Special report No 9/2004 on Forestry Measures within Rural Development Policy, together with the Commission's replies
Date: 2004-10-14
Institutions: European Court of Auditors
Subjects: European Court of Auditors, forestry policy, report, rural development, sustainable forest management

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 9/2004

on Forestry Measures within Rural Development Policy, together with
the Commission’s replies

(pursuant to the second subparagraph of Article 248(4) of the EC Treaty)

(2005/C 67/01)

CONTENTS

Paragraph

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Forests in the EU: key data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EU forestry support and the EU forestry strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EU financial support to forests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The audit of the Court

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE EU STRATEGY AND ITS IMPLEMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sustainability and how to implement it

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Member States define ‘forest’ differently . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The shared management for implementing the forest strategy is not clear

. . . . . . . . . . .

NATIONAL FOREST PROGRAMMES (NFP) OR EQUIVALENT INSTRUMENTS . . . . . . . . . . .

still
information on forestry action at Member States
Commission’s
incomplete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

level

is

LARGE UPTAKE OF FUNDS FROM PREVIOUS PROGRAMMING PERIOD . . . . . . . . . . . . . . .

A COMPLEX SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Creating difficulties for managing authorities and beneficiaries . . . . . . . . . . . . . . . . . . . .

IMPLEMENTATION OF FORESTRY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Afforestation of agricultural land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extension of woodland compatible with the environment . . . . . . . . . . . . . . . . . . . .

Administrative implementation (Unclear project selection criteria)

. . . . . . . . . . . . .

I-XIII

1-13

1-3

4-6

7-10

11-13

14-22

14

15-16

17-18

19-22

23-36

34-36

37-39

40-42

40-42

43-64

43-57

46

47

Uncertain verification of previous land use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48-51

Calculation of compensation for loss of income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52

Unverifiable criteria for designation as a farmer . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53-56

Weak on-the-spot checks by the national authority . . . . . . . . . . . . . . . . . . . . . . . . .

57

Other forestry measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58-64

4

5

5

5

6

7

7

7

8

8

8

9

10

10

11

11

11

11

12

12

12

13

13

13

14

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Paragraph

Page

Eligibility of public land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Large uptake of funds for restoring damage caused by natural disasters

Compliance with tendering procedures

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59-61

62-63

64

IMPACT OF AFFORESTATION OF AGRICULTURAL LAND MEASURE . . . . . . . . . . . . . . . . .

65-76

Afforestation of agricultural land is very expensive due mainly to the compensation for
loss of income over a 20-year period (Economy) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Degree of afforestation is not very significant (Effectiveness) . . . . . . . . . . . . . . . . . . . . . .

Result could be better achieved (Efficiency)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

It has a very dispersed impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IMPACT OF OTHER FORESTRY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSION AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65-69

70-74

75

76

77-78

79-87

ANNEX I — Community forestry related actions in the period 1964 to 1999 . . . . . . . . . . . . . . . . . . . . . . . .

ANNEX II — Forest definition in the Member States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

14

14

14

14

15

51

16

16

16

18

19

20

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GLOSSARY OF TERMS

Afforestation of agricultural land: where new forests and woodland are created from agricultural land (this
afforestation policy was originally dealt with under 1992 common agricultural policy (CAP) reform as part of
a set of policies to take farmland out of food production).

CAP: common agricultural policy

Crown cover density: proportion of area covered by the vertical projection of tree crown

DG: Directorate-General

EAGGF: European Agricultural Guidance and Guarantee Fund

Forest action: afforestation and other forestry measures

Forest area: the United Nations Food and Agriculture Organisation final report on global forest resources
assessment (FRA), issued in 1995, defined a forest as: an area with 20 % crown cover density for industrialised
countries and 10 % for developing countries.

Forestry measures: measures (i) to improve the multifunctional role of forests and woodland and to protect
against, or assist in re-establishing forests after natural disasters (fire, flood, high winds etc.); (ii) to maintain
and improve the ecological stability of forests where the protective and ecological role of these forests is of
public interest, and (iii) to afforest non-agricultural land.

Forestry plans: national or subnational forest programmes (or equivalent instruments) are the basis for for-
estry support in the EU (1). They provide a framework for applying sustainable forest management. They are
tools for planning, implementing and monitoring forestry and forest-related activities and provide an envi-
ronment for the concerted and coordinated implementation of programmes and activities by all interested par-
ties on the basis of mutually agreed objectives and strategies (2).

Forestry structures measures: measures which address the development of forests and forestry, the protec-
tion of forests against atmospheric pollution and fires and forestry research.

OP: operational Programme.

Star Committee: Commission Committee on Agricultural Structures and Rural Development.

Sustainable forestry: a widely used definition is: ‘development which meets the need of the present without
compromising the ability of future generations to meet their own needs’. Sustainable forest management thus
means finding the right balance between economic, environmental and social aspects for current and future
generations.

Wooded land/woodland area: the UN/FAO final report on Global Forest Resources Assessment, issued in
1995, defined for developed countries as land which has some forestry characteristics but is not forest. It
includes woody elements more than 50 cm and less than 7 m in height, covering more than about 20 % of the
area.

(1) Article 29 of Council Regulation (EC) No 1257/1999 (OJ L 160, 26.6.1999, p. 80).
(2) COM(1998) 649, 3.11.1998.

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SUMMARY

I.
Forests and woodlands cover 136 million ha (36 %) of the land area of the European Union of 15 Mem-
ber States. Forestry and forest-based industries provide employment for 2,6 million people. Forests and wood-
lands have important environmental benefits such as the preservation of fauna and flora and protection against
desertification.

Although the Treaties have little to say about forestry, EU support for forestry has existed since 1964.
II.
In 1998 the Council adopted an EU forestry strategy (1) based on two key principles: (a) forest management
should be sustainable (2), (b) forests have a multifunctional (ecological, economic and social) role.

III.
Since the year 2000, forestry measures, grouped in two categories of action, afforestation and other
forestry measures, have been financed by rural development funds. Planned EU spending on forestry for the
period 2000 to 2006 is 4,7 billion euro, half for afforestation of agricultural land and half for other forestry
measures.

IV.
The Court’s audit determined whether the forestry measures were based on forestry plans or equiva-
lent instruments; how such measures were programmed and financed; how they were implemented and what
their impact was. Audit visits were carried out at the Commission and in the main recipient Member States
(Spain, Portugal, Italy, Ireland and France). A sample of projects, selected on the basis of their financial impor-
tance and representativeness, were visited on the spot.

The EU forestry strategy assumes that the objectives of forestry policy (mainly economic, environmen-
V.
tal and social) are complementary: in reality they are often contradictory. In the absence of a commonly applied
definition of ‘forest’, the extent to which the objective is achieved is difficult to monitor (see paragraphs 15
to 18).

VI.
Management of the EU forestry strategy is shared between the Commission and the Member
States. There is no clear responsibility for assessing the extent to which the financed projects contribute to the
achievement of the EU strategy (see paragraphs 19 to 22).

VII.
Since 2000 Member States have been required to base their forestry measures on national or subna-
tional forest programmes. However, these do not always exist and, when they do, they have a widely varying
content. In the absence of forest programmes the Commission accepted rural development plans (RDP) and
operational programmes (OP) as equivalent to the national programmes. However their assessment was
affected by the Commission’s own internal organisation and by the time pressure. The Commission’s infor-
mation on forestry actions in Member States is still incomplete (see paragraphs 23 to 36).

VIII.
Forestry support is implemented using rural development programming tools but is hampered by the
large uptake of funds for forestry CAP accompanying measures which had been entered into previously.
Because of the long contract period for forestry there is little freedom to manoeuvre: much of the money avail-
able has in practice already been allocated in the form of CAP accompanying measures (see paragraphs 37
to 39).

The system in place for implementing forestry measures is complex. This creates difficulties for both

IX.
managing authorities and beneficiaries (see paragraphs 40 to 42).

(1) Council Resolution of 15 December 1998 (OJ C 56, 26.2.1999, p. 1). The Council Resolution states that the responsi-
bility for forestry policy lies with the Member States and that Community actions are based on the principle of subsid-
iarity: ‘emphasises the principle of subsidiarity, given the fact that the Treaty establishing the European Community
makes no provisions for a specific common forestry policy and that responsibility for forestry policy lies with the Mem-
ber States, nevertheless taking into account that, pursuant to the principle of subsidiarity and the concept of shared
responsibility, the Community can contribute positively to the implementation of sustainable forest management and
the multifunctional role of forests.’

(2) 1993 pan-European Ministerial Conference in Helsinki.

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The audit found a number of weaknesses in the implementation of forestry measures (see paragraphs

X.
43 to 58 and 62 to 64), such as:

— varying interpretations were noted in prioritising the land to be afforested,

— no clear Community guidelines on how to ensure compatibility with the environment,

— unclear project selection criteria,

— unsatisfactory arrangements for deciding on eligibility relating to land use, loss of income and whether

beneficiaries were farmers,

— weak on the spot checks to verify the correctness of claims,

— a need to improve control procedures for public contract tendering.

XI.
Afforestation carried out by municipalities does not receive aid for the maintenance of seedlings and
young plantations. As some of these local authorities claimed that they might not have sufficient financial
resources, there is a risk that projects which have received considerable EU aid will fail in subsequent years (see
paragraphs 59 to 61).

XII.
Increasing woodland area by grant-aided afforestation of agricultural land is very expensive mainly
due to the compensation paid for loss of agricultural income over a period of 20 years. Moreover, the results
have not been very significant and could have been obtained more cheaply (see paragraphs 65 to 78).

XIII.
Various aspects of the support scheme should be reviewed. In particular the Commission should
reconsider how the afforestation measure can be better targeted, at a lower cost to the EU budget taking into
account the changing public needs and the fact that the emphasis of Community legislation is now on sus-
tainable environmental benefits (see paragraphs 79 to 87).

INTRODUCTION

Forests in the EU: key data

sawn wood producer and the third largest exporter of forest prod-
ucts. The value of forest-based industries’ production amounts to
close to 300 billion euro, which represents 10 % of total of manu-
facturing value in the EU (1).

1.
Forests and other wooded areas account for 136 million
ha (1), which is about 36 % of the total EU surface area. Forests
favour tourism and are considered to be an important component
of European nature, being home to a rich variety of mammals,
birds and reptiles. They protect against desertification and ava-
lanches and act as windbreaks.

Forests are of considerable socio-economic relevance.
2.
About 65 % of forests are privately owned by approximately
12 million owners in the EU. However ownership structures vary
widely within the EU. In Greece and Ireland, the State owns about
two thirds of forest land. In Belgium, France, Germany, Italy, Lux-
embourg and Spain, the main forest owners are local communi-
ties and in Nordic countries private holdings are predominant. In
economic terms the EU-15 is the world’s second largest paper and

3.
Forest sector is an important employer, particularly in EU
rural areas. According to the Commission (2), the sector is esti-
mated to employ directly 2,6 million people.

EU forestry support and the EU forestry strategy

4.
The EU has provided support for forestry since 1964. For
more than 30 years that support consisted of improving forestry
structures and, since 1992, afforestation of agricultural land. A
new impetus was given on 15 December 1998, when the Coun-
cil adopted a Resolution (3) setting out an EU forestry strategy.

(1) Source: Commission.

