The Case for Investment. Cohesion Funding and Europe s Water: Successes to Date, Challenges Ahead

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1 The Case for Investment Cohesion Funding and Europe s Water: Successes to Date, Challenges Ahead

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3 CONTENTS 4 INTRODUCTION FROM VICTOR BOSTINARU MEP 5 EXECUTIVE SUMMARY 8 AN INTRODUCTION TO THE COHESION FUND AND WATER INVESTMENTS 21 EUROPEAN UNION WATER LAW 25 SUMMARY LIST OF NON-COMPLIANCE 30 APPENDIX: DETAILED LIST OF NON-COMPLIANCE PAGE 3

4 INTRODUCTION FROM VICTOR BOSTINARU MEP All across Europe, governments are struggling to meet the challenges posed by high public sector debt burdens and increasing unemployment. As a result of these economic challenges, many European Union member states have issued calls for the European Union s budget to be cut. Individual member states have argued that, by reducing the amount they pay into the EU s budget, they will be able to better focus on spending priorities on a domestic level. The EU budget is different from national budgets. The EU budget is an investment tool to support long-term development and strategic European co-operation. In fact 94% of the EU budget is invested in the member states to create a European added value or in making sure the EU speaks with one voice on the world stage. The budget cannot run a deficit and cannot produce debt. It gives additional instruments to the member states and the regions that are crucial in times of austerity. As such, in my 2012 report presented to the European Parliament's Committee on Regional Development, I argued it is necessary to ensure an efficient and extensive infrastructure network that improves access to drinking water and drainage and waste management systems. More specifically, I concluded that the terms of the Cohesion Fund budgeting round from 2014 to 2020 should contain measures designed to "address the significant needs for investment in the water sector to meet the requirements of the Union's environmental acquis" as well as promoting energy efficiency, job creation and economic growth. This report demonstrates the scale of the problem that exists across the 27 EU member states. The quality of water in many countries has to improve and the money needs to be found to make it happen starting with the city of Brussels, in which the European Union s institutions are based. As we prepare to commit billions of Euros of investment to infrastructure projects, through the EU Cohesion Fund, we must demand improvements from these failing cities, regions and countries. Every country needs to apportion funds to meet minimum standards of water quality that we should all expect across Europe. Investment in the water sector and Cohesion Fund projects more generally is not simply an investment in infrastructure. It is an investment in more growth and more jobs for all parts of the European Union; from building and maintaining infrastructure on the ground to the research, development and innovation centres that devise solutions to challenges facing the sector. The challenge to the European Union is clear. At a time when Europe is facing economic challenges on an unprecedented sale, it would be foolhardy to cut the very funding that provides the economic motor that can return Europe to a position of economic growth while at the same time bringing about demonstrable benefits to the quality of life of millions of European citizens. Victor Bostinaru MEP PAGE 4

5 EXECUTIVE SUMMARY The European Union is currently concluding its arrangements for the 2014 to 2020 Cohesion Fund. The Cohesion Fund provides funding support for infrastructure-related project to regions across Europe whose economic development lags behind EU average standards. Since the launch of the Cohesion Fund in 1994, it has brought untold benefits in terms of upgraded infrastructure in many countries across the European Union. This has resulted in economic growth and improved living standards for millions of people. For the 2007 to 2013 funding period, financial support totalled 347 billion - equivalent to approximately one third of the European Union's total budget. The European Union is responsible for formulating legislation in respect of the water sector; including regulations governing water monitoring requirements, cleanliness and chemical treatment. A total of 6,311 areas across Europe are still not in compliance with European Union laws governing the water sector. Romania is the country with least compliance with EU water legislation with a total of 2,476 instances of non-compliance followed by Spain (1148), Bulgaria (901), Hungary (631) and Slovakia (356). Brussels, the capital of the European Union, is also featured in the report. Instances of non-compliance with EU water legislation span both north and south Europe and occur in both old and new EU member states. Non-compliance with EU water legislation leaves taxpayers across the European Union area vulnerable to fines of up to 3,026,124 a day or 1,104,535,260 a year. The Cohesion Fund can be used as a means by which to assist EU countries (particularly those from the 2004 and 2007 accession waves) in bringing their domestic water standards into compliance with the law. Ongoing EU investment in the water sector is crucial for improving the quality of life of EU citizens, providing employment opportunities and encouraging ongoing research and innovation in Europe. The budget of the European Union and individual EU member states is under pressure from the drive for austerity. Such cuts should not be instituted while infrastructure and legal compliance challenges remain in so many EU member states. The information contained in the report has been obtained from formal European Commission sources, including information that is available as a matter of public record. The research reflects the position for the year 2012/3.For further information, contact the European Commission s Europe Direct service on or visit PAGE 5

