Special Report The cost-effectiveness 
of EU Rural Development 
support for non-productive 
investments in agricultureEN 2015  NO 20
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The cost-effectiveness 
of EU Rural Development 
support for non-productive 
investments in agriculture
(pursuant to Article 287(4), second subparagraph, TFEU)Special ReportEN 2015  NO 20
02
 Audit team
The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas 
or management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering 
the risks to performance or compliance, the level of income or spending involved, forthcoming developments and 
political and public interest.
This performance audit was produced by Audit Chamber I — headed by ECA Member Augustyn Kubik — which 
specialises in preservation and management of natural resources spending areas. The audit was led by ECA Member 
Jan Kinšt, supported by Alejandro Ballester Gallardo, head of private office; Bernard Moya, private office attaché; 
Davide Lingua, head of unit; Paulo Oliveira, team leader. The audit team consisted of Franco Radicati; Anne Poulsen; 
Paul Toulet-Morlane and Zoltan Papp. Secretarial assistance was provided by Murielle Siffert.
03
 Contents
Paragraph
 Glossary
I-IX Executive summary
1-9 Introduction
1-9 EU support for non -productive investments in agriculture
10-14  Audit scope and approach
15-71  Observations
15-34  The Court found indications of effective NPI support, despite weaknesses in the selection 
procedures and the monitoring tools
17-18  Despite the broad definition of agri -environment needs, Member States targeted the aid by restricting the 
types of NPI eligible for funding
19-23  All four audited Member States referred to the complementarity of NPI support, but only two applied it at 
operational level to foster synergies with other support schemes
24 Weaknesses in the audited Member States’ selection procedures led to NPIs being supported that were 
ineligible, or whose selection was insufficiently justified
25-31  There was a lack of relevant information to show what has been achieved by EU support to NPIs at EU and 
Member State levels …
32-34  … nevertheless, the Court found indications that 71 % of the audited NPIs contributed to objectives linked 
to the sustainable use of agricultural land
35-50  In the audited Member States, the costs of supported NPIs were often unreasonably high or 
insufficiently justified
39-41  NPIs receive high rates of public funding even though sometimes they include remunerative components
42-48  Audited Member States funded investments with excessively high costs or with costs which were 
insufficiently justified
49-50  There were problems with the reasonableness of the costs in most of the NPIs audited by the Court
04 Contents
51-71  Weaknesses affecting the cost -effectiveness of NPI support in the 2007-2013 period had not yet 
been corrected by the start of the 2014-2020 period
60-61  Complementarity not always achieved at operational level to foster synergies
62-64  Lack of appropriate indicators and performance data beyond inputs and output
65-66  Weaknesses in the selection procedures  
67-68  Aid rates not adjusted on the basis of the remunerative features of the investments
69-70  Unreasonable or insufficiently justified costs
71 Other eligibility issues
72-81  Conclusions and recommendations
 Annex I —  Main characteristics of the EAFRD measure support for non -productive 
investments in agriculture
 Annex II —  Summary of NPI visited on the spot
 Annex III —  Summary of needs, objectives and types of NPI per Member State
 Reply of the Commission
05
 Glossary
CMEF : Common Monitoring and Evaluation Framework. A single framework for monitoring and evaluating rural 
development interventions for the 2007-2013 programming period as a means for improving performance of the 
programmes, ensuring accountability and allowing an assessment of the extent to which the objectives have 
been achieved.
Cost -effectiveness analysis : Compares the costs and effects of an intervention to assess the extent to which 
it can be regarded as providing value for money. For the purpose of this audit, non -productive investments are 
considered to be cost -effective when: (i) they are effective (see definition of effectiveness below) and; (ii) there is 
no evidence that the same investments could have been implemented at lower costs. When the same investments 
could have been implemented at lower costs, the value for money of such investments is undermined, since the 
same objectives and/or results would have been achieved at lower costs.
EAFRD : European Agricultural Fund for Rural Development.
EAFRD regulation : Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development 
by the EAFRD.
Effectiveness : Achieving the objectives set. For the purpose of this audit, eligible non -productive investments 
which address an agri -environmental need and/or contribute to achieve an agri -environmental objective identified 
by the Member States in their RDPs are considered to be effective.
Efficiency : Achieving the best relationship between effectiveness and costs.
Evaluation : A periodic collection and analysis of evidence to form conclusions on the effectiveness and efficiency 
of interventions.
Ex ante evaluation : Part of drawing up each rural development programme aiming to optimise the allocation of 
budgetary resources and improve programming quality.
Managing Authority : A national or regional body designated by a Member State to manage a rural development 
programme.
Measure : An aid scheme for implementing a policy. Each measure sets out specific rules to be complied with by 
the projects or actions that can be financed. There are two main types of measures: investment measures and 
area -related aid.
Mid -term evaluation (MTE) : A type of ongoing evaluation report. Mid -term evaluation reports propose measures 
to improve the quality of rural development programmes and their implementation.
Monitoring : Regular examination of the resources, outputs and results of interventions.
NPI : Non -productive investments supported by EAFRD measure 216.
Programming period : Multiannual framework to plan and implement EU policies such as rural development policy.
Results : The direct effects or changes that arise due to the intervention.
06 Glossary
Rural development programme (RDP) : A document prepared by a Member State or region, and approved by the 
Commission, to plan and monitor the implementation of the rural development policy.
Shared management : A method of implementing the EU budget where the Commission delegates implementation 
tasks to the Member States, while retaining final responsibility.
07
 Executive  
summary
I
As part of the EU rural development policy, Member 
States may use the EU budget to give grants towards 
the costs of non -productive investments (NPIs). NPIs 
are investments which do not generate a significant 
return, income, or revenue, or increase significantly 
the value of the beneficiary’s holding, but have a posi -
tive environmental impact. In particular, NPIs should 
play a complementary role in helping to achieve 
agri -environmental objectives or commitments, 
which can be undertaken under other environmental 
schemes, or in enhancing the environmental value of 
protected areas.
II
Public support for NPIs is provided by the European 
Agricultural Fund for Rural Development (EAFRD) and 
national co -financing. The public aid rates applied 
for NPIs are much higher than those granted to other 
productive investments, and often reach 100 % of the 
total investment costs. For the 2007-2013 program -
ming period, approximately 860  million  euros of 
public money were spent on NPIs. This audit examined 
the cost -effectiveness of NPIs in contributing to the 
achievement of environmental objectives in the 2007-
2013 programming period.
III
The conclusions of this audit are based on the exami -
nation of the management and control systems of 
four Member States that spent 80 % of the total 
EAFRD funds for NPIs and on visits to 28 NPI projects 
that were most commonly funded. The Court con -
cludes overall that NPI support has contributed to the 
achievement of environmental objectives linked to the 
sustainable use of agricultural land, but in a way that 
was not cost -effective.IV
While the Member States did not always ensure the 
complementary role of NPIs in synergies with other 
support schemes, they targeted NPI funds to the 
types of investments with the potential to effectively 
address their agri -environmental needs. However, the 
audit revealed that the Member States reimbursed 
investment costs which were unreasonably high or 
insufficiently justified, making the NPI support not 
cost -effective. Furthermore, weaknesses in the selec -
tion procedures led Member States to fund NPI pro -
jects which were ineligible for EU funding, or to select 
project applications without verifying appropriately 
that they respected crucial selection criteria.
V
The audit found that 71 % of the visited projects 
contributed to the achievement of agri -environment 
objectives such as landscape and biodiversity pro -
tection. For this contribution to be cost -effective, it 
is essential that the costs of the supported NPIs are 
reasonable and justified. The Court found clear indica -
tions of unreasonable costs in 75 % of these projects. 
As a result, only 5 of the 28 (18 %) audited projects 
proved to be cost -effective.
VI
The problems with the reasonableness of costs of NPIs 
may not be confined to the sample of projects, since 
the concrete cases identified stem from weaknesses in 
the management and control systems of the Member 
States. In particular, they reimbursed investment costs 
on the basis of unit costs which were much higher 
than the actual market costs, or did not appropriately 
verify the reality of the costs claimed, or accepted the 
most expensive offer for undertaking the investment 
without requiring justification from the beneficiar -
ies or without comparing the proposed costs against 
benchmarks. In addition, the Court found several 
cases in all the Member States audited where NPIs 
with obvious remunerative characteristics benefited 
from the maximum aid rates stipulated for this type 
of investments, which meant that, in most cases, they 
were fully funded with public money.
Executive summary 08
VII
There was a lack of performance information to show 
what has been achieved with the support to NPIs at 
EU and Member State levels. The available monitor -
ing indicators measured only input and output data, 
such as the amount of public expenditure, the number 
of holdings receiving support, and the total invest -
ment volume. The absence of specific result indicators 
led some Member States to bundle the performance 
assessment of NPIs with other environmental schemes, 
wishfully assuming that all performed in the same way.
VIII
EAFRD support for NPIs continues in the 2014-2020 
programming period, but the Commission and the 
Member States have not yet corrected most of the 
weaknesses identified by the Court. The main reason 
is that they did not do enough to identify weaknesses 
in a timely manner, so that the necessary corrective 
actions could be taken before the start of the new 
period. On the one hand, the Member States did 
not analyse the causes of the irregularities detected 
through their own controls to improve the manage -
ment of the scheme. On the other hand, the Commis -
sion’s own audits took place too late to help Member 
States identify and correct management shortcomings 
during the 2007-2013 implementation period.
IX
On the basis of these findings the Court makes the 
following recommendations aimed at improving the 
cost -effectiveness of NPIs that will be funded during 
the 2014-2020 Rural Development programme period:
— The Commission should monitor the relevant 
Member States’ implementation of NPIs through 
their annual implementation reports, from 2017, 
which should also include the number and propor -
tion of NPI projects that have been implemented 
in combination with other rural development 
measures or environmental schemes, including 
integrated projects.— The Member States should include in their evalu -
ation plans, an assessment of the extent to which 
NPIs are implemented in synergy with other 
rural development measures or environmental 
schemes.
— The Member States should make public all the 
criteria used in the selection and prioritisation 
of NPIs and systematically verify the supporting 
documentation proving compliance with these 
criteria. The Member States should also ensure an 
appropriate segregation of duties between organi -
sations and persons involved in the transmission 
and selection of applications.
— For the new programming period, the Commission 
should provide guidance to Member States on 
selection criteria, having due regard to their trans -
parency and check that Member States apply ap -
propriate procedures for the selection of projects.
— The Commission should ensure that the contribu -
tion of NPIs to achieving the EU agri -environment 
objectives is monitored, or at least specifically 
assessed during the evaluations of the 2014-2020 
programming period.
— Member States where NPI support is significant 
should define specific results indicators and report 
on these indicators in their annual implementation 
reports and evaluations.
— Member States should define, as soon as possible, 
appropriate criteria to determine the remunerative 
characteristics of NPIs benefiting from the highest 
aid rates. On the basis of this assessment, Member 
States should modulate the intensity of support.
— The Commission should also provide further guid -
ance on the establishment of such criteria.
— Member States should implement, without delay, 
procedures to ensure that the costs of the sup -
ported NPIs do not exceed the costs of similar 
types of goods, service or works offered by the 
market.
Executive summary 09
— The Commission should, in the context of its 
multiannual audit plan, verify the Member States’ 
effective application of the controls foreseen to 
ensure reasonableness of costs.
— Member States should define, before the first 
on-the -spot controls for the 2014-20 period are 
performed, a method for the timely consolidation 
and analysis of the cause of the errors found dur -
ing these controls.
— In planning future audits, the Commission should 
take due account of the scale of weaknesses 
identified by the Court in the area of expenditure, 
irrespective of its limited financial importance.
10
 Introduction
EU support for non - 
productive investments  
in agriculture
01 
Non -productive investments (NPIs) are 
investments which do not generate 
a significant return, income, or reve -
nue, or increase significantly the value 
of the beneficiary’s holding, but have 
a positive environmental impact. Pub -
lic support for NPIs provides a financial 
incentive for the owners of agricultural 
holdings to undertake this type of 
environmentally friendly investments. 
NPIs have a varied content, ranging 
from the restoration of landscape fea -
tures such as traditional boundaries, 
wetlands, hedges and dry -stone walls, 
to creating and/or restoring a habitat 
or landscape element, such as restor -
ing heathland, species -rich grassland 
or floristically enhanced grass margins 
(see Box 1 ).02 
During the 2007-2013 period, the 
European Agricultural Fund for Rural 
Development (EAFRD) granted support 
for NPIs under measure 216. As shown 
in Figure 1 , this measure is part of  
Axis 2 of the EU rural development 
policy relating to the overarching 
objective of sustainable use of agricul -
tural land.
Examples of supported NPIBox 1
Dry‑stone wall in Puglia (IT) Wetland boardwalk in East Devon (UK)
Source:  European Court of Auditors.
11 Introduction
03 
The EAFRD regulation1 states that ‘sup -
port should be granted for non -remu -
nerative investments where they are 
necessary to achieve the commitments 
undertaken under agri -environmental 
schemes or other agri -environmental 
objectives, or where they enhance 
on-farm the public amenity value of 
Natura 2000 areas and other areas of 
high natural value’.
04 
In particular, NPIs should play a com -
plementary role in helping to achieve 
the sustainable use of agricultural 
land, either by enhancing the environ -
mental value of protected areas or by 
contributing towards achieving ag -
ri-environment commitments, such as 
those supported by rural development 
measure 2142, ‘agri -environment pay -
ments’. Alternatively, NPIs can be im -
plemented independently to achieve 
other agri -environmental objectives, 
often shared by other environmental 
schemes and/or measures.05 
In the 2014-2020 programming period, 
support for NPIs remains under the 
new sub -measure3 4.4 ‘support for 
non -productive investments linked 
to the achievement of agri -environ -
ment -climate objectives’. The measure 
is essentially the same as in 2007-2013 
as regards its rationale, scope, ben -
eficiaries, type and level of support. 
