastructures and transport systems in Champagne-Ardenne

Located in the middle of significant, East-West and North-South trade flows the region of Champagne-Ardenne is characterised by an important transit of freight and travellers. a) Motorway and road network

With its 160 kilometres of motorways and its 1200 km of trunk roads, Champagne-Ardenne has a road mesh size which ensures a good servicing of its territory. The major agglomerations are practically all interconnected by motorways. Major axes such as Paris- Strasbourg or Dijon-Calais integrate Champagne-Ardenne into a broader entity which includes the Paris basin and the North-East of France.

In the motorway field, some strategic segments still have to be built:

- the connection Reims (A4) - Charleville-Mézières and its extension in the direction of Charleroi and Brussels (future A34) - the Langres-Vesoul-Belfort-Basel connection - the Troyes-Auxerre connection and its extension towards Bourges and Clermont-Ferrand (A75) - the completion of the motorway axis Troyes-Orleans

205 In the field of the trunk roads, the following routes should be improved:

- RN4: complete modernisation with dual carriageway - RN67 between Saint-Dizier and Chaumont (A5) - RN51 between Reims and Épernay

Currently, road transport fulfils a pre-eminent function in conveying travellers and goods. In 1997, more than 99% of internal goods flows, 71% of regional exports and 77% of imports concentrated on the road. Intermodal transport is particularly under-represented in Champagne-Ardenne.

Suburban trips and travels outside urban areas are made in majority on the road, which generates growing traffic difficulties around the city-centres. b) Rail network

The rail network of the region comprises almost 1000 km of railways. It includes three major radial axes from Paris in the direction of Chalons-en-Champagne/Nancy/Strasbourg, Troyes/Chaumont/Basle and Reims/Charleville Mézières/Sedan. Interregional railways connecting Lille to Metz through the north of the Ardennes, Lille to Dijon and Le Havre to Nancy, while passing through Reims concern more particularly the transport of goods.

The main project in the region concerns the construction of the high-speed railway Paris- Strasbourg-Germany. It implies also the connection of the future TGV station Champagne- Ardenne with the traditional railway network, which means strengthening peri-urban servicing around Reims and of the triangle Reims-Épernay - Chalons-en-Champagne and, beyond, of other towns in the Ardennes and Haute-Marne.

The other priorities of development and improvement of the railway network concern:

- the densification of freight flows on the railway axes Channel-Mediterranean coast and Le Havre- Central Europe including the common part made up by the Laon - Reims-Chalons- en-Champagne -Vitry le Francois axis, which should be completely electrified;

- the connection to the Belgian network by improving the servicing of the Ardennes towards Paris and Belgium (Givet-Dinant);

- the modernisation of the East-West and North-South European main axes skirting the Paris area and passing through Champagne-Ardenne.

The railway network is used by national trains which service the routes to the Ile de France and other regions, as well as by regional shuttles which play an important role in the home- work and home-studies connections. As regards the transport of goods, intra-regional flows are very weak, but the rail ensures a considerable share of the traffic towards foreign countries (42% of regional exports and 28% of imports in 1996). c) Inland waterways

Waterways connect the Paris basin to the Rhine and Saone valleys and to the countries of northern Europe. These waterways, enabling the passage of boats up to 250 t, ensure only a very low share of the transport of goods. This share increases however with the distance (11% of international flows in 1996). Only the port of Givet is connected to the network of large gauge waterways of the north of Europe.

206 A number of development and modernisation projects are envisaged in order to re-create minimum operating conditions and to allow the improvement of export capacities for agricultural products, to improve the connection with the network of the Benelux countries and to become a tourist development tool:

- the re-shaping of the Meuse between Givet and the Belgian border, the improvement of the port of Givet, the rebuilding of the dam and lock of Quatre-Cheminées;

- the deepening of the canal’s draught between Compiègne, Reims-Sillery until Vitry le François;

- the completion of the setting at large gauge of the Seine between Bray and Nogent sur Seine.

At a later stage, the construction of a large gauge inland waterway Seine-Est is envisaged. d) Airports and air transport

Handicapped by the proximity of the Paris airports, the airports of Champagne-Ardenne do not have any important traffic. The airport of Reims - Champagne is however of interregional interest and develops its activities both at the level of regular lines and charters. Business aviation uses in addition the airfields of Charleville Mézières, Troyes and Chaumont.

In the year 2000 the Europort of Vatry was put in operation, which is first international airport dedicated exclusively to freight.

In the longer-term prospect (2015-2020), a site located in the West of the Champagne- Ardenne region is at present being examined for the potential construction of a third airport for the Paris area. e) Logistics and combined transport

Owing to the excellent European positioning of the Champagne-Ardenne region, regional development priorities plead for a strengthening of intermodality and for the creation of regional logistical space. These priorities take account of the increasingly acute perception of the harmful effects generated by road flows of goods and of saturation which is developing. They also aim at generating an added value out of transit flows of goods. The objective is the realisation of a network of interregional and international logistics areas comprising:

- a central logistics area regrouping current logistics spaces and activities of Reims, Châlons and Aube, integrated into the logistics space of the freight airport Vatry;

- a logistics area for the Ardennes;

- a southern logistics area ( Haute-Marne).

3.2.2. Territorial impacts of the Community transport policy

The Community transport policy has of very low visibility in Champagne-Ardenne due to the fact that the regional territory is not eligible (with a few exceptions) for Community support to the development of infrastructure networks and transport systems. The region is concerned with the TEN-Transport (for instance the Paris-Strasbourg corridor), but the construction of the TGV-Est will not benefit from Community support and the strategic priorities of the region concern henceforth corridors which are not part of the TEN-T, in

207 particular the North-South main axis Troyes-Reims-Charleville-Charleroi-Bruxelles or the East-West freight corridor Le Havre-Reims-Lorraine-Germany.

In the field of intermodality, the Champagne-Ardenne region selected development options which are in line with the Community doctrine, but doe not benefit from support in this field.

The Community policy of transport liberalisation does not appear to have significant impacts on the territory of the region. The railway sector is not liberalised. The only airport of passengers in the region is that of Reims, the traffic and connections of which did not significantly develop after the liberalisation of air transport.

3.3. Environmental policy

3.3.1. Main environmental issues of the Champagne-Ardenne region a) Natural areas

The region has a remarkable natural heritage, above all composed of significant water resources as well as of an important forestry area and of a high level of biodiversity.

In addition to its faunistic and floristic richness, the natural environment has landscape entities of very high quality and more particularly the valleys of Meuse and Semoy, the peaks of the pre-Ardennes, the massif of Argonne, the plateaux of Barrois and of the southern Haute-Marne. These entities are potentially threatened because of the great economic difficulties of industrial sectors affected for many years by the economic crisis.

In the region, 604 natural areas of ecological, faunistic and floristic interest (ZNIEFF) were inventoried, which represent a total surface of 358 000 ha, i.e. 14% of the regional territory.

Champagne-Ardenne is concerned with the three large catchment areas of the Meuse, Seine and Rhone, which confer it a role of «water tower» attested by the presence of major storage dams guaranteeing the security of the water supply to the Paris area. b) Water

Surface water

Surface water is altered according to numerous parameters and tendencies show an increase in certain pollution which are difficult to control (nitrogen, plant health products). The important flow of rivers certainly reduces the pollutant concentrations, but masks a real problem of pollution. The main black spots are located downstream the agglomerations of more than 10 000 inhabitants. They are mainly related to the rejections of the sewage treatment plants which do not meet European standards. Rejections from industries connected to the urban sewage networks sometimes lead to excessive concentrations in heavy metals in the muds resulting from the purification of effluents. This prevents their use for agricultural spreading. Other pollution sources of industrial origin happen to be pollution from the workshops of metal surface treatment (Ardennes, Marne, Aube basin), pollution from the metal processing activities, pollution through lead originating in the activities of used batteries reprocessing (Ardennes), pollution from the dyeing rejections (Aube).

In the upstream areas of rivers with low flow, pollution of agricultural origin is observed in the livestock-farming areas (Argonne, Barrois, Bassigny, plateau of Langres). This involves diffuse pollution of various nature (in particular nitrates and plant health products). Certain

208 farming practices also result in deteriorating the beds of major rivers, although this impact is less strong than that of the extraction of aggregates. In Aube, the wine-growing activities generate two types of pollution: pollution through plant health products which pollute rivers primarily by streaming and pollution related to the wine production (increase in the biological oxygen demand) which causes a very important and almost immediate excessive mortality of the fish fauna.

Underground water

Underground water in the chalky area, which is very broad, and in the alluvial valleys are the main exploited resources. They are important enough for almost all the needs in drinking water supply and for a good many of industrial needs. They are however threatened by human activities. The underground water of the chalky area is facing at the same time qualitative problems with major trends (pollution through nitrates and plant health products) and quantitative problems in a more localised way, but which are likely to develop with the increase in irrigated areas. Intensification of agriculture and the development of the cereals cultivation during past decades are at the root of progressive pollution by nitrates which is alarming with respect to the satisfaction of collective needs (several collectings had to be given up) as well as to those of industries, in particular agri-foodstuff, which is confronted with very severe standards of use.

Flooding

All major rivers of the region (Meuse, Aisne, Marne, Seine and Aube) overflow regularly. The 1995 flood caused very important damages. Owing to the strong streaming and to erosion connected with the cultivation methods in the vineyards, the wine-growing zones suffer periodically from very located floods, to which mud slides are sometimes added. c) Waste

Muds and effluents from agriculture and agri-foodstuff industries are generally used through spreading on arable lands. This technique sometimes poses problems owing to the presence of toxic products (heavy metals).

Along the Meuse valley and in the region of Saint-Dizier, the problem of worn sands produced in large quantity by the foundries is significant. These sands are generally eliminated in internal rubbish tips or in rubbish tips treating domestic or similar waste. Studies are being carried out to enable the treatment of these sands through recycling or other economic use. d) Industrial derelict land and polluted sites

The derelict land left by industries generally contains more or less important traces of pollution related to previous activities. One counts 56 polluted sites in Champagne-Ardenne. This problem concerns particularly the “départments” of Ardennes and Marne. In Aube, and more specifically in Troyes, industrial derelict lands are located in downtown areas. e) Sand pits

The region counts a large number of alluvial sand pits which strongly deteriorated the major river beds. The area of La Bassée, which stretches on the “départments” of Aube, Marne and Seine-et-Marne, includes numerous alluvial deposits. It is environmentally very sensitive. f) Air

209 Although air is generally of good quality in Champagne-Ardenne, there are a number of localised problems, in particular those resulting from the activities of foundries which, for the most part, are old and not equipped with powerful dust extractors. It is in particular the case in the Ardennes, along the Meuse valley and along the Marne, upstream from Saint- Dizier. The use of solvents in mechanical and printing industries, in the application of paintings is also a subject of increasing concern. The improvement of air quality in urban areas will make necessary the rebalancing of transport modes and the improvement of the servicing of the regional territory through more environmentally friendly transport modes. Regarding the pollution of industrial origin, it requires more investments in air cleaning.

3.3.2. The environmental policy and its territorial impacts

The region of Champagne-Ardenne comprises already two regional natural reserves ( Forêt d’Orient, lake of Der). Two others are envisaged (Ardennes, Haute-Marne).

Concerning the Community programme Natura 2000:

- on the basis of the «habitats» directive, a list of 74 Natura 2000 sites representing a surface of 56 000 ha was drawn up. These sites cover a large number of varied habitats. They will be the subject of an important action to preserve and restore them. Each site will be endowed by the end of 2004 with a management plan.

- on the basis of the ”birds” directive, 11 important areas for the conservation of the birds were listed, covering a total of 397 000 ha. Three areas of special protection (lake of Der, pond of La Horre, lake d’Orient), representing a surface of 8924 ha were listed and will be incorporated into the Natura 2000 network.

In addition, the largest area designated by France under the Ramsar convention is in “wet Champagne”. It covers 235 000 ha and stretches around three large lakes (storage dams of Der, Temple and Orient). This area is the subject of numerous realisations or projects aiming at enhancing its richness.

The introduction of the Natura 2000 programme has a number of effects, in particular of financial nature, on other natural areas. Before Natura 2000, combined Region-State actions, relating to protection and development of natural areas were implemented jointly. These actions concerned, inter alia, remarkable natural areas (primary forests, marshes) not recognised as habitats and therefore non integrable into Natura 2000. The Natura 2000 programme meant concentrating all available financial resources, in particular those of the State. Consequently, actions in favour of natural areas independent from Natura 2000 were practically suspended. The Regional Council intervenes, for its part, in the field of the environmental set aside to encourage the constitution of green bands along rivers, hedgerow plantings and crops for the fauna and flora.

Various actions are developed in the field of water. In the fight against flooding, the region devoted a large part of its territory to the regulation of the water-course of the Seine by storing flood water and restoring water in low water level phase. The «Grands Lacs» which result from this policy constitute henceforth an important tourist potential. The main issue of the region as regards flooding remains the improvement of the Meuse valley. The carrying out of necessary actions will take place within the context of interregional and European co- operation, making it possible to guarantee overall consistency on the scale of the drainage basin. These installations will have as aim not only to fight against flooding, but also to promote the sustainable development of the Meuse valley, returning this river the plenitude of its cultural dimension.

210 In the field of pollution of underground and surface water through agricultural activities, the application of the «nitrates» directive should contribute to improving the situation. However, all agricultural pollution is not connected with nitrates and specific solutions have to be found (for instance for viticultural production).

Problems also remain in the pollution of rivers through industrial activities. The treatment of polluting sources will still require numerous investments. The same is true for the treatment of waste water of domestic origin. The implementation of the corresponding Community directive is far from being completed.

Concerning domestic and industrial waste, the issue is to know whether or not the application of the elimination plans and the development of the corresponding economic activities will make it possible to adhere to the regulatory deadlines and in particular to the 2002 one.

As regards industrial derelict land and polluted sites, investigations are necessary to evaluate the importance of soil pollution and its environmental impact, before assigning them to another use. In Troyes, the rehabilitation of industrial derelict lands, which has already started, is very important for the economic development and the quality of life.

In order to avoid the proliferation of alluvial sand pits, the strategy consists in seeking economic and rational use of alluvial materials and in promoting the development of substitution materials as well as the recycling of materials from building demolition and from public works.

3.4. Regional structural policies

Certain parts of the regional territory were eligible for the old Objectives 2 and 5b (1994-99) and are eligible for the new Objective 2 (2000-2006). The corresponding regional structural policies will be examined here only from the point of view of the three fields concerned with the study, namely agriculture and rural development, transport and the environment.

3.4.1. Rural development

At the end of 1999, it was noted that the overall situation of the Objective 5b area remained a cause for concern as regards the evolution of major structural indicators (population decline, low density, ageing) and of overall job losses (especially the decline of agricultural jobs).

A major part of the ESF programming for Objective 5b was articulated around national measures, not always well adapted to local specific characteristics, with sometimes over- estimated budgets. The difficult elaboration of regional projects did not make it possible to ensure a significant consumption all ESF credits available. The tiny size of the 5b area, together with a very weak offer of training facilities (15 organisations) was badly suited to dynamic training. a) Actions in agriculture

In the field of actions in agriculture (EAGGF), the so-called « individual » actions were in very small number, while the so-called « collective » actions were more substantial and rather successful (support to intangible investments like studies and co-ordination, promotion of regional productions, encouragement of the agricultural profession). The mechanism set up is efficient to support important operations of well-established production chains, or « traditional » projects supported through national or local well identified programmes (agricultural buildings; rural lodgings). It is however questionable whether the

211 methods of implementation adopted make it possible to truly support innovative actions in emerging production chains or with weak production potential, in fragile or backward areas. b) Development of enterprises

In the field of actions related to the development of enterprises (ERDF), interventions for material productive investments were not very numerous (80 companies, i.e. 6% of the potential target). The interventions for intangible productive investments show, through the low number of approved projects in relation to the number of companies likely to benefit from it, that the procedures applied to identify the concrete needs, to encourage and direct the heads of companies of the eligible area towards the 5b programme, do not seem operational, in particular for the very small enterprises. With regard to interventions for collective actions of economic promotion, the main difficulties concern the implementation methods of these interventions and their leadership. An urgent and pressing need was identified for the improvement of the specifications of economic promotion, the formulation of contracts, the clarification of competences, the recognition, or even the approval of the relevant partner organisations having to carry out such operations, according to the various financing bodies in the region.

The interventions for the development of collective infrastructures show that all projects are of great interest for the economy of municipalities and local companies. This resulted in new enterprise locations, and more often, in the development of existing companies and in the creation of new jobs. The absence of projects related to sites important for the development of the region is however questionable, while the areas concerned do have enterprise zones and a fabric of companies the reinforcement of which appears necessary.

For operations of direct support to investments, the mechanism appears globally well adapted, although it is considered as heavy and very «administrative», especially for very small enterprises. This results in a lack of candidates. On the other hand, it did not prove capable to meet the needs for economic promotion and for the organisation of professions (insufficient geographical coverage and weak range of benefiting sectors), as well as the needs for immaterial investments.

Insufficient results can also be observed: few creations of companies or locations of new companies, little amount of very small enterprises supported, no economic promotion and collective dynamisation of the SME sector, a support rate lower than possible. Some perverse effects are also noted: sometimes clientelism and advantages to companies already having previously benefited from government aid. c) Training activities

Concerning the training activities (ESF), a clear distinction has to be made between the training of farmers, which was particularly unsuccessful (25% of the forecasts in total expenditure were carried out and only 18% of ESF programming used) and training of other actors of the economy which shows a relative success (112% of the forecasts were carried out, but only 57% of ESF programming used).

The lack of candidates from the agricultural sector in the training programme of the Objective 5b shows that the agricultural profession was not sufficiently mobilised. The training stages were rather short, not very numerous and sometimes qualified as economically not very motivating. The priorities of the programme are however still considered as fundamentally relevant and still appear to correspond to identified needs. The main reason for the failure of the section «agricultural training» is to be sought in the lack of

212 articulation between the implementation of the 1994-99 Objective 5b programme and usual training operations related to this profession, which benefits from other sources of financing.

Training for SMEs, for the craft industry and for trade led to a strengthening of qualifications, to the obtention of ISO standards, to better organisation of work as well as to better positioning on high level markets. But here too, a number of training activities carried out in the region were not registered on the ESF heading of the 5b programme. Consequently, the overall impact of the programme on the training level of employees of SMES in the 5b area is, all in all, rather weak, even if the operations carried out gave entire satisfaction to their promoters. Training for the actors of tourism also showed good results. d) Development of tourism

The implementation of the tourist section of the 5b programme shows a very good progression level (programming rates corresponding to 114% of the initial objective). The most populated centres (Langres, Bourbonne-les-Bains) and those with the longest experience in inter-municipal co-operation and in the implementation of development policies (south of Haute-Marne) have invested most during the 5b programme. On the other hand, the programming of operations relating to heritage protection is not as successful as expected (engagement rates of 82% for the 5b programme). Moreover, the lack of operations supported under the tourist products heading does not make possible to envisage the rapid development of a genuine capacity likely to generate real economic benefits. The policy of creation of tourist poles is totally relevant to better structure the development of the tourist sector. However, the methods adopted for its implementation were not sufficiently efficient as regards the partnership rules to be set up, in particular in relation to private actors.

e) Improvement of actions concerning the enhancement of agricultural production, the diversification of the holdings and the development of multi-activity:

The objectives of the new Objective 2 programme (2000-2006) stress the development of typically regional products, the diversification of farmers activities, the maintenance of the activity and the development of agricultural employment in order to curb down the trends towards enlarging holdings and agricultural abandonment. These can be counteracted by encouraging the increase in the added value of products through quality or diversification approaches. Synergies between holdings or with other actors of the rural economy are sought in order to implement innovative strategies for the maintenance of activities. These objectives concern in particular:

- the fine monitoring of the needs of the area in agricultural matters; - the awareness-rising in the direction of farmers likely to develop new productions or new services; - the creation of an intervention fund for small projects; - actions for the marketing of innovative products or non-existent in the region, or of production chains with limited production potential. f) LEADER's II contributions

The Champagne-Ardenne region did not benefit from LEADER I. LEADER II projects contributed to:

- support the emergence of innovative projects (intense action in favour of tourism and of other economic initiatives; cultural promotion in rural areas, in particular addressing young people);

213 - develop new ways of using the rural space (development of agricultural or of food processing companies, study for a permanent centre of environmental initiation, marketing project for typical regional products) - develop the local actors' skills - encourage international co-operation.

However, the most important result was the introduction of co-operation between local actors within the 8 Local Action Groups (LAG). Their progression level is variable. The most advanced in the region is the one which will constitute the future «Pays de Langres». Others will have to be reorganised and regrouped in order to reach a sufficient critical mass in the context of the constitution of ”pays”. The LEADER programme had a beneficial effect for the awareness of needs for joint work throughout the areas concerned.

3.4.2. Transport infrastructure

The regional structural policy finances only exceptionally transport infrastructure in Champagne-Ardenne. During the last programming period (1994-99), the following projects were financed.

• Objective 5b area (EAGGF): improvement of the holding structures and of infrastructures: Rural road network: 176 km (150 km programmed) Forestry roadway system: 382 km (36 km programmed)

• Objective 2 area (ERDF):

- Europort Paris-Champagne (Vatry): infrastructure or superstructure operations concerning the equipment or installation of the logistics platform as well as the development of the ZAC (in particular lengthening of the runway) 136 million francs;

- Troyes-Barberey airfield: modernisation in order to strengthen the commercial air traffic concerning the Aube “départment”.

• In the new Objective 2 programme (2000-2006), it is considered necessary to complete the opening-up of the Meuse valley by ensuring the connection with Belgium from the point of view of transnational development. The ERDF will contribute to it while taking part in the financing of the motorway connection between Gué d’Hossus and Charleville- Mézières (RN43 and RN51). The Ardennes will thus be placed in a privileged geographical position with respect to the proximity of Brussels and Wallonia. A participation of the EIB is also envisaged for the financing of this project,.

3.4.3. Operations of environmental protection

Operations of environmental protection are rather numerous in the context of the regional structural policy. During the programming period 2000-2006, the following measures were financed:

• Objective 5b area

- prevention of industrial pollution

- protection of the heritage

- support to the restructuring of the built and natural heritage for economic, tourist and cultural purposes

214 - equipment and upgrading of urban sites and of the central boroughs (Langres sewage treatment plant)

- protection and management of the natural environment:

- safeguarding of water resources and improvement of the quality of water distributed in rural areas; - qualitative and quantitative control of surface water (fight against diffuse pollution of animal origin, setting to the standards of livestock buildings, adjustment of water-courses) - support to communities in order to control pollution and to encourage the reprocessing of waste (treatment of liquid waste, waste processing) - safeguard and management of the fauna and flora (reconstitution, protection and development of the natural environment, awareness-raising and information/promotion actions)

The major part of the achievements concerns the setting to the standards of livestock buildings. However, the rhythm of setting to the standards exceeds sometimes the available capacity of financing.

• Objective 2 area:

- Policy of the city and improvement of the local environment

Traditional urban developments, but connected with an approach of upgrading and of tourist development in the areas concerned. 101 projects were selected

- Improvement of the environment:

- treatment of polluted soil - preventive collective investments (prevention of floods, creation of utility services for the collection and processing of industrial waste, of units for the recycling and economic enhancement of obsolete material and products; - setting to the standards of industrial companies by the production of ecological products and by the use of services and technologies respectful of the environment - collective treatment actions of effluents and industrial refuse - control actions of energy and development of renewable energy - prevention of pollution (Monthermé dam, general study on the Meuse floods)

• New Objective 2 programme (2000-2006)

The improvement of water quality and the protection of nature and landscapes are major issues with the aim of improving the attractiveness of the region and of voluntarily safeguarding the natural heritage. In particular, the implementation of the «habitats» directive and the restoration of deteriorated areas are particularly urgent. We find among new priorities:

- the protection of biodiversity

The areas which will benefit from an ERDF intervention are those which are recognised for their major ecological interest (Natura 2000, ZNIEFF, ZICO, Ramsar) as well as certain non- classified areas, but presenting an real or potential ecological or landscape interest. Natura 2000 sites will have priority. For the eligible areas of chalky Champagne, it will be advisable

215 to avoid the disappearance of the wooded small islands and to encourage greater landscape diversity.