6 Visit Liege elgium s Home to some of Bm nce 72 areas of non-co plia Brilliant Balaton One of 631 cases of non-compliance in Hungary Amazing Alcantara Just one of 1,148 areas of non-compliance in Spain Perfect Porto Alto eas of Albeit one of 201 ar gal non-compliance in Portu Areas of Europe not compliant with EU water legislation Greetings from Pisa Leaning into Italy s 443 areas of non-compliance Party Polic Where Gr 22 cases

7 Enjoy Kosice A highlight of Slovakia s 35 cases of non-compliance 6 y in chono reece offers you of non-compliance Beautiful Brasov Just one of Romania s 2,476 areas of non-compliance Holiday in Varna One of Bulgaria s 901 areas of non-compliance Head to Ayia Napa Find some of Cyprus 57 cases of non-compliance here

8 AN INTRODUCTION TO THE COHESION FUND AND WATER INVESTMENTS The Cohesion Fund was set up in 1994 in order to provide funding for environmental projects and transnational transport infrastructure projects and spans several distinct funding streams; all designed to raise the quality of life of European citizens and increase economic activity in regions whose economies lag behind the rest of the EU. The Fund has proved particularly crucial in respect of assisting member states in remedying problems with their national water infrastructure; improving public health and increasing the degree to which EU member states adhere to legislation mandating the scrupulous testing and cleanliness of water. The support from the Cohesion Fund is based on the principle of cofinancing. The maximum rate of support for any specific investment projects brought about by the Cohesion Fund can only amount to 85% with individual national governments or member states also having to make up the remaining 15% from their own national budgets. Writing in 2006, the then European Commissioner for Environmental Policy Stavros Dimas outlined details of the three Cohesion Fund support streams available for water-related projects (these funding mechanisms are discussed in more detail later in this report): Convergence funding: Support to stimulate growth potential by focussed investment in collective services needed to ensure long-term competitiveness. Dimas argued that massive investment in water infrastructure was required to upgrade and extend water and sanitation systems to new member states whose laws were not in line with EU law. Regional competitiveness and employment: To anticipate and promote economic change and development by improving competitiveness and attractiveness through investments in the knowledgebased economy and innovation. Dimas argued that the investment in the water sector was necessary to ensure a business environment that was conducive to economic development as well as being sensitive to environment and human concerns. Therefore, this funding stream had clear relevance to the need for member states to adhere to stringent environmental standards. Cooperation: To promote the balanced and sustainable development of all regions of the European Union so as to ensure that one region, country or subregion (such as a county or state) lagged considerably behind the rest of the European Union in terms of its environmental and social standards. Again, Dimas argued that the uneven development of water infrastructure instituted a clear barrier effect which harmed this sense of equal development. 1 1 Making the Structural and Cohesion Funds Water Positive, Commissioner Stavros Dimas and the European Network of Environmental Authorities, February PAGE 8

9 For the period from 2007 to 2013 the following funding streams were made available for water-related projects: Item Funding stream available European Regional Development Fund European Social Fund Cohesion Fund Scientific studies, inventories and mapping X Awareness-raising campaigns X Monitoring systems and risk analyses X Water-saving solutions for industry X Adapting existing water infrastructure X X Improvement of water networks X X Equipment acquisition X Why invest in water? The benefits of Cohesion Fund investments in water-related projects are clear to see; spanning economic, environment and social factors. Economic Lower costs and improved competitiveness for economic entities whose primary business operations are focussed on the water sector (i.e. private or state water suppliers); Increased availability of water supplies for consumers and businesses where they otherwise may have been sporadic and unreliable; Development of new and innovative environmental, water treatment and waste treatment technologies which in turn can bring about increased investment in the EU economy and create high-quality jobs; The building of modern and long-lasting infrastructure can lead to reduced maintenance charges and processing costs; saving both private businesses and taxpayers money; Lasting improvements in pipes, treatment plants and other ancillary water infrastructure reduce the need for further investment in the short to medium term; Planning security for economic activity and development; Increased opportunities for development of the tourism sector based on greater confidence in the safety of drinking water supplies or recreational waters (i.e. seaside areas or inland lakes). Environmental Increasing the quality of water brings clear benefits to public health in terms of reduced illnesses brought about by water contamination by both chemical compounds and natural properties (i.e. E Coli and cryptosporidium); Expanded water quality projects and infrastructure can benefit the wider environment, including the quality and diversity of all water sources; More efficient water infrastructure can cut down the need for excessive use of chemicals in the treatment process and the amount of energy used, therefore decreasing carbon dioxide emissions; Reduced need for more water than is otherwise necessary to be extracted from the natural environment in order to serve domestic and industrial demands. PAGE 9