It also retains its complementary role 
towards other measures4 and/or other 
environmental objectives. Annex I  
provides, for comparison, the ration -
ale and certain characteristics of the 
measure in the 2007-2013 and 2014-
2020 programming periods.Figure 1Structure of Axis 2 of the EU rural development policy with regard to the sustainable 
use of agricultural land
Source:  The European Network for Rural Development (ENRD).Axis 2 - Improving the environment and the countryside
Sustainable use of 
agricultural landNatural handicap payments to farmers in mountain areas 211
212
213
214
215216Payments to farmers in areas with handicaps, 
other than mountain areas
Natura 2000 payments and payments linked 
to Directive 2000/60/EC
Agri-environment payments
Animal welfare paymentsNon-productive investments
1 Recital 37 of the preamble to 
Council Regulation (EC) 
No 1698/2005 of 20 
September 2005 on support 
for rural development by the 
European Agricultural Fund 
for Rural Development 
(EAFRD) (OJ L 277, 21.10.2005, 
p. 1).
2 Rural development measure 
214 ‘agri -environment 
payments’ supports the 
sustainable development of 
rural areas. The payments 
granted under this measure 
represent 57 % of the public 
funding for sustainable use of 
agricultural land. It 
encourages farmers and other 
land managers to commit, on 
a voluntary basis, to 
introducing or continuing to 
apply agricultural production 
methods compatible with the 
protection and improvement 
of the environment, the 
landscape and its features, 
natural resources, the soil and 
genetic diversity.
3 As defined in the Commission 
implementing Regulation (EU) 
No 808/2014 of 17 July 2014 
laying down rules for the 
application of Regulation (EU) 
No 1305/2013 of the European 
Parliament and of the Council 
on support for rural 
development by the European 
Agricultural Fund for Rural 
Development (EAFRD) (OJ 
L 227, 31.7.2014, p. 18).
12 Introduction
06 
The Commission and the Member 
States share responsibility for manag -
ing EU support to NPIs. Member States 
must define specific objectives and 
implement effective management 
and control systems to ensure that the 
supported investments respect the ap -
plicable rules and are cost -effective.
07 
The Commission establishes imple -
menting rules and guidelines, and ap -
proves national or regional rural devel -
opment programmes (RDPs) where the 
Member States identify their objec -
tives for the selected support meas -
ures. The Commission monitors and 
supervises the implementation of the 
programmes and checks that national 
administrations of the Member States 
have implemented effective manage -
ment and control systems.08 
For the 2007-2013 period, the public 
support rates stipulated for NPIs can 
reach 100 % of total eligible costs. This 
compares with a support rate of 40 % 
generally applied to other produc -
tive investments, such as those linked 
with the modernisation of agricultural 
holdings or adding value to agricul -
tural products. For the 2014-2020 
period, these public support rates are 
maintained.
09 
For the 2007-2013 programming 
period, approximately 1 014 mil -
lion euros, i.e. 1,5 % of public funding 
(EAFRD plus national co -financing) for 
the sustainable use of agricultural land 
was programmed for non -productive 
investments (see Table 1 ). In the 2014-
2020 programming period, since most 
of the RDPs had not been approved 
by the time of writing (late May 20155), 
it is not possible to present the 
amounts of EAFRD expenditure that is 
programmed.Table 1Total EAFRD and public (EAFRD plus national co -financing) expenditure for  
NPI 2007-2013 (in euro)
Measure DescriptionPaid Programmed
EAFRD Public EAFRD Public
216 Non ‑productive investments 549 900 632 859 331 286 610 843 250 1 013 996 313
Source:  European Commission SFC2007 system (May 2015).4 ‘Agri -environment -climate’ 
refers to the new rural 
development measure 10 for 
the period 2014-2020. The 
payments under this measure 
aim to preserve and promote 
necessary changes to 
agricultural practices with 
intent to make a positive 
contribution to the 
environment and climate.
5 According to the 
Commission’s SFC2014 system, 
by 29.5.2015 there were 51 
programming documents 
approved by the Commission 
and 67 programming 
documents still undergoing 
approval procedures.
13
 Audit scope  
and approach
10 
The Court conducted an audit of the 
cost -effectiveness of NPIs in contribut -
ing to the EAFRD objective of a sus -
tainable use of agricultural land in the 
2007-2013 programming period, with 
a view to providing recommenda -
tions regarding the new programming 
period. This is so that Member States 
can take these recommendations into 
account in developing implementa -
tion rules and procedures which will 
govern their programmes, and so that 
the Commission can use them as well, 
in particular to improve its monitoring 
of the Member States’ management 
and control systems.
11 
The audit focused on answering the 
following question:
Have NPIs provided a cost -effective 
contribution to the sustainable use of 
agricultural land?
12 
With regard to this, the Court’s report 
provides answers to the following 
sub -questions:
— Have NPIs effectively contributed 
to the achievement of agri -envi -
ronmental objectives linked to 
the sustainable use of agricultural 
land?— Were the costs of the supported 
NPIs justified and reasonable?
— Have the Commission and the 
Member States identified and cor -
rected the weaknesses affecting 
the cost -effectiveness of NPIs in 
the 2007-2013 period in order to 
make improvements for the 2014-
2020 period?
13 
The audit was carried out between July 
2014 and April 2015. The audit focused 
on the 2007-2013 programming period 
and covered the Member States’ man -
agement and control systems related 
to NPI support and a sample of 28 pro -
jects that reflected the most relevant 
NPIs in four Member States6: Portugal 
(Mainland), Denmark, United Kingdom 
(England) and Italy (Puglia) that repre -
sented 80 % of EAFRD expenditure and 
60 % of the beneficiaries of measure 
216 at the beginning of the audit (see 
Figure 2 ).6 For the purpose of this report, 
Member State may be taken to 
mean the country or a region 
in that country.
14 Audit scope and approach 
14 
Audit evidence was collected through 
documentary reviews and audit visits 
to Managing Authorities and benefi -
ciaries in the audited Member States. 
For the 28 audited NPI projects, the 
Court assessed their eligibility and 
complementarity with other agri -envi -
ronment measures or objectives, and 
whether they actually contributed to 
addressing the identified agri -environ -
mental needs at a reasonable cost. The 
results of this assessment are present -
ed in Annex II .Figure 22007-2013 programming period  — Implemented EAFRD expenditure for NPI
Source:  European Commission SFC2007 system (March 2014).020406080100120140160180200
UK IT PT DK SE NL ES DE FR HU EE LT GR FI BERural Development 2007-2013 - Support for NPIs
Implemented EARFD funding (in million euro)
15
 Observations
The Court found 
indications of effective 
NPI support, despite 
weaknesses in the 
selection procedures and 
the monitoring tools
15 
The Court reviewed the management 
and control systems of the audited 
Member States and applied the follow -
ing criteria in order to assess whether 
NPI support contributed effectively 
to the sustainable use of agricultural 
land:
— Member States should clearly iden -
tify their specific agri -environment 
needs as regards the sustainable 
use of agricultural land and the 
types of NPI that would contribute 
to addressing those needs. Given 
that NPIs should complement 
other relevant agri -environment 
measures and/or objectives, 
Member States should ensure this 
complementarity by explicitly link -
ing NPI support to those measures 
and/or objectives.— Member States should effectively 
apply project selection criteria 
to direct the available funding 
to the identified types of NPI, 
while ensuring transparency and 
compliance with the applicable 
legislation.
— Member States should monitor 
project implementation and assess 
whether the supported NPIs con -
tributed to achieving the defined 
environmental objectives.
An intervention logic illustrating these 
criteria is presented in Figure 3 .
16 
In addition to this assessment of the 
management systems, the Court 
reviewed a sample of 28 NPI projects 
(see paragraph 13), the Member States’ 
RDPs and relevant monitoring data 
and evaluation reports.Figure 3Intervention logic of NPI within the scope of the 2007-2013 programming period
Identiﬁcation of needs 
and deﬁnition of objectivesIdentiﬁcation of types 
of investments that are
 coherent and linked 
to needs and objectivesAssessment of the
contribution and synergistic
role of NPIs in complementing
other measures and objectives
16 Observations
Despite the broad definition 
of agri -environment needs, 
Member States targeted the 
aid by restricting the types of 
NPI eligible for funding
17 
In order to be effective, NPI support 
must be targeted to address specific 
agri -environment needs related to the 
sustainable use of agricultural land. 
The Court found that, although all 
Member States defined their agri -en-
vironment needs in broad terms, they 
mitigated the risk of untargeted sup -
port by restricting the NPI types eligi -
ble for funding. A summary of agri -en-
vironment needs and objectives, and 
types of NPI observed in each audited 
Member State, are presented in  
Annex III . It shows that there is indeed 
overall consistency between the type 
of NPIs selected by Member States and 
the agri -environment needs described 
in their RDPs.
18 
When considering the financial alloca -
tion of public support, two Member 
States have targeted the aid further, 
mainly to projects related to land -
scape maintenance and protection. 
In the case of Portugal, 89 % of NPI 
support regarded the restoration of 
traditional dry -stone walls support -
ing terraced vineyards in the Douro 
valley. In the case of Italy (Puglia), 97 % 
of public support to NPIs concerned 
the restoration of traditional dry -stone 
walls that constitute a characteristic 
of the regional farming systems and 
of the landscape. These are examples 
of a clear choice of concentrating NPI 
support to address an agri -environ -
ment need.All four audited Member 
States referred to the 
complementarity of NPI 
support, but only two 
applied it at operational level 
to foster synergies with other 
support schemes
19 
The EAFRD regulation provided NPIs 
with a complementary role (see para -
graphs 3 and 4), but granted Member 
States the discretion to choose the 
level at which this complementarity 
should occur. The audit found ref -
erences to complementarity in all 
Member States audited, but only in 
two — Portugal (Mainland) and UK 
(England)  — was this complementarity 
defined at an operational level to actu -
ally foster synergies between different 
environmental support schemes. In 
particular, these latter Member States 
had integrated NPI support with the 
EAFRD measure 214, ‘Agri -environment 
payments’, to the extent that the 
access to NPI support required the 
existence of an agri -environment com -
mitment linked to rural development 
measure 214.
20 
On the other hand, Denmark and Italy 
(Puglia) defined complementarity in 
less practical and vaguer terms, since 
NPI support was linked to general ag -
ri-environment objectives defined in 
their RDPs (e.g. landscape preservation 
and natural resource protection) that 
were shared by other EAFRD measures 
of Axis 2 (see Figure 1 ). However, cross 
measure complementarity was not 
developed. Box 2  shows examples of 
synergies and vague complementarity 
of NPI support.
17 Observations
21 
The Court considers that the choice 
of integrating NPI support with other 
rural development measures, such as 
measure 214, provided for a potentially 
stronger link with already existing 
agri -environment commitments and 
therefore encourages a stronger 
synergy effect for the achievement of 
agri -environment objectives.22 
However, this integration of meas -
ures also causes a risk of overlapping 
support if the activities to be funded 
under each measure are not clearly 
demarcated. This was the case in Por -
tugal (Mainland), where the support 
under measure 214 Agri -environment 
payments included amounts for the 
maintenance/restoration of portions 
of dry -stone walls that were in need of 
restoration (bad condition). As a conse -
quence, payments under measure 214 
related to the maintenance commit -
ment could include both, walls which 
had to be maintained, and restored. At 
the same time, the cost of the restora -
tion work could also be claimed under 
NPI support at 100 %. This means that 
the aid intensity of support for the 
reconstruction of some dry-stone walls 
could objectively exceed 100 %. The 
Court found four such cases in the six 
projects visited in Portugal.Examples of complementarity with other measures/objectives
In Portugal (Mainland), NPI schemes supporting the restoration of dry -stone walls in the Douro Valley require 
applicants to be beneficiaries of measure 214 agri -environment payments. Under measure 214, beneficiar -
ies receive financial support for undertaking a number of agri -environmental commitments. One of these 
commitments is to maintain the existing dry -stone walls of their agricultural holding in good condition for 
a minimum period of 5 years. In such cases, NPI support for the restoration of dry -stone walls complements 
the commitment requiring their maintenance, and both measures combined contribute to the objective of 
keeping an important landscape feature in that region in good condition.
In the case of the United Kingdom (England), Environmental Stewardship is a voluntary scheme that offers 
payments (financed under rural development measure 214) to land managers who commit to manage their 
land for the benefit of agri -environment objectives. This scheme is composed of different tiers with increas -
ing requirements; one of those tiers, High -Level Stewardship (HLS) includes the possibility of financing certain 
types of capital works (e.g. restoration of landscapes and features or traditional boundaries) to be undertaken 
by beneficiaries. NPI support provides the financing of these capital works.
In the case of Italy (Puglia) and Denmark, NPI support was linked to the achievement of general agri -environ -
ment objectives that were defined for the whole of Axis 2, such as protection of rural landscapes and main -
taining biodiversity and was not limited to specific areas identified as having particular environmental value. 
In the case of Italy (Puglia), the beneficiaries for the support are only required to develop a farming activity, 
whilst in the case of Denmark any private or public legal persons, including owners or tenants of agricultural 
land, may be a beneficiary except for the sub -measure for the acquisition of land for the creation of wetlands, 
for which the Danish state was the beneficiary.Box 2
18 Observations
23 
Overall, the choice made by the Mem -
ber States to implement NPI support 
was reflected in the sample of projects 
visited by the Court, where 16 of the 28 
visited projects were implemented in 
synergy with other rural development 
measures, and a majority of projects 
(21 of 28) was considered to be com -
plementary to other agri -environment 
objectives. See Annex II  for details.Weaknesses in the audited 
Member States’ selection 
procedures led to NPIs 
being supported that were 
ineligible, or whose selection 
was insufficiently justified
24 
Member States must direct scarce 
public money to those project propos -
als that best meet national or regional 
needs, while respecting the applicable 
regulations and the principles of equal 
access and transparency. The Court 
reviewed the selection procedures in 
place in the audited Member States 
and found, in all but one, weaknesses 
concerning these aspects. Examples 
are provided in Box 3 .
Weaknesses found in the selection of NPI projects
(a) Selection of ineligible investments
Denmark
The preliminary (i.e. feasibility) studies for wetland projects are treated as individual NPIs, follow individual 
approval procedures and are economically independent from any investment that might take place at a later 
stage. However, Article 55 of Regulation 1974/20067 stipulates that a general cost of an investment operation 
which is eligible for co -financing can only be considered as such in so far as an actual investment operation 
exists. The Court considers that this requirement protects value for money principles, since it prevents EU 
money from being spent on actions which do not contribute to the objectives of the support scheme. This is 
the case for feasibility studies that do not result in concrete investments. In this Member State, less than half 
of the financed preliminary studies were eventually followed by separate applications for actual investments 
in wetlands. Furthermore, in several cases, feasibility studies with a positive conclusion did not lead to con -
crete projects being implemented.
Italy (Puglia)
The national authorities have defined that only farm holders that are registered in the farms register of the 
Chamber of Commerce can have access to NPI support. The Court found that three out of the six beneficiaries 
visited on the spot did not comply with this requirement and as such should not have accessed NPI support.
7 Commission Regulation (EC) No 1974/2006 of 15 December 2006 laying down detailed rules for the application of Council Regulation (EC) 
No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ L 368, 23.12.2006, p. 15).Box 3
19 Observations
(b) Project selection insufficiently transparent
United Kingdom (England)
The national authorities identify holdings that could potentially be supported. To do so, they use predefined 
lists of holdings prioritised according to their potential to deliver environmental outcomes followed by a ne -
gotiation procedure between the national authorities and the potential beneficiaries. However, information 
on the basis for the prioritisation and assessment of the merits of the application was not available. In addi -
tion, the scheme documentation suggests that the inclusion of additional land management proposals is at 
the discretion of national officials.
Denmark
The aid applications relating to NPIs on collective plantations are submitted to the Managing Authorities 
almost exclusively by a national association of landowners and tenants. This national association decides, 
based on its own criteria, which local association will participate in the projects submitted, and ultimately on 
which projects are supported. In addition, the national association participates in the advisory committee that 
determines the relative priority of the applications that were submitted. In the Court’s view, this constitutes 
a potential conflict of interest.
(c) Inappropriate verification of crucial selection criteria
Italy (Puglia)
In the 2009 call for proposals concerning NPI support for the restoration of dry -stone walls, 602 of 3 887 sub -
mitted applications were approved, entailing total public expenditure of 42.7 million euros. The prioritisation 
criteria awarded a maximum of seven points. All applications with less than six points were excluded.
Among the decisive prioritisation criterion was the classification of the holding as having high environmental 
and landscape value if it had olive groves. Applicants fulfilling this criterion would receive two points, which 
was decisive for not being excluded.
The national authorities did not verify compliance with this specific criterion independently. This task was 
entrusted to the producer associations, who had to certify that their affiliated members fulfilled the criterion. 
20 Observations
There was a lack of relevant 
information to show what 
has been achieved by EU 
support to NPIs at EU and 
Member State levels …
25 
A key tool in ensuring that EAFRD 
support to NPIs is well spent is moni -
toring and evaluation. For the 2007-
2013 period the rural development 
regulation introduced a ‘Common 
Monitoring and Evaluation Frame -
work’ (CMEF). The CMEF used common 
indicators intended to record progress 
towards rural development objectives 
in a way that allows each of the RDPs 
to be compared and the data to be 
aggregated. As common indicators 
cannot fully capture all the effects of 
individual support schemes, Member 
States can also set a limited number of 
additional indicators.26 
The Court found several weaknesses in 
monitoring and evaluation that lead to 
an overall lack of relevant information 
showing the results achieved by NPIs, 
notably in the extent to which NPIs 
have contributed towards the achieve -
ment of agri -environment objectives 
linked to the sustainable use of agri -
cultural land.
27 
Firstly, the Member States did not 
define additional baseline indica -
tors in relation to NPI support during 
the programming phase. The use of 
additional baseline indicators would 
make it possible to establish a context 
in which the allocation of resources for 
supporting NPI becomes clearer and 
allows a comparison of the contribu -
tion of NPI support at the end of the 
period. Box 4  provides an example of 
how baseline indicators could facilitate 
the measurement of results achieved 
by NPI support.
Examples of possible baseline indicators
Italy (Puglia) and Portugal (Mainland)
The restoration of dry -stone walls was the single most important type of NPI defined in the RDP (97 % of total 
public support in Puglia, 89 % in Portugal). However, the national authorities have not defined a baseline 
situation regarding the total quantity of dry -stone wall in the areas subject to this type of NPI support, the 
quantity of dry -stone wall that was identified as requiring maintenance at the beginning of the programming 
period, or the targeted quantities of dry -stone wall to be recovered at the end of the programming period; 
this would have provided a clearer picture of the significance and effectiveness of the resources allocated to 
this type of NPI.Box 4
21 Observations
28 
Secondly, the CMEF common indica -
tors measure input and output data, 
such as the amount of public expendi -
ture, the number of holdings receiv -
ing support, and the total investment 
volume, but are particularly inad -
equate in their attempts to assess the 
impact of investment measures such 
as NPI support. Likewise, the com -
mon result indicator obtained for NPI 
support takes into account the area of 
land (measured in number of hectares) 
under successful land management 
schemes and therefore, is meaningless 
to express the link or the contribution 
of an investment measure.
29 
Despite the inadequacy of the com -
mon result indicators, which was 
explicitly acknowledged in the RDPs 
of Portugal (Mainland) and the UK 
(England), the audited Member States 
have not defined additional indicators 
to capture this important information 
as regards NPI support.30 
Another source which can produce 
relevant information on results is an 
evaluation. In contrast to the regular 
examination performed by monitor -
ing, evaluation is a periodic collection 
and analysis of evidence, including 
the information produced for moni -
toring. At the time of the audit, only 
the mid -term evaluations carried out 
towards the middle of the period were 
available. The review of these evalua -
tion reports showed that they did not 
provide relevant information on the 
results achieved by NPI support. This 
was mainly due to the combination of 
late implementation and the lack of 
relevant monitoring information. In 
fact, the Commission’s review of the 
individual MTE reports mentioned 
the low availability and completeness 
of monitoring data. Box 5  provides 
examples of the very limited informa -
tion concerning the performance of 
NPI support.
Examples of references made to NPI support in MTE reports
In the case of Portugal (Mainland), the MTE did not contain any reference to NPIs due to the late implementa -
tion of the measure.
Regarding Italy (Puglia), the MTE provided information on the outcome of NPI support and its correlation to 
environmental benefits. However, at the time of the MTE, no expenditure had been paid, which suggests that 
the report repeated the intended environmental benefits that were expressed in the RDP and ex ante  evalua -
tion report.
As for Denmark, the MTE referred that the national measures implementing NPI support lacked in terms of 
definition of operational objectives.
Concerning the United Kingdom (England), the MTE included a specific recommendation regarding the need 
to define new indicators to allow the assessment of the effectiveness and relevance of NPI support.Box 5
22 Observations
31 
The issues described above prevented 
the national authorities from being 
able to draw meaningful conclusions 
on the success or the effectiveness 
of NPI support in contributing to the 
achievement of other environmental 
measures or objectives. This could 
lead, for instance, the Member States 
who restricted NPI support to ben -
eficiaries of other rural development measures, such as agri -environment 
payments, to bundle the assessment of 
both measures, according to a wishful 
rationale in which the performance of 
the latter in a certain direction would 
imply that NPIs must have been per -
forming in the same way, despite the 
lack of objective data regarding the 
outcome of NPI support (see Box 6 ).
… nevertheless, the Court 
found indications that 
71 % of the audited NPIs 
contributed to objectives 
linked to the sustainable use 
of agricultural land
32 
As indicated in paragraph 13 the Court 
examined a sample of 28 NPI projects. 
In order to assess whether these pro -
jects had contributed effectively to the 
sustainable use of agricultural land, 
the Court assessed the following.
— Whether the projects were eligible 
for EAFRD support.
— Whether they addressed an en -
vironmental need recognised by 
the Member States in their RDP 
and pursued objectives linked to 
the sustainable use for agricultural 
land.— Whether related investments were 
carried out as planned and were 
sustained at the time of the audit 
visits. Annex II  presents, for each 
project, the results of this assess -
ment together with an analysis of 
the reasonableness of their costs, 
which is developed in the next 
section.Example of a bundled assessment
In the case of UK (England), the national authorities stated that, when assessing how NPI support had per -
formed, they considered the performance of two measures (214 agri -environment/216-NPI) together. Howev -
er, the demonstration of the way in which NPI aid contributed to the longer-term benefit of agri -environment 
commitments is affected by the lack of specific objectives and indicators for NPIs.Box 6
23 Observations
33 
As regards eligibility, the Court found 
that four projects were not eligible 
even at the time of the application (see 
Box 3 ). In addition, the Court found 
three projects which were ineligible 
due to issues which occurred dur -
ing their implementation (see para -
graph 44). Since these seven projects 
(25 %) should not have been sup -
ported with EAFRD funding, the Court 
considers them not to be contributing 
to the objectives of the measure.
34 
The Court found evidence to sug -
gest that 20 out of the 21 remaining 
projects addressed identified agri -en-
vironment needs. The needs which 
were covered most frequently were 
landscape and biodiversity protection. 
In addition, these projects were imple -
mented as planned and were operat -
ing sustainably at the time of the audit 
visits. Overall, the Court found indica -
tions that 20 out of the 28 projects 
examined (71 %) contributed to the 
achievement of agri -environment ob -
jectives linked to the sustainable use 
of agricultural land.In the audited Member 
States, the costs of 
supported NPIs were 
often unreasonably high 
or insufficiently justified
35 
In order to provide a cost -effective 
contribution to the sustainable use of 
agricultural land, NPIs must not only 
address related environmental needs, 
but should do so at a reasonable cost. 
Furthermore, given that the propor -
tion of the investment costs funded 
with public money is higher (up to 
100 %) than for other EAFRD invest -
ment measures, the beneficiaries of 
NPIs may have less incentive to contain 
their costs. The Member States should 
therefore pay particular attention to 
ensure that they reimburse only invest -
ment costs which are reasonable and 
appropriately justified.
36 
As noted in paragraph 3, the rationale 
for granting public support to NPIs 
is to provide beneficiaries with the 
financial incentive to undertake invest -
ments which do not generate any 
significant return, but deliver a posi -
tive environmental impact. As such, 
the support rate can be up to 100 % 
of the eligible expenditure of the NPI. 
Since almost any kind of investment 
can potentially provide a direct or indi -
rect economic benefit, the applicable 
regulations state that NPIs should not 
provide a significant economic return 
to the beneficiary. However, the Com -
mission did not provide guidance as to 
what a significant economic return is 
or how Member States should assess it.
24 Observations
37 
The Court considers that, to safeguard 
the principle of economy, the remu -
nerative or return -generating charac -
teristics8 of operations that are subject 
to NPI support should be taken into 
consideration by the Member States 
when determining how much public 
support they should receive. In par -
ticular, this rate of support should be 
defined according to the significance 
of the remunerative aspects or agro -
nomic benefits expected from the NPI, 
between the funding rates provided 
for normal productive investments, 
typically 40 %, and the maximum rate 
of 100 % permitted for NPI.
38 
The Court examined the public sup -
port rates applied to NPIs by the four 
Member States visited and assessed 
whether these rates were modulated 
to take into account any productive 
features in a sample of 28 NPI projects. 
Furthermore, for these NPIs, the Court 
also assessed the reasonableness of 
their costs. Overall, the Court found 
that most NPIs in fact had some pro -
ductive features, but that the Member 
States did not take these features into 
account to reduce the high rates of 
public funding used. The Court also 
found systematic problems with ensur -
ing the reasonableness of costs in all 
Member States.NPIs receive high rates of 
public funding even though 
sometimes they include 
remunerative components
39 
All the Member States audited have 
set specific rates for NPI support. 
Whilst Portugal (Mainland) and Italy 
(Puglia) set the support at 100 % of 
eligible expenditure, Denmark and 
the UK (England) have set specific 
rates per type of NPI, from 50 % in the 
case of NPIs with some remunerative 
characteristics to 100 % if there are no 
remunerative characteristics. Examples 
of modulation include projects for 
erecting fencing, co -financed at a rate 
of 50 % in the UK (England); projects 
for restoring hedgerows, funded at 
a rate of 60 %, in both Denmark and 
UK; and projects funded at a rate of 
100 %, such as projects involving the 
reversion of land to heathland (UK) 
and the state acquisition of land for 
establishing wetlands (DK).
40 
The Court considers that the UK 
(England) RDP was the only RDP 
that considered aspects such as the 
expected environmental and agro -
nomical benefits, or market failure, in 
determining the support rate individu -
ally for each NPI.8 Productive or remunerative 
characteristics of an 
investment are those that 
result in, or contribute to, an 
increase in the value or 
profitability of the agricultural 
holding. They can take the 
form of economic or 
agronomical benefits such as 
the structural role of the 
investment on the holding’s 
farming systems, the 
reduction of costs of 
operations associated with the 
investment or the increase of 
the holding’s output.
25 Observations
41 
However, in all Member States visited 
the Court found NPIs whose remunera -
tive characteristics had not been taken 
into account in determining the sup -
port rates granted, which were in fact 
the highest possible. The Court consid -
ers that this undermines the princi -
ple of economy because it involves 
overpaying for certain types of goods 
when those goods could have been 
obtained at a lower cost in view of the 
share of benefits that go to the benefi -
ciary and/or to associated entities:
— In Portugal (Mainland), the restora -
tion of dry -stone walls supporting 
terrace farming in the Douro valley 
made up the greatest share of NPIs 
supported (89 % of total expendi -
ture for the measure). The support 
rate was 100 % of eligible expendi -
ture, capped at 70 000 euro per 
holding. The Court considers that 
this type of NPI includes a produc -
tive component, as the walls play 
a structural role in the system 
of terrace farming used in the 
area where the investments were 
made and the landscape element 
is therefore not the only driver 
for the farming systems in ques -
tion. The very high support rate in 
Portugal (Mainland) can be seen 
in contrast with the UK (England), 
where stone wall projects had 
a support rate of 60 %.