(2) COM(1998) 649.
(3) Council Resolution of 15 December 1998.

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The Strategy fixes a framework for forestry actions, creat-
5.
ing the perspective for the integration of forests into other poli-
cies and encouraging a participatory and transparent approach
for all ‘stakeholders’ (1). It is based on international undertakings
previously given by the Community and the Member States and
was to be applied using national or regional forestry plans.

6.

Two guiding principles govern the Strategy:

(a)

forest management should be sustainable (2),

(b)

forests have a multifunctional (ecological, economic and
social) role.

EU financial support to forests

7.
Some 1 500 million euro were spent in the period 1992
to 1999 on afforestation of agricultural land. For the period 2000
to 2006 the EU contribution is planned to be 2 387 million euro
for afforestation measures and 2 420 million euro for other for-
estry measures (3) (see table).

Financial forecast of forestry measures 2000 to 2006: EU contribution under EAGGF

Table

Source: Commission

(1) Council Resolution of 15 December 1998. The Council Resolution
states that the responsibility for forestry policy lies with the Members
States and that Community actions are based on the principle of sub-
sidiarity: emphasises the principle of subsidiarity, given the fact that
the Treaty establishing the European Community makes no provisions
for a specific common forestry policy and that responsibility for for-
estry policy lies with the Member States, nevertheless taking into
account that, pursuant to the principle of subsidiarity and the concept
of shared responsibility, the Community can contribute positively to
the implementation of sustainable forest management and the multi-
functional role of forests.

(2) 1993 pan-European Ministerial Conference in Helsinki.

(3) Source: Commission.

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From the year 2000, forestry expenditure was integrated
8.
into the support for rural development by Regulation (EC)
No 1257/1999 (1). Such support is intended to promote, in par-
ticular, one or more of the following objectives (Article 29):

The present audit covered the forestry measures of the
12.
rural development Regulation summarised in paragraph 8
above (5). The principal objectives of the Court’s audit were to
determine:

— sustainable forest management and development of forestry,

— whether the forestry measures are based on forestry plans or

equivalent instruments,

— maintenance and improvement of forest resources,

— how such measures were programmed and financed,

— extension of woodland areas.

Two distinct types of actions were set:

(a) afforestation (2) (Article 31),

(b) other forestry measures (2) (Articles 30 and 32).

9.
All EU financial support for afforestation of agricultural
land is charged to the EAGGF-Guarantee section. Afforestation of
‘other’ land is financed by the Guidance section of EAGGF if it
takes place in regions which are classified as ‘Objective 1’ (3) for
the purposes of the Structural Funds and by the Guarantee sec-
tion of the EAGGF if it takes place elsewhere.

10.
The figures in the table demonstrate the different
approaches to the strategy adopted by the Member States. The
northern EU countries (Sweden and Finland) have substantial for-
est cover already and do not have any significant afforestation
policy, preferring to concentrate on other rural development pri-
orities. Expenditure is highest in Spain, Italy and Portugal which
face not only serious risk of damage of forests through fires and
drought but also promote afforestation measures for economic,
social and environmental reasons.

The audit of the Court

11.
A previous Court audit of the afforestation of agricultural
land (4) concluded that there were insufficient impact analyses
and lack of evaluations and monitoring of implementation by the
Member States.

(1) Regulation (EC) No 1257/1999 which sets out the framework regu-

lation for rural development support.

(2) See glossary.
(3) Objective 1 of the Structural Funds is aimed at promoting the devel-
opment and structural adjustments of regions whose development is
lagging behind.

(4) Special Report No 14/2000 (OJ C 353, 8.12.2000, p. 1).

— how they were implemented,

— what was the impact of the measures as regards economy,

efficiency and effectiveness.

Audit visits were carried out at

13.
the Commission
(Directorate-General for Agriculture), where information on the
implementation of the strategy was examined. Audits were also
carried out of the management of forestry measures and projects
by the national, regional and local administrations in the main
recipient Member States (Spain, Portugal,
Ireland and
France). Thirty four projects, selected on the basis of their finan-
cial importance and representativity of the measures, were visited
on the spot.

Italy,

THE EU STRATEGY AND ITS IMPLEMENTATION

Legal framework

14.
The Treaty establishing the European Community makes
no provision for a common forestry policy, nor do the articles of
the EC Treaty relating to the common agricultural policy set out
market provisions for forestry products such as timber. Instead,
Community forestry actions have been undertaken by applying
the EC Treaty provisions of other policies (6).

Annex I summarises the main forestry actions carried out in the
past.

(5) The audit scope did not cover other forestry financing by the EU bud-

get like Forestry Research, Forest Natura 2000, Forest Focus.

(6) The Commission (COM(1998) 649) indicates the relevance of forestry

by the following:
— with their many functions, forests are essential to rural areas and
constitute a major component of an integrated rural develop-
ment policy, particularly because of their contribution to income
and employment and their ecological and social value,

— forests and their diversity are an important part of the European
natural environment and their protection and conservation falls
within the scope of a number of Community policies and is the
subject in particular of specific environmental issues such as the
EU Biodiversity Strategy, Natura 2000 and the implementation
of the Climate Change Convention,

— for forest products, and in particular wood (as well as cork and
resins), the rules of the Internal Market apply, including the nor-
mal EU competition rules on state aids, mergers and cartels.

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Sustainability and how to implement it

15.
The concept of sustainability has been developed in inter-
national conferences and is mostly linked to political commit-
ments. Conferences in Helsinki and Lisbon, in 1993 and 1998
respectively defined more explicitly the concept of sustainable
forest management by drawing up a set of monitoring indicators.
However, this concept is vague because it is based on the integra-
tion of aims (mainly economic, environmental and social) and
intentions (e. g. protection of biodiversity, and productivity),
which can be contradictory.

16.
It appears to have been particularly difficult to obtain an
appropriate balance between the economic, ecological and
social aims. Interested parties identify the balance in different
ways depending on their own interests and conflicts between
these stakeholders exist. In one Member State visited the policy
was highly criticised by environmental NGO’s which claimed
that it was over-focused on economic aspects without due
regard to the need to maintain bio-diversity. Other Member
States gave limited consideration to the social aspects of
sustainability
forests. The diagram illustrates
components.

the various

Diagram

Member States define ‘forest’ differently

the extension of wooded land, however in the absence of a com-
monly applied definition, the extent to which the objective is
achieved is difficult to monitor.

17.
Member States do not use a consistent definition
of woodland areas. A definition, developed internationally does
exist (notably by the Food and Agriculture Organization of the
United Nations – FAO (1)), but this is not applied in all the Mem-
ber States in the same way, as is highlighted in a report produced
by the European Commission (2).

18.
Annex II illustrates the differences in the forestry defini-
tions applied by the Member States. For example, if the definition
of forest area used by Ireland were to be applied, the total EU for-
ested area would be roughly 5 % less, whereas if the Luxembourg
definition were to be applied the forest area would be approxi-
mately 3 % (3) more. One of the objectives of EU forest support is

(1) The FAO final report on Global Forest Resources Assessment (FRA)
issued in 1995 set a forest definition at 20 per cent crown cover den-
sity for industrialised countries and 10 % for developing countries.
(2) Study on European Forestry Information and Communication System

(EFICS) 1997.

(3) Reference UN/FAO Report ‘Forest Resources’ year 2000, p. 34.

The shared management for implementing the forest strategy is
not clear

The management of the EU Forestry Strategy is shared
19.
between the Commission and the Member States. The different
responsibilities for implementation of the strategy under the rural
development regulation are:

(a)

level I: the Strategy was proposed by the Commission (4) (and
then adopted by the Council); this took account of the inter-
national commitments and the main concepts of sustainabil-
ity and multi-functionality;

(b)

level II: in line with the principle of subsidiarity, the Member
States are responsible for planning and implementing
national forest programmes or equivalent instruments;

(4) The Commission Communication was prepared on the basis of a spe-
cific request of the European Parliament (A4-0414/96, OJ C 55,
24.2.1997, p. 22).

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(c)

level III: forestry measures are co-financed by Member States
and the Community budget under the terms of Regulation
(EC) No 1257/1999, which defines the structure and require-
ments of the forestry measures;

(d)

level IV: individual projects are authorised and managed by
the national, regional or local authorities of the Member
States.

Thus, forestry measures in the Member States must com-
20.
ply with the requirements of Regulation (EC) No 1257/1999, for
which the Commission has financial responsibility (1), including
the assessment of their soundness (efficient, effective, economic)
whilst Member States are responsible for drawing-up and imple-
menting the national programmes which apply the measures (2).

21.
The audit found that neither the Commission nor the
Member States assumed responsibility for assessing whether a
project contributed to the achievement of the EU forestry strat-
egy. Furthermore, national administrations did not systematically
assess whether a project approved for EU co-financing was coher-
ent with the strategy and its objectives.

A study (4), co-financed by the Commission, which aimed
24.
at providing policy makers with improved means to formulate
and implement national forest programmes, examined the exist-
ence of such programmes in the Member States. This revealed
that the availability and content of such programmes varied
widely. The study observes that, even by 2001, some Member
States did not have such programmes, others were developing
them and, only a few were already implementing them.

Indeed,

25.
it was only in April 2003 that a common
approach to defining the principles of national forest programmes
was decided (5).

26.
The main problems highlighted in the study were: that
the process of developing forest programmes is slow; that there
is a vagueness in their formulation; and that, when available, their
implementation is fragmented. The study identified the existence
of many actors and the vagueness of the concept of sustainability
as being amongst the causes of this situation.

22.
There is a need to clarify the responsibilities and roles of
the Commission and the Member States in implementing the
strategy not only in order to generally strengthen effective man-
agement but also to maximise the impact of EU funding on for-
estry. It will also assist the Commission in complying fully with
the legal requirements of financial accountability for implement-
ing the budget.

27.
In the absence of forestry programmes, the Regulation
allows forestry support to be based on equivalent instruments (6).
The Regulation clearly states that the instrument should be
equivalent and thus constitute and justify the link between the EU
forestry strategy and the national forestry measures, co-financed
by the EU. Rural development plans (RDP) and operational pro-
grammes (OP) have been accepted by the Commission as being
equivalent to forestry programmes.

NATIONAL FOREST PROGRAMMES (NFP) OR EQUIVALENT
INSTRUMENTS

23.
As indicated in paragraph 19(a) and as stipulated in the
basic Regulation on support for rural development (3), from
1999, Member States were required to base their forestry rural
development measures on national or subnational forest pro-
grammes or equivalent instruments.

(1) Article 274 of the EC Treaty: ‘The Commission shall implement the
budget, in accordance with the provisions of the regulations made
pursuant to Article 279, on its own responsibility and within the lim-
its of the appropriations, having regard to the principles of sound
financial management. Member States shall cooperate with the Com-
mission to ensure that the appropriations are used in accordance with
the principles of sound financial management.’

(2) According to Article 29 of Regulation (EC) No 1257/1999, support
shall be based ‘on national or subnational forest programmes or
equivalent instruments which should take into account the commit-
ments made in the Ministerial Conferences on the protection of for-
ests in Europe’.

28.
However, RDP establish the relationship between various
rural development measures in order to implement rural devel-
opment policy. They generally do not focus on forestry but on
other agricultural priorities, which indeed, absorb most of the
financial resources. While forestry programmes focus on forest-
related priorities including the implementation of the strategy,
forestry measures as set out in RDPs tend to be marginal, as com-
pared to the more agriculturally orientated measures in the sec-
ond pillar of the CAP.

Furthermore the Commission’s assessment of the equiva-
29.
lent instruments was affected by both: time constraints and inter-
nal organisation as explained hereunder.

(4) Source: ‘National forest programmes in European countries: an initial
overview based on a quick survey in countries participating in the
COST E-19 Action’ page 11.

(5) Fourth Ministerial Conference on the Protection of Forests in Europe

(Vienna, April 2003).

(3) Article 29 of Regulation (EC) No 1257/1999.

(6) Article 29(4) of Regulation (EC) No 1257/1999.

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According to the legislation (1), both the RDP and the OP
30.
had to be submitted by the national authorities to the Commis-
sion by the end of 1999. The programming period started on
1 January 2000. At the end 1999 and the beginning 2000 the
Commission had an extremely heavy workload and for several
months the Commission’s units had to assess large quantities of
documents in a very short period (2).

31.
Often extensive discussions and negotiations took place
between the Commission and the national authorities before the
approval of plans. Forestry measures were just one of the topics
of the discussion and numerous amendments followed. The
approval process took more than a year for most Member States
and programmes and plans were approved as late as 2001.

32.
One of the reasons for this is that many different DGs
and units are involved in the Commission’s approval process of
the RDP and OP (3) and thus in the approval of forestry measures.
DG Agriculture was responsible for the analysis of the RDP. While
the OP were mainly under the overall coordinating responsibility
of DG Regional Policy. In total more than eight units within DG
Agriculture and seven other DG’s (e. g. Environment, Energy and
Transport, Health and Consumer Protection) are involved in for-
est related issues. This division of forestry related matters amongst
so many departments within the Commission threatens coher-
ence and complicates decision-making.

33.
This issue was already raised in 1997 by the Economic
and Social Committee (4) which wrote: ‘the responsibility for the
drawing up and application of key EU laws and regulations affect-
ing forestry is divided between various directorates-general of the
European Commission. This makes it difficult to take account of
forestry policy objectives in a coherent manner.’

(1) Regulation (EC) No 1257/1999 and Council Regulation (EC)

No 1260/1999 (OJ L 161, 26.6.1999, p. 1).

(2) 69 operational programmes for Objective 1 regions plus the pro-
gramme complements, 20 Objective 2 Single Programming Docu-
ments including EAGGF Guarantee measures, 68 RDPs EAGGF Guar-
antee and Leader + 73 programmes.

(3) Main DGs being, DG AGRI/DG REGIO/DG ENV.
(4) Opinion of the Economic and Social Committee on ‘The situation and
problems of forestry in the European Union and potential for devel-
oping forestry policies’ (OJ C 206, 7.7.1997, p. 128).

Commission information on forestry action at Member State
level is still incomplete

34.
In order to assess the coherence with the EU-financed
forestry measures, the Commission needs information on those
forestry measures in the Member States which are not financed by
the EU budget. However this information was not available to the
Commission when Regulation (EC) No 1257/1999 was proposed
and adopted and is still lacking. According to the Commission,
Member States themselves do not have an inventory of the dif-
ferent forestry measures.

35.
The Commission is required to be notified of State Aid in
forestry (and other) sectors and the unit responsible for forestry
in DG Agriculture receives a copy of the information sent by
Member States. However, no inventory of that aid is made.

36.
An EU financed research project (coordinated by the
European Forestry Institute) aims to obtain more reliable knowl-
edge of the public funding of the forest sector and first results
should become available in the course of the year 2004. Such
basic information on the existing financial instruments and their
effects should be an essential prerequisite before launching any
additional EU funding.

LARGE UPTAKE OF FUNDS FROM PREVIOUS PROGRAMMING
PERIOD

37.
The use of rural development programming is hampered
by the extensive uptake of funds for forestry CAP accompanying
measures which had been entered into previously. Because of the
long contract period for forestry, there is little freedom to
manoeuvre: much of the money available has in practice already
been allocated in the form of CAP accompanying measures as
detailed below.

38.
Afforestation contracts established before 2000 (when
the measure was funded as an accompanying measure under the
CAP reform) and running for a maximum of 20 years, have taken
up considerable funds for the afforestation measure as part of
rural development. Indeed, in the period 2000 to 2002, most of
the funds allocated to afforestation in the programming
period 2000 to 2006 were spent on previous contracts under
accompanying measure arrangements. Thus, although environ-
mental constraints have been considerably reinforced in the new
programming period, no additional environmental benefits can
be identified as yet, because in general, the less-strict commit-
ments contracted before 2000 apply to most of the funds used.

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The seven years of the current programming period is ill-
39.
fitted for afforestation contracts which can and frequently do last
20 years. The entitlement of the beneficiary, in particular, to an
annual premium for each hectare to cover a supposed loss of
income for a period of up to 20 years greatly exceeds the financ-
ing resources available in the programmes.

A COMPLEX SYSTEM

Creating difficulties for managing authorities and beneficiaries

Financing arrangements are complex as indicated in
40.
paragraph 5. The requirement for managing authorities to use
two sets of rules constitutes a significant and unnecessary com-
plication. Checks on operations to be carried out by the Member
State differ depending on whether the operations were financed
by the Guarantee Section of EAGGF or by the Guidance sec-
tion (1). This duality of systems reduces their clarity and effective-
ness. At the Salzburg conference on rural development this deliv-
ery system was criticised by various stakeholders (2).

(1) EAGGF Guarantee: the Commission Regulation (EC) No 817/2004
(OJ L 153, 30.4.2004, p. 30) on support for rural development from
the European Agricultural Guidance and Guarantee Fund (EAGGF)
sets out in Article 69 that on-the-spot checks shall cover at least 5 %
of beneficiaries each year and all the different types of rural develop-
ment measures set out in the programming documents. On-the-spot
checks shall be spread over the year on the basis of an analysis of the
risks presented by each rural development measure. Checks shall cover
all the commitments and obligations of a beneficiary which can be
checked at the time of the visit. They shall be made in accordance with
Title III of Regulation (EC) No 2419/2001.
EAGGF Guidance: Commission Regulation (EC) No 438/2001
(OJ L 63, 3.3.2001, p. 21) (on Structural Funds Management) sets out
(Article 10) that ‘Member States shall organise checks on operations
on an appropriate sampling basis, designed in particular to: (a) verify
the effectiveness of the management and control systems in place; (b)
verify selectively, on the basis of risk analysis, expenditure declarations
made at the various levels concerned. The checks carried out before
the winding-up of each assistance shall cover at least 5 % of the total
eligible expenditure and be based on a representative sample of the
operations approved, taking account of the requirements of paragraph
3. Member States shall seek to spread the implementation of the
checks evenly over the period concerned. They shall ensure an appro-
priate separation of tasks as between such checks and implementation
or payment procedures concerning operations’.

(2) The European conference on rural development held in Salzburg in
November 2003 expressed in its conclusions concern as to ‘the com-
plexity of the current delivery system for EU rural development policy,
with different funding sources and procedures according to whether
an intervention is implemented within or outside Objective 1 regions’.

The Regulatory framework has been amended on vari-
41.
ous occasions. Most recently in 2003 various amendments were
introduced of which two are of particular importance. Standard
unit costs for establishing the cost of certain forestry investments
were once again allowed, whereas previously invoices or equiva-
lent documents, providing evidence of expenditure incurred, were
required. In addition, the sanction system which was based on
IACS requirements (3) for area payments are considered no longer
to be applicable with retroactive effect to 1 January 2000. As a
result, it is unclear which sanctions are to be applied in case of dif-
ferences between surface declared and those established during
the check.

42.
The system for the beneficiary is equally complex. In
order to benefit from measures, beneficiaries have to provide up
to 22 documents. The time allowed for presenting the informa-
tion is short, and is further complicated by the fact that applica-
tion periods are not always well known in advanced. As a conse-
quence, in all the Member States visited, applications are usually
presented on behalf of beneficiaries by specialised agencies and
consultants, thereby increasing the administrative burden (Italy,
Ireland, Spain, Portugal, France).

IMPLEMENTATION OF FORESTRY MEASURES

Afforestation of agricultural land

For

43.
the period 1992 to 1999, Regulation (EEC)
No 2080/92 regulated afforestation of agricultural land. It was a
CAP accompanying measure, compulsory for the Member State,
aimed to promote an alternative use of agricultural land and the
development of forestry activities on farms.

44.
For the period 2000 to 2006, afforestation of agricultural
land as stipulated in Article 31 of Regulation (EC) No 1257/1999
consists of converting agricultural land into forests or woodland.
Afforestation aims to promote the extension of woodland areas
provided that it complies with Regulation (EC) No 1257/1999
(see paragraph 8). Support shall be granted if planting is adapted
to local conditions and is compatible with the environment. The
agricultural land eligible for support shall be specified by the
Member State and shall include, in particular, arable land, grass-
land, permanent pastures and land used for perennial crops,
where farming takes place on a regular basis (Regulation (EC)
No 445/2002, Article 26).

(3) Council Regulation (EEC) No 3508/92 of 27 November 1992 estab-
lishing an Integrated Administration and Control System (IACS) for
certain Community aid schemes (OJ L 355, 5.12.1992, p. 1).

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As a consequence, afforestation of agricultural land was
45.
refocused from promoting an alternative use of agricultural land
under the Regulation (EEC) No 2080/92 to promoting the exten-
sion of woodland areas provided that it complies with Regulation
(EC) No 1257/1999. Furthermore, afforestation is now part of the
RDP, which have their own administrative, implementation and
control criteria by the Member States. Afforestation is no longer
compulsory.

Extension of woodland compatible with the environment

46.
Varying interpretations were noted in prioritising the
land to be afforested taking into account the environment. In
some countries low quality and low value land on exposed hills
was given priority in order to combat erosion (Spain), thus tak-
ing into account the environmental needs but not always com-
plying with the requirement to be agricultural land. In other
countries (Italy, Portugal), in which comparable climate condi-
tions were found with similar environmental needs, conversion of
high quality and high value agricultural land into forests was
noted. No clear operational objectives were set nor were guide-
lines issued on how to prioritise afforestation in order to be com-
patible with strategy, particularly that part relating to the envi-
ronment. In three of the five Member States visited, no systematic
checks were made prior to project approval to assess compatibil-
ity with the environment (Spain, Portugal, France) and in one
Member State (Ireland), despite being provided for in the proce-
dures, lack of prior approval was noted in one of the projects
visited.

Administrative implementation (Unclear project selection
criteria)

For most of the measures, more project applications were
47.
introduced than funds were available. Consequently, a choice had
to be made regarding which projects to finance between the
applications eligible. Notwithstanding the Guideline document
issued by the Commission (1), the audit noted a number of weak-
nesses in the project selection procedure: frequent lack of clear,
transparent and objective criteria for prioritising and selecting the
different project applications (Italy, Spain, Portugal, France). Often
the ‘first come first served’ principle was used (2). Sometimes the
selection procedures were insufficiently documented. No proper
information system was in place to record rejected or excluded
applications (Italy, Portugal).

(1) Guideline document VI/10535/99 rev.7 issued by the Commission’s
services for the implementation of the management, checks and pen-
alties concerning rural development measures under Regulation (EC)
No 1257/1999, point 3(5).

(2) In particular, having just one single call for applications instead of

recurrent ones encourages a first in approval of projects.

Uncertain verification of previous land use

48.
An important feature of the afforestation measure is that,
in order to be eligible the land should have been used for agricul-
tural purposes in the past. The previous use of the land also deter-
mines the compensation aid for loss of income, higher in case of
the more remunerative previous uses. Therefore, it is of the high-
est importance that reliable systems are in place to verify that the
information provided to justify the level of compensation is
correct (3).

49.
During the audit it was noted that, in most cases, the
information provided stems from a self-declaration by the appli-
cant. In most cases, crops allowing the highest compensation rate,
e.g. wheat, were declared as having been grown in the past. How-
ever, no valid procedures were applied by the administration to
check the veracity of this declaration. In particular, there were no
systematic checks of what crop had been declared in the previous
years in the IACS (4) system (Italy, Ireland, Spain, Portugal). Cer-
tain administrations accepted cadastral information (some of it,
out of date) as justifying the declaration (Spain, Ireland). Others
checked the validity of the self-declarations during the on the spot
visits carried out by the managing authority before the investment
was approved (Italy, Ireland). However these visits, although use-
ful, did not always allow identification of the exact crop grown on
the land in the past.

50.
In some cases a high level of compensation of income
was allocated whereas the surrounding areas were of poor qual-
ity and at the time of the visit used as grazing land for sheep (Ire-
land). In other cases debatable conditions for previous land use
were noted (Spain), the land having been abandoned for many
years.

51.
During the audit it was noted that the reference period
for justifying the classification of land as agricultural varied con-
siderably between Member States. In one Member State (Spain)
this period was set at five times the period used by other Member
States visited (10 years against two). Such a long period increases
the difficulties in verifying the use of the land in the past and casts
doubt on the reality of the agricultural land use. The audit iden-
tified debatable cases of land accepted as having had an agricul-
tural use in the past. There is a clear need for a consistent
approach and the Commission should issue guidance.

(3) See also Guideline document VI/10535/99 rev.7, point 3(7).
(4) Regulation (EEC) No 3508/92.

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Calculation of compensation for loss of income

52.
The amount per hectare to be paid as compensation for
loss of income for up to 20 years is set out in the RDP. The legal
basis (Regulation (EC) No 1257/1999) does not require Member
States to justify the calculation of these amounts in its proposed
plan, whereas for agri-environment measures this is a require-
ment. The issue has been raised by the Court in the past (1). The
audit in the Member States found that the amounts set as com-
pensation for loss of income were within the limits set by the
Regulation. However, in nearly all Member States visited no sat-
isfactory documentation was provided which justified the loss of
income set as compensation in the RDP (Italy, Ireland, Spain, Por-
tugal). This key information should be provided and examined by
the Commission.

The audit identified debatable cases of beneficiaries being
55.
paid as farmers. Cases which were accepted by the national
authority included land purchased by someone who farmed a dif-
ferent piece of land. He was considered to be a farmer due to the
activity on the other land and as a consequence received a loss of
income compensation on the land just purchased although he
himself had never farmed it before (2).

56.
The difficulties raised by the distinction between farmers
and non- farmers in the practical implementation of the measure
was known by the Commission prior to the approval of Regula-
tion (EC) No 1257/1999. In its 1997 Report (3) to Parliament and
the Council on the application of Regulation (EEC) No 2080/92
it is stated that, ‘in relation to the premium covering income loss
(…) the difference in aid depending on whether or not the recipi-
ent is a farmer practising farming as a main occupation (…) raises
difficult issues for the relevant administrations in the Member
States (…)’. However the Commission appears not to have fol-
lowed this up by giving guidance and no corrective action was
taken.

Unverifiable criteria for designation as a farmer

Weak on-the-spot checks by the national authority

53.
Another aspect of the loss of income compensation is
that the beneficiary receives a higher compensation if he is a
farmer. Criteria for qualifying as a farmer vary between Member
States and also between the conditions laid down according to
Regulations (EEC) No 2080/92 and (EC) No 1257/1999. Usually
the criteria applied rely on the working time spent on farming
and on the income received from it.

57.
Member States are required to organise on the spot visits
to check the regularity of the payments (4). Several weaknesses
were noted in this respect:

— insufficient application of a risk analysis (Italy, Spain) and
non-segregation of the duties between managing officials and
officials in charge of on-the-spot checks (Italy, Ireland),

54.
The audit found that it was very difficult to check that a
beneficiary actually was a farmer. In particular, the percentage of
time really spent on agricultural activities is usually not verifiable.
Thus, once again the status of farmer relies on a declaration by
the beneficiary himself that the criteria have been fulfilled (Italy,
Ireland, Portugal).

— insufficient documentation of the checks carried out (Italy,

Ireland, France),

— unsatisfactory verification of expenditure incurred (Ireland,

Spain, Portugal, France).

(1) Special Report No 14/2000 ‘Greening the Cap’ paragraph 47 ‘In
respect of agri-environmental measures, Member States must provide
detailed evidence to support proposed program aid rates; these spe-
cific rates are then approved by the Commission. By contrast, in
respect of afforestation measures, such information is not demanded
of national authorities; the Commission approves aid rate maxima,
within which Member States are free to set aid rates, without need for
Commission approval.’

(2) Article 31 of Regulation (EC) No 1257/1999 states that an annual pre-
mium per hectare may be paid ‘to cover loss of income resulting from
afforestation for a maximum period of 20 years for farmers or asso-
ciations thereof who worked the land before its afforestation or for
any other private law person’.

(3) Report to Parliament and the Council on the application of Regula-

tion (EEC) No 2080/92 (COM(1997) 630 of 28.11.1997).

(4) Commission Regulation (EC) No 445/2002, Article 61 (OJ L 74,

15.3.2002, p. 1).

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Other forestry measures

58.
The other forestry measures cover a wide variety of
actions and interventions and are set out in Regulation (EC)
No 1257/1999, Articles 30 and 32. They concern mainly invest-
ments in forestry but also afforestation of non-agricultural land.
Some aim at maintaining and improving the ecological stability
of forests where the protective and ecological role of these forests
are of public interest. Others aim at preventing fires and other
natural disasters and combating erosion.

Eligibility of public land

The governing Regulation provides that (1), support for
59.
forestry may be granted only for forests and areas owned by pri-
vate owners or by municipalities. Associations of these two own-
ers may also benefit from aid.

60.
Land and forest owned by public authorities other than
municipalities (e.g. State or region) are not eligible. During the
audit several managing authorities criticised this, arguing that
actions with a significant ecological value were not encouraged
(Italy, Spain). In one Member State (Ireland) a semi-public body,
which prima facie was not eligible, benefited from these subsidies.
An amendment (2) of the basic Regulation now allows for invest-
ments in public forests with the aim of improving their ecologi-
cal or social value (Article 30(1), second indent). However the
non-eligibility for afforestation of public land (with the exception
of municipalities) remains.

61.
Afforestation carried out by municipalities does not,
under the present support system, receive maintenance aid.
Municipalities claimed that they might not have sufficient finance
to ensure that seedlings and young plantations are correctly
looked after and maintained. This severely risks that projects
which have received considerable EU and national funding will
fail in subsequent years.

Large uptake of funds for restoring damage caused by natural
disasters

62.
In 1999 strong winds affected several countries includ-
ing France, Germany, Austria and Denmark. Only one Member
State (France) decided to use the option of co-financing the cost
of restoring the damage from RD funds. However, this led to two
thirds of the available resources being used on this measure alone.
In the other Member States, additional funds were made available
which did not affect the planned strategy or programming
arrangements.

(1) Article 29 of Regulation (EC) No 1257/1999, as amended by Council
Regulation (EC) No 1783/2003 (OJ L 270, 21.10.2003, p. 70).

(2) Regulation (EC) No 1783/2003.

Therefore different approaches exist to deal with the
63.
same problem. Although legal, it is doubtful whether these dif-
ferent approaches to funding windfall damages and implement-
ing the strategy are equally valid in the long term. The Commis-
sion should assess which approach better complies with the
future needs of EU forests. For example, in Denmark after the
1999 windfall a scheme was introduced combining insurance
against future windfall with Government support to re-establish
private forests.

Compliance with tendering procedures

64.
The audit showed that control procedures for public con-
tract tendering for forestry actions should be improved particu-
larly in view of the low level of competition in this area. Cases of
infringement of the tendering procedure were found in two Mem-
ber States (Italy and Ireland).

IMPACT OF AFFORESTATION OF AGRICULTURAL LAND
MEASURE

Afforestation of agricultural land is very expensive due mainly
to the compensation for loss of income over a 20-year period
(Economy)

65.
For the period 1992 to 1999, afforestation of agricultural
land under Regulation (EEC) No 2080/92 cost 1,519 billion euro
to the EU budget. For the period 2000 to 2006, a further 2,38 bil-
lion euro of the EU budget were allocated to afforestation of agri-
cultural land under Regulation (EC) No 1257/1999.

In the case of agricultural land owned by a private per-
66.
son (the most common case) the cost of financing is composed
of three elements:

(a)

the establishment costs (for preparation and planting);

(b) an annual premium per hectare to cover maintenance costs

for a period of five years;

and

(c) an annual premium per hectare to cover the loss of income
resulting from afforestation for a period of 20 years (3).

(3) The rural development plans set out the amount per hectare to be paid
as loss of income compensation for the following 20 years. The com-
pensation for loss of income varies depending on the previous use of
the afforested land, being higher in the case of the more remunerative
uses and if the beneficiary qualifies as a farmer.

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It is the loss of income compensation that incurs the
67.
most costs. For example, the EU financing granted to one affor-
estation project, audited, totalled 847 487 euro (75 % of the total
follows: establishment cost
cost) and was constituted as
137 940 euro (16 %), maintenance cost
for the five years
101 748 euro (12 %) and the costs for loss of income for 20 years
607 799 euro (72 %).

Afforestation of agricultural land was discussed during a
73.
conference on the future of Rural Development which was held
in November 2003 (1). However, the changing context and the
successive enlargement have affected priorities, which, until now,
have been insufficiently taken into account.

68.
In all projects audited, the compensation for loss of
income represented more than half of the total cost. Beneficiaries
see this compensation as a guaranteed income and it has become
the main factor in attracting applications for the measure.

69.
For the period 1992 to 1999 under Regulation (EEC)
No 2080/92 the afforestation of agricultural land was a CAP
accompanying measure aiming to promote an alternative use of
agricultural land. Since 2000 the measure became part of the
rural development support Regulation (EC) No 1257/1999 aim-
ing to promote the extension of woodland areas with due regard
to environmental impact. Considering this change in focus, the
use of most of the resources to compensate for the loss of income
over 20 years in case of private agricultural land does not appear
to be the most economic option to achieve the given objective
and should be reconsidered (see also following paragraphs).

74.
Doubts on the effectiveness of afforestation were already
raised in 1997 by the Economic and Social Committee (2) which
wrote: ‘another question which needs to be addressed is whether
it would be more effective in the long run to use EU resources for
promoting the marketing of timber, including its use as an energy
source, rather than provide direct assistance for afforestation. In
particular, EU funds should be allocated to research, training,
information, advice and support for rural areas so as to enable the
forestry sector to operate and compete more effectively in the
longer term. EU assistance for afforestation should focus on
improving the quality of forests through such measures as ero-
sion prevention, conservation of groundwater, protection from
fire damage or the re-afforestation of areas devastated by fire.
Funding provided under the Union’s structural and regional policy
programmes should be used more widely to support the applica-
tion of economical and environmentally-friendly practices in for-
estry and the forest industry.’ Many of the recommendations were
taken into account in the Regulation (EC) No 1257/1999, how-
ever the core expenditure still relates to afforestation.

Degree of afforestation is not very significant (Effectiveness)

According to the official final evaluation of Regulation
70.
(EEC) No 2080/92, afforestation was made at a cost of 1,519 bil-
lion euro. In this evaluation it is indicated that the plantations cre-
ated represented 0,92 % (1 041 589 hectares) of the European
forested area of 1998. The evaluator concluded that ‘overall this
contribution does not seem to be very significant’. The conse-
quent impact on reducing agricultural production, which was the
objective of this regulation, was considered to be quite limited.

71.
Regulation (EC) No 1257/1999 allocated a further
2,38 billion euro to the afforestation of agricultural land over the
period 2000 to 2006. The objective became the extension of
woodland areas. However, the mechanism remained largely
unchanged. Therefore it is likely that the contribution to the
increase in forestry resources will not be more significant under
Regulation (EC) No 1257/1999 than that obtained under Regu-
lation (EEC) No 2080/92.

Result could be better achieved (Efficiency)

75.
Regarding the objective of increase of woodland areas
(see paragraph 8), there are different kind of land which might be
afforested. The Regulation stipulates that where support is granted
for afforestation of agricultural land owned by public authorities,
it shall cover only the cost of establishment (3), i.e. no loss of
income compensation or maintenance are to be paid which is
indeed the case for afforestation of private land. Thus theoreti-
cally it could be argued that if the aim is to extend woodland,
focussing this action on public land would be much more effi-
cient. It would lead to a significant economy (no payment of loss
of income compensation), thus, with the same funding, allowing
for a considerably bigger area to be afforested.

In 1995, the accession of Finland, Sweden and Austria
72.
increased the forested area in the EU by around 57 million hect-
ares, from 79 million to 136 million hectares (+ 72 %). Enlarge-
ment in 2004 will lead to another increase of the EU forests of
around 24 million hectares from 136 million to 160 million
hectares.

(1) The Conference concluded on the opportunity of ‘refocusing of affor-
estation measures to strengthen multi-functionality and sustainability
(e.g. risk management, improve environmental benefits and reduce
fire risks)’.

(2) Opinion of the Economic and Social Committee on ‘The situation and
problems of forestry in the European Union and potential for devel-
oping forestry policies’.

(3) Article 31 of Regulation (EC) No 1257/1999.

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It has a very dispersed impact

76.
Furthermore, the impact of afforestation has been very
dispersed due, in part, to its voluntary nature. Some farmers apply
the measures, others do not. As a result, there is no coordinated
strategy and afforestation projects are approved piecemeal with
the consequence that there is often no appreciable impact on the
region or locality.

IMPACT OF OTHER FORESTRY MEASURES

The Commission bases its forestry support on there
81.
being national or subnational forestry programmes or equivalent
instruments but these programmes are rarely available and, if so,
their quality is very varied (see paragraphs 23 to 26).

82.
When using equivalent instruments, usually rural devel-
opment plans, the qualitative assessment of the forestry measures
suffers from time constraints and availability of staff. The quali-
tative assessment also suffers from lack of information in the
Commission on forestry action by Member States level (see para-
graphs 27 to 36).

77.
Various Member States (Denmark, Italy, Portugal and
Greece) indicated that the effective implementation of an EU-wide
forestry policy was affected by the list of actions included in
Articles 30 and 32 which they claim looks more like a framework
than targeted actions.

— The Commission and Member States should, in partnership,
ensure the development of strategic planning documents
which can be used as an effective tool for the planning of for-
estry measures and aid.

78.
Measures under Article 32 focus more on environmental
benefits. However, the take-up has been extremely low, appar-
ently due to the fact that the maximum premium allowed is not
considered attractive enough by potential beneficiaries (all Mem-
ber States). The Commission should study this phenomenon with
a view to ensuring that this aspect of the strategy is operating as
intended.

CONCLUSION AND RECOMMENDATIONS

79.
The EU has been supporting forestry action since 1964
although no provision is made for a common forestry policy.
Since 2000 financial support is granted as part of the EU rural
development regulation but is based on international political
commitments. The concepts in these commitments (sustainabil-
ity and multi-functionality) being vague, the additional EU value
of its support is difficult to assess. It is not helped by the fact that
Member States define ‘forest’ differently (see paragraphs 14 to 18).

— The Commission should simplify and make more coherent
the legal basis of EU forestry action and work towards a com-
mon understanding and interpretation of ‘forest’.

80.
The shared management for implementing the forest
strategy is not clear. Due to this lack of clarity neither the Mem-
ber State nor the Commission feel responsible for assessing
whether a forestry project contributed to the achievement of the
EU forestry strategy (see paragraphs 19 to 22).

— Clarity should be sought in attributing responsibilities to the
Member States and the Commission for the implementation
of the EU forestry strategy when EU-financed forestry mea-
sures are used.

— The Commission should ensure that the qualitative assess-
ment of the forestry part in each rural development plan is
appropriate.

83.
Afforestation contracts established before 2000 and run-
ning for up to 20 years have taken up considerable amounts of
funds which had been planned to be used for the implementation
of afforestation measures as part of rural development. Further-
more, a seven-year programming period is ill-fitted to the longer
planning required for forest actions, of up to 20 years (see para-
graphs 37 to 39).

84.
The use of varying financing arrangements (a mix of
EAGGF Guidance and Guarantee funding) has led to a complex
delivery system of rural development policy (see paragraphs 40
to 42).

— The Commission should examine the financing arrange-

ments with a view to simplification.

85.
Examination of a selection of projects revealed a number
of weaknesses. There were varying interpretations in prioritising
the land to be afforested. When project applications exceeded
available funds, there were no clear criteria for project selection
(ranking). Furthermore, uncertainty existed as to the previous
land use and whether the beneficiary was a farmer. There were
also instances of weak and insufficient control systems operated
by the Member States (see paragraphs 43 to 58 and 62 to 64).

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— The Commission should, together with the Member States,
examine the system of application and approval of projects
in order to ensure that the most viable and worthy proposals
for assistance within the terms of the EU and national strat-
egies receive aid.

— The Commission should review current checks by Member
States with a view to reinforcing administrative and control
systems and to take appropriate action in case of non
compliance.

86.
Afforestation carried out by municipalities (local authori-
ties) does not, under the present support system, receive mainte-
nance aid. They might not have sufficient finance to ensure that
seedlings and young plantations are correctly looked after (main-
tenance) this severely risks that projects which have received con-
siderable EU and national funding will fail in subsequent years
(see paragraphs 59 to 61).

— The Commission should examine the circumstances sur-
rounding the granting of aid for afforestation to avoid that

aid is granted in circumstances where the projects cannot be
sustained. If necessary it should propose changes to the cur-
rent basis for granting aid.

87.
The impact of the measure for afforestation of agricul-
tural land has been low. The degree of afforestation is not signifi-
cant and the result could be obtained more cheaply. The projects
financed lead to dispersed and uncoordinated implementation in
rural areas. Overall forestry action is not sufficiently targeted (see
paragraphs 65 to 78).

— The Commission should reconsider how the afforestation
measure may be better targeted and at a lower cost to the
budget, taking into account the changing public needs and
the fact that the emphasis of Community legislation is now
on environmental benefits.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 14 October 2004.

For the Court of Auditors
Juan Manuel FABRA VALLÉS
President

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ANNEX I

COMMUNITY FORESTRY RELATED ACTIONS IN THE PERIOD 1964 TO 1999

1964 to 1988:

Until 1988, the European Community took certain measures to develop the forestry sector, which were always directly
linked to the common agricultural policy, in particular the policy on improving agricultural structures. The measures con-
cerned harmonisation of legislation, the development of forests and forestry, the protection of forests against atmospheric
pollution and fires and forestry research.

1988 to 1992:

The Community adopted a more coherent approach to its forestry projects. In September 1988 the Commission presented
to the Council a Community forestry action programme. This was adopted by the Council in 1989 and focused on five main
areas:

— afforestation of agricultural land,

— development and optimum use of forests in rural areas,

— cork,

— forest protection,

— accompanying measures.

1992 to 1999:

In 1992 Community measures in the forestry sector entered a more ambitious phase. Decisions in two main areas funda-
mentally modified the 1988 action programme:

— measures to protect forests from atmospheric pollution and fires were strengthened (1),

— forestry measures in agriculture were adopted (2) as part of the measures accompanying the reform of the CAP to sup-

port afforestation of agricultural land.

Since 1992, other Community measures in the forestry sector have included the European Forestry Information and Com-
munication System (EFICS) (3) and forestry research co-financed under the EU’s research and development programmes in
the field of agricultural and environmental research.

During the 1990s, the European forestry debate focused mainly on defining and implementing the principles of sustainable for-
estry. The concept of sustainable forest management was defined in 1993 by the pan-European ministerial conference in Helsinki
on the protection of forests. Sustainable forest management consists of a balanced combination of ecological, economic, social and
cultural activities. The debate on the EU forestry strategy was initiated by, amongst others, the report from the European Parlia-
ment (4), the Communication from the Commission on a forestry strategy for the European Union (5) and the Council Resolution
on a forestry strategy for the European Union (6). The debate reaffirmed, in particular, the principles that forests have a multi-
functional role that the rules of the market economy should apply to them and that, in accordance with subsidiarity, the strategy
should be implemented at the lowest possible level. Although the subsidiarity principle is to be applied and the forestry strategy
seeks to improve coordination within the Community, concrete proposals on improving cooperation are lacking.

(1) Regulation (EEC) No 2157/92 and Regulation (EEC) No 2158/92 of 23 July 1992.
(2) Regulation (EEC) No 2080/92 of 30 July 1992.
(3) Regulation (EC) No 400/94.
(4) A4-0414/96; PE 213.578/fin (the Thomas Report).
(5) COM(1998) 649 final.
(6) Council Resolution of 15 December 1998.

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ANNEX II

FOREST DEFINITION IN THE MEMBER STATES

Definition of forest: main criteria and threshold used by country according to the European Forestry Information and Com-
munication System (EFICS)

Country

Austria

Belgium (Walloon region)

Belgium (Flemish region)

Denmark

Finland

France

Germany

Greece

Ireland

Italy

Luxembourg

Portugal

Spain

Sweden

Netherlands

United Kingdom

Width

10 m

9 m

25 m

20 m

15 m

10 m

30 m

40 m

20 m

none

15 m

20 m

30 m

50 m

Minimum

Crown cover

Area

Potential
production

Height in
mature age

30 %

20 %

0,05 ha

0,1 ha

0,5 ha

0,5 ha

0,25 ha

1 m3/ha/year

6 m

10 % or 500 stems/ha with
cbh < 24,5 cm

10 %

20 %

20 %

none

10 %

30 %

20 %

20 %

0,05 ha

0,1 ha

0,5 ha

0,5 ha

0,2 ha

none

0,2 ha

0,25 ha

0,25 ha

0,5 ha

2 ha

4 m3/ha/year
(conifer)

2 m3/ha/year
(broadleaf)

1 m3/ha/year

Sources: EC 1997 — Study on European Forestry Information and Communication System (EFICS).
Reports on forestry inventory and survey systems. European Commission, Luxembourg.

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THE COMMISSION’S REPLIES

SUMMARY

II.
The Commission welcomes this report whose timely pre-
sentation will allow appropriate consideration to be taken in the
light of the forthcoming review of the EU forest strategy and the
future rural development framework (COM(2004) 490 final).

With regard to the principle of subsidiarity the Commission con-
siders that a number of implementation decisions remain at the
discretion of the Member States, as it is expressed in various parts
of the Commission’s reply to this report.

V.
Sustainable forest management is based on the balanced
integration of economic, social and environmental objectives
weighing the various issues at stake.

The Commission considers that the quality of monitoring can be
assured without a common definition of forest. The outcome of
the policy can be monitored at Member State level and subse-
quently at EU level.

VI.
The link between the forestry strategy and the individual
projects co-financed by the EAGGF funds is ensured via the rural
development programmes (RDPs). The Commission verifies that
programmes are in line with the forestry strategy. The national or
regional authorities approve the individual projects on basis of
the RDP.

In the proposal for the future rural development framework the
Commission proposes a clearer demarcation of responsibilities
between the Commission and the Member States.

The contribution to the achievement of the EU forestry strategy
is assessed for each rural development programme in the evalu-
ation reports prepared by the Member States and summarised by
the Commission. The Commission proposed in July 2004
(COM(2004) 490 final) to reinforce the evaluation requirements
for the future rural development framework.

European countries have developed a common approach
VII.
to national forest programmes in the context of the Ministerial
Conferences on the protection of forest in Europe (MCPFE) and
significant progress has been made in drawing up programmes.
However, when such programmes are not available, the accep-
tance of rural development programmes (RDPs) and operational
programmes (OPs) as equivalent seems to be a justified approach
in order not to hamper the implementation of the forestry mea-
sures in the programmes.

In order to ensure the quality of the approved programmes an
in-depth analysis was made in collaboration with all associated
Commission services which included intensive contacts with the
Member States. This process took time.

Long-term contracts are necessary to ensure sufficient
VIII.
uptake of measures like afforestation of agricultural land. By their
nature they affect several programming periods.

As for as the duration of the contracts and the amounts of aid are
concerned, the proposals for the rural development framework
for the post 2006 period contain a number of modifications to
mitigate these problems, notably by reducing the duration and
the ceiling for compensation of loss of income.

IX.
The Commission is aware of the fact that the system is
complex and has consequently already introduced simplifications
and proposed further substantial steps for the post 2006 rural
development framework. One of the simplifications is the intro-
duction of a single Fund for rural development.

X. — The implementation of the forestry measures is guided
by the principle of subsidiarity. The type of land to be
afforested is largely a matter for the Member States to
decide on basis of the national and regional situation
and need. The proposal for the post 2006 rural devel-
opment policy contains several elements for improved
environmental targeting in the selection of land for
afforestation.

— Compatibility with the environment is a legal require-
ment. Member States implement this obligation on
basis of the regional conditions.

— Most programmes include selection criteria, but it is
recognised that in some cases there may be a need to
improve the definition of these.

The Commission audit services verify the selection sys-
tems on the basis of guidelines it has issued. Non-
transparency or non-objectivity in the project selection
entails recommendations addressed to the Member
State and may also lead to financial corrections within
the clearance of accounts decisions.

— The definitions of ‘agricultural land’ and a ‘farmer’ are
within the competence of the Member States and must
be indicated in the national or regional programmes.
Verifications must be ensured by the Member States
and in accordance with guidelines issued by the
Commission.

The Commission recognises that there is scope for
improvements and will for the next programming
period review requirements and provide more guid-
ance to Member States for the issues mentioned by the
Court.

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— The Commission has also identified weaknesses simi-
lar to those mentioned by the Court and has imposed
financial corrections. Regulatory steps have been
undertaken to improve the verification of claims.

— In their work, the Commission audit services pay par-
ticular attention to the respect of proper control pro-
cedures for public contract tendering for all measures
allowing for aid under rural development to be granted
to public bodies.

XI.
There is a certain responsibility of municipalities to main-
tain their own forests. The authorities approving projects should
require sufficient evidence from the municipalities that the main-
tenance work is ensured.

XII.
A long-term compensation is necessary for afforestation
of agricultural land to be attractive to farmers. Nevertheless, the
proposals for post 2006 rural development framework provide to
limit the compensation for income loss to 10 years. On top of the
overall impact account should be taken on the significant effect
in certain specific regions.

Sustainability is already an overarching principle of
XIII.
Council Regulation (EC) No 1257/1999. The proposals for post
2006 rural development framework further meet this recommen-
dation by targeting afforestation more explicitly on environmen-
tal objectives and by requiring designation of areas suitable for
(and thus limited to) afforestation for environmental reasons.

INTRODUCTION

4.
The Council Resolution on an EU forestry strategy pro-
vided a reference framework for forest-related activities in the EU.
It is important to note that the strategy confirmed the subsidiar-
ity principle applied in the forestry area.

With regard to the principle of subsidiarity the Commis-
5.
sion considers that a number of implementation decisions remain
at the discretion of the Member States, as it is expressed in vari-
ous parts of the Commission’s reply to this report.

10.
The rural development Regulation is based on the prin-
ciple of subsidiarity and it is up to the Member States to draw up
their rural development programmes, considering national and
regional priorities.

11.
The Commission carried out an evaluation of Council
Regulation (EEC) No 2080/92 in 2001 and clearer guidelines for
monitoring measures were introduced by Regulation (EC) No
1257/1999. With this regulation the requirement for an ex ante
evaluation of rural development programmes (RDPs) has been
introduced, as well as a thorough mid-term evaluation of these,
which would lead, if necessary, to an adaptation of the pro-
grammes concerned.

THE EU STRATEGY AND ITS IMPLEMENTATION

15.
The concept of sustainability is consistent with the notion
introduced and defined by the ‘Bruntland Report’ to the World
Commission on Environment and Development in 1987, which
now applies to all sectors of the economy and sustainable devel-
opment strategies developed worldwide.

Sustainable forest management is based on the balanced integra-
tion of economic, social and environmental objectives. There may
be conflicts between the three types of objectives, but these con-
flicts should be seen as healthy ones, and they should give rise to
cooperation between different interest groups and a constructive
search for the best solution. The progress achieved in the estab-
lishment of criteria and indicators of sustainable forest manage-
ment as well as in the use of voluntary schemes to certify sustain-
able managed forests in the EU are indicative of the progress
achieved in the last years towards sustainable forest management.

16.
Sustainable forest management requires a participatory
approach and involvement of all relevant stakeholders in order to
build consensus and to find satisfactory approaches. Countries are
developing appropriate mechanisms and structures for the par-
ticipation of stakeholders in forest policy formulation and imple-
mentation processes, notably in the context of their national for-
est programmes.

In Member States that for socio-economic reasons in the past put
more emphasis on the economic development of the sector, are
gradually considering and developing strategies towards diversi-
fication and incorporating environmental and social objectives.
Sustainability and sustainable development do not define a static
state of stability, but rather a dynamic process of change with the
goal of continuous improvement.

17.
Forest definition lies within the competence of the Mem-
ber States. The differences respond to historical, social, legal and
ecological conditions in the countries. However, for statistical
purposes the Member States adjust the data according to a com-
mon method developed within the context of
the Joint
FAO/UNECE/Eurostat/ITTO questionnaire for collecting forest
statistics. In this way, the forest data become comparable both
with regard to forest area and stand volume.

18.
The Commission considers that the quality of monitor-
ing can be assured without a common definition of forest. The
outcome of the policy can be monitored at Member State level
against the objectives set in the RDPs, allowing subsequently an
assessment at EU level (eg. ex post evaluations). As indicated in
paragraph 17, forest-related data are made comparable between
countries.

Regular reporting by Member States, based on commonly agreed
monitoring indicators, enables the measurement of progress in
the implementation in the RDPs.

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The shared management and the Commission responsi-
19.
bilities for the implementation of the EU forestry strategy were
established by the Council in its Resolution of 15 December 1998
on a forestry strategy for the European Union. It should be noted
that evaluation is an integral part of the programme management
and assesses the degree of achievement of the programme
objectives.

At the beginning of the present programming period, only few
Member States had developed national forestry programmes, but
progress has been achieved over the last years. Member States are
developing to a different degree mechanisms and approaches to
the forest policy making process that are consistent with the prin-
ciples of national forest programmes.

20.
Being part of the CAP the forestry measures are imple-
mented under shared management and the Commission thereby
considers that a number of implementation decisions remain at
the discretion of the Member States. The Commission has to
assess the conformity of programmes with the Community objec-
tives and legislation. The implementation of the approved pro-
grammes is delegated to Member States. This includes all contacts
with the beneficiary from the assessment of the project to the
final payment. The Commission supervises the implementation of
programmes via monitoring and evaluation. It audits the confor-
mity of the implementation with the approved programmes and
the relevant Community rules in order to assess any possible risk
to the Funds and to assume final responsibility for the execution
of the Community budget.

If the Commission audits reveal deficiencies in Member States’
management and control systems and/or non-conformity with
Community rules in project implementation, financial corrections
may be proposed within the Commission clearance of account
procedure.

21 to 22.
The forestry strategy provides a reference frame-
work for forestry-related actions in the EU. Measures included in
programmes shall be in line with EU objectives, hereunder the
forestry strategy. It is part of the rural development programmes
approval to confirm this. When selecting individual projects, the
competent national or regional authorities shall ensure that
projects selected are in conformity with the programme. See also
reply to point 20.

The proposal for the post 2006 rural development framework
contains a clearer demarcation of responsibilities between the
Commission and Member States. As to the implementation of EU
strategies (including the forestry strategy), the proposal provides
for the drawing up of an EU strategy plan for rural development
to be adopted by the Council and the European Parliament.

The contribution to the achievement of the EU forestry strategy
is assessed for each rural development programme in the evalu-
ation reports prepared by the Member States and summarised by
the Commission. The Commission proposed in July 2004
(COM(2004) 490 final) to reinforce the evaluation requirements
for the future rural development framework.

25 and 26.
The concept of national forest programmes has
evolved under a variety of intergovernmental processes over the
last 20 years. Today, the term has become an important concept
with a broad scope for achieving sustainable forest management.
At international level there is agreement on the general principles
and dimensions of national forest programmes. However, there is
no commonly agreed definition. In response to this need, the
European countries have developed a common approach to
national forest programmes in the context of the Ministerial Con-
ference on the Protection of Forest in Europe (MCPFE).

27.
In the absence of national forest plans in some Member
States in 2000, it seemed justified to accept RDPs or OPs, a pos-
sibility which was provided for in Regulation (EC) No 1257/1999
(Article 29). When necessary, during the ex ante assessment of
programmes the Commission requested additional information
concerning the link between the proposed forestry measures and
the fulfilment of the undertakings given by the Community and
the Member States at international level.

Rural development as part of the common agricultural
28.
policy, with a corresponding legal basis in the Treaty of course,
has by nature a focus on the agricultural sector. Forestry is nev-
ertheless considered as an integral and essential part of the rural
economy and rural development, which is reflected by the for-
estry chapter in Regulation (EC) No 1257/1999. Member States
can set their forestry related objectives in the rural development
programmes.

The essential contribution of forestry to rural development is to
be reinforced according to the proposals for the post 2006 rural
development framework: forestry is particularly addressed under
axis I and II; several forestry measures are to be better articulated
and targeted, for example addressing the importance of forests for
the implementation of Natura 2000.

29 and 30.
The Commission acknowledges the fact that the
transition between two programming periods creates a heavy
workload on its services. This is due to the fact that the Commis-
sion examines all programmes submitted by the Member States
before approving them.

NATIONAL FOREST PROGRAMMES (NFP) OR EQUIVALENT
INSTRUMENTS

24.
The COST (cooperation on science and technology) study
mentioned by the Court was a preparatory stocktaking of the
situation in the countries participating in the COST action in
order to launch the discussion.

Forestry measures form an integral part of the rural
31.
development programmes (see also reply paragraph 28). The
lengthy duration of the approval process is an indication of the
time and efforts put in by the Commission in order to have cor-
rect programmes. This includes intensive contacts with the Mem-
ber State during this process.

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The involvement of many other units/DGs is linked to
32.
the fact that rural development measures (including forestry mea-
sures) not only touch agricultural issues but are placed within a
wider rural context and can have an economic, social and envi-
ronmental impact. Therefore, the approval of the measures is
sought to be based on an as wide as possible mutual agreement
within the Commission services, while DG AGRI remains the lead
service for the afforestation of agricultural land.

33.
In March 2002 the Commission established an inter-
service group on forestry to strengthen the coordination of for-
estry issues among the services responsible for the different Com-
munity policies. The inter-service group, chaired by DG
Agriculture, has brought together desk officers and managers
from 10 different directorates-general.

the

linkage

between

proposed measures

The rural development programmes provide information
34.
on
and
national/subnational forest programmes or equivalent instru-
ments (Regulation (EC) No 817/2004 Annex II, point 9(3)(X)) in
order to allow the Commission to check their coherence. In addi-
tion, Regulation (EC) No 1257/1999 obliges each Member State
to submit, as part of the rural development programme, the infor-
mation necessary to allow a check of compatibility with compe-
tition rules.

35.
It is true that no specific inventory of State aid decisions
relating to forestry is made. However all decisions taken by the
Commission in the field of State aid, and therefore also decisions
taken on State aid in the forestry sector, are published in full on
the website of the Commission Secretariat-General. In addition, a
short resumé of each State aid measure for forestry is published
in the OJ ‘C’ series.

36.
The Commission proposed to select for funding the
project within the Quality of Life specific programme under the
fifth research framework programme (1998 to 2002). The aim of
the project is to evaluate the effects of different financial instru-
ments in the forest sector. The Commission attaches importance
to the results of the project to learn from best practice and to
draw conclusions. However, the project will not provide a com-
plete overview of financial instruments, as it is limited in scope to
some specific countries.

The Commission is also currently analysing mid-term evaluations
of rural development programmes under Regulation (EC) No
1257/1999, which will include the evaluation of the forestry
measures in a number of Member States.

LARGE UPTAKE OF FUNDS FROM PREVIOUS PROGRAMMING
PERIOD

37 to 39.
Where

Continuity has to be ensured in rural development.
(EC)

(EEC) No 2080/92 and

the Regulations

No 1257/1999 provide for a long-term (up to 20 years) compen-
sation for income losses by nature, this affects several program-
ming periods.

The longer-term compensation for income foregone is a core ele-
ment to make afforestation of (more or less) productive agricul-
tural land attractive for farmers; the only alternatives would be a
capitalised one-off aid or an (eventually higher payment) over a
shorter period with all resulting problems for the control of the
commitment over a longer period.

However, with its rural development proposals for the post 2006
period (COM(2004) 490 final) the Commission envisages to miti-
gate the problem by granting income loss compensation for only
up to 10 years and by reducing the ceiling for compensation for
loss of income.

As far as environmental targeting of afforestation is concerned, it
will be reinforced in the post 2006 rural development proposal.
Recital 37 of the proposal names, in the first place, the protec-
tion of the environment as objective of afforestation; and ‘any first
afforestation should be adapted to local conditions and compat-
ible with the environment and enhance biodiversity’. Moreover,
Member States will have to designate areas suitable for afforesta-
tion for environmental reasons (Article 47(5)).

A COMPLEX SYSTEM

40.
The Commission also finds that the current financing
arrangements are complex and should be simplified. In the papers
presented at the Salzburg conference by the Commission, this
issue was addressed. It has been followed-up in the Commission’s
proposal for the post 2006 rural development framework which
provides for a single fund with a single, significantly simplified
delivery system.

41.
The regulatory framework was modified in the spirit of
simplification and of adherence to the real situation and to the
best practices in use. The application of standard unit costs in for-
estry is justified by the specific nature of the projects supported.
It is also a measurable method (the national authorities are
required to establish a priori of a pricing system based on objec-
tive criteria) that provides for an effective simplification of the
administrative procedures. Concerning the sanction system for
forestry measures other than afforestation of agricultural land, as
these are not generally linked to area measurements, sanctions
based on IACS rules are not appropriate. The sanctions to be
applied are therefore those set out in Article 64 of Regulation (EC)
No 445/2002, replaced by Article 73 of Regulation (EC) No
817/2004, which reads as follows: ‘Member States shall lay down
the rules on penalties applicable to infringements of the provi-
sions of this Regulation and shall take all measures necessary to
ensure that they are implemented. The penalties provided for
must be effective, proportionate and dissuasive’. This element is
taken into account in the Commission’s audits.

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The procedures for applications are basically established
42.
by the Member States according to their administrative organisa-
tion. The number of documents required to apply for aid under a
measure depends largely on the eligibility criteria set by the pro-
gramming document and on the national requirement in terms of
supporting documentation. The assistance of external consultants
can improve the quality of projects.

IMPLEMENTATION OF FORESTRY MEASURES

46.
Afforestation strategies are defined by the Member States
either at national or at regional level. The Member States indicate
in their rural development programmes the type of land to be
afforested, the specific priorities to be addressed and the compat-
ibility with the environment of the proposed actions. The Com-
mission services examine these questions during the approval
procedure for rural development programmes.

Where systematic checks on compatibility with the environment
were left aside, the Commission has already conducted legal pro-
ceedings against Member States and will not hesitate to continue
the same approach if need be.

A significant improvement of the environmental targeting and
compatibility can be expected from the rural development pro-
posals for post 2006 period. Both aspects are significantly rein-
forced in a way that Member States have to consider clearly envi-
ronmental aspects as

(a)

to the design of the measure, and

(b)

to the implementation of the measure.

The essential tool to verify this ex post is the reinforced monitor-
ing and assessment of the results achieved also in terms of envi-
ronmental delivery.

The DG AGRI audit services apply, consistently, the
47.
approach indicated in the Guideline document provided to Mem-
ber States to all rural development measures implying selections
among applications eligible for financing due to limited funds
available. When, during audits, findings are made in respect of
non-transparency or non-objectivity of the selection systems, rec-
ommendations are made and financial corrections may be
imposed.

Generally, the rural development programmes do include selec-
tion criteria, but the Commission recognises that in some cases
there is scope for improvements. The issue of lack of recording
of
to Regulation (EEC)
No 2080/92. For the present programming period this has been
improved.

rejected projects mainly relates

The national/regional definition of ‘agricultural

48.
must be part of the rural development programme.

land’

DG Agriculture has recommended cross-checks with the
49.
IACS system, or when appropriate with another reliable database,
and has made efforts in order to ensure that this recommenda-
tion is respected.

50 and 51.
The verification of the previous agricultural use
and intensity is the competence of the Member States. The only
Community provision is in Article 32 of Regulation (EC)
No 817/2004 (shall be specified by the Member State where
farming takes place on a regular basis). The Commission has the
intention for the next programming period to specify the condi-
tions in the implementing rules. In addition, a research project is
to be launched about harmonised and appropriate methods to
calculate area-related premiums, i.e. including the compensation
of income loss (level must be determined by real previous use)
and maintenance cost. Moreover, the designation of areas suitable
for afforestation (RD-proposal post-2006, see paragraph 38) will
contribute to limit possible abuses.

For the next programming period the Commission
52.
intends to review the calculation of payment levels (see also para-
graphs 50 and 51).

53.
Given these great varieties in tax systems, property rights
etc. among the Member States a definition of a ‘farmer’ at Com-
munity level is difficult. In the absence of a Community defini-
tion the Commission accepts the national definitions of a ‘farmer’;
its national/regional definition must be part of the rural develop-
ment programme. The verification of this status, however, is the
responsibility of the Member State. The objective verification is
difficult. For the next programming period more Community
guidance is envisaged (e.g. requirement for proof via official docu-
ments, e.g. being registered, tax declaration, applications for direct
payments).

54.
The definition of the status of ‘farmer’ for the purposes
of afforestation measures is to be provided by the Member State
according to detailed criteria (Article 33 of Regulation (EC) No
817/2004). The Member State is required to define appropriate
control criteria to verify the compliance with the given definition.
Mostly, this is checked on the basis of official documents (e.g.
income declarations, payment to the health/security system of
farmer categories, registration in the farmers’ register. See also the
reply to paragraph 53).

55.
The important starting point for the Commission is that
the definitions of the eligibility criteria set in Member States’ pro-
grammes meet the objectives of the Regulation. Attempts by indi-
viduals to evade the provisions cannot be avoided completely.
Member States shall duly check applications against this possibil-
ity and in case of doubts undertake the appropriate actions. When
the Commission services during audits in Member States find
weaknesses in the control systems, they are followed up by rec-
in imposing financial
ommendations and may also result
corrections.

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The Commission has applied financial corrections on the
57.
basis of these and other findings and addressed recommendations
to the Member States audited and found not to be in conformity.

Storms and their destructive power cannot be influenced by the
techniques applied. However, as to other types of natural disas-
ters, floods and forest fires, the Commission pursues a series of
initiatives to reduce the risk and to mitigate the impact.

The shortcoming ‘unsatisfactory verification of realised expendi-
ture’ was addressed with the introduction of the derogation for
standard costs in forestry by Regulation (EC) No 963/2003 when
appropriate standard cost systems were found to be in place.

60.
The objective of afforestation of agricultural land under
Regulation (EEC) No 2080/92 was both to reduce the agricultural
production potential and to increase forest production. In order
to meet both objectives with a limited overall budget for rural
development a certain targeting on private owners and munici-
palities seemed appropriate. It should be noted that Regulation
(EC) No 1783/2003 opened the measure to improve the ecologi-
cal and social value of forest owned by public authorities. The
afforestation of agricultural land owned by public authorities
would be eligible according to the proposals for post 2006 rural
development proposal.

In the case of Ireland, the Commission considered that amounts
paid to the organisation concerned were ineligible, and has recov-
ered all amounts paid under the clearance of accounts procedure.
Since the Commission began this action (recently confirmed by
the European Court of Justice) the Irish authorities have not paid
any further EU money to the organisation.

61.
Concerning targeting, see reply to point 60. There is a
certain responsibility of municipalities to maintain their own for-
ests. The authorities approving projects should require sufficient
evidence from the municipalities that the maintenance work is
ensured.

62.
Such major unforeseen events have a huge impact on
forestry resources and must lead to an appropriate review and,
where necessary, to an adaptation of the strategy. Member States
may choose different approaches to tackle these unexpected
problems.

to

reallocate

authorities

Given the gravity of the damages in France, the choice of the
national
towards
restoration/prevention seems to be justified. This can be entirely
supported from an environmental point of view, as in many cases
the restoration activities were used as an occasion for conversion
to more ecologically oriented forestry, which corresponds with
the elements of the forestry strategy regarding biodiversity.

funds

The Commission, as part of the Luxembourg compromise of the
Presidency in June 2003 on the CAP reform, committed itself to
analyse measures related to crisis and risk management in agri-
culture. In the framework of this exercise consideration will be
given to aspects of risk management related to natural disasters
in forestry.

In their work, the Commission audit services pay particu-
64.
lar attention to the respect of proper control procedures for pub-
lic contract tendering for all measures allowing for aid under rural
development to be granted to public bodies.

IMPACT OF AFFORESTATION OF AGRICULTURAL LAND
MEASURE

67.
The example mentioned by the Court, underlines the
importance of income loss compensation in the framework of the
afforestation of agricultural land, due to the need for a longer
period of compensation payments to make the measure attractive.

68.
The loss of income over a considerable number of years
from the land planted with forest is in fact the biggest cost to the
farmer entering the scheme.

69.
Afforestation does indeed appear to be expensive but it
can be justified as a long term investment in ecological stability
and renewable natural resources.

See answer to paragraph 70.

70.
It is worth noting that the evaluation report of Regula-
tion (EEC) No 2080/92 indicates also that concerning the contri-
bution of the regulation to rural development ‘Overall this con-
tribution appears to us to be significant and positive, and
Regulation (EEC) No 2080/92 has fully played its role accompa-
nying the reform of the common agricultural policy’. On top of
the overall impact account should be taken on the significant
effect in certain specific regions (like the planting of 100 000 hect-
ares of cork oaks in Spain and Portugal.

71.
A recent survey carried out by the Commission services
in the context of the preparation of the implementation report of
forestry measures
the EU Forestry Strategy indicates that
co-financed under Regulation (EC) No 1257/1999 have led to
positive results in terms of contributing to enhance forestry
resources.

There are several forestry establishment and management
63.
techniques that can, to a limited extent, reduce the degree of
windfalls by increasing the stability of forests (e.g. as regards the
plantation in the margins or the mix of species and ages). Such
investments are eligible under rural development. However,
actions of this type can only have limited impact.

Moreover, the benefits of the extension of woodland areas are not
limited to the increase of forest resources. Extension of woodland
areas promotes the diversification of activities in rural areas, as
well as the protection of the environment. This measure may have
very positive effects in some specific regions or areas.

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In its working papers distributed at the Salzburg confer-
73.
ence, the Commission services raised the question of explicitly
retargeting the afforestation policy more towards environmental
objectives.

In some regions and countries the measure is also conditioned by
the very small average size of farms and the need to not discrimi-
nate small farmers.

The conclusions of the Salzburg conference have been used as an
input for the extended impact assessment on rural development
which accompanied the Commission’s proposal for a new regu-
lation for the next programming period. The legislative propos-
als themselves reflect this retargeting (recital 37, Article 47(5)
with requirement to designate areas suitable for afforestation for
environmental reasons).

In terms of the impact of the measure, it should be noted that
programmes are still half way in their implementation, so it is dif-
ficult to draw conclusions at this stage. The latest reports pro-
vided by the Member States show in some countries a gradual
increase in uptake of the measure during the most recent years,
for example in Spain.

74.
The proposals for the post 2006 rural development
framework provide for a better targeting and articulation of the
entire bundle of forestry measures. The current Article 32 of
Council Regulation (EC) No 1257/1999 is to be split. Investment
aids are better specified.

In addition, the co-financing levels are to be reduced for affores-
tation (income loss) and for the successors of Article 32 to be
increased.

Furthermore, the envisaged EU strategy guidelines will articulate
the entire range of objectives for the forestry sector.

75.
The objective to enhance forest resources, also with a
reinforced targeting on environmental issues as proposed for the
period post-2006, cannot be completely isolated from the gen-
eral objective of rural development policy to accompany the
Common Agricultural Policy;
thus the farming community
remains the main target group of this policy. The importance of
afforestation of agricultural land reflects this.

Nevertheless, the proposals for the post-2006 rural development
framework do not exclude the possibility for Member States to
focus on afforestation of agricultural
land owned by public
authorities. In addition, the afforestation of other than agricul-
tural land is to be continued to be eligible (private holders and
municipalities and their respective associations).

In addition the proposal provides for the designation of the areas
suitable for afforestation for environmental reasons. This will be
independent from the type of ownership.

76.
There are several intrinsic factors that explain this vary-
ing uptake which also stems from the fact that the implementa-
tion decisions are, to a large extent, made in respect of the prin-
ciple of subsidiarity by the Member States. Firstly, it depends
largely on the individual situation (structure of the holding, age
of the farmer, personal preferences etc). Afforestation of leased
land normally is difficult. In several regions the share of leased
land in the holdings’ UAA is relatively high.

Secondly, in this context it should be taken into account that the
measure is of a long term nature. Farmers’ areas afforested are
definitively out of agricultural production for decades. Therefore,
such decisions are considered very carefully, if not reluctantly, by
the farmer.

IMPACT OF OTHER FORESTRY MEASURES

77.
Some countries, however, considered the scope of the eli-
gible measures satisfactory with regard to their added value (Aus-
tria, Ireland, Spain and United Kingdom). Others would prefer
that the scope of the measures or the type of activities would be
expanded (Belgium, France and Germany).

Article 32 of Regulation (EC) No 1257/1999 has proven
78.
difficult to implement. Nevertheless, support for maintaining the
ecological role of forests continues to be justified in the general
public’s interest. Therefore the proposals for the post 2006 rural
development framework contain a revision of and a more tar-
geted approach to the current Article 32 measures. There will be
a clear split between mandatory obligations to be compensated
(Natura 2000 payments) and voluntary commitments (in analogy
to agri-environment). The ceilings, which may be co-financed, are
alsoto be increased to facilitate the uptake.

CONCLUSION AND RECOMMENDATIONS

79.
The approach adopted since 2000 following the rural
development Regulation (EC) No 1257/1999 is consistent with
the EU forestry strategy, which provides the overall reference
framework for forestry actions in the EU. The overall principles
of the EU forestry strategy (sustainability and multifunctionality)
are reflected in the rural development policy, which aims to trans-
form the three dimensions (economical, social and environmen-
tal) of sustainability into a coherent package of measures. These
measures facilitate and support the implementation of national
forest programmes or equivalent instruments in areas where there
is a synergy with the objectives of rural development.

— The legal basis of EU forestry action stems from the Treaty.
The EU forestry strategy provides the reference framework
for forestry actions at EU level, including but not limited to
rural development. The definition of forest is within the com-
petence of the Member States. At EU level, forest data are
made comparable with regard to forest area and stand
volume.

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The link between the forestry strategy and the individual
80.
projects co-financed by the EAGGF funds is ensured via the rural
development programmes. The Commission verifies that pro-
grammes are in line with the forestry strategy. The national or
regional authorities approve the individual projects on basis of
the programme.

A long-term compensation is necessary for afforestation
83.
of agricultural land to be attractive to farmers and will inevitably
go over a number of programming periods. Nevertheless, the pro-
posals for post 2006 rural development framework will provide
to limit the compensation for income loss to 10 years and a
reduction in the aid ceiling.

— The Commission foresees, in the proposal for the future rural
development framework, a clearer demarcation of responsi-
bilities between the Commission and Member States.

The Commission shares the opinion that the current

84.
financing arrangements are complex.

At the beginning of the present programming period
81.
only few Member States had developed national forest pro-
grammes. In the absence of such programmes, it seemed justified
to accept RDPs or OPs as equivalent instruments, a possibility
which was provided for in Regulation (EC) No 1257/1999. How-
ever, Member States made progress over the last years in the for-
mulation and implementation of
forest
programmes.

their national

82.
At the start of the programming period all proposals for
programmes were submitted to the Commission services within
a short period of time. Member States are interested in a rapid
Commission approval to start programme implementation. The
Commission examined thoroughly all proposals in the shortest
time possible. Nevertheless, the analysis had to include all infor-
mation available on forestry actions, the ex ante evaluation, and
involved a number of Commission services with DG AGRI being
the lead service.

— The proposals for post 2006 rural development framework
contain as an essential feature a requirement for strategic
planning and monitoring. EU strategic guidelines will be pro-
posed by the Commission to be adopted by the Council.
National strategy plans will be elaborated on this basis. The
rural development plans will implement the measures to
achieve the objectives of the strategies.

The EU forestry strategy will be an integral part of these
strategies.

— For the period post 2006 significant simplifications are pro-
posed. A single funding and programming system will
remove the need to comply with different rules for different
funds. The responsibilities of the Member States and the
Commission will be more clearly defined.

85.
Member States indicate in their programmes the land to
be afforested and specific priorities to be addressed. This is sub-
ject to examination by the Commission services.

Non-transparency or non-objectivity of selection systems are sub-
ject to recommendations and may be taken into account for the
proposal of financial corrections.

The current legislation requires the definition of eligible land and
of a ‘farmer’ to be made by the Member State.

For the next programming period the Commission has the inten-
tion to provide more specific implementing rules and/or
guidelines.

Where audits by the Commission services detect weak and insuf-
ficient control systems, financial corrections are applied.

— The

implementation of

result-oriented
the
approach for post 2006 period will contribute to a thorough
selection of individual projects against efficiency criteria.

strategic,

The clearer target setting and well-defined strategies linking
objectives and means to achieve them will allow a better
assessment of policy outcomes and efficiency of the EU-funds
used.

— The Commission will take account of the Court’s observa-
tions in the risk analyses covering all CAP aid schemes and
leading to its audit work programme. Where non-
compliance with Community rules is established financial
corrections will be imposed.

— The qualitative assessment is currently based on the various
evaluations (including ex-ante) and material submitted by the
Member States.

86.
There is a certain responsibility of municipalities to main-
tain their own forests. The authorities approving projects should
require sufficient evidence from the municipalities that the main-
tenance work is ensured.

The proposals for post 2006 rural development framework
will strengthen the strategy aspect of this assessment (includ-
ing forestry), reinforce evaluation and focus clearly on the
results achieved in relation to the strategic objectives.

— Based in particular on the mid-term evaluations of the rural
development programmes the Commission services will
analyse the extent and reasons for non-sustained projects and
propose, where necessary, appropriate actions.

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It is worth noting that the evaluation report of Regula-
87.
tion (EEC) No 2080/92 also indicates that concerning the contri-
bution of the regulation to rural development ‘Overall this con-
tribution appears to us to be significant and positive’.

The farming community is the main target group of rural devel-
opment. The implementation of voluntary measures depends also
on the personal situation of the individual farmer. Against this

background the results achieved can be considered reasonable.
However, several elements of the current objectives and design of
the measure deserve improvements.

— The proposals for the post 2006 rural development frame-
work contain several provisions for better targeting of the
measure (e.g. strategy, designation of areas) and cost-
efficiency (e.g. reduced aid ceilings, shorter duration).