10 Social Improved human health and the elimination of social and geographic barriers which prevent certain groups from accessing clean water; Material improvements in the quality of life for residents in areas with decaying urban infrastructure or underdeveloped rural infrastructure; Increased employment opportunities in relation to research and development into, construction of and maintenance/operation of technologies; High public awareness of the need to invest in robust water infrastructure can engender lasting debates in communities about water security, quantity and quality; Increased tourism and investment as a result of improvements in the attractiveness of the area in which infrastructure developments are upgraded. Funding streams explained Legal basis The Cohesion Fund s operations are enshrined in Article 161 of the Treaty establishing the European Community ( scope of assistance ) which states that: Assistance from the Fund shall be given to actions in the following areas, ensuring an appropriate balance, and according to the investment and infrastructure needs specific to each Member State receiving assistance: a. trans-european transport networks, in particular priority projects of common interest as identified by Decision No 1692/96/EC; b. the environment within the priorities assigned to the Community environmental protection policy under the policy and action programme on the environment.in this context, the Fund may also intervene in areas related to sustainable development which clearly present environmental benefits, namely energy efficiency and renewable energy and, in the transport sector outside the trans-european networks, rail, river and sea transport, intermodal transport systems and their interoperability, management of road, sea and air traffic, clean urban transport and public transport The administration of how money related to the Cohesion Fund is spent is a fairly unique case in terms of the general operation of the EU budget. While the majority of programmes the European Union funds are administered directly by the European Commission, the system for cohesion funding works as follows: 1. The Commission negotiates and approves the programmes proposed by individual countries and allocates resources; 2. The individual EU countries and their regions manage the programmes, implement them by selecting which projects they wish to carry out and then monitor their implementation; 3. The Commission is involved in programme monitoring, commits and pays out approved expenditure and verifies the control systems. When a decision is taken to spend money (an operational programme ) the individual government of the European Union member state in question appoints: a) a managing authority (a national, regional or local public authority or public/private body to manage the operational programme); b) a certification body (a national, regional or local public authority or body to certify the statement of expenditure and the payment applications before their transmission to the Commission); c) an auditing body (a national, regional or local public authority or body for each operational programme to oversee the efficient running of the management and monitoring system). European Regional Development Fund The purpose of the European Regional Development Fund is to strengthen, on a pan-european basis, the economic and social fabric of the European Union in order to reduce inequalities between wealth levels in individual regions. As an example, the wealthiest area of the EU (Inner London) has a GDP per capita of roughly 60,000 Euros per year while the average is only 2,500 Euros in the EU s poorest area, North East Romania. The priorities for this fund are PAGE 10

11 mandated as follows: Research, development and innovation; Improving access to and quality of information and communication technologies; Climate change and moves towards a low-carbon economy; Business support for small and medium-sized enterprises; Telecommunications, energy and transport infrastructure; Enhancing institutional capacity i.e. civil service reform; Health, education and social infrastructure; and Sustainable urban development projects. In order to ensure that funding is focussed on these individual priority areas, the 2014 to 2020 funding round mandates that 80% of ERDF resources allocated to transition or moredeveloped regions must be spent on energy efficiency and renewable energy projects. Countries considered to be less-developed will have more latitude as to how ERDF funding is spent, although 50% of their budgets will have to be spent on energy efficiency, renewables, innovation and support for small and medium-sized enterprises. European Social Fund While the European Regional Development Fund is very much focussed upon business an d infrastructure, the Social Fund is targeted at investments in employment and educational opportunities. The fund has four main policy priorities: Promoting increased employment across the EU, including supporting labour mobility; Promoting social inclusion and reducing poverty and inequalities; Providing assistance for increased investments in education, skills and life-long learning; Enhancing state capabilities i.e. improving public administration processes. The European Social Fund is also designed to encourage a sustainable economic framework created to provide the jobs of the future. As such, money can be provided from its budget for projects intended to promote a low-carbon economy, promote resource efficiency, develop climate resilient solutions, enhance the use of information technology, strengthen research and development capabilities and boost SME competitiveness. The 2007 to 2013 Budget Round In order to bring an element of stability and predictability to the European Union s budgetary processes, the framework in which the Cohesion Fund operates is fixed for a six year period. Prior to the 2014 to 2020 budget round, the fund s budget was fixed for the period from 2007 to During this period, the general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund mandated that EU funding be provided to support the convergence objective of improving the infrastructure and development of poorer regions of Europe whose economies lagged behind the EU average in terms of average earnings and job creation. Under the terms of the Fund, the EU was able to provide funding for up to 85% of the cost of individual projects. For the period from 2007 to 2013, the allocations made available to each European Union member state were as per the table on the following page. PAGE 11

12 Country Country Convergence Objective Total EU Regional Funds GDP per head, 2005 Million per head in recipient regions Million per head in recipient country Share of GDP % Share of total regional funds % Austria 28, , Belgium 27, , Bulgaria 7,913 5, , Cyprus 20, Czech Republic 17,156 22,979 2,252 23,698 2, Denmark 28, Estonia 14,093 3,011 2,221 3,058 2, Finland 25, , France 25,077 2,838 1,623 12, Germany 25,797 14, , Greece 21,589 17,447 1,585 18,217 1, Hungary 14,393 20,243 1,998 22,451 2, Italy 23,474 19,255 1,112 25, Ireland 32, Latvia 11,180 4,010 1,725 4,090 1, Lithuania 11,914 5,999 1,737 6,096 1, Luxembourg 59, Malta 17, , , Netherlands 29, , Poland 11,482 59,048 1,546 59,698 1, Portugal 16,891 18,316 1,750 19,147 1, Romania 7,933 16, , Slovak Republic 13,563 9,663 1,796 10,264 1, Slovenia 19,462 3,646 1,827 3,739 1, Spain 23,069 23,411 1,566 31, Sweden 27, , United Kingdom 26,715 2, , Not Allocated EU 27: all member states 308, New member states 158, Pre-2004 member states 149, NB: Finland, Sweden, Denmark, Netherlands, Ireland and Luxembourg did not quality for any funding during the 2007 to 2013 period as a result of the high level of development in these countries. PAGE 12

13 The criteria upon which each region was judged between in order to determine its eligibility for EU funding was as follows: Objective Financial Instruments Eligibility Financial Allocation (Million, 2004 prices) Regions/countries receiving allocation Convergence ERDF Regions whose GDP per head is less than 75% of the EU average. 177,083 (57.5%) 84 regions (31.7% of EU27 population) ESF Tapering transitional support up to 2013 for regions that would have been eligible if the threshold had remained 75% of the EU15 GDP per head average and not the EU25 ("phasing out") 12,521 (4.1%) 58,308 (18.9%) 16 regions (3.4% of EU27 population) Cohesion Fund Member States whose GDP per head is less than 90% of the Community average for the period ,250 (1.0%) All 2004/7 Member States, Portugal and Greece Tapering transitional support for Member States that would have remained eligible for the Cohesion Fund if the threshold had remained 90% of the EU15 GNI per head average and not the EU25 Subtotal: 251,162 (81.5%) Spain Regional Competitiveness and Employment ERDF ESF Regions not covered by the Convergence Objective or by transitional support Transitional support for regions which were covered by Objective 1 in the framework (which corresponds to the present Convergence Objective) but whose GDP per head now exceeds 75% of the EU15 GDP per head average ("phasing in") 38,742 (12.6%) 10,385 (3.4%) Subtotal: 49,127 (15.9%) All regions not covered elsewhere (61% of the EU27 population) 13 regions (3.9% of the EU27) European Territorial Cooperation EDRF (i) Cross-border co-operation. regions that have maritime, national or EU borders (ii) Trans-national co-operation. All European regions are eligible but the Commission has identified 13 cooperation zones (iii) Inter-regional co-operation and setting up networks and exchanges of experience. Subtotal: 7,750 (2.5%) Total: 308,041 (100%) PAGE 13

14 Country-by-country analysis The last round of Cohesion Fund ran from 2007 and will conclude at the end of To date, the Cohesion Fund has made a significant impact on improving infrastructure in many areas across Europe. Successes include widening public access to drinking water, upgrading the capacity of waste-water and improving piping infrastructure. Despite the successes of the fund, considerable challenges remain for member states. Many are still not compliant with EU water laws and require substantial continued EU support in order to be able to do so. Bulgaria The funding made available to Bulgaria for Cohesion Fund-related project was approved on 7th November 2007 by the European Commission. While some countries were only granted Cohesion Fund monies for particular regions, the relatively low GDP per capita in Bulgaria meant that the whole country was judged to be in need of funding under the terms of the convergence objective. Bulgaria was allocated a total budget of 6 billion in Cohesion Fund monies for the period At the time the money was allocated to the country the Bulgarian government declared that their number one priority would be the preservation and improvement of the environmental conditions of the water in the country by improving water supply and wastewater infrastructure to the standards required by EU law. In particular, the country outlined its wish to bring about the construction and modernisation of sewage treatment networks and waste water treatment plants. By 2013, EU funding had delivered 65 new or rehabilitated waste water treatment plants serving an additional 1,845,000 people, and 22 integrated waste management systems serving an additional 3.5 million people. 2 Case study: Ruse is a city of 160,000 inhabitants with a harbour on the Danube. The European Union funded the rehabilitation and extension of the water supply and sewerage network, along with the construction of an urgently needed waste water treatment plant. The main objective of this project was to protect the environment by reducing pollution in the Danube, and to increase the reliability of the water supply and the efficient use of water resources. The total estimated cost of the project was 46.8 million, with an EU contribution of 35 million. 3 Czech Republic For the period from 2007 to 2013, the Czech Republic was allocated a total of 23.6 billion for cohesionrelated projects. Nearly 40% of the total allocation was spent on environment-related projects such as waste water treatment and measures to reduce air pollution. Prior to the commencement of the 2007 to 2013 budget round, a report by the European Commission concluded that part of the [country s] sewerage system has not been connected to wastewater treatment plants and 11% of water was not clean with highly polluted waters evident in large parts of the country, largely as a result of former mining and industrial processes. 4 Case study: The objective was to reduce surface and wastewater pollution in the South-East region of Jihovýchod in the Czech Republic. The implementation of the project enabled an additional 4,198 inhabitants to be connected to the new wastewater infrastructure, while the overall rehabilitation of existing sewerage systems benefited up to inhabitants, 115 of whom were connected to the wastewater infrastructure for the first time. The project included 53.1 km of new sewers, 20.6 km of reconstructed sewers and 3 km of reconstructed water pipes. Total investment was 54.1 million of which the EU provided Atanas Kostadinov, Former Deputy Minister of Environment and Water, Bulgaria 3 Bulgarian Ministry of Regional Development and Public Works, European Infrastructure Projects Directorate 4 Strategic Evaluation of Environmental and Risk Prevention Under Structural and Cohesion Funds for the Period , National Evaluation Report for Czech Republic 5 INFOREGIO PAGE 14

15 Estonia For the period from 2007 to 2013, Estonia was allocated a total of 3 billion for cohesion-related projects. At the time the money was allocated the Estonian Government declared that water and waste management infrastructure would be their top priority for the 2007 to 2013 funding round. The programmes implemented to improve such infrastructure were designed to ensure that a total of 55,000 individuals were provided with new drinking water and sewage systems. 6 In 2010, however, the Estonian National Audit Office published a report stating that the country would be "unable to guarantee sufficient waste water treatment in all built-up areas in the country" in a timely enough manner to bring the country into full compliance with EU water law. The report concluded that "too little funding is planned for the improvement of water management systems" with "several local governments unable to take part in projects as their ability to co-finance them is restricted." 7 Case study: It was necessary to launch a programme reconstructive of water and wastewater networks in Narva city. The project consisted of the replacement of some 26 km water distribution pipelines, the reconstruction of drinking water treatment plant and water reservoirs. Some 65,000 inhabitants living in the project area directly benefited from the improved water services by receiving drinking water of higher quality. Safe drinking water contributed to the reduction of health risks for the population. Leakages reduced to 20%. Wastewater disposal improved the hygienic conditions and the quality of the environment. Cyprus For the period from 2007 to 2013, Cyprus was allocated a total of 580 million for cohesion-related projects. At the time, the Cypriot Government described investments in "basic infrastructure in the environment and energy sectors" as their top "priority axis," including the "construction of pipes for the collection and transfer of waste, construction of pumping stations and waste treatment stations, tanks for storing processed water and central water distribution pipes." 8 Case study: "EU funds will help to bring state of the art sewage facilities to a region of Europe that currently has no modern sewage system. Until completion of the Sewerage System of Kokkinochoria Complex project, every householder in the Kokkinochoria area is responsible for the building, maintenance and operation of his or her own septic tank and absorption pit. The project involves constructing a new system for the collection, conveyance and centralised treatment of urban sewage from the Kokkinochoria Complex. Eleven new wastewater pumping stations will be installed, along with new transfer and mains systems to link the local communities. 432 jobs will be created during the project s implementation, with a further 13 longterm jobs in place when construction is over. The total project cost 95 million of which the EU provided 64.6 million." 9 Latvia For the 2007 to 2013 period, Latvia was allocated a total of 4.09 billion Euros for cohesion-related projects. Upon confirmation of this figure, the Latvian Government announced that "water management infrastructure and services" would be amongst their top priorities in the field of environmental policy. 6 Managing Authority for Operational Programme Development of the Economic Environment, Estonia 7 Toomas Mattson, Communication Manager of National Audit Office of Estonia 8 Overview of the mechanisms of Structural and Cohesion Funds, Cyprus Institute of Energy 9 Instrument for Structural Policies for Pre-Accession Monitoring Department, European Commission PAGE 15