 Additionally, the Court found that 
in one of the six NPIs visited, the 
intended support for maintaining 
traditional farm structures resulted 
in the support of a non -traditional 
structure that was used for farming 
operations.— In Italy (Puglia), the restoration of 
dry-stone walls delimiting agricul -
tural parcels made up the greatest 
share (97 % of total expenditure 
for the measure) of NPIs supported 
in Italy (Puglia). The support rate 
was 100 % of the eligible expendi -
ture; this was not capped in the 
first application period. Subse -
quent periods had an expenditure 
ceiling of 100 000 euro. The Court 
considers that this type of NPI 
includes a productive component, 
because the stone walls are used 
as boundaries to keep livestock in 
certain grazing areas or to protect 
plantations from being damaged 
by neighbouring livestock or wild 
animals. The very high support 
rate in Italy (Puglia) contrasts with 
the situation in the UK (England), 
where stone wall projects were 
co-financed at a rate of 60 %.
— In the United Kingdom (England), 
despite the existence of a meth -
odology allowing the degree of 
economic impact of supported 
NPIs to be taken into account in 
determining the aid rate, the Court 
found that 4 out of 10 projects vis -
ited on the spot, all of which were 
funded at a rate of 100 %, involved 
significant economic benefits for 
the beneficiaries and/or associ -
ated entities. In two cases involv -
ing the restoration of degraded 
peatlands9, the beneficiaries had 
managed projects in a partnership 
which included two water compa -
nies. The two projects are located 
in the catchment areas of two 
water reservoirs managed by those 
companies. The economic inter -
est of those companies lay in the 
reduction of water treatment costs 
resulting from the implementation 
of these NPIs. Whilst these projects 
fall in the scope of NPI support, 
the vested economic interest of 
the water companies ought to be 
taken into account for the defini -
tion of the support rate.9 Peatlands are wetlands with 
a thick waterlogged organic 
soil layer (peat) made up of 
dead and decaying plant 
material. Peatlands include 
moors, bogs, mires, peat 
swamp forests and permafrost 
tundra.
26 Observations
 In another case, the beneficiary 
used the support to buy equip -
ment primarily used for his eco -
nomic activity as a forest owner. 
The fourth case regards the recov -
ery of historic buildings in a prop -
erty in which the beneficiary oper -
ates a Bed & Breakfast. These two 
projects benefited from a support 
rate that was significantly higher 
to the rate they would have re -
ceived as productive investments 
in other RD measures foreseen for 
similar types of projects.
— In Denmark, despite the stipulation 
made by the national authorities 
that NPIs linked to a commercial 
operation should have support 
rates below 75 %, the Court found 
that 2 out of 6 projects visited 
were grazing projects that were 
linked to commercial operations 
but received a standard sup -
port rate of 75 %. These projects 
comprised inter alia fencing and 
the creation/extension of grazing 
areas for their previously stabled 
cattle which consequently resulted 
in the increase in the number of 
the reared cattle or the renting out 
of some of the additional grazing 
areas.Audited Member States 
funded investments with 
excessively high costs or 
with costs which were 
insufficiently justified
42 
The Court reviewed the procedures in 
place in the Member States audited to 
ensure the reasonableness of costs of 
supported NPIs. The auditors observed 
weaknesses in all the Member States 
visited.
43 
Regarding Portugal, in the case of 
dry-stone walls supporting terrace 
farming in the Douro valley (89 % of 
total NPI support), the national author -
ities had defined a maximum eligible 
unit cost that was excessive when 
compared with independent bench -
marks10 or with similar types of NPIs in 
other Member States (see Box 7 ).
44 
In addition, the Court found in Por -
tugal that an eligibility condition for 
NPIs requiring public works, whereby 
the contractor carrying out the works 
must have an activity permit was not 
respected in three of the six projects 
visited on the spot. A further examina -
tion showed that a total of 12 out of 20 
additional beneficiary files examined 
were affected by the same eligibility is -
sue. A limited follow -up undertaken by 
the national authorities showed that 
the contractors used by five of those 
beneficiaries were involved in a total 
of 79 similar cases.10 Benchmarks obtained from 
the public database of the 
National association of 
construction companies 
(AICCOPN).
27 Observations
45 
In Denmark, the procedures in place 
for checking the costs that were paid 
did not require all supporting docu -
ments to be verified. In fact, a dec -
laration by the beneficiary’s auditor 
concerning compliance with environ -
mental and legal rules, including ten -
dering, was considered sufficient. Simi -
larly, until the end of 2013, the Danish 
authorities did not verify whether the 
invoices submitted had actually been 
paid by the beneficiary prior to the 
payment request. The Court also found 
that the national authorities did not 
check whether deductible VAT, which 
is not eligible, was included in the pay -
ment requests by the beneficiaries. As 
a result, in one of the six NPIs exam -
ined by the Court in Denmark, deduct -
ible VAT amounting to 20 % of the total 
investment costs declared was subse -
quently reimbursed. Since the end of 
2013, a new procedure for checking 
costs has been in place, but the Court 
found no evidence, such as a service 
order or an official communication to 
staff, documenting the implementa -
tion of the new procedure.46 
In the UK (England), the Court re -
viewed, when applicable, the tender -
ing documentation and the service 
agreements between beneficiaries 
and third parties for the management 
of 10 investment projects. The Court 
found instances in which the actual 
costs incurred were higher than the 
cost of the alternative options that had 
been proposed. In other instances, the 
analysis of the bids did not use com -
parison with benchmarks to mitigate 
the risk of awarding the tender to 
an overpriced bid (see Box 8 ). Addi -
tionally, the lack of physical visits by 
the national authorities constitutes 
a shortcoming in ensuring the reality 
and the value for money of the sup -
ported NPIs, especially considering the 
high support rates and the absence of 
a deterrent factor, such as significant 
financial participation by beneficiaries.Examples of unreasonably high costs — Portugal (Mainland)
The national authorities have defined a maximum eligible unit cost of 250 euro per cubic metre in the case of 
the construction of dry -stone walls supporting terrace farming. According to data provided by the national 
authorities the average cost paid to beneficiaries was 198  euro per cubic metre. Independent professional 
benchmarks, such as reference costs from the National Association of Construction Companies, suggest that 
the unit cost for similar types of works activity should be 75 euro per cubic metre.
In the case of dry -stone walls used solely as boundaries, which are another type of NPI, the defined maxi -
mum eligible unit cost of 150 euros per cubic metre can be compared with similar NPIs in Italy (Puglia) where 
the maximum eligible unit cost was 74 euros per cubic metre in the first call for applications; this was later 
reduced to 61 euros per cubic metre in the second call for applications. In the UK (England), the maximum 
eligible unit cost was 75 euros per linear metre.Box 7
28 Observations
47 
In the case of Italy (Puglia), the audit 
showed that the costs of NPIs concern -
ing dry -stone walls were systematically 
equal to the maximum eligible unit 
cost. Although the Court only found 
indications that the maximum eligi -
ble unit costs were set at a high level, 
it is obvious that implementing NPI 
projects in different conditions, de -
pending on their location (mountain -
ous or flat land), accessibility or land 
conditions, requires differentiation in 
at least some of the costs of the invest -
ments (see Box 9 ).48 
Furthermore, the invoices presented 
by the beneficiaries of four of the 
six NPIs visited in Italy (Puglia) did 
not provide enough information to 
ascertain the quantities of restored 
dry-stone walls and the location of the 
works. This meant that the national 
authorities could not ensure the rea -
sonableness of the costs or the reality 
of the supported operations.Examples of unreasonably high costs — United Kingdom (England)
In three of the 10 projects visited on the spot, the tendering documentation showed that the NPI cost was 
higher than necessary given that other less costly alternatives were available. Examples of this include the use 
of airlifting services, timber removal and preparatory earthworks and restoration of an historic structure for 
which the selected bids exceeded the cost of their competitors by 65 %, 139 % and 31 % respectively.
In three other projects visited on the spot, the winning bids represented the lowest cost. However, in the ab -
sence of a benchmark system for assessing the reasonableness of the costs of the bids, the risk concerning the 
reasonableness of costs is not mitigated, for instance, in cases where all the bids for an NPI are overpriced.
Examples of unreasonably high costs Italy (Puglia)
The support conditions for dry -stone walls allowed beneficiaries to use their own farm labour to justify a part 
of the costs of the works. The remaining costs of the works had to be performed by external contractors, and 
the expenditure had to be substantiated by invoices. Alongside the systematic alignment of NPI costs with the 
maximum eligible cost, there was no requirement to use tendering to select external contractors.
An indication that the maximum eligible unit cost set for dry -stone walls was set at a high level is that in the 
2011 call for applications, the maximum eligible unit cost was 23 % lower than in the 2009 call for applications. 
Despite this reduction, the demand for NPI support exceeded the funding that was available.
The lack of competitive tenders combined with the systematic alignment of costs with maximum eligible unit 
costs set at high levels entails a risk to the cost -effectiveness of the support.Box 8 Box 9
29 Observations
There were problems with 
the reasonableness of the 
costs in most of the NPIs 
audited by the Court
49 
Annex II  provides detailed information 
on the 28 projects that were visited on 
the spot, as well as individual assess -
ments of whether the projects in -
cluded productive components and of 
whether their costs were reasonable. It 
also includes the Court’s overall assess -
ment of their cost -effectiveness.
50 
As stated in paragraph 34, 71 % of 
the projects audited were effective 
in the sense that they contributed to 
the achievement of objectives linked 
to the sustainable use of agricultural 
land. However, the Court found indica -
tions of unreasonable costs in 75 % of 
these projects. The combined analysis 
of effectiveness and reasonableness 
of costs shows that overall only 5 of 
the 28 audited NPI (i.e. 18 %) provided 
a cost -effective contribution to the 
achievement of agri -environment 
objectives. The problems with the 
reasonableness of costs of investments 
may not be confined to the sample 
of projects, since the cases identi -
fied stem from the weaknesses in the 
control systems of Member States 
described in paragraphs 41 to 48.Weaknesses affecting the 
cost -effectiveness of NPI 
support in the 2007-2013 
period had not yet been 
corrected by the start of 
the 2014-2020 period
51 
Since the entry into force of the new 
2014-2020 multiannual financial 
framework, Member States or regions 
wishing to receive EAFRD funds have 
had to present their new RDPs to the 
Commission for approval. This repre -
sented a unique opportunity for the 
Commission and the Member States to 
solve weaknesses in the programming, 
management, monitoring and evalua -
tion of NPI support from the previous 
period. This is all the more important 
in a context where the audited Mem -
ber States will maintain or extend the 
range of investments eligible11 for 
support.
52 
The Court assessed the extent to 
which the Commission and the visited 
Member States had identified and 
corrected the weaknesses highlighted 
in the two previous sections of this 
report, with a view to improving the 
cost -effectiveness of NPI in the new 
programming period. This assess -
ment was based on the information 
contained in the four audited RDPs12, 
implementing rules, guidelines and 
management and control procedures 
available at the time of the audit. 
Furthermore, the Court reviewed com -
munications between the Commission 
and the four Member States resulting 
from the Commission’s review of draft 
RDPs. Overall, the evidence obtained 
by the Court shows that corrective ac -
tion has not yet been taken for most of 
the weaknesses identified by the Court 
(see paragraphs 60 to 71).11 In UK (England) NPI support 
will maintain its integration 
with the new measure 10 
‘Agri -environment -climate’ 
that replaces the previous 
measure 214 
‘Agri -environment’ payments, 
as is the case in Portugal 
(Mainland). In the case of 
Denmark the support for NPI is 
maintained on similar terms as 
in the previous programming 
period and in Italy (Puglia) the 
scope of the support is 
enlarged to include public 
bodies as potential 
beneficiaries and new types of 
NPIs like non -residential stone 
structures or traditional paths 
(Tratturi).
12 For Denmark, Portugal 
(Mainland) and UK (England) 
the approved RDP, for Italy 
(Puglia) the latest draft 
available.
30 Observations
53 
One reason explaining the limited 
improvement observed so far is that 
the Commission and the Member 
States did not do enough to identify 
possible weaknesses in good time. In 
particular, national authorities did not 
analyse sufficiently the causes of the 
irregularities found during their checks 
to improve the management of the 
scheme.
54 
The on-the-spot checks carried out by 
the national authorities13 showed a sig -
nificant frequency of irregularities. In 
Portugal (Mainland), 50 % of the pro -
jects examined by the national author -
ities were affected by irregularities or 
the final use of the NPI was eminently 
productive (e.g. generated returns). In 
Italy (Puglia) 27 % of the NPIs exam -
ined by the national authorities were 
affected by irregularities and in the 
UK (England), breaches of the rules on 
NPI support occurred in around 10 % 
of the cases. The Court did not obtain 
data for the controls carried out by the 
Danish authorities14.
55 
However, with the exception of Den -
mark, the national authorities made 
limited use of the irregularities found. 
They basically used them to reduce 
the amounts to be paid to the affected 
beneficiaries, but did not analyse the 
causes of irregularities in order to iden -
tify aspects of the scheme manage -
ment that should be improved.56 
The Commission is responsible for 
supervising the correct implementa -
tion of the NPI schemes in the Member 
States. In this respect, audit visits are 
crucial to identify weaknesses affect -
ing the execution of management 
procedures (e.g. selection of projects, 
checks on reasonableness of costs, 
production of reliable monitoring 
data, etc.), which cannot be detected 
through documentary reviews. How -
ever, the Court found that the Commis -
sion’s audits took place too late to help 
Member States identify and correct 
the detected shortcomings during the 
2007-2013 implementation period. Fur -
thermore, the results of these audits 
were not available during the Commis -
sion’s review and approval of the 2014-
2020 RDPs in any of the Member States 
audited except Italy (Puglia)15. This 
means that the Commission could not 
use the final results of these audits to 
request the Member States to reflect in 
the new RDPs the necessary corrective 
actions before they were approved. 
Once the Commission approves an 
RDP and the EU funds are made avail -
able to the Member State, it is more 
difficult for the Commission to ensure 
that the Member States take the neces -
sary corrective actions in good time.16
57 
Table 2  shows that for three out of 
the four audited Member States, the 
audit results were not available before 
the approval of the new RDP for 
2014-2020.13 Article 25 of Commission 
Regulation (EU) No 65/2011 of 
27 January 2011, laying down 
detailed rules for the 
implementation of Council 
Regulation (EC) No 1698/2005, 
as regards the implementation 
of control procedures as well 
as cross- compliance in respect 
of rural development support 
measures (OJ L 25, 28.1.2011, 
p. 8).
14 Additional data regarding the 
types of error and the financial 
importance of the 
irregularities was not made 
available with the exception of 
Italy (Puglia), where the most 
frequent reason for irregularity 
was the calculation of the 
cubic meters of restored wall.
15 In the case of Italy, the 
Commission’s services have 
not audited the 
implementation of NPI in 
Puglia. Instead the 
Commission’s audit covered 
the NPI support in Sicily. As at 
June 2015, the RDP of Puglia 
was not yet approved by the 
Commission.
16 As at May 2015, the results of 
the Commission’s audits 
regarding UK (England), 
Portugal (Mainland) and Italy 
(Sicily) concerning the 
2007-2013 period were still 
being considered by the 
Commission as part of the 
decision process that may lead 
to the application of financial 
corrections to the Member 
States in question.
31 Observations
58 
Monitoring and evaluation should also 
allow the Commission and the Mem -
ber States to identify problems, learn 
lessons, and apply this when preparing 
and reviewing the draft RDP . However, 
as reported in paragraphs 25 to 31, 
monitoring only provided information 
on expenditure incurred, number of 
beneficiaries and total investment. The 
mid -term evaluations did not provide 
relevant information on implementa -
tion and performance. This represent -
ed an additional burden for the timely 
identification and correction of weak -
nesses affecting the cost -effectiveness 
of NPI support.
59 
The following paragraphs present the 
Court’s analysis on the extent to which 
the Commission and the visited Mem -
ber States have corrected the weak -
nesses reported in the two previous 
sections of this report.Complementarity not always 
achieved at operational level 
to foster synergies
60 
The Court found that two out of the 
four Member States audited (Denmark 
and Italy -Puglia) did not implement 
NPI support in complementarity with 
other support schemes (see paragraph 
20). For the 2014-2020 period, Den -
mark, like the UK and Portugal, intends 
to implement NPIs in synergy with 
other rural development measures or/
and environmental schemes. The new 
EAFRD regulation provides for the 
possibility of implementing integrated 
projects concerning investments in 
physical assets, whereby the same 
beneficiary applies once for imple -
menting actions under at least two 
different measures or sub -measures. 
Only the RDP for Denmark makes 
explicit reference to the possibility 
of receiving support for integrated 
projects combining three types of NPI 
(establishment of wetlands, extensifi -
cation in lowlands and restoring natu -
ral water -level conditions in Natura 
2000 areas) with the new measure 10 
‘Agri -environment climate’. The latest 
draft RDP for Italy (Puglia) does not 
foresee the implementation of NPI in 
synergy with other EAFRD measures or 
other environmental schemes.Table 2Timing of Commission’s audits of NPI versus 2014-2020 RDP approval dates
Member State Date of Commission audit Status of audit Date of approval RDP 2014-2020
Portugal (Mainland) February 2014 Ongoing December 2014
United Kingdom (England) June 2014 Ongoing February 2015
Denmark October 2014 Ongoing December 2014
32 Observations
61 
The Court notes that, in Portugal 
(Mainland), the support for the main -
tenance of dry -stone walls foreseen 
in the new measure 10 ‘Agri -environ -
ment -climate’ is essentially the same as 
was foreseen in the previous program -
ming period for measure 214 ‘Ag -
ri-environment payments’. The Court 
did not find any evidence that the 
national authorities have addressed 
the problem of overlapping support 
between the support provided for the 
maintenance and the restauration of 
dry-stone walls (see paragraph 22).
Lack of appropriate 
indicators and performance 
data beyond inputs and 
output
62 
The Court found that there was a lack 
of monitoring indicators to meas -
ure the results of NPI support in the 
2007-2013 programming period. This 
limited the performance information 
to the number of holdings supported 
and amounts spent because the result 
indicators were inadequate for an 
investment measure (see paragraphs 
26 to 29). Furthermore, the Court 
noted that none of the visited Member 
States had completed the set of com -
mon indicators with result indicators 
specific to their NPIs. The Commis -
sion has reviewed the performance 
framework proposed by the audited 
Member States in their draft RDPs. This 
review covered the Member States’ 
compliance with the requirements of 
the 2014-2020 monitoring and evalua -
tion system17. In particular, the review 
examined whether the RDPs included 
the common context, result and out -
put indicators and presented plausible 
targets and milestones in relation to 
the proposed budgetary allocations.63 
However, the new set of common 
indicators includes results indicators 
only at the level of the focus areas, to 
which several measures contribute. 
This means that, as in the previous 
period, there are no common indica -
tors measuring the results achieved by 
individual measures or sub -measures. 
Since the budgetary allocations are 
made at measure/sub -measure level, 
the Court considers that measuring 
performance of individual measures/
sub -measures is important to identify 
the cause of problems and to effec -
tively target corrective actions. This 
will be difficult when results are only 
assessed at the level of focus areas. 
For example, if targets for a given 
focus area are not reached, it will be 
difficult to identify which measure/s 
or sub -measure/s are lagging behind 
or which are the ones contributing 
the most to the achievement of the 
defined targets. Box 10  shows the 
monitoring framework applicable to 
the sub -measure 4.4; ‘non -productive 
investments’. It shows that no perfor -
mance information concerning results 
will be produced for NPIs.
64 
The new RDPs for 2014-2020 prepared 
by the audited Member States make 
no provision for any additional indica -
tor in relation to NPI support.17 The common monitoring and 
evaluation system is referred 
to in Article 67 of Regulation 
(EU) No 1305/2013 of the 
European Parliament and of 
the Council of 17 December 
2013 on support for rural 
development by the European 
Agricultural Fund for Rural 
Development (EAFRD) and 
repealing Council Regulation 
(EC) No 1698/2005 (OJ L 347, 
20.12.2013, p. 487) and further 
developed by Commission 
implementing Regulation (EU) 
No 808/2014.
33 Observations
Monitoring framework applicable to measure 4.4 ‘non -productive investments’
NPIs can potentially contribute to at least three focus areas linked to the rural development priority of Restor -
ing preserving and enhancing ecosystems:
 ο4(a) biodiversity, including Natura 2000 areas, areas facing natural or other specific constraints and high 
nature value farming, and the state of European landscapes;
 ο4(b) water management, including fertiliser and pesticide management; and
 ο4(c) prevention of soil erosion and soil management.
Apart from NPI, the following measures can also contribute to these focus areas: measure 1-knowledge trans -
fer and information; measure 2- advisory services ; measure 10-agri -environment–climate; measure 11-organic 
farming, measure 12-Natura 2000 and water framework directive payments; and measure 13-payments to 
areas facing natural or other specific constraints.
However, the common result indicators apply only at the level of focus areas:
 οResult indicators for focus area 4(a): R6 — % of forest or other wooded areas under management contracts 
supporting biodiversity and R7 — % of agricultural land under management contracts supporting biodi -
versity and/or landscapes.
 οResult indicators for focus area 4(b): R8 — % of agricultural land under management contracts to im -
prove water management and R9 — % of forestry land under management contracts to improve water 
management.
 οResult indicators for focus area 4(c): R10 — % of agricultural land under management contracts to improve 
soil management and/or prevent soil erosion and R11 — % of forestry land under management contracts 
to improve soil management and/or prevent soil erosion.
The common indicators specific for NPI are output indicators measuring the number of projects supported, 
since the total expenditure and total public expenditure are applied at measure level (including sub - 
measures 4.1 to 4.4).
The performance information for NPIs will therefore be very limited.Box 10
34 Observations
Weaknesses in the selection 
procedures
65 
The Court identified weaknesses 
affecting the transparency in the 
selection of NPI project applications 
and the verification of the applicants’ 
compliance with key selection criteria 
(see paragraph 24). The Commission 
has little scope to correct these issues 
during the RDP approval process, 
because the detailed selection proce -
dures are defined in the national rules 
governing the implementation of the 
scheme, generally once RDPs are ap -
proved. The Commission has, however, 
required Member States to reflect in 
their RDPs the commitment to use 
relevant selection criteria and apply 
minimum thresholds for the selection 
of project applications. The Court has 
recommended these practices several 
times in previous special reports. In 
any case, the Commission can super -
vise the correct implementation of the 
Member States selection procedures 
through its audits.
66 
As regards the Member States audited, 
only the UK (England) made explicit 
reference in its RDP to the principles 
governing the selection of projects. 
The information provided suggests 
that the issues referred to in Box 3  
are likely to be addressed, such as 
the clear definition of inclusion and 
exclusion criteria, the segregation of 
duties and the use of a scoring system, 
which will involve a minimum thresh -
old, above which applications will be 
prioritised. The other audited Member 
States make reference to selection 
criteria that will be defined at a sub -
sequent stage. However, these criteria 
were not developed at the time of the 
audit.Aid rates not adjusted on the 
basis of the remunerative 
features of the investments
67 
The Court found in all Member States 
visited NPIs for which their remunera -
tive characteristics were not taken into 
account to reduce the high aid rates 
granted (see paragraphs 35 to 41). 
The new EAFRD regulation provides 
for a maximum aid rate of 100 % for 
NPIs. In its review of the draft RDPs, 
the Commission verified that the aid 
rates proposed by the Member States 
complied with the maximum aid rates 
in the regulation. However, the Court 
found no evidence that the Commis -
sion required Member States to reduce 
NPI aid rates on the basis of projects’ 
remunerative elements.
68 
The new RDPs of the Member States 
audited except Denmark show a great -
er variety of aid rates for NPIs, which 
increases the possibilities for national 
authorities to modulate the aid accord -
ing to the remunerative characteris -
tics of the investments. Overall, this 
is a limited improvement, since only 
the UK (England) will apply the good 
practice of defining a specific aid rate 
for each NPI type on the basis of its 
remunerative characteristics. The UK 
(England) maintains a comprehensive 
list of capital work options indicat -
ing the rate of support that varies 
between 10 % and 100 % according to 
the non -remunerative characteristics 
of the capital work option. However, it 
should be noted that the Court found 
problems in the correct application of 
this modulation procedure in the 2007-
2013 period.
35 Observations
Unreasonable or 
insufficiently justified costs
69 
Beyond general statements noting the 
Member States intentions to use refer -
ence costs and to compare different 
offers, the Court found examples of 
concrete improvements in the proce -
dures for checking the reasonableness 
of costs in two Member States (UK–
England and Portugal–Mainland).
70 
In the case of the United Kingdom 
(England), beneficiaries will need to 
provide a clear specification of the 
activity to be procured, an invitation 
to tender, a minimum of three written 
quotations, an evaluation of all bids, 
and a justification for the selection of 
preferred supplier making reference to 
pre-established and recorded value-
for-money criteria. In the case of Portu -
gal (mainland) the reference costs will 
be validated using independent pro -
fessional benchmarks. Denmark noted 
also its intention to use reference costs 
for the different phases of the creation 
of wetland projects. However, since 
these costs had not been defined at 
the time of the audit, the Court could 
not assess the appropriateness of the 
benchmarks on which these reference 
costs will be defined.Other eligibility issue
71 
The Court found that, in Denmark, 
feasibility studies (see Box 3 ) are 
planned for eligible NPIs for all types 
of intervention at national level. The 
new EAFRD regulation explicitly stipu -
lates that feasibility studies are eligible 
expenditure even where, based on 
their results, no investment expendi -
ture is made18. Nevertheless, the Court 
considers that granting by default 
NPI support to feasibility studies 
undermines the principle of economy, 
notably in view of the experience in 
the previous period, in which a consid -
erable number of positive feasibility 
studies did not lead to any investment. 
Furthermore, the Court considers that 
the widespread use of feasibility stud -
ies may entail the risk that other gen -
eral costs, such as consultation fees or 
professional advice, may be labelled 
as feasibility studies, thus avoiding 
the eligibility requirement that such 
general costs must be linked to actual 
investment expenditure.18 Article 45 of Regulation 
1305/2013 of the European 
Parliament and of the Council.
36
 Conclusions and 
recommendations
72 
As part of the EU rural development 
policy, Member States may use the 
EU budget to give grants towards the 
costs of non -productive investments 
(NPIs). NPIs are investments which 
should not generate a significant eco -
nomic return to the undertakers, but 
contribute towards the sustainable use 
of agricultural land. In particular, NPIs 
play a complementary role in helping 
to achieve agri -environment objec -
tives or commitments, which can be 
undertaken under other schemes, or 
in enhancing the environmental value 
of protected areas. Because of their 
non -productive character, the Member 
States apply public aid rates to NPIs 
that are higher than those granted to 
productive investments, and often 
reach 100 % of the total investment 
costs.
73 
The audit set the question ‘Have NPIs 
provided a cost -effective contribution 
to the sustainable use of agricultural 
land?’ The Court concludes overall, 
that NPI support has contributed to 
the achievement of objectives linked 
to the sustainable use of agricul -
tural land, but in a way that was not 
cost -effective.