- environmentally friendly transport means: encouraging mobility through the reinforcement of reception facilities, diversification and interconnection of the various transport modes.

Global and concerted environmental approaches, such as t environment charters and the agendas 21, are tools to be encouraged.

216 4. Territorial governance and regional planning

The territorial governance is particularly complex in the French context for three main reasons:

- the very strong administrative parcelling out of the territory: there are 1945 municipalities in Champagne-Ardenne and numerous inter-municipal bodies,

- the creation of new territorial governance levels (region, pays, agglomerations etc.) without removal of the old ones,

- permanent interference between the local authorities on the one hand and numerous decentralised services of the State (Prefecture of Region and sectoral administrations of the State at regional level, “département” Prefectures and sectoral state administrations at the “département” level, Establishments Publics) in addition to the administrations at national level.

As regards spatial planning, the law of 1999 (Voynet law) prescribes the elaboration at national level of a series of “schémas de service collectifs” (collective service plans), which reflect the territorial implications of the various sectoral policies. At regional level the regional plan (Schéma Régional d’Aménagement et de Développement du Territoire) is elaborated. The Champagne-Ardenne Region approved its regional plan on 16 October 2000. At a lower level (in particular «pays» and «agglomerations») are worked out the «territorial projects».

The dispersal of competences and of activities between local authorities and decentralised State services can be illustrated for some examples:

- the regional natural reserves are generally managed by associations of local authorities, but the Natura 2000 policy falls within the competence of the State services,

- the regional council carries out a programme of environmental set-aside completely independent from the «European» set-aside programme, the implementation of which falls within the competence of the Directorate of Agriculture (State) at the level of the “département” and of the Regional Directorate of Agriculture and Forests (State),

- the water and floods policy falls within the competence of the Regional Directorate of the Environment (State) and the Basin Agencies (State), but the fight against the floods is not a competence of the Water Agencies, while the SDAGE are worked out on the initiative of the State and Water Agencies,

- the «nitrates» directive is implemented by the Chambers of Agriculture on the basis of the national law TGAP,

- the local authorities do not intervene in the implementation of agri-environmental measures (CTE). These fall within the competence of the State services,

- the rural development programmes, drawn up by the State services, suffer from a lack of regionalised approach and of co-operation with the local authorities.

So far, coherence between the territorial policy of the State and that of the Champagne- Ardenne Regional Authority was very weak. It seems however that the creation of the «pays» will make it possible to have a common territorial reference level to channel individual projects. There will be in Champagne-Ardenne fourteen «pays» corresponding more or less to the districts (sub-prefectures). The influence of the Regional Authority on the

217 “pays” will be strong (the administrative director of the «pays» is paid up to 80% by the Region).

Moreover, the State services will be led to respect gradually the economic and spatial development strategies of the «pays», because the sub-contracts of the State-Region Planning Contract will be concluded with the «pays». The new Objective 2 programme (2000-2006) already reflects this approach in its priorities: « it is envisaged, in total complementarity with the setting up of the “pays” and agglomerations, to encourage the organisation of the territories by developing the multi-sector local co-ordination (integrated development of the territories). Eligible projects will have to fall under a draft or adopted territorial project. In order to carry out this structuring of the territory, the planning and leadership actions will be supported, in particular those required for the development and implementation of territorial projects. These activities will be supplemented by actions of awareness-raising, information of the population and communication on the territorial approach, and by the development and promotion of the assets of the territories ».

Concerning the implementation of the regional structural policy, the experience of the last years (Objective 5b and Objective 2) revealed a too high amount of bureaucracy.

Numerous recipients (companies, public and private leaders) are disappointed by the persistent gap between the level of support received and the burden and mobilisation necessary to obtain it in certain fields, as well as the gap between the official message relating to the possibilities of supports and the reality of operation (length of procedures, complexity of operation rules, eligibility of expenditure).

To increase the effectiveness of the programme, it is necessary:

- to act with greater precision in the definition of actions and to simplify, for the recipients, the methods of registration in the programme (procedures of application) and the termination methods (simplification of assessments to be carried out), - to take better into account the specific local characteristics in the promotion and communication of the programme, - to strengthen the partnerships for the collective operations of promotion, - to avoid cross-financing which lengthens the procedure and the delays for payment, - to improve the promotion of local development. In a context of lack of organisation of project engineering, the development agents can devote themselves only very partially to the awareness-raising in the territory and to territorial dynamisation. Project engineering should be better formalised.

The new Objective 2 programme (2000-2006) stresses:

- the integrated development of the territory: encouraging the improvement of the environment in eligible areas, but also their economic dynamisation (rural areas); actions for interdependent development and for urban regeneration.

- support and the acceleration of the structuring process of the territory on a relevant scale, while developing solidarity between urban and rural areas.

- the development of territorial projects: the projects financed by the Objective 2 programme will have to fall under a draft or adopted territorial project.

218 5. Quantitative analysis of the impact of Community financing on the internal cohesion of the region

Table 1: External positioning of Champagne-Ardenne (abs amounts. in millions) Absolute Per In % of capita the EU Population 1.35 1 0.36% Income (GDP, PPP) 23 035 17 100 0.34% CAP 735 545 1.20% Comm. Transport Policy. 5 4 0.12% Territorial Comm. 33 24 0.16% Policies. (SPD)

219 Table 2: Internal positioning of Champagne-Ardenne Marne Haute- Aube Ardennes Total Marne Champagne- Ardennes Inhabitants (x1000) 568 (42%) 199 (15%) 293 (22%) 291 (22%) 1.351 (100%) Income (GDP, PPP) Total (MEURO) 11,974 3,248 5,259 4,771 25,256 Per inhabitant (EURO) 21,081 16,322 17,949 16,397 18,694 Agricultural policy (CAP) Total (MEURO) 285 96 171 117 667 Per habitant (EURO) 501 482 583 402 493 Structural Funds Total (MEURO) 19.8 17.9 5.1 11.4 54 Per habitant (EURO) 35 90 17 39 40 Sources: Emploi et Agriculture, main report, p. 99

The division of Community Agricultural funds by “département” can only be indicated. It is difficult to make a precise regional breakdown of such supports, as the regional split of part of this support (e.g. export restitutions) can only be estimated. Most specific are the operating subsidies (1996), that represent 71% of all public support and 65% in Champagne- Ardennes. In the year 1996, for which precise data are available, total public agricultural support amounted to Euro 716 mln. Euro, of which 93% came from Community sources (Euro 667 mln.). The Community component in the total agricultural funding is considerably higher than in France as a whole (84% of all agricultural funding in France comes from Community sources)205. Total agricultural Community funding in Champagne-Ardennes (1996) amounts to Euro 493 per inhabitant. Support levels are relatively high in the Champagne-Basin, notably in Aube (Euro 583 per inhabitant) but also in Marne (Euro 501 per inhabitant). These levels can be related to the large-scale, extensive forms of production, particularly cereal production (the champagne wine production is not eligible for support). The Haute-Marne and especially the Ardennes region (Euro 482 and 402 per inhabitant respectively) receive less support than for the region as a whole. The productive capacity of these regions, relatively small entities with a focus on dairy products, is clearly lower than in the more prosperous Basin.

The distribution of Structural Funds over Champagne-Ardenne (1997-1999) has been primarily based on the Objective 2 and 5B programmes, with an average annual commitment of Euro 39 mln. and Euro 11 mln of Community funding respectively. The total average spending on Structural Funds (including Community Initiatives) amounted to Euro 54 mln. per year in the 1997-99 period, amounting to Euro 40 per capita per year. For Champagne- Ardennes as a whole, this level of support is over ten times lower than the per capita spending on agricultural funding.

205 Source: Conseil Economique et Social Champagne-Ardenne (1998) “Emploi en Agriculture”, 1er Partie, p. 99.

220 The impact of the Community Agricultural and Structural Funding can now be summarised as follows (see table 3). The more populated and prosperous part of the region (Marne) receives at least average amounts of Agricultural funding. Aube, average in terms of population and income, benefits most of the Agricultural funding and receives some Structural Funding as well. Haute-Marne, relatively poor and with a low population density, is able to attract its share of both Agricultural and Structural Funding. The Ardennes department, with a relatively low GDP as well, attracts a rather low level of Agricultural funding. This limited funding is only partly compensated by Structural Funds allocations.

It turns out, as far as Champagne-Ardennes is concerned, that the Structural Funds dampen the income effect of the Common Agricultural Funding that have a tendency to favour the more productive agricultural areas. However, the Structural Funds amount concerned are relatively low compared to the Agricultural Funding. Finally, it should be mentioned that these calculations have been made on the basis of Structural Funds commitments only. Indications hint to absorption problems that can be quite serious in the implementation of the programmes, thus resulting in possibly lower disbursement rates. In practice, the capacity of the Structural Funds to contribute to economic and social cohesion at this low geographic level therefore appears to be limited.

The Lorenz curve for Champagne-Ardenne confirms more or less the above-described pattern, even though it remains possible to assess the results in various ways. Although the number of observations is only limited, the Regional Policy curve clearly demonstrates that the Structural Funds contribute to economic and social cohesion between the various departments within the region (Gini is -0.09). The CAP line, however, is to be found slightly underneath the equity line and does therefore not contribute to economic and social cohesion within the region (Gini is +0.01). This implies that the spending on CAP per capita is slightly lower for poorer Departments than for more prosperous Departments. Although the Lorenz curve is not helpful in reaching an equal income position among the Departments (as expressed by the equity line), it is neither significantly contributing to a more unequal income distribution, due to the existing income situation among the departments (Gini is +0.03).

221 Fig 1 Lorenz curve for Champagne-Ardenne

100,0%

80,0%

60,0%

40,0%

20,0%

0,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0%

Higher dotted curve: Regional policy Straight line: balance line Lower dotted curve: CAP Lower yellow curve: Incomes

Cost of non-co-ordination

The combined Gini coefficient of CAP and Regional Policy is almost zero (+0.004). This means that the combination of the two policies gives no impulse to income disparities. The beneficial effect of Regional Policy (Gini of -0.09) is broken down entirely. The cost of non- co-ordination are therefore a little over 54 MEURO206 a year.

206 (0.09+0.004)/0.09 times 54 MEURO to be precise, which makes 56.4 MEURO.

222 6. Conclusions

The region of Champagne-Ardenne has a wide territory with major diversity reflecting in particular the variety of agricultural production. Its endowment level in transport infrastructure is relatively good and certain major structuring projects (the Vatry freight airport and in future the TGV-Est as well as, possibly, the 3e airport of the Paris area) will further strengthen its accessibility and economic impulses. The natural resources (wooded areas, water resources) are significant in Champagne - Ardenne. However, the regional income is weak on average and strongly unbalanced within the region owing to a high concentration of added value on a territory with a restricted size which is that of the Champagne wines. The industries of the region do not belong in general to high-tech sectors and the level of service activities is low.

The quantitative analysis of the Community budgets showed that the allocations of the CAP (more than ten times higher than those of the Structural Funds) strongly counteract the corrective process of reducing income disparities between the four “départements” of the region generated by the Structural Funds.

At a more qualitative level, one could observe for more than ten years a process of intensification of agriculture in the most fertile areas of the region (which also are generally the richest ones) and of continuation of agricultural abandonment in the less favoured areas ( High-Marne, Ardennes). This process was accompanied by a considerable environmental deterioration, owing to the high sensitivity of underground water. The application of the «nitrates» directive has not yet had palpable effects. The set-aside practice, imposed by the CAP, did not have significant effects on the environment either, on the one hand owing to certain malfunctioning in its application and on the other hand owing to a too low attractiveness of environmental set-aside.

Interaction and the synergies in the rural areas between the regional structural policy and the CAP are weak. This is due mainly to the weakness of entrepreneurial initiatives, both of farmers and of other actors. It results from this that in the less-developed areas, structural support is largely absorbed by investments in slightly productive infrastructure (rural roads, forest roads). The absorption rate of the ESF allocations intended for the farmers is also very low.

The Natura 2000 programme means concentrating all the available financing, in particular that of the State, on the areas selected. These areas are wide in Champagne-Ardenne, but the region also counts numerous semi-natural areas and cultural landscapes worth being protected and enhanced. Unfortunately there are practically no more resources available for this.

In prospective terms, one can envisage with a relatively high probability a strengthening of the dualisation of the territory especially if, in future, the CAP support has again to be reduced. Activities of intensive stock breeding would develop in the cereal area to the detriment of extensive livestock-farming in the Ardennes and Haute-Marne. The abandonment of agricultural activities in these less-favoured areas would lead to further afforestation or to brushwood development. Regarding natural spaces, those which are of Community interest (Natura 2000), will benefit from important protection and from significant financial resources, while others, in particular the semi-natural areas and cultural landscapes, will no longer be maintained and enhanced.

The Common Transport Policy does not play any important role in Champagne-Ardenne, insofar as the large corridors corresponding to the TEN-T are already largely built and the region is not eligible for Community financing for heavy infrastructure. The transnational

223 infrastructures which still should be completed (the Charleville-Charleroi motorway corridor and railway) are not part of the TEN-T.

In terms of synergies between various development sectors, in connection with an explicit territorial approach, the LEADER programme had a very positive impact in Champagne- Ardenne. It made possible to start various local development initiatives and integrated approach processes prefiguring the policy of the «pays» which is now being implemented.

The governance of Community policies, itself dependent upon the territorial governance within the region, is very segmented. This is due, on the one hand, to the dual system existing in France, with on the one hand the decentralised services of the State at the level of the region and “départements” and, on the other hand, to the numerous levels of local authorities. The very strong segmentation of the competences is hardly suitable for an integrated territorial approach. Recent evolution makes possible, however, to envisage a noticeable improvement of the situation. This concerns on the one hand the adoption in October 2000 of the regional plan, and on the other hand, of the setting up of «pays» with their own territorial strategy. The sectoral interventions of the various actors will have to focus increasingly on these two levels, whether the actors are those of the State, who very largely manage the Community policies, or those of the local authorities and, beyond, semi- public and private actors.

224 CASE STUDY: THE REGION OF NORTH-PORTUGAL207

1. Characteristics of the Region of North Portugal 1.1. Territorial development typologies and co-ordination of policies The problems arising from interactions between several Community policies, concerning mainly the positive or negative synergy effects between these interventions, have to be analysed in the context of well defined territories. Nevertheless, the territories which can serve as a basis for this analysis diverge considerably not only with respect to their economic level, structures and social development models, but also in terms of their institutional frameworks. The typology of territories that a cohesion country like Portugal may provide for the analysis is useful for the approach of the costs of non co-ordination mainly because of the characteristics of the institutional framework of the regional development policy in Portugal. It is in this context that the reflections presented in this document on the problems of (non) co-ordination between sectoral and territorial policies in the region of North Portugal have to be interpreted. 1.2. Institutional and organisational aspects which relativise the lessons to be drawn from from the experience of North Portugal If one considers these reflections within the context of a case study on the presented topic, the limits of the produced reflections must be specified by invoking the institutional and organisational factors which set limits to the lessons to be drawn from this experience: - this first element concerns the territory, a planning region, which does not correspond to an administrative region. Indeed, regional decentralisation did not progress in Portugal because it was refused by a national referendum, which was politically very much disputed during the phase of debate on the problem. A large majority refused the creation of administrative regions. This characteristic is important because the multiplication of levels of political decision on a territory is often seen as a source of increased risks of non-coordination. In this case, there are Community, national and local decision levels together with a regional co-ordination level which does not correspond to any political autonomy and which is a downward emanation of the central power; - as an Objective 1 region, North Portugal is crossed by considerable asymmetries mainly between the large urban region in phase of structuration, polarised by the Oporto agglomeration and the internal regions with low urban density and in major rural crisis. In other words, the region of North Portugal, which is interested in the topic of European cohesion, is itself facing the challenge of internal cohesion, or rather facing the challenge of the politically and socially desirable and tolerable combination between competitiveness and cohesion; - experiences of associations between municipalities start to emerge between the local and the central decision levels, which can become a new political basis for the co- ordination of policies, especially from the point of view of coherent objectives and of investment projects coherent with these objectives. - the region of North Portugal is one of the EU regions with the strongest industrial specialisation, in particular if this is measured by the average weight of industrial employment in total employment. This characteristic leads the analysis to certain sectoral policies and makes out of it an interesting case study for rather industrialised territories;

207 Study composed of the contributions of quaternary-Portugal (Prof A. Figueiredo) and of the Nederlands Economisch Instituut NIS, for the quantitative analysis

225 - in addition, owing to a still very divergent specialisation profile in relation to that of more developed EU regions and to a relatively low level of real wages which remains one of the key-factors of the industrial competitiveness of the region, North Portugal continues being a region very vulnerable to the risks of asymmetrical shocks inside the EU. One knows, however, that the co-ordination of sectoral policies among themselves and with the territorial policies will become one of the key-conditions for minimizing this type of risk; - finally, since there is not a legitimated regional authority from the political point of view, the case of North Portugal raises the question of sectoral policy co-ordination within the context of a specific territory, starting from a co-ordination model based on mediation and downward delegation of the central power towards the Commission of Co-ordination which is only a deconcentrated institution at regional level. The sensitive question here is to ask how the central state articulates itself through a deconcentrated regional delegation. Moreover, in this context, there is the problem of the articulation of sectoral policies with the territorial and cohesion policies which pertain not only to national cohesion policies but also to local investment policies co-financed by the European institutions; - one can therefore raise the fundamental question of knowing if the absence of administrative regions encourages the synergy effects between the sectoral policies and between them and the territorial policies or if, on the contrary, the absence of regions can be seen as an additional obstacle to the well-known difficulties of co-ordination? In addition, one can wonder to what extent different typologies of regional development models introduce differences with respect to the problems of co-ordination ? While doing this, there are also characteristics which, simultaneously, make the exercise very stimulating and which enable an extension of the analysis of the costs of non-co-ordination to Objective 1 regions, industrialised and in the process of structural adjustment, to the effects of the single currency. 2. Procedures of elaboration of the EU structural policies 2.1. How the CSF contributed to the emergence the regional policy in Portugal As soon as the EU structural policies received concrete expression according to the Community Support Framework model (CSF), negotiated and contractualised on the basis of a regional development programme drawn up at national level, the regional policy in Portugal reached a new stage of realisation thanks mainly to the extent of associated financial resources. Before this phase, which coincided with the 1st and the 2nd Community Support Framework, regional policy was limited to a system of support to the mobility of capital towards less developed areas (mainly tax rebates) and to a very unfinished policy of industrial park development aiming at territorial rebalancing which never mobilised considerable amounts of financial resources. 2.2. The double and unequal logical of the CSF The characteristics of the model result from the fact that the CSF, despite their evolution in the management structure and programme architecture, were always organised according to a double logic, on the one hand that of the sectoral operational programmes corresponding broadly the Portuguese central administration structure in the fields elegible to the Structural Funds and, on the other hand, that of the regional programmes, elaborated according to a spatial logic on the basis of NUT II units, i.e. by intervention areas of the Regional Co-ordination Commissions. Nevertheless, in the first two CSF, the weight of the sectoral operational Programmes was still dominant and omnipresent. Although it is possible, on the one hand, « to regionalise » the vast majority of investments co-financed by these programmes according to the various NUTS II, this distribution is rather a statistical splitting of the funds spent rather than a rigorous measure of the effects and of the impact of eligible investment projects of each Ministry. On the other hand, the territorial operational programmes incorporate only local investment projects submitted and managed by the municipalities or in some minor cases, decided within an inter-municipal framework by municipality

226 associations. The participation of the civil society in the territorial operational programmes is very poor and is limited to immaterial projects (feasibility studies, equipment programming, enhancement of local resources, culture and heritage, tourism, training, regional and local product marketing, etc.). 2.3. How the CSF contributed to the strengthening of a sectoral logic at the expense of a territorial logic Although the decision was taken by the Member State of Portugal, one can say that the two CSF implemented between 1990 and 1999 contributed to strengthening an almost exclusively sectoral logic in the organisation of public investments, where the territory becomes only a statistical unit of reference for the accountancy of actions to be implemented. This does not mean that « regions » are not taken into account in terms of equity and territorial balance. Very often, the sectoral operational programmes are analysed according to the distribution criterion per capita, by comparing the distribution by region of the funds programmed or spent per capita with other distributions such as those of the population, of assets, of added value, of resource allocation, etc. This type of comparison sometimes generated claiming reactions of the civil society, mainly of the business associations, denouncing serious imbalances in the allocation of Structural Funds, which are more significant when comparing the distribution programmed by region with that effectively carried out. In any event, with regard to the reflections of our work, what has to be underlined it is that the sectoral programmes were very seldom modulated according to dynamic and prospective strategic diagnoses of the planning regions. In recent years, the strategic thought, especially in terms of strategic diagnosis of the territories and of their development, progressed rather well in Portugal. The bases of the regional development programmes by NUTS II were appreciably improved, mainly because the planning services of the Regional Commissions of Co-ordination succeeded in getting under control the issues related to sectoral problems, the territorial impacts of which are more significant in each planning region. Moreover, there are sub-regional entities inside each planning region (generally these are groupings of municipalities corresponding to a NUTS III) which are endowed with strategic development plans, the quality of which is recognised by the vast majority of observers and even by the local institutions. In North Portugal the situation progressed very distinctly and, one can say, it is not the absence of a strategic reference framework for territorial policies which explains the difficulties that sectoral programmes face in modulating actions within the context of regional problems considered from a prospective point of view. The question is not restricted to discussing if the financial magnitude of the operational programme intended for the planning region X is in line with the dimension of identified problems. In our opinion, the relevant question is another one and it is not limited to the quantitative dimension of problems. The real question is to know if the sectoral operational programme will have a positive effect on the qualitative dimension of problems: will the investment projects be implemented in the planning region indeed contribute to the resolution or alleviation of the identified problems? Are these projects in conformity with the regional development strategies formulated in the work of the CCR or in the strategic development plans worked out in the sub-regional areas?