16 Lithuania For the 2007 to 2013 period, Latvia was allocated a total of 6.09 billion for cohesion-related projects. Amongst the chief goals of the Cohesion Fund in Lithuania were efforts to upgrade water supply and water treatment plants for a total of 220 communities. 10 The results of this investment were quickly felt in Lithuania with the country s Minister for the Environment Valentinas Mazuronis declaring that over 900 km of new wastewater and water supply networks were built and more than 200 km were reconstructed and 25 wastewater treatment plants were built or modernised in Lithuanian cities and towns 11 by October The country s Ministry of Finance confirmed in February 2010 that the following projects had either been implemented or were at a shovel ready 12 stage: New and renovated wastewater network lines 728 km. New and renovated water supply network lines 865 km. I n s t a l l e d / r e c o n s t r u c t e d wastewater pump stations 380 Additional citizens connected to centralised wastewater network lines 36,794 Additional citizens connected to centralised water supply network lines 35,993 New wastewater treatment plants 35 Reconstructed wastewater treatment plants 15 Malta For the 2007 to 2013 period, Latvia was allocated a total of 761 million Euros for cohesion-related projects. When seeking to define their objectives for the spending of Cohesion Fund monies, the Maltese government declared that improving water supply and water and waste management 13 would be amongst their priorities for the period up to the end of Poland For the period from 2007 to 2013, Poland was allocated a total of billion for cohesion-related projects. Poland's share of Cohesion Fund monies was by far the largest allocated to any European Union member states and reflected both the country's relatively large population size as well as the scale of the challenges it faced in respect of bringing its infrastructure and living standards in line with European Union averages. 14 The country's Operational Programme Infrastructure and Environment - the document outlining how EU cohesion-related monies would be spent during the 2007 to 2013 period - mandated that "water and sewage management" and "waste management and the protection of earth" would be amongst its fifteen "priority axes" for implementation. 15 Case study: A project was undertaken to upgrade the water and sewage management in the city of Nowy Sącz, the city and the municipality of Stary Sącz and two municipalities of Nawojowa and Kamionka Wielka. As a result of the implementation of the project the water supply system will be connected to around 8,000 inhabitants of the cities of Nowy and Stary Sącz and municipality Nawojowa. The modernization of the water purification station ensures reliability of supply of the drinking water of appropriate quality, which will contribute to fulfilment of basic health and economic needs of the local community. The total project cost 64.1 million of which the EU provided 43.9 million Rolandas Kriščiūnas, Ministry of Finance Director Financial Assistance Department, Governor of Lithuania 11 Ministry of Environment of the Republic of Lithuania 12 Ministry of Finance of the Republic of Lithuania 13 Country Report on Achievements of Cohesion Policy, European Commission Directorate-General for Regional Policy 16 Instrument for Structural Policies for Pre-Accession Monitoring Department, European Commission PAGE 16

17 Romania For the 2007 to 2013 period, Romania was allocated a total of 17.3 billion Euros for cohesion-related projects. In order to access European funding for infrastructure related projects, it is necessary for individual EU member states to outline a strategy indicating their priorities. In Romania s case, several of the priorities for the funding round had clear relevance to the water sector: Priority axis 1: Extension and modernization of water and wastewater systems. This priority sought to address one of the main weaknesses of the water and wastewater systems reflecting poor rate of connection of the communities to basic water and wastewater infrastructure (52%), poor quality of drinking water and lack of sewerage collection and treatment facilities in some areas. As well, it addresses the issue of limited efficiency of public water services mainly due to a large number of small operators, many of them dealing with different other activities (public transport, urban heating, local electricity, etc.) and due to long term under-investments, poor management, lack of long term development strategies and business plans. 17 Silviu Stoica, Director General, Ministry of Environment and Sustainable Development, Government of Romania 18 Instrument for Structural Policies for Pre- Accession Monitoring Department, European Commission Priority axis 5: Implementation of adequate infrastructure of natural risk prevention in vulnerable areas. Support under this priority axis was intended to focus on investments providing for adequate level of protection against floods by improvements of the economic, environmental, ecological and conservation status in the most vulnerable flood areas. Priority axis 6 ( technical assistance ): The aim of this priority was to ensure the efficient implementation of EU law in respect of environmental standards, as well as encouraging the use of innovative technologies. 17 Case study: Piatra Neamt is a medium-sized town with a population of about 125,000, situated in the north-east part of Romania. Our project involved the elimination of waste previously unsafely deposited in the streets by means of the introduction of safe and sound collection methods contributes to the reduction of health risks. A substantial increase in waste recycling, a reduction in waste disposed in landfill, and reduced soil and water pollution levels were achieved. The EU contribution to this project was 10.4 million. 18 Case study: Water services are being vastly improved in eight towns and communes across a large county in south-eastern Romania. This work will deliver EU-standard drinking water and wastewater to almost their entire population. The four-year project targets some 59,700 people and will include the construction of three wastewater treatment plants. It will be implemented over four years. New wastewater treatment plants are to be built in Bragadiru-Cornetu, Domnesti-Ciorogarla, and Branesti capable respectively of handling sewage for populations equivalent to 16,200, 13,000 and 11,330. The local economy will benefit from the creation of 170 jobs during the project implementation and almost 50 jobs during the operating stage. The EU contribution to this project is 55.6 million. Case study: The development and upgrading of the water and wastewater systems in Dâmbovita County represents the first step in a long term investment plan for the region. The project consists of infrastructure investments to upgrade drinking water treatment and distribution, and wastewater collection and treatment; it will include six treatment plants. Over 170,000 residents in Dâmbovita, Romania s most densely populated county, will gain access to clean water and an upgraded and rehabilitated modern water supply and wastewater service. It is estimated that 95% of the inhabitants will be connected to the drinking water network and safe water resources, representing an additional 25,800 inhabitants connecting to the safe drinking water supply system. The connection rate to the sewer collection system will reach 94%, bringing in an additional 59,391 inhabitants to the wastewater system. The project is also expected to directly mobilise 310 jobs during the implementation phase and 10 jobs during the operating stage. The EU contribution to this project is million of the total million cost. PAGE 17

18 Case study: A project is currently underway to bring about the extension and rehabilitation of water and wastewater systems in Medias, Agnita and Dumbraveni regions in Sibiu County. The project consists of the replacement and construction of 45 km distribution pipelines, the rehabilitation of three drinking water treatment plants and five water reservoirs. Some 68,000 inhabitants living in the project area will directly benefit from improved water services. Particularly, the investment will improve the quality of life of the citizens living in the service area by ensuring better access to drinking water and wastewater services: 100 % of the population living in the municipalities of Medias, Agnita and Dumbraveni will have access to compliant drinking water supply after project implementation and 100% of the population of the concerned wastewater agglomerations will be connected to the sewerage system. Case study: A project is underway to bring about the extension and the rehabilitation of water and wastewater systems in Calarasi County. It will be implemented for the agglomerations of Calarasi, Urziceni, Oltenita, Lehliu, Fundulea and Budesti. The ultimate purpose is to promote the compliance with the relevant EU environmental legislation and in turn improve the quality of the water services. The project involves the rehabilitation and extension of 81 km of sewers, the construction of 13 pumping stations, the extension and rehabilitation of five wastewater treatment plants. The target population served will be of 117,000 people. The EU is funding roughly 80% of the 99 million project. Slovenia For the 2007 to 2013 period, Slovenia was allocated a total of 3.7 billion for cohesion-related projects. Following the granting of these monies, the Slovene Government confirmed that issues relating to the environmental and water quality sector would form party of the priority axes for part Cohesion Fund spending in the period from 2007 to More specifically, the Government s plan stated that the programme would facilitate the construction of waste water treatment plants, the installation of main water supply systems and longterm protection of existing and potential potable water sources the EU and the National Government will provide respectively 325,483,339 and 57,438,237 respectively, for this program, for a total investment of Case study: Slovenia introduced a wastewater management programme to improve the quality of the water in the rivers around Celje. Celje is located along the banks of two rivers, just where the Voglajna meets the Savinja and then the latter river turns abruptly south to join the Sava. Celje is the third largest city in Slovenia and also an important regional centre for business and commerce, education and tourism. It covers an area of 24 square kilometres and has over 50,000 inhabitants. Formerly, all the wastewater that was produced in Celje flowed into the regional sewage system that discharged more than 4,500 cubic metres of untreated water directly into the Savina River. The quality of the water in this river was rated as 3rd to 4th class, in accordance with the EU fresh water classification scale, and naturally, the effluent from Celje flowed on to contaminate the purity of water in the Sava. The Municipality paid for the upgrading of the primary collector of wastewater and then the treatment plant was built, which had the capacity to handle output from the equivalent of 85,000 inhabitants. Additional collectors of a total length of 7.7 kilometres were installed and six pumping stations and five retention tanks were constructed along the Savinja River. In the new plant, the wastewater is mechanically and biologically purified and it refines household and pre-treated industrial and hospital effluents. The final products are cleansed water, which flows into the Savinja, and sludge that has been dehydrated and can then be used as manure on farmland. The project is one step towards ensuring that Slovenia meets the requirements of the EU Urban Wastewater Directive and the National Environmental Action Programme. The total cost of the project was 15.1 million, of which the EU provided 8.4 million. 19 Peter Wostner, Office for Local Self-Government and Regional Policy, Government of Slovenia PAGE 18

19 Slovakia For the 2007 to 2013 period, Slovakia was allocated a total of 10.2 billion for cohesion-related projects. Given the challenges facing the country in respect of bringing its domestic water quality standards in line with European Union requirements the Slovak Government described the water sector as being in need of the heaviest investment given the need to comply with the EU s environmental acquis. Throughout the period from 2007 to 2013, it was envisaged that there would be an increase in the number of people connected to public sewers to 4.4 million, the percentage of population connected to waste water treatment plants to 81% and the proportion of the population supplied with drinking water from public water supply networks to 91%. 20 Case study: The Myjava waste water treatment plant is located in the Trenčin region close to the Myjava river. The main objective of the project was to reconstruct and intensify the works of the existing Myjava WWTP in order to achieve compliance with European environmental law. The project s secondary objective was to protect water quality: the Myjava river, which is a natural monument, together with its riverside vegetation, represents a significant landscape and eco-stabilising factor. The vegetation also protects the river body from pollution by absorbing part of the fertilizers washed down from the surrounding fields. In the longer term, the reconstructed WWTP should create favourable conditions for the preservation of several species of fish and invertebrates in that protected area. Before the works began in 2005, the treatment efficiency of the Myjava WWTP was approximately 76%. After the project was finished in 2007, measurements proved 95% efficiency of waste water treatment. The total cost of the project was 1.7 million of which the EU contributed 1.3 million. 21 Hungary According to figures published by the European Commission in 2003, at that stage only 16% of water courses in Hungary were of a good or excellent quality, 37% had a tolerable quality and around 47% of the country s waters were contaminated or extremely contaminated. The number of homes connected to the sewerage system was only 59%. The European Commission Directorate-General for Regional Policy Country Report on Achievements of Cohesion Policy stated that, in 2003, many public utility network and wastewater treatment facilities were obsolete or worn out. Consequently, the capacity of wastewater treatment plants and the efficiency of treatment technologies did not comply with basic criteria at many locations in Hungary most facilities need refurbishment, and many need complete replacement of infrastructure. 22 As such, the country faced significant challenges in bringing its domestic water quality standards into line with minimum European Union requirements. Mindful of this, Hungary was allocated a total of 22.4 billion for cohesion-related projects for the period from 2007 to 2013 amongst the largest aid recipients in Europe. 20 Results of the Negotiations of Cohesion Policy Strategies and Programmes , European Commission 21 Instrument for Structural Policies for Pre-Accession Monitoring Department, European Commission 22 Country Report on Achievements of Cohesion Policy, European Commission Directorate- General for Regional Policy 23 Dr Puskás Tivadar, Mayor of Szombathely Case study: The Municipality of Szombathely is in the centre of Vas county next to the Hungarian- Austrian border. Its waste water, together with that from Köszeg and 24 communities, is treated by an existing waste water treatment plant which was upgraded in Four thousand people were connected to the waste water collection system in the City of Szombathely, an increase from 92.4% to 96.7% of the population. The project also contributed to mitigating negative environmental impacts including odour nuisance, contamination of groundwater and surface water from storm-water overflows and sewage flooding. It also provided a sustainable sludge disposal solution that complies with EU environmental legislation. The European Union made a financial contribution of 11.9 million to this project, out of a total budget of 19.8 million. 23 PAGE 19

20 The Budget Round On 6th October 2011, the European Commission announced its draft legislative package to underpin the operation of the Cohesion Fund for the period from 2014 to The proposal focussed on a number of distinct areas, including: Concentrating on boosting measures for economic growth in line with the Europe 2020 strategy which encourages sustainable development in order to foster economic growth; Reinforcing the territorial cohesion objective of ensuring countries with weaker or less developed infrastructure were brought up to EU standards; Simplifying the means by which countries and regions are allowed to apply for funding for cohesion-related projects. The total budget made available for cohesion funding for the 2014 to 2020 period was 376 billion. The proposal mandated that every region across the European Union would have a right to benefit from cohesion funding whether it be from the European Regional Development Fund (ERDF) or the European Social Fund (ESF). A distinction, however, was drawn between regions considered to be less developed (i.e. North East Romania), in transition from being a low income to medium income area (the majority of Polish regions) or more developed (i.e. the South East of England). Less developed regions are defined as being those with an average GDP per capita of less than 75% of the European Union average while a transition region is one where the average GDP lies between 75% and 90% of the average. While funding was not explicitly banned from being passed to more developed regions for projects ensuring competitiveness in the field of the digital economy or shifting towards low carbon technologies, the clear focus remained in respect of lower income regions. In respect of European Social Fund monies, a minimum share mechanism was established for each category of region of 25% for less developed regions, 40% for transition regions and 52% for more developed regions. This calculation resulted in a minimum overall share of the overall EU cohesion fund budget of 25%, equating to 84 billion. The Cohesion Fund, it was decided, would continue to support EU member states with a Gross National Income (GNI) per capita of less than 90% with their efforts to invest in trans-european transportation projects such as motorways or railway systems and environment-related projects such as water infrastructure. One of the key criticisms of the budget round was that individual EU member states in receipt of cohesion fund monies had had significant problems in absorbing and spending European funding. In some cases, money was misdirected or significant under-spends occurred. In order to remedy these problems, the 2014 to 2020 funding round introduced several new principles that must be followed when allocating funding: Cohesion funding made available to each country must not exceed 2.5% of the country s total GDP; Cohesion funding will only be made available to pay for up to 85% of any individual project in less developed regions, 60% in transition regions and 50% in more developed regions; Partnership Contracts will be introduced between the EU and entities receiving funding in order to improve transparency and accountability in the funding process. PAGE 20