COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Date: 2011-12-12
Institutions: European Commission
Subjects: EU environmental policy, EU financing, EU programme, environmental protection

EUROPEAN COMMISSION 

Brussels, 12.12.2011 
SEC(2011) 1541 final 

COMMISSION STAFF WORKING PAPER 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Regulation  

on the establishment of a Programme for the Environment and Climate Action (LIFE) 

{COM(2011) 874 final} 
{SEC(2011) 1542 final} 
{SEC(2011) 1543 final} 

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Disclaimer: This executive summary commits only the Commission's services involved in its 
preparation and does not prejudge the final form of any decision to be taken by the 
Commission. 

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This  Impact  Assessment  (IA)  assesses  the  options  for  managing  a  programme  for  the 
environment  and  climate  action  (LIFE)  for  the  period  2014-2020  (successor  to  the  LIFE+ 
Programme).  

In its Communication of 29 June 2011 (the MFF Communication), the Commission adopted 
its  position,  including  for  the  LIFE  Programme,  for  the  next  Multiannual  Financial 
Framework (MFF) for 2014-2020. The main changes are:  

i)   the creation of a Climate Action sub-programme (€800 million over the period) with three 

priorities: mitigation, adaptation, governance and awareness;  

ii)   a  better  definition  of  the  Environment  sub-programme  structure  (€2.4  billion  over  the 

period): Biodiversity; Environment; and Governance;  

iii)  the  introduction  of  Integrated  Projects  (IP)  as  demonstration  projects  to  achieve 
environmental  objectives,  in  particular,  through  the  mobilisation  of  other  available 
national and/or EU funds. 

1.  Procedural  issues,  consultation  of  interested  parties  and  opinion  of  the  Impact 
Assessment Board (IAB) 

This IA has been prepared by DG Environment and DG Climate Action, with support of other 
DGs,  and  the  European  Agency  for  Competitiveness  and  Innovation.  It  is  based  on  a 
extensive analysis and consultation, in particular: 

-  

the LIFE programme Ex-post (1996-2006) & Mid-term (2007-2009) evaluations;  

-   external consultants' studies:  "Combined impact assessment and ex-ante evaluation of the 
review of the LIFE+ Regulation" and "Climate Change in the future multiannual financial 
framework"; 

-   an open online consultation on 'Your Voice in Europe'; 

-   a  consultation  conducted  by  the  Committee  of  the  Regions,  a  consultation  of  the  LIFE 
Committee  members  and  Member  States'  environmental  attachés,  an  ad-hoc  stakeholder 
meeting, and two conferences.   

The overall view was that the LIFE Programme is generally performing well in environmental 
and  value-added  terms.  There  was  vast  support  from  all  stakeholders  to  continue  LIFE  and 
general support for Commission's proposals. 

The IA was submitted to the IAB on 29 July 2011. Following IAB's opinion of 13 September 
2011, the IA was modified accordingly.  

2. Current structure and performance of LIFE 

LIFE is one of the spearheads of EU environmental funding and has financed 3,115 projects 
with a contribution of €2.7 billion.  

Under the current Regulation, three types of interventions are possible: 1) action grants (78% 
of the budget) with three strands: LIFE Nature & Biodiversity (NAT) covering at least 50% of 
the  action  grants  budget,  LIFE  Environment  Policy  &  Governance  (ENV)  and  LIFE 
Information  &  Communication  (INF);  2)  operating  grants  for  NGOs  (3%  of  the  budget);  3) 
public  procurement  contracts  for  services  and  studies  (13%  of  the  budget)  and  technical 
assistance  to  the  selection,  monitoring  and  evaluation  of  LIFE  projects  and  the  Programme 
(6% of the budget). 

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The  evaluations  confirmed  that  LIFE  is  a  successful  instrument  with  significant  EU  added 
value. In addition to quantified benefits estimated at some €600 million a year, LIFE led to 
the improved conservation and restoration of some 4.7 million hectares of land (or 6% of the 
total area of the designated Natura 2000 terrestrial sites). LIFE also supported environmental 
improvements  including  for  water  quality  over an  area  of  approximately  3  million  hectares, 
air  quality  affecting  some  12  million  people,  waste  reductions  of  some  300,000  tonnes  and 
recycling of a further 1 million tonnes; and reduction of 1.13 million tonnes of CO2 per year. 
LIFE has a significant role in increasing awareness, good governance and public participation. 
Stakeholders consider that the Programme's flexibility and management mode are the keys of 
its success.  

3. Problem definition and added value of EU action 

EU action is necessary as most environmental and climate problems have a crossborder nature 
and cannot be adequately solved by Member States alone. Furthermore, environmental assets 
often have a public good nature and are unevenly distributed across the EU.  

The EU added value derives from LIFE's ability to act as a platform for exchange of practice 
and  knowledge-sharing  so  that  actors  can  learn  from  each  other's  experience  and  address 
environmental  problems  more  effectively.  LIFE  also  allows  for  a  better  distribution  of 
responsibility  and  solidarity  in  preserving  the  EU  environmental  common  good.  It  acts  as  a 
catalyst, providing one-off investments, eliminating initial barriers to EU environmental and 
climate policy implementation and testing new approaches for scaling-up.  

Evaluations  and  consultations  have  also  identified  how  to  improve  the  design  and 
functionning of the Programme, by tackling the following issues:  

-  a lack of strategic approach and critical mass. EU policy priorities are not fully reflected 
in the Programme, especially for the ENV and INF strands. If no programming changes 
are  made,  LIFE  risks  continuing  funding  very  good  projects,  but  scattered  across  the 
acquis  with  little  possibility  to  draw  lessons  and  disseminate  them  for  replication  in  a 
particular sector and through other EU instruments; 

- 

the objectives for certain strands (ENV and INF) and the territorial scope need to be better 
defined.  LIFE  ENV  should  focus  more  on  implementation  and  creation  of  multipliers. 
Funding  constraints  for  activities  outside  the  EU  have  reduced  the  effectiveness  of  the 
Programme; 

-  a need to improve complementarity and synergies with other EU Funds;  

-  project results should be better utilised and know-how transfer improved, especially at EU 

level.  

-  a need to simplify the application and selection procedures;   

-  national allocations have not led to a more balanced distribution of projects across the EU.  

4. Objectives of the future Programme 

LIFE provides solutions for achieving environmental and climate policy specific objectives by 
contributing  to  policy  implementation  and  development  and  promoting  integration  of  these 
concerns into other policies.   

The general objectives of the new Programme are the following: i) to ensure a better link with 
EU  policy  priorities,  including  climate  action,  ii)  to  promote  the  use  of  IP,  iii)  to  develop 
synergies and complementarily with other EU Funds, iv) to promote the EU added value and 
solidarity/effort sharing and v) to simplify the Programme. 

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LIFE is closely linked to other EU funds such as Cohesion policy Funds (ESF, ERDF, CF), 
the  Rural  Development  Fund  (EAFRD)  or  the  European  Maritime  and  Fisheries  Fund 
(EMFF).  The  complementarity  and  coherence  of  LIFE  with  such  Programmes  have  been 
reinforced in the MFF Communication. LIFE would not only cover identified gaps, but would 
also aim at establishing synergies and a structured cooperation with these funds.  

5. Policy options and analysis of impacts 

The  budget  increase  decided  in  the  MFF  Communication  should  lead  to  a  proportional 
increase  in  absolute  terms  of  the  environmental  and  socio-economic  impacts  of  LIFE  to 
between  €750  and  €1,000  million.  The  most  signifi
cant  increase  regarding  impacts  can  be 
expected on climate mitigation and adaptation, given the increased allocation of resources for 
climate  action.  The  exclusion  of  market-replication  eco-innovation  from  the  Environment 
sub-programme  could  reduce  the  overall  increase  in  socio-economic  benefits,  but  these 
activities will be better undertaken through other EU Funds.  

The options below address only those aspects not decided by the MFF Communication.   

A. Options for strategic planning and allocation of resources: 

A1: Baseline- Bottom up approach for all types of projects.   

Thematic  priorities  would  be  set  for  the  entire  programming  period.  Annual  calls  for 
proposals  would  continue  indicating  the  priorities  within  those  themes,  but  without  being 
exhaustive. No limitation of the thematic areas for IP would be set. The problems identified 
under  the  current  programming  period  as  regards  lack  of  focus  and  difficulty  to  create 
critical mass in specific sectors would remain.  

A2:  Top-down  approach  for  all  types  of  projects  (with  more  flexible  top-down  applied  to 
traditional projects and a rigid top-down applied to IP). 

The  Commission  would  establish  2-3  year  work  plans  defining  specific  priorities,  which 
would be non-exhaustive for traditional projects, not to neglect any particular environmental 
sector, while IP would focus on priority areas.  

Assuming a 50% improvement in the least effective part of LIFE, and a 25% improvement 
in the second least effective quartile, this would represent an overall improvement of 19%, 
and therefore a yearly increase of €150 million of environmental benefits. 

A3: Top-down approach for IP and bottom-up approach for all other types of interventions:  

The  Commission  would  only  apply  the  top-down  approach  to  IP  in  order  to  focus  on 
specific  priorities  defined  ex-ante  for  the  whole  programming  period.  Traditional  projects 
could be submitted in all priority areas. The absence of a more focused approach to priority 
setting  could  lead  to  supporting  projects  with  weak  links  to  policy  development  and 
implementation. No adjustments during the programming period would be possible.   

B. Options for thematic concentration of IP 

B1: Baseline-no thematic concentration 

IP could be submitted in all priority areas where possible, namely nature, water, waste, air 
and  marine,  climate  mitigation  and  adaptation.  This  option  would  replicate  the  current 
dilution problems. Traditional projects might not be financed, if LIFE is to achieve targets 
in all priority areas where IP are possible. 

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B2: Thematic concentration on specific sectors 

Given the limited resources of LIFE and the criticism regarding lack of strategic focus, IP 
could concentrate on priority areas where they could work better. Two sub-options for the 
Environment sub-programme are possible: 

-  Thematic  concentration  on  3  sectors  (nature,  water  and  waste):  it  would  focus  the 
Programme  and  improve  environmental  benefits  (by  30-40%  compared  to  the  baseline), 
while allowing funding of traditional projects. Failure risks remain low since these sectors 
are  the  most  successful  under  LIFE.  Air  and  Marine  could  be  partially  covered  by  other 
sectors. 

- Thematic concentration on 4 sectors (nature, water, waste and air): it would increase the 
link between political priorities and LIFE, and increase its overall socio-economic benefits 
(up  to  10%  of  EU's  population  could  benefit  from  improved  air  quality).  Given  limited 
resources,  covering  air  may  imply  that  the  number  of  traditional  projects  go  below  the 
threshold or lowering targets for water and waste. For the Climate Action sub-programme, 
priorities would be sufficiently focused on mitigation and adaptation.  

C. Options for allocation of resources between different priority areas 

C1: Baseline – the MFF Communication allocation  

Dedicated  resources  are  one  of  the  essential  elements  for  increased  focus  and  achieving 
critical  mass  in  a  particular  area.  Concentration  on  climate  action  may  increase 
environmental  benefits  by  50%  (from  €135  m illion  a  year  to  €270  million).  However,  for 
the Environment sub-programme, if no pre-allocation of resources is made, the NAT strand 
would lose the feature that has been partially responsible of its success under LIFEII, III and 
LIFE+, diluting the direct environmental benefits provided by the strand.   

C2:  The  MFF  Communication  allocation  and  50%  of  the  resources  for  Environment  sub-
programme to Biodiversity  

Positive environmental impacts derived from the pre-allocation of resources to the Climate 
sub-programme  will  increase  due  to  the  pre-allocation  of  resources  to  Biodiversity.  A 
minimum  of  additional  €450-500  million  envir onmental  benefits  could  be  expected. 
Additional  benefits  related  to  IP  are  difficult  to  quantify.  This  option  is  in  line  with 
stakeholders' views. 

D. Options for geographical distributional impacts (national allocations) 

D1: All projects selected on merit:  

All types of projects would be selected according to merit. No geographical distribution key 
would be foreseen. The risk is that some countries would continue being over-represented. 
The  fact  that  natural  assets  are  unevenly  distributed  among  Member  States  would  not  be 
addressed. 

D2: All projects selected on merit but ensuring geographical balance for IP: 

Traditional  projects  would  continue  being  selected  on  merit.  For  IP,  a  system  to  ensure 
geographical  balance  would  be  established,  as  these  projects  are  more  linked  to 
development of regional or local strategies, implementation and capacity building. Member 
States  which  have  an  IP  one  year  would  be  considered  less  favourably  later  on.  The 
Commission  would  ensure  the  funding  of  at  least  one  IP  per  Member  State  in  waste  and 
nature  sectors,  one  per  transboundary  river  basin  district  (Danube,  Rhine,  etc)  and  two 
projects  per  bio-geographical  region.  Member  States  with  lower  administrative  capacity, 

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important  nature  assets  or  hosting  transboundary  river  basin  districts  would  be  favoured. 
The strategic programming (option A2) would allow adjustments if one Member States has 
not received any IP.   

D3: Traditional projects selected on merit only and national allocations (specific amounts per 
MS) for IP for the whole programming period:  

Traditional projects would be selected on merit only as in D1. For IP, a system of indicative 
national allocations would be established for each Member State and per area. This option is 
the  same  as  D2,  but  with  indicative  prior  allocations  based  on  environmental  and  climate 
needs agreed with Member States.  

E. Options on governance and awareness raising  

E1:  Baseline 
funding,  Commission 
communication/dissemination obligations for projects.  

-  NGO 

communication 

activities 

and 

NGO operational funding will continue as NGOs contribute to civil society participation in 
policy  development,  promote  implementation,  and  strengthen  the  knowledge  base  and 
awareness-raising.  Project  communication  activities  will  be  enhanced  via  a  stronger 
strategic approach and promotion of networks of similar projects around priority themes.  

E2:  NGO  funding,  Commission  communication  activities,  communication/dissemination 
obligations for projects and specific Communication campaigns financed through grants:  

In  addition  to  the  activities  in  E1,  specific  projects  funded  through  action  grants  would 
support  selective  information  priorities.  Positive  impacts  of  option  E1  are  expected  to 
increase when complemented by specific information and communication projects.  

F. Options for simplification  

F1: Baseline- On-line tools and larger projects  

A new IT tool called "eProposal" will be used from 2012 onwards for online applications. 
Simplifying  the  submission  procedure  could  save  around  20%  of  the  bidding  costs. 
Assuming an increased effectiveness of 50% for administrative staff and 10% for technical 
staff, e-Proposal could lead to 7 % savings. If applying 50% gains for both, a 12% increase 
in savings could be expected. Moving to larger projects will imply a reduction in the total 
number of projects managed (from 230 projects selected per year to 100 by the end of the 
programming period), thereby reducing overheads and management costs for LIFE. 

F2:  Baseline  +  Simplified  selection  procedures  and  reporting:  2  stage  procedure  and 
simplified reporting for IP, multi-annual selection for NGOs  

A  2-step  approach  for  the  selection  of  IP  could  be  introduced.  Reporting  and  re-
programming  would  be  based  on  a  two  years'  cycle  and  the  payment  schedule  adapted  to 
ensure  a  more  gradual  cash  flow  to  the  project.  This  simplification  would  reduce  by  25% 
reporting costs, representing savings of between €178.500 and €357.000 a year. As IP are 
around 5 times bigger than traditional projects, the number of transactions could be reduced 
by  70%.  A  multi-annual  selection  for  NGOs  would  reduce  the  administrative  burden  of 
selection procedures by at least 50%.  

F3: Baseline + Outputs and results payments vs lump-sums, ineligibility of certain costs:  

More  use  of  lump  sums  (e.g.  application  of  standard  EU  per-diems  for  travel  costs,  and 
standard staff costs) would simplify reporting costs. Limiting the eligibility of certain costs 
with  difficult  reporting  and  monitoring  (e.g.  by  only  funding  additional  staff  specifically 

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recruited for the project under personnel costs; by considering VAT as non-eligible) would 
simplify these procedures. This would imply a reduction in eligible costs of about 5-10% for 
VAT and 20-40% for personnel, which could discourage potential applicants. An increase in 
the co-financing rate could outweigh these negative impacts. 

G. Options for externalisation  

In the MFF Communication, the Commission considered that LIFE should remain centrally 
managed,  but  management  tasks  could  be  delegated  to  a  large  extent  to  an  existing 
executive  agency.  Currently,  the  staff  needed  to  manage  LIFE,  including  external 
contractors  and  EU  officials,  is  approximately  125  full-time  equivalent  posts.  The  total 
administrative  cost  is  just  over  €15  million.  This  represents  6.2%  of  the  total  annual 
Programme budget.  

G1.Full externalisation:  

The  management  tasks  for  project  selection  and  monitoring,  NGO  operating  grants,  and 
communication  activities  would  be  transferred  to  an  existing  agency,  for  both  traditional 
projects and IP. The governance, supervision and evaluation of LIFE would remain within 
the Commission. For technical assistance, the two following sub-options are possible:  

- Externalisation without replacing technical assistance: the total cost would be 6.3% of the 
Programme budget.  

-  Externalisation  replacing  technical  assistance:  the  total  cost  would  be  6.0%  of  the 
Programme budget. 

G2.  Hybrid  solution:  externalisation  of  traditional  projects,  while  keeping  IP  within  the 
Commission:  

The  management  of  traditional  projects  and  operating  grants  for  NGOs  would  be 
externalised  to  an  existing  agency  while  maintaining  IP  for  the  Environment  sub-
programme and the Programme governance within the Commission. The main reasons are 
to secure integration of project results into EU policy, to ensure IP are designed adequately 
and to maintain close monitoring and liaison with thematic units. The total cost is similar to 
option G1 (with or without replacing technical assistance). 

To summarise, the advantages of the agency option are: lower staff costs, same quality for 
programme  implementation,  communication  and  dissemination  activities  as  under  the 
current situation, and up to 19 posts freed in the Commission.  

However,  there  is  a  risk  that  the  agency  option  would  reduce  the  ability  to  deliver  the 
desired EU added value. In particular, IP would require careful design in cooperation with 
the policy units of the parent DGs and close monitoring to ensure their success and the link 
with implementation, which would be weaker if the Programme is managed by an agency.  

6. Comparing the options 

The options above were evaluated and compared on the basis of effectiveness, coherence and 
efficiency criteria. The preferred option would therefore be a Programme: 

- 

- 

- 

with  thematic  priorities  for  the  entire  programming  period,  a  2-3  year  work  plan  with 
non exhaustive priorities, and a top-down approach for all projects (Option A2); 

with IP focussing primarily on a limited number of areas (Options B2a or B2b); 

with allocation of LIFE funds as distributed in the MFF Communication and 50% of the 
resources for the Environment sub-programme to biodiversity (Option C2); 

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- 

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- 

- 

with  a  system  to  select  "traditional"  projects  based  on  merit  and  a  system  to  select  IP 
that ensures geographical balance (Option D2); 

that enhances NGOs role in dissemination, and with enhanced approaches to governance 
and communication; (Option E1);   

that introduces IT-tool mechanisms for submitting proposals and a 2-step approach for 
IP with 2-year cycle reporting obligations; increases the use of lump sums and simplifies 
eligibility of costs by restricting the eligibility of some costs (a combination of Options 
F); 

with  externalisation  of  the  management  of  traditional  projects  to  an  existing  agency, 
while keeping the governance of the Programme as well as the management of IP of the 
Environment  sub-programme  within  the  parent  DGs.  Based  on  a  mid-term  evaluation, 
the management of these projects could be progressively externalised (Option G2). 

This  would  address  the  main  recommendations  of  the  LIFE  Programme  evaluations,  i.e., 
better thematic prioritisation, simplification and good management. Synergies with other EU 
Funds  would  be  significant,  ensuring  a  better  multiplier  effect.  This  option  could  generate 
around €900-1,210 million/year of environmental bene fits, and savings of between 7-12% of 
bidding costs and 25% for reporting obligations.  

7. Monitoring and Evaluation 

The  proposed  monitoring  framework  is  organised  around  two  levels:  the  monitoring  of 
outputs,  results  and  impacts  at  project  and  Programme  level;  and  expenditure  tracking  at 
Programme level. 

Monitoring of outputs, results and impacts: 

Projects  proposals  will  include  expected  outputs  tables  as  a  basis  for  monitoring  progress. 
Thematic reports per area will serve as a basis for dissemination and feeding into policy. A 
mid-term and an ex-post evaluation of the LIFE Programme would be carried out.  

Tracking of expenditure at programme level:  

To  provide  evidence  of  the  co-benefits  that  both  sub-programmes  can  bring  to  specific 
priorities  such  as  climate  action  and  biodiversity,  and  better  illustrate  the  level  of  spending 
throughout  LIFE  for  these  priorities,  the  monitoring  framework  will  also  include  the 
methodology  for  tracking  climate  and  biodiversity-related  expenditure  as  per  the  MFF 
Communication and derived from the OECD "Rio markers". 

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