2.4. How the CSF did not create the requirements for institutional training in co-operation- co-ordination by regional development objectives The available evidence does not permit to generate truly optimistic expectations. On the contrary a feeling of pessimism starts emerging, sometimes because the delays for the preparation of the national Regional Development Programme are very short, sometimes also because the preparation becomes an exercise limited only to the central administration services and because the contributions requested from the regional Commission of Co-ordination aim only at preparing the draft of the territorial

227 development programmes. Other times, the reflection work carried out jointly by the CCR and the deconcentrated regional Directorates of the sectoral Ministries, although developed in good faith and according to a real spirit of regional collaboration, is not respected by the central services of each Ministry which regard them as an interference in their field of competence. In short, the concrete practice of planning/preparation procedures of the CSF and of its regional sections did not create good conditions for institutional training in co- operation by regional development objectives; in other words, apprenticeship towards a better performance of co-ordinating the impacts of sectoral policies, was not encouraged by this practice. We emphasise the point of the planning/preparation phase of the OPs of the CSF, because as soon as the sectoral and territorial Operational Programmes (here, there are no differences) start to be implemented, other concerns come to the forefront. From there onwards, it is the financial dimension of the real implementation which counts. It is only before the beginning of the implementation of projects that there is room for manoeuvre for co-ordinating the impacts. As from this moment, management is imposed to strategy, but only if the latter is present and coherent. In this context, two critical aspects have to be cleared up, the first of methodological nature, the other raised by the architecture of the 3 th CSF already negotiated and being implemented. 2.5. National and territorial impacts of projects and of sectoral programmes The first aspect concerns the methodological interrogation of how to separate, from the point of view of weighting and hierarchisation of projects, their national and regional- territorial dimensions. Except in some exceptional cases, where the central administration does not succeed in regionalising a project or investment, owing to the diffuse configuration of actions and results or to organisation problems of the central services, a sectoral investment programme co-financed by the Structural Funds always has an explicit territorial dimension: - on the one hand, the formulation of the OP has to clarify it; -on the other hand, the public capital expenditure plan which allocates the national co- financing of this programme has also to make it explicit. Nevertheless, the regionalisation of projects and of national participations are only instruments which have to be put at the service of co-ordination efforts. Indeed, beyond statistical distribution by areas (a problem of «accountability»), the objectives must be taken into account according to which the project is adopted. But if the experience of North Portugal is taken as a field of research and if one starts from the identified development issues, one can conclude that a sectoral project can have an impact on a territory because it pursues national objectives which cross all the territories or because it emerges as an unambiguous priority to cope with important problems at regional level rather than at national level. In other words, if one considers in the design of the programme/projects their impacts, determined by the synergy effects with other projects, on the achievement of specific objectives, the difference between sectoral and regional national objectives is fundamental. The co-ordination issue is therefore rather different if one works with national or territorial objectives. 2.6. National objectives and regional issues According to our analysis of the practice of sectoral planning in Portugal, the objectives and the selection criteria of investment priorities are formulated according to a basically national logic. On an illustrative basis, some examples can be presented: - the major road transport or logistical infrastructure projects are formulated mainly according to criteria of response to objectives of up-grading the infrastructural endowment within a context of European benchmarking, of support to the consolidation of a sustainable and competitive rate of exports or of concerns of opening- up and easy connections with European dynamic centres; the decision to promote one

228 or the other project will only seldom be determined by the critical dimension that one or the other project can present vis-a-vis the regional problems; - the architecture and priorities of the national sectoral science and technology programme, mainly because it is formulated within a context which is not that of the industrial policy, will fix its strategic guidelines in relation to the need to correct the "gaps" of the scientific and technological national infrastructure most probably independently from the need to correct the internal territorial imbalances in the regional offer of R&D potential and without taking into account the importance of an R&D model more adapted to territorialised industries; - the operational programme "Agriculture" fixes its priorities according to the conditions that the CAP gives to Portuguese agriculture, while trying to maximise them, even if the CAP is not conform with the characteristics of certain regions, mainly of those like North Portugal where the small agricultural holdings, weakly endowed with entrepreneurial capacity, are not encouraged by the current guidelines of the Community policy. These are some examples which illustrate well the propensity of sectoral programmes to follow strategic guidelines sometimes not easily compatible with the multivariate dimension of regional problems. The inconsistency which emerges from the gap between national objectives and territorial problems has consequences for the co-ordination efforts of the synergy effects of sectoral policies between them and with the territorial issues: - first, two co-ordination levels of the synergy effects of sectoral policies can be identified: according to the complementarities which can be established within the context of the achievement of national objectives and in terms of complementarities of the sectoral policies in the approach of territorial problems and strategies; - in the case of North Portugal, the non-existence of a regional political representation space able to enforce the consistency of territorial approaches raises the problem to know if one can minimise this at central level or if, on the contrary, one has to do so by means of the mediation of deconcentrated institutions of the sectoral Ministries in charged of the design, concretisation and management of the Ops. The experience of the two CSF already concluded shows that the second co-operation/co-ordination method remains very difficult to implement, despite the presence of a co-ordination institution which depends on the Ministry of Planning. The evaluation of the co- ordination practice of the northern CCR also shows that it tends to be more effective when helping the municipalities to find consistencies between the investment projects within the context of a given territory, generally a NUT III. On the contrary, it had some difficulty to engage the sectoral programmes on the way of compromise and responsibility vis-a-vis the desirable strategic guidelines for a given territory. The main reason is, in our opinion, the predominance of a very centralised logic for the preparation and implementation of the national sectoral programmes which facilitates the action of the Ministry of Planning at central level but makes difficult the action of its territorially deconcentrated services in the context of a given territory; - finally, the analysis of recent experience also shows that room for manoeuvre for the co-ordination between national objectives and regional strategies in the context of sectoral programmes diverges according to the typology of the objectives; - one may dare the following generalisation: when sectoral policies concern national objectives which aim at consolidating and strengthening already existing dynamics, such as for example, objectives of improving the competitiveness and innovation potential of the productive sectors, compatibility with the territorial issues become a problem except for the regions which concentrate the majority of dynamics and resources to be used as a lever. On the contrary, when the objectives of socio-economic cohesion are already present in the sectoral policies themselves, room for manoeuvre for co-ordination is broader; - the analysis of the application of the 1st and 2 nd CSF in North Portugal suggests that, for example, with regard to the OP “Industry”, “Science and Technology”, “Tourism”,

229 “Training” and even “Infrastructure”, it proved very difficult to introduce into these programmes qualitative nuances in conformity with the characteristics of the regional problems. On the contrary, with regard to the sectoral programmes where the dimension of socio-economic cohesion is explicit, such as the fields of “Education”, “Employment” and “Social Integration”, there is a clearer contribution of the sectoral programmes to the qualitative nuances of the regional strategy, which are not represented in the national objectives. One may conclude that it is at the level of the formulation of objectives that room for manoeuvre in terms of co-ordination between sectoral policies modulated in relation to a given territory starts to emerge. In other words, the ex-ante evaluation of the programmes should appreciably be improved, not like a requirement on the part of the European institutions, but basically as an essential planning methodology to be internalised by all the services involved in the preparation of a framework for investment programming like the CSF 's are. 2.7. Questions raised by the 3 th CSF Beyond the changes of architecture and management models of the 3 th CSF which do not have any close relation with our reflection topic, one has to mention an important innovationofthisCSFwhenitiscomparedwiththosewhichprecededit. Indeed, the sectoral Ministries in charge with the OPs were obliged to invest a part (approximately 35%) of their total budget co-financed by the CSF in decentralised terms, i.e. by adding this type of projects to the territorial operational programmes formulated for each planning region. In other words, a considerable part of the total of co-financed investments, for example by the OP “Economy”, will have to be spent by the deconcentrated authorities of the Ministry of Economic Affairs in each planning region. One will have therefore for each planning region an increase in funds explicitly granted to this region, although the eternal separation of the co-ordination responsibilities persists. Indeed, the President of the Commission of Co-ordination who is responsible for the consistency and management of the territorial OP of North Portugal, primarily materialised by local and supra-municipal investment projects, cannot extent his influence on decentralised projects of the sectoral Ministries allocated to North Portugal. Although the Monitoring Committees may try to study in greater detail the regional/ sectoral co-operation strategy, it also is true that the inaccuracy on the co-ordination space and especially the clarification of the framework of management of conflicts on priorities persist. This lack of definition is rather delicate in a programming model which, every two years, revises the implementation rates and proceeds to project re- orientations. Vis-a-vis the non-existence of a political regulation at regional level, the more explicit intervention of sectoral policies in the implementation of a regional strategy through the investment projects managed by the deconcentrated services does not constitute in itself any finer and effectiver co-ordination condition for these policies within the context of a given territory. 3. The field of non-structural Community sectoral policies Vis-a-vis the context analysed above, it is estimated that the degree of intervention of non-structural Community sectoral policies in the approach of regional problems is still insufficient and largely tributary of the sectoral operational programmes. Reflection on the impact of these policies on the territory remains unfinished and very incomplete, except for the territorial effects of the CAP which, at least within the context of the preparatory work of the 3 th CSF carried out by the CCRN, were the subject of critical analyses which will be considered in a later section of this chapter. With regard to the possible territorial malfunctioning resulting from the lack of reflection on the territorial impacts of these policies, it is the field of the environment which provides the richest elements of analysis and evaluation. Indeed, the environment was up to now the object of several interventions with Community co-financing: -inthe2th CSF there was an Operational Programme “Environment”;

230 - there is the Cohesion Fund which added an considerable amount of investments, mainly in the fields of water supply, sewage and urban solid waste; - the Operational Territorial Programme in North Portugal (PRONORTE) incorporated an environmental section for local authorities' and supra-municipal investments; - the Modernisation Programme of the Portuguese Industry also incorporated a section "external environment of companies" by financing investments for the treatment of industrial pollution ( water, waste and emissions) determined by productive processes not yet able to control downstream the environmental question. The relations between these aspects will be analysed in a separate section. 3.1. The territorial impacts of the liberalisation of transport This concerns a field where reflection remains very weak and almost exclusively concentrated in the Ministry of the Public Works and of Transport. With regard to the impacts on the planning region of North Portugal, one could identify some impacts that one tries to locate according to a qualitative approach owing to the non-existence of reliable quantitative data. One of the first impacts of liberalisation concerns the emergence in Portugal of more powerful organisations specialised in very important intra-Community road transport for the logistics of the Portuguese export sector and mainly the industrialised North of Portugal. Available elements suggest that this corresponds to an increase trend in the degree of concentration of the activity, as the large operators succeeded in setting up very flexible structures where individual producers are incorporated into global logistical management. But the development of road transport companies takes shape within a regional context which is very deficient in terms of logistical and intermodal infrastructure in the case of the northern region. In a rather important exporting region, the large freight center based on the intermodality between road, maritime and rail transport, which is planned in the area contiguous or close to the port of Leixoes in the metropolitan area of Oporto, did not yet take shape. One observes here an obvious malfunctioning between the foreseeable impacts of the liberalisation of road transport and the adoption of logistical infrastructures able to give to the affected companies the fundamental externalities to manage the new forms of competition determined by liberalisation. With regard to air transport, the impact is basically indirect and determined from the effects that liberalisation will tend to have on the state airline TAP which has just negotiated the sale of a part of its capital to SWISSAIR. The indirect effects concern the way in which the national company, inserted in the new SWISSAIR group which incorporates also SABENA, will manage the national airport Sá Carneiro located in the metropolitan agglomeration of Oporto. Recently, the economic agents of the Region accused the national company of a fall of the quality of service, materialised in the reduction of European and intercontinental connections from the Oporto airport (Sá Carneiro). There is therefore a risk that the adaptation of the national company to the new liberalisation context, current simultaneously with the financial recovery process under the monitoring of the European authorities, could materialise in the reinforcement of the Lisbon airport, mainly as from the moment when the Portuguese Government announced the project to build a new airport in the north of Lisbon (OTA) by presenting it as a connection airport and an intercontinental interface which aims at reducing the central role that the Madrid airport plays in this field. The reduction in the capacity of service of the Oporto airport and of the diversity of European and intercontinental connections which characterised it, is likely to weaken the role that it wanted to play in the context of the space Galicia-North Portugal. For the moment, the liberalisation of air transport has not yet had knock-on effects on the emergence of new tourist operators, based for example on regular charter flights which make it possible to escape the influence of the hub that the Lisbon airport plays in tourist terms mainly after the EXPO-98. Moreover, no initiative emerged in terms of

231 private air transport for the relations Oporto-Santiago de Compostella. The good conditions of connection by motorway will probably be an market obstacle to the emergence of this type of result. With regard to the liberalisation of maritime transport, the territorial effects that can be considered in the region of North Portugal will be tributary from the consequences of the current reorganisations in the institutions responsible for the management of ports. A main port (Leixoes) and a secondary port of regional size (Viana do Castelo in the north and very near to Vigo) are trying out changes in the management model, likely to introduce nuances of flexibility that centralised management was not in a position to ensure. The current reorganisation envisages mainly the creation of harbour terminal concessions, extensible to all functions fulfilled on-shore. The trend development will be therefore to bring the management model closer to those which are generalised in the EU, by transfering to private firms the port operations according to public service concession arrangements. The Leixoes port will be the first to manage the concession of the container terminal, by reserving for the administrative authorities the role of rigorous preservation of the public interest. One expects much from this reorganisation mainly because of the bottlenecks that economic agents identify in the national ports, determined by bureaucratic reasons and malfunctioning of relations between harbour entities. One expects stronger integration of the ports mentioned with the local economic activity which could encourage the emergence of new maritime transport operators. This tendency would be very positive with a view to enhancing the hinterland, mainly of the port of Viana do Castelo, which remains under-utilised having regard to the weakness of its relations with the non- metropolitan territories of North Portugal. 3.2. Territorial impacts of the CAP reform on the development of the rural areas The reflection in this field is focused on two complementary aspects: - on the one hand, critical analyses on the conformity of the CAP guidelines, including those negotiated in June 1999 in Berlin, start to become general vis-a-vis the dominant structure of agriculture and forestry in the planning region of North Portugal, based basically on small and medium-sized holdings not necessarily evolutionary towards a more extensive208 model owing to entrepreneurial capacity deficits. This critical position presents difficulties in penetrating the Ministry of the Agriculture which remains prisoner of the results that it obtained in the negotiation of the June 1999reform; -on the other hand, new attention is paid to the territorial effects of the LEADER initiative which led to the emergence in the rural areas of a new fabric of local institutions and of development experiences of rural areas which the traditional agricultural policy of price support and later of income support had some difficulty to encourage. These are the two aspects which deserve some reflection. With regard to the first aspect, it must be stressed that the gross agricultural production of the Region increased in terms of volume between 1960 and the beginning of second half of the 1990s, with territorial asymmetries, basically based on the creation of dairy-bovine animals production in the coastal region of Entre-Douro-et-Minho and wine production (verde in the Entre-Douro-et-Minho and Port wines and Douro in Trás-os-Montes). At the same time, one concluded that the region is close to a

208 See the important study recently published by the former Portuguese Minister for Agriculture Arlindo Cunha, currently member of the European Parliament, “the Common Agricultural Policy and the Future of the Rural World ", in which the author speaks about Agricultural and Rural Common Policy by stressing the new topics of regional planning, enhancement of cultural landscapes and fixing of people and by showing the urgent need to strengthen the second pillar of the CAP, i.e. the rural development of the areas more dependent on agriculture.

232 development threshold by crops intensification and relative concentration of production209 . With regard to the consequences of the development of the CAP, one must take into account that the support to income represented in 1996 only 6.2% and 2.1% of the final agricultural production of the main sectors generating farm income in the region, namely cow's milk and wine. In the horticultural and fruit production income support accounted also for only 8.7% of the final agricultural production. The most important territorial effects will occur in the internal rural mountain areas and, where the production of olive oil, rearing of cattle, sheep and goats depend much more on income support (respectively 45.1%, 32.5% and 24.2% of final agricultural production). The prospective diagnosis of the northern region stresses that there will be advantages determined by the progressive reduction of the influence price support to agricultural products: « In a context where agriculture based on “minifondia” is dominant and the income per capita is below the Community average, the region is penalised by the stabilisation of farm income by means of prices. The progressive importance of the direct income subsidies contributes to correcting the regressive effects on consumers. Nevertheless, the regressive effects for agricultural production persist because the Commission proposes support which continues being based on surfaces and units of animal production. The innovation will be the introduction of a ceiling for the totality of support that the farmer can receive. » The territorial impacts will be therefore tributary from the productive specialisation profiles inside the region and will probably be more sensitive in the internal and mountainous areas. It can therefore be said that, in relation to the changes introduced into the CAP within the context of the Agenda 2000 vis-a-vis the 1992 Reform, one is in face of tendencies favourable to the region of North Portugal. In particular, the socio-structural components and those related to rural development progress in terms of relative importance. Nevertheless, one should not ignore that the national states increased their room for manoeuvre because income support is modulated and is distributed according to criteria defined by the national state. In this context, the capacity of national administrations must be taken into account to locate correctly the territorial impacts of the support modulation adopted. In any case, a region where small holdings remain dominant and where the income per capita is significantly lower than the EU average will have a potential gain with the progression of the importance attached to income support . In this context, the territorial impacts of the new guidelines will depend on three groups of factors: - first, it must be considered whether the small agricultural holdings will have a political representation at the level of the specific characteristics to be respected within the context of the national agricultural policy; - then, the differentiated weight of income support in the final agricultural added value by products and the territorial distribution of these products will generate unequal effects within the region itself; - finally, the impacts of the adjustment of regional agriculture to a scenario of evolution of prices towards world prices must be taken into account. The latter point represents an obvious threat for the region. Firstly, room for manoeuvre in terms of intensification, i.e., of reduction in the average costs thanks to increases in physical productivity tends to be very weak according to the strategic evaluation carried out by the CCRN; secondly, room for manoeuvre in terms of "extensification" (reduction in the average costs by cultivated agricultural area) is

209 See also: CCRN, Prospective Diagnosis of the Northern Region, Works of the National Plan of Economic and Social Development, Oporto, June 1998

233 almost limited to the abandonment of arable land, to the new presence of forests and to the regions in the process of desertification where the farming population decreased very significantly. Finally, the increasing importance of strategies of quality and of differentiation of products will be limited by the small degree of organisation, not only of producers but also within the other phases of creation of added value. In this context, the opportunities for the region of the progressive CAP reform will take place mainly at the level of the rural development policy. The strategic diagnosis carried out by the CCRN is very clear in connection with the expectations raised by this aspect. One cannot ignore that the region presents very strong assets in terms of receptivity to this type of policy, mainly because a major part of rural areas still preserve a major capacity to fix people and activities. Indeed, either in the rural areas very close to the metropolitan area, or in the rural areas where diffuse industrialisation progressed, or in the Douro region where the image, landscape-resource and heritage potential is very high, either in the rural areas where rural tourism is already developed and organised, it is not a question of starting from zero but, on the contrary, to strengthen a tendency the effects of which already start to be perceived by the population. More generally, these are the regions which benefited more from the LEADER Initiative by developing the component of rural development, by improving the endowment in cultural and social facilities of the target-rural areas and by improving the institutional governance of rural development thanks to the emergence of rural development associations better endowed with human resources, mainly with local development agents and project leaders. Difficulties persist nevertheless in terms of creation of basic externalities for the rural development policy, mainly concerning the services of certification of local products, of quality research, of co-operative and collective marketing structures etc. The more complex problems arise in the territories where desertification progressed irreversibly and where complementary activities likely to constitute a new anchoring for territorial development are more sparse or without any image of quality already consolidated. In such cases, one cannot identify obvious opportunities for the improvement of local income and the scarcity of capacity of local initiative becomes a complementary source of problems. In this type of case, the "environment" component of the CAP will become a key factor enabling rural income to reach a threshold essential to the fixing of people. What is meant here is a possible scenario for the development of the CAP and not the impact of the guidelines already implemented. Indeed, in the internal areas away from the coast of the region, the more future- orientated concept will be that of "cultural landscape" according to the terms normally used by UNESCO. This means areas where agriculture and environment combine themselves in an optimum way to ensure jointly the safeguarding of landscapes and of activities. In this case, it is not strictly a question of a rural development policy which has to be started. This also involves an environmental aspect that must be introduced because the safeguarding and development of landscapes are only possible by ensuring the maintenance of the agricultural activity. It will be possible to associate to this model complementary activities of local income creation, but the initial start dynamics will hardly be guaranteed without ensuring that the environmental role of agricultural activities is taken into account and, of course, financed. In relation with the topic of cultural landscapes, it must also be said that the CAP does not yet make possible to take into account the effects of externalities that forests continue producing in some regions concerning issues such as the protection of soils against erosion and the fight against desertification in areas loosing manpower.

4. Quantitative analysis of the impact of Community financing on the internal cohesion of the region

234 4.1. Administrative context

In a number of ways, North Portugal has a number of characteristics that have serious consequences for the analysis of the cost of non-co-ordination of sectoral and regional EU policies at this level. For one thing, Portugal has no regional administration and, especially in the period that this study is dealing with (1994-1999), almost no regional policy, at least not in the sense that it is referred to generally in the EU and in many of its member states.

It all comes down to a very powerful position of sectoral Ministries, especially in the regions. Most of them have so-called ‘deconcentrated offices’, responsible for the regional translation of centrally designed guidelines and strategies for the sector. At regional level, so-called Commissions for Co-ordination in the Regions (CCRs) exist. These Commissions have modest power; they can bring together developmental parties, such as the rather powerful and relatively large municipalities and the deconcentrated sectoral ministries. However, executing this moderating role is very difficult without any formal power (the creation of regional administrations was voted away in a referendum in 1998) or real funding.

Nevertheless, the regional dimension has been only weakly developed in the Structural Fund framework of Portugal. The second CSF was dominated by a large number of heavy SOPs, co-ordinated from Lisbon and carried out almost without any real involvement of the regions, on the basis of nationally designed strategies.

Translated to our methodological framework, the above structure implies that no explicit co- ordination of regional development aims has taken place in the CSF. This complicates the discussion about the cost of non-co-ordination, due to the unclear policy stance.

4.2. Key features of the region of North Portugal: external positioning

Table 1: External positioning of the Region North Portugal (abs amounts. in millions.)

235 Absolute Per in % of the capita EU Population 3.54 1 0.95% Income (GDP, PPP) 39 946 11 300 0.59% CAP 326 92 0.48% Territorial Commun. 686 194 3.31% policy 1 Transport Commun. 2 1 0.46% policy (TEN) Cohesion fund (CF.), 141 40 3.19% Transport SOP Transport 2, 3 188 53 0.90% ROP 3 90 25 0.44%

1 This includes SOPs, which should be considered as sectoral policy in this region, but not CF 2 Estimate, based on share of Norte in transport projects in general and national total 3 % of EU calculated on total EU Structural Fund funding Sources: Eurostat, REGIO database, CCRN, INE, Min. de Planeamento

From 157 regions in the EU, North Portugal is 18th in terms of income per head (starting at the lower end) at some 11,300 Euro in 1996 (on a PPP basis). The region is indeed below average in income as it accounts for 0.95% of population and 0.59% of total GDP in the EU. Total GDP equals 39,946 MEURO (Purchasing Power Parities).

The industrial character of the region is underlined by the relatively small amounts of CAP support, at a level of about 326 MEURO annually in terms of producer support (PSE). This support equals 0.48%, about half its population share. One of the reasons for this small support lies in the low share of cereal production in the region. For this product range, North Portugal receives only 0.1% of all EU support, far less than its population share. The region’s most intensive agricultural product is milk, which does result in a fair share of CAP support, but this only goes for a relatively small area of land on the coast.

North Portugal gets (relatively) much larger amounts from EU Transport policy, especially through SOPs and the Cohesion Fund. The annual contribution is 331 MEURO all together, only a fraction of which is made available through the TEN budget line (mainly for the HST Vigo-Porto).

A conclusion from this preliminary exercise is that North Portugal, with its relatively low income levels, has quite extensive Community territorial policies at its disposal. However, the picture is somewhat different looking at the nature of this ‘territorial policies’: most of it turns out to be distributed by means of the Cohesion Fund and the SOPs, which are really sectoral in nature. It does not receive sizeable agricultural support. The Community Transport support is large, but not through the TEN budget line. Environmental policy will not be considered in a quantitative manner because this policy is enforced by legislation rather than by funding.

4.3. Key features of the region North Portugal: internal positioning

236 Going one step lower, we arrive at the NUTS 3 level. The internal positioning of North Portugal becomes clear if we look at the relative positions of the 8 NUTS3 regions. Table 2 shows the internal positioning of the region.

Table 2: Internal positioning of North Portugal Minho- Cávado Ave Grande Tâmega Entre Douro Douro alto Trás- Norte Lima Oporto e Vouga os-Montes total

Inhabitants (x 249.6 369.3 475.6 1189.8 530.1 262 234.9 226.5 3537.8 1000) Income (GDP, PPP) 2095 3697 5301 18 466 3354 2955 2183 1895 39 946 Total (MEURO) 8393 10 011 11 146 15 520 6327 11 279 9293 8366 11 291 Per capita (EURO) CAP 1 Total (MEURO) 60 35 3 60 3 35 50 80 326 Per capita 240 90 10 50 10 130 210 350 92 (EURO) Support to transport 2 Total (MEURO) Per capita (EURO) 24.9 46.9 18.3 213.1 19,2 8.3 0 0 331 99.8 127.1 38.5 179.1 36.2 31.5 0 0 93.5 Regional policy (ROP) Total (MEURO) Per capita 9.6 5.6 9.7 13.2 20,6 6.2 12.1 13.1 90 (EURO) 38.5 15.0 20,4 11.1 38.9 23.8 51.3 57.7 25.5 Total financing Total (MEURO) Per capita 87.4 94.2 25.8 226.1 37.3 47.1 62.1 93.1 679 (EURO) 350 255 54 190 70 180 264 411 192

1 Rough Estimates on the basis of qualitative information 2 Estimations for constituent part of Transport SOPs, Cohesion Fund and TEN budget line real values Sources: Eurostat, INE, CCRN

Compared with its share of population, Community Agricultural Policy in North Portugal is dominated by three regions: Minho Lima, Alto Tras os Montes and Douro. It must be stressed however, that these data are based upon a qualitative assessment of the situation, among others taking into account the production mix in the NUTS3 regions of Norte.

Transport policy seems to land mostly in the Grande Porto area, even if we correct for this region’s high share of the total population of North Portugal. Regional policy, in contrast, seems to be quite equally distributed across the 8 sub-regions.

4.4. Cost of the non-coordination

A first impression of the relation between sectoral and regional policies is given by the Lorenz curves for North Portugal. The graph below shows the inequalities of the three strands of policy (regional, transport and agriculture), relative to the income inequalities and the equality situation.

FIG 1 : Lorenz curve for North Portugal

237 100%

80%

60%

40%

20%

0% 0% 20% 40% 60% 80% 100%

Straight line (Equity line), Upper dotted line (Regional Policy), White line (Agricultural Policy), Lower dotted line (Income), Lower black line (Transport policy)

The main conclusion from this analysis is that Community transport policy is unevenly distributed in the North Portugal region, clearly favouring the richest regions (Porto). The other two policies are more beneficial to cohesion: regional policy is clearly above the equity line, although not pulling at its maximum for reaching economic and social cohesion. Agricultural policy has a mixed impact on cohesion, not unlike the pattern that was established at the EU level; for the poorest area, this policy is counterproductive in terms of its contribution to cohesion, while it supports cohesion in all other cases.

These graphical observations can be quantified by means of their respective Gini coefficients. Regional income differentials within the North Portugal region are about as large as at the European level (Gini = +0.08). Transport policy results in a Gini coefficient of +0.16, twice as large. Regional and Agricultural policy have coefficients of –0.14 and – 0.09 respectively. Compared to the European-wide situation, Transport policy works completely in the opposite direction (large positive contribution to cohesion in EU). Agriculture does more or less the same and Regional policy is considerably less effective in North Portugal as compared to the EU level.

The interpretation of the above is that the combination of transport and regional policy in North Portugal leads to a relatively high level of costs. This is of course heavily influenced by the fact that regional policy is so modest in size (90 MEURO a year) and therefore has little weight in the combined distribution of funding. At the same time, this means that the absolute value of the costs cannot be that large as there is not a great deal to be ‘wasted’. The

238 combination of Gini’s above leads to a cost of 72 MEURO annually for agricultural policy and to 154 MEURO210 for transport policy.

5. Conclusions

The region of North Portugal is an important industrial region of the Objective 1. Its territory is wide and presents major diversity between on the one hand the plain and the densely populated and industrialised valleys and on the other hand the medium-sized and high mountain areas, much more rural and backward. Agriculture comprises a prestige sector (the Port wine and the vinho verde), as well as rather significant milk production. For the remainder, it is rather ineffective, being based on a “minifondia” structure.

The trends show a certain specialisation and differentiation of farms. Certain forms of intensive milk production develop in the plain, beside other also intensive productions (horticulture, vegetables). The internal rural mountainous areas develop productions of olive oil as well as of sheep and goats rearing, which is rather tributary from price guarantees. Generally, the application of the CAP support was not defined up to now in a sufficiently fine way to take account of the specific agricultural characteristics of the region. Direct support to holdings represent a positive aspect, however with unequal repercussions within the various rural areas. The main issue for the years ahead lies in an effective policy of rural development which enables real diversification of activities. In this context, the LEADER programme had very positive impacts.

Considering the relatively modest importance of the CAP allocations in the region, the allocations of the Structural Funds and of the Cohesion Fund has the most significant territorial impact.

The main characteristic of the distribution of these funds is that they are affected primarily on a sectoral basis out of numerous programmes drawn up at the national level. In the absence of a real programme of spatial development, and in a context of weak consultation of the regional level (in the best case), co-ordinated and territorialised approaches are not likely to develop, even if the new CSF (2000-2006) envisages a much more important share of allocations programmed on a regional scale.

As regards internal cohesion in the region, it was observed that the allocations to the development of transport infrastructure in Greater Oporto (which is facing important problems of traffic congestion) counteract the efforts of rebalancing resources within the region, developed in particular by the Regional Operational Programme. The analysis of the practice of the two first CSF in Portugal allows to identify very obvious characteristics of the implementation of structural policies in Portugal, mainly when this practice is compared with that of the countries where Operational Programmes are presented as territorialised programmes for a given region. The main specific character results from the fact that the Regional Development Programme that Portugal presents to the European authorities with a view to framing the negotiation of each CSF is a development programme for a national territory considered as a single region rather than a coherent set of regional development plans. Of course, the RDP is territorialised and from the formal point of view it defines objectives of regional development for each planning region (NUTs II - North, Centre, Lisbon and Tagus Valley, Alentejo and Algarve). In any case, the spatial Operational Programmes (one for each planning region), in addition to the fact that it is based almost exclusively on investment projects co-financed by the local authorities

210 This amount is larger than total regional policy funding as transport policy not only breaks down the entire beneficial effect of regional policy in funding terms but makes it (in combination) negative at an almost equal level (+0.10 in stead of –0.14). This almost doubles the cost of non-coordination.

239 (municipalities), is not based at a regional development plan (territorial level NUT II) according to the methods normally used in regional planning; The Commissions of Co-ordination responsible for the territorial Operational Programmes did not yet succeed in working out true regional development plans, in the sense that they try ensuring that local authorities' investments have a coherent and priority character rather than urging the sectoral Ministries to co-ordinate themselves within the framework of the regional development objectives; The main deconcentrated central institutions which could be mobilised for a different type of involvement are the following: - Agriculture (two Regional Directorates, one for the more populated region of Entre Douro e Minho and another for the internal regions of Trás-os-Montes and Alto Douro); - the Ministry for Economic Affairs with a slightly more complex deconcentated structure which incorporates regional delegations from the Institute of Support to SMEs (IAPMEI) and the Regional Directorate of the Ministry which will be required to play a more active role in the 3 th CSF; - the Ministry of Public Works and Transport with deconcentrated Institutes; - the Regional Directorate of the Ministry of Spatial Planning and the Environment which, in the last Government, was located at the CCRN which depends itself for the moment upon the Ministry of Spatial Planning and the Environment; - the Regional Delegation of the Ministry of Culture which, in the fields of development of heritage and cultural facilities (theatres, libraries, arts centres, museums, events, etc.), starts to have a more active presence in the CSF; - the regional Institute of Employment and Vocational Training which depends upon the Ministry of Labour and Solidarity; - the Regional Directorate of Education which depends upon the Ministry of Education; - the regional antenna of the Science and Technology Foundation which is the main institution responsible for the scientific and technological policy and which depends upon the Ministry of Science and Technology. The co-operation relations between the CCRN and the deconcentrated services mentioned above are unequal in depth and in co-operation capacity for action in the context of a group of objectives. This results from the facts that the degree of autonomy and of motivation of the services is not homogeneous, that there is no well defined institutional framework to direct co-operation and mainly that the services did not develop a feeling of responsibility to act together and with the CCRN within an exercise of regional planning; Relations remain informal and very dependent upon a logic of suitability or of conflictual relations between institutions; co-operation sometimes exists but it is not marked out by a frame of reference. Sometimes, the co-operation that the CCRN develops is closer to the central services of the Ministries than to the deconcentrated services, because co-operation dynamics developed by the President of the CCRN often consists in good informal relations with the Ministries; The strategic thought tradition which exists inside CCRN, which is moreover devaluing owing to the institutional blocking which was created, gives normally rise to a strategic orientation document which can hardly be called a regional development plan, because its preparation method never succeeds in incorporating all the institutions the action of which is considered necessary and because it does not succeed in contractualising the actions; In this context, the objective of programming at deconcentrated level a part of the resources which were previously at the disposal of sectoral programmes will be set up without a true regional development plan as a frame of reference, of engagement and of contractualisation that the deconcentrated services should respect. Formally, this is a progress. Actually, it should be feared that this will not contribute to increasing the

240 potential and the performance of co-ordination owing to the lack of a contractualised frame of reference; The activity of the CCRN proceeds therefore between two fires: on the one hand, it tries to develop an informal discussion with the deconcentrated services; on the other hand, it tries to direct the municipalities and their associations towards a logic of more coherent and strategic investments. In our opinion, in the latter field of action, there is still room for manoeuvre to be exploited. Indeed, the CCRN had some difficulties to incorporate into its strategic thought the efforts that municipality groupings made recently in terms of strategic planning with the support of universities or private consulting offices. This aspect is important in a context where the capacity of the region to think its future is not at all limited to the CCRN. In the 2 th CSF, a positive progression could be observed which is worth being mentioned and it is hoped that the 3 th CSF will be able to consolidate it. The CCRN succeeded, from the section of intangible investments of the Regional Operational Programme (PRONORTE), in involving institutions of the organised civil society into projects coherent with the regional development objectives, such as the Development Associations, the Entrepreneurial Associations with a sectoral base ( the shoe industry sector for example) or with regional or local base (Entrepreneurial Association of Portugal/Oporto ex- Industrial Association) or the sectoral Technological Centres (textile, shoes, mechanics, wood and furniture). In any case, this represents only embryonic dynamics, because the immaterial section of the regional OP remains marginal compared with investments in physical infrastructures.

241 •

• CASE STUDY211 : STRUCTURAL AND SECTORAL COMMUNITY POLICIES IN SPARSELY POPULATED AREAS DEFICIENT IN LOCAL INITIATIVES: THE CASE OF TERUEL-ARAGON212

•Characteristics of the case study

The starting point was the study that the Territorial Development Service of the OECD realised on the Aragonese « Província » of Teruel within the context of a mission of experts carried out in the region with the support of Iber-Caja, one of the most important finance companies performing in the region of Aragon. The OECD report on Teruel was used as a descriptive basis of the « Província de Teruel ». For that reason the study does not present any detailed characterisation of the Aragonese region in question, restricting itself to demonstrating some key-features with a view to pinpointing the issue of co-ordination between structural and Community policies. •The mission in the region

Taking the OECD study as a starting point, the mission in the region was organised withaviewtospecifyingtheaspectsconcerningthenotobviousissueof(non)co- ordination of the structural and sectoral Community policies. In this context, it was decided to concentrate the mission on the Diputación General de Aragon (the Regional Government) while trying to analyse the point of view of the Diputación General for Teruel. The mission was prepared by giving priority to the following fields:

•Environment (Dirección General del Medio Ambiente);

•Transport and communications (Dirección General de Transportes y Comunicaciones);

• Agricultural structures (Dirección General de Estructuras Agrarias - rural Programme of agri- environmental Development PRODER and Measures);

• Territorial policy (Dirección General de Administración Local y Politica Territorial)

• Main structural characteristics of the territory object of the case study

The report of the Territorial Development Service of the OECD « Territorial Development Review of the Province of Teruel (Spain) » (DT/TDPC/RUR (99) 4) provides a structural characterisation of the territory in question, an indispensable reference for the analysis of the underlying conditions of co-ordination procedures which one tries to identify in this section. Only the structural data considered as relevant for the issue of co-ordination between sectoral and structural Community policies are presented here.

211 Study carried out by Prof. Manuel Antonio Figueiredo, Faculty of Economy Oporto, Quaternaire Portugal 212 The author thanks warmly the persons responsible of the Dirección General del Medio Ambiente, Dirección General de Administración Local y Politica Territorial, Dirección General de Transportes y Comunicaciones , Dirección General of Estructuras Agrarias and of the Central Library of the Diputación General of Aragón (Regional Government) who took part in the reflections proposed in the context of the mission in the region and without which this qualitative approach would not have been feasible. The author also thanks the valuable collaboration of Iber-Caja concerning the identification of services considered as relevant to carry out the mission.

242 Rather dependent on the strategic node that the town of Saragoza represents on the territory of the Iberian Peninsula, the region of Aragon is a good illustration of a broad territory affected simultaneously by processes of demographic decline in the more distant and badly accessible areas and by major difficulties, in this type of territory, relating to the implementation of economic dynamics as alternative to the traditional agricultural base.

The Aragon region and the Provínce of Teruel share what can be called call the paradox of the income per capita. Indeed, the region taken globally, as well as the Provínce, present an income per capita higher than 75% of the EU average, a fact which prevents the classification of these territories in the Objective 1. Even Teruel is above 80% of the EU average, which constitutes a paradoxical fact considering the context of obvious demographic decline and weak dynamics of economic growth. This paradox affects ineluctably the regional policy in Aragon and the vast majority of observers stress the unfavourable comparative consequences which emerge for the region and for the Province considering the major challenges resulting from the territorial marginalisation, demographic decline, weak distribution of initiative power and low settlement density (9 inhabitants per km2). With regard to the consequences for our reference topic, this implies a high incidence of the co-ordination issue in the question of the agricultural Structural Funds. Moreover, there is probably an effect of financial resource scarcity for the rebalancing of the Aragonese territory, which is equivalent to high pressure on the budget of the Diputación General de Aragon and to very strong dependence upon the budgetary transfers of the central State and upon the territorial policy followed at central level.

This question of rebalancing the Aragonese territory also becomes a major challenge vis-a- vis the relation « broad territory - high number of municipalities - weakness of the autonomous resources of municipalities ». This fact must be stressed, because it will lead us to the topic of governance of the territorial policy in Aragon and in Teruel in particular. The OECD report shows clearly that the number of municipalities in Aragon which depend on other municipalities for ensuring the minimum daily offer of essential services, is very strong. Approximately 153 municipalities are in this critical situation. There is therefore a basic structural situation which encourages co-operation between municipalities and it is in this orientation that the territorial policy in Aragon progresses. This question will be considered again in the final sections of this report. We consider it as a key question for giving a concrete expression to more powerful effectiveness levels of the territorial policy and this also concerns the topic of the co-ordination of Community policies.

The description of the strategically unfavourable situation of the territory of the Província of Teruel can be supplemented by other very significant facts:

• the irrigated agricultural surfaces account for only 8%;

• the public services account for 28% of the gross product;

• from 1981 until now, employment increased by only 5.8%;

• 1/3 of the farm income has its origin in Community support.

Considering this very unfavourable context, the OECD report proposes an economic and social revival strategy, the ambition of which passes through the following priorities:

• development of all the potential of local initiative already present in Teruel;

• increase of the dynamisation efforts of some agricultural clusters located mainly in the “comarcas” of Maestrazgo and Bajo Aragón, with a very strong emphasis on the activities of

243 certification and of creation of labels of origin concerning mainly the « jamón de Teruel » and the « pears de Calenda », while drawing profits from a selective policy of product quality and of market niche for excellence food products;

• development of tourism as an instrument for the renewal of the entrepreneurial capacity;

• creation of a new economic channel rural environment-tourism, very much centred on the “comarca” of Albarracín;

• directing towards these strategic framework-priorities the active employment and vocational training policies and the support schemes for the small and medium-sized enterprises.

The fields chosen to analyse the co-ordination procedures between structural and sectoral policies correspond well to this strategic issue in Teruel:

• the question of transport and communications will become a key question to check the risks of territorial marginalisation and the insulation of Teruel;

• the field « environment » is essential with a view to structuring the new rural channel environment-tourism;

• the question of agricultural structural interventions is fundamental with a view to maximising the effects of Community structural policies, including the LEADER initiatives 1, 2 and +;

• finally, the territorial policy raises the issue of governance in low density territories and that of « entrepreneurship ». •

244 • Synthesis table of the structural characterisation of Teruel

Variables/Indicators Teruel Relative position vis-a-vis Spain Demographic density (hab./km2) 9 0.12 % of rural population 100% 3.34 Rate of participation of the active 42% 0.87 population 1996 1996 unemployment rate 15% 0.82 1996 unemployment rate - Young 11 0.05 people - 1996 unemployment rate Women 27% 0.03 Variation of employment 1986- 0% 0.01 1996 Variation of agricultural -? 23% 1.18 employment 1986-1996 Variation of industrial employment -? 8% 0.84 1986-1996 Variation of employment in + 21% 0.93 services 1986-1996 GDP per capita at purchase power 16926 1.32 parity 1996 Variation of GDP 1981-1996 + 21% 0.82 Population variation by comarcas Relative position vis-a-vis the 1988-1998 region of Aragón Bajo Martin - 13.9 15.4 Calamocha - 16.0 17.7 Cuencas will mine - 20.5 22.8 Andorra - 9.5 10.6 Bajo Aragón - 3.1 3.4 Teruel - 2.8 3.1 Maestrazgo - 14.0 15.6 Albarracín - 11.9 13.2 Gudarjavalambre - 9.8 10.9 Matarraña - 11.3 12.6

245 Population > 65 years 1996 by Relative position vis-a-vis the comarcas in % region of Aragón Bajo Martin 30.4 1.52 Calamocha 31.4 1.57 Cuencas will mine 23.6 1.18 Andorra 18.5 0.93 Bajo Aragón 24.0 1.2 Teruel 22.9 1.15 Maestrazgo 29.9 1.5 Albarracín 33.0 1.65 Gudarjavalambre 30.8 1.54 Matarraña 31.3 1.57 Network of trunk roads 546 Kms 0 023 Regional road network (DGA) Relative position vis-a-vis Aragón Km/1000 Km2 99.3 0.88 Idem Kms/1000 inhabitants 10.6 2.52 Road traffic density N-330 (7000/day) - N-234 (10000/day) - N-232 (3000/day) - N-420 (2000/day) -

246 4. The practice of implementation of Community policies

The application of Community structural policies in Aragón and particularly in the Provínce of Teruel is very much characterised by the non-existence of Objective 1 structural interventions in the region. In this context, it is the « Dirección General de Economía » which leads the whole co-ordination process of the main concretisation principles of Community policies in the Aragonese territory (2000-2006 programming):

•Objective 2;

•Objective 3;

• Regional Programme of Rural Development of Aragon; although, in the latter case, it is the « Dirección General de Estruturas Agrarias » which has the responsibility for drawing up this important document.

If one considers the programming period 2000 - 2006, the key documents of implementation of Community policies in the region are the following:

•Plan de Desarollo Socio-económico de Aragón (Objective 2) which was transformed into Documento Único de Programación de Aragón (Objective 2), and has as the function of regrouping the interventions of the Regional Government, of the « Diputaciones Provinciales » and of the co-ordination entities of the municipalities and of the central Government;

•Plan de Recursos Humanos de Aragón (objectif 3) transformed into Programa Operativo de Aragón (Objectif 3);

•Rural Development Programme of Aragón. In relation to the objectives of the case-study and to the fields of co-ordination which are considered, the analysis will be concentrated on the interventions of the Objective 2 and of rural development.

During the programming period 1994-1999, except for two districts of the city of Zaragoza, the entire region of Aragon was covered by the objectives of the various Structural Funds. Within the context of current programming (2000-2006), the Commission, by the decision of 14 March 2000, established that the Huesca and Teruel provinces are eligible to the Objective 2 as declining rural areas, while Zaragoza (except for some residential areas) is considered eligible as a rural area and an area in socio-economic transformation. This means that Teruel is completely eligible to the Objective 2 as a rural area affected by major decline.

The framework of implementation of the rural Development Programme is the same. The whole Teruel territory is also eligible to this programme.

With regard to the co-ordination procedures, the Single Programming Document «Objective 2-Aragón» analyses in-depth the provisions taken in order not only to meet the Community standards but also in relation to the needs for adapting the framework of implementation of Community policies to the political and administrative organisation of the Aragonese region. The issue of co-ordination procedures has to be analysed by incorporating into it the experiences of co-operation and partnership associated with the various phases of implementation of programming. The initiatives taken before the closure of the programming must therefore be separated from those associated with the monitoring of the programmes and with the adopted management models.

247 In the first case, co-operation with the ConsejodeProteccióndelaNaturaleza(Council of Nature Conservancy) must be stressed, which incorporates a broad list of representatives of Aragonese social organisations. This is a key preparation-coordination stage for the future of structural interventions, because it led to an outline-document for the whole programming of investments co-financed by the EU, which is the « Environmental Strategy for the implementation of Structural Funds in Aragón for the period 2000-2006 ». The discussion with the « Dirección General del Medio Ambiente » confirmed the key-role of this approach which became the element of environmental framing for all the planning and programming documents of the Aragón Government. This is a considerable change determined by the Agenda 2000 and by the new programming phase of the Structural Funds.

This co-operative approach with the Council of Nature Conservancy is probably more significant than the contacts produced with the Instituto Aragonés de la Mujer (Woman's Aragonese Institute). Thus, within the context of programming procedures, the co-operation agreement drawn up with the « Diputaciones Provinciales » relating to the interventions concerning local governments must also be stressed. This agreement led to specific priorities in terms of projects that the Rural Development Programme should incorporate, namely: the improvement of the roadway system, the improvement projects of urban public spaces, street lighting, rural roads and the supply of electrical energy to isolated buildings.

This agreement becomes a key element for our case-study, mainly if one takes into account that, simultaneously, the Aragón Government decided to accelerate the procedures of implementation of the « Plan de Comarcalización de Aragón» (see hereafter). Indeed, if the Comarcas manage to be constituted from the operational point of view, they will become a new framework of co-ordination for the projects of municipalities. In this context, both procedures, that of the « Diputaciones » and that of « comarcalización », can become contradictory. The fact must be taken into account that the Aragón Regional Government decided to implement a model of transfer of competences and of funds towards « comarcas ». If the practice of transfer becomes effective there will be two possible and possibly contradictory fields of co-ordination. In any case, given the complex relations from the political point of view between the «Diputación General» and the «Diputaciones Provinciales», it proves essential to follow in future which strategic co-operation the regional Government will carry out by means of the « comarcalización » procedures. With regard to the co-ordination of structural interventions implemented by the Objective 2 Single Programming Document, it is the « Dirección General de Fondos Comunitarios y Financiación Territorial - Ministerio de Hacienda » of the central Government in Madrid which ensures the co-ordination of structural interventions, according to a co-operation and responsibility arrangement shared with the Administration of the Autonomous Community of Aragon and also in collaboration with the central administrative units in charge of the ERDF and ESF in Madrid. It must therefore be stressed that, despite the presence of the Regions, it is the central Government which ensures the role of co-ordination, although the administration of the « Diputación General de Aragón » and the institutions responsible for the co- financed interventions share the responsibility for management and monitoring of the interventions. This shared responsibility is based on targeted guidelines in a very important reference document « Statement on the parts to be played by the regional and national authorities with a view to guaranteeing rigorous and effective management of t Structural Funds interventions in Spain for the period 2000-2006 subsidiary to the Provisions for Implementing the Objective 2 Single Programming Document ». This involves therefore a national co-ordination structure, with which the service chosen by the Regional Government to lead the structural interventions (Departamento

248 de Economía) has to co-operate and share the responsibility. In any case, the role of the national Structure of Co-ordination of the Objective 2 is limited to the logic of the management-evaluation of interventions. It is true that, among the established roles, that of the analysis of interventions co-financed by other Community instruments (in particular that of EAGGF Guarantee Section) and of the consistency and complementarity with the ERDF and ESF interventions can be stressed. But all the elements available suggest that the co-ordination logic is based on a financial approach, say a monitoring of the rhythm of financial implementation of programmes and actions.

It is probably in the practice and dynamics of this national Co-ordination Structure that a widened appreciation of the approach of the cost of non-coordination between the structural and sectoral Community policies will be possible. Moreover, the specific procedures implemented by the central Spanish authorities concerning co-ordination with the environmental authorities must be mentioned. Under the Commission communication on the « Cohesion Policy and the Environment » (COM/95/509 of 22.11.95), a network of environmental authorities was created, where the Ministries which manage the Structural Funds take part, co-ordinated by the Department of the Environment. In this network, the environment services of the Regional Government are represented, in collaboration also with the European Commission departments.

The logic and model of co-ordination of the structural interventions in Aragón are basically inspired by a centralised approach, according to which the co-ordination engineering that the regional Government can create is rather dependent on the model and on the priorities of the national co-ordination structure. This conclusion proves relevant from the point of view of the comparative analysis proposed in this case study. Indeed, the high degree of regionalisation of the Spanish State does not correspond in practice to a net added value in terms of co-ordination of the structural and sectoral Community policies, because the regional initiative has to be inserted in a co-ordination model which does not leave major room for manoeuvre to the regions with a view to making changes. In other words, centralised management obliges...

With regard to the Rural Development Programme (PDR), it is presented as a main implication of the Agenda 2000. Concerning the co-ordination procedures, the basic document which is already in the implementation phase, is less rich in terms of co-ordination mechanisms set up. One must take into account that the needs for co-ordination are in this case very visible. Whereas the Objective 2 programme was drawn up by the Economy Department (Dirección General of Economia), the responsibility for the design and programming of the PDR is granted to the Agriculture Department (Dirección General de Estruturas Agrarias). In this context, the co-ordination efforts are based, according to evidence collected in the region, on the fluid and friendly relations between the teams responsible for the elaboration of the two programmes in both Departments, within the context of a thorough analysis of the intervention lines envisaged with amain view of avoiding double actions. The co-ordination which was given concrete expression to within this context is limited to a sound management of the allocation of projects between the interventions of the Objective 2 and those of the PDR. An well concretised example in this context is the agreement with the municipalities at the time of the definition of the type of projects to be submitted to both programmes. For example, the projects to be submitted to the PDR were limited to local operations of improvement of the roadway system and of public spaces, of realisation of street lighting and of improvement of ways in a rural environment. All other projects to be submitted by the municipalities are directed towards the Objective 2 programme.

249 Co-ordination by objectives is far from being generalised. In any case, this PDR reveals critical fields as regards co-ordination.

A critical field of co-ordination is raised by the measures on the rural economic diversification programmes (PRODER) that the PDR introduces according to an intervention line which tries to follow the favourable results reached within the framework of the LEADER initiatives. This type of intervention is directed towards the implementation of an integrated Development Programme based on the objective of economic diversification and basically directed towards the multiplication of the Local Action Groups created under the LEADER projects. This orientation is really new in terms of co-financing of agricultural structural interventions, because it is the first time that intermediate local institutions incorporating the civil society are presented as project leaders. In other words, there is here an explicit dynamisation objective of the local agents which until now was limited to the action of the LEADER Community Initiative. But it was not observed that this innovation in programming was in some way complemented by an individual mechanism of co-ordination within the PDR.

A favourable point of the PDR lies in the generalised participation, at the time of its preparation, of a very diversified network of local institutions:

6.Asociación Agraria de Jóvenes Agricultores de Aragón (ASAJA);

7.Unión de Agricultores y Ganaderos de Aragón (UAGA-COAG);

8.Asociación Regional de Agricultores y Ganaderos de Aragón (ARAGA);

9.Federación Aragonesa de Municipios y Provincias (FAMP);

10.Asociación Aragonesa de Municipios (ASAM);

11.Federación Aragonesa de Cooperativas Agrarias (FACA);

12.Red Aragonesa de Desarrollo Rural (RADER);

13.Consejo Económico y Social de Aragón (CESA);

14.Consejo de Protección de la Naturaleza de Aragón (CPNA).

Considering the impossibility of reaching all members of these institutions which took part in the consultation, one tried to analyse evidence available in the PDR itself, but comments are diverse and it is practically impossible to evaluate the contents and the quality of the participation process from the materials mentioned.

With regard to the procedures used to give concrete expression to and adapt the guidelines of the CAP to the regional context, these were the subject of analyses within the context of discussions with the « Dirección General de Estruturas Agrarias » (see hereafter).

5. Environmental policies o The transposition of Community directives towards the region and the target-territory

With regard to the environment aspect and to Community directives, the Member State has the task of transposing these directives into national legislation. The Region, i.e. the

250 Comunidad Autonoma, is therefore tributary of the political will of the central State concerning the timetable chosen to give concrete expression to Community standards. Nevertheless, there is a division of competences between the central State and the Region concerning the power to legislate in the field of the concretisation of the overall framework of Community directives. In this context and taking the case of a possible delay in transposition the Community standards towards national law, one could envisage a possible situation according to which the Region would take a legislative initiative before the central State takes the decision to give concrete expression to the Community guidelines within the national legislative framework. Putting concretely the question to our speakers in the « Dirección Generale del Medio Ambiente », no situation of concretisation was identified on the basis of the competences of the Government of Aragon before the central State has taken the initiative to initiate the process. A situation with a significant delay concerning the transposition towards the national legislative framework of Community standards on the environmental impact assessment of projects and investment plans was identified. This decision of the Spanish Government was taken only in October 2000, with a rather long delay, if one takes into account the fact that the Community Directive was adopted in 1997. Even in this extreme case, probably due to political alternation at the national level and to the adjustment periods that the change of political power caused, the Government of Aragon did not take any decision to proceed itself to an autonomous legislative initiative and by anticipation. The Government of the Region considers therefore that the transposition of Community standards in the field of the environment has to follow a methodology of deepening and progressive concretisation from the EU towards the Region while passing through an initiative of the central Government which has to realise a first adaptation of the directives to the situation of the country and to the possible characteristics that can be identified at national level. The intervention of the regional Governmenthastobeledaccordingtothesameprincipleoforientation,i.e.byplaying its decisional role while trying to bring to the Community directives transposed towards national legislation some adaptations justified by the regional characteristics. The influence of the sub-regional level is therefore pointless concerning this transposition. It is true that the characteristics of certain sub-regional areas sensitive in environmental terms can influence the legislative initiative of the Regional Government. Nevertheless, there is no mechanism of participation of the intermediate levels - «diputación », « comarcas » or « ayuntamientos » concerning the decision to introduce legislative nuances relating to the directives coming either from the EU or from the central Government. With regard to the specific situation of the «provincia» of Teruel, there are no characteristics which differentiate it sufficiently to require a shift of the transposition towards the region of Community directives.

One tried to identify possible tensions between the central and regional levels of decision on the manner how both levels see the effects of the Community guidelines in terms of environment. The representative of the DGMA did not confirm the existence of significant differences. The main questions emerge as regards the relations between the Regional Government and the economic or institutional agents vis-a-vis situations which will be the subject of analyses in the following section.

Estimated effects of Community guidelines in the field of environment in relation to regional or sub-regional policies of development of endogenous resources The main idea proposed by the representative of the DGMA is that the Community directives, and even those which can be associated with additional financing opportunities, are still perceived more as constraints than as opportunities with a view to enhance resources which are not “enhanceable” in other contexts. This has important effects in relation to the action of the services in charge of the environmental

251 policy, regarded as vigilant and strict police constables rather than as development agents. The Regional Government's services call therefore for a more horizontal prospect for the practical application of Community environmental directives by passing the guidelines through several fields of promotion of regional and local development and not according to regulations submitted as isolated constraints for the development potential of certain local resources. It is in this context that the DGMA considers that the 2000-2006 programming period provides an increased importance to the environment aspect in relation to the previous programming periods. It can therefore be said that the environmental field has henceforth a more transversal incidence in various activities and programmes, being taken into consideration by almost all Regional Government's investment plans, which is regarded as an outstanding development compared with previous programming. This means that, compared with the previous programming period of 1994-1999, where the coexistence of structural and environmental measures existed within the context of the 5b structural measures, such as for example the agri-environmental measures, a more qualitative than quantitative change was observed. The financial volume of environmental actions anchored in the programmes of structural measures did not increase and remained globally the same. The most significant development is observed in relation to the horizontal application of the criteria and of the measures of environmental impact in almost all fields of action co-financed by the EU. It is the case for example of all investments in agricultural hydraulic works which have for the moment to respect the Community standards concerning the environmental impact.

This qualitative change goes hand in hand with the creation of the DGMA which was set up in the context of the new Aragonese Government (PSOE + Partido Aragonés) which came out of the last autonomic elections in Aragon (1999). With regard to the transposition of the Community Directive which leads to the NATURA 2000 network, there is a rather long delay in the procedures which have to lead to the conclusion of the list of classified sites integrated into this network. In this field, procedures are clearly established. The central Government takes the initiative to propose a list of sites to be incorporated which has then to be appreciated by the Regions, which can propose changes, involving the indication of new sites or of some removals.

The underlying criteria in the Directive are not sufficiently precise, according to the evidence of DGMA. Ambiguities are still observed mainly in connection with the criteria to be used and the conditions of development of the sites registered in the list submitted by the Member State to the European authorities. This question has strong implications for the region of Aragon, because the Aragonese territory is rich in sites potentially considered as belonging to the Natura 2000 network.

At the level of the « Províncias », Teruel does not have a significant heritage in terms of potential sites, except for the area of Albarracín, including very sensitive mountain areas and landscapes to be protected and enhanced. It is the Província of Huesca which dominates the interest of the « Diputación General of Aragón » (DGA) in this matter, owing to the importance of the territories of the Pyrenees. It can therefore be said that there is still no map which directs the application in the territory of this important environmental protection instrument. In any case, the NATURA 2000 network constitutes the result, in the Aragonese region, of a process which started there a long time ago with the instrument of Management of Protected Spaces. In the Província of Teruel, it is the protected Rodeno Pinares landscape area, located in the east of the Montes Universales in the comarca of Albarracín which constitutes the only example of management of protected space out of a number of 10 areas throughout the Aragonese region. This environmental protection instrument is in conformity with the revival strategies proposed for Teruel by the analysis of the

252 Territorial Development Service of the OECD. The DGMA grants to these areas a major interest in the environmental protection policy and established for each area an Interpretation Centre, managed under a co-operation protocol between the Government of Aragon, Ibercaja and the Spanish Society of Ornitology. In addition, these centres have to play a major role in the field of environmental education mainly towards young people and schools. With regard to the LIFE instrument, there is a generalised perception, not limited to the regional authorities, that it is an initiative which should be much more powerful with a view to producing really significant effects and to incite the local institutions to use it, even in a combined way with other instruments. The weak financial dimension of the initiative and of the aid granted to the institutions reduces considerably the possibility of the LIFE interventions to be combined within the context of sets of environmental measures, mainly with regard to enhancement projects for sensitive areas in terms of landscape protection, considered as cultural landscapes belonging to the identity dimension of the territory.

From the point of view of the articulation-integration mechanisms between the action of the DGMA and the intervention of Structural Funds, the organisation logic of the administrative management machinery of Structural Funds in the Aragonese Government conditions the intervention of the services associated with the field of the environment. Indeed, all what is concerned with the ERDF and ESF is managed by the «Economy» service which has in addition the responsibility for general co-ordination. The possible role of the «Environment» service is limited to the agricultural funds, in the current case to the Rural Development Programme controlled by the « Dirección General de Estruturas Agrarias » (DGEA). It is within this framework, managed by the agriculture services that the DGMA can play a role favourable to the support of the environmental aspect. It must be first of all stressed that the DGMA does not intervene in the implementation of the LEADER programmes, be it LEADER 1 or LEADER 2 and, in this programming period, LEADER +. One may wonder about the reason for this absence in a context where several LEADER experiments conducted by the Local Action Groups managed projects having an environmental aspect and in particular an aspect related to the «enhancement of areas and sensitive landscapes from the point of view of environmental protection ».

Room for manoeuvre in terms of co-ordination proves therefore limited to the relations, under the DGA, between the DGMA and the DGEA and consequently to two possible methods: - on the one hand, to administrative machineries such as the ex-ante evaluations of environmental impact concerning sensitive areas and relating to the nature conservancy or restructuring actions of agricultural holdings involving increases in dimension; - on the other hand, to the normal relations of exchanges of information in the chain of the normal administrative procedures inside the DGA.

It should be noted that the DGMA services well pointed out that it is a possible integration within a framework which sets the rules and conditions from programmes controlled by the agricultural administrative structures. It is not a question, one has to underline it once again, of integration led from programmes controlled by the environmental authorities. In other words, this involve primarily agricultural interventions where one tries to enforce environmental constraints rather than enhancement projects for areas and natural landscapes where one attempts to introduce environmentally friendly agricultural activities.

It must therefore be pointed out that the progression of the aspect « development of cultural landscapes the environmental quality of which is valuable » is far from being solved and

253 made operational in projects able to manage good practices to be disseminated, in particular towards the LEADER experiments which seem the closest ones in this respect. From the point of view of long-term effects, the conviction prevails in the DGA services that the Community directives will produce in future conditions more favourable to integration between the agricultural structural interventions and the environment aspect. For the moment, in the context of the existing distribution of the environmental protection values within the vast majority of institutions, the Community directives are still perceived as constraints and not as opportunities for enhancing endogenous resources. The application of the most important directives must be accompanied by more stimulating aids with a view to allowing the progressive diffusion of another sensitivity vis-a-vis the intervention potential of this type of measure. Finally, for the medium term, the possible effects must be mentioned which could be associated with the progressive creation of Comarcas under the Plan Comarcal decided by the new Government of Aragon according to a model which will be the subject of individual analyses in a later section of this report.

Moreover, if the results of this reflection are combined with that produced from the experience of the DGEA, it seems that the situation of the « Província » of Teruel remains very unfavourable even if an environment aspect is added within the framework of agricultural structural interventions. Teruel, except for the LEADER interventions and for the local action programmes that they had to develop and consolidate, remains marginal to the dynamics of agricultural structural interventions enriched with an environmental conservation section. This results mainly from the non-existence of reliable and diversified dynamics inside the civil society and from the problems of depopulation and ageing of the social structures, which block a more significant presence at the centre of open programmes awaiting the emergence of initiatives by hoping that they exist and putting requests for support to the regional services.

6.Transport and communications policies

The transport and communications field proves to be a key field for the analysis of the conditions of co-ordination between sectoral Community policies and the impact of structural policies in the case study region.

Several reasons explain the relevance of this reasoning for the Aragonese territory:

• the TERUEL territory is known through the physical marginalisation that it presents vis-a-vis the national and European transport networks;

• the city of Zaragoza plays a role of strategic node in the Iberian territory which awaits the implementation of some key-investments of the Trans-European Transport Network;

• the main projects of the Trans-European Transport Network still have room for manœuvre, especially with regard to the priorities of programming;

• there are signs suggesting that the most important logistical operators in the Iberian Peninsula are locating in the Aragonese territory with a view to guaranteeing their influence in the supply of logistical services in this region (see for example the initiatives of the ports of Santander, Barcelona and Valencia, which present themselves in the Aragonese territory as new sources of logistical services).

In this context, the extreme sensitivity for the Aragonese region of the issue of programming the implementation of the Trans-European Transport Network must first of all be stressed and in particular for « província » of Teruel.

254 Indeed, the Aragonese region is close to some elements envisaged in the programming of the TEN-T:

• the connection by TGV Madrid-Saragoza-Barcelona crosses over a distance of 200 kms the Aragonese territory, which strengthens considerably the strategic node which Saragoza represents concerning the mobility of people in the Iberian and European territory in general and which also improves the relation with the Ebro motorway favouring also the centrality of Saragoza;

• the road link Valencia (Sagunto) - Teruel-Saragoza-Somport (France) constitutes a key element of the Teruel opening-up, which is for the moment built only on 58 Km between Zaragoza and Teruel.

Beyond these corner elements with the TEN-T, the importance of some connections dependent on the central Government's action and that the « Diputación General of Aragón » tries to modify either in terms of acceleration of programming and of implementation of investments or in terms of design still have to be stressed,:

• The improvement of the railway line Saragoza-Teruel, implying for the moment a journey of 3 hours and considered in new version with one hour and a quarter;

• An international railway line in basis tunnel b through Huesca-Canfrán the objective of which is the permeability of the Pyrenees;

• The claim that the Madrid-Levante connection should cross the Aragonese territory through Zaragoza.

The political change which occurred in Spain with the access to power of the Popular Party revived the question of the Spanish national Infrastructure Plan and it is for reason that movements are currently being observed on the part of the Regional Government with a view to pushing the structuring projects proposed by the Spanish Government in the list of the TEN-T infrastructures and to ensuring the permeability of the Aragonese territory in relation to road and railway projects stipulated in the national Infrastructure Plan. An important element of the analysis is that the Regional Government plays a major role in ensuring a wide awareness-raising in the region about the TEN-T. The issue is more visible thanks to the action exerted by the Regional Administration towards the central Government and this pushes the discussion on projects towards the economic and political agents of the region. In comparative terms, there is here a significant difference in relation to the Portuguese situation where the discussion about the TEN-T is very limited and normally restricted to publications in the media at the occasion of international meetings. The regional action introduces into the scenario of international connections a greater visibility of the needs of territories and a stronger exhibition of the effects of the TEN-T on territorial cohesion. The direct action of the region concerning infrastructures such as motorways is limited to a few sections of connection with the national and European primary networks. Currently, the Aragón Government is trying to launch a project of a 15 Km long connection motorway between the « Cuencas Mineras» near Saragoza, by inserting directly the traffic flow from the mines on the Ebro motorway and by taking it up again after the Zaragoza belt.

Along the same line of complementary investments, the Diputación General de Aragón, in partnership with the Ayuntamiento of Saragoza and a regional savings bank, is the driving element of a project of large logistical platform for Saragoza. The aim is clear: by

255 anticipating the effects of centrality derived from the above-mentioned TEN-T projects, it wishes to strengthen the inter-modal potential of the city of Saragoza. Concerning the consequences of this type of projects in Teruel, they depend completely on the implementation of projects of improved connections between Zaragoza and Teruel, by motorway and also by rail. The progress of endowment in logistical infrastructures of the Aragonese region generated by the development of the strategic and inter-modal role of Saragoza requires, to be diffused on the insulated territory of Teruel, already identified complementary investments. The mission in the region made possible to identify important dynamics in terms of location of logistical activities in the Aragonese region. The ports of Santander and Barcelona opened terminals in Aragón, the first at the OPEL factory and the second in Zaragoza. The port of Valencia is also interested in taking place in Aragón and there have already been preliminary contacts between the Regional Government and the harbour authorities of the Valencia Community.

This shows that the Aragonese territory will be disputed by the logistical activities in close association with the stipulated projects of road and railway transport infrastructure which will strengthen considerably the inter-modal node that Saragoza represents, even in relation to a broader frame of reference like that of the ESDP. The Ebro valley plays a decisive role as regards the establishment of bridges between areas of potential development in the Iberian territory and also from the point of view of their connections with other dynamic centres of the European territory. In short, the opening-up of Teruel, essential with a view to making feasible the strategic options that the report of the OECD presents, remains therefore tributary from the capacity of the Spanish Government, of the Diputación General de Aragón (DGA) and of other important provincial institutions (mainly the Chamber of Commerce and Industry,) to push the programming and financial commitments of the TEN-T mentioned above and to develop also the complementary infrastructures of the European projects. One does not know yet what will be the effects of the EU enlargement after 2006 on the TEN-T issue with regard mainly to the financial engagements that the EU will maintain. This period of programming is therefore vital with a view to guaranteeing the new logistical conditions for Aragón and consequently for Teruel.

The strategy proposed for Teruel by the Territorial Development Service of the OECD also raises the question of the role that telecommunications can play in the strategy of opening-up and of local economic revival of the target-territory.

The prospect of the DGA on the subject of telecommunications and their influence on territorial issues is very careful and based on the following elements:

• the role of the Regional Government concerning the issue of telecommunications is very limited because it is the central Government which controls the sector;

• the current impacts of the sector is very volatile because the relaxing of control procedures are still being worked out and the strategies of private companies are going on on the territory;

• moreover, the development of technological progress is vertiginous, which also requires precaution in decision-making.

In this context, the Regional Government uses a network of Telefonica, the most important Spanish company, in virtual network arrangement rented to the central operator. With regard to the subject of mobile phones, the Regional Government remains also tributary from the private operators' action. The attitude is therefore the expectancy vis-a-vis market trends.

256 The indicated reasons stress a great deal the speed of technological development and the risks which are associated with it. The persons responsible for the Dirección de Transportes y Comunicaciones present the example of other autonomous communities which made major investments in the field of analogue rural telephones which was completely precipitated considering the progress of the digital one . One may conclude that strategies based on the development of local excellence and high quality food products by means of electronic commerce proposed by the OECD for Teruel may face short-term constraints considering the full application of information and communication technologies and use of Internet with a view to looking for and answering to increasingly wide markets. It is true that the strong competition which exists today between private telecommunication operators may become a factor favourable to the regional policy developed by the DGA, by encouraging the connection of the more distant areas with the decision-making centre of Zaragoza. Account must be taken of the fact that this competition is obviously directed towards the areas with more substantial demand and the coverage of depopulated areas can only be achieved in the context of negotiations and compensations. But in terms of markets, areas like Teruel are at the beginning highly disfavoured, because they mean a very poor participation in the demand driving forces. With regard to, for example, the project of large logistical platform provided for in Zaragoza, the decision of the DGA to set up a wide-band optic fibre infrastructure and to open the operation of this infrastructure to the private market seems correct. Indeed, this represents an extremely strong point in the field of logistics in terms of potential demand for communication services. The private market will surely answer and the privatisation of services will consequently ensure the continuous adaptation of the project to technological developments with a view to guaranteeing the profitability of the infrastructure. Nevertheless, in relation to situations of the type of Teruel, it proves to be a high-risk solution for physically insulated territories to remain dependent upon a private coverage. In economic terms (exploitation of opportunities that the e-business provides to marketing activities of local excellence products) or in social terms (follow-up and medical and social assistance to distant and not easily accessible people) the option requires, at least, a political lever at regional level. The intervention at regional level of the DGA seems essential with a view to compensating for the market constraints that depopulation generates in these territories. This intervention does not necessarily has to lead regional public institutions to assume the responsibility of the infrastructure and operation. This means only trying to direct private operators towards a more generalised coverage of the Aragonese territory, by considering the potential earnings that they will realise in the areas where demand is already existing.

A final reflection is necessary concerning the issue of transport and communications. The presence of a regional political decision level plays in this case an important role to guarantee greater visibility of the options placed by the TEN-T plan, considering their consequences for disabled territories such as Teruel. Without the regional Government's action it would not be easily possible for an insulated territory like Teruel to benefit from the favourable effects of the progression of the TEN-T. In addition, it is clear that it is from the favourable effects that the TEN-T projects mentioned will produce in relation to the strategic and intermodal role of Zaragoza that Teruel will be able to benefit from the new context of opening up towards the Iberian Peninsula and the centre of Europe. The action of the regional decision level becomes, therefore, in our opinion, an asset concerning more effective co-ordination between the Community transport policy and the structural interventions of the Objective 2 and of current Rural Development within the framework of 2000-2006 programming.

257 7. Rural development policies

Spaces and mechanisms of articulation between the evolutionary measures of the CAP and interventions in the field of rural development

The Rural Development Programme (RDP) of Aragón 2000-2006 mentions explicitly the need for co-ordination with the other instruments of the CAP, but this concerns an approach very limited to a specific instrument. The regulation in question is the 1257/1999 (Article 37) one, which prohibits the attribution of support to activities covered by COM schemes, by limiting the exceptions to cases justified by objective criteria. Following the guidelines of regulation 1750/1999, the RDP 2000-2006 designates the exceptions to this regime. It introduces them in the case of fruit and horticultural productions and to support to product marketing and processing. The selected method consists in financing under the COM marketing projects the maximum eligible investment of which amounts to Euros 100.000 and to support and finance by means of the RDP projects, the investment of which is higher than the above-mentioned amount. This exception is justified by the importance of fruit and horticultural production in Aragón. According to the figures presented by the RDP 2000-2006, this concerns the most important sector of investments co-financed during the 1994-1999 programming period. This means that, according to the same source, approximately 60% of support reduction to fruit and horticultural production would have a limited incidence for the Aragonese region. The justification of the exception described in the previous section probably becomes, in the main RDP document 2000-2006, the central element for taking into account CAP changes. It is true that, in the pages introducing the programme, it is well stressed that the rural development policy is presented, in the new context, as an instrument of monitoring of reforms proposed in the fields of prices and markets under the CAP. The document stresses that it is a more limited vision of the rural issue, since the cohesion policy is broader and more ambitious than the agricultural policy. Despite the demonstration of this concern at the beginning of the document, which frames the overall programming of the RDP, an operational approach remains to be developed, likely to follow, in terms of synergy effects, the CAP actions and the results expected from the RDP.

The territorial approach is organised in this programme by means of the identification of a typology of territorial units, the composition of which is based on « comarcas ».

The Teruel territory comprises several territorial units, namely:

• Teruel mountain: the comarcas of Albarracín, Maestrazgo and Gudarjavalambre;

• Iberian system: the comarcas of Andorra, Calamocha, Teruel, Cuencas Mineras;

• Somontanos of the Iberian: the comarcas of Bajo Martin, Bajo Aragón and Matarraña.

The first unit is of particular interest because it is the only one incorporating protected areas in Teruel (Albarracín) and because it incorporates also one of the most dynamic agricultural clusters areas (Maestrazgo).

The differentiated territorial unit identification, aiming at refining the strategic vision of the RDP and the effectiveness of actions and projects to be co-financed, has to be considered as an opportunity for the objective of co-ordination. The approach consists of course in identifying the major problems in each territorial unit and in configuring actions according to this problem typology.

258 In any case, except with regard to the PRODER priority, the new character of which has already been stressed, this concerns open measures awaiting decisions to submit a request for co-financing on the part of territories and agents considered as eligible. Despite the constraints that the morphology and typology of agricultural problems in Teruel represent for a programming according to the territorial unit typology of the RDP 2000-2006, the major problem remains dependent upon the progression of local initiatives. The Dirección General de las Estructuras Agrarias confirms that the vast majority of support available does not meet the economic agents of Teruel. The PRODER constitutes therefore, in the context of previous experience in terms of Structural Funds and of the new 2000-2006 programming period, the only instrument of the agricultural sectoral policy enabling interventions related to the main weakness and major constraint of agricultural modernisation and economic revival of the area. Under the PRODER, the agricultural sectoral policy is for the first time articulated with local institutions, the action and the raison d'être of which are precisely to play the role of catalyst for local initiatives.

The importance of the PRODER is also due to the fact, for the first time, of opening a room for manoeuvre concerning structural interventions of the sectoral policy as well as LEADER experiments already on the ground.

In our opinion, this change deserves attention and a follow-up organised as a critical observatory of the achievements of the co-ordination, to be developed in future by means of the RDP 2000-2006.

It must be said that the organisation of the « Dirección General de las Estructuras Agrarias » is based on the setting up of a functional specialisation model by fields and follow-up matters. Thus, the services which ensure the follow-up and management of the RDP measures 2000-2006 are not the same as those which ensure the follow-up and management of the CAP instruments. Co-ordination space between the two aspects does not correspond therefore to a practice existing in the daily operation logic of the Directorate services. It is limited practically to the action of the person responsible for the Directorate.

In this context, it may be concluded that a delay exists as regards the taking into account of synergy, or of the costs of the absence of synergy, between the monitoring of the CAP implementation effects and of the combined effects of actions of the Objective 2 and Rural Development Programmes.

Another field to be investigated concerns the effects which will be generated by the progressing importance of the comarcas, considering the political will expressed by the Aragón government to push the Plan de Comarcalisación and to accompany it by an effective transfer of competences and not simply by a power delegation. According to the terms envisaged in the RDP 2000-2006, the Diputaciones Provinciales have the role to articulate themselves with the municipalities in relation to the implementation of the RDP at local level. As soon as the comarcas will be active on the ground, the question will arise: which supra-municipal co-ordination level will have to be retained: that of Diputaciones or that of comarcas, the creation of which became a bet of the regional Government ?

When the services of the Dirección General de Estructuras Agrarias are questioned about the problem of co-ordination, it is clear that they know well the complexity of the procedures envisaged. It is not only a question of co-ordinating with the Dirección General de Desarollo Rural of the central Administration which leads the programme in relation to the authorities of the European Commission, but also of co-ordinating with the Department of Economy of the Regional Government which ensures the overall management of structural interventions. In this context, it seems that almost the whole energy supplied is spent in this difficult operation. Room for manoeuvre to set up co-ordination mechanisms

259 related to the monitoring of the CAP effects in the region proves to exceed the existing capacity of co-ordination and integration.

Moreover, the regional agricultural services have a clear perception of the fact that the PRODER will produce significant changes. It will require a new attitude on the part of the services, because it will determine permanent relations with new agents who will be able to play a decisive role by increasing the response capacity of certain territories to the opportunities opened by the PDR 2000-2006. It also proves a key factor with a view to instigating the emergence of young farmers.

With regard to the agri-environmental measures, they already existed in the 5b programming of 1994-1999 in the fields of prevention against forest fires, the protection of hunting areas, interventions in protected natural areas and agricultural hydraulic works.

The effect of moving to the RDP 2000-2006 will not introduce significant changes, even in terms of financial amounts used by each measure. The change which will occur concerns the rigour of the evaluation of the environmental impacts of interventions.

The most important spatial impact of these measures will probably occur with regard to the agricultural hydraulic works. The « comarca » of Monegros will probably be the most affected by this rise in importance and rigour of the implementation of environmental measures.

The question of the water control has historically and currently a major importance in Aragón. The basic situation is paradoxical and contradictory. The presence of a rather important river at Iberian level, the Ebro, does not suppress the water shortcomings that Aragón is facing, where the rivers which are almost dry during summer time are numerous. This situation explains the strong claims and the generalised rejection in Aragón of the plan of water transfer from the Ebro that the Spanish state has just approved. As was already underlined, the problem worsens considerably in Teruel, where the percentage of irrigated land is very low and prevents major changes in terms of agriculture in the region.

Finally, the development of agricultural surface directed towards ecological agriculture must be mentioned (hectares):

Provinces 1995 1996 1997 1998 1999 Huesca 1617.9 2246.2 2422.7 3087 3174.3 Teruel 974.8 1508.3 2150.2 2016.1 2570.2 Zaragoza 2809.3 4559 7637.2 8171.2 9894 Région Aragón 5402 8313.6 12210.1 13274.3 15638.4

Although the Teruel province is that in which the importance of ecological agriculture is lowest, one has to notice the positive development observed for the period of 1994-1999 programming. The relations between the sectoral agricultural policy and the LEADER interventions

The vast majority of studies on the implementation of Structural Funds in Aragón converge towards considering the major role played by the successive phases of application of the LEADER Community Initiative, concerning the diffusion of new rural development approaches. This reflects an important innovation, mainly when considering areas such as Teruel where the capacity of local initiative is very weak and rare and in view of the fact that the agricultural policy has a tradition characterised by vertical actions, without

260 individual aptitude to develop relations of local co-ordination and of support to the training of new local development agents.

It is not by chance that the Aragonese Network of Rural Development which associates the 12 Local Action Groups created under LEADER1 and LEADER2 became the first network created in Spain.

The approach of consolidating with LEADER + the existing field experiences could, in our opinion, be strengthened by the relations of co-operation envisaged due to the fact that the PRODER measure of the rural Development Programme has for the first time a mission of stimulating the emergence of local development agents able to disseminate and consolidate rural development actions in the territories less endowed with initiatives and local organisations.

The Teruel province is quite well represented in the dynamics of Local Action Groups which were created in Aragón:

• in the « comarca de Bajo Martin », action is centred on the development of the Natural Reserve of Rio Martin and presents as one of the main innovative initiatives the adoption of a Centre for the integrated development of the Alabastre, a tourist marketing plan and a plan for the promotion of the new information and communication technologies in a rural environment;

• in the « comarca de Jilloca-Gallocanta », which includes mainly the Daroca, Calamocha and Monreal del Campo territories, it is the aromatic and medicinal plants which have the major innovative role, mainly with regard to the search for local resources likely to be present on the market;

• in the « comarca de Maestrazgo », the main principle of intervention is the Maestrazgo Natural Reserve and, in articulation with the LIFE programme, there is also an intervention integrated with sections relating to urban solid waste, to waste from the production of bovine animals, to waste water and to the management of small rivers which are the main structuring principle of it. Here, associative dynamics were very strong, involving the creation of two local entrepreneurial associations (agri-foodstuff and tourism) and an association of house owners for rural tourism. In relation with the topic «Natural Reserve», specialised parks and interpretation centres were created and significant dynamics developed in the field of co-operation of the local population about cultural and rural heritage;

• in the Mesquin-Matarraña area, in the extreme north-east of Teruel, dynamics developed in the fields of rural lodging, of SMEs working in ceramics and small packaging and of agricultural diversification;

• finally, in the area of Albarracín, the objective giving concrete expression to a protection and development project of the Albarracín mounts, where the protected areas of Teruel are located, the innovative aspects of which are the efforts of re-insertion of young people by guiding them towards rural tourism and of rehabilitation of a mill, adapted for activities of cultural debate (local tertulias), of interpretation of villages through virtual images, of planetary networking through Internet.

Some summarised figures illustrate the magnitude and diversity of interventions and of local dynamics which were developed in the context of the LEADER interventions:

261 • Results of the LEADER initiatives in Aragón up to 1999 • Technical Training and Rural SME and Enhance- Environ- Total assistance support to tourism craft ment and ment employment industry marketing of agricultural products Financing 1233976.2 1143071.8 7735128.0 7148818.1 3263331.5 2713762.6 23238088.2 envisaged (pesetas) Engagements 103 101 121 134 114 106 120 (%) Certified (%) 72 46 57 65 60 36 57 Number of 375 765 655 858 350 283 3286 Projects Of which: - Private 66 325 349 94 18 852 agents Companies - 39 114 395 110 19 677 Administra- - 61 96 26 23 109 315 tions Co- - 3 - 12 83 2 100 operatives Residual 56 75 9 6 5 4 155

With regard to the effects to be identified, mainly the sections of rural tourism and SMEs and craft industry must be mentioned. According to the figures that were obtained on the ground, actions directed towards rural tourism have create 3591 new jobs in Aragón, although in terms of modernisation 2162 jobs were safeguarded. Considering of the actions « SMEs and craft industry », approximately 454 companies were created or modernised and 2400 new jobs were created. These figures concern the whole Aragon region as LEADER reports do not regionalise the effects. Teruel corresponds to less than one third of these figures according to information obtained on the ground.

Moreover, it must be said that:

LEADER initiatives brought to the rural development policy in Aragón and to Teruel in particular elements of change. The consolidation of dynamics and of the of Local Action Groups proves a key factor of change in agricultural policies, mainly in the context of reorientation towards the section of rural development. Indeed, the lack of decentralising tradition in the agricultural policy will oblige the central and regional services to develop other co-operative practices with local organisations. The role of the LEADER initiatives was to set up experiments leading to a more professional level of local organisations suitable for the promotion of rural development. This experience stock will surely be very useful in the context of the implementation of the rural Development Programme and in particular of the measures and actions of the PRODER.

8. The questions of governance: the policy of setting up « comarcas »

The political change in Aragón determined by recent regional elections gave, among other effects, to the Aragón Comarcal Plan a new blast. As in the vast majority of Spanish autonomous communities, even in the historical communities (Galicia, Catalunya and Bask Country -Euskadi), the political and administrative organisation of the Spanish State often

262 raises problems in relation to the choice of relevant territories for co-ordinating policies and maximising the results.

It is well known that in Spain the number of municipalities (ayuntamientos) is a source of problems for the co-ordination between actions of the central State and of the regions. Aragón is not an exception to this rule, considering the 730 « ayuntamientos » which exist in this region. The complexity of this co-ordination is strengthened by the presence of the Diputaciones Provinciales which have a budgetary role and which also adopt investment measures on their territory. This administrative unit cannot be regarded as a source of ascending co-operation between the municipalities and often the action of the Diputaciones becomes conflictual either with the Regional Governments' action or with the municipalities in specific areas.

Despite the lack of tradition and practice as regards supra-local co-ordination, shown by the « Diputaciones Provinciales », one has already pointed out that, under the Objective 2 and Rural Development programmes, the Diputaciones Provinciales were in charge of a role of co-ordinating the actions of municipalities considered as eligible to these two programmes. This does not necessarily mean that the Provincias could always be regarded as a relevant territory for pushing the practice of inter-municipal co-operation and to build organisational mechanisms leading to a higher level of co-ordination between sectoral and territorial policies.

It is true that, in addition to actions of the Diputaciones , there are experiments of inter- municipal co-operation – the Mancomunidades – which play, in particular in urban contexts, an important role for the management of specific problems affecting several municipalities and which cannot be solved and managed from budgets as limited as that of the « ayuntamientos » and based on technical support structures which remain very weak in every municipality. Mancomunidades have consequently a specific role with regard to fields like urban waste management, management of the networks of water supply and sewage and probably other fields of inter-municipal co-operation will emerge in the immediate future when new problems arise in the municipalities least endowed with budgetary and technical resources.

But it is also true that there are, on the ground, no other experiences of inter-municipal co- ordination based on more comprehensive development strategies and mainly based on effective co-operation, non imposed and perceived as a real need. The only exception is the experience of « comarcalisación » (creation of comarcas) which are only groupings of municipalities directed towards common strategic objectives. The region of Catalonia is pioneer in this field and the region of Galicia also began a creation process of comarcas, according to the initiative of the Dirección General de Planificación Territorial of the Xunta de Galicia and centred in this first phase on the internal rural regions of Galicia.

The Aragón experience proves, in our opinion, one of the most interesting approaches to the issue of the construction of relevant territories for inter-municipal co-operation and, consequently, for the search of conditions favourable to co-ordination between sectoral and territorial policies.

This implies a progressive approach, elaborated step by step and presented as a result of the political will of the Aragón Government. Moreover, the « comarcas » are presented as an inescapable consequence of the depopulation process which a rather large number of Aragonese municipalities are facing. In the daily practice, and in Teruel in particular, a great number of them rely on other municipalities for coping with the supply of essential services. Depopulation and the administrative and budgetary fragility of numerous municipalities force co-operation. The comarcalisación wants only to organise this co- operation in more comprehensive terms and to direct it towards strategic approaches.

263 The progressive approach developed according to three key-moments:

• in 1993, by means of the Law 10/1993 of 4 November, the « comarcalización »ofAragón was established in terms of general guidelines;

• in 1996, by means of the Law 8/1996 of 2 December, the delimitation of the comarcas was established;

• in 1999, by means of the Law 7/1999 of 9 April, the guidelines of organisation of Local government in Aragón were drawn up, in which the comarcas are considered as fundamental units of the territorial organisation of Aragón.

In addition, one has to refer to the political will of the Aragonese Regional Government to implement these guidelines and to promote practically the Comarcal Plan of the region. The best way of certifying this political will is the internal organisation of the work carried out by the DGA, through the Dirección General de Administración Local y Política Territorial, of preparation, advising, support and financing of procedures obligatory to constitute the comarcas.

The creation of comarcas in Aragón is envisaged in the Autonomy Statute of the region which promulgated a specific law of the Cortes de Aragón with a view to constituting and controlling the comarcas. The Law 10/1993 fulfilled this role of regulation of the conditions of creation of comarcas. In the text of introduction to this law, one can read the following statement:

« The creation of a territorial supra-municipal level as a local entity different from the “província” and from the municipalities raises political, administrative and financial questions which must be analysed with prudence, considering the effects that it will generate in Aragón. Nevertheless, it proves necessary not only because a better organisation of public services is required, but also because the management of these services must be brought closer to people, because it is necessary to innovate in terms of public services and to ensure a more balanced distribution of living conditions in Aragón. To this end, the comarca can become the most relevant protagonist and asset for the management of the guidelines of the territorial policy. » (italic of the author).

The articulation of the creation of comarcas with a more co-ordinated model of territorial policy proves therefore a constituent component of co-operation procedures, which becomes in our opinion a key element for the topic of our case-study.

It must be mentioned that the creation, by a law of the Cortes de Aragón, of the comarcas does not mean that this corresponds to a process «top-down» with regard to these territorial units. Indeed, the creation process can be regarded as a co-operation process, because the initiative to create a comarca can originate in, according to the following procedures:

• by totality or part (not less than 2/3) of the municipalities which will incorporate a comarca and according to majority decisions of the ayuntamientos;

• by a mancomunidad of comarcal interest according to a decision of its government;

• by agreement of the DGA, when the process developed in at least 70% of the Aragonese territory.

In this context, the intervention of the regional Government is primarily based on a role of development and support to the local environments. The action of the DGA develops according to two parallel processes:

264 • on the one hand, it organises seminars with the Ayuntamientos with a view to ensuring a technical role of advising and promotion of the creation process;

•on the other hand, by means of the Territorial Policy Programme, the comarcas already constituted join the DGA with a view to making investments within the framework of comarcas.

The expression of regional political will can also be measured by the organisation of 33 working meetings with each comarca, chaired by the Regional Government's Vice-President who is also in charg of the Dirección General de Administración Local y Política Territorial. This dynamics determined the creation of working groups where all the political parties are represented, the activity of which is directed towards co-operation for a common action plan in the comarca, able to be presented to the Territorial Policy Programme.

Moreover, it must be considered that protocols were drawn up with the Diputaciones Provinciales and the Mancomunidades with a view to stimulating these institutions to take part in the definition of actions of comarcal interest and to strengthen the unity of the population concerned around precise objectives. The participation of Ayuntamientos is envisaged in connection with 10% of investments to be contracted under the common action plan. In Teruel, as in the others provincias there are specific protocols.

The DGA fixed a budgetary amount of 3 000 million pesetas with a view to instigating this process in the Aragonese territory. It considers that the overall programme will constitute a successful realisation, taking account of the initial local reactions to the proposals for working. Although the comarcal delimitation sometimes raises questions and doubts considering the various types of relations that municipalities develop among themselves (the attraction of variable geometry in co-operation relations), the widened participation at local level will become a considerable opportunity, considering the expected spreading effects. The services of the Dirección General de Administración Local y Politica Territorial consider that this jointly managed working dynamics is irreversible and is currently organised in the context of the definition of investments for 2001.

The institutional dynamics in the creation of comarcas is, as has already been underlined, progressive and obeys the following critical path:

• ayuntamientos state the initial will, starting from jointly elaborated strategic studies defining the field of co-ordination and of possible co-operation;

• the DGA draws up an opinion on the issue and prepares a preliminary draft law which is again sent to the comarca, after having received the comments and remarks of the public consultation phase; at the end of this process DGA submits a draft Law to the Cortes de Aragón;

• the Cortes adopt the final and legislative decision to create the comarca.

The situation of the Comarcal Plan is for the moment the following:

• one comarca created;

• 4 are in a creation phase at the Cortes;

• 13 are at the stage of preliminary project;

• 6 are still in phase of statement of the initial interest.

265 The Aragón Government, regarding the hypotheses of transfer, delegation and concession of competence, chose the first, i.e. the one which requires a stronger political will in relation to the objectives of devolution. This process will affect the whole structure of the DGA and constitutes a difficult although limited step. The transfer of competences will determine the strengthening of the financial and human resources of the comarcas, within the framework of a process of creation of new local structures.

The role of the DGA in the immediate future will be that of promoting new conditions for the territorial policy by means of the emergence of comarcas. The comarcal identity programmes will become new opportunities for giving concrete expression to the territorial policy within a co-operative and strategic co-operation framework between the municipalities. The territorial policy will ineluctably be connected to objectives of economic development and of promotion of local development.

In terms of development dynamics, the progressive emergence of comarcas will be confronted with realities already established on the ground and with a very clear political dimension as in the case of Diputaciones Provinciales. InthecaseofMancomunidades, the articulation with the comarcas is easier, because these result from local dynamics and concern specific fields and concrete problems perceived by the population as a practical need of efficiency and effectiveness. The articulation with the Diputaciones is complex because these institutions already have an established place in the procedures of co- ordination of Community, regional and national policies.

The preparation of the 2000-2006 programming could not rely on the preliminary presence of experiences on the ground made by the comarcas. The development of programming must be carefully followed in order to identify if comarcas will have the opportunity of making their room for manoeuvre progress in terms of units of policy co-ordination.

When the DGA services are asked about their opinion on the co-ordination potential of comarcas, one finds interrogations justified by the embryonic statute of the current procedures. In any case, this corresponds, in our opinion, to an opportunity for the region, considering the possibility of preparing a new field for actions and co-ordination efforts.

With regard to the basic issue of our case study, the key-question to be placed is as follows:

Will the favourable conditions for better co-ordination performance of the structural and sectoral Community policies require a stable field of co-operation and of inter-municipal co-ordination as well as relevant and stable territories or, on the contrary, should variable geometry be the standard in view of the various co-ordination problems ?

It is certain that the attitudes and organisation mechanisms directed towards co-ordination are more important than the consecration of stable administrative units. Nevertheless, the creation of comarcas becomes a considerable asset, because it will open a new field of experimentation, starting from a still open situation, not yet made rigid by administrative constraints. In any case, it is necessary that the question of governance of the territorial policy, especially that which is co-financed by the Structural Funds, be taken into account by the authorities which will follow the Objective 2 and of Rural Development programmes.

266 Bibliographical references

Câmara de Comércio y Indústria de Teruel (1999), Teruel en la Unión Europea –Ayudas Regionales y Apoio a la Empresa, Teruel

Diputación General de Aragón-Departamento de Agricultura (2000), Programa de Desarollo Rural de Aragón 200-2006, Saragoza

Dipuatción General de Aragón (2000), Documento Unico de Programmation Objetivo 2 en Aragón, Saragoza

Gobierno de Aragón (1999), Administración Local de Aragón, Textos Legales nº 76, Saragoza

Gobierno de Aragón (1999), Directrices Generales de Ordenación Territorial, Textos Legales nº 77, Saragoza

Gobierno de Aragón (2000), Subvenciones y Ayudas a las Entidades Locales de Aragón.2001, Saragoza

Gobierno de Aragón-Departamento de Medio Ambiente (2000), Espacios Naturales Protegidos –Programa Educativo, Saragoza

OECD Territorial Development Service (1999), Territorial Review on the Province of Teruel (Spain), Paris, DT/TDPC/RUR (99)4

Rede Aragonesa de Desarollo Rural (2000), El Desarollo Rural en Aragón, Aragón Leader

267 CASE STUDY FOR THE REGION OF TZOUMERKA (GREECE)213

1. Overview and geographical context The Tzoumerka region is located in the eastern part of the Region of Epirus and belongs partly to the prefecture of Ioannina and partly to the prefecture of Arta. To the east, the Tzoumerka region borders the prefectures of Trikala and Karditsa in the Region of Thessalia. The region is bordered in the North and East by the mountain range of Pindos (with mountain peaks of over 2.000 m. altitude) which forms a natural border of the area. The region includes the Kalaritiko river, which feeds the Arachtos river. The study area includes 10 local authorities: 4 municipalities and 6 communes. Six of these (the municipalities of Pramanda and Tzoumerka and the communes of Vathipedo, Kalarites, Matsouki and Sirako) are part of the prefecture of Ioannina and four (the municipalities of Agnanta and Athamania and the communes of Theodoriana and Melissourgi) are part of the prefecture of Arta. The region under study represents 11% of the total area of the prefectures of Ioannina and Arta and 8.1% of the total area of the Region of Epirus. The region is almost entirely mountainous. It covers an area of 74,930 ha of which 7,019 ha (94%) is mountainous and only 4,820 ha (0,6%) is semi-mountainous. The seats of the local authorities and almost all the settlements of the region are located in altitudes between 660 to 1,150 m. The population density of the area (calculated with the figures of the census data which are anyway overinflated) is very low i.e. 0.213 inhabitants per ha against 0.317 and 0.474 inhabitants per ha for the prefectures of Ioannina and Arta and 0,369 inhabitants per Ha for the Region of Epirus, which is in fact the region with the lowest density in the country. Only four settlements (Agnanta, Vourgareli, Athamanio and Pramanda) are just over or near the 1,000 population mark. Together they comprise 28% of the total official population of the region.

The settlements of the region and the local authorities they belong to, can be grouped into 4 sub-areas which represent broader units on the basis of geographical and socio-economic criteria and the structure of the road network of the area. These four sub-areas are as follows: -1st sub-area: Municipality of Agnanta -2nd sub-area: Municipality of Athamania and commune of Theodoriana. -3rd sub-area: Municipality of Pramanda and communes of Mellissourgi and Matsouki. -4th sub-area: Municipality of Tzoumerka and communes of Vathipedo, Kalarites and Sirako.

The 1st,2nd and 3rd sub-areas represent spatial and economic constellations, developed around a "head village" which also brings together the most important services in the sub-area. These head-villages are Pramanda, Vourgareli and Agnanta. The 4th sub-area consists of 3 communities and 1 municipality, which form a remote and less active constellation that is lacking almost entirely essential services. These villages are practically deserted in winter and temporarily re- vitalized in the summer.

2. Demographic and socio-economic indicators

213 Report compiled out of two studies realised by PRISMA (Athens)

268 • Demographic indicators As with most declining rural and mountainous areas, defining the population of Tzoumerka is not straightforward. There are three different socio-economic population groups that can be identified: active members of families, retired people and visitors and their number varies substantially between winter and summer. Following this two-fold classification the current population of Tzoumerka on the basis of a survey of local authorities conducted in June 2000 is as follows: • Population structure ( realistic figures from local authorities survey,2000)

Members of Season Retired people Visitors Total active families Winter 3.780 5.320 1.620 10.720 Summer 6.690 18.610 35.340 53.670

In this context, the members of active families and retired people during the winter (3.780+5.320=9.100) can be defined as the permanent population core of the area. Alternatively, the members of active families during the summer can also be counted (6.690+5.320=12.010) for defining the permanent population. Many of these people are sheep farmers who take their animal herds to lowlands during the winter and move back to Tzoumerka during the summer. To a much smaller extent the reverse movement takes place. There are people, chiefly young people, who move to the islands to work in the tourism industry during the summer and move back to Tzoumerka during the winter. A substantial proportion of visitors and most of the retired people who stay to Tzoumerka in the summer are not typical tourists but people born in Tzoumerka, or descendants of people born in Tzoumerka who come to their home villages during the summer; most of them have their own homes in Tzoumerka.

Despite inflated figures, official population statistics are useful as an indication of population trends over time. On this basis Tzoumerka loose population at an increasing rate which is considerable faster, not just compared with the region of Epirus which has positive population trends, but also compared with the rural areas of the region and the rural or mountainous areas of Greece as a whole.

Population trends (% change), 1981-1991

• zou Rural Mountain- Greece Rural Epirus Epirus total mer Greece ous Greece total ka -17,9 -6,7 -1,5 -0,2 +4,7 +5,3

Source: National Statistical Service

Indeed, depopulation has reached a situation where there are villages and communes whose permanent population has reached levels which put the survival of these villages and communes at risk, i.e. a permanent population of 20-30 people or less, most of whom are old. Such villages have an official population between 100-

269 200 and a larger number of people vote in these villages during local or national elections. Official figures, in spite of their inaccuracies (including the bias towards younger ages) also point out the aged structure of the Tzoumerka population. Tzoumerka lags substantially behind not just the region, which follows closely the national trends, but also in comparison with the rest of rural Greece.

• Age structure, 1981-1991

1981 1991 Age bands Greece Rural Epirus Rural Greece Epirus total Greece total Tzoumerka Rural Epirus Rural Greece Epirus total total 36 36 39 39 24 30 31 33 34 37 37 37 39 34 35 36 38 39 27 27 24 22 42 35 33 29 27

Source: National Statistical Service

There are no indications of people coming back to Tzoumerka. There are though a few exceptional cases of people coming back who actually take on a role of regenerating the local economy in some villages; (e.g. a computer professional who came back to the home village of his father -one of the smallest at Tzoumerka- and runs now a village shop, restaurant and bed & breakfast accommodation, and also cultivates a small plot and raises, goats, sheep and rabbits for his business).

• Economic activity indicators

With respect to economic activity indicators, available data are even more problematic than for demographic indicators, but it is sufficient for identifying broad trends. As with demographic indicators, economic activity data suggest that there is a substantial development gap between Tzoumerka and the rest of the region and Greece as a whole, as well as, apparently, between Tzoumerka and the rural areas of Greece as a whole. Active population, employment, unemployment

Official statistics indicate a level of participation of 35% against 36,5% for the region and 37,9% for the country as a whole (1991). It is notable that the number of farmers who represent the primary economic actors in the region amounts in 1991 to 1.879 people according to the official population statistics, but their number is estimated at just over 1.000 in 2000. Members of active families in all sectors amounted to less than 4.000 people in 2000 (according to the Local Authorities Survey), which, on the basis of a permanent population of about 12.000, indicates a level of participation between 30% and 35%. Per capita GDP

There are no GDP data available at the territorial level of Tzoumerka or for the rural areas of the region or Greece as a whole. Data on GDP per capita available for the region and for the prefectures of Arta and Ioannina suggest that the gap between the region as well as the two prefectures and Greece as a whole has been

270 growing at least until 1995, the latest year for which GDP data are available. It can be assumed that Tzoumerka is in a worse position than either the prefectures or the region and that, most probably, its position is worsening over time. The logical basis for this are that rural areas in general lag behind the country average and that demographic trends presented above are consistent with the structure of economic activity.

• Per capita GDP (% of country average), 1981-1995

• erritorial 1981 1985 1995 level Prefecture of Arta 70,7 74,1 70,4 Prefecture of 81,7 72,7 68,8 Ioannina Epirus region 78,7 76,1 70,7 Greece 100 100 100

• Source: Center of Economic Planning and Research

Structure of economic activity

The primary sector is important and more details will be given in the chapter on "agriculture and the CAP".

In the case of the secondary sector it is notable that only three proper small businesses were identified in the whole area through the Local Authorities Survey. These are two cheese production units which employ 8 people and a small mineral water bottling plant employing 10 people. Between 1995-2000 only 5 business grants (of a total value of 130.000 EURO) were awarded in Tzoumerka and these were for small shops (e.g. bakeries) and craftsmen (e.g. metal work). There is no evidence of new competitive products and services outside tourism. Tourism itself, despite the substantial increase of the tourism accommodation stock, represents a new product and a new economic activity for the area with more than 21 new accommodation units funded with grants between 1995-2000. Within the tourism sector mountain sports, including rafting, canoeing and climbing, represent a new competitive product which has emerged as a main attraction for the area in the last 2-3 years. However, the effects of these developments in economic activity, on GPD per capita and on personal incomes will not materialize for some time. Services

Educational and training facilities

The area of Tzoumerka appears to be adequately covered by public education facilities at nursery, primary and secondary education level, considering its small pupil population and its geographical dispersion.

271 Schools and school population, 2000 Secondary Nursery • Primary Lyceum (16- school (12- Total school 18 years) school 15 years) Number of 48 200 115 68 431 pupils Number of 6113 3 23 schools Source: Local Authorities Survey However, the level of schooling facilities lags behind that of the urban centers of the region, where state school facilities tend to be better and where private out-of-school/ education services, i.e. for foreign language lessons and for university examination support lessons, (which in the Greek context have become indispensable for those who wish to go to tertiary education) are available. Moreover, there are no technical training or post-secondary education facilities in the area, and for this purpose young people have to go and live in the towns of Ioannina or Arta as distances do not allow for daily commuting between Tzoumerka and these two towns. Health services

The area is covered by three health centers and another 15 health facilities staffed by young doctors who after their graduation have to serve as "rural" doctors for two years in order to acquire a licence to practice medicine. Compared with other remote rural areas in the country this level of health facilities can be considered as satisfactory. Nevertheless, it is by far inferior compared to the level of the towns of Ioannina and Arta where the main hospital facilities of the region are located, especially when the distances between Tzoumerka and these two towns are considered. Public administrative services

Public administrative services represent a major problem for Tzoumerka, given the extensive bureaucracy that characterises citizen-administration and business- administration relations in Greece which requires person-to-person contacts for virtually any administrative transaction. Public administrative services available locally are very limited and people have to travel to Ioannina or Arta for most private or business transactions with prefectural authorities, the regional government or the central government departments located in the region. Privatesectorservices

Shops are quite scarce in the region, especially those that sell durables, household ware or clothes. Also scarce are outlets that provide services (e.g. hairdressers or pharmacists) or crafts (blacksmiths, carpenters, plumbers etc.). Businesses services (e.g. agriculturalists or rets; computer service providers) are virtually non existent and there are no bank facilities at all. For all these services people have to travel to Ioannina or Arta.

272 3. Territorial impacts of EU policies

3.1. Agriculture and common agricultural policy

3.1.1. Main characteristics of agricultural production

As agriculture and animal husbandry represent the basis of the economic activity in Tzoumerka, primary sector trends represent useful indicators of economic development for the area. Again there are no reliable data, or no data at all in some cases, at the territorial level of Tzoumerka. In these cases the territorial level of the prefecture of Arta can be used, as the primary sector represents the dominant economic activity for Arta and over 85% of the population of Tzoumerka belongs to the prefecture of Arta. With respect to GDP and employment, available data for Arta indicate again a growing gap between the prefecture and the region as well as Greece. The primary sector is of course steadily shrinking across Greece but the rate of shrinking for Arta is considerably higher than for the region or Greece as a whole.

Primary sector GDP and employment trends (% change), 1981-1991

Prefecture of Arta Epirus region Greece GDP +3,3 +21,2 Employment -37,9 -28,4 -29,3 • Source: Center of Economic Planning and Research On the basis of the data for Arta it can be assumed that the position of Tzoumerka is worse. This is consistent with the views of officials responsible for the primary sector in the prefectural authority of Arta who observed in the past 5 years or more a annual decline in the sector comprised between 4-5% in terms of number of farmers and CAP funds directed to Tzoumerka. This is also confirmed when looking at the indicators available for specific primary sector products, which also show a steady decline trend, which is more steep than for the region or Greece as a whole.

Agricultural activity (% change), 1990-1998

Tzoumerka Prefecture of Arta Epirus region (Arta only) Land -50,9 -13,5 -2,0 Maize Produce -50,0 +1,6 -9,6 Land -63,8 -26,9 N/A Wheat Produce -58,2 -29,4 -12,0 Land 0,0 5,6 +6,1 Vegetables Produce N/A -30,0 -10,3 Land +19,01 -24,3 -32,1 Beans Produce +12,8 -7,1 -22,4 Source: Prefecture of Arta

273 Agricultural activity (% change), 1995-1997

Tzoumerka Epirus region Greece Land -3,2 -1,3 -4,5 Clover Produce -0,9 -3,3 -0,7 Land -6,1 +11,4 +22,5 Maize Produce +5,0 +6,5 17,6 Land -13,8 -11,5 -2,8 Wheat Produce -3,0 -10,9 -10,7 Land 0,2 -1,0 +0,4 Vegetables Produce -0,6 -2,9 -1,3 Land +1,3 -10,2 -1,4 Beans Produce -0,6 -17,3 +1,7 Source: National Statistical Service

In animal husbandry the position is better and this is a field where Tzoumerka has strengths. Nevertheless, there is a trend of decline which is more steep than for the region or Greece as a whole, as the following tables show.

Animal husbandry (% change), 1995-1997

Tzoumerka Epirus region Greece Number of sheep -4,8 -1,2 +0,2 Number of goats -5,4 -2,1 +1,4 Milk -5,9 -0,9 -1,5 Cheese +9,8 -0,1 +1,1 Butter -19,1 -28,6 -10,6 Source: National Statistical Service

Animal husbandry (% change), 1990-1998

Tzoumerka Prefecture of (Arta only) Arta Number of sheep -1,4 +11,1 Number of goats -4,8 -3,7 Milk -9,5 +18,6 Cheese +39,2 +140,4 Butter -58,5 -45,5 Source: Prefecture of Arta

• 3.1.2. Territorial impacts of Community Agricultural and Rural Policy, including the LEADER Initiative • • National and regional contexts

In Greece, the share of the primary sector in the economic activity of the country (GDP and employment) is the highest in the EU, among the least competitive, and has been following a steady downward trend. In the past, support to agriculture has been largely treated as a social protection policy mechanism; it has concentrated in providing

274 income support for farmers and did not encourage greatly modernization and the competitiveness of the primary sector. This approach has been changing over the last few years partly as a result of changes in the policy of the European Union and of the CAP and partly out of the awareness that the socioeconomic survival of rural areas requires a competitive primary sector and the development of complementary activities such as tourism. This shift in policy, from income support measures to structural reform measures, is reflected in the content and allocation of structural funds resources over the last 12 years (through the IMPs and the two CSFs). Nevertheless, the shift in policy has been, and still is, slow and structural reform measures are not pursued effectively. Public authorities and agencies managing the implementation of these measures are more concerned with administrative procedures and with the absorption of available funds than with the substantive objectives of the measures and policies officially pursued. This is not surprising in the Greek context, as the organizational structures, practices, methods of work and the staffing of these agencies have not been adapted to the new policies and to the new conditions facing agriculture and the primary sector of the economy. Indeed, their capacity has deteriorated over the last 10 years through a government policy of fiscal restrictions for the public sector that had the effect of not replacing retiring staff and not recruiting staff with up-to-date skills. This was in a period where the problems facing the primary sector have become much more complex and demands for modernization have multiplied. The current national policy, as formally stated in the CSF 2000-2006, adopts what is described as a strategy that follows the new CAP directions and the decisions of Agenda 2000. This strategy follows a holistic approach that considers the problems of agriculture as an integral part of the socioeconomic development of the rural sector as a whole and incorporates all aspects of the European Union's policy in this field. The strategy sets three primary objectives: • Strengthening the competitiveness of the Greek agriculture to face an international environment that becomes more competitive all the time. • Sustainable and holistic development of rural areas so as to make them more competitive and attractive and re-establish them as viable socio-economic structures. • Preservation and improvement of the environment and of the natural resources of the rural areas.

• Nevertheless, it remains to be seen whether this strategy will be implemented effectively. It is noticeable that the CSF 2000-2006 has just been approved by the EC whilst the mechanisms for managing the operational programmes of the CSF have not yet been set-up and the programming supplements of the operational programmes are not expected before another 2-3 months. At a different level, it is also noticeable that a key provision of Regulation 1257/99 (Article 35) for rural development plans for the period 2000-2006 has not yet been effected; the agricultural department of the prefectural authority of Arta has just been informed of this provision. • • Impact of CAP reform on Tzoumerka • • It is not possible to identify the impact of the 1992 CAP reform in any detail. The necessary data exist in administrative documents but it is not readily available. It is noticeable that even today such data are not computerized, which is another indication of the

275 weakness of the mechanisms that are expected to implement the new policies and provide support to the sector. • Overall, officials in the prefectural authorities in Arta and Ioannina believe that the CAP after 1992 has had a positive impact on Tzoumerka and there were no adverse effects from the constraints imposed by the CAP because of the particular types of primary activity that are found in Tzoumerka. Nevertheless the 1992 CAP reform has not been able to reverse the decline of the area especially in the field of agriculture where the area of Tzoumerka has decisive disadvantages. Nevertheless, without it, the decline would be much more steep.

• Output of the LEADER Initiative • Funds for Tzoumerka from LEADER II are as follows :

LEADER II funds allocation (mil. Drs) • Road Public space Tourist Training Cultural improvements renovation accommodation & heritage ot associated facilities projects al grants 930 240 121 518 8 43 100,0 25,8 13,0 55,7 0,9 4,6 Source: PRISMA

Over ½ of Leader II funds were directed towards new tourist accommodation grants; ¼ of LEADER II funds financed road improvements works specifically related to tourist attraction and another ¼ financed heritage renovation projects also related to tourist attraction. Notably, tourist accommodation funded by LEADER II in Tzoumerka represents about 1/3 of the total accommodation funded through the structural funds between 1995 and 2000.

Tourist accommodation financed by the structural funds (1995 – 2000)

LEADER II CSF Ministry of Total Agriculture (Forest village) Number of 10 10 1 21 units Number of 55 49 56 160 room Number of 150 172 112 434 beds

Source: PRISMA

It is noticeable that LEADER does not differ significantly from the regional operational programme with respect to its contribution to tourism, and indeed it does not differ significantly either in its overall structure, except for the share of road improvement works from the regional operational programme with respect to Tzoumerka. Another noticeable aspect is that LEADER does not contribute at all to the primary sector which represents the core economic activity of the area.

276 3.2. Impacts of structural and cohesion policies (programming period 1994-1999 and outlook for 2000-2006) • Structural fund programmes • • Regional programmes

The area of Tzoumerka, receives direct support from the structural funds almost exclusively through regional programmes (direct support refers here to projects and actions located within the boundaries of an area). There are two such programmes, the regional operational programme and the LEADER Initiative which is also regionally organised. This is the case for most remote rural areas, except for border areas which are also supported through INTERREG. • Sectoral programmes

Many sectoral operational programmes and the cohesion fund tend not to support directly rural and mountainous areas. They fund large public infrastructure projects (e.g. highways, ports, sewage facilities, etc.) which tend not be located in remote rural areas or are directed to areas with a concentration of economic activity which is not the case of rural areas like Tzoumerka. Direct support for areas like Tzoumerka is possible in principle from sectoral programmes and initiatives that fund small budget projects or soft actions. There are two basic ways for allocating structural funds resources: on a competitive basis or on a central programming basis. Structural funds are allocated on a competitive basis in the case of business grants which involve a private sector contribution; central government programming is usually the case for projects that do not involve a private sector contribution. The difference is important with respect to the role of local actors in each case. In the case of competitive programmes it is up to the private enterprises of an area (or in some cases public-private partnerships) to submit grant applications and success depends on their capacity to identify opportunities and prepare good applications. Areas such as Tzoumerka, where there are few and very small enterprises and where also local authorities are very small, are clearly at a disadvantage. In the case of central programming the success of an area in getting funds depends primarily on the political power of its local government and its access to the political level of the regional government or central government in Athens and to a lesser extent on the technical capacity of local government to prepare project proposals. Again, in both respects remote rural areas such as Tzoumerka are in principle at a disadvantage. It is indicative of this situation that the prefecture of Ioannina has managed to get funds only for its own part of Tzoumerka which is the northern part of Tzoumerka from the O.P. for Tourism, whilst the OP for Agriculture funded a project of a forest village in the southern part of Tzoumerka, which is where the minister for Agriculture comes from. The available evidence suggests that Tzoumerka has not benefited from sectoral programmes directly. This is a function of two factors. Firstly the socio-economic structure of the area does not fit well with the kind of projects funded by some sectoral programmes. For instance the absence of almost any industrial activity rules out grants from the industry and services programmes, while training programmes in rural areas with a dispersed population, are expensive and difficult to organise and private training providers tend to avoid them or conduct them in a small town where a trainee group from local people is easy to assemble. Moreover in the case of training, ESF regulations in the Greek CSF effectively rule out farmers, and exclude employed persons unless training is

277 organised on an enterprise-basis, which in turn rules out the participation of very small enterprises and the self-employed. Secondly, the technical capacity of the area to put forward good proposals and its political clout to put pressure on central government to get support from those sectoral programmes the resources of which are allocated on a central programming basis is very weak. Similarly its capacity to compete for funds (e.g. in the case of ADAPT and Employment initiatives) is also very weak. On the other hand, sectoral programmes can indirectly benefit to rural areas to the extent that they contribute to the development of the broader territory or the region where a rural area belongs and more importantly to the extent they enhance its competitive position.

The structural funds have financed Tzoumerka projects through LEADER, the regional operational programmes for Epirus and the operational programme for Tourism. The total funds directed to Tzoumerka from these sources including existing contract commitment to be financed by the CSF3 (2000-2004), i.e. covering the period 1991-2000 (excluding LEADER I for which no data is available) are summarized in the following table.

• Structural funds allocation, 1991-2000 mil. drs. Tourism Water Public space Traditional Cultural Other Health center Road accommodation Total supply renovation footpaths heritage business Traini modernization improvements & associated works projects renovation projects grants ng facilities grants 9.152 81 4.621 1.084 292 1.891 294 772 45 72 100,0 0,9 50,5 11,8 3,2 20,7 3,2 8,4 0,5 0,8 Source: CSF research

Public sector projects represent almost 4/5 of the total funds directed to Tzoumerka (78%). Of these funds the largest part of the funding (50,3) was directed to road improvements; the rest of the funding was directed to the improvement of water supply (11,8%), public service (health) facilities (0,9%) and renovation of public spaces (3,2%), traditional footpaths (3,2%) and heritage projects (8,4%). Projects directed towards the strengthening of the local economy represent 22% of the total funds. Of these funds 20,7% was directed to tourist facilities (private or public-local government- owned), (0,5%) to other types of business activity and only 0,8% to training. Of course public sector projects indirectly contribute to the quality of life of inhabitants but also to the strengthening of the local economy. This applies to road improvements which provide access for visitors, and to heritage renovation projects as well as to other public sector projects which directly or indirectly improve the tourist products of the area. On the basis of this data it can be concluded that structural policies have been successful in balancing public sector projects which contribute to the improvement of the quality of life for residents and indirectly to tourism, with projects contributing directly to the local economy and in particular to tourism. With respect to tourism in particular, it is noticeable that the accommodation stock of the area has tripled through the new stock built between 1995-2000.

278 • Tourism accommodation stock, 1995-2000 1995 stock New stock 2000 stock % change 1995-2000 1995-2000 Number of units 8 21 29 + 262 Number of rooms 62 92 154 + 176 • 129 242 371 188 umber of beds

Source: CSF research

Structural policies for Tzoumerka have been less successful in three respects: • Firstly in not complementing adequately tourism grants with support actions such as training and guidance for new and existing tourism entrepreneurs and overall promotion of Tzoumerka as a tourist destination. • Secondly in not providing training and guidance to economic actors outside the sector of tourism, especially residents engaged in farming and animal husbandry activities which represent the core economic activity of the area, which can be complemented but not substituted by tourism. • Thirdly in not co-ordinating projects and funds within an overall development strategy and plan for Tzoumerka, and in non-applying criteria of costs and benefits in making project choices. Such failures are not incidental to Tzoumerka but reflect the established approach and practices of the development process and the management of the structural funds in Greece. There is no proper development planning and the public agencies that take the lead in managing and spending the funds available to the region (i.e. the regional government and the prefectural authorities and to a lesser extent local authorities) are chiefly concerned with maximising their share of resources and absorbing the funds allocated to them, with the minimum of planning and without cost and benefit considerations that could establish priorities and allow informed choices between competing projects. In the case of funds allocated on a competitive basis, such as business grants, the prevailing model is based on calling for applications and awarding grants on merit (and sometimes not on merit) but with the minimum targeting or no targeting at all (spatial or sectoral) and without any substantive guidance and support to applicants.

3.3.Transport policy 3.3.1. Level of infrastructure and accessibility The area of Tzoumerka appears to be characterised by the worst level of accessibility in the region and probably in the country. This position stems from the geographical location of Tzoumerka in the eastern side of the region, its mountainous character, from the geographical dispersal of the communes and settlements, and from the poor condition of the roads of the area. The area of Tzoumerka is effectively cut out from central and eastern Greece, as roads in this direction, in the region of Thessaly, are in a very bad condition, whilst there is no direct access to the national road which links the region with northern Greece. • •

279 • • Highways

At present there are no highways servicing the region as is the case with most of Greece at present. For the whole of Greece there are no more than 500 km of highways around Athens and in the north of Greece, most of which have been built in the last few years.

At present the region is serviced by the so-called national road network (two-lane roads without a middle barrier). Access to this national road network varies among communes and settlements, but on average Tzoumerka appears to be in a worse position than other rural areas of the region. 50% of the population is located at a distance from the Ioannina-Arta national road which corresponds to a distance of driving time between 1 and 2 ½ hours. Access to the two nearest urban centres (the towns of Arta and Ioannina) coincides with access to the national road network which passes through Ioannina ant Arta. • Regional and local road network

Local road access, i.e. access of the more remote areas of Tzoumerka to small towns within Tzoumerka or outside Tzoumerka and existing road links between the different parts of the area have improved over the last few years through road improvement projects in the regional and local road networks that service Tzoumerka, but the overall position of the area remains unsatisfactory. There are virtually no villages to which access is through non- asphalted roads but in many cases roads which are asphalted are in a poor condition or without proper safety features. More importantly, internal linkages within the area are not satisfactory. No new roads have been built and there are no direct road links between the eastern and the northern part of the area. Public transport

Public transport services are provided by two private transport associations (one for the prefecture of Arta and another for the prefecture of Ioannina) under the regulation of the respective prefectural authorities who authorize destinations and frequency of services. The level of service has deteriorated in the last decade as the population has decreased and fewer people use services. The present level of service is indicated in the table that follows:

Public transport service frequency, 2000 Total Daily Daily Twice per Once per No service including excluding week week weekends weekends Population 16.000 2.450 6.500 4.550 1.050 1.450 % 100 15.3 40.6 28.4 6.6 9.1 Source: Public transport associations of Arta and Ioannina It should be noted, however that, except for old people without an active family, virtually all inhabitants have private cars which they use for their daily work and for getting to Arta or Ioannina. Airports

There is only one airport in the region in the town of Ioannina. This airport is only used for domestic flights and is occasionally out of operation due to low cloud and poor visibility.

280 The airport is at a distance between 50 and 100 kms from Tzoumerka which corresponds to a distance of driving time between 1 ½ and 2 hours. Ports

The region is serviced by the port of Igoumenitsa. This is a passenger and cargo port which is in the process of being expanded and is expected to become the main gateway of the country to central and western Europe. The port can be reached from Tzoumerka via the town of Ioannina and this amounts to a distance of 2 ½-3 ½ driving time. When the EGNATIA Road, which will connect Ioannina with Igoumenitsa, is built there will be a saving of 45 mins which will bring down the driving time distance between Tzoumerka and the port to 2-3 hours. Railways There is no railway service in the region of Epirus, and this is the only region of mainland Greece without a railway service. There is neither plan nor budget provision for a railway service in the structural funds for the 2000-2006 period. Preliminary studies on the economic viability of a railway service do not show any prospect for building a railway service in the next 10-15 years.

3.3.2. Elements and procedures of the transport policy

Two highways are in the process of being built as part of the national highway network and these will link the region of Epirus with the rest of the country. The first is the EGNATIA Road which will link the far eastern part of Greece with Thessaloniki in central northern Greece and the port of Igoumenitsa in the West. The second highway is the West Axis which will link the Greek Albanian border in the north of the region with the south west of Pelopenesse and the Patras-Athens highway through the Rio-Antirio bridge which is also at the stage of being built. It is expected that EGNATIA Road will be completed by 2005 and the West Axis by 2010. By 2005 the Rio-Antirio Bridge and the Patras-Athens highway are also expected to be completed. The national highway network will drastically improve the access of the region and of Tzoumerka, to the major economic and population centres of the country (Athens and Thessaloniki in the north) and establish a strategic advantage for the region as a gateway to central and western Europe and west Balkans. To what extent and how Tzoumerka will benefit from these projects will depend on whether it will have access to these two highways, not through the towns of Ioannina and Arta, but through more direct junctions that will also serve the needs of the area for linkage with other parts of the region. However, it is not clear yet where and how Tzoumerka will have access to these two highways. There is not as yet a definite plan for the position of junctions that will link the two highways and the national and regional or local road network servicing Tzoumerka. Notably, the improvements in these networks funded by the regional programme of the CSF during the last 5 years have been done without taking into account plans for these two highways. There is no co-ordination in the form of a specific plan, as yet, between trunk networks in the form of the two highways under construction (EGNATIA Road) or planned (West Axis) and secondary road networks (national road network and regional/local road networks). There is no master plan for the transport infrastructure of the region, and for Tzoumerka. Road infrastructure works are being determined at three different levels (central government/ministry of public works for highways; central government and regional government for national road networks; prefectural government for regional/local road network) with a minimum of co-ordination or without the knowledge in some cases in each level of the plans of the other levels. Moreover decisions on road improvements for the national road network and for the regional and local road networks are taken without taking into account cost and benefit considerations. Notably there are no traffic data for the national

281 road network; The last counts of road usage were made more than 10 years ago, and there has never been any measurement of road usage in the regional and local road networks. Accessibility is an aspect that cannot be assessed in an objective way. Accessibility for Tzoumerka can be measured with respect to two criteria: driving time distance from urban centres and the quality of road access as follows, with respect to the population of the area. The present situation is as follows: Driving distance from nearest urban centre -towns of Arta or Ioannina- in minutes (official population)

Total 50-60 mins 60-90 mins 90-100 mins 100-150 mins • 16.000 Popul 7.800 5.700 2.130 370 ation % 100,0 48,7 35,6 13,4 2,3 Source: Survey of Local Authorities Quality of road access (official population)

Asphalted Asphalted Asphalted • Non • Total satisfactory average unsatisfactory asphalted • Popul 11.700 16.000 1.000 3.000 300 ation % 100,0 73,1 6,118,61,2 Source: Prefectural authorities of Ioannina and Arta

In both respects the present level of accessibility has been achieved primarily through the structural funds especially during CSF 1994-1999. Funds for road improvement totaled 4,6 billion drs., or over 50% of total funds allocated to the area between 1991 and 2000 but were spent exclusively on improving the existing road network and not in extending it. As a result there is new asphalted access to virtually all villages though these are still settlements without asphalted access, but in most mountainous roads there are no satisfactory safety features (e.g. barriers, signals, etc.). However there are severe problems of accessibility with respect to internal linkages between the different communities of the area and also between the area and neighboring areas in the region of Epirus and in the region of Thessaly in the east. More specifically: • There are no links between nearby villages, where such linkages would improve their economic development potential; more importantly, there is no linkage between the southeast and the north of the area, which again would improve the tourism development of Tzoumerka as a whole. • There is no link with the area of Metsovo in the northeast of the region and with neighboring areas in the region of Thessaly.

3.4. Environmental heritage and policy

The area of Tzoumerka includes outstanding natural amenities in the form of a varied mountainous landscape which combines high mountain ranges with gorges and rivers and a rich eco-system. Tzoumerka includes three protected areas of ecological value designated under NATURA 2000. One of these areas belongs to a national part of Valia-Kalda and in that area all agricultural or animal husbandry activity except grazing in forbidden. In the other two NATURA areas the farming and animal husbandry activities are not likely to be in

282 conflict with NATURA regulations when management plans for these areas are prepared.These areas cover over 25% of the total area of Tzoumerka. Tzoumerka includes also parts of three designated wild game reserves. The area includes an impressive number of outstanding natural value spots and landscapes and an equally impressive cultural heritage in the form of byzantine monuments, ancient sites, stone bridges and many settlements of architectural value. The combination of the natural environment and the cultural heritage of the area represents for Tzoumerka a very important resource for attracting tourism. Up to now there are no indications of any significant soil or water pollution and the level and trends of agricultural activity combined with the absence of industry do not make it likely that pollution might become a problem in the future. Nor is there any indication of the high biodiversity of the area being threatened in any way. Notably Tzoumerka also features a particular stock of sheep which is only found in this area and is specially suited to its hard climatic conditions. Keeping this stock of sheep is subsidized and for those with sheep herds of this particular stock the subsidy represents a substantial income and an incentive to stay in the area. • Water resources are plentiful and are exploited for electricity generation although this activity does not contribute significantly to the local economy. There are large hydroelectric dams in the south western part of the region and small private ones are being introduced under strict environmental conditions in the north and east of the area. There is also mineral water which is bottled locally. At the same time water supply in several settlements is not satisfactory and cannot cover the needs of residents and visitors. The small size of the population its geographical dispersal and the kind of economic activity in Tzoumerka have so far preserved a very good quality for the natural environment of the area, and indeed the quality of the natural environment represents a major asset for Tzoumerka. Nor have there been any major infrastructure projects or industry projects in the area that could have adverse environmental impact and for public infrastructure projects environmental approvals are obtained before implementation. Therefore there has been as yet no need for environmental protection measures of the kind applied in urban areas such as sewerage and water treatment plants. Nitrate directive

There are no agricultural areas concerned by the NITRATE directive in Tzoumerka. Impact of EU environmental provision on the management of water resources

There is no noticeable impact of EU environmental provision on water resources management in Tzoumerka.

4. Territorial governance, spatial planning and co-ordination of policies

4.1. Institutional context and territorial allocation of responsibilities

283 The administrative structure of government in Greece comprises four distinct government levels: central government ministries and public agencies (state government); regional administrations (state government); prefectural authorities (local government); municipalities and communes (local government). Their role and functions are as follows: • Central government ministries. There are 13 central government ministries with sectoral jurisdiction The ministries have territorial jurisdiction for Northern Greece and the Aegean Islands. All ministries have territorial responsibilities for the whole of Greece, except for two ministries with bounded territorial responsibility and all, except four (Defence, Foreign Affairs, Justice, Public Order) fund development projects. Their responsibilities include policy making, regulation, the finance of services and the finance of development (investment) budgets as well as the direct delivery of services from their central (Athens based) departments and through a deconcentrated structure of government departments located at the levels of the region and prefecture. Other public services are delivered through the regional administrations, prefectural governments and municipalities/communes. • Regional administrations. They are part of central government with regional territorial responsibilities for development planning and management of regional development programmes and budgets, and for the delivery of certain central government services where there is not a decentralised office structure under direct central government control. There are 13 regions in all. Regional administration were all set up in 1986. They are headed by a political personality appointed as secretary general by the Council of Ministers at the recommendation of the Minister of Interior, Public Administration and Decentralisation to whom they formally report. Since they were set up, their chief responsibility has been and still is the planning and managing of development programmes and budgets from the structural funds (i.e. IMP CSF I and CSF II). Beyond that role, regional secretary generals have a political role as central government representatives in their region but no operational jurisdiction over central government departments in the region. In the last few years regional administrations have been given certain responsibilities formerly exercised by central government departments in Athens, and their political and administrative jurisdiction over central government departments at regional or prefectural level has been strengthened. • Prefectural authorities. These are elected authorities with territorial responsibility over prefectures. There are 53 prefectural authorities in Greece and they are responsible for the provision of certain public services, and for the implementation of public development projects. Prefectural authorities are responsible for a range of public services, mostly of an administrative and not of a professional nature (such as planning and building control, education, welfare and health, passports, commerce and industry, agriculture etc.). In most cases regional administrations or central government departments also are involved in the provision of services in one way or another. Prefectural authorities also are responsible for prefectural level public works projects, for which they are funded by central government either through the regional administration or directly by central government ministries. Prefectural authorities have been set up in 1995 and taken over the majority of prefectural government responsibilities. Before that, prefectural governments were part of central government and run by political apointees. • Local authorities (municipalities and communes). These are elected authorities with territorial responsibilities for a range of services of local nature. These include administrative services, such as birth certificates, technical operations such as water supply, sewage and refuse disposal and certain planning control functions. Local authorities are also responsible for public works projects for which they are funded by central government again either through the regional administration or directly by central government ministries. Local authorities were given more responsibilities and power

284 through a process of decentralisation during the 1980s. From a number of over 5.000, they now amount to approx.1.000 as a result of reforms that took place in 1998 through the amalgamation of existing municipalities and communes into new, larger, municipalities, with a small number of communes retaining their commune status. A key weakness of all levels of government in the region is their administrative and financial dependence on central government, which inhibits severely their capacity to manage their affairs and take initiatives. Typical example of such dependence is the lack of powers for the recruitment of staff and budgetary control by central government. Local authorities are the least dependent on central government. However, the lack of powers to raise local rates and dependence on central government funds, in conjunction with their small size and lack of qualified staff, limit greatly their capacity for a development role. The problems of small size and lack of qualified staff were behind the policy of amalgamation of local authorities into a smaller number of municipalities in 1998. Before the amalgamation virtually local authorities in Tzoumerka as elsewhere had no graduate staff at all. Communes typically employed just one administrator educated at secondary school level. After the amalgamation graduate staff was recruited for the new municipalities. Typically this staff included engineers and economists or political scientists with very little or no work experience. In the case of Tzoumerka 15 people were recruited. Nevertheless, even after the amalgamation local authorities remain very small. In the case of Tzoumerka six communes retained their commune status and the position of the region in this respect is worse than in other areas of the Region of Epirus. Clearly the structure of the local authorities of the region is still problematic in two respects which are related. Firstly, it is problematic with respect to their sheer size (i.e. population, staff, budget size). Even municipalities are too small whilst communes are not viable under any terms. In effect, communes, and municipalities to a lesser extent, are run by the elected representatives with the commune president or municipality mayor being for all practical purposes a part time or full time general manager and administrator. Secondly, the structure is problematic in territorial terms. Settlements that are geographically close to each other and share similar socio-economic and cultural characteristics are split into different authorities. It should be said, however, that the present structure represents more or less the maximum degree of amalgamation which was politically possible at the time of the amalgamation. Communes, especially remote small communes tend to defend their independence for a variety of reasons, without much concern about viability and the need to play a proper development role in the normal sense of the term.

4.2. Allocation of responsibilities for the structural funds

Territorial allocation of responsibilities with respect to the structural funds which represent the main source of development funds, is quite complicated. It can be summarized as follows for the different types of programmes: • Sectoral structural fund programmes: Planning and management are the responsibility of central government ministries through monitoring committees set- up at central government level, typically under the leadership of a government ministry secretariat. The Secretary General in charge of the secretariat takes the chair of the respective monitoring committee, with a membership coming from central government departments and national level non-government institutions (e.g social partners, local government, etc.). Implementation of projects is primarily the responsibility of the central government department itself. For a few large size projects (typically large public infrastructure projects) and for some categories of small size projects (typically grants to the private sector such as SMEs),

285 implementation is the responsibility of intermediate agencies which are funded for this purpose by the central government concerned. Also, for some small size projects implementation is undertaken by prefectural or local authorities which are funded for this purpose directly by the government ministry concerned. • Regional structural funds programmes: Programme planning and management is the responsibility of regional secretariats, through monitoring committees set up at regional level. The Secretary General of the region chairs the regional monitoring committee and its membership includes the prefects of the region and a selection of other regional partners such as chambers of industry and commerce, unions of local authorities, the regional university, etc. Implementation is chiefly the responsibility of the prefectural authorities, municipalities and communes, and central government departments either though their own organisation or through the organisation of the regional secretariat. In some cases (typically for private sector grants) intermediary agencies are being used. • Community Initiatives: In the case of Community Initiatives, monitoring committees are set up at national level and have a structure similar to that encountered in the case of sectoral programmes. As with sectoral programmes, programme planning and management is centralised with implementation being the responsibility of central or local government. There is an exception in the case of certain initiatives with decentralised local implementation structures such as LEADER or URBAN where a substantial share of planning and management is the responsibility of local partnerships (e.g. in the case of LEADER local action groups) which combine the roles of steering committee and intermediary agency. • In this context co-ordination is a crucial function. Co-ordination is exercised by several central government ministries in parallel with their roles in relation to their own sectoral programme or community initiative, as follows: • Ministry of National Economy. The ministry oversees the CSF as a whole through a minister with responsibility for the structural funds; chairs the CSF monitoring committee; its representatives sit in every monitoring committee and their role is typically a key one, especially in the case of regional programmes. • Ministry of Public Works, Physical Planning and Environment. The ministry has regulatory responsibility for the technical and financial construction procedures governing the construction of public works projects in Greece and for the corresponding environmental policy and regulation procedures for CSF projects. • Ministry of Labour and Social Security. The ministry oversees the ESF, and in particular continuing education programmes, for the whole of the CSF . • Ministry of Interior Public Administration and Decentralisation. The ministry controls directly regional funds for municipalities and communes through its Special Programme for Local Government. • Ministry of Agriculture. The ministry oversees FEOGA actions across the CSF and in particular the regional programmes all of which fund FEOGA projects.

• Territorial equalization There is a policy for socio-economic convergence between regions and for improving the quality of life and standards of living for the less developed areas of the country, such as rural remote or island areas, high unemployment areas etc. This policy is not applied in any formal way at global level. At regional level less developed regions such as the Region of Epirus are funded through the regional strand of the CSF at a higher per capita rate than the country average but this is determined in an ad hoc way and depends on political factors. In any case, as already indicated at the level of the region, the proportion of development funds coming from the regional programme are a small proportion (about 20%) of the

286 total of the structural funds spend for project, in the region. The largest proportion (80%) is determined at national level on the basis of national priorities and plans. Within the regional programme funds for local level projects amounted to 12% of the total. Allocation among the four prefectures of the region was fixed at the start of the 2nd CSF through a negotiation process at regional level. The allocation of these funds among local authorities in each prefecture was done on an ad hoc basis, formally on the basis of needs and of merits of project proposals but in reality through political negotiation between local authorities, the regional administration and the Ministry of Interior which controlled this particular part of the regional programme. Funds for the region of Tzoumerka for the period between 1991 and 2000 represent 1,6% of the total of development funds for the whole of the Region of Epirus for this period. 5. Coordination of policies 5.1. Spatial planning and development programmes There is no spatial development plan for the region of Epirus or for the area of Tzoumerka. At the level of the region and at sub-regional level (i.e. at the level of the prefecture or at the level of the mountainous areas of the region) there are elements of spatial development planning but they do not make-up a proper, official, development plan. These elements fall in two groups: development or spatial planning studies and development programmes: o Development or spatial planning studies • A spatial planning study for the whole of the region (Regional Plan of Spatial Development of Epirus) was completed in 1999 and spatial planning for each of the four prefectures are now being conducted and will be completed by the end of 2001. These studies provide a thorough spatial development analysis and offer proposals and guidance for spatial development, but they fall short of providing spatial development plans for the region or the prefectures that can be acted upon (e.g. through land use zoning). Initially, it was believed that the spatial study for the region would be formally adopted and acquire official status which would introduce certain provisions, that would be compulsory for development decisions. Now this is uncertain, and these studies are now being used as sources of information for the public development actors of the region (e.g. the regional government and the four prefectural governments). • The spatial policy for the area of Tzoumerka is defined in the Regional Plan of Spatial Development of Epirus, which has not yet become law. According to the draft Regional Plan, it is proposed that the area of Tzoumerka should constitute a "Zone of Spatial Interventions" according to Law 2792/99. Special emphasis is also given to the re-vitalization of this upland area through organised and planned development. The directions proposed by the Regional Plan include the development of soft and specialised forms of tourism (mountain, cultural, adventure tourism, agrotourism); and the elaboration of a Special Development Plan for Tzoumerka ensuring integrated development. • Development studies for the mountainous parts of the region and for selected rural areas have also been conducted between 1998-1999. The second of these studies covers Tzoumerka, as the area is mountainous, but again both studies fall short of being spatial development plans and their usage is limited to being sources of information and in some cases sources of guidance for development decisions. • Certain local development studies or so called "local development plans", have also been conducted which cover smaller areas, typically a single local authority or a group of local authorities which tend to be of variable quality and are again used as sources of information and occasionally as sources of guidance for development decisions.

287 • Recently a provision for local area spatial planning studies has been introduced on the lines of regional spatial planning studies but at much greater level of detail. No such studies have yet been conducted, there is no budgetary provision for funding them, and there is no provision to give them official status and beyond to use them as sources of information and guidance. • At local level, there are some land use control zones (e.g. in the greater area of Ioannina or in RAMSAR designated areas) and more are proposed in the spatial planning studies mentioned above. For NATURA 2000 designated areas, land use control will be introduced through management plans that will be prepared for each of these areas. Development programmes • The regional development programme represents the main regional development instrument. It is in principle a development plan for the region with spatial implications. In reality, however, its spatial implications do not go beyond very general development policy directions (e.g. with respect to urban or rural areas) or to spots of strategic significance for the region (e.g. the port of Igoumenitsa) and broad budget allocations among the four prefectures of the region which are determined on an ad hoc basis or as a result of political negotiations rather than on the basis of any spatial development considerations or plans. • The LEADER Initiative for the region complements the regional programme for the development of the rural areas of the region and in principle it also has spatial planning implications. In reality, however, especially LEADER II (1995-1999), did not have any elements of spatial planning beyond a budget allocation between prefectures. Projects funded were not part of local development strategies or plans and there was no co-ordination with the regional operational programme. • Sectoral development programmes that fund public infrastructures (i.e. motorways, ports, etc.) have definite spatial implications. They are based in principle on sectoral plans at national level but in reality they represent sectoral projects and budgets and do not reflect proper or internally consistent sectoral plans or when they do such plans are often out of date. In the case of the region of Epirus and of Tzoumerka in particular the sectoral operational programme which funds transport infrastructures, includes the EGNATIA Road and the West Axis mentioned earlier. Both have important implications for Tzoumerka and will contribute to territorial cohesion at regional and inter-regional level, but their direct effect on Tzoumerka will depend on their spatial alignment and design. But as already mentioned, there are no definite plans on access junctions even at this stage.

• 5.2. Co-ordination of EU policies and programmes All in all, it can be said that there are many elements of spatial analysis, spatial planning studies development plans and studies, but these elements are not brought together in a spatial development plan at the level of the region or sub-regional or local area levels such as Tzoumerka and little use is made of them for co-ordinating interventions from EU policies and the allocation of the structural funds in the region. Not only that, but there is not even ex-post or on-going proper monitoring of development actions. A special study in 1997/98 pulled together the development actions in the region from all structural funds for the period 1991-1999 and there was no up-date or follow-up monitoring after that. This situation is clearly unsatisfactory. The problem is not the lack of resources; nor the lack of involvement by regional/local authorities and actors, although at the level of first degree local government the lack of technical capacity of the

288 small communes in Tzoumerka was a decisive constraint for their involvement. Resources are available from the structural funds and they have been used for funding the studies mentioned earlier. The problem is the lack of development planning culture and the absence of development planning and physical planning instruments and procedures necessary for this purpose; and for small local authorities the lack of technical capacity. It can be concluded that there is definitely a need for more co-ordination between the various EC policies and programmes at the level of the region and at the level of the area of Tzoumerka and also, most importantly, the adoption of proper development planning practices.

7. Conclusions

The Tzoumerka region is a deep rural area belonging to the poorest regions of the EU. Its economy is largely based on agricultural activities, the part of subsistence agriculture being significant. Exports to other areas are modest (milk, beans) and are mainly limited to the borders of the province. Tourism is still very modest (if one excepts the native population from Tzoumerka, who lives in the towns and returns to Tzoumerka in summer time), although there is a large non-exploited potential.

Trends are in some respect alarming, with population decrease, strong ageing and decline of agricultural production. A typical characteristic of weak local initiatives is the fact that no one farmer so far accepted the financial support of the EU for developing origin-labelled products and quality certification.

The territorial impacts of EU policies are contrasted:

- the CAP contributes to supporting the revenue of farmers to some extent, but does not achieve to promote quality products with higher added-value and to give a new impetus to agricultural production. This is partly due to the fact that local farmer initiative is particularly weak. It is also probable that the CAP provisions are insufficiently targeted towards local production potentials and existing farm structures.

- the largest part of structural funds (80%) is implemented through national sectoral programmes and favours large-scale projects. Sectoral programmes based on the structural funds and projects funded by the Cohesion Fund and by Community Initiatives, are not subject to an assessment procedure, at the level of the Region of Epirus. This represents a serious drawback, as funds from these programmes are a multiple of the regional programme funds and are expected to have a much stronger impact on the region.

- as large-scale projects are not present in Tzoumerka, the region benefits from grants from the regional development programme and from LEADER. The proportion of funds directed towards economic development is very small compared with the proportion of funds directed towards public works projects. Furthermore, the allocation of funds between competing projects may have suffered from inadequate consideration of potential impacts and may have had a poor cost/benefit balance. In some sectors, the impact of structural policies is significant. Beside the development of the road network, the sector of tourism and in particular that of tourist accommodation has to be mentioned. The impact on the number of visitors is however still modest.

There is evidence for a lack of co-ordination between various EU policies:

289 - there is no evident synergy between the implementation of the CAP and other policies, in particular the LEADER initiative, which favours others sectors than agriculture;

- training programmes aiming at improving the professional skills are generally not organised in the region of Tzoumerka, because of its too dispersed population, although the need for improving skills and production techniques, in particular in agriculture and crafts, is important.

- the planning of regional and local transport infrastructure is not co-ordinated with that of the Transeuropean Networks, in the sense that the Tzoumerka region will not be properly connected to the two new highways (Egnatia and West axis) now under construction. Its very poor accessibility will not significantly be improved.

The lack of co-ordination stays largely in relation with the fact that there is so far no comprehensive spatial plan for the region of Epirus and for the area of Tzoumerka. The weakness of the spatial planning culture favours sectoral approaches and punctual decisions which do not take into account territorial interactions. The situation is likely to improve in the years to come, but probably too late for having a significant impact on the programming period 2000-2006.

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