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# 52013SC0190

**COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing the Copernicus Programme and repealing Regulation (EU) No 911/2010 /\* SWD/2013/0190 final \*/**

  

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the
European Parliament and of the Council

establishing the Copernicus
Programme and repealing Regulation (EU) No 911/2010

TABLE OF CONTENTS

1........... Procedural issues and
consultation of interested parties.................................................... 5

1.1........ Identification................................................................................................................... 5

1.2........ Organisation and timing................................................................................................... 5

1.3........ Stakeholders consultation................................................................................................ 5

1.4........ Scrutiny by the Commission Impact
Assessment Board................................................... 8

2........... Context.......................................................................................................................... 9

3........... Problem definition......................................................................................................... 12

3.1........ The problem that requires action................................................................................... 12

3.2........ Upgrading the system to routine
operational status......................................................... 14

3.3........ Underlying drivers of the problem.................................................................................. 14

3.4........ Establishment of an appropriate
governance structure.................................................... 14

3.5........ Who are the most affected groups?............................................................................... 15

3.6........ Foreseen evolution of the problem................................................................................. 16

3.7........ The risk of non-sustainability......................................................................................... 17

3.8........ Does the EU have the right to
act?................................................................................ 17

4........... Objectives.................................................................................................................... 19

4.1........ General objectives........................................................................................................ 19

4.2........ Specific Europe 2020 policy
objectives......................................................................... 19

4.3........ Operational policy objectives........................................................................................ 20

4.4........ Consistency with and relevance to
other EU policies...................................................... 20

4.5........ Synergies with other DG
Enterprise programmes........................................................... 21

5........... Options and impact analysis.......................................................................................... 23

5.1........ Different options on budget
allocation............................................................................ 23

5.2........ Methodology................................................................................................................ 25

5.3........ Options description....................................................................................................... 27

5.4........ Analysis of impact of options on
budget allocation......................................................... 28

5.5........ Cost-Benefit Analysis................................................................................................... 31

5.6........ Key enabling factors and the
impact of a reduced budget............................................... 32

5.7........ Expenditure profile
considerations................................................................................. 33

5.8........ Conclusion................................................................................................................... 33

6........... Options and impact analysis on
Governance.................................................................. 34

6.1........ State of play................................................................................................................. 34

6.2........ Options on programme governance............................................................................... 35

6.2.1..... Option A: Commission in charge of
overall coordination and management...................... 35

6.2.2..... Option B: Delegation of the
management to an existing European Agency....................... 35

6.2.3..... Option C: Delegation of the
coordination and management to the European Space Agency 35

6.2.4..... Option D: Delegation of the
management to a new Agency............................................ 35

6.3........ Impact analysis on governance...................................................................................... 35

6.3.1..... Option A: Commission in charge of
management........................................................... 35

6.3.2..... Option B: Delegation of the
management to an existing European agency........................ 36

6.3.3..... Option C: Delegation of the
coordination and management to the European Space Agency 36

6.3.4..... Option D: Delegation of the
management to a new agency............................................. 36

6.4........ Decisions on governance............................................................................................... 36

6.5........ Considerations on ownership........................................................................................ 37

7........... Monitoring and Evaluation............................................................................................. 38

7.1........ Evaluation..................................................................................................................... 38

7.2........ Monitoring.................................................................................................................... 41

7.3........ Anti-fraud measures...................................................................................................... 41

1.           Procedural
issues and consultation of interested parties

1.1.        Identification

The European Earth Observation programme
Copernicus (originally called GMES, Global Monitoring for Environment and
Security), is coordinated by the GMES/Copernicus unit of DG Enterprise and
Industry.

1.2.        Organisation
and timing

This Impact Assessment is foreseen to
accompany a legislative proposal for a Regulation of the European Parliament
and the Council on the European Earth observation programme (GMES/Copernicus).
It is based on a previous version that was elaborated in consultation with an
impact assessment steering group that met four times and was consulted on the
draft impact assessment. The following DGs were invited to the IASG: ENV,
CLIMA, RTD, AGRI, ESTAT, JRC, TAXUD, DEVCO, ECHO, INFSO, ENER, MOVE, EEAS,
MARE, REGIO, JUST, HOME, OLAF, BUDG and SG.

This report also builds on previous impact
assessment studies, in particular those accompanying the Commission proposal on
the GMES/Copernicus programme and its Initial Operations[1] (GIO) and the Commission
Communication on the challenges and next steps for the GMES/Copernicus Space
component[2].
As the existing Regulation concerns the initial operations period and runs
until 2013, there is a need for a new Regulation and for a new impact
assessment.

·
This is the first impact assessment of GMES/Copernicus
that is looking at the programme as a whole, including the three components
(space, in situ and services) and at all the six services.

·
By now two services (i.e. Emergency Management Service
and Land Service) are already operational, while the other four services are
close to being operational and more information is available on costs and
benefits of those services.

The major study used for this impact
assessment is the cost-benefit analysis commissioned by the EC and conducted by
SpaceTec Partners in 2013 (see Annex I). This, in turn, builds on Booz &
Company’s “Cost- Benefit Analysis for GMES” (CBA[3])
completed in 2011 and on SpaceTec Partners' "Assessing the Economic Value
of GMES/Copernicus: European Earth Observation and GMES/Copernicus Downstream
Services Market Study" completed in 2012. The executive summaries of these
studies are presented in the Annexes V, VI and VII.

1.3.        Stakeholders
consultation

This impact assessment is based on a
continuous consultation of external stakeholders which started early in the
GMES/Copernicus development process.

Since the creation of the European
Commission's "GMES Bureau" in 2006 a rolling process of stakeholders'
consultation has been in place on GMES/Copernicus. This consultation process,
launched with the Communication entitled “GMES: from concept to reality”[4], led firstly to the adoption of
the 2008 Communication entitled "GMES: we care for a safer Planet"[5]. Further consultation was
carried out in order to prepare the Commission proposal for a Regulation on the
European Earth monitoring programme (GMES) and its initial operations
(2011-2013)[6]
and the Communication entitled "Global Monitoring for Environment and
Security (GMES): Challenges and Next Steps for the Space Component"[7].

This multiannual consultation process
included:

· Thematic workshops with users of Earth observation-based information
services;

· Extensive consultation of independent expert groups including
"implementation groups" for envisaging the blueprints of future
services. The consultation of national GMES/Copernicus coordinators, appointed
by their respective Member States, in the framework of the GMES Advisory
Council, an expert group with the mandate to provide strategic advice, foster
the co-ordination between European and national activities, and facilitate
consensus-building in the relevant communities around the development of
GMES/Copernicus. This consultation continued in a more structured and formal
manner with the creation of the GMES Partners Board[8], an expert group assisting the
Commission with an enlarged mandate compared to the Advisory Council. National
coordinators were tasked to consult stakeholders at national level and report
back at the level of the Partners Board. This process, in full respect of
subsidiarity, has been delivered and best practices have been developed and
exchanged;

· Workshops and conferences[9],
by successive EU Presidencies, dedicated to GMES;

· An Information Day was organised in September 2009 with industry;

· A public consultation on the successor of the Competitiveness and
Innovation Programme (CIP) also touched upon innovation in the space and Earth
observation sector. Out of the 676 persons who participated at the survey, 75%
considered support for satellite applications and other space based services relevant[10].
Results from the impact assessment study on the successor of the
Competitiveness and Innovation Programme confirm space as an important sector
for future priorities in innovation financing. The study concludes that EU
intervention to support the application and adoption of European Satellite
Initiatives among non-space sectors should be expanded.

· Regional authorities' point of view, as well as that of local 'final
users', has been monitored through FP7 projects such as Graal[11] and DorisNet[12], which also set up Regional
Contact Offices both to raise awareness on GMES/Copernicus and to better
understand local users' needs. In the same context the network of European
regions using space technologies[13]
has organised conferences and built publications to spread GMES/Copernicus
knowledge at the regional level.

· Since the entry into force of the GMES Regulation in 2010[14], the consultation of Member
States and users has continued through the new governance bodies set up by the
Regulation itself: the GMES Committee (which has met 10 times from 27th
January 2011 till 10th December 2012) and the User Forum[15].
The establishment of a 'User Forum' composed of user representatives has the
objective of preparing recommendations concerning the scope, architecture and
implementation for each GMES/Copernicus area. The work of these groups
culminated in public conferences which are reported in the following table:

Table 1 User Forum Meetings and Thematic Workshops

9th March 2011                   || GMES USER FORUM: PREPARATORY WORKSHOP ON LAND MONITORING

17th May 2011 || 1st GMES User Forum

26th September 2011 || GMES USER FORUM PREPARATORY WORKSHOP on ACCESS TO GEOSPATIAL REFERENCE DATA FOR GMES Land Monitoring and other services

27th October 2011 || GMES USER FORUM PREPARATORY WORKSHOP on ATMOSPHERE MONITORING

30th November 2011 || 2nd MEETING OF THE GMES USER FORUM

12th 13th January 2012 || WORKSHOP on GMES Data and Information Policy

25th January 2012 || GMES USER FORUM PREPARATORY WORKSHOP on the GMES MARINE MONITORING SERVICE

7th March 2012 || USERS MEETING on the GMES Initial Operations of the Emergency Management Service - Mapping

16th March 2012 || 3rd MEETING OF THE GMES USER FORUM

11th May 2012 || Expert meeting on the Delegated Act for GMES Data and Information Policy

19th June 2012 || GMES USER FORUM PREPARATORY WORKSHOP ON GMES SECURITY

2nd July 2012 || Expert meeting on the Delegated Act for GMES Data and Information Policy

23rd October 2012 || 4th MEETING OF THE GMES USER FORUM

15th January 2013 || USER FORUM WORKSHOP ON GMES/COPERNICUS EMS Rush mode implementation

22nd March 2013 || 5th MEETING OF THE GMES USER FORUM

Over time, the consultation has confirmed
the interest and need for the GMES/Copernicus Programme and is now focusing on
different design options, in particular for the GMES/Copernicus services.
Stakeholders have indicated that the uninterrupted and guaranteed availability
of the information coming from GMES/Copernicus services is the cornerstone for
the success of the programme and for its benefits to be fully materialised.

The network of European regions using space
technologies has also expressed a need for a long term perspective and a
consequent and timely implementation of GMES/Copernicus[16].
The European Association of Remote Sensing Companies recommended that financial
support is assured in the multi-annual European Budget to continue the
GMES/Copernicus programme[17].

1.4.        Scrutiny by
the Commission Impact Assessment Board

Two versions of this Impact Assessment have
been scrutinised by the Impact Assessment Board (IAB), firstly in October 2011
and secondly in March 2013. Following these submissions the IAB has made a
number of suggestions for improvement. Those related to the first submission
were taken into account in the re-submitted document and those from the second submission
have been responded to in this version.

The first version of the Impact Assessment
analysed different options with respect to the overall funding, and with
respect to governance issues. Since the European Council has decided on 8
February 2013 that GMES/Copernicus should be financed from within the EU MFF
budget and has decided on a maximum budgetary level, the re-submitted Impact
Assessment no longer compared different options with respect to budget size and
funding sources but rather analysed alternative ways of allocating the budget
within the same budgetary envelope[18].

In its opinion of March 2013 on the revised
Impact Assessment, the IAB made further suggestions for improvement. This
Impact Assessment addresses these suggestions as far as practically possible
(and to the extent that they remain relevant). A structured summary of the
responses to the latest IAB suggestions for improvement is provided separately.

2.           Context

Copernicus is the European Earth
observation system, previously called GMES. Earth observation systems provide
information about planet Earth’s physical, chemical and biological systems, and
hence enable the monitoring of the natural environment. They produce crucial
information for a better management of our environment, including the
availability of resources, enhanced security of the citizens and evidence-based
policies.

As a monitoring system, GMES/Copernicus
includes both space based and non-space based facilities, including airborne,
seaborne and ground based installations (referred to as "in situ").
Data collected through satellites and in situ infrastructure are
processed to enable the provision of information services. This will allow, for
example, the more efficient management of natural resources and biodiversity,
the monitoring of the state of the oceans and the chemical composition of our
atmosphere (important factors for understanding climate change and evaluation
of the adaptation actions for policy-making), the response to natural and
man-made disasters and ensuring border surveillance in a more effective way.

Since
GMES/Copernicus was launched in 1998[19], continuous and substantial efforts have
been made by the EU (through Framework Programmes for Research and Development,
Preparatory Actions and GMES Initial Operations), the European Space Agency ESA
and its Member States, together with contributions from EU Member States and
European organisations, for the development of services, the provision of access
to space and in situ data, and for the development of a dedicated
observation infrastructure.

During the period 2000-2006, the concept of
GMES/Copernicus started to be designed and tested. On the EU side, preliminary
projects were supported by the 5th and 6th Framework
Programmes for Research, Technological Development and Demonstration. The first
concrete steps started with the development of the pre-operational GMES fast
track services using available funds from the FP6 Space Theme. In parallel, ESA
launched its first activities in support of GMES at the Ministerial Council in
November 2001 with the Earth Watch programme and its GMES Service Elements
activities. At the political level, an important step was achieved with the first
Space Council meeting in 2004, a joint and concomitant meeting of the ESA
Council at ministerial level and the EU Competitiveness Council.

The
period from 2007 to 2013 saw major achievements on GMES architecture,
governance and funding. GMES became a reality with the adoption of a Regulation
on the Initial Operations. Moreover, more funding was made available from the EU (FP7 Space Programme, Preparatory Actions, and operational
funding allocated to the Regulation) and ESA Member States, for the development
of pre-operational services and for the continued development of a dedicated space infrastructure (the Sentinels). The launch of
the first GMES/Copernicus Sentinel is scheduled for October 2013 while, until
the Sentinels are operational, satellite data come only from contributing
missions. Some of the services are already generating and disseminating
products to users. For example, the Emergency Management Service has been
operational since 1st April 2012 and has been activated in the
so-called "rush-mode" on 21 occasions, of which 60% concern an EU
continental territory. For instance, after the serious earthquake that hit the
Italian region of Emilia Romagna, new reference maps were made available,
facilitating the work of the emergency teams. Other interventions took place in
Bulgaria, France, Germany, Hungary, Italy, Portugal, Romania, Spain and Sweden
dealing with floods, forest fires and earthquakes using GMES/Copernicus
satellite images.

An Urban Atlas (Land
Service product) provides digital mapping for urban planning. Different
projects and activities have been undertaken under the supervision of
GMES/Copernicus Unit to disseminate knowledge and demonstrate the potential of
the programme; six projects have been selected to build demonstrators using
GMES/Copernicus and Galileo services combined, exploiting the synergies between
the two European programmes which is an area of potential enhanced benefit[20].

The
GMES/Copernicus activities paid under the Preparatory Action (PA) and
the GMES Initial Operations (GIO) have been evaluated by an independent body[21].

As
far as the Preparatory Action is concerned, the evaluator stressed the
important role they played in stimulating the formation of user communities
especially in the emergency management field. The GMES/Copernicus PA provided the main lesson that obtaining regular user input is
critical in adapting services to meet evolving user needs. The PA has helped to
encourage greater networking and coordination among user communities in
specific fields (e.g. ice monitoring, emergency management) and has promoted
the exchange of information between relevant actors.

As
far as the GIO is concerned, it has been considered that operations have been
managed and implemented efficiently and effectively, under the overall
coordination of the GMES/Copernicus Unit. JRC, EEA and ESA have provided the appropriate technical
expertise to manage and implement the three components, space, in situ
and services. The GIO has achieved the objective of developing two fully
operational services within the 3 year programming period, an important outcome
at ‘results’ level.

Some
lessons learnt from the GIO provide important pointers to GMES future success:
the availability of quality and timely reference data, sufficiently
well-resourced services and the need to close the data gaps of in situ
data. Challenges remain in terms of the lack of harmonization between national
reference datasets based on a common methodology and gaps in country coverage.

The
evaluator stressed the necessity of raising awareness about GMES/Copernicus and
about innovative downstream applications that build on its services. Although
good progress has been made in strengthening awareness about GMES/Copernicus
services and the potential downstream benefits, further work is needed to
encourage user uptake among specific types of users that are less familiar,
such as local and regional authorities and some of the New Member States. This
process is ongoing, for example through the funding of EMMIA projects and through
the different communication activities, such as the European Space Expo.
Moreover, as suggested in the evaluation, studies have been recommended to
better understand the size and the type of potential downstream markets for
GMES/Copernicus, the results of which are already integrated in this Impact
Assessment.

In
its Communication on the Budget Review, the Commission has acknowledged the
major strategic importance of large scale projects, such as GMES[22].
In the context of the Europe 2020 strategy, the Commission has also underlined
that the GMES/Copernicus Programme contributes to reaching the Europe 2020
goals: the Flagship initiative n°5 « An industrial policy for the
globalisation era » explicitly mentions GMES: « to develop an
effective space policy and (…) in particular to deliver (...) GMES »[23].

The
Communication towards a space strategy for the European Union that benefits its
citizens[24],
clearly mentions the importance of GMES/Copernicus for space policy and states:
"The current priority is to ensure that it is implemented quickly and
effectively, in partnership with the Member States, and that it is fully
operational by 2014".

The Competitiveness Council has reaffirmed
the need for the Commission to ensure a quick and effective implementation of
the GMES/Copernicus programme by 2014, in partnership with the Member States
and has recognized the necessity and importance of guaranteeing continuous and
long term sustainable access to Earth observation data and Earth monitoring
services provided by GMES/Copernicus in order to encourage the development of a
European industry of well-diversified downstream services[25].
At its meeting of 31 May 2011, the Competitiveness Council invited the
Commission to present by the end of 2011 a proposal for the operations and to
clarify the governance of GMES/Copernicus from 2014 onwards. The conclusions[26] of the 31 May 2011 Council meeting recognised the necessity and
importance of guaranteeing continuous and long term sustainable access to earth
observation data and derived Earth monitoring services provided by GMES/Copernicus.

The European Economic and Social Committee
(EESC)[27]
supported the Regulation on Earth Observation and its initial
implementation (GIO), considering it to be a strategic
step in the establishment of
a new framework to bring European space policy to maturity.

The European Parliament showed strong
support for GMES/Copernicus by voting in favour of the Commission’s GIO
proposal in its first reading[28].

A
Regulation governing the initial operations of the GMES/Copernicus programme
2011-2013 was adopted in 2010 by the European Parliament and the Council[29]. The GMES/Copernicus programme
now has a legal basis that prepares its transition from mere research activity
to operational activities.

The European Council decision of the 8th of February 2013
has given to GMES/Copernicus a maximum level of commitments of € 3.786 Mio[30]. This Impact Assessment estimates the Cost-Benefit ratios for
different scenarios related to different apportionment of the proposed budget,
based on the analysis of the costs and of the social, environmental and
economic benefits.

3.           Problem
definition

3.1.        The
problem that requires action

Insufficient existing earth observation services

In the last thirty years, substantial
R&D efforts in the field of Earth Observation have been made by the EU, the
European Space Agency (ESA) and their respective Member States, with a view to
developing infrastructure and pre-operational Earth Observation services.
However, many of the existing Earth Observation services in Europe are
insufficient due to infrastructure gaps and lack of guarantees on their
availability in the long term. Data provided through the currently existing
services, either do not cover all the parameters needed by policy makers[31], or are not provided on a
continuous basis, in particular because the lifetime of the service or the underlying
observation infrastructure is limited due to budgetary and/or technical
constraints. GMES/Copernicus is conceived to address this potential weakness
for the long term.

Continuity of GMES/Copernicus is of
paramount importance. Any interruption of GMES/Copernicus services would hamper
the harmonization and standardization efforts of the geospatial information products
at European level and would thus lead to a decrease of efficiency for inter-country
comparison of environment information. Moreover, since many areas of
environmental issues – such as climate change mitigation and adaptation
policies – require thinking globally and acting locally, discontinuing
GMES/Copernicus would reduce dramatically the European added value and capacity
to address environmental policies caused by a lack of coordination between
national/regional and European / global programmes.

Economic investments at risk

The GMES/Copernicus programme based on the
GMES Initial Operation regulation has financed, during the period 2011 – 2013,
a range of operational activities. A first step has been made towards the
definition of a comprehensive Earth Observation system. However, it is still
limited in time (i.e. 2011-2013).

To date, the total
investment made by the EU, ESA and its Member States accounts for more
than € 3.000 Mio. If GMES/Copernicus were to be discontinued, almost all
past investments would be lost, with an additional risk to disrupt national
capacities to maintain their investment in space earth observation activities
as the EU dimension would no longer provide a political and programmatic
framework. It is thus very likely that the situation would go back to
fragmented and uncoordinated space activities with remaining gaps, unsolved
redundancies, and lack of economies of scale, as they existed before the
creation of GMES/Copernicus.

This risk of discontinuity represents a
major concern for end-users like public authorities, but also for downstream
service providers, as they are unlikely to invest significantly in non-mature,
risky markets and will face additional difficulties in raising capital.

Innovation potential at risk

The risk of discontinuity would also imply
that R&D investments are not translated into innovation. Therefore the
potential to unleash the innovation capacity linked to GMES/Copernicus, which
is mainly a service related innovation, will not be exploited. This would be
regrettable especially taking into account that the EU innovation policy should
be more targeted to the services sector, as different studies show[32].

Autonomous access to reliable, traceable
and sustainable information on environment
and security is strategic

GMES/Copernicus is
expected to provide key tools and products for enabling the definition,
implementation and monitoring of EU policies on environment and security. The
six thematic services as defined in the GMES/Copernicus Regulation are
currently developing more than 400 products to be issued either on a routine
basis, either every day (e.g. air quality information), or on demand (e.g.
damage assessment maps following a major disaster).

Hence through
GMES/Copernicus, the EU has significant influence in international programmes
and negotiations such as the three Rio Conventions (Climate Change,
Desertification and Biodiversity), post-Kyoto Treaty, GEO, CEOS, GCOS, and in
bilateral discussions on space activities.

Finally, GMES/Copernicus
gives the EU an autonomous capacity on access to information. Without it, the
EU would have to rely on non-European (e.g. US) satellites or international
sources of information (e.g. International Charter, international conventions),
or even on uncoordinated sources from its Member States for the implementation
of its policies.

Employment at risk

Satellite applications systems are the main
source of income for the European space industry (€ 3.100 Mio), and are the main
domain of exports (with € 1.130 Mio).[33]
One of the two most significant segments in terms of income is Earth
Observation (e.g. GMES/Copernicus Sentinels). Currently, Earth Observation
systems account for around 30% of the total income for the European space
industry. Besides this direct impact on industry sales, GMES/Copernicus has a
significant impact on the competitiveness and the profitability of the European
space manufacturing industry. Export and trade vastly depend on the relative
competitive position of the sector.

Recent studies[34] have explored the impact of
GMES/Copernicus data availability on downstream markets development and have
added the figures of downstream sector employment to the figures of jobs
development in the space related sectors. Considering the GMES/Copernicus
contribution along the Space value chain, GMES/Copernicus can be seen as a
driving force for creating highly skilled job opportunities and can have
indirect effects on the wider economy by 2030.

Downstream:
Maintaining and creating more than 9.000 direct jobs cumulatively, provided
that full data continuity is assured for GMES/Copernicus in the long term, and
the EO market potential is realised, with enabling factors in place.

Upstream
and Midstream: Maintaining and creating 2.740 direct jobs under the
GMES/Copernicus funding scenario of full data continuity.