74 
The Court found that the Member 
States targeted the NPI support to 
investment types with the potential to 
effectively address their agri -environ -
mental needs. This was corroborated 
by the sample of projects visited by 
the Court, where 71 % addressed ag -
ri-environmental needs and objectives 
identified by the Member States, nota -
bly landscape and biodiversity protec -
tion. However, the complementary role of NPIs to help achieve the specific 
objectives of other agri -environmental 
schemes was not always realised. 
Often, NPIs were not implemented in 
synergy with other schemes and the 
aid was granted to beneficiaries which 
had not undertaken any additional 
agri -environmental commitment or 
benefited from other environmental 
support programmes. In the Court’s 
view, this reduced the potential envi -
ronmental impact of NPIs (paragraphs 
19 to 23 and 32 to 34).
Recommendation 1  
Complementarity and 
synergies with other 
support schemes
(a) In order to foster a stronger syn -
ergy effect for the achievement 
of agri -environment objectives, 
the complementary role of NPIs 
should be maximised. To this end, 
the Commission should encour -
age Member States to implement 
NPIs more in synergy with other 
rural development measures and/
or environmental schemes. More 
concretely, the Commission should 
monitor relevant Member States’ 
implementation through their an -
nual implementation reports, from 
2017, which should also include 
the number and proportion of NPI 
projects that have been imple -
mented in synergy with other rural 
development measures or environ -
mental support schemes, including 
integrated projects.
(b) Member States should include in 
their evaluation plans, an assess -
ment of the extent to which NPIs 
are implemented in synergy with 
other rural development measures 
or environmental schemes.
37 Conclusions and recommendations
75 
The overall effectiveness of the sup -
port was undermined by weaknesses 
in the Member States’ selection proce -
dures. These weaknesses led Member 
States to fund investments which were 
ineligible for EU funding and as such, 
did not contribute to the objectives 
of the support scheme, or to select 
project applications without verifying 
appropriately that they respected cru -
cial selection criteria. In addition, some 
Member States used selection proce -
dures that were not fully transparent 
(paragraph 24).
Recommendation 2  
Selection of NPIs project 
applications
(a) The Member States should ensure 
that selection procedures are 
transparent and effectively im -
plemented. In particular, Member 
States should make public all the 
criteria used in the selection and 
prioritisation of NPIs and effec -
tively verify the compliance with 
these criteria. Furthermore, the 
Member States should ensure an 
appropriate segregation of duties 
between organisations and per -
sons involved in the transmission 
and selection of applications.
(b) For the new programming period, 
the Commission should provide 
guidance to Member States on se -
lection criteria, having due regard 
to their transparency and rele -
vance, and check that the Member 
States apply appropriate proce -
dures for the selection of projects.76 
The audit revealed that neither the 
Commission nor the Member States 
had relevant information about the 
direct results of NPI support. Basic 
performance data such as the increase 
in the number of traditional structures 
or landscape features restored, or the 
extent to which NPIs have contributed 
to protect biodiversity was missing. 
Several reasons could explain this. 
Firstly, the Member States did not 
define baseline indicators during the 
programming phase on the basis of 
which a sound allocation of resources 
and a subsequent comparison of the 
progress achieved could be made. 
Secondly, the common monitoring 
indicators used to aggregate the per -
formance data at Member State and EU 
levels measured only input and output 
data, such as the amount spent, the 
number of holdings receiving support 
and total volume of investment.
77 
The absence of specific results indica -
tors led some Member States to bun -
dle the assessment of NPIs with that of 
other environmental schemes, accord -
ing to a wishful rationale in which the 
performance of the latter in a certain 
direction would imply that NPIs have 
been performing in the same way, de -
spite the lack of objective data regard -
ing the outcome of NPI support (see 
paragraphs 25 to 31).
38 Conclusions and recommendations
Recommendation 3  
Monitoring and evaluation
(a) The Commission should ensure 
that the contribution of NPIs to 
achieving the EU agri -environment 
objectives is monitored, or at least 
specifically assessed during the 
evaluations of the 2014-2020 pro -
gramming period. To this end, the 
Commission should advise those 
Member States where NPI support 
is significant, to define specific 
result indicators for the NPIs types 
most frequently funded.
(b) Member States should report on 
these indicators in their annual im -
plementation reports starting from 
June 2016. These Member States 
should include the assessment of 
the results of NPIs in their evalua -
tion plans.
78 
Although most projects visited by the 
Court delivered a positive contribution 
to address the Member States’ agri -en-
vironmental needs and objectives, for 
this contribution to be cost -effective, 
it is essential that the cost of the 
supported NPIs are reasonable and 
justified. This is all the more so in the 
case of high public funding rates (up 
to 100 %) in which the beneficiaries 
may have less incentive to contain the 
costs. However, the Court found clear 
indications of unreasonable costs in 
75 % of these projects. As a result, only 
5 of the 28 (18 %) audited projects 
proved to be cost -effective.79 
The weaknesses observed with the 
reasonableness of costs of NPIs are not 
confined to the sample of projects, 
since the concrete cases identified 
stem from weaknesses in the man -
agement and control systems of the 
Member States. In particular, they 
reimbursed investment costs on the 
basis of unit costs which were much 
higher than the actual market costs, or 
did not appropriately verify the reality 
of the costs claimed, or accepted the 
most expensive offer for undertak -
ing the investment without requiring 
justification from the beneficiaries or 
without comparing the proposed costs 
against benchmarks.
80 
In addition, the audit revealed several 
cases in all the Member States audited 
where NPIs with obvious remunera -
tive characteristics benefited from the 
maximum aid rates stipulated for this 
type of investments, which meant that, 
in most cases, they were fully funded 
with public money. In the Court’s view, 
the fact that Member States did not 
reduce these high aid rates to take 
account of the remunerative aspects 
entailed the overpayment of the 
related investment costs. Indeed, once 
deducted the benefits that the invest -
ments provided to the beneficiaries, 
these costs could be actually lower 
than the aid granted (see paragraphs 
35 to 50).
39 Conclusions and recommendations
Recommendation 4  
Intensity of support rates 
and reasonableness of 
costs
(a) Member States should define, as 
soon as possible, appropriate crite -
ria to determine the remunerative 
characteristics of NPIs benefiting 
from the highest aid rates. These 
criteria should consider, for ex -
ample, the economic benefit, the 
agronomical benefit, the degree 
of financial assistance necessary 
to encourage undertaking the NPI 
and the basic support rate appli -
cable to productive investments 
in the same geographical area. 
On the basis of this assessment, 
Member States should modulate 
the intensity of support.
(b) The Commission should also 
provide further guidance on the 
establishment of such criteria 
and promote their implementa -
tion through the Monitoring 
Committee.
(c) Member States should imple -
ment, without delay, procedures 
to ensure that the costs of the 
supported NPIs do not exceed the 
costs of similar types of goods, 
service or works offered by the 
market. More concretely, Member 
States should define appropriate 
benchmarks and/or reference costs 
against which the costs of NPIs are 
systematically verified as part of 
their administrative checks. These 
checks must include the verifica -
tion of proof that the costs claimed 
have been actually incurred by the 
beneficiaries.(d) The Commission should build on 
the information provided by the 
Member States regarding the con -
trollability and verifiability of the 
measures for the approval of their 
RDPs for 2014-2020 to ensure that 
Member States define and imple -
ment adequate procedures regard -
ing the reasonableness of costs.
(e) The Commission should, in the 
context of its multiannual audit 
plan, verify the Member States’ ef -
fective application of the controls 
foreseen to ensure reasonableness 
of costs.
81 
EAFRD support for NPIs continues in 
the 2014-2020 programming period, 
but the Commission and the Member 
States have not yet corrected most 
of the weaknesses identified by the 
Court. The main reason is that they did 
not do enough to identify weaknesses 
in a timely manner, so that the neces -
sary corrective actions could be taken 
before the start of the new period. On 
the one hand, the Member States did 
not analyse the causes of the irregu -
larities detected through their own 
controls to improve the management 
of the scheme. On the other hand, the 
Commission’s audits took place too 
late to help Member States identify 
and correct management shortcom -
ings during the 2007-2013 implemen -
tation period (see paragraphs 51 to 71).
40 Conclusions and recommendations
Recommendation 5  
Identification of 
management weaknesses
(a) Member States should define, be -
fore the first on -the -spot controls 
for the 2014-2020 period are per -
formed, a method for the timely 
consolidation and analysis of the 
cause of the errors found dur -
ing these controls. The results of 
this analysis should trigger, when 
applicable, improvements in the 
management and control systems 
of the NPIs scheme. The Member 
States should report on these 
improvements in their annual im -
plementation reports starting from 
June 2016 onwards.(b) In planning future audits, the 
Commission should take due ac -
count of the scale of weaknesses 
identified by the Court in this area 
of expenditure, irrespective of its 
limited financial importance.
This report was adopted by Chamber I, headed by Mr Augustyn KUBIK, Member 
of the Court of Auditors, in Luxembourg at its meeting of 11 November 2015.
 For the Court of Auditors
 Vítor Manuel da SILVA CALDEIRA
 President

41
 Annexes
Main characteristics of the EAFRD measure support for non -productive investments 
in agriculture
Programming period 2007-2013 Programming period 2014-2020
Title/  
actionsMeasure 216 — Support for NPI
Investments that do not lead to any significant increase in the 
value or profitability of the agricultural holding.Measure 4.4 — Support for NPI linked to the achievement of 
agri‑environment–climate objectives
Investments that do not lead to any significant increase in the 
value or profitability of the agricultural holding.
Rationale Support is needed for NPI where they are necessary to achieve:
–  commitments undertaken under agri‑environmental 
schemes;
– other agri‑environmental objectives;
–  enhancement on‑farm of the public amenity value of 
a Natura 2000 area or other high nature value areas.Support is needed for NPI linked to the achievement of agri ‑ 
environment–climate objectives including:
– biodiversity conservation status of species and habitat; 
–  enhancing the public amenity value of a Natura 2000 area or 
other high nature value system in Member States. 
Beneficiaries – Farmers and/or land managers – Farmers and/or land managers
Types of operations – Land use change;
– Wetland restoration;
– Conversion of agricultural land to swamp;
– Construction/management of biotopes/habitats;
– Management of high value perennials.–  Capital works in the framework of an agri‑environment–  
climate commitment;
–  Fencing and other works needed to facilitate conservation 
management;
– Restoration of wetlands and moorland;
– Restoration of landscapes and features;
– Dry‑stone walls.Annex I
42 Annexes
Member 
StateDescriptionEAFRD  
approved  
(euro )Complementarity1
NPI2Support 
rate  
(%)Environmental objective3
Eligibility4Reasona -
bleness   
of costs5Overall  
Cost-  
effectiveness6 Synergy General Proposed Addressed
DK7Plantations 107 786 Y Partially 60Landscape and 
biotope improvingY Y N N
DK Grazing 29 132 Y Partially 75Landscape and 
biotope improvingY Partially N N
DK Wetland 2 089 870 Y Y 100Protect/improve  
aquatic 
environmentN Partially N N
DKPreliminary study 
wetland48 523 Y N 100Protect/im ‑
prove aquatic 
environmentN N N N
DK Hedges 6 926 Y Partially 60Landscape and 
biotope improvingY Y N N
DK Grazing 43 529 Y Partially 75Landscape and 
biotope improvingY y N N
IT Dry‑stone walls 251 245 Y Partially 100 Landscape N N N N
IT Dry‑stone walls 975 328 Y Partially 100 Landscape Y Y N N
IT Dry‑stone walls 208 760 Y Partially 100 Landscape Y Y N N
IT Dry‑stone walls 200 397 Y Partially 100 Landscape Y Partially N N
IT Wetlands 35 759 Y N 100Biodiversity, 
landscapeN N N N
IT Wetlands 492 196 Y Y 100Biodiversity, 
landscapeN N Y N
UK8Suspension bridge 407 4089Y Y 99 Landscape Y Partially N N
UKAccess 
features — wetlands 264 576 Y Y 99Public access and 
conservation of 
natural wildlifeY Y Y Y
UK Culm grassland 294 845 Y Partially 95Biodiversity,  
conservation of 
natural wildlifeN N N N
UKStone wall, tree 
planting166 883 Y Partially 65Biodiversity, 
landscapeY Y Y Y
UK Lowland raised bogs 1 027 307 Y Y 100Biodiversity,  
conservation of 
natural wildlifeY Partially N NAnnex IISummary of NPI visited on the spot
43 AnnexesMember 
StateDescriptionEAFRD  
approved  
(euro )Complementarity1
NPI2Support 
rate  
(%)Environmental objective3
Eligibility4Reasona -
bleness   
of costs5Overall  
Cost-  
effectiveness6 Synergy General Proposed Addressed
UK Peatland 1 710 408 Y Partially 100Biodiversity and 
resource protectionY Y N N
UK Peatland 1 153 002 Y Y 100Biodiversity and 
resource protectionY Y Y Y
UK Stone wall 159 183 Y Partially 68 Landscape Y YYY
UK Peatland 622 402 Y Partially 89Biodiversity and 
resource protectionY Y Y Y
UK Historic buildings 284 775 Y N 93 Landscape N N N N
PT Traditional structures 21 721 Y N 100 Landscape N N N N
PT Dry‑stone walls 59 500 Y Partially 100 Landscape Y Y N N
PT Dry‑stone walls 59 500 Y Partially 100 Landscape Y Partially N N
PT Dry‑stone walls 59 500 Y Partially 100 Landscape Y Partially N N
PT Dry‑stone walls 59 479 Y Partially 100 Landscape Y Partially N N
PT Traditional structures 25 876 Y Y 100 Landscape Y Partially N N
1 Complementarity: NPIs were considered to be implemented in synergy when the NPI funds complemented payments from other EAFRD measures and/or other environ -
mental schemes. General complementarity refers to those projects which were not implemented in synergy with other schemes, but shared the same general objectives.
2 Assessment of the significance of the remunerative components of NPI projects: when there were no indications that the investment delivered and/or contained significant 
remunerative components, the investment was considered as non‑productive . When the remunerative elements observed were considered not significant, but in view of 
the very high aid rates granted the Court considered that these elements should have been taken into account to reduce these aid rates, the investment was considered as 
partially productive . Investments which clearly influenced the main commercial or productive activity of the beneficiary were considered as providing a ‘significant’ remu -
nerative component.
3 Assessment of whether or not the NPI project contributed to the achievement of the proposed environmental objective(s) (Y/N). In the case of NPIs that were assessed as 
non -eligible, the Court considers that the NPI project in question is not contributing to the objectives of the measure.
4 Assessment of the eligibility of NPI projects in regard to their nature and costs (Y/N/Partially). ‘Partially’ denotes the existence of ineligible costs that are not affecting the 
entirety of the NPI project.
5 Assessment of the reasonableness of the costs of the NPI projects (Y/N). It takes in consideration the existence of adequate tendering procedures and/or the use of reason -
able reference costs and whether the high intensity of aid took into account the remunerative characteristics of the project.
6 Cost -effectiveness (Y/N): non -productive investments are considered to be cost -effective when they fulfil the following two criteria: (i) they are effective, meaning that they 
are eligible, address an agri -environmental need and/or contribute to achieve an agri -environmental objective identified by the Member States in their RDPs and; (ii) there 
is no evidence that the same investment could have been implemented at a lower cost (i.e. investment costs are reasonable). When effective investments could have been 
implemented at lower costs, the value for money of such investments is undermined, since the same objectives and/or results would have been achieved at lower costs.
7 The amounts in DKK regarding Denmark’s projects have been converted to euros using an exchange rate of 0.13 euro/DKK.
8 The amounts in GBP regarding United Kingdom’s projects have been converted to euros using an exchange rate of 1.18 euro/GBP.
9 The individual EAFRD contribution for each project funded in the UK was not evident from the grant documents reviewed. The Court has therefore used the average 
co-financing rate by EAFRD for M216 projects during the period 2007-May 2015 in the UK, which was 74 %. This rate has been applied for the calculation of EAFRD amounts 
for these projects.
44 Annexes
Summary of needs, objectives and types of NPI per Member State
Member State Identified needs and objectives Description of types of NPI
United Kingdom 
(England)– Conservation of natural wildlife;
– Natural resource protection;
– Adaptation of farming methods;
– Maintenance of landscape quality and character;
– Promotion of public access and understanding.– Traditional boundaries;
– Fencing in association with conservation works;
– Items associated with tree planting and management;
– Restoration of moorland and wetlands;
– Control of scrub and bracken;
– Reversion of land to heathland and species‑rich grassland;
– Restoration of landscapes and features;
– Structures for specific species;
– Changes to farm access tracks and gateways.
Portugal (Mainland)– Maintenance of landscape quality and character;
–  Maintenance of ecological structure of farming systems in 
order to preserve high natural value areas;
– Maintenance of specific habitats.– Dry‑stone walls;
– Traditional structures;
– Protection of riparian zones;
– Fencing (to protect from wildlife activity);
– Traditional boundaries;
– Water management structures. 
Denmark– Conservation of natural wildlife;
– Natural resource protection;
– Adaptation of farming methods;
– Maintenance of landscape quality and character;
– Promotion of public access and understanding.– Maintenance of landscape and cultural elements; 
–  Establishment of landscape and biotope‑improving 
vegetation; 
– Restoration of dikes;
–  Operations that encourage sustainable use of and public 
access to rural natural heritage; 
– Establishment of permanent wetlands;
– Periodical and reoccurring flooding of farmland; 
– Clearing of scrubs and fencing; 
– Restoration of hydrological conditions; 
– Conversion of farmland to permanent grassland.
Italy (Puglia)– Conservation of biodiversity;
–  Protection and diffusion of high natural value agro‑forestry 
systems;
– Protection of landscape.– Dry‑stone walls;
– Small constructed wetlands;
–  Interventions on wetlands such as towers for sighting 
wildlife, walkways;
– Interventions to plant hedges.Annex III
45
The Member States have also to ensure the eligibil -
ity of the projects, assess them against the selection 
criteria established in consultation with the Moni -
toring Committee and rank them according to their 
quality. The Commission has produced guidance on 
eligibility and selection to assist the Member States 
and regions for the programming and implementa -
tion of the 2014-2020 RDPs.
V
Where the level of support is based on standard 
costs and standard assumptions of income fore -
gone, the Member States must ensure that the 
calculations contain only verifiable elements, are 
based on figures established by appropriate exper -
tise and are regionally or locally differentiated if 
needed.
Where the level of support is based on simplified 
cost options, a thorough ex ante  assessment of 
the calculation method is necessary, which will be 
applicable to any cost falling under the selected 
category.
These methods should guarantee that costs 
incurred and declared are reasonable and should 
help in justifying the payments proposed by Mem -
ber States.
VI
The Commission carries out conformity audits in 
the Member States to verify that the expenditure 
paid is in compliance with the rules. Since these 
audits have also revealed weaknesses regarding 
the reasonableness of costs, substantial financial 
corrections have already been made and a number 
of conformity clearance procedures are currently 
ongoing which should lead to further financial 
corrections.Executive summary
I
The NPIs should not generate a significant eco -
nomic return to those who undertake them. This 
does not mean that no economic return can be 
expected and accepted. In the majority of invest -
ments there is always an element of return even 
though the investment is of a purely non -pro-
ductive nature, for instance in the case of install -
ing hedges made of trees or bushes which, when 
pruned or cut can provide biomass serving as 
a source of electricity. Therefore, it is difficult to cre -
ate an entirely non -productive investment.
The Managing Authorities may reduce the aid 
intensity, although if environmental objectives are 
to be achieved, the impact of such reduction on the 
uptake of the measure must be estimated to ensure 
that the environmental objectives are met.
II
The difference in the maximum support rate 
between productive and non -productive invest -
ments is due to the fact that the latter by definition 
are not supposed to bring significant economic 
benefits. Therefore, without a higher support rate 
the agri -environmental–climate objectives could 
not be achieved.
IV
Article 24(2)(d) of Commission Regulation (EU) 
No 65/2011 requires the Member States to assess 
the reasonableness of costs during administrative 
checks using a suitable evaluation system, such as 
reference costs, comparison of offers or evaluation 
committee. This provision has been maintained 
with regard to the 2014-2020 programming period.Reply of the  
Commission
Reply of the Commission 46
IX  Second alinea
This part of the recommendation is for the Member 
States
IX Third alinea
This recommendation is for the Member States.
IX Fourth alinea
The Commission accepts this recommendation.
Selection criteria are defined by the Member States 
following consultation with the Monitoring Com -
mittee where the Commission is present in an 
advisory capacity.
The Commission has produced guidance on eligibil -
ity and selection criteria to assist the Member States 
and regions in the programming and implementa -
tion of the 2014-2020 RDPs.
The Commission will continue to carry out con -
formity audits in the Member States in accordance 
with its audit planning to verify that the expendi -
ture paid is in compliance with the rules includ -
ing appropriate procedure for the selection and 
appraisal of projects. The measures and the paying 
agencies to be audited are determined on the basis 
of a risk analysis, where the most important ele -
ment is the level of expenditure.
IX Fifth alinea
The Commission accepts this recommendation.
The 2014-2020 CMES will monitor the implementa -
tion of the measure whereas the evaluation will 
consider its performance in the context of the 
relevant RD objectives.
IX Sixth alinea
This recommendation is for the Member States.VII
The CMES provides monitoring information on what 
is supported. A more thorough assessment of the 
effectiveness of all measures against programmes’ 
objectives will be performed at the time of the ex 
post  evaluation. However, a balance needs to be 
found between what can be done through monitor -
ing and evaluation taking into account the risk of 
excessive administrative burden and the financial 
constraints. Collecting specific result indicators for 
NPIs can be burdensome.
VIII
With regard to the 2014-2020 programming period 
the Commission has strengthened the provisions 
and guidance regarding reasonableness of costs.
The audit work programme is determined on the 
basis of a risk analysis, where the most important 
element is the level of expenditure. Since the 
amount of funding for NPIs is relatively low, the 
priority is given to more financially important meas -
ures where weaknesses in management and control 
systems could have a bigger financial impact on the 
EU budget.
IX First alinea
The Commission accepts this recommendation.
The Commission considers that the new program -
ming period 2014-2020 provides the opportunity for 
increasing synergies between rural development 
measures towards policy objectives. While not all 
NPIs must be directly complementary to other RD 
measures and schemes, in cases where there is such 
complementarity, the Commission will encourage 
the relevant Member States to report in their annual 
implementation reports the number and propor -
tion of NPI projects linked to the achievement of 
agri -environmental–climate commitments.
Reply of the Commission 47
However, the multiannual audit plan is determined 
on the basis of a risk analysis, where an impor -
tant element is the level of expenditure. Since the 
amount of funding for non -productive invest -
ment is relatively low, the priority is given to more 
financial important measures where weaknesses in 
management and control system could have a big -
ger financial impact on the EU budget.
Introduction
08
The difference in the maximum support rate 
between productive and non -productive invest -
ments is due to the fact that the latter by definition 
are not supposed to bring significant economic 
benefits. Therefore, without a higher support rate 
the agri -environmental–climate objectives could 
not be achieved.
Observations
19
The aim of NPIs is to contribute to the overall objec -
tives and priorities of rural development. In this 
sense, NPIs are complementary to other rural devel -
opment measures in pursuing agri -environmental 
(and in 2014-2020 also climate) objectives. While the 
synergy between NPIs and other rural development 
measures can be reached by establishing a link in 
their implementation (i.e. by linking NPI projects to 
the achievement of specific agri -environmental–
climate commitments), NPIs can also contribute to 
agri -environmental–climate objectives, Natura 2000 
and high nature value systems as a stand -alone 
measure.IX Seventh alinea
This recommendation is for the Member States.
IX Eighth alinea
The Commission accepts this recommendation.
However, Managing Authorities may reduce the aid 
intensity of the measure, although if environmental 
objectives are to be achieved, the impact of such 
reduction on the uptake of the measure must be 
estimated to ensure that the environmental objec -
tives are met.
IX Ninth alinea
This recommendation is for the Member States.
IX Tenth alinea
The Commission accepts this recommendation.
The Commission will continue to carry out conform -
ity audits in the Member States in accordance with 
its multiannual audit plan to verify that the expend -
iture paid is in compliance with the rules, including 
the reasonableness of costs. The measures and the 
paying agencies to be audited are determined on 
the basis of a risk analysis.
IX Eleventh alinea
This recommendation is for the Member States.
IX Twelfth alinea
The Commission partially accepts this 
recommendation.
The Commission takes due account of the Court’s 
findings in establishing its audit planning.
Reply of the Commission 48
27
The Commission recommended to the Member 
States to define additional indicators in accordance 
with the sound cost–benefit analyses. However, 
defining additional baselines for all sub -measures is 
not always possible and would lead to an increased 
administrative burden.
Box 4
Exhaustive statistics for specific environmental 
features such as stone walls are rarely available and 
it would be costly to constitute them.
28
CMEF is one of the tools through which the impact 
of investments can be assessed.
The result indicators such as the number of hectares 
under successful land management are relevant 
since they are used as input for the evaluations 
which aim at assessing the contributions of the 
relevant group of measures.
See also Commission reply to paragraph 27.
30
The mid -term evaluation for the 2007-2013 pro -
gramming period came too early for results to be 
measurable. As regards the 2014-2020 programming 
period enhanced implementation reports in 2017 
and 2019 will replace the mid -term evaluation.
31
Collecting specific result indicators for NPIs can be 
burdensome. A more thorough assessment of the 
effectiveness of all measures against programmes’ 
objectives will be performed at the time of the ex 
post  evaluation.21
See common reply to paragraphs 19.
22
The Commission is of the opinion that the overlap -
ping of commitments leading to double funding 
must be excluded as a matter of principle.
The objectives of measures 214 and 216 are differ -
ent and clearly set in the RDPs. Support under 214 
has the commitment of maintaining (among others) 
existing dry-stone walls, while NPIs can support the 
reconstruction/restoration of dry stone walls. How -
ever, in some cases setting a clear demarcation can 
be difficult and can lead to an increased administra -
tive burden.
23
See common Commission reply to paragraph 19.
24
As regards the 2014-2020 programming period, 
the selection criteria are obligatory for the NPIs 
support.
See also Commission reply to paragraph 19.
Box 3(a)
Given the expected contribution of non -productive 
investments to environmental objectives, excluding 
feasibility studies from eligible costs might severely 
undermine its uptake.
Feasibility studies should help to decide whether 
an investment should or should not be undertaken. 
A feasibility study may conclude that the invest -
ment will not contribute to the objectives of the 
support scheme. Cases where the feasibility study 
reached a positive conclusion on the investment, 
which was not then carried out, need to be ana -
lysed on a case -by-case basis. Budgetary constraints 
may be one of the reasons for not implementing the 
project which was the subject of feasibility study.
Reply of the Commission 49
41
See common Commission reply to paragraphs 37 
and 38.
41 Third alinea
Where the environmental benefit of the operation 
is significantly predominant, water agencies may 
be beneficiaries of the measure on their own or 
together with farmers, notwithstanding potential 
residual economic advantage.
42
The Commission carries out conformity audits in the 
Member States to verify that the expenditure is in 
compliance with the rules. Since these audits have 
also revealed weaknesses regarding the reasonable -
ness of cost, substantial financial corrections have 
already been made and a number of conformity 
clearance procedures are currently ongoing which 
should lead to further financial corrections.
50
See Commission reply to paragraph 33.
51
With regard to the 2014-2020 programming period 
the following actions have been undertaken to sol-  
ve weaknesses in the programming, management, 
monitoring and evaluation of the NPI support:
— The measure specific guidance and horizontal 
guidance providing information on eligibility 
conditions and selection criteria and guid -
ance on investments, including NPIs have been 
issued;
— A joint ex ante  assessment by the Managing Au -
thority and the Paying Agency has been made 
obligatory in order to establish the verifiability 
and controllability of all measures included in 
the RDP;33
Although the projects did not always respect the 
eligibility conditions, they may have contributed to 
the objectives of the measure.
34
See Commission reply to paragraph 33.
36
By their very nature NPIs are not expected to pro -
vide significant economic returns, although some 
limited economic benefits cannot be excluded. 
Where economic benefits prevail over environ -
mental ones, the respective investment should be 
funded under measure 121. Demarcation between 
the two measures is assessed at the time of pro -
grammes’ approval.
Common Commission reply 
to paragraphs 37 and 38
Although the NPIs should be free of productive ele -
ments, any kind of investment has at least a small 
element of ‘productivity’ in it. Nevertheless, such 
investments should remain mostly non -productive 
and their ‘productive’ or remunerative features 
should be limited.
The Managing Authorities may reduce the aid 
intensity, although if environmental objectives are 
to be achieved, the impact of such reduction on the 
uptake of the measure must be estimated to ensure 
that the environmental objectives are met.
The difference in the maximum support rate 
between productive and non -productive invest -
ments is due to the fact that the latter by definition 
are not supposed to bring significant economic 
benefits. Therefore, without a higher support rate 
the agri -environmental–climate objectives could 
not be achieved.
39
See common Commission reply to paragraphs 37 
and 38.
Reply of the Commission 50
Measure 216 was not targeted by the conformity 
audits during the first years of auditing the 2007-
2013 period when the focus was on the agri -envi -
ronmental measures which represent more than 
50 % of the expenditure declared under Axis 2. 
Measure 216 was audited in 2014-2015.
57
The fact that the audit is still ongoing does not 
mean that the Member State is not aware of the 
preliminary results. In the case of Portugal, the 
Letter of Findings was sent in April 2014 and the 
bilateral meeting between the Member State and 
the Commission took place in September 2014. In 
the case of England, the Letter of Findings was sent 
to the Member State in July 2014 and the bilateral 
meeting took place in December 2014.
58
Monitoring committees which involve RD manag -
ers, broader RD stakeholders and the Commis -
sion services in their advisory capacity are better 
designed to deal with problems and lessons learnt.
The key reason for not having sufficient information 
on performance in the mid -term evaluation is the 
timing. Firstly, there is a minimum time necessary to 
launch and initiate the implementation and sec -
ondly, all operations, but in particular those in the 
environmental field, will take time before result of 
that operation could become measurable.
60
See reply to paragraph 19.
61
See reply to paragraph 22.
62
See common reply to paragraphs 27 and 28.— The result -oriented approach has been rein -
forced with the setting of precise targets for the 
programmes and the reporting throughout the 
programming period, based on a rationalised 
common monitoring and evaluation system;
— The SWOT analysis of the RDP aims at establish -
ing the baseline for monitoring and evaluation 
of the programme.
52
Corrective actions to address potential weaknesses 
can also be implemented after the adoption of the 
programmes through their amendments.
See also Commission reply to paragraph 51.
55
In some Member States the controllability and 
verifiability of the NPI and related maintenance 
contracts have been debated in connection with 
the 2014-2020 programme negotiation.
56
The Commission carries out the conformity audits in 
the Member States to verify that the expenditure is 
in compliance with the rules. If during these audits 
weaknesses are found, financial corrections are 
applied.
The measures and the paying agencies to be 
audited are determined on the basis of a risk 
analysis. The risk factors such as the importance in 
financial terms, the quality of the control systems, 
the characteristics of the paying agency, the nature 
of the measures (its complexity) and any other 
information and findings from other bodies are 
taken into account. The financial importance plays 
a major role in the quantification of the exposure to 
risk. That means that high expenditure is more likely 
to be highly ranked and audited.
Reply of the Commission 51
65
During the 2007-2013 programming period, the 
Commission reminded on several occasions the 
Member States of the obligation to set up genuine 
selections criteria, ensuring a ranking of projects 
when the budget allocation did not allow financ -
ing all eligible project applications. In order to 
help MS to avoid weaknesses in the application of 
selection criteria and taking into account previous 
ECA recommendations, the Commission produced 
guidance on eligibility and selection as regards the 
2014-2020 programming period.
The Commission can through it audits verify the use 
of selection criteria. When audits are performed on 
investment measures, the implementation of selec -
tion criteria is indeed systematically verified. The 
Commission has imposed financial corrections for 
a number of Member States for deficiencies found 
in the use of selection criteria.
66
As regards Denmark, the projects will be selected 
on the basis of their cost -efficiency in relation to 
the objectives of the measure (e.g. area of biotope 
created/cost of the project, etc.).
67
See common Commission reply to paragraphs 37 
and 38.
68
Denmark has simplified the RDP by reducing the 
number of possible NPIs to be supported. This 
could partly explain decreasing variability of the aid 
rates from the previous RDP .
71
Given the expected contribution of this sub -meas -
ure to environmental objectives, excluding fea -
sibility studies from eligible costs might severely 
undermine its uptake.63
The assessment of the effects of measures or 
sub -measures will be carried out against the pro -
grammes’ objectives to which they contribute. The 
objectives are defined at the level of focus areas for 
which targets are established ex ante . The progress 
of the programmes against these targets is regu -
larly monitored. This approach reflects a result -ori-
entation of the policy and allows to better address 
the combined effects of measures against relevant 
objectives.
Member States can define additional pro -
gramme -specific indicators in relation to a set 
of key measures. However, this should not be 
requested systematically for all measures and 
sub -measures for reasons of keeping the costs of 
monitoring/evaluation reasonable and avoiding 
excessive administrative burden.
In case of underperformance of the programmes 
against their targets the Managing Authorities can 
look further at the level of individual measures/
sub -measures to identify the causes of problems 
and to effectively target corrective actions.
Ex post  evaluators will further investigate the per -
formance of single measures/sub -measures.
Moreover, the indicators as defined in the legisla -
tion or by the Member States are only the starting 
point for an evaluation. The evaluators can collect 
additional information, e.g. through case studies.
Box 10
The 2014-2020 monitoring will also contain total 
expenditure by sub -measures including non -pro-
ductive investments (4.4). Indicators are one com -
ponent of the monitoring and evaluation system.
See also Commission reply to paragraph 63.
Reply of the Commission 52
Recommendation 1(a)
The Commission accepts this recommendation.
The Commission considers that the new program -
ming period 2014-2020 provides the opportunity for 
increasing synergies between rural development 
measures towards policy objectives. While not all 
NPIs must be directly complementary to other RD 
measures and schemes, in cases where there is such 
complementarity, the Commission will encourage 
the relevant Member States to report in their annual 
implementation reports the number and propor -
tion of NPI projects linked to the achievement of 
agri -environmental–climate commitments.
Recommendation 1(b)
This part of the recommendation is for the Member 
States.
75
The Commission is of the opinion that only the pro -
jects respecting the selection criteria should receive 
support and that the selection procedures should 
be clear and transparent.
The selection of operations is better underlined in 
the legal framework for the 2014-2020 program -
ming period and extensive guidance has been 
provided to Member States/regions with the aim of 
ensuring that only the best operations and invest -
ments contributing to the programmes’ objectives 
and priorities are selected.
Recommendation 2(a)
This recommendation is for the Member States.The Commission considers that Denmark’s intention 
to support feasibility studies under non -productive 
investments is in line with the legislation: feasibil -
ity studies receiving support should be capable of 
reaching negative investment conclusions.
Conclusions and recommendations
72
The NPIs should not generate a significant eco -
nomic return to those who undertake them. This 
does not mean that no economic return can be 
expected and accepted. In the majority of invest -
ments there is always an element of return even 
though the investment is of a purely non -pro-
ductive nature, for instance in the case of install -
ing hedges made of trees or bushes which, when 
pruned or cut, can provide biomass serving as 
a source of electricity. Therefore, it is difficult to cre -
ate an entirely non -productive investment.
The Managing Authorities may reduce the aid 
intensity, although if environmental objectives are 
to be achieved, the impact of such reduction on the 
uptake of the measure must be estimated to ensure 
that the environmental objectives are met.
74
The agri -environmental objectives targeted by the 
NPIs do not always require the complementarity 
with other RD measures. In most cases, NPI support 
was linked to agri -environmental–climate com -
mitments. However, it is possible to meet the NPIs 
objectives without a link to any other RD measure. 
For instance, supporting the purchase of fences to 
avoid large carnivores causing damage to livestock 
achieves the agri -environmental objective per se 
even without a link to other RD measures. Support 
for NPIs can also exist as a stand -alone sub -measure 
which contributes to agri -environmental–climate 
objectives.
Reply of the Commission 53
Recommendation 3(a)
The Commission accepts this recommendation.
The 2014-2020 CMES will monitor the implementa -
tion of the measure whereas the evaluation will 
consider its performance in the context of the 
relevant RD objectives.
Recommendation 3(b)
This recommendation is for the Member States.
78
The Commission carries out conformity audits in 
the Member States to verify that the expenditure 
is in compliance with the rules. Since these audits 
also revealed weaknesses regarding the reasonable -
ness of costs, substantial financial corrections have 
already been made and a number of conformity 
clearance procedures are currently ongoing which 
should lead to further financial corrections.
79
Compliance with one of the methods of selecting 
an offer (i.e. comparison of different offers, assess -
ment by the evaluation committee or comparison 
of reference costs with the costs of other similar 
projects) is sufficient to ensure that the justified and 
reasonable offers in terms of the costs are selected. 
Multiplying obligations can lead to an unnecessary 
administrative burden.
80
Although the NPIs should be free of productive ele -
ments, it is difficult to have an investment without 
an element of ‘productivity’ in it. In other words, it 
is difficult to imagine a purely NPI.
Nevertheless, such investments should remain 
mostly non -productive and therefore their ‘produc -
tive’ or remunerative features should be sufficiently 
limited. The administrative burden and complex -
ity linked to extracting the economic benefits 
from the eligible expenditure should also not be 
underestimated.Recommendation 2(b)
The Commission accepts this recommendation.
Selection criteria are defined by the Member States 
following consultation with the Monitoring Com -
mittee where the Commission is present in an 
advisory capacity.
The Commission has produced guidance on eligibil -
ity and selection criteria to assist the Member States 
and regions in the programming and implementa -
tion of the 2014-2020 RDPs.
The Commission will continue to carry out con -
formity audits in the Member States in accordance 
with its audit planning to verify that the expendi -
ture paid is in compliance with the rules includ -
ing appropriate procedures for the selection and 
appraisal of projects. The measures and the paying 
agencies to be audited are determined on the basis 
of a risk analysis, where the most important ele -
ment is the level of expenditure.
76
The CMES provides monitoring information on what 
is supported. A more thorough assessment of the 
effectiveness of all measures against programmes’ 
objectives will be performed at the time of the ex 
post  evaluation. However, a balance needs to be 
found between what can be done through monitor -
ing and evaluation taking into account the risk of 
excessive administrative burden and the financial 
constraints. Collecting specific result indicators for 
NPIs can be burdensome.
77
A more thorough assessment of the effectiveness of 
all measures against programmes’ objectives will be 
performed at the time of the ex post  evaluation.
Reply of the Commission 54
81
With regard to the 2014–2020 programming period 
the Commission has strengthened the provisions 
and guidance regarding reasonableness of costs 
which should address some of the weaknesses iden -
tified by the Court.
The audit work programme is determined on the 
basis of a risk analysis, where the most important 
element is the level of expenditure. Since the 
amount of funding for NPIs is relatively low, the 
priority is given to more financial important meas -
ures where weaknesses in management and control 
system could have a bigger financial impact to the 
EU budget.
Recommendation 5(a)
This recommendation is for the Member States.
Recommendation 5(b)
The Commission partially accepts this 
recommendation.
The Commission takes due account of the Court’s 
findings in establishing its audit planning.
However, the multiannual audit plan is determined 
on the basis of a risk analysis, where an impor -
tant element is the level of expenditure. Since the 
amount of funding for non -productive invest -
ment is relatively low, the priority is given to more 
financial important measures where weaknesses in 
management and control system could have a big -
ger financial impact on the EU budget.Furthermore, Member States can make use of the 
simplified cost options for the calculations and 
payments of the grants. In this case a fair, equitable 
and verifiable calculation must be carried out in 
advance.
Recommendation 4(a)
This recommendation is for the Member States.
Recommendation 4(b)
The Commission accepts this recommendation.
Recommendation 4(c)
This recommendation is for the Member States.
Recommendation 4(d)
The Commission accepts this recommendation and 
has started to implement it.
During the screening of the Rural Development Pro -
grammes for the 2014-2020 programming period, 
the Commission paid attention to check the con -
trollability and verifiability section of the measures. 
If this explanation was missing or was not detailed 
enough, MS had to provide additional information.
Recommendation 4(e)
The Commission accepts this recommendation.
The Commission will continue to carry out conform -
ity audits in the Member States in accordance with 
its multiannual audit plan to verify that the expend -
iture paid is in compliance with the rules, including 
the reasonableness of costs. The measures and the 
paying agencies to be audited are determined on 
the basis of a risk analysis.
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EUROPEAN
COURT
OF AUDITORS
Non -productive investments (NPIs) are investments which 
do not generate significant return, income, or revenue, or 
increase significantly the value of the beneficiary’s 
holding, but have a positive environmental impact. Public 
support for NPIs is provided by the European Agricultural 
Fund for Rural Development and national co -financing. 
This public support often reaches 100 % of the total 
investment costs. The Court concludes that NPI support 
has contributed to the achievement of objectives linked to 
the sustainable use of agricultural land, but in a  way that 
was not cost effective. This was because the costs of 75 % 
of the visited projects were unreasonably high. 
Furthermore, even though many of these projects had 
obvious remunerative characteristics, they were fully 
funded with public money. The Court makes five 
recommendations aimed at improving the 
cost -effectiveness of NPIs that will be funded during the 
2014-2020 programming period.