An
aggregate of 11.900 direct jobs will be created and maintained across the
entire GMES/Copernicus and EO value chain.

A
high-level analysis of potential economic multiplier effects (based on Oxford
Economics’ Space industry multipliers, provided by the European Commission)
suggests that more than 36.000 indirect jobs could be maintained and created,
yielding an overall employment impact of approximately 48.000 jobs in Europe by
2030.

3.2.        Upgrading
the system to routine operational status

The GIO (GMES Initial Operation) Regulation
will be valid until the end of 2013. In the meantime a new budget has been
proposed by the European Council for GMES, which is entering its operational
phase from the start of 2014 under the new name of Copernicus. These changes
require a new Regulation which will propose decisions on, among other topics,
the issues of programme governance, of ownership of the infrastructure and of
budget apportionment between the different components. In addition, a Delegated
Act on Copernicus Data and Information Policy, to be applicable to the
operational phase, has been prepared and enshrines the principle of full, open
and free-of-charge data access for all users. It is crucial that this ‘upgrade’
of the programme results in a smooth transition to the new operational phase,
especially from the perspective of existing and potential users, with the
highest level of continuity and the efficient apportionment of the budget, as
well as efficient governance choices.

3.3.        Underlying
drivers of the problem

As shown above, stakeholders widely agree
that a public intervention in basic operational services is a prerequisite for
wide-ranging operational services to emerge. Without such intervention
operational services useful for policy makers and others will not become
available.

The market fails in providing the
operational services without public intervention. This is mainly due to intrinsic
high fixed costs, while at the same time returns generated by selling data to
public authorities or commercial players are risky and hard to estimate. This
makes the investment not sustainable for the private sector given the very long
time span required to reach the break-even point of the investment[35].

Although the overall benefits from the
programme are estimated to largely exceed the costs, they are partly of a
public nature linked for instance to monitoring climate change or to
deforestation[36].
Moreover the benefits coming from downstream market development require the
continuous availability of GMES/Copernicus data to incentivize private
investments in the sector. For these reasons, the continuation of the Programme
has to be assured and the most appropriate budget allocation and apportionment
approach has to be adopted. This impact assessment will therefore look into
different options regarding alternative allocations of the budget foreseen by
the European Council for GMES/Copernicus.

3.4.        Establishment
of an appropriate governance structure

The shifting from a research phase to an
operational phase requires re-thinking of the governance structure. The reasons
are manifold: research projects are smaller in terms of budget and objectives,
limited in duration and conceived as prototypes of what the whole Copernicus
structure could look like. It is exactly building on those experiences, and
taking into account internal financial and human resource constraints, that the
GMES Unit has been analysing different options and proposing the most efficient
governance framework for Copernicus. Final decisions on governance in the
proposed Copernicus Regulation have taken account of discussions with other
interested Commission Services and in stakeholder meetings such as the User
Forum and GMES Committee. Past evaluations and personal experiences have been
taken into account in choosing the “delegation solution”. The main reasons that
lead to this decision are the increasing number of management tasks and the need
for specialised personnel to address the specific services development: it is
exactly to avoid duplication that the Regulation proposes the delegation of
tasks to external actors who already have the required skills and organisation.
In addition, certain management responsibilities could exploit existing
Commission resources or could be covered by seconded experts. Thus, through a
combination of outsourcing and exploiting internal resources, the effective
capacity of the GMES Unit for managing the programme will be appropriately
increased.

3.5.        Who
are the most affected groups?

GMES/Copernicus is a user-driven programme,
thus requiring the continuous, effective involvement of users, particularly
regarding the definition and validation of service requirements, aiming at providing
information services in the field of environment and security. Up to now,
during the build-up phase, the user consultation process has been based on
interaction with Member States (GMES Advisory Committee, Partners Board, GMES
Committee), on recommendations from the User Forum, and took stock from outcomes
of the demonstration activities financed through the FP7 programme, conclusions
of specific studies, results of dedicated workshops and dialogues with
stakeholders, and reports from the Implementation Groups.

GMES/Copernicus services are based on more
than 30 applications with over 400 products. The user community is large
and diverse, spanning from international stakeholders to European citizens. The
most affected groups include:

–
At European level, Commission services
(13 DGs) are already using or are planning to use GMES/Copernicus products,
e.g. ECHO for emergency management services, ENV for land, marine and
atmosphere monitoring services, AGRI for agri-environmental monitoring, MOVE
for oil spill and ice monitoring, MARE for ocean monitoring and forecasting,
REGIO for land use and CLIMA for forest monitoring and climate change
mitigation and adaptation.

–
EU agencies are
also important users and actors (EEA, EMSA, FRONTEX, EUSC…), as well as the
European External Action Service (EEAS), intergovernmental European agencies
(ECMWF, EUMETSAT, EDA, ESA), and European programmes, associations and networks
(EMEP[37],
EUMETNET, Eurogeographic, Eurogeosurvey, OSPAR, HELCOM…).

–
At international level, GMES/Copernicus
is developing relationships with GEO partners, UN agencies (FAO, WFP, UNEP,
UNOSAT…), NGOs, and international research programmes (ESSP[38] with DIVERSITAS, IGBP, WCRP,
IHDP) since the scientific community is an important user of GMES/Copernicus
data and services;

–
National Authorities (Ministries of Environment, Transport, Interior, Agriculture,
Energy, Fisheries, Land Management, Maritime Affairs …) and Public Local
Authorities (e.g. in urban planning issues), but also specific entities such as
Civil Protection Authorities and Risk Control Agencies.

–
A wide range of users in the industry
framework (space manufacturing sector and related
operations, service provision, data production and dissemination sector,
development of value added services in the downstream sector), and ultimately
European citizens who will use the final products.

As far as the downstream sectors are
considered, a specific analysis has already identified the more promising ones
and estimated the potential turnover. An estimate of the European
GMES/Copernicus’ downstream market potential has been performed and is included
in the Cost-Benefit Analysis below.

3.6.        Foreseen
evolution of the problem

The challenge is to ensure the continuity
and evolution after 2013 of appropriately designed services to meet the users'
needs. This continuity of services presupposes the continuity and evolution of
GMES/Copernicus infrastructure providing the necessary data. Without good
policy management, the "raison d'être" of the Programme is put into
question, as users will only rely on GMES/Copernicus if a sustained flow of
data is ensured. Without appropriate funding given to services, the continuity
will be exposed at risk.

In this context, and given the € 3.786 Mio that are
allocated to GMES/Copernicus inside the Multiannual Financial Framework for
2014-2020, the baseline scenario for this impact assessment is that the above
budget would be spent on GMES/Copernicus, and include financing the following
actions:

–
The uninterrupted provision and adaptation of
GMES/Copernicus services according to evolving user needs. The earth
Observation (EO) downstream evolution will largely depend on the continuous
input of information produced in the framework of GMES/Copernicus services.

–
The exploitation of GMES/Copernicus infrastructure
currently developed specifically for GMES/Copernicus (the prototypes of the
Sentinel missions),

–
The recurrent units (i.e. identical
copies of existing prototypes needed e.g. to increase the frequency of
observations and extend the time span of data provision with a relatively low
investment compared to the prototypes);

–
The renewal of space infrastructure
developed specifically for GMES/Copernicus (taking into consideration the long
design and construction lead times for satellites (8–10 years), including
decisions on the second generation of Sentinels);

–
The user friendly access to space data from
contributing missions (i.e. existing or new space infrastructure at
national or international level which is not developed specifically for
GMES/Copernicus) and co-ordination activities in the European Earth observation
sector;

–
A contribution for the coordination of
the in situ component.

–
It should be recalled that the long-term
GMES/Copernicus funding approach should be developed in a modular way. This
means that new expansions in the scope of GMES/Copernicus services and every
new evolution of GMES/Copernicus will be assessed against the criteria of cost
efficiency, user needs and EU policy interests.

–
However, while the overall budget has been
decided, the allocation of the budget among the three main components of
GMES/Copernicus (space infrastructure, in situ infrastructure and services) is
not predetermined by the decision. This impact assessment will therefore
compare three alternative options, without regarding any one of them as the
baseline. The impacts in terms of costs and benefits will be analysed in
absolute and relative terms for all three scenarios.

3.7.        The
risk of non-sustainability

The primary area of risk for both the
downstream exploitation of the Copernicus Services and also the upstream sector
is the inherent uncertainty in the funding model, based, as it is, on the
European Union’s MFF funding strategy. This currently guarantees sustainability
of the Copernicus programme only for 7 years. Hence, as time passes and the
guarantee period diminishes so the various actors whose businesses depend on
the programme might become less confident about the future. Unless this loss of
confidence over time can be mitigated, several negative impacts may emerge,
including the likelihood that the profile of benefits revealed by the Cost
Benefit Analyses may turn out to be over-optimistic. In order to mitigate these
risks the Commission should take steps at an appropriately early stage (perhaps
starting at the mid-term review) to instil confidence by firmly and publicly
stating its commitment to securing funding for Copernicus beyond 2020. In
addition the Commission should develop and publish a long-term strategy for
Copernicus, including its funding, so that the confidence of those with vested
interests in the programme can be maximised.

3.8.        Does
the EU have the right to act?

The legal basis for a European Earth
observation programme (GMES/Copernicus) is Article 189 of the TFEU, which
allows the EU to act. Article 2 of the Regulation 911/2010 on the European
Earth Monitoring programme (GMES) and its initial operations establishing the
GMES/Copernicus Programme already lists activities included in the programme.
Moreover, the delivery of GMES/Copernicus is a strategic objective of Europe
2020.

Responsibility for funding the exploitation
and the renewal of space infrastructure developed with EU and intergovernmental
funds cannot be optimally achieved by individual Member States because of the
costs incurred. In the field of space-based observation for operational
meteorology, European States have pooled their resources to develop and exploit
meteorological satellites in the framework of the European Organisation for the
Exploitation of Meteorological Satellites (EUMETSAT). European States also
developed demonstrators of environmental satellites either through ESA or
through national space agencies. They could not, however, find a way to
co-operate with regard to the funding of sustained operational programmes in
the field of environmental monitoring similar to that for meteorology. The need
for continuing such observations is becoming critical, considering the
increasing political pressure on public authorities to take informed decisions
in the field of environment, security and climate change and the need to
respect international agreements.

For the services with a pan-European (or
even global) coverage, Member States cannot sufficiently achieve the objectives
of the proposed action, as the inputs from different Member States have to be
aggregated at European level. The provision of other services (e.g. emergency
maps or thematic land monitoring maps of a more limited geographical scope) can
be better achieved by the EU for two reasons. First, a more coherent and
centralised management of input data, from space based or in situ
sensors will allow for economies of scale. Secondly, an uncoordinated
provision of Earth observation services at Member State level would lead to
duplications and would render the monitoring of the implementation of EU
environmental legislation on the basis of transparent and objective criteria
difficult or even impossible. If information produced at Member State level is
not comparable, it will not be possible for the Commission to ascertain whether
environmental legislation has been implemented correctly in all Member States.
Moreover, action at European level will create economies of scale leading to a
better value for public money.

The action proposed for the operational
phase of GMES/Copernicus does not replace existing services at national or
regional level, but rather complements and optimises them, coordinates them or
ensures their continuity. EU institutions and policy makers will be among the
main users and beneficiaries of the GMES/Copernicus information and services;
moreover the provision of GMES/Copernicus data at a European level is necessary
to build trust in the final users and to foster investment in downstream applications.

4.           Objectives

4.1.        General
objectives

The over-arching objectives of defining,
financing, establishing and operating a GMES/Copernicus, long-term operational
programme of activities as described in the proposed Regulation on establishing
the European Earth Observation Programme (Copernicus) are to actively address
the problems described in Section 3 above.

By forming a key element of the EU’s Space
Policy, an overall objective of GMES/Copernicus can be defined as contributing
to reaching the following Europe 2020 goals by creating:

« a more resource efficient, greener economy »

« a more competitive economy »

« an economy based on knowledge »

« an economy based on innovation »

« a high-employment economy »

« economic, social and territorial cohesion ».

· The GMES/Copernicus services aim to enable public policy makers in
particular to:

–
prepare national, European, and international
legislation, for instance in the field of environmental matters, including
climate change;

–
monitor the implementation of this legislation;

–
access comprehensive and accurate information
concerning safety and security matters (e.g. for border surveillance, civil
protection activities, …)[39].

–
Additional objectives concern the need of
assuring continuous data provision to foster downstream markets development.

These objectives will be pursued in the
context of international cooperation, while at the same time guaranteeing a
minimum level of autonomy of the EU when it comes to accessing crucial
information to inform its policy decisions.

4.2.        Specific
Europe 2020 policy objectives

Delivering GMES/Copernicus and Galileo
Programme is one of the objectives stated in Europe 2020 strategy.
GMES/Copernicus aims to contribute to the Europe 2020 objectives in the
following ways:

« a more resource efficient,
greener economy », i.e. in particular the
preservation and management of environmental resources and ecosystems and
biodiversity (knowledge of biomass and land use, monitoring of oil spills…);
achieving efficiency gains as a result of better enforcement of EU policies
(environment, agriculture, maritime policies…).

« a more competitive
economy », as a flagship on industrial and
space policies, GMES/Copernicus aims to foster the competitiveness of EU
industry and its technological edge in space (manufacturing) and beyond
(services + applications); it specifically aims to create business potential
for SMEs by boosting innovation (SMEs represented half of the downstream sector
in 2009).

« an economy based on
knowledge », GMES/Copernicus aims to
contribute to a better understanding of global challenges (e.g. climate change,
tropical deforestation, desertification, land degradation and emergency
preparedness); it supports the development of research/science by the provision
of critical data.

« an economy based on
innovation », GMES/Copernicus allows the
emergence of highly innovative downstream services (e.g. for the management of
the environment, security, meteorology, civil protection and risk management);
it aims to create partnerships between research and business communities and
can set benchmarks for transfer of research and development into business;

« a high-employment economy »,
GMES/Copernicus creates additional potential for
new jobs (e.g. in the satellite manufacturing industry and in the downstream
sector[40])
by boosting additional demand for highly-skilled workers and fostering new
markets development.

« economic, social and territorial
cohesion », i.e. need for new ground
infrastructure in particular in the EU-12; creating new business potential for
SMEs in all EU Member States (also for services and applications in countries
with weaker industrial base, thanks to the full and open data access principle
of GMES/Copernicus). GMES/Copernicus will give an impetus to those countries
lacking behind in land or emergency services and will therefore contribute to
the objective of an increased cohesion among the Member States. GMES/Copernicus
services are by definition pan-European and respond to European requirements.

4.3.        Operational
policy objectives

The
decision of the European Council integrates GMES/Copernicus inside the MFF,
setting the ceiling for the maximum level of commitments to € 3.786 Mio from 2014 to 2020. The operational
objective now is to allocate that amount in the most cost-effective way
when developing the different components of GMES/Copernicus. On governance,
and based on principles of good governance, the operational objective is to
separate supervision, management and technical implementation.

4.4.        Consistency
with and relevance to other EU policies

In the operational phase GMES/Copernicus
will be able to deliver information services to policy makers, public
authorities, businesses and European citizens. This means that GMES/Copernicus,
as an EU autonomous source of information, aims to support all relevant Union
policies, instruments and actions, where understanding the way environmental
changes affect our planet is paramount.

Examples of GMES/Copernicus contribution to
other EU policies include following:

·
International cooperation policies: extending GMES/Copernicus services to Africa represents a concrete
contribution to EU development policies. Satellite Earth Observation, for
instance, enables the monitoring of crop conditions during the agriculture
season and the development of Food Security Early Warning System for at-risk
regions worldwide. In addition some applications of GMES/Copernicus could
provide policy makers with information on natural resources in Africa.

·
Transport policy:
by optimising ship routing GMES/Copernicus Marine service could minimise fuel
consumption and emissions.

·
Environmental policies: the GMES/Copernicus services provide systematic or periodic
information at various scales which are necessary for monitoring on a
continuous basis the state of the Marine, Atmosphere and Land environment. In
this context environmental images collected through GMES/Copernicus could
provide the basis to monitor the targets of the new European biodiversity
strategy, as announced in May 2011, or as a tool to monitor the efficient use
of resources such a wood, water, minerals, land, air (quality) and many others
at European and global scale

·
Humanitarian aid:
GMES/Copernicus services also play an important role in emergency response
activities inside and outside the EU, providing up-to-date information which is
crucial for decision makers, operation planners and field teams.

·
Energy:
GMES/Copernicus can provide Europe with a reliable source of information, monitoring
nuclear proliferation or decommissioning of nuclear sites and protecting vital
infrastructure such as pipelines.

·
Regional policy:
at Pan-EU level GMES/Copernicus Land Service provides harmonised land cover and
land cover change products. This information is essential for land use and
urban policies purposes.

·
Climate change policy: There are several GMES/Copernicus services that touch upon
climate-related issues such as forest monitoring and land carbon information,
monitoring sea and ice level, analysis of greenhouse gases and fluxes.

·
Internal affairs and security: GMES/Copernicus can contribute to border surveillance and maritime
surveillance. In this framework since 2008, DG ENTR and DG HOME have
established a close cooperation.

·
Agriculture: Agri-environment
monitoring could contribute to the improvement of the timely and accurate
monitoring of agricultural land use state and its changes at European, national
and regional levels by providing common methodologies and indicators covering
various temporal, spatial and thematic scales. The common agriculture policy
could use GMES/Copernicus in order to monitor the ‘set-aside’ policy.

·
Marine related policies: GMES/Copernicus allows understanding the ocean, its dynamic processes
and its impact on climate change. Applications in this domain include: Maritime
Security, Oil Spill, Marine Resources management, Climate Change, Seasonal
Forecasts, Coastal Activities, Ice Surveys and Water Quality.

4.5.        Synergies
with other DG Enterprise programmes

There are clear synergies between
Copernicus and other DG Enterprise programmes, which have been exploited in the
past and may be exploited in the future. The main Programmes to be mentioned
are the space elements of Horizon2020[41]
and COSME (Competitiveness of enterprises and SMEs). The fact that Copernicus
is now entering its operational phase does not mean that it will not need
research activities also in the future. The Copernicus services build on the
results of FP7 projects (e.g.: MACC II, MyOcean2, etc) and there will be a
similar need from the Space projects of the framework programme Horizon 2020 to
provide further guidance and inspiration – obtained through multi-national
European projects – to help in the onward development of Copernicus, especially
regarding the less mature elements (e.g. the Climate Change Service) and the
future evolution (e.g. through emerging technologies). Other examples include
contributions to the provision of better tools to access and analyse the data,
to studying innovative downstream applications of Copernicus data and services
and to support the establishment of Space Surveillance and Tracking capability.
As far as COSME is concerned, in the past there has been cooperation especially
for the European Mobile and Mobility Industries Alliance (EMMIA) projects: a
European Commission initiative which fosters the cooperation between
industries, especially SMEs, and regional authorities in the field of mobility
and mobile services. A specific call[42]
was made to help entrepreneurs who want to build downstream applications using
Copernicus and Galileo and new initiatives are foreseen for the future.

·

5.           Options
and impact analysis

Preamble

The whole of Annex I and the large majority of this
Section, while based on material from a Specific
Contract with Space Tec Partners under the Framework Service Contract
89/PP/ENT/2011 – LOT 3, has been edited and updated to reflect the Commission's
proposal for a Regulation establishing the Copernicus programme.

This section presents the key results from the
overall impact analysis. A more comprehensive description, along with details
of the analysis methodology, is presented in Annex I. It is important to note
that the most up-to-date version of the so-called “Injection Paper” (the
deliverable from the Specific Contract) has been used in this updated Impact
Assessment (and is included as Annex I). The most significant difference from
previous version is the assumption that the level of funding for Copernicus in
the period 2021-2030 will be the same as that applicable during the current
MFF. This change was requested and allows an analysis that is not complicated
by guesses of future budget variability which are necessarily based on mere
speculation. It does not impact in any way the opinions expressed by the IAB on
the previous submission.

Preliminary
considerations

All options in this impact assessment share
some common elements that are described below.

Infrastructure at Member State level

GMES/Copernicus is
partly based on an existing infrastructure at Member State level, of so-called "in
situ" components (airborne or ground-based sensors) and space
components (so-called "contributing missions"). The starting
assumption is that Member States will continue to invest in their space and in
situ infrastructure for their own purposes, as they have done in the past.

Principle of modularity

The modularity
principle refers to the possible differentiated implementation of
GMES/Copernicus based on budget constraints. The principle applies both to the
services and to the infrastructure investment. For instance, if under one of
the options, the available budget would be still somewhat lower than what is
foreseen in the option, the services can be slightly reconfigured and still be provided
with a reduced portfolio of products. Therefore the GMES/Copernicus programme
has no systemic risk of cost overrun.

5.1.        Different
options on budget allocation

Given the amount of funding decided by the
European Council for the Copernicus programme, the three scenarios (options)
described in this section examine the effects of varying the amount apportioned
to the three main components: space infrastructure, contribution to the in
situ infrastructure and the financing of the Services. The
analysis emphasises the trade-off between investments in space infrastructure
and services, while keeping the expenditure on the in situ stable, given
the inherent nature of this component (primarily reliant on national
investments).

The logic applied in designing the three
cost breakdown scenarios in this analysis proceeds as follows:

Previous studies have identified minimum
annual budget levels for the three components, below which realisation of
benefits falls rapidly.

The first scenario represents the maximum investment
in the Service component.

The remaining two scenarios adjust the
levels of the Space component upwards, and apportion the remaining budget to
the Services component.

The analysis of the possible funding
scenarios shows that investment should be proportionally higher than previously
envisaged in the service component, including their initial set up and the
continuous improvement of the specific services. Nonetheless, a large
investment in the space component still remains necessary since this will provide
the EC with the essential source of sustained, independent and comprehensive
Earth Observation data, whose exploitation is underpinned by a well-defined
full and open Data Policy. This is of crucial importance when it comes to
private business development: a stable and transnational regulatory framework
is one of the enabling factors for private entrepreneurs to invest to develop
businesses with Copernicus data.

For the space component, ESA has proposed a
revised strategy for Sentinel satellite development and deployment which
reflects the reduction in the available budget but which responds to the
essential need for continuity of space-based observations. This re-planning
includes three major changes when compared with the previously agreed Copernicus
Long-Term Scenario (LTS) as follows:

Recurrent –C and –D units of all the Sentinels are introduced. These
provide for data continuity and have the benefit of the economies of scale at
the expense of postponing the evolution of observational needs. The development
of these units will take place during the MFF period, although their eventual
launch and operations will occur post 2020;

Related to the above point, the development of the Sentinel-NG (Next
Generation) satellites is deferred beyond 2020;

Less funds than previously foreseen will be committed to securing
access to data from contributing missions (i.e. satellites other than the
Sentinels). The impact of this decision is mitigated by the fact that data from
the Sentinels will become available progressively over time, obviating the
continued need/importance of some third-party data sets.

This approach clearly puts the onus on the
Services and the downstream applications to exercise their creativity and
expertise to the maximum extent to continually find new and novel ways of
making the most benefit from the existing data while, at the same time, to
expend effort in capturing the changing requirements that must be consolidated
for the planning of future (post 2020) developments with confidence.

This approach results in the revised
Sentinel development/deployment baseline described in the diagram below.

5.2.        Methodology

In 2011 Booz & Company was commissioned
by the European Commission to undertake a Cost-Benefit Analysis (CBA) of the
GMES programme. The main focus of this study was the assessment of four broad
funding levels for GMES and its operational services. The evaluation of
benefits was mainly based on the role EO infrastructure plays in supporting the
implementation of government policies aimed at better managing the environment
and issues related to security. Based on this assumption, the study analysed
the value of information GMES provides to support policy action and resource
management across the EU and further afield.

In order to establish these benefits (and
how GMES may reduce various costs), a literature review of the economic value
of information, combined with interviews and desktop research, enabled the
development of assumptions around the incremental benefit from better EO
information. Four options were provided for analysis under the cost-benefit
assessment:

Option A (Baseline Option with no on-going commitment to replace
infrastructure or investing significantly in services);

Option B (Baseline Option Extended, but still with no on-going
commitment to replace infrastructure over the longer term and invest
significantly in services);

Option C (Partial Continuity, with commitment to provide Sentinel
infrastructure and invest considerably in services, with limited support to
ensuring continuity of data from Contributing Missions); and

Option D (Full Continuity with commitment to provide Sentinel
infrastructure and enhanced support for the continuity of data from
Contributing Mission with full investment in services).

The quantification of benefits was based on
an approach that attributes to GMES an incremental improvement in outcomes,
e.g. measured as a change in baseline environmental damage costs. This
recognised that the attainment of particular outcomes in each benefit area is a
result of multiple factors, of which the contribution by GMES is only one part.
The extent of GMES contribution was taken into account in the analysis for each
benefit area.

A new study was commissioned from SpaceTec
Partners to re-examine the original CBA in the light of potential budgetary and
governance choices. The methodology adopted in the Booz CBA was based on a
Copernicus “full continuity” scenario (referred to as Option D), and then
applying progressive degradation to each of the other options in relation to
this scenario. This scenario was used as the reference case in the new SpaceTec
Partners study. The “progressive degradation” principle is applied in the
present analysis to establish the baseline for analysing the changes in the
allocation of funding amongst the different main cost areas, and the
like-for-like estimation of benefits, subject to the understanding that there
are limits to the validity of this principle, such as minimum and upper
thresholds on benefit realisation.

The CBA regards each of its options “as
being discrete” (Booz CBA, p. 99), meaning that the benefits do not grow
linearly in relation to the level of investment, but are the outcome of
different configurations of the Space, Service and In Situ components within
the options. In other words, a step function is at work, with threshold
boundaries separating unconnected plateaux of benefit escalation.

This is particularly true in the case of
the Space component; since the Sentinels are deployed in units, there are
limits as to what can be achieved with specific levels of funding. Minor
deviations around these step changes do not serve to alter the benefit profile
in a significant way. Whilst this proposition is not readily observable in the
Booz CBA because of the proportionally large gap between the funding levels of
each option, it is recognised that in each case, a step change in commitment
(and hence, benefits) has taken place.

In order to refine the analysis, the
SpaceTec 2013 study examined the extent to which benefits scale in relation to
the level of funding allocated between the Space and Service components, in
particular. This analysis allows a comparison of the three scenarios analysed
in this Impact Assessment, that all share the same budgetary envelope. The
following assumptions underpin the present analysis as regards the scaling of
benefits:

Investment in the
Space component is a necessary, but insufficient condition for the
realisation of benefits.

In order for
benefits to arise, parallel investments must be made in Services.

A step change in
benefits occurs once investment in Space reaches a
certain threshold. Beyond this threshold:

Additional
investment in Space does not bring about linear increases in benefits

Step-changes in
benefits are contingent on additional investment in Services.

Benefits linked
to investments in services are more linear, with
incremental benefits possible through service improvement, extension to scope,
and the development of new services. These nonetheless remain dependent on
upgrades or enhancements to the underlying Space infrastructure for larger step
changes, accompanied by more major service-supporting developments such as
improved access to data and the enabling of the downstream sector[43].

While the in situ component also
plays a role in the scaling of benefits, it is not shown here as the
Space-Services relationship is considered to have the most impact on the
present analysis.

5.3.        Options
description

The Cost-Benefit Analysis will analyse the
three scenarios described below:

Service Delivery Pull

This scenario foresees a
relatively large share of the available budget being used to finance the
provision of services. This scenario allows for a level of funding for the
Space component in line with previous studies (namely the Booz CBA option B).
The realisation of additional, programme-wide benefits rests on the development
of the Service component and on the implementation of its enabling factors. In
this scenario, the deployment of the Space component is assumed to follow a
serial approach (i.e. the Sentinel series of satellites are deployed in
series). This scenario would therefore try to combine the minimum investment in
space infrastructure with the maximum possible financial allocation to
services.

Intermediate

The “Intermediate” scenario increases the
investments in the Space component with respect to the first, while the
Services component is reduced proportionally. In this scenario, as in the
previous one, the deployment of the Space component is assumed to follow a
serial approach. This scenario illustrates the impact of adding emphasis to the
evolution in contrast to that attributable to the impact of evolving services.

Technology Driven

This scenario foresees the
highest possible investment in the Space component while the Services component
would be reduced to the bare minimum. This scenario would be completely driven
by advances in Space-based remote sensing technology but would not necessarily
embrace the priorities elaborated by the users of the Services.

5.4.        Analysis
of impact of options on budget allocation

The budgetary allocation assumptions for
each scenario, given a fixed total budget, and the benefits for each of the
scenarios are presented in the tables below:

Table 2 - Cost Distribution by Scenario (Annual
Averages)

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven ||

|| || Space || in situ || Services || Space || in situ || Services || Space || in situ || Services || Annual average

TOTAL 2014-2030 || € Mio || 400 || 22 || 119 || 422 || 22 || 97 || 438 || 22 || 81 || 541

% || 74% || 4% || 22% || 78% || 4% || 18% || 81% || 4% || 15% ||

Source: SpaceTec Partners 2013.

Table 3 - Benefit
Simulation by Scenario

|| 2014-2020 || 2021-2030 || TOTAL (2014-2030) || Integrated contribution to European GDP || Integrated Benefit Cost Ratio (BCR)

|| Cumulative, € Bn || % || Ratio

I - Service Delivery Pull || 6,3 || 23,0 || 29,4 || 0,164% || 3,30

II - Intermediate || 6,1 || 22,1 || 28,2 || 0,157% || 3,17

III - Technology Driven || 5,9 || 20,8 || 26,7 || 0,149% || 3,01

Source: SpaceTec Partners 2013.

Downstream Impact

In addition to the direct benefit analysis,
the economic impacts associated with the Earth Observation and GMES/Copernicus
downstream market have been estimated by scenario, as illustrated in the chart
below.

Figure 1 - Projected Downstream Turnover By
Scenario (2014-2030, € Bn)

Source: SpaceTec Partners 2013.

Impacts on employment

The impact on employment has been estimated
for each scenario, considering direct and indirect employment separately. The
effects of different funding inputs have been modelled according to the cost
scaling parameters outlined in Annex I.

Table 4 - Employment Impact by Scenario

(US: Upstream, MS: Midstream, DS: Downstream, DE:
Direct Employment, IE: Indirect Employment, T: Total)

(Figures rounded up to nearest 10)

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

|| || DE || IE || T || DE || IE || T || DE || IE || T

|| || Number of jobs created / maintained by 2030

TOTAL(2014-2030) || US || 2.030 || 5.270 || 7.300 || 2.140 || 5.550 || 7.690 || 2.220 || 5.770 || 7.980

MS || 710 || 1.830 || 2.540 || 680 || 1.750 || 2.420 || 650 || 1.690 || 2.340

DS || 7.170 || 29.340 || 38.510 || 8.710 || 27.850 || 36.550 || 8.460 || 27.070 || 35.530

T || 11.900 || 36.440 || 48.330 || 11.510 || 35.150 || 46.650 || 11.330 || 34.520 || 45.840

Source: SpaceTec Partners 2013.

Economic, Environmental and Social
Benefits

The benefits of each scenario have been
categorised according to their economic, environmental, and social dimensions,
both qualitatively and quantitatively.

Table 5 - Summary of Economic, Environmental and
Social Benefits (Quantitative)

Benefit Categories || Values || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

Economic || Total Space Turnover (2014-2030) || € Mio || 8.002 || 8.306 || 8.542

Total Downstream Turnover (2030) || 1.034 || 981 || 954

Combined Δ Scen. I || % || 0% || -2% || -4%

Environmental || Total (2014-2030) || € Mio || 17.611 || 17.005 || 16.158

Δ Scen. I || % || 0% || -3% || -5%

Social || Total (2014-2030) || € Mio || 11.585 || 11.045 || 10.415

Employment Impact[44] (2030) || # || 48.330 || 46.650 || 45.840

Δ Scen. I (Benefits) || % || 0% || -5% || -10%

Δ Scen. I (Employment) || % || 0% || -4% || -5%

In order to complement the analysis being
carried out by Booz, the SpaceTec study used an additional model, the FeliX
model, a system dynamics model and benefit simulator, which takes into account
the complex relationships between natural and socio-economic systems has been
developed by SpaceTec. The model forecasts benefits that are in the order of
magnitude of € 21.700 Mio cumulatively by 2020 and € 220.000 Mio by 2030
(undiscounted), substantially higher (~8 times, in the long term) than
the ‘static’ benefit projections of the present study. This is due to the enlarged
scope of the FeliX model, and its broad assumptions of underlying
infrastructure (namely GEOSS[45],
to which Copernicus is expected to constitute the EU’s major contribution). The
comparison with the FeliX output serves to highlight the strong potential for
higher-order magnitudes of benefits when Copernicus is viewed as part of a
broader system of systems. The figures used in this impact assessment are
therefore considered to be conservative estimates.

Figure 2 - Potential Range of Benefit Scaling Based
on FeliX Model

Source: SpaceTec Partners 2013.

5.5.        Cost-Benefit
Analysis

This section summarises the results of the
scenario analysis presented in this chapter.

Table 6 - Integrated Impact Simulation by Scenario
(Undiscounted)

|| || || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

2014-2020 || Cumulative Benefits || € Bn || 6,3 || 6,1 || 5,9

2021-2030 || Cumulative Benefits || 23,0 || 22,1 || 10,8

TOTAL (2014-2030) || Cumulative Benefits || 29,4 || 28,2 || 26,7

Downstream Impact in 2030 || 1,03 || 0,98 || 0,95

Integrated contribution to European GDP || % || 0,164% || 0,157% || 0,149%

Integrated BCR || ratio || 3,30 || 3,17 || 3,01

Source: SpaceTec Partners 2013.

The analysis has examined three scenarios
with different proportional allocations of budget amongst Space, in situ
and Services. The scenario “Service Delivery Pull” has the highest benefit
potential, at € 29,4 Bn cumulatively over the 2014-2030 period, and the highest
integrated Benefit Cost Ration (BCR) at 3,30.

Scenario I: Service Delivery Pull

The larger benefits projection in this
scenario is due to the increase in investment in services, coupled with the
serialised deployment of the Space component, conferring the necessary
longevity and programme commitment for the development of the downstream
sector.

Overall, this scenario represents an
interesting mix of investments. It capitalises on the marginally increased
investment in Services against a “legacy” level of Space component investment.
The programme’s continuity is assured until 2030. The level of funding for the
Space component should include some allowance for preparatory activities
leading into developing the next generation of Sentinels. It is assumed also
that ESA will continue to fund, to a large extent, all the preparation and
pre-development activities for the future generation satellites, plus the
development of the prototype units.

The impact of funding services at this
level leads to a higher, relative level of benefits, given the strong coupling
between services and benefits. The impact should be ensured by an appropriate
expansion of the Copernicus services, by ensuring access from everywhere in
Europe to the services and data, by enforcing adequate standards for products,
by supporting the expansion of the downstream sector and sustaining the user
community in the access to and adoption of new products, services.

Scenario II: Intermediate

This scenario represents less of an
increase in benefits with respect to “Service Delivery Pull”, due to the higher
spending in Space at the expense of Services.

The objectives and extent of the investment
in Services remain substantially the same as in the previous scenario, only to
a slightly lesser degree.

The Space component has additional margin
for preparing the next generation, but part of this extra should be dedicated
to ensuring wider circulation of data to different user categories (science,
commercial, downstream, regional, etc.). This amount does not allow a change in
philosophy from the serial deployment of Sentinels. As in the previous one, it
relies heavily on the Contributing Missions.

Scenario III: Technology Driven

This scenario presents a significant
drop in overall benefits with respect to the previous ones, as the transfer of
funding from the Services to the Space component does not compensate for the
loss in benefits.

This scenario does not offer many reasons
to be recommended. It poses questions about the use of the extra funding for Space
(for example, starting a different family of Sentinels, or adding C/D units)
and does not sufficiently encourage the expansion of services and their
availability to a much wider user community.

All projected benefits in this analysis are
contingent on the implementation of a set of enabling factors, including
regulatory and market development actions, summarised in Annex I.

5.6.        Key
enabling factors and the impact of a reduced budget

The initial phase has mainly been based on
research projects, which have also led to the birth of the first two
operational services (i.e. Land and Emergency Management). On the basis of this
experience, the GMES Unit is now presenting the proposal for the Regulation
with the aim of putting in place the framework necessary for the theoretical
benefits to be realised. In particular, sustained data availability, quality
and continuity, underpinned by a data policy that ensures full, open and
free-of-charge access, combined with a strategy ensuring historic data
preservation, appear to be necessary factors for the private sector to invest
in the use of Copernicus data to develop new businesses and also for the public
sector to have the information they need to support their policies and their
monitoring roles. The budget apportionment and the governance choices will
particularly affect the quality and the continuity of data provision.

To some extent, the reduction in the budget
could be foreseen as a likely outcome of the MFF debate and so, in anticipation
of the decision of Council, analyses of several possible funding scenarios were
conducted with the aim of mitigating the impact of an eventual reduced budget.
The key drivers were to ensure the continuity of space-based observational inputs
(necessitating some re-planning of the Sentinel developments and deployments)
and to preserve the effectiveness of the services – and hence maximising their
downstream impact – by assigning as much of the remaining budget as possible to
them. The decision on the apportionment of the available budget to the three
component areas is informed by the analyses and reflects the most favourable
scenario analysed.

The proposal had to be adjusted to take
account of the fact that the MFF cut the initial amount by over 2 Billion EUR.
In order to preserve service delivery, the Commission had to cut expenditure
for new developments of the space component during the MFF period. ESA will
take over responsibility for the development of the next generation of the Sentinels.
Moreover, the introduction of the next generation will be postponed. Instead,
the D-Units of the Sentinels will be procured as explained in section 5.1 of
the Impact Assessment. This will maintain the quality and continuity of the
satellite data whilst postponing the introduction of a more modern generation
of Sentinels to the second part of the next decade.

5.7.        Expenditure
profile considerations

The Commission shall establish a
multi-annual plan for the implementation of the Copernicus programme. In order
to optimise the implementation, a mix of annual and multi-annual work
programmes will be adopted. Moreover, such is the nature of the transition to
routine operations, it is also envisaged that the allocation of funds during
the MFF period shall reflect the ‘ramping up’ characteristic of the various
Copernicus Services over time as well as reflecting the expenditure needs
resulting from the revised satellite development and deployment. Hence an
adjusted yearly allocation of the budget, constrained by the overall envelope,
will be needed. This is anticipated to result in a peak of expenditure in 2017
and 2018. Administrative expenditure (including human resources) is expected to
remain at a constant level throughout the MFF period.

The analysis of benefits performed by Space
Tech Partners did not attempt to reflect the year on year variability in
expenditure but rather assumed a constant average spend each year. This was
decided due to the uncertainties currently present in the spending profile
combined with the likely marginal impact that might be expected (since benefits
are generally shown as cumulative).

5.8.        Conclusion

The above Cost-Benefit Analysis shows that
within the budget foreseen by the European Council, Scenario I (Service
Delivery Pull) would have the highest benefits and therefore would be most
cost-effective scenario.

6.           Options
and impact analysis on Governance

Preamble

The content of this section has, to some
extent, been overtaken by internal discussions and other events since it was
first presented in the IA. However, since not all questions have yet been
completely addressed, it has been retained in this version for the sake of
completeness.

6.1.        State
of play

· The objective for governance is to assure that all aspects ranging
from policy supervision to technical implementation are clearly fulfilled by
mandated organisations:

–
The policy supervision and overall
coordination consists in defining the policy objectives, the high level
orientations and content of the programme, the associated budget requirements,
the main organisational and architecture principles, and the overall guidelines
for programme implementation. It also covers the coordination of funding
commitments from stakeholders.

–
Management: the managing authority follows the
political guidelines and is in charge of the management of budgets for the
implementation of tasks. It prepares and implements the work programmes and
supervises the implementation of tasks. It is responsible for the preparation
of administrative arrangements (e.g. calls, grants, delegations…) to the
entities who will be in charge of the technical implementation of the tasks;

–
Technical coordination: is usually carried out
by the management authority, but in some cases, the latter may delegate some
tasks to a body, e.g. preparation of contracts and Service Level Agreements,
monitoring of the task implementation, certification of products and services,
consolidation of user and service requirements.

–
The technical implementation is ensured by the
operating entities (industrial companies, networks of centres…) in charge of
specific tasks (construction of satellites, delivery of services). The
assignment of this responsibility will follow a competitive approach (e.g.
Calls for Expressions of Interest) to ensure transparency and fairness.

· Under the current GMES/Copernicus programme[46],
the Commission is in charge of the political supervision and overall
coordination of the GMES/Copernicus programme, including management of the
services, and of the EU budget[47]. The technical coordination of some activities, including budget
management for the implementation of tasks, are outsourced to external entities
such as ESA for the space component, or the European Environment Agency (EEA)
for the in situ component.

· The responsibility for the technical implementation of the services
must, on the one hand, take into account the invaluable experiences gained
during the GIO (and earlier) phases while, on the other hand, pay due respect
to the principles of open competition. The latter concern should take account
of the presence of the open competition that underpinned the awarding of the
FP7 funded pre-cursor services as well as ensuring that principles of open
competition are embraced by the coordinating entities of the services through
the selection of partnership arrangements.

· The topic of governance has been discussed at different occasions. Stakeholders
agree that the GMES/Copernicus programme is very complex and the technical
implementation could be done by an external agency, enabling the European Commission
to focus on political supervision.

6.2.        Options
on programme governance

6.2.1.     Option
A: Commission in charge of overall coordination and management

Under this option, the Commission would remain
in charge of the political supervision and the overall coordination of the
programme, including the management of tasks. The technical coordination of
space infrastructure would be outsourced to competent bodies, such as ESA and
EUMETSAT, and agencies such as EEA and ECMWF for the in situ component
and/or the technical implementation of appropriate services. The Commission
would take decisions regarding the daily management of the programme and would
also implement the budget.

6.2.2.     Option
B: Delegation of the management to an existing European Agency

The Commission would remain in charge of the
overall coordination and political supervision of the programme but not of its
management. Management activities, such as the budget implementation, would be
delegated to an external entity/Agency (or to several entities) who already
possess the appropriate skills. The Commission would remain in charge of
relationships with partners and users.

6.2.3.     Option
C: Delegation of the coordination and management to the European Space Agency

The Commission would no longer be in charge of
the programme. The overall coordination, including budget management and
implementation of tasks, would be delegated to ESA, subject to the appropriate
amendment of the constituent acts or to functional arrangements. The Commission
would no longer be in charge of the political supervision of the programme and
of relationships with partners and users.

6.2.4.     Option
D: Delegation of the management to a new Agency

Compared to the options described above, a new
Agency would be set up for the programme management of GMES/Copernicus and the
implementation of the corresponding budget. This new agency could be an EU
Agency or an international one.

6.3.        Impact
analysis on governance

6.3.1.     Option
A: Commission in charge of management

The advantage of this option is that the
current set up would not be disrupted. With the outsourcing of tasks, the
impact on the EU resources would be limited. However, the Commission would
remain involved in the direct management of the operational phase of the
programme, including the budget implementation, while it should concentrate on
its core business, namely the political supervision of the programme.

6.3.2.     Option
B: Delegation of the management to an existing European agency

The Commission would play a political role of
supervision and coordination. The daily management would be entrusted to
entities more suited to this role with more specialized staff, under the
control of the Commission. The delegating tasks to an Agency would still have
an impact on EU resources. This option is in full respect with the separation
principle between supervision and management. Moreover, operational
efficiencies could be created if synergies with other programmes can be
realised.

6.3.3.     Option
C: Delegation of the coordination and management to the European Space Agency

The management would be entrusted to an entity
with experience in this role and the impact on EU resources would be minimised.
However, the Commission would lose political control over the programme and its
influence in defining the objectives and requirements. In addition, the
implementation of and access to GMES/Copernicus infrastructure and services may
be reduced to a few Member States willing to continue their investments into
GMES/Copernicus. GMES/Copernicus would then risk becoming a technology pushed
programme instead of a user driven one. The management of an operational
programme such as GMES/Copernicus could require amendments to the ESA Convention,
which could be difficult to obtain and require a long time (ESA currently being
a research and development Agency, ESA Member States may not necessarily be
prepared to amend its statute). It should also be clear that ESA is a space
agency whereas GMES/Copernicus has a large part of activities that go beyond
launching satellites. This may mean that under ESA management the services and in
situ component of GMES/Copernicus are liable to receive a lower level of
focus.

6.3.4.     Option
D: Delegation of the management to a new agency

In this option, the
Commission would play a political role of supervision/coordination. The daily
management would be entrusted to entities more suited to this role, under the
control of the Commission. Opting for an international organisation would not
impact EU resources. This option is however likely to make the institutional
landscape more complex with one new entity. Synergies would not be maximised,
with potential risks for the implementation of the programme. In addition,
creating a new entity could prove either too complex and long (e.g.
international organisation) or incompatible with the EU policy of not creating
new agencies. A new Agency would require substantial additional resources.

6.4.        Decisions
on governance

Various options for the governance of Copernicus
are described above. An assessment of these options and other factors has led
to the following governance proposal.

General considerations:

The
Commission, assisted by a dedicated Copernicus Committee, should have the
overall responsibility for the Copernicus programme; it should define its
priorities and objectives, in accordance with the Copernicus Regulation, ensure
the overall coordination and supervision of the programme;

The
implementation of the programme should be delegated to entities with the
appropriate expertise. The Commission should rely, whenever possible, on the
capacities of competent Union agencies.

Specific considerations:

The
Commission shall entrust to ESA the development tasks of the space component;

The
Commission shall entrust the operational tasks of the space component to ESA
and to EUMETSAT in accordance with their respective mandates;

The
Commission may entrust the operational tasks of the in-situ component to the
operators of the services;

The
Commission shall award responsibility for the operation of the services to
agencies who respond to a call for expressions of interest and who satisfy the
Commission as regards their capabilities, experience and financial/operational
capacity and suitability.

6.5.        Considerations
on ownership

Decisions on ownership of the Sentinels
cannot be considered in isolation of decisions on governance. EU ownership of
infrastructure, developed specifically for GMES/Copernicus (in particular space
infrastructure), would result in direct control of the assets by the EU.

With ownership of assets comes
responsibility for associated risks and liabilities. For the Sentinel
satellites, which represent the largest value assets, the highest risks occur
in relation to their launch and early in-orbit life and also in respect of
their potential susceptibility to damage from space debris, along with the
implementation of the end-of-life scenario (i.e. de-orbiting). By deferring the
transfer of ownership until after the satellites have been launched and
successfully completed their respective in-orbit validation (IOV) tests, the
first risk category is all but eliminated. Furthermore, the proposed Copernicus
Regulation specifically identifies an operational activity delegating the
physical preservation of the satellites to the agencies responsible for their
routine operations, thereby addressing the second risk category.

While the risk from ownership is low, it
has to be noted that EU should not forego the benefits of ownership stemming
from such a major investment. In fact, it would be inappropriate for the EU to
invest some 3.8 Bn EUR without acquiring ownership of the space infrastructure
and all the data and information thereby produced. Thus, it is suggested that
the EU should assume ownership of the tangible and non-tangible assets of the
programme.

Co-ownership of GMES/Copernicus assets by
different public entities could be more costly than EU ownership only. This
could lead to a governance structure for GMES/Copernicus that is too complex
and potentially to higher costs.

In a data purchase scheme, the EU would not
own infrastructure, but would acquire ownership or exclusive licences for parts
or all data collected by one or more satellites. The advantage of this option
would be that the EU would avoid direct involvement in the complex technical
operations of the space infrastructure, which, however, could also mean that
the EU cannot influence strategic decisions taken by the infrastructure owner.
The inconvenience would be that the data policy would largely depend on the
commercial strategy of the seller. Moreover, given the present structure of the
satellite industry, the EU could find itself paying a large portion of the
funds to satellite data providers of third countries, thus supporting the
development of the satellite industry of those countries rather than investing
in the development of the European satellite industry.

7.           Monitoring and Evaluation

7.1.        Evaluation

On-going evaluation will take place through
the User Forum. An ex-post external evaluation will be organised in 2014, at
the end of initial operational activities, and also it is planned that there
shall be a mid-term evaluation of the operational programme in 2017.

Three main indicator types will be
considered:

Sectoral performance indicators – e.g. context, trend and strategic indicators

Policy indicators – setting out the link between objectives, the achievement of policy
goals and the criteria needed to measures progress towards these.

Programme indicators linked to the
implementation of specific activities – indicators
that measure progress towards the achievement of goals linked to activities
within specific Copernicus' services, and those few that can be aggregated.

The GMES unit has already undertaken some
work to develop sectoral performance indicators. These are
important indirect proxies of the programme’s success, but are contextual in
nature. It is important that the indicator framework builds on these existing
indicators.

An overview of those suggested is provided
below:

Upstream indictors, relating to space infrastructure and services such as satellite
application systems, launcher systems, scientific systems and ground systems,
as well as the manufacturing and development of earth-based infrastructure
(sensors etc...);

Midstream indicators relating to the production, distribution, dissemination of data and
data processing; and

Downstream indicators on the use of EO services and products both by the public sector
and the commercial one, focussing on the opportunities for spin-off companies.

These indicators provide a useful framework
to develop a better understanding of the enabling factors that will lead to the
development of EO products and services. They are also interrelated, with the
development of downstream applications and services having knock-on upstream
effects by potentially creating an increase in demand for data and
enhancing the commercial viability of space infrastructure.

At this stage, monitoring the development
of downstream services can mainly be achieved indirectly through sectoral
performance monitoring. In the future, it may be possible through evaluation
and improved monitoring processes within Copernicus full operations to capture
the direct longer term results and impacts of the development of
downstream, measured in terms of their contribution to employment and growth.

There is also a need to develop indicators
to assess programme outcomes, measured in terms of outputs and results. A study
requested by the Commission to CSES advocated including a small number of indicators
for the overall services (e.g. service user uptake, financial
implementation), and then some supporting indicators relevant to each of
the two services, EMS-Mapping and the GIO land.

Examples of quantitative indicators are:
the number of registered users, the number and volume of data downloads, the
number of service activations, the number of data products used, etc. Qualitative
indictors will also provide some interesting information that can be used as
indicators. These could include ease of access to reference data, harmonisation
for available data between Member States etc.

The indicator framework should include
specific indicators relevant to each service so as to provide monitoring
information about the extent of usage of data products, the purpose for which
these are being used and the uptake of specific services. It would also be
useful to incorporate indicators in the framework that can be aggregated across
Copernicus services to complement service-specific ones.

Within this broad set of indicators, the
main types of indicators that should be taken into account are:

• Inputs – indicators that monitor the level of resource requirement to implement a particular policy measure, initiative or action. • Outputs – indicators that monitor immediate outcomes and are useful for internal management purposes. • Results – indicators to assess medium-term, intermediate policy outcomes. It should also reflect the intervention logic of the specific objective under which measures / initiatives have been supported. • Impacts – longer-term indicators that relate to the achievement of high-level global objectives and their effects (e.g. economic and employment impacts, impacts on innovation, technology transfer and progress towards strengthening space industrial competitiveness).

A set of performance indicators is proposed
in the table below. Although these are based only on an analysis of the fast-track
services implemented under the GIO, they could nevertheless be considered
as a template for the assessment of future services.

Some of the performance indicators relate
to monitoring internal processes e.g. Length of time to produce reference maps
and some to user uptake and exploitation. Context indicators relating to
sectoral performance of the upstream and downstream EO industry are also
included in the table.

Table 7: Proposed indicators

Performance indicators Service –specific (EMS) || No. of service activations (i) Rush Mode and (ii) Non-Rush Mode Sub-indicators for internal management purposes: by type (earthquake, explosions, fire, floods) || Organisation responsible for collecting data || Output

No. of Member States triggering the service - EMS-Rush mode - EMS-Non-rush mode - EFAS || DG ECHO/ MIC || Output

No. of downloads of EMS-Mapping data products || DG ECHO/ MIC || Output

No. of downloads of EFAS products || JRC || Output

Length of time to produce: - Reference maps - Delineation maps - Grading maps Baseline (i) from point of service activation (ii) from point of reception of raw data || Service contractor || Output

Length of time between the production of maps and their dissemination to end-users || DG ECHO/ MIC || Output

No. of users of EMS-Mapping data products - Rush mode - Non-rush mode - EFAS || DG ECHO/ MIC Survey of members of the NFP network belonging to MIC to ascertain how widely used among civil protection agencies. || Result

Service-specific indicator – GIO Land || Number of GIO land product downloads - Pan-European component - Local component - Global component || EEA || Output

Number of public authorities and wider organisations using land applications / services - Pan-European component - Local component - Global component || EEA || Result

Number of new applications / services developed using GIO land data products || EEA’s Corine Land Cover User Application Database || Result

No. of Member States having harmonised reference datasets through INSPIRE || EEA || Output

No. of Member States making their datasets interoperable to the EC/ EEA/ JRC || EEA/ JRC || Output

No. of Member States for which GIO land data is the only reference data available || EEA/ JRC || Output

Aggregate Copernicus indicators || Number of companies that have used GIO data to develop downstream applications and services || || Output

Estimated number of jobs created as a result of these applications and services || || Result

Number of companies relying on GMEs data for over 20% of their turnover || || Result

Indicator type || Indicator || Data source || Type of indicator

Sectoral indicators Upstream || •Number of commercial and institutional launches •Share of launchers sales (and trends) •European satellite manufacturing market share (commercial and institutional) •Number of potential international clients with which there are trade barriers (in public procurement and other barriers) •Value of orders (by sector) •EU upstream trade balance || ESPI, Eroconsult, companies data Arianespace data Company data , Euroconsult Ad hoc analysis Company data Eurostat || Context

Sectoral indicators Midstream || •Turnover from EO data •Employment in midstream sector •EBIT / EBITDA of operators •Level of vertical integration between space actors || Companies data Companies data, ASD Eurospace Ad hoc qualitive analysis || Context

Sectoral indicators Downstream || •Employment •Share of SMEs in total firms in the sector / TO •Number of patents developed in downstream services •Ease of access to finance for start-ups •Number of application and services developed || Ad hoc qualitive analysis || Context

Source: CSES 2012

7.2.        Monitoring

The Commission will ensure that contracts
and grants concluded in the framework of the Copernicus programme provide for
supervision and financial control by the Commission, if necessary by means of
on-the-spot checks, including sample checks, and audits by the Court of
Auditors. If need be, the Commission could be assisted by external technical
experts when monitoring the implementation of the programme. On the basis of
the results of the on-the-spot checks, the Commission will ensure that, if
necessary, the scale or the conditions of allocation of the financial
contribution originally approved as well as the timetable for payments are
adjusted.

In addition to financial supervision, the
Commission will put in place mechanisms to ensure the continuous quality of the
services provided. This will be realised by measuring users' satisfaction on
one side and by technical audits on the other side. Finally, the Commission
will organise user fora in order to ascertain that services are user-driven.

7.3.        Anti-fraud
measures

The setting up of the operation will mainly
take place through our partners: ESA for the space component and EEA for the
in-situ component. The delegation agreements allow the financial flow to be
fully controlled. Public procurement will be used to subcontract, and grants
are limited, hence we can consider Copernicus not to be fraud-sensitive.

ANNEXES

The annexes attached to this Impact
Assessment are listed below along with a short rationale for their inclusion.

# || Title || Rationale for Inclusion

I || Injection paper by SpaceTec Partners || This annex forms the primary input into the cost-benefit analysis underpinning this Impact Assessment. The document provides substantive and methodological material supporting the key conclusions in Section 5 “Options and Impact Analysis”.

II || List of acronyms and definitions || Lists acronyms and definitions used in this Impact Assessment.

III || Reference studies and documents || Lists other supporting studies and reference material.

IV || Evaluation of the GMES Preparatory Action (Conclusions) || Summarises the conclusions of the Evaluation.

V || Evaluation of the GMES Initial Operations (Executive Summary) || Summarises the conclusions of the Evaluation.

VI || Assessing the Economic Value of Copernicus: “European EO and Copernicus Downstream Services Market Study" – Executive Summary || Summarises the conclusions of the study, which forms an important input to the Impact Assessment’s evaluation of downstream impacts.

VII || Summary of the Booz & Co's Cost-benefit Analysis on GMES || Summarises the conclusions of the study, undertaken by Booz&Co. in 2011, which provide a key benchmark underpinning the cost-benefit analysis in the Impact Assessment.

VIII || The FeliX Model || Provides a description of the FeliX model, which serves as a high-end benchmark against the CBA conclusions.

IX || Comparison of the PwC 2006 study and Booz & Co's 2011 study || Compares the two major cost-benefit studies on Copernicus.

X || GMES programme - overview on the evolution and funding until 2013 || Provides an overview of the evolution and various funding inputs and their sources until 2013.

ANNEX I Injection Paper by SpaceTec
Partners

Injection Paper

Specific
Contract under the Framework Service Contract 89/PP/ENT/2011 – LOT 3[48]

Key
Analysis for Copernicus Impact Assessment

1. SUMMARY AND CONCLUSIONS

The budget for the next Multi-Annual
Financial Framework (MFF, 2014-2020), decided by the European Council on the 7th
and 8th of February 2013, set the maximum level of commitment for
the Copernicus programme at € 3.786 M.

Based on this financial envelope for the
Copernicus programme, the present study analyses the costs, benefits and
impacts of three scenarios for the Copernicus programme with respect to the
budgetary distribution across the Space, In Situ and Services cost
categories. The expected impact is expressed in terms of:

The socio-economic and environmental
benefits;

The economic impact generated by the
future, potential downstream services market;

The overall impact on employment in the
upstream, midstream and downstream markets.

Two approaches have been applied in this
analysis: a like-for-like comparison with the costs and benefits of the options
in Booz & Company’s “Cost- Benefit Analysis for GMES” (CBA[49]), completed in 2011 (using the
same budget distribution), and a scenario analysis of the costs and benefits of
three scenarios, varying the budget proportions between the three cost
categories given the funding envelope for Copernicus. In each case, two time
horizons and total Copernicus funding assumptions are considered: €3,8 Bn in 2014-2020
(the 7-year timeframe of the MFF) and € 5,4 Bn in the second 2021-2030 period (the
following MFF, plus an additional 3 years).

Seen in terms of the average annual budget,
the Copernicus funding envelope (€ 541 M for 2014-2020; € 541 M for 2021-2030;
€541 M average overall) falls between Options B (€ 362 M overall annual average)
and C (€ 730 M) of the Booz CBA The benefits are therefore calculated based on
enhancement of Option B, but not reaching the level of Option C. In the
like-for-like analysis, the proposed funding envelope is referred to as Option
X. The associated impact on the downstream market and employment has been
modelled as a proportional decrease based on the funding deficit.

The scenario analysis establishes three
scenarios, varying the breakdown amongst the Space, In Situ and Services
cost areas. The three cost budget distribution scenarios are shown below.

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven || Total

|| || Space || In Situ || Services || Space || In Situ || Services || Space || In Situ || Services || € Mio

TOTAL (2014-2030) || € Mio || 400 || 22 || 119 || 422 || 22 || 97 || 438 || 22 || 81 || 541

% || 74% || 4% || 22% || 78% || 4% || 18% || 81% || 4% || 15% ||

Table 8: Cost Distribution By Scenario (Annual
Averages in the 2014-2030 period)

The analysis ranks Scenario I, “Service
Delivery Pull”, as the option with the most benefit potential. The cumulative
benefits, downstream impacts and associated Benefit-to-Cost Ratios are shown in
the table below.

|| || || I - Service Delivery Pull || II -Intermediate || III - Technology Driven

2014-2020 || Cumulative Benefits || € Bn || 6,3 || 6,1 || 5,9

2021-2030 || Cumulative Benefits || 23,0 || 22,1 || 20,8

TOTAL (2014-2030) || Cumulative Benefits || 29,4 || 28,2 || 26,7

Downstream Impact in 2030 || 1,03 || 0,98 || 0,95

Integrated contribution to European GDP || % || 0,164% || 0,157% || 0,149%

Integrated BCR || : || 3,30 || 3,17 || 3,01

Table 9: Integrated Impact Simulation By Scenario
(Undiscounted)

The FeliX model (a system dynamics model
and benefit simulator, which takes into account the complex relationships
between natural and socio-economic systems) forecasts
benefits that are in the order of magnitude of € 21.7 Bn cumulatively by 2020
and € 220 Bn by 2030 (undiscounted), substantially higher (~8 times, in the
long term) than the ‘static’ benefit projections of the present study. This is due
to the enlarged scope of the FeliX model, and its broad assumptions of
underlying infrastructure (namely GEOSS[50],
to which Copernicus is expected to constitute the EU’s major contribution). The
comparison with the FeliX output serves to highlight the strong potential for
higher-order magnitudes of benefits when Copernicus is viewed as part of a
broader system of systems.

Figure 3: Potential Range of Benefit Scaling Based
on FeliX Model

In compliance with the EC Impact Assessment
Guidelines, the benefits of each scenario have been categorised according to
their economic, environmental, and social dimensions, both qualitatively and
quantitatively. A summary of the quantitative analysis is provided below.

Benefit Categories || Values || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

Economic || Total Space Turnover (2014-2030)[51] || € Mio || 8.002 || 8.306 || 8.542

Total Downstream Turnover (2030) || 1.034 || 981 || 954

Combined Δ Scen. I || % || 0% || -2% || -4%

Environmental || Total (2014-2030) || € Mio || 17.611 || 17.005 || 16.158

Δ Scen. I || % || 0% || -3% || -5%

Social || Total (2014-2030) || € Mio || 11.585 || 11.045 || 10.415

Employment Impact[52] (2030) || # || 48.330 || 46.650 || 45.840

Δ Scen. I (Benefits) || % || 0% || -5% || -10%

Δ Scen. I (Employment) || % || 0% || -4% || -5%

Table 10: Summary of Economic, Environmental and
Social Benefits (Quantitative)

Scenario I: Service Delivery Pull

The larger benefits projection in this
scenario is due to the increase in investment in services, coupled with the
serialised deployment of the Space component, conferring the necessary
longevity and programme commitment for the development of the downstream sector.

Overall, this scenario represents an
interesting mix of investments. It capitalises on the marginally increased
investment in Services against a “legacy” level of Space component investment.
The programme’s continuity is assured until 2030. The level of funding for the
Space component should include some allowance for preparatory activities
leading into developing the next generation of Sentinels. It is assumed also
that ESA will continue to fund, to a large extent, all the preparation and pre-development
activities for the future generation satellites, plus the development of the
prototype units.

The impact of funding services at this
level leads to a higher, relative level of benefits, given the strong coupling
between services and benefits. The impact should be ensured by an appropriate
expansion of the Copernicus services, by ensuring access from everywhere in
Europe to the services and data, by enforcing adequate standards for products,
by supporting the expansion of the downstream sector and sustaining the user
community in the access to and adoption of new products, services.

Scenario II: Intermediate

This scenario represents less of an
increase in benefits with respect to “Service Delivery Pull”, due to the higher
spending in Space at the expense of Services. The
objectives and extent of the investment in Services remain substantially the
same as in the previous scenario, only to a slightly lesser degree.

The Space component has additional margin
for preparing the next generation, but part of this extra should be dedicated
to ensuring wider circulation of data to different user categories (science,
commercial, downstream, regional, etc.). This amount does not allow a change in
philosophy from the serial deployment of Sentinels. As in the previous one, it
relies heavily on the Contributing Missions.

Scenario III: Technology Driven

This scenario presents a significant
drop in overall benefits with respect to the previous ones, as the transfer of
funding from the Services to the Space component does not compensate for the
loss in benefits. This scenario does not offer many
reasons to be recommended. It poses questions about the use of the extra
funding for Space (for example, starting a different family of Sentinels, or adding
C units) and does not sufficiently encourage the expansion of services and
their availability to a much wider user community.

All projected benefits in this analysis
are contingent on the implementation of a set of enabling factors, including
regulatory and market development actions,
summarised below

|| Enabling Factors

Space || · Continuity of Sentinel data · Research and development for the next generation of Sentinels · Continuity of current arrangements for sharing of responsibilities between ESA and EU, in particular concerning the preparation of the next generation developments · Continuity of access to contributing missions (primarily European, but not exclusively) · Simplified access to Sentinel data for widespread distribution · Development of international cooperation in order to complement Contributing Missions

Services || · Accessibility to services / products · Supporting the operations and evolution of the Copernicus services, in their transition to operations · Enlarging the range of the Copernicus services · Service development and evolution · Enabling of downstream sector · Demand incubation at regional and local levels aimed at commercial users · Continued promotional and communications efforts · Continued, coherent action to federate, consolidate and update user needs and requirements

In Situ || On-going coordination and harmonisation efforts in complement to the subsidiarity principle

Regulatory || · Free and open data policy · Governance, assurance of data and service continuity · Quality assurance and standards-building

Table 11: Enabling Factors

2. INTRODUCTION AND OBJECTIVES

The budget for the next Multi-Annual
Financial Framework (MFF, 2014-2020) was decided by the European Council on the
7th and 8th of February 2013[53]. The maximum level of
commitment for the Copernicus programme was set at € 3.786 M.

The present document aims to provide input
to the European Commission’s Impact Assessment (IA) following the announcement
of the new Copernicus funding envelope. This Impact Assessment is based on Booz
& Company’s “Cost- Benefit Analysis for GMES” (CBA) and further study and
analysis performed by SpaceTec Partners.

The Copernicus budget for the period
2014-2020 represents a significant milestone in the history of the programme.
The programme stands to move definitively past the foundational R&D basis
on which it has been established and transition into a genuine, operational
system. This budget represents a somewhat unique opportunity to make Copernicus
operational, and the realisation of this opportunity is hinged on the question
of how to best deploy the relatively scarce resources available, for the
benefit of the EU taxpayer.

The objective of the Impact Assessment is
not to support a decision on the funding level, but rather how the given budget
should best be deployed amongst the three key programme cost areas: Space,
In Situ and Services.

Since the Booz CBA was published,
additional studies have been performed on the impacts of the Copernicus
programme, particularly with regard to the downstream sector. These projections
need to be taken into account in the Impact Assessment.

The present study has the following main
objectives:

Given the funding envelope
for Copernicus within the next MFF, evaluate the programme benefits on a
like-for-like basis as a function of the options defined in the Booz CBA

Integrate the
results of 2012 study on the future potential Copernicus downstream market,
performed by SpaceTec Partners, into this analysis

Perform a sensitivity
analysis of projected benefits based on different scenarios/allocations of
funding amongst the three major programme cost areas, Space, In
Situ and Services

In the chapters, which follow, these
objectives will be dealt with in turn.

3. METHODOLOGY AND INTEGRATION OF
IMPACTS

This chapter firstly introduces the
methodologies used in the present analysis, and in the studies which served as
key input material. The key studies are the Booz & Co. “Cost Benefit
Analysis for GMES”, and the 2012 European Earth Observation (EO) and GMES
Downstream Services Market Study by SpaceTec Partners. The FeliX System
Dynamics Model is introduced, and its application to the present analysis
discussed. Thereafter, the approach to the integration of the study inputs in
the present analysis is outlined, concluding with a section on the enabling
factors, which underpin the conclusions of the analysis.

3.1 Booz and Co. Cost Benefit Analysis

This chapter reports the main
methodological aspects and approach of the Booz CBA. Booz & Company was
commissioned by the European Commission to undertake a Cost-Benefit Analysis
(CBA) of the Copernicus programme. The main focus of this study is the
assessment of four broad funding options for Copernicus and its operational
services. In carrying out this exercise, it is important to bear in mind that
Copernicus represents a unique public investment programme which is designed to
support a wide array of public policy objectives. Copernicus is Europe’s
contribution to the Global Earth Observation System of Systems (GEOSS), a
multi-lateral initiative of States and the international scientific community
involved in EO and climate research.

As Copernicus is a major EU effort to
enhance our understanding of Earth science, a major benefit of Copernicus
will be the Value Of Information it provides to support policy action and resource
management across the EU and further afield. The Value of Information (VOI)
depends on a number of factors regarding the circumstances of decision makers,
including the level of uncertainty that they face, what is at stake, the cost
of using information, and the cost of the next-best information substitute. A
review of academic literature supports the view that there is inherent value in
information. Based on this review, there are valid reasons to suggest that the
overall extent of the VOI is incremental. These include the ability of Copernicus
to provide additional information that may assist decision making and add to
analysis incrementally, rather than provide a transformational difference to a
particular sector. These incremental benefits accrue over time as extended time
series of observations are available, particularly for strategically important
fields such as climate change. As such, Copernicus has the potential to deliver
significant economic value through enhanced EO information.

The quantified cost-benefit assessment
requires the identification and calculation of benefits arising from Copernicus.
These benefits almost exclusively arise from Copernicus being an enabler of
better policy responses to key public policy issues. In order to establish
these benefits (and how Copernicus may reduce various costs), a literature
review of the economic value of information, combined with interviews and
desktop research, enabled the development of assumptions around the incremental
benefit from better EO information.

The benefit areas considered in the Booz
CBA study have environmental, economic and social impacts. They are reported in
the table below along with the policy sector and service area which they refer.

Policy Sector || Service Area || Main Applications

Global Climate Change Action

|| Climate || Climate Change Mitigation & Adaptation

Resource Management

|| Atmosphere || European Air Quality

|| Land || European Deforestation (Forest Fires)

|| Land || Global Desertification

|| Marine || Unlawful Oil Discharge in Sea Vessel Operations

|| Marine || Major Accidental Oil Spills

|| Marine || Maritime Navigation

|| Land || EU CAP Monitoring

|| Land || Regional Policy (Urban Development)

Emergency Response (Europe)

|| Emergency || Europe - Geohazards (Earthquakes)

|| Emergency || Europe – Flooding

|| Emergency || Europe - Forest Fires

|| Emergency || Europe – Other, including storms and landslides

|| Emergency || European Natural Disaster Reconstruction Support (EU Solidarity Fund)

Global Humanitarian Aid

|| Emergency || Natural Hazards - Rest of World

|| Security / Emergency || Humanitarian Aid in Conflict Situations

|| Emergency || EU Humanitarian Aid

Other

|| All || Wider Economic[54]

Table 12: Key Benefit Areas for the Cost-Benefit
Analysis (Booz CBA)

Four options were provided for analysis
under the cost-benefit assessment:

Option A:
Baseline Option with no on-going commitment to replace infrastructure or
investing significantly in services;

Option B:
Baseline Option Extended, but still with no on-going commitment to replace
infrastructure over the longer term and invest significantly in services;

Option C:
Partial Continuity, with commitment to provide Sentinel infrastructure and
invest considerably in services, with limited support to ensuring continuity of
data from Contributing Missions; and

Option D:
Full Continuity with commitment to provide Sentinel infrastructure and enhanced
support for the continuity of data from Contributing Mission with full
investment in services.

Each option contains profiles of investment
in infrastructure (Space, In Situ), Services and user take-up. The
quantification of benefits is based on an approach that attributes to
Copernicus an incremental improvement in outcomes, e.g. measured as a change in
baseline environmental damage costs. This recognises that the attainment of
particular outcomes in each benefit area is a result of multiple factors, of
which the contribution by Copernicus is only one part. The extent of Copernicus
contribution has been taken into account in the analysis for each benefit area.

Key results for each of the four options
are presented in the table below. The table shows total benefits, total
programme costs and the associated net benefits over the 2014 – 2020 and
2021-2030 time periods. Results are cumulative undiscounted and discounted at 4%
per annum. All values are expressed with 2010 as the base year.

|| Option A || Option B || Option C || Option D

|| P1 || P2 || T || P1 || P2 || T || P1 || P2 || T || P1 || P2 || T

|| Cumulative, Undiscounted, € Bn

Benefits || 2,0 || 0,9 || 3,0 || 6,0 || 11.0 || 17.0 || 13.0 || 36.6 || 49.6 || 18.0 || 53.0 || 71.0

Costs || 2,1 || 1,0 || 3,0 || 3,7 || 3.4 || 7.0 || 5.0 || 9.9 || 14.8 || 6.4 || 12.4 || 18.8

Net Benefits || 0,0 || 0,0 || 0,1 || 2,4 || 7.6 || 10.0 || 8.0 || 26.7 || 34.7 || 11.6 || 40.7 || 52.3

|| Cumulative, Discounted, € Bn

Benefits || 1,5 || 0,6 || 2,1 || 4,5 || 6.2 || 10.7 || 9.5 || 19.9 || 29.4 || 13.2 || 28.8 || 42.0

Costs || 1,6 || 0,6 || 2,1 || 2,8 || 1.9 || 4.7 || 3.7 || 5.4 || 9.1 || 4.8 || 6.7 || 11.5

Net Benefits || 0,0 || 0,0 || 0,0 || 1,7 || 4.3 || 6.0 || 5.9 || 14.5 || 20.4 || 8.4 || 22.1 || 30.5

BCR || 1 || 2,3 || 3,2 || 3,7

Table 13: Results of Cost Benefit Analysis (Booz
CBA. P1: 2014-2020; P2: 2021-2030, T: Total)

The methodology adopted in the Booz CBA is
based on a Copernicus “full continuity” scenario (referred to as Option D),
which is used as a reference case, and then applying progressive degradation to
each of the other options in relation to this scenario. The scaling parameters
applied to the other options are listed in the following table. Meaning that in
the Booz Model the cost to benefit discount ratio is (1:1,3).

|| Cost Reduction on "undiscounted" Values || Resulting Benefit Fulfilment || Resulting benefit discount || Ratio benefit/cost discount

|| 2014-2020 || 2021-2030 || 2014-2020 || 2021-2030 || 2014-2020 || 2021-2030 || 2014-2020 || 2021-2030 || Total average

Option A || -67% || -92% || 11% || 2% || -89% || -98% || 1,3 || 1,1 || 1,3

Option B || -43% || -73% || 34% || 21% || -66% || -79% || 1,6 || 1,1 ||

Option C || -22% || -20% || 72% || 69% || -28% || -31% || 1,3 || 1,6 ||

Option D || 0% || 0% || 100% || 100% || 0% || 0% || || ||

Table 14: Cumulative Cost and Benefit Scaling
Parameters Across Booz CBA Options

This “progressive degradation” principle
will be applied in the present analysis to establish the baseline for analysing
the changes in the allocation of funding amongst the different main cost areas,
and the like-for-like estimation of benefits,
subject to the understanding that there are limits to the validity of this
principle, such as minimum and upper thresholds on benefit realisation.

3.2 SpaceTec Partners Downstream Study

The principle goal of this study was an
assessment of the value of the potential downstream market for Earth
Observation (EO) Value-Added Services (VAS) arising as a result of the
provision of data and services from the Copernicus programme.

The study was based on a high-level
assessment of market potential across relevant sectors of economic activity,
such as insurance, water transport, agriculture, extraction of oil and gas and
the production of electricity. Using a combination of case-based bottom-up
analysis and top-down industry assessments, the study sought to project the
future markets for downstream services over a broad time horizon (2015-2030).
The study also included an analysis of the impact on direct and indirect employment
in the downstream, upstream and midstream sectors.

3.2.1 Downstream Impact

The expected continued availability of
Copernicus data is essential for the purposes of downstream market development.
This applies both to the immediate implications during the next MFF and –
crucially – to the longer-term 15-year timeframe[55]. The forecast scenarios in the
STP EO and Copernicus downstream market study depend on the assumption of full
data continuity, underscored by an average yearly budget of € 800 M in the high
scenario. Therefore, any funding option which threatens full data continuity
will generate a less favourable impact on the downstream market.

In addition, the downstream market
development is linked to the development of the Services component. Without active
and continuous provision of Copernicus service, the market for downstream
services is unlikely to evolve beyond the relatively limited boundaries of the
services funded under FP7. The correlation between the Services component and
the downstream market is reflected in the modelling undertaken for the purposes
of this analysis.

In the STP downstream study, long-term
market potential was assessed through the concept of the Total Addressable
Market (TAM). This concept expresses hypothesised market penetration, under
specific assumptions and within certain limitations. It serves as a metric of
the underlying revenue potential of a given opportunity - in this case,
downstream market turnover - and should be treated as a “bounded theoretical
maximum”. The three downstream turnover scenarios presented in the STP downstream
study are summarised below, for reference.

Figure 4: Downstream Market Scenarios, STP
Downstream Study

The foreseen € 3,8 Bn envelope for
Copernicus translates into an annual budget of € 541 Mio in 2014-2020. This has
the following implications for the assessment of impact on the future
downstream market:

The closest corresponding budget scenario
is the “STP Low” case, against which the annual average budget for the entire
period represents a -14,1% reduction.

It is assumed that the same € 541 M (or a
higher) annual budget level will be committed in the 2021-2030 period to assure
programme continuity in the longer term.

3.2.2 Impact on Employment

The approach utilises a methodology based
on the relationship between industry labour productivity and projections of:

EO/Copernicus
downstream turnover (for the downstream);

Copernicus
funding in the Space component (for upstream and midstream).

Labour productivity represents a measure of
the relationship between “a volume measure of input to a volume measure of
output” (OECD, 2002). It is calculated by proxy, as the quotient of industry
turnover and the total number of employees, or FTEs (Full-Time Equivalents) in
the sector. Dividing the cost or turnover inputs by the labour productivity for
each sector serves as a proxy of the number of jobs created or maintained in
each case. Labour productivity is assumed to be approximately € 179,000 in the
upstream and midstream sectors, and € 113,000 in the downstream. The key data
used in the employment analysis are summarised in the table below:

|| Input || Data Type || Labour productivity

|| Description || € / Employee

Upstream || Space component - Satellites only || Programme budget forecast || 179.000

Midstream || Space component - Contributing Missions and Services component || Programme budget forecast || 179.000

Downstream || Downstream services Total Addressable Market (TAM) || Turnover forecast || 113.000

Table 15: Key Inputs for Employment Analysis

The remainder of this section provides the
background to the methodology used in the STP downstream study, for reference
and as a baseline input to the core analysis in the chapters which follow. In the context of this analysis:

Direct employment
refers to persons employed by an organisation operating in the Space industry
(upstream, midstream or downstream);

Indirect employment
refers to persons employed in other industries which are impacted by the Space
industry, either because they form part of the Space industry supply chain, or
because the industry supplies other goods and services (such as retail or
financial services). In both cases, these industries benefit from increased employment
in the Space sector.

The STP study introduced three cost
scenarios[56]
representing different levels of Copernicus-related funding in the upstream and
midstream sectors. The scenarios correspond to variations of the “Copernicus
data continuity” options outlined in the Booz CBA (Options C and D), and are
summarised below.

Cost Scenario || Upstream || Midstream || Total || In Situ || Grand Total

STP High (as Booz Option D) || 535 || 215 || 750 || 50 || 800

STP Medium (as Option D excluding Jason Mission) || 487 || 198 || 685 || 50 || 735

STP Low (as Option C) || 424 || 176 || 600 || 30 || 630

Total || 1.446 || 589 || 2.035 || 130 || 2.165

Table 16: Copernicus Programme Cost Scenarios
2014-2020, STP Downstream Study (€ M, Annual Averages)

The resulting employment scenarios from the
STP downstream study are presented below. Any decrease of the programme funding
scenario would reduce the associated impact on employment.

|| Upstream || Midstream || Downstream || Total

STP High || Direct || 3.500 || 1.300 || 23.000 || 27.800

Indirect || 9.100 || 3.380 || 73.600 || 86.080

Total || 12.600 || 4.680 || 96.600 || 113.880

STP Medium || Direct || 3.300 || 1.200 || 16.000 || 20.500

Indirect || 8.580 || 3120 || 51.200 || 62.900

Total || 11.880 || 4.320 || 67.200 || 83.400

STP Low || Direct || 2.900 || 1.100 || 9.000 || 13.000

Indirect || 7.540 || 2.860 || 28.800 || 39.200

Total || 10.440 || 3.960 || 37.800 || 52.200

Table 17: Aggregated (Direct and Indirect)
Downstream Employment Scenarios, STP Downstream Study (Number of Employees,
2030)

It is important to point out that these
figures do not necessarily represent new employment positions, although a large
proportion will indeed be new, particularly in the downstream and midstream
sectors. The numbers also indicate other cases of employment impact, such as
jobs, which are maintained by the inflow of funding, or the expansion in scope
of existing roles.

In the calculation of the downstream
employment, the budget change between the two periods is not modelled, since
the average across both is used to establish the turnover baseline. For
upstream and midstream, the drop is evident in the funding between the two
periods, but to avoid inconsistencies, in the analysis the combined average
between the periods is taken as an order-of-magnitude measure of the employment
impact across the timeframe. Therefore, when employment impact is reported,
this is not done per period, but only as a total over the entire timeframe.

3.2.3 Scaling of
Benefits

The Booz CBA regards each of its options
“as being discrete” (Booz CBA, p. 99), meaning that the benefits do not grow
linearly in relation to the level of investment, but are the outcome of
different configurations of the Space, Service and In Situ components
within the options. In other words, a step function is at work, with
threshold boundaries separating unconnected plateaux of benefit escalation.

This is particularly true in the case of
the Space component; since the Sentinels are deployed in units, there are
limits as to what can be achieved with specific levels of funding. Minor
deviations around these step changes do not serve to alter the benefit profile
in a significant way. Whilst this proposition is not readily observable in the
Booz CBA because of the proportionally large gap between the funding levels of
each option, it is recognised that in each case, a step change in commitment
(and hence, benefits) has taken place.

The extent to which benefits scale is,
therefore, assumed to differ in relation to the level of funding allocated to
the Space and Service components, in particular. The following assumptions
underpin the present analysis as regards the scaling of benefits:

Investment in the
Space component is a necessary, but insufficient condition for the
realisation of benefits.

In order for
benefits to arise, parallel investments must be made in Services and In
Situ.

A step change in
benefits occurs once investment in Space reaches a
certain threshold. Beyond this threshold:

Additional
investment in Space does not bring about linear increases in benefits

Step-changes in
benefits are contingent on additional investment in Services.

Benefits linked
to investments in services are more linear, with
incremental benefits possible through service improvement, extension to scope,
and the development of new services. These nonetheless remain dependent on
upgrades or enhancements to the underlying Space infrastructure for larger step
changes, accompanied by more major service-supporting developments such as
improved access to data and the enabling of the downstream sector. These
considerations are elaborated in Section 0, "3.5 Enabling Factors.

The figure below is a simplified
representation of the relationships described above. It serves to conceptually
highlight the key points of reference for the modelling exercise in the
analysis.

Figure 5: Conceptual Relationships of Benefit
Scaling Based on Investments in Space and Services

Evidently, the In Situ
component also plays a role in the scaling of benefits. It is not shown here,
in the interests of parsimony, and because the Space-Services relationship is
considered to have the most impact on the present analysis.

3.3 FeliX System Dynamics Model

The EuroGEOSS FeliX[57] model is a systems dynamics
model developed in order to represent conceptually the interrelationships
between environmental, economic and social subsystems. It provides a modelled
example of how EO data can influence future development based on government
policy decisions and human behaviour. The FeliX model has been used to
illustrate a potential maximum-benefit scenario through investment in a
comprehensive EO system at European in order to augment Member States’ EO
networks.

It is important to recognise that FeliX has
not been used to model specific Copernicus scenarios, and it is difficult to
identify the extent to which Copernicus services are reflected in the
underlying model structure and assumptions, and the likely added value of Copernicus
over and above other available EO systems. Copernicus represents the EC’s
contribution to GEOSS. Benefits projected by the FeliX model may therefore be
seen as a way of demonstrating the value of a comprehensive GEOSS architecture.

Figure 6: EuroGEOSS FeliX Benefits (2014-2030)

The FeliX model shows that potential
benefits in the order of magnitude of € 220 Bn can be generated (cumulatively
by 2030, using undiscounted values). This is substantially
higher than the ‘static’ benefit projections of the present study (by a factor
of 7,5 to 8,2 at period end) due to its enlarged scope and broad assumptions of
underlying infrastructure (GEOSS).

3.4 Integrated Approach

This chapter describes the methodological
approach used in the analysis, and establishes a methodology by which the
outputs of various input studies can be effectively combined, in order to
arrive at a synthetic conclusion. The major outputs of the STP downstream study
and the Booz CBA are summarised below:

Figure 7: Outputs of Booz CBA and STP Downstream
Study

The STP downstream study is subject to the
following key assumptions:

Catalytic effect
of free and open data provision[58]: Copernicus services are expected to enable and stimulate the
downstream sector by freely and openly providing access to basic pre-processed
data and modelling outputs, more cheaply than would be the case if companies
had to undertake such basic processing and modelling themselves. The business
case for Copernicus is that the services improve the efficiency of the
downstream sector, allowing the industry to offer better value for money in
products and services to end users.

Full and assured
continuity of Copernicus: In order for the
potential of future markets for Earth Observation downstream services to be
realised, the continued long-term availability of Copernicus data services is
assumed. The investment incentives are crucially tied to both political and
financial commitments at an institutional level. This continuity of services
presupposes the continuity and evolution of Copernicus infrastructure providing
the necessary data. Without continuity, the "raison d'être" of
Copernicus is put into question, as users will only rely on Copernicus if a
sustained flow of data is ensured. Without appropriate funding, existing
services will cease their activities.

Therefore, a Copernicus funding
envelope, which is not able to assure full data continuity will impact the
fulfilment of the downstream market potential. Furthermore,
a set of enabling factors has been identified, on which action and
associated investments are considered necessary for the realisation of
downstream market potential. Certain institutional conditions are necessary to
enable and accelerate the market dynamics foreseen in this study, linked, inter
alia, to market development and capacity building. They are summarised below:

Regulation: Free and open data policy; assurance of data continuity; quality
assurance and standards-building.

Data Availability
and Access: Simplified access to Copernicus
Sentinel datasets at ready-to-use processing levels (L1)[59] for high-volume distribution,
thereby responding to the needs of the value-adding industry, ideally avoiding
the duplication of efforts at national level.

Demand/Market: Continued dissemination efforts; regional/local demand incubation
and communication schemes aimed at commercial users; federation / consolidation
of user needs and industry requirements; further integration of EO information
as a supplement to traditional systems.

The figure below shows the potential
impacts from investments in Space programmes, comparing the outputs of the Booz
CBA and the STP downstream analysis. The notion of “enduring impacts”,
distinguished from “temporary impacts”, refers to causal implications beyond
the development phase of a programme. The impact categories are drawn from the
model presented in OECD (2011).

Figure 8: Relative Contribution of Studies Towards
Assessment of Enduring Impacts

The economic impacts and the benefits as
defined in the Booz CBA should be regarded as separate, but parallel measures
of potential causal effects, each with a different and distinct methodology,
scope and interpretation. It should follow that there is no possibility to
establish overlaps between the two types of measurement. This makes it
logically inconsistent to simply add them together.

There is, however, a potential approach,
which may allow the production of an integrated picture. The approach is based
on establishing the impact of both benefits and impacts on EU Gross Domestic
Product (GDP) and the integrated impact on employment (excluding any
double-counting), allowing the comparison of like with like.

In order to be fully compliant with the EC
Impact Assessment Guidelines, the derived integrated impacts have been
associated with economic, environmental and social dimensions. The approach is
visualised below:

Figure 9: Potential Integrated Impacts Approach

In this analysis, the approach to
integrated benefits will incorporate only the conclusions from the STP
downstream analysis, and exclude the impact on
employment presented in the Booz CBA.

The benefit categories and associated
indicators used to evaluate the impact of each scenario are presented in the
table below.

Benefit Categories || Quantifiable Indicators || Qualitative Indicators`[60]

Economic || · Space industry turnover · Downstream sector turnover · Wider economy impact || · Functioning of the internal market and competition · Competitiveness, trade and investment flows · Operating costs and conduct of business/Small and Medium Enterprises · Administrative burdens on businesses · Public authorities · Property rights · Innovation and research · Consumers and households · Specific regions or sectors · Third countries and international relations · Macroeconomic environment

Environmental || · Global climate change mitigation & adaptation · European air quality · European deforestation · Global desertification · Oil spills || · The climate · Transport and the use of energy · Air quality · Biodiversity, flora, fauna and landscapes · Water quality and resources · Soil quality or resources · Land use · Renewable or non-renewable resources · The environmental consequences of firms and consumers · Waste production / generation / recycling · The likelihood or scale of environmental risks · Animal welfare · International environmental impacts

Social || · Maritime navigation · EU CAP Monitoring · Urban development · Emergency response · Global humanitarian aid · Employment impact || · Employment and labour markets · Standards and rights related to job quality · Social inclusion and protection of particular groups · Gender equality, equality treatment and opportunities, non -discrimination · Individuals, private and family life, personal data · Governance, participation, good administration, access to justice, media and ethics · Public health and safety · Crime, Terrorism and Security · Access to and effects on social protection, health and educational systems · Culture · Social impacts in third countries

Table 18: Economic, Social and Environmental
Benefits Description

3.5 Enabling
Factors

To conclude this chapter, it is necessary
to elaborate on the precept underpinning all conclusions in this analysis,
namely that all projected benefits are contingent on the implementation of a
set of enabling factors. The enabling factors are summarised in the
following table.

|| Enabling Factors

Space || · Continuity of Sentinel data · Research and development for the next generation of Sentinels · Continuity of current arrangements for sharing of responsibilities between ESA and EU, in particular concerning the preparation of the next generation developments · Continuity of access to contributing missions (primarily European, but not exclusively · Simplified access to Sentinel data for widespread distribution · Development of international cooperation in order to complement Contributing Missions

Services || · Accessibility to services / products · Supporting the operations and evolution of the Copernicus services, in their transition to operations · Enlarging the range of the Copernicus services · Service development and evolution · Enabling of downstream sector · Demand incubation at regional and local levels aimed at commercial users · Continued promotional and communications efforts · Continued, coherent action to federate, consolidate and update user needs and requirements

In Situ || · On-going coordination and harmonisation efforts in complement to the subsidiarity principle

Regulatory || · Free and open data policy · Governance, assurance of data and service continuity · Quality assurance and standards-building

Table 19: Enabling Factors

If the enabling factors are not in place,
the benefits are not expected to materialise to the projected levels. An
indicative and conceptual analysis of the extent to which the enabling factors
are linked to the fulfilment of benefits is supplied below.

|| Level of Fulfilment

Enabling Factors || Basic || Medium || High

Continuity of data || · No guarantees of data continuity || · Data continuity assurances in the medium term, up to the end of the “serialised” Sentinel schedule (2025) || · Fully assured data continuity in the long term (2025+)

Accessibility to services / products || · Services as they are today · Service products accessed through disparate websites Commercial access to products not catered for · No unified perception of Copernicus || · Service accessibility by commercial service providers becomes viable · Copernicus services are presented under a common visual identity || · "One-stop shop" for service products · Organised coordinated databases of information generated by services · Interfaces for real-time data streaming when required · Availability of Software Development Kits (SDK) for programmatic data retrieval

Service development and evolution || · No clear roadmap for new services Climate change: a slow starter, or a bad example? · No perspective for users || · Expanding the range of products of services · Enlarging the range of services Limited set of standards for services || · Roadmap for continuous improvement and innovation of services: for the first time a long term plan appears in this sector of industry · EU actors have access to substantial databases (climate, environment, agriculture, disasters and emergencies, monitoring of European waters etc.) obeying coherent standards and easily applicable to local and regional situations · Europe-wide product standards

Enabling of downstream sector || · Minimal funding of DS sector through R&D (FP7) No overarching market development strategy · The piecemeal approach at its worst || · Initial action in the downstream sector: support to development outside R/D budgets · Limited funding for downstream services targeting public needs · Attention and support to services targeting regional ad hoc requirements || · Broad support to downstream services, for public and commercial needs: expanding the information society and advancing Europe to the same level as the most advanced competing countries

|| TODAY

2014+?

Indicative Downstream Benefits Scaling Within Given Scenario || 20% || 40% || 80%

Table 20: Indicative Dependency of Benefits on
Enabling Factors

Given that the benefits are clearly mainly driven
by the investment in services, there are some additional enabling factors which
should be considered as multipliers, or at least as necessary conditions for
such benefits to materialise.

These factors concern essentially the
availability and accessibility to a wider public of:

Data from the
Sentinel satellites, and

Products and information generated by the services.

This obviously derives from the fact that a
wider user base is more likely to generate ideas and new services, because of
the well-known mechanism in Earth Observation that allows science and research
results to move smoothly into operational applications and services[61].

Investment in data and products
accessibility, coupled with an enlargement in scope, number and quality of the
initial Copernicus services, accompanied by continuous support to the
downstream industry, may indeed act as a real multiplier of benefits, both
in the preservation and creation of jobs and in overall economic value.

The costs of this wider availability should
be borne by the Space component and the service component. The current
assumptions about the allocation of funding to the three components are
certainly compatible with this suggestion.

The areas to be addressed are, in more
detail:

Making Sentinel data accessible for the scientific
community

Making Sentinel data available for European
SMEs involved in value-adding activities

Making products and information generated
by the Copernicus services accessible to value-adding industry

Ensuring the evolution of current
Copernicus services: wider scope, additional products

Favouring the addition of new Copernicus
services

Supporting the development of downstream
services of European interest

Creating an adequate distribution
network in support of the above points

Developing the capability to follow and
assess the development of services: the quality of their products, the
degree of adoption by user organisations, and their impact in terms of
socio-economic benefits.

Preparatory work on these areas should lead
to a 'service implementation plan', as a set of guidelines.

4. LIKE-FOR-LIKE COST-BENEFIT ANALYSIS

In this chapter, the Copernicus benefits
associated with the new MFF funding level for the 2014-2020 period are
evaluated on the basis of a “like-for-like” comparison with the options
presented in the Booz CBA. “Option X”, the reference scenario for the
like-for-like analysis, is defined as follows:

|| Option X

|| 2014-2020 || 2021-2030

|| Annual Average

|| % || € Mio || % || € Mio

Space || 79% || 427 || 79% || 427

In Situ || 4% || 22 || 4% || 22

Services || 17% || 92 || 17% || 92

Total || 100% || 541 || 100% || 541

Table 21: Option X Costs, Budget Distribution and
Annual Values

4.1 Costs and Benefits

The Copernicus costs reported in the Booz
CBA Options are presented below. In the Booz CBA, costs are increased year on
year to account for price escalation in line with real GDP growth (~2% per
annum) and subsequently discounted to reflect the time value of money (4% per
annum).

|| 2014-2020 || 2021-2030 || TOTAL

|| Uninflated || Inflated || Uninflated || Inflated || Uninflated || Inflated

|| Cumulative, Undiscounted, € Mio

Option A || 1.925 || 2.054 || 809 || 961 || 2.734 || 3.015

Option B || 3.430 || 3.669 || 2.723 || 3.378 || 6.153 || 7.047

Option X || 3.786 || 4.025 || 5.410 || 6.839 || 9.196 || 10.864

Option C || 4.620 || 4.969 || 7.810 || 9.869 || 12.430 || 14.838

Option D || 5.950 || 6.384 || 9.790 || 12.372 || 15.740 || 18.756

% Δ X to B || 10,4% || 9,7% || 98,7% || 102,4% || 49,5% || 54,1%

% Δ X to C || -18,0% || -19,0% || -30,7% || -30,7% || -26,0% || -26,8%

Table 22: Comparison of Costs Across Booz CBA
Options and Option X (Cumulative, 2014-2020, € M)

The Copernicus MFF funding level falls
between Options B and C of the Booz CBA. With this as a starting point, an
estimation of benefits is presented based on the following assumptions, whilst
respecting the principles of benefit scaling outlined in the section “Scaling
of Benefits”

Like-for-like
benefits accrue in the first period according to a change in the budget with
respect to Booz Option B;

In
the second period, because the foreseen budget is considerably higher (in the
order of 100%) than that of Option B, an alternative method has been used to
establish a benefits baseline (both for Option X and in the ensuing scenario
analysis).In particular, the benefits baseline in the analysis has been
calculated as follows: for the first period (2014-2020), benefits are assumed
to fall in line with those projected by Option B in the Booz CBA. In the second
period (2021-2030), because the cost base is higher in the present analysis
than in Option B, a different benefits profile has been assumed. As with all of
the Options in the Booz CBA, this is based on a proportional degradation of the
benefits of Option D, relative to the cost difference. Specifically, the
benefits of Option D in the second period are degraded by 59%, based on a cost
difference of 45% and a benefits scaling ratio of 1,3, which is the average for
each of the cost-benefit relationships across the Booz CBA options.

The
second period benefits across the Booz options are generally considerably
higher than the first period benefits, due to the combined effect of
longer-term user uptake and downstream fertilisation activities, incremental
improvements to services, deeper integration with operational platforms and
potential upgrades and improvements to the space and ground segments.

The proposed funding level can be expressed
as a 10% increase to Option B (comparing uninflated and undiscounted figures in
each case) in the first period, and a roughly 100% increase in the second. For
the first period, the like-for-like analysis therefore places the benefits of
Option X in the same order of magnitude as those described in the Booz CBA
Option B. In practice these are regarded as being equivalent for the purpose of
this analysis, assuming that the split between the Space, In Situ and
Service components follows the proportions of the Booz CBA.

In the second period, the benefits are
higher due to the increased budget, coupled with the assumptions about the
incremental accrual of benefits expressed in the Booz CBA, and summarised in
the Methodology chapter. The costs and benefits of Option X are summarised in
the table below, which includes the discounted figures based on the Booz CBA.

|| Option X

|| 2014-2020 || 2021-2030 || TOTAL

|| Undiscounted || Discounted || Undiscounted || Discounted || Undiscounted || Discounted

|| Cumulative, € Bn

Benefits || 6,0 || 4,8 || 21,9 || 12,0 || 27,9 || 16,8

Costs || -3,8 || -4,0 || -5,4 || -6,8 || -9,2 || -10,9

Net Benefits || 2,3 || 0,8 || 16,5 || 5,1 || 18,7 || 6,0

Benefit to Cost Ratio (BCR) || 1,60 || 4,04 || 3,04

Table 23: Option X Costs and Benefits (Cumulative,
€ Bn)

The Space component of Option X is assumed
to follow the serialisation strategy outlined in the section on “Scaling of
BenefitsError! Reference source not found.”.

4.2 Downstream Impact

The impact on the downstream market is
estimated as a function of the decreased programme budget with respect to the
existing cost scenarios outlined in the STP downstream study (see section on
Methodology). The closest corresponding scenario is “STP Low” at € 630 Mio,
against which the annual average Copernicus budget over the whole period
(2014-2030) - namely € 541 Mio - represents a decrease of 14,1%. The projected
downstream market size under this programme funding scenario is € 0.77 Bn in
2020, and € 0,97 Bn in 2030.

Figure 10: STP Downstream Market Development
Scenarios and Option X

4.3 Impact on Employment

The corresponding impact on direct and
indirect employment is presented in the following table.

|| Option X || Direct || Indirect || Total

|| # of jobs created / maintained by 2030

TOTAL (2014-2030) || Upstream || 2.170 || 5.650 || 7.820

Midstream || 670 || 1.750 || 2.420

Downstream || 8.620 || 27.590 || 36.210

Total || 11.460 || 34.990 || 46.450

Table 24: Direct and Indirect Employment Impact in
Option X (Jobs Created or Maintained by 2030)

In conclusion, the like-for-like analysis
of Option X results in the following outcomes:

|| Option X

2014-2020 || Cumulative Benefits || € Bn || 6,0

2021-2030 || Cumulative Benefits || 21,9

TOTAL (2014-2030) || Cumulative Benefits || 27,9

Downstream Impact in 2030 || 0,97

Integrated contribution to European GDP || % || 0,155%

Integrated BCR || : || 3,14

Table 25: Option X, Total Impacts By Area
(Undiscounted)

Option X, overall, represents a positive
return on investment, with a Benefit to Cost Ratio (BCR) of 3,0. The integrated
impact, expressed as a percentage of EU GDP, is 0,155%. The aggregate impact on
direct and indirect employment by 2030 is estimated at approximately 46,500 (new
or maintained) jobs.

5. SCENARIO ANALYSIS

This chapter evaluates the sensitivity of
projected programme benefits to different allocations of funding amongst the
three major programme cost areas, Space, In Situ and
Services.

5.1 Analysis Background

In order to provide a baseline for
comparison, the cost breakdown provided in the Booz CBA study serves as a key initial
input. The costs reported below apply to the period 2014-2020 only, and are expressed
in 2010 prices, uninflated and undiscounted.

Cost Components || Option A || Option B || Option C || Option D

Space component || 180 || 370 || 500 || 600

In Situ component || 10 || 20 || 30 || 50

Service component || 65 || 80 || 100 || 150

Total GMES || 255 || 470 || 630 || 800

Competitiveness and Innovation Framework Programme (CIP)[62] || 20 || 20 || 30 || 50

Total EU || 275 || 490 || 660 || 850

Table 26: Average Spend per Annum (2014 – 2020, €
M, 2010 Prices, Uninflated, Undiscounted)

Derived from the above information, the
proportional split between Space, In Situ and Services in the four
options of the Booz CBA is shown below.

|| Space || In Situ || Services

Option A || 71% || 4% || 25%

Option B || 79% || 4% || 17%

Option C || 79% || 5% || 16%

Option D || 75% || 6% || 19%

Average || 76% || 5% || 19%

Table 27: Percentage Breakdown of Costs by Booz
CBA Option (2014-2020)

The proportions across the four options are
broadly comparable, with the average being 76% for Space, 5% for In Situ and
19% for Services. A baseline scenario has been established, based on the
allocation of budget in the same proportions as Booz CBA Option B (79%, 4%, and
17% respectively). Booz Option B was used as a reference point since it is the
closest to the 2014-2020 MFF funding level. The three scenarios are built
around this reference scenario and its associated benefit profile.

|| Option X

|| 2014-2020 || 2021-2030

|| Annual Averages

|| % || € Mio || % || € Mio

Space || 79% || 427 || 79% || 427

In Situ || 4% || 22 || 4% || 22

Services || 17% || 92 || 17% || 92

Total || 100% || 541 || 100% || 541

Table 28: The Baseline Scenario (equivalent to
Option X)

The lowest cost option in the Booz CBA is
Option A. Under this option, overall costs are largely equivalent to benefits,
meaning that the Copernicus programme “breaks even” with a BCR of 1.

The assumption is therefore taken that
there are levels of funding for Space, In Situ and Services, which
constitute the “minimum requirement” for the realisation of benefits. Below
these levels, the benefits do not exceed the costs, and the BCR would fall
below 1. Based on previous studies, and through additional consultation,
minimum thresholds for benefits realisation as well as upper limits (ceilings,
i.e. in terms of absorptive capacity) on annual expenditure have been
established. Both of these are presented in the table below.

|| Minimum Threshold || Ceiling (Absorptive Capacity)

|| € Mio, Annual

Space || 300 || ≈600

In Situ || 20-30 || 60

Services || 70 || 170

Table 29: Minimum Thresholds for Benefit
Realisation and Upper Limits on Annual Expenditure

5.2 Scenario Descriptions

Given the amount of funding which has been
made available to the Copernicus programme, the scenarios described in this
section examine the effects of varying the amount allocated to the three cost
areas: Space, In Situ and Services. The analysis preferentially
emphasises the trade-off between Space and Services, maintaining the In Situ
component relatively stable.

The logic
applied in designing the four cost breakdown scenarios in this analysis
proceeds as follows:

Minimum annual budget levels have been
identified for the three components, below which realisation of benefits falls
rapidly towards zero. Such levels are approximately € 320 Mio for Space, € 20
Mio for In Situ, and € 90 Mio for Services.

The first scenario represents the maximum
investment in the Service component.

The remaining two scenarios adjust the
levels of the Space component upwards, and apportion the remaining budget to
the Services component.

The cost-benefit analysis therefore
establishes the three scenarios described below.

Service Delivery Pull

The Space component is held at a
level just below the Booz CBA Option B threshold (74%), and investment in the
Services component is maximised at 22%, whilst 4% is allocated to the In
Situ component. This scenario allows for a level of funding for the Space
component in line with previous studies. The realisation of additional,
programme-wide benefits rests on the development of the Service component and
on the implementation of its enabling factors. In this scenario, the structure
of the Space component is assumed to follow the serialisation strategy for
Sentinel deployment.

Intermediate

The “Intermediate” scenario
raises the Space component by 4% with respect to the first, and the Services
component is reduced proportionally (to 18%). In this scenario, as in the
previous one, the structure of the Space component is assumed to follow the
serialisation strategy for Sentinel deployment.

Technology Driven

Investment in the Space component is
maximised (81%). The Services component is decreased to 15%. Under this
level of investment, it would be feasible to consider the deployment of the C
units of Sentinels 1-3, but this would not affect the benefits profile without
a corresponding increase in investment in the Services component.

5.3 Costs and Benefits

The budgetary allocation assumptions for
each scenario, given a fixed total budget, are presented in the table below:

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven || Total

|| || Space || In Situ || Services || Space || In Situ || Services || Space || In Situ || Services || € Mio

TOTAL  (2014-2030) || € Mio || 400 || 22 || 119 || 422 || 22 || 97 || 438 || 22 || 81 || 541

% || 74% || 4% || 22% || 78% || 4% || 18% || 81% || 4% || 15% ||

Table 30: Cost Distribution By Scenario (Annual
Averages)

The percentage differences between the
baseline costs and the costs of each of the other scenarios are reported in the
table below.

|| I - Service Delivery Pull || II - Intermediate || III - Technology Driven

|| %

Space || -6% || -1% || 3%

In Situ || 0% || 0% || 0%

Services || 29% || 6% || -12%

Table 31: Cost Scaling Relative to Baseline
Scenario (applicable to both periods)

Based on the average correlation between
cost and benefit scaling (1:1.3) derived from the Booz CBA model, the above
cost changes imply the following percentage changes in benefit for each
scenario:

|| I - Service Delivery Pull || II - Intermediate || III - Technology Driven

|| %

Space || -6% || -1% || 3%

In Situ || 0% || 0% || 0%

Services || 32% || 6% || -13%

Table 32: Benefit Scaling Relative to Baseline
Option

The benefits for each of the Scenarios
I-III are calculated by applying the benefit scaling factors to the Baseline
Scenario benefits.

|| 2014-2020 || 2021-2030 || TOTAL (2014-2030) || Delta on Scen. I

|| Cumulative, € Bn || %

Service Delivery Pull || 6,3 || 23,0 || 29,4 || 0%

Intermediate || 6,1 || 22,1 || 28,2 || -4%

Technology Driven || 5,9 || 20,8 || 26,7 || -10%

Table 33: Benefit Simulation By Scenario

The model outcome is the result of
pre-existing relationships of proportion between the costs and benefits of the
options defined in the Booz CBA.

5.4 Sensitivity Analysis

A sensitivity analysis on the 2014-2020
period has been performed, in order to elucidate the potential impact on
benefits, while changing the proportional allocation of the services or space
components on a total given budget . The results are highlighted below.

Scenarios || || Selected Scenarios ||

Cost Breakdown (%) || I+ || I || II || III || III+

Space || 71% || 74% || 78% || 81% || 85%

Services || 25% || 22% || 18% || 15% || 11%

In-Situ || 4% || 4% || 4% || 4% || 4%

Total Benefits Outputs (2014-2020, € Bn) || 6,7 || 6,3 || 6,1 || 5,9 || 5,7

Delta on Scenario I || 6% || 0% || -4% || -7% || -11%

Delta Services on Scen I || 14% || 0% || -18% || -32% || -50%

Table 34: Sensitivity Analysis of Different
Potential Scenarios (at Constant Total Costs)

The analysis shows that, for a given total
budget envelope, every +10% increase in the services funding results in a +2%
increase of total benefits, while an equivalent +10% increase in the Space
funding (up to the next step ceiling of approx. €500 M defined in “Scaling of
Benefits”), to the disadvantage of the Services component, will result in an
approximately -7% decrease of total benefits, as illustrated below.

Conceptual Analysis || +/- Delta || Scenario I || +/- Delta

Delta Services Costs vs Scenario I || -10% || 0% || 10%

Delta benefits vs Scenario I || -2,1% || 0% || 2,1%

|| || ||

Delta Space Costs vs Scenario I || -10% || 0% || 10%

Delta benefits vs Scenario I || 11,2% || 0% || -7,1%

Table 35: Correlation between Incremental
Variations of Services and Space Costs and Resultant Benefits

5.5 Downstream Impact

In addition to the benefit analysis, the
economic impacts associated with the EO and Copernicus downstream market have
been estimated by scenario, as illustrated in the chart below.

Figure 11: Projected Downstream Turnover By
Scenario (2014-2030, € Bn)

The chart shows a sharp increase in the
first period, which tapers off gradually from 2021, whilst still rising
steadily.

5.6 Impact on Employment

The impact on employment has been estimated
for each scenario, considering direct and indirect employment separately. The effects
of different funding inputs have been modelled according to the cost scaling
parameters outlined above.

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

|| || DE || IE || T || DE || IE || T || DE || IE || T

|| || # of jobs created / maintained by 2030

TOTAL (2014-2030) || US || 2.030 || 5.270 || 7.300 || 2.140 || 5.550 || 7.690 || 2.220 || 5.770 || 7.980

MS || 710 || 1.830 || 2.540 || 680 || 1.750 || 2.420 || 650 || 1.690 || 2.340

DS || 9.170 || 29.340 || 38.510 || 8.710 || 27.850 || 36.550 || 8.460 || 27.070 || 35.530

T || 11.900 || 36.440 || 48.330 || 11.510 || 35.150 || 46.650 || 11.330 || 34.520 || 45.840

Table 36: Employment Impact By Scenario (both
periods, figures rounded up to nearest 10; US: Upstream, MS: Midstream, DS:
Downstream, DE: Direct Employment, IE: Indirect Employment, T: Total)

5.7 Economic, Environmental and Social
Benefits

This section combines the economic
indicators resulting from the analysis above with qualitative considerations in
order to assess the overall impact of the scenarios in terms of three areas:
economic, environmental and social. The economic impact is linked to the
development of the Space industry, the downstream sector and cascading economic
impacts on the wider economy. The environmental impact is loosely hinged on the
climate change and under certain extent to resource management benefits, and
the social impact is linked to the emergency response/security benefits, other
resource management benefits like maritime navigation, CAP monitoring and urban
planning, as well as to the employment benefits. It is worth noting that in
order to derive the scenario-related benefits from the quantitative assessment
table below, the Social and Environmental totals should be added to the Wider
Economic row.

The benefits in each of these benefit
categories have been assessed both qualitatively and quantitatively. In the
latter case, data from the cost-benefit analysis has been linked with outcomes
in each benefit category. For the qualitative analysis, reference is made to
the list of impact areas in the EC Guidelines for Impact Assessment[63], which are qualitatively
ranked in terms of the impact of Copernicus.

Benefit Category || Impact Area || Scenario Ranking

I || II || III

Economic || Functioning of the internal market and competition || ++ || ++ || ++

Competitiveness, trade and investment flows || ++ || ++ || ++

Operating costs and productivity || ++ || ++ || ++

Small and Medium Enterprises development || +++ || ++ || +

Administrative burdens on businesses || ++ || ++ || ++

Public authorities || ++ || ++ || ++

Property rights || ++ || ++ || ++

Innovation and research || ++ || ++ || ++

Consumers and households || ++ || ++ || ++

Specific regions or sectors || ++ || ++ || ++

Third countries and international relations || ++ || ++ || ++

Macroeconomic environment || ++ || ++ || ++

TOTAL (Relative) || 3 || 2 || 1

Environmental || The climate || +++ || +++ || +++

Transport and the use of energy || + || + || +

Air quality || +++ || +++ || +++

Biodiversity, flora, fauna and landscapes || + || + || +

Water quality and resources || +++ || +++ || +++

Soil quality or resources || +++ || +++ || +++

Land use || +++ || +++ || +++

Renewable or non-renewable resources || +++ || +++ || +++

The environmental consequences of firms and consumers || +++ || +++ || +++

Waste production / generation / recycling || +++ || +++ || +++

The likelihood or scale of environmental risks || +++ || +++ || +++

Animal welfare || || ||

International environmental impacts || +++ || +++ || +++

TOTAL (Relative) || 2 || 2 || 2

Social || Employment and labour markets || +++ || ++ || +

Standards and rights related to job quality || +++ || +++ || +++

Social inclusion and protection of particular groups || + || + || +

Gender equality, equality treatment and opportunities, non -discrimination || + || + || +

Individuals, private and family life, personal data || + || + || +

Governance, participation, good administration, access to justice, media and ethics || + || + || +

Public health and safety || +++ || +++ || +++

Crime, Terrorism and Security || +++ || +++ || +++

Access to and effects on social protection, health and educational systems || +++ || +++ || +++

Culture || +++ || +++ || +++

Social impacts in third countries || + || + || +

|| TOTAL (Relative) || 3 || 2 || 1

Table 37: Economic, Social and Environmental
Benefits by Scenario – Qualitative Assessment

|| || I. Service Delivery Pull || II. Intermediate || III. Technology Driven

|| Quantifiable Indicators || P1 || P2 || T || P1 || P2 || T || P1 || P2 || T

Economic || Space industry turnover (€ M) || 2.802 || 4.003 || 6.805 || 2.953 || 4.220 || 7.173 || 3.067 || 4.382 || 7.449

Downstream impact (€ M, at period end) || 815 || 219 || 1.034 || 774 || 207 || 981 || 752 || 202 || 954

Wider economy || 38 || 125 || 163 || 35 || 116 || 152 || 33 || 107 || 140

Total (€ M) || 3.655 || 4.347 || 8.002 || 3.762 || 4.543 || 8.306 || 3.852 || 4.690 || 8.542

Delta vs scen. I || 0% || -2% || -4%

Environ-mental || Global climate change || 1.033 || 8.213 || 9.246 || 987 || 7.846 || 8.833 || 952 || 7.336 || 8.288

European air quality || 1.345 || 3.793 || 5.138 || 1.282 || 3.616 || 4.898 || 1.235 || 3.429 || 4.664

European deforestation || 2 || 6 || 8 || 2 || 6 || 8 || 2 || 5 || 8

Global desertification || 790 || 2.280 || 3.070 || 804 || 2.320 || 3.124 || 814 || 2.250 || 3.064

Oil spills || 39 || 109 || 148 || 38 || 104 || 142 || 36 || 97 || 134

Total (€ M) || 3.210 || 14.401 || 17.611 || 3.113 || 13.892 || 17.005 || 3.040 || 13.118 || 16.158

Delta vs scen. I || 0% || -3% || -5%

Social || Maritime navigation || 102 || 282 || 384 || 97 || 268 || 365 || 93 || 251 || 345

 EU CAP Monitoring || 12 || 35 || 47 || 12 || 33 || 45 || 11 || 31 || 42

 Urban development || 9 || 27 || 37 || 9 || 26 || 35 || 9 || 24 || 33

Emergency response || 705 || 1.859 || 2.565 || 668 || 1.761 || 2.430 || 641 || 1.650 || 2.291

 Global humanitarian aid || 2.269 || 6.284 || 8.552 || 2.167 || 6.003 || 8.171 || 2.091 || 5.613 || 7.704

Total (€ M) || 3.098 || 8.487 || 11.585 || 2.953 || 8.092 || 11.045 || 2.845 || 7.570 || 10.415

 Employment impact || 48.330 || 46.650 || 45.840

Delta vs scen. I (benefits) || 0% || -5% || -10%

Delta vs scen.I (empl) || 0% || -3% || -5%

Table 38: Economic, Social and Environmental
Benefits by Scenario – Quantitative Assessment

5.8 Concluding Remarks

The analysis has examined three scenarios
with different proportional allocations of budget amongst Space, In Situ
and Services. The scenario “Service Delivery Pull” has the highest benefit
potential, at € 29,4 Bn cumulatively over the 2014-2030 period.

The combined impacts of the socio-economic
benefits and the downstream stimulus are presented in terms of their integrated
contribution to European GDP in the table below.

|| || || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

2014-2020 || Cumulative Benefits || € Bn || 6,3 || 6,1 || 5,9

2021-2030 || Cumulative Benefits || 23,0 || 22,1 || 20,8

TOTAL (2014-2030) || Cumulative Benefits || 29,4 || 28,2 || 26,7

Downstream Impact in 2030 || 1,03 || 0,98 || 0,95

Integrated contribution to European GDP || % || 0,164% || 0,157% || 0,149%

Integrated BCR || : || 3,30 || 3,17 || 3,01

Table 39: Integrated Impact Simulation By Scenario
(Undiscounted)

Only marginal benefits will arise from
increased investments in Space, even if substantially increased. The
benefits of Copernicus will arise in parallel with the expansion of the quality
and range of services, enabling a manifold increase in the volume of products
and correspondingly of the used base served. This, in turn requires
substantial investments on the Services side, sustained over time. If the role
of Copernicus is to make available information where and when required, this
must occur through the mechanism of services. Their creation, establishment,
acceptance, reliability will be more than proportional to the investment made.

The FeliX model (a system dynamics model
and benefit simulator, which takes into account the complex relationships
between natural and socio-economic systems) forecasts
benefits that are in the order of magnitude of € 21.7 Bn cumulatively by 2020
and € 220 Bn by 2030 (undiscounted), substantially higher (~7 times, in the
long term) than the ‘static’ benefit projections of the present study. This is due
to the enlarged scope of the FeliX model, and its broad assumptions of
underlying infrastructure (namely GEOSS[64],
to which Copernicus is expected to constitute the EU’s major contribution). The
comparison with the FeliX output serves to highlight the strong potential for
higher-order magnitudes of benefits when Copernicus is viewed as part of a
broader system of systems.

Figure 12: Potential Range of Benefit Scaling Based
on Felix Model

All projected benefits in this analysis
are contingent on the implementation of a set of enabling factors, including
regulatory and market development actions. Any
delays in the implementation of these factors will have a knock-on effect on
the service uptake and downstream market development. It may be interesting
to consider the use of other budgets in support of the implementation of
enabling factors, given that these can be associated with other initiatives and
EU policy goals, chiefly in respect of SMEs (i.e. COSME) and regional and local
development.

6. REFERENCE LITERATURE

Booz & Co. (2011) Cost-Benefit Analysis
for GMES (http://ec.europa.eu/enterprise/policies/space/files/gmes/studies/ec\_gmes\_cba\_final\_en.pdf)

OECD (2002) Measuring Productivity - OECD
Manual: Measurement of aggregate and industry-level productivity growth
(https://www.oecd.org/std/productivitystatistics/2352458.pdf)

OECD (2011) The space economy at a glance (http://www.oecd-ilibrary.org/content/book/9789264111790-en)

SpaceTec Partners (2012) European Earth
Observation (EO) and GMES Downstream Services Market Study (copernicus.eu/pages-principales/library/study-reports/?no\_cache=1&cHash=2cd2910c48204b21e891488a5e59a1b2)

ANNEX II: List of acronyms and
definitions

Abbreviations & Acronyms

|| Acronym || Explanation

|| BCR || Benefit/Cost Ratio

|| BOOZ || Booz & Company

|| C/B analysis || Cost-Benefit analysis

|| CIP || Competitiveness and Innovation Framework Programme

|| COR || Committee of the Regions

|| CSES || Centre for Strategy and Evaluation Services

|| DG || Directorate-General

|| DG CLIMA || The Directorate-General for Climate Action

|| DG MARE || The Directorate-General for Maritime Affairs and Fisheries

|| EEA || European Environment Agency

|| EU || European Union

|| ECFIN || The Directorate-General for Economic and Financial Affairs

|| ECV's || Essential Climate Variables

|| EDA || European Development Agency

|| EESC || European Economic and Social Committee

|| EGNOS || European Geostationary Navigation Overlay Service

|| EIB || European Investment Bank

|| EIF || European Investment Fund

|| EMMIA || European Mobile and Mobility Industries Alliance

|| EMSA || European Maritime Safety Agency

|| EO || Earth Observation

|| ESA || European Space Agency

|| ESE || European Space Exposition

|| EU || European Union

|| EUMETSAT || The European Organisation for the Exploitation of Meteorological Satellites

|| FAO || Food Agriculture Agency

|| FP6 || The Sixth Framework Programme

|| FP7 || The Seventh Framework Programme

|| Galileo || European Global Satellite Navigation System

|| GCOS || Global Climate Observation System

|| GIO || GMES Initial Operations

|| GSC || GMES Space Component

|| GTOS || Global Terrestrial Observing System

|| GMES || Global Monitoring for Environment and Security

|| GNSS || Global Navigation Satellite System

|| HELCOM || The Baltic Marine Environment Protection Commission

|| ICEMAR || Iceberg Forecasting project

|| IGPB || International Geosphere-Biosphere Programme

|| IHDP || International Human Dimensions Programme

|| INSPIRE || Infrastructure for Spatial Information in the European Community

|| Meteosat || European meteorological geostationary satellite

|| MFF || Multiannual Financial Framework

|| MS || Member States

|| MSFD || Marine Strategy Framework Directive

|| NASA || National Aeronautics and Space Administration

|| NEREUS || Network of European Regions Using Space Technologies

|| obsAIRve || Air quality observation project

|| OECD || Organisation for Economic Co-operation and Development

|| OSPAR || the Oslo and Paris Conventions for the protection of the marine environment of the North-East Atlantic.

|| PA || Preparatory Action

|| Pan-EU || Involving all European nations

|| PwC || PricewaterhouseCoopers

|| R&D || Research and Development

|| SME || Small and Medium Enterprise

|| SPV || Special Purpose Vehicle

|| SSA || Space Situational Awareness

|| STP || SpaceTec Partners

|| TFEU || Treaty on the Functioning of the Union

|| UN || United Nations

|| UNEP || United Nations Environment Programme

|| UNFCCC || United Nations Framework Convention on Climate Change

|| UNOSAT || United Nations Institute for Training and Research

|| US || United States

|| VC funds || Venture capital funds

|| VEGA || VEGA Group PLC

|| VHR || Very High Resolution

|| WCRP || World Climate Research Programme

|| WFD || Water Framework Directive

|| WFP || World Food Program

Definitions

Term || Explanation

Term || Explanation

Altimetry || The science and techniques involved in making relative or absolute height measurements.

||

Contributing missions || GMES relevant satellite missions. Around 30 Earth observation missions, operated by European national or multinational organisations, are in orbit today or will be flying within the next few years.

||

Credit rating || A published ranking, based on detailed financial analysis by a credit bureau, of one's financial history, specifically as it relates to one's ability to meet debt obligations. The highest rating is usually AAA, and the lowest is D. Lenders use this information to decide whether to approve a loan.

||

Discounting || Most policy options result in costs and benefits that arise at different times. Building a railway line has an immediate cost, but provides benefits over a long period. When beneficiaries receive a constant amount of money over a set period of time, their benefit will worth more on the first year than on the last year of the programme. Conversely, costs to be paid in the future are less onerous. The discount rate is a correction factor reflecting these facts. All in all, discounting allows the direct comparison of costs and benefits occurring in different points in time, valuing immediate costs and benefits more highly than those that occur later. When 'discounting' is used, it should be applied both to costs and benefits. A standard discount rate (4%) should be used for impacts that occur in the future. The total of the discounted costs and benefits of a policy option is called its net present value. (EC Impact Assessment Guidelines, SEC(2009) 92,15 January 2009)

||

ETF Startup || Part of the EC's Growth & Employment Initiative aiming to provide risk capital to innovate SMEs through investment in relevant specialised venture capital funds.

||

GMES-dedicated satellites || Missions, developed specifically for the operational needs of the GMES programme.

||

Impact || Economic, social and environmental consequences of a policy or solution, either direct or indirect, either positive or negative.

||

In situ || Sensor - usually ground based, airborne or sea based - closely located to the observed phenomena, as opposed to remote sensing

||

INSPIRE Directive || Directive 2007/2/EC of the European Parliament and of the Council of 14 March 2007 establishing an Infrastructure for Spatial Information in the European Community. It will enable the sharing of environmental spatial information among public sector organisations and better facilitate public access to spatial information across Europe.

||

Jason-CryoSat (Jason-CS) || A satellite that will carry a radar altimeter package to continue the high-precision, low-inclination altimetry missions of Jason-2 and 3 satellites.

||

Meteosat Third Generation || Satellite programme established through cooperation between EUMETSAT and ESA. The Meteosat Third Generation (MTG) programme is expected to bring a step change in capability for operational meteorology, by providing significant improvement over the capabilities of the current Meteosat generation. The programme should guarantee access to space-acquired meteorological data until at least the late 2030s.

||

Radar altimeter (RA) || Active sensors that use the ranging capability of radar to measure the surface topography profile along the satellite track. It provides precise measurements of a satellite's height above the ocean by measuring the time interval between the transmission and reception of very short electromagnetic pulses.

||

Remote sensing || The technique of obtaining information about objects through the analysis of data collected by special instruments that are not in physical contact with the objects of investigation

||

SEED Initiative || Global partnership for action on sustainable development and the green economy. It supports innovative small-scale and locally driven entrepreneurships around the globe which integrate social and environmental benefits into their business model. Founded by UNEP, UNDP and IUCN at the 2002 World Summit on Sustainable Development in Johannesburg.

||

Sensitivity analysis (SA) || Study of how the variation in the output of a model (numerical or otherwise) can be apportioned, qualitatively or quantitatively, to different sources of variation.

||

Sentinel missions || Satellite missions, developed specifically for the operational needs of the GMES programme. Five families of Sentinels are being developed up to now.

||

Synthetic aperture radar || Airborne or space borne side looking radar system which utilizes the flight path of the platform to simulate an extremely large antenna or aperture electronically, and that generates high-resolution remote sensing imagery.

ANNEX III: Reference studies and documents

A number of external studies, some
specifically targeting Copernicus and others Earth observation from a more
general perspective, are available. In addition, a specific study on the
Copernicus downstream sector's competitiveness has been performed by an
external contractor. Finally, cost information on services can be derived from
past and current development activities, co-financed by the Commission under
FP6 and FP7. For the space component, the ESA Long Term Scenario provides
detailed cost figures.

The Impact Assessment builds on the Impact
assessments accompanying the 2008 Communication "GMES:
we care for a safer planet", the proposal
for a Regulation on the European Earth observation programme (GMES) and its
initial operations, and for the 2009 communication "GMES:
Challenges and Next Steps for the Space Component".

Further data on costs and benefits of the
GMES services was also gathered. On the cost side, the Commission services
interacted with partners such as ESA and the EEA to obtain an update of cost
figures. The Impact Assessment builds on the outcome of the cost-benefit
analysis performed by SpaceTec Partners in 2012. This is based on SpaceTec
Parnters' 2012 study on the downstream market potential of GMES and on a
cost-benefit analysis which was performed by BOOZ & Co in 2011 complementing
the 2006 PWC study entitled "Socio-economic benefits of GMES".

a)         Studies performed by external
contractors

–
SpaceTec Partners. Injection paper: Preliminary
Note in Preparation for Copernicus Impact Assessment. March 2013.

–
SpaceTec Partners. Assessing the Economic Value
of Copernicus: “European Earth Observation and Copernicus Downstream Services
Market Study". Dec 2012.

–
Booz&Co. Cost-Benefit Analysis for GMES. Sep
2011.

–
the CBA carried out for the "GMES service
elements" (GSE), i.e. service demonstrator projects financed by ESA,
including the CBA procured by ESA for following GSE: COASTWATCH; Icemon;
RISK-EOS; Urban Services; TerraFirma; RESPOND; Northern view; PROMOTE; ROSES;
ForestMon; GMFS; SAGE.

–
a PWC study on the socio-economic benefits of
GMES procured by ESA (see http://www.esa.int/esaLP/SEMJZ10DU8E\_LPgmes\_0.html;

–
an ECORYS
study on the GMES downstream sector procured by the Commission;

–
sections concerning GMES in the ECORYS study on
the European space programme, procured by the Commission;

–
the GEOBENE study, financed by the Commission
under FP 6;

–
the HEIMTSA study, financed by the Commission
under FP 6.

b)         Cost estimates. Cost estimates
for different Copernicus components have been prepared:

–
ESA Long term scenario (LTS) for the GMES space
component;

–
Costs for the in situ component prepared in the
frame of the FP7-funded GISC study carried out by the EEA;

–
Service costs were calculated in-house by the
Copernicus Bureau and then discussed with member States[65], and in the Boss4GMES study.

c)         Other supporting studies

–
Impact Assessment of the European Space Policy,
including GMES
http://ec.europa.eu/enterprise/space/off\_docs\_en.html

–
GOSIS study (funded under FP6) on GMES
governance models
http://ec.europa.eu/enterprise/space\_research/pdf/gosis.pdf

–
SEIS Impact Assessment: Towards a Shared
Environmental Information System (SEIS)
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52008SC0112:EN:HTML
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0046:FIN:EN:PDF
http://eurlex.europa.eu/Notice.do?val=464212:cs&lang=en&list=464212:cs,&pos=1&page=1&nbl=1&pgs=10&hwords=&checktexte=checkbox&visu=#texte

–
Impact Assessment relating to the Economic and
Governance Evolution of Space in Europe, RPA February 2007, prepared for EC DG
Enterprise & Industry
http://ec.europa.eu/enterprise/calls/files/08\_004/rpa\_study.pdf

–
European Commission Green Paper, European Space
Policy, COM(2003)17 final (21.1.2003) - http://eur-lex.europa.eu/LexUriServ/site/en/com/2003/com2003\_0017en01.pdf

–
European Commission White Paper Space: a new
European frontier for an expanding Union: An action plan for implementing
the European Space policy, COM(2003)673 (11 November 2003)
http://ec.europa.eu/comm/space/whitepaper/whitepaper/whitepaper\_en.html

–
European Commission 'European Space Policy -
Preliminary Elements' COM(2005) 208 final (23.May 2005)
http://ec.europa.eu/enterprise/space/doc\_pdf/pep.pdf

–
SPASEC March 2005: Report of the panel of
experts on space and security, prepared for EC DG Enterprise & Industry
http://ec.europa.eu/comm/space/news/article\_2262.pdf

–
ECORYS / ESYS 2006: SATMAC – Satellite
Communication Market Assessment and Cost Benefit -, Market Characterisation
Report and Satellite Communication Application and Services, prepared for EC DG
Enterprise & Industry
http://ec.europa.eu/enterprise/space/doc\_pdf/impact\_assessment\_en.pdf

–
BICEPS report - Building an Information Capacity
for Environmental Protection and Security (European Commission, DG RTD, 2004)
http://www.gmes.info/library/index.php?&direction=0&order=&directory=6.%20Cross-Cutting%20Studies%20Documents

–
DPAG report - Data Policy Assessment for GMES
(European Commission DG RTD) - http://www.gmes.info/library/index.php?&direction=0&order=&directory=6.%20Cross-Cutting%20Studies%20Documents

–
INSPIRE Extended Impact Analysis – European
Commission, SEC(2004)980 – http://inspire.jrc.it/reports/inspire\_extended\_impact\_assessment.pdf
http://inspire.jrc.it/reports/AANSDI\_Italy\_FinalApproved\_v12en.pdf

–
GINIE (10/2003): Geographic Information in the
Wider Europe, DG-INFSO Contract IST-2000-29493
http://www.ec-gis.org/ginie/doc/ginie\_book.pdf

–
PIRA (09/2000): Commercial Exploitation of
Europe’s Public Sector Information © European Communities, 2000
ftp://ftp.cordis.europa.eu/pub/econtent/docs/2000\_1558\_en.pdf

–
Craglia M and J. Nowak (2006): “Assessing the
Impacts of Spatial Data Infrastructures - Report of the International Workshop
on the Cost to Benefit and Return on Investment Ratios of SDIs”. 2006, Ispra, Italy
http://www.ec-gis.org/sdi/ws/costbenefit2006/reports/report\_sdi\_crossbenefit%20.pdf

–
EARSC 2011: A Taxonomy for the EO Services
Market.

–
European KNOWLEDGE INTENSIVE Services based on
Earth Observation: “Doing business with the help of GMES” by S.Galant,
T.Pagano, A.Vaféas, TECHNOFI, October 2007 (copy available)

–
Eurospace (2011) The European space industry in
2010.

–
Eurospace (2011) Satellite-Based EO, Market
Prospects to 2020.

–
Geospatial Interoperability Return on
Investment Study, National Aeronautics and Space
Administration (NASA): Geospatial Interoperability Office, April, 2005.
http://www.ec-gis.org/sdi/ws/costbenefit2006/reference/ROI\_Study.pdf

–
OECD Environmental outlook to 2003 http://www.oecd.org/dataoecd/29/33/40200582.pdf

–
OECD(2005): Space 2030 – “Tackling society’s
challenges”
http://www.oecd.org/document/13/0,2340,en\_2649\_34815\_35059341\_1\_1\_1\_1,00.html

–
OECD (2011) Space Economy at a Glance.

–
OECD (2011) Measuring the Space Economy.

–
Oxford Economics (2009) The Case for Space: The
Impact of Space Derived Services and Data.

–
Space for GeoInformation, The Netherlands
(02/2003)
http://www.ravi.nl/ruimte/index.htm

–
MICUS (01/2003): The market for geospatial
information: potential for employment, innovation and added value, study for
the Germen government
http://www.micus.de/pdf/micus\_study\_broadband.pdf

–
P.Weiss (NOAA, 02/2002): Borders in Cyberspace –
conflicting public sector information policies and their economic impacts (for
the EU/US comparison)
http://www.weather.gov/sp/Borders\_report.pdf

–
Environmental Performance Index 2008, Yale and
Columbia, http://epi.yale.edu/Home

–
Euroconsult 2007, Assessment of the downstream
value-adding sectors of space-based applications

–
VEGA and Booz Allen and Hamilton, 2004, The
state and health of the European and Canadian EO service industry

–
VEGA, 2008, The state and health of the European
and Canadian EO service industry in 2006

ANNEX IV: Evaluation of the GMES Preparatory
Action (Conclusions)

Overall
conclusions

Overall, the GMES Preparatory Action (PA)
has played a valuable role in laying the basis for, and structuring the
development of GMES Initial Operations 2011-13.

The PA has been an appropriate instrument in
supporting the development of GMES by providing additional funding to promote
greater take-up of data products developed through FP7 precursor services. The
contribution made however has been project-specific, given the varied nature of
the five projects, which are difficult to evaluate as a coherent whole.

It was not necessary to have a formal
annual work programme for the PA, given its experimental nature, relatively
small budget compared with other GMES funding streams and the fact that a
description of the topics for the annual calls for tenders was included in the
DG ENTR Annual Work Programme.

The contribution made by the PA has been
important for both operational services funded through the GIO. In the case of
the EMS-Mapping Service, the main contribution was in structuring the user
community through linkER[66]
while the GIO land has benefited through funding for the development of the
first pan-European reference data products covering EEA-39, the EU-DEM and
EU-HYDRO.

Although there were criticisms of the
approach to the development of reference access data under the PA, it is not
possible presently to produce pan-European datasets on an EEA39 basis using
bottom-up data in the absence of harmonised and comparable national datasets.

In order to address gaps, the EEA therefore
implemented a combination of a centralised approach to the procurement of
European datasets combined with a decentralised approach through INSPIRE to
harmonise national datasets to European specifications over the medium-long
term.

Since this exercise is on-going and far
from complete, it is clear that a top-down approach to the development of
comparable European datasets was necessary in the interim period.

Since problems remain in terms of the lack
of harmonisation of reference datasets between EU countries and gaps in country
coverage, it is important that NMCAs work together with the EC and the EEA
through the INSPIRE process in order to ensure that national data is
interoperable with EU reference datasets.

GMES stakeholders were sometimes unsure
what the difference was between the Preparatory Action and wider funding
instruments that are contributing to the common goal of ultimately having six
operational services within GMES.

            Relevance

It is not appropriate to assess the
internal coherence of the GMES Preparatory Action as an instrument in its own
right, but rather how it has contributed to supporting the implementation of
pre-operational services and in prepaing for operational services.

The projects supported through the PA were
relevant in addressing the specific identified needs of users. A distinction
can be made between projects that addressed needs across a whole service area
within GMES, such as linKER/ emergency management and those that were focused
on specialised areas of downstream and only one part of the service (e.g.
ICEMAR / maritime and obsAIRve / atmosphere).

Projects supported through the PA have led
to useful feedback being obtained on evolving user needs. These lessons have
been incorporated by the EC, EEA, JRC and service contractors responsible for
contracts under GMES Initial Operations and some adaptations to services and
data products have been made.

            Efficiency

The limited overall budget of € 10.2 Mio for the GMES PA
meant that funding support for preparatory technical projects to support the
development of intial and full operations could not be provided across all GMES
Services[67].

The GMES PA demonstrates high efficiency.
For instance, there have been no budgetary overruns and the administrative
overheads in managing the PA within the Commission were low.

            Effectiveness

Among the lessons learned through the
implementation of the PA were that obtaining regular user input is critical in
adapting services to meet evolving user needs. This was taken into account in
planning the configuration of the future GIO EMS-Mapping Service.

The PA was successful in supporting take-up
of GMES pre-operational services funded through FP7. As a result of intensive
awareness-raising activities through linkER, for instance, more users became
aware about the potential utility of GMES data (especially in EU12 MS), and the
number of activations increased over time.

A factor hindering the linkER project’s
effectiveness was that users had to rely on non-validated reference data
provided through SAFER because it was funded through an FP7 research
environment. In comparison, the new EMS-Mapping Service in the GIO is able to
provide an operational service using validated data.

The PA has allowed for a piloting approach
to testing and developing innovative, customised downstream services and
applications that build on GMES services. This has enabled new service areas to
be tested, such as the development of on-board ship ice monitoring services
(ICEMAR).

However, there remain low awareness levels
among the private sector about the specific GMES data that will be available in
future, and uncertainty with regard to the structure and size of public user
markets and how the private sector can access these markets.

Since Preparatory Actions are an EU
financial instrument that operates outside the constraints of a full EU
programme, the PA has allowed the Commission to experiment and test the first
initial operational downstream services (e.g. obsAIRve and ICEMAR).

The linkER project helped to ensure that
there was strong user input into the development of data products and services
developed through FP7 SAFER. This in turn has fed into the effectiveness of the
design and configuration of the EMS-Mapping Service under the GIO.

            Results and impacts

Since most projects are on-going, it is too
early to evaluate the final results and impacts achieved. Nevertheless, a
number of findings can be noted at interim stage:

A key result of linkER was that it
structured the user community in the emergency management field. This was
viewed as having been critical in laying the basis for the development of
future GMES Services within the EMS-Mapping under the GIO.

The ICEMAR and obsAIRve projects helped to
demonstrate the potential of GMES to facilitate the development of downstream
EO services and applications. However, it remains unclear at this stage how
viable it will be to provide services on a fully commercial basis.

The new pan-European reference access data
products developed through the RDA project Lot 1 – EU-DEM and EU-HYDRO) have
directly contributed to the implementation of the GIO land’s pan-European
component (in particular, to the development of the 5 thematic HRLs).

This demonstrates continuity between the
Preparatory Action and the GIO in resolving long-standing challenges in
strengthening the comparability of reference data between Member States.

With regard to sustainability, the PA has
helped to encourage greater networking and coordination among user communities
in specific fields (e.g. ice monitoring, emergency management) and also the
exchange of information.

            Community Added Value

The linkER project promoted the development
of a pan-European community of civil protection users of GMES data. This added
value by promoting better and more effective coordination between civil
protection agencies and wider users.

It was recognised by stakeholders that
there was a need for EU intervention to promote the development of downstream
GMES services and applications since these remain in their infancy.

Sustainability

The projects funded through the PA could
not have gone ahead without EU assistance.

The projects supported through the PA have
led to concrete results and outcomes that have already fed into the
implementation of GMES services within the GIO. As such, the results achieved
through the PA are likely to be sustainable, since follow-up is broadly
assured. For instance:

linkER project 2008 - a network of NFPs has
been established and a customised user interface and has been developed
supported by the installatoin of an IT platform through which users can access
GMES-derived data products and reference maps.

RDA project Lot 1 2009 – two new
pan-European datasets have been developed that cover EEA39, the EU-DEM and
EU-HYDRO. These are essential for the development of the 5 thematic HRLs and
also for European environmental reporting and monitoring purposes

ANNEX V: Evaluation of the GMES Initial Operations (Executive Summary)

Conclusions - the Emergency Management
Service – Mapping

The EMS-Mapping Service was already fully
operational by April 2012 and has been able to provide data products to users
from the outset. It was therefore possible to carry out an initial assessment
of the service’s relevance, efficiency, effectiveness and utility to users in
the civil protection community. Conclusions in respect
of the initial period of implementation of the
EMS-Mapping service were that:

The
transition process from the pre-operational Emergency Response Service (“ERS”)
under FP7 SAFER to the EMS-Mapping Service has generally been effective.
However, there were difficulties in the first 3 months for users of the ‘Rush
Mode’ service in accessing image data beyond those that had activated the service
directly. This problem has now been resolved.

The
EMS-Mapping Service meets identified user needs for the timely provision of
reference data and ‘before and after’ reference maps. Among the advantages of
the new EMS-Mapping in Rush Mode are that users are able to work with vector
data and on validated data products.

The
EMS-Mapping Service has been effective in incorporating the cumulative
practical experiences and knowledge built up over several years about user
needs in the emergency response field through dedicated thematic workshops,
working groups and user meetings organised through the GMES precursor project
SAFER (FP7) and through the linkER project supported through the GMES
Preparatory Action.

The
transition from SAFER (FP7) to the new EMS-Mapping Service under the GIO was
regarded as having been effective, with strong continuity in the quality of
service provision for authorised users. However, there were some initial
difficulties in ensuring that civil protection agencies beyond those that had
requested the service activation were able to receive the data.

There
remains a challenge in the timeliness of data product availability in Rush Mode
for civil protection agencies since there are difficulties linked to external
factors for the service provider in meeting the target timeframe for post-event
delineation and grading maps[68].

The
network of National Focal Points (NFPs) set up through the linkER Preparatory
Action and coordinated by DG ECHO’s MIC has played an important role in
disseminating ESM-Mapping satellite imagery / data products to relevant actors
at regional and sub-regional levels. NFPs in some Member States have been
especially active in putting in place mechanisms to structure the user
community whereas in other Member States, there remains more work to do in this
area, which is also important from an awareness-raising point of view.

There
were high levels of satisfaction among service users with final image products.
However, some civil protection users of EMS-Mapping data products stated that
they would like to have access to primary datasets through ESA’s DWH so as to
be able to integrate these into operational workflows.

The
EMS-Mapping Service could be made more effective if the space component were to
be supplemented where appropriate in Rush Mode with very high resolution
in-situ data for specific types of emergencies (e.g. airborne remote sensing
data for earthquakes).

Conclusions – the GIO land

The data products produced through the
GIO’s local, pan-European and global components will not be available until
2013 at the earliest (in many cases only in 2014 and 2015). It is therefore too
early to provide a comprehensive evaluation of the GIO land service.
Nevertheless, significant progress has already been made in the specification
of land data products and in the design and configuration of the above three
service components. Findings in respect of the implementation to date of the GIO land are set out below.

Management and implementation

The
EEA has played an effective role as the technical coordinator for GIO land and
in assuming management responsibility for the pan-European and local
components. Likewise, the GMES Bureau has made good progress in the preparatory
stages of the global component.

As
part of its coordination role in respect of the pan-European and local
components within GIO land, the EEA has strengthened links between GMES and
INSPIRE (Infrastructure for Spatial Information in Europe).

The
EEA has played a constructive role in structuring the GMES land community in
particular through its coordination role in EIONET[69]. This network – which includes
a dedicated working group on GMES - has been especially effective in bringing
together appropriate stakeholders to cooperate on outstanding technical matters
relating to data harmonisation and interoperability of land cover and land
change products (although outstanding issues remain in harmonising national
reference datasets).

Through
its coordination role on EIONET, the EEA has improved cooperation between EU
level actors in GMES and Member States’ national and regional environmental
authorities[70].
The EEA has also been effective in promoting greater awareness about INSPIRE
and how it can benefit GMES through the EIONET and the User Forum.

The
JRC has made a valuable input to the preparatory stages in the development of
the global land component.

Clarity
should be provided by the Commission as to whether GMES includes formal
cooperation with EFTA countries and with Candidate Countries in the Balkans and
in Turkey, given the potential for GMES to support the European Neighbourhood
Policy (ENP).

The GIO
land service

The GIO land has successfully built on a
number of existing land monitoring services and data products, notably the Land
Cover and Land Change products (Image 2006 and the recent CLC Image 2012) and
the imperviousness and forest layers.

The outputs produced through the GIO land
have strong relevance to identified user needs. Once available, they should
help to inform evidence-based policy making and enable the overall situation
across the EU and EEA39 to be assessed. Data products being developed through
the GIO land’s pan-European component on an EEA39-wide basis should meet the
identified needs of European users. Comparable data products are needed for
reporting and monitoring purposes at European level by the EEA. Many EU
environmental indicators will be directly informed by GMES land data, for
instance, in the EEA’s update on the European State of the Environment due in
2015.

Although many national authorities and
environmental agencies and currently make use of national Land Cover and Land
Change usage datasets (especially in smaller EU countries where the scale of
reference data and spatial resolution may be higher), EEA39 datasets produced
through GMES should benefit national authorities, for instance by facilitating
inter-Member State benchmarking and macro-regional geographic comparisons.
Since pan-European and national datasets serve different purposes, they should
continue to exist in parallel.

Pan-European datasets will also help Member
States to carry out monitoring activities to meet environmental reporting
requirements under various key EU Directives[71].
The availability of pan-European data products
covering EEA39 will moreover provide an important input to enable Member
States’ to meet their commitments under Annex II (Land Cover) and Annex III
(Land Change and environmental monitoring) of the INSPIRE Directive.

The development of five thematic High
Resolution Layers (“HRLs”) through the GIO represents a major step forward. The
data will provide new environmental information that can be built upon and
further customised through the integration of datasets that build on ‘core’
land products by either the public or private sectors. This should in turn promote
the development of downstream services and applications.

It is not yet possible to produce
comparable data across EU27 (and even less so on an EEA39 basis) using a
bottom-up approach despite the significant EU investment made through EU
programmes (by DG INFSO and DG ENTR) in funding NMCAs to carry out technical
work to address this problem and to strengthen the harmonisation of national
datasets.

Despite progress, the interoperability of
European reference datasets produced using a top-down approach and national
datasets remains problematic in instances where access and use restrictions
relating to the use of national datasets prohibits proper linking. There is a
need to engage with NMCAs in order to resolve this issue and strengthen access
to reference data within the in-situ component of GMES.

The division of the imperviousness and
forestry layers into regionalised Lots across EEA39 had both advantages and
disadvantages. While it promoted supplier diversity and ensured that the
responsible service contractor had strong regional knowledge, there has been a
lengthy period to develop product specifications during the streamlining phase,
with methodological and technical challenges faced by the contractors
responsible for the different Lots to harmonise the production of data
products.

Although at an earlier stage of
development, the GIO global land component has potential to support
evidence-based policy making, especially for external EU policies in domains
such as agriculture, food security, environment, desertification, drought
monitoring and tackling climate change at international level. It should also
help the Union to meet its existing European commitments under international
treaties and conventions by contributing to GEOSS, thereby fulfilling the EU’s
international commitments regarding earth observational systems.

Key evaluation findings

An assessment was carried out of key
evaluation issues pertaining to the implementation of GMES Initial Operations.

Relevance

The GIO was found to be highly relevant to
the identified needs of users, especially those at European and national level,
but less relevant from the point of view of some local and regional
stakeholders. This is because GMES ‘core’ data products have been designed to
provide comparable data at European level across EU Member States, with a need
for further customisation of data (and the incorporation of additional thematic
datasets) before the products have strong utility at local/ regional levels.
With regard to coherence, although the GIO Regulation was adopted before
the Europe 2020 strategy was adopted, the programme is coherent with the Europe
2020 aims of promoting smart, sustainable and inclusive growth, for instance,
through the development of downstream services, which will contribute to growth
and jobs, although there are barriers to maximising the potential linked to
lack of awareness among enterprises and a demand for higher resolution data
(see case study 4).

Effectiveness

Overall, the GIO is likely to be an effective mechanism for developing fully
operational GMES services. It is clear that the objective of establishing the
first operational services has been achieved. The transition towards a
pre-operational environment has been effective and generally smooth, although
there have been particular challenges in the land field as part of the
structuring phase for the development of the five HRLs.

Significant progress has already been made
in the development of fully operational land and emergency management services.
However, budgetary limitations have meant that only two services out of the
intended eventual six could be developed, which risks underming the overall
coherence of GMES in terms of programmatic structure and the development of
services in parallel. This raises a question as to whether an appropriate
balance has been struck between the budgetary allocation for the space and
service components of GMES. The services component represents a very small
share and this has restricted the pace of development of operational services.

There is a question
mark as to whether Regulation 911/2010 provides
sufficient clarity as to the programme’s strategic
objectives during initial
operations in the 2011–2013 period.
There is no clear distinction between the general and specific objectives
in the annex which outlines the ‘objectives’. It is therefore difficult to assess how far at this early stage the
GIO will contribute to the Europe 2020 Strategy’s objectives. Only tentative
conclusions can be reached with regard to GMES’ contribution to growth and jobs
since there have been long developmental lead times within GMES before data
products have been made available for public and private sector usage. However,
this is beginning to happen, especially in the past 12-24 months.

Efficiency

Overall, stakeholders were very satisfied
with management and implementation arrangements within the GIO.
Specifically, they were satisfied with the delegation of specific functions to
the JRC, the EEA and DG ECHO’s MIC in relation to for the development of two
GMES services and the provision of technical expertise by the JRC and the EEA
to steer the development of the EMS-Mapping and GIO land services, and to
ensure adequate coordination in defining data and imagery needs to ESA.

Although it is not appropriate to make
direct comparisons with precursor GMES services (since R&D is inherently
more cost-intensive compared with running an operational service), GMES Initial
Operations should deliver value for money, because lessons have been learned
from precursor projects, and user needs have been incorporated into the
procurement of service contractors and into service design and implementation.

Overall, although premature to provide a
full assessment, the two main GMES services developed through the GIO are likely
to deliver good value for money. At this early stage in implementation, results
are only partially available (e.g. data products / maps available through the
EMS-Mapping).

Results and impacts

The GIO appears on track to achieve the
objective of developing two fully operational services within the 3 year
programming period, an important programme ‘result’. The key achievement to
date of the EMS-Mapping Service is the availability of a fully operational
service from the outset of the service’s launch accessible by national focal
points capable of delivering data products in both rush and non-rush mode.
However, since the non-rush mode service has not yet been activated, the rush
mode service appears likely to have a greater impact on assisting the user community,
particularly in the civil protection field.

The GIO land has already made a number of
important achievements, particularly within the pan-European component, through
the initial design configuration of 5 thematic HRLs covering EEA39. However, It
is however too premature at this stage to assess the GIO’s results and impacts
since it will take another 12 – 24 months years to produce the data products
that are envisaged. Impacts will consequently need to be assessed at ex-post
evaluation stage. Nevertheless, the data products under development are based
on previous evidence from the development of data products such as CLC data
using Image 2006, the products should be useful to a wide variety of
environmental stakeholders and public authorities at European and national
levels.

European Added Value

GMES is a European flagship programme and
by definition, the activities supported within it have an inherent European
dimension.

In the emergency management field, the GIO
also demonstrates European Added Value since they address users’ cross-border
EO monitoring needs. In the land monitoring domain, pan-European data products
in the land and land cover change field and the wider thematic HRLs being
developed through the GIO in 2011-2013 will provide unique data products, for
which in the case of the former there is already demonstrable demand from EU
policy makers and agencies, with benefits for Member States in having fully
comparable data.

Likewise, the development of the EU-DEM and
EU-HYDRO pan-European reference access data products produced through the
predecessor GMES RDA project under the GMES Preparatory Action have strong
European Added Value. The development of comparable, relevant and timely
reference access data on a pan-European and EEA39 basis was an essential
precursor for the development of EU-wide GMES services in future and represents
a European level innovation in that such datasets were not previously
available.

Sustainability

The services being provided and data products being produced through the GIO could
not be continued without public funding, pointing to high financial
additionality. However, this also means that uncertainty about future funding
can act as a barrier to future development. One of
the weaknesses of INSPIRE’s contribution to the effective development of GMES
operational services is that the directive and supporting technical processes
are limited to EU27, whereas GMES data products produced through the Land
Service need to ensure geographic coverage across EEA39 countries.

ANNEX VI: Assessing the Economic Value of Copernicus: “European EO
and Copernicus Downstream Services Market Study" – Executive Summary

This document presents the summary of the
Final Report of the “European Earth Observation (EO) and GMES Downstream
Services Market Study”, performed under the first Specific Contract of the
Framework Service Contract 89/PP/ENT/2011 – LOT 3 (“Support to GMES related
policy measures”).

It contains a high-level summary of key
findings of the analysis of the potential market value for European Earth
Observation and GMES[72]
downstream services for the Non-Life Insurance sector.

STUDY OBJECTIVES

In the context of Copernicus programme
implementation, several studies have been carried out, focusing on costs and
benefits in the context of European Commission (EC) regulatory actions.
Independently, industry surveys and market analyses have described the state
and structure of the Earth Observation market. However, the economic value of
these markets in relation to Copernicus has not yet been the subject of
detailed investigation, particularly with regard to the potential impacts on
growth and employment. The specific objective of the study is to assess the potential
market value for European Earth Observation and Copernicus downstream services
(with a focus on non-institutional markets), and the potential resultant impact
on employment. The study seeks to project the future markets for downstream
services over a long-term time horizon (2015-2030).

KEY ASSUMPTIONS AND ENABLING FACTORS

The study is subject to the following key
assumptions:

Catalytic effect of free and open data provision[73]: Copernicus services are expected to
enable and stimulate the downstream sector by freely and openly providing
access to basic pre-processed data and modelling outputs, more cheaply than
would be the case if companies had to undertake such basic processing and
modelling themselves. The business case for COPERNICUS is that the services
improve the efficiency of the downstream sector, allowing the industry to offer
better value for money in products and services to end users.

Full and assured continuity of Copernicus: In order for the potential of future markets for Earth Observation
downstream services to be realised, the continued long-term availability of
Copernicus data services is assumed. The investment incentives are crucially
tied to both political and financial commitments at an institutional level.
This continuity of services presupposes the continuity and evolution of
Copernicus infrastructure providing the necessary data. Without continuity, the
"raison d'être" of Copernicus is put into question, as users will
only rely on Copernicus if a sustained flow of data is ensured. Without
appropriate funding, existing services will cease their activities.

Furthermore, a set of enabling
factors has been identified, on which action and associated investments are
considered necessary for the realisation of downstream market potential.
Certain institutional conditions are necessary to enable and accelerate the
market dynamics foreseen in this study, linked, inter alia, to market
development and capacity building. They are summarised below:

Regulation: Free and open data policy;
assurance of data continuity; quality assurance and standards-building.

Data Availability and Access: Simplified
access to Copernicus Sentinel datasets at ready-to-use processing levels (L1)[74] for high-volume distribution,
thereby responding to the needs of the value-adding industry, ideally avoiding
the duplication of efforts at national level.

Demand/Market: Continued dissemination
efforts; regional/local demand incubation and communication schemes aimed at
commercial users; federation / consolidation of user needs and industry
requirements; further integration of EO information as a supplement to
traditional systems.

Examples of relevant enabling activities,
which already exist in Europe, include:

Tools
for Copernicus Sentinel data pre-processing, which are already being piloted in
selected Member States.

The
provision of support to the promotion of Space applications-related ideas (e.g.
GMES Masters) and business incubators.

Easy
access to credit for entrepreneurs willing to invest in the value-added service
sector.

Support
to training programmes in geospatial sciences to ensure availability of
necessary talents for these applications.

The
building of networks and the organisation of dedicated events to consolidate
user needs and industry requirements.

These activities should be built upon,
extended and promoted in order for the full potential of the market to be
realised. Under the EU’s Horizon 2020 strategy, “it
is expected that around 15% of the total combined budget for all societal
challenges and the enabling and industrial technologies will go to SMEs”[75].

KEY FINDINGS

In this study, the Earth Observation value
chain is divided into three areas of activity, each with specific markets,
actors and industry structure:

Upstream refers to the providers of EO
Space infrastructure, comprising satellite and ground system manufacturers and
operators, as well as the providers of launch capabilities.

Midstream refers to data providers, who
make use of upstream infrastructure for commercial and institutional purposes.
The core activities include the acquisition, production, processing, archiving
and distribution of Space-derived data.

Downstream represents companies offering
Value-Added Services (VAS). Such companies typically develop commercial
applications based on EO data provided by the commercial data resellers.

Market Overview

The European EO downstream market is
currently estimated at € 700 Mio, against € 200 Mio for the midstream and € 600
Mio for the upstream. According to a study published by
Euroconsult, the EO downstream market will, in 2015, reach approximately € 1.000
Mio in Europe (and over € 2.000 Mio globally), growing at a Compound Annual
Growth Rate (CAGR)[76]
of 7%.

Figure 13: Earth Observation Downstream
Services Market Forecast

Sector Analysis

The present study used Eurostat’s NACE[77] taxonomy as a basis for the
identification of potential industrial application areas for Copernicus
downstream services. Five initial pilot sectors, considered to have a high
market development potential, have been selected for priority analysis:

Agriculture

A cost-benefit analysis[78] shows that net economic benefits of more than € 5 per hectare can
be achieved, thanks to savings in nitrogen, better crop quality (increased
protein content) and increases to overall crop yield. A positive environmental
impact is also gained by avoiding the dispersal of excessive nitrogen into the
water, air and soil.

Non-life insurance

Continuous and reliable Earth Observation
information can play a role in reducing costs and
introducing efficiencies in non-life insurance business processes. Remote sensing
information can substantially improve the accuracy of catastrophe models, thus
helping insurers to improve risk management and compliance practices. In
addition, claims management functions can be supported by damage or disaster
assessment information supporting loss quantification and exposure mapping.

Oil and gas

In the oil and gas sector, Earth
Observation exploitation is currently still limited. Satellite imagery and GIS
systems can, however, usefully complement geological surveys and improve the readability
of complex geoscience datasets, used by engineers in order to identify areas where it is geologically likely that petroleum or gas
deposits might exist. Moreover, satellite imagery can contribute to improved
asset management: seismic planning and subsidence mapping help to highlight
geo-hazard risks and to ensure safer management of reservoirs and pipelines.

Water transport

In the water transport sector, Earth
Observation information offers benefits through a number of different
applications. Satellites provide continuous and large-scale information about
sea currents, which can be converted into current forecast models. These models
allow ships to optimise their routes, yielding fuel efficiency benefits and the
reduction of CO2 emissions. Satellite imaging applications can also
improve traffic management in major ports and harbours.

Electricity generation from renewable sources

Earth Observation can contribute to the
optimisation of renewable energy systems for power production, and to the
provision of information for optimal integration of traditional and renewable
energy supply systems into electric power grids. Energy sources such as solar,
wind, and wave power facilities, which offer environmentally-friendly
alternatives to fossil fuels, are particularly sensitive to environmental
conditions. Data on cloud cover, solar irradiance, and on wind/wave speed and
direction (combined with other environmental parameters such as land elevation
and land cover models) are vital elements in developing a strategy for the
location and operation of solar, wind, and wave power facilities.

Examples of practical downstream
applications in these sectors include solar power site selection and plant
monitoring, damage assessment for insurance claim management, oil pipeline
encroachment monitoring and precision agriculture maps.

These and many other examples of the use of
EO data demonstrate that the free and open provision of Copernicus data is an
essential driver for the creation of new business opportunities.

The long-term market potential for these
pilot segments has been assessed through the concept of the Total Addressable
Market (TAM). This concept expresses hypothesised market penetration, under
specific assumptions and within certain limitations. It serves as a metric of
the underlying revenue potential of a given opportunity, and should be treated
as a “bounded theoretical maximum”. The approach and key inputs for the
estimation of the EO downstream services’ Total Addressable Market for each
pilot segment are illustrated in the following table.

Table 40: Approach and Key Inputs for
Estimating EO Downstream Market Potential

The results of the analysis performed for
the five pilot market segments are illustrated in the following figure.

Figure 14: Long Term Forecast EO Downstream
Services Market Potential for the 5 Pilot Segments

The approach used for the pilot sectors has
been applied to the wider European economy by qualitatively evaluating the
remaining NACE segments on their potential for uptake of EO value-added
services. 15 out of the 21 top-level NACE sectors have been identified as being
strong candidates for EO downstream service applications. The demand potential
is moderate to high for more than half of these sectors. The total turnover of
these sectors represents 19% of European GDP.

EO and Copernicus Downstream Market Potential

On the basis of the selected industry
sectors and EO relevance analysis, expert interviews and information from
previous studies, the total European EO downstream market potential has been
assessed.

The analysis has resulted in the
identification of an indicative economic factor (EO downstream Total
Addressable Market as % of European GDP) and a total estimated EO downstream long-term
market potential of € 2,8 billion, as shown in the scheme below.

Figure 15: Methodology for Estimation of
European EO Downstream Services Market Potential

Due to the nature of the TAM concept as
well as to the uncertainty of future market projections, it is difficult to
predict when the estimated potential will be reached. Therefore, the potential
growth scenarios have been calculated in two example cases (2015 + 10 years and
2015 + 15 years, resulting in a CAGR of 11% and 7% respectively). These results
have been triangulated with data from other studies, including Euroconsult
(2010, 2011). The potential growth rates of EO downstream markets display
consistency with the projected growth rates drawn from these sources.

In order to derive the Copernicus downstream market potential the following considerations
must be highlighted.

The downstream services and applications
considered in the analysis do not, in general, require Very High Resolution
(VHR) data, i.e. the required resolution for these services is higher than 2,5
meters. Only a small fraction (approximately 10%) of the commercial downstream
services for the different sectors would require VHR data as an input. This
fraction is therefore excluded from the analysis of the addressable markets
resulting from the availability of Copernicus services.

Copernicus is expected to provide impetus
to the downstream services industry by offering specific technical advantages
through the Sentinel satellites along with free and open access to data. This
can represent an incentive for new users as well as downstream service
providers to engage in EO service solutions.

Copernicus may to some extent impact the
(less valuable) EO data market for non-VHR (5% of total EO data sales market
value) served by commercial data providers. This may urge some providers to
focus more on the VHR data market or expand their capabilities towards
value-adding activities. Those operators who provide data to Copernicus through
Contributing Missions are expected to see some non-institutional markets
strengthened and others opened up.

Taking into account the considerations
above, three scenarios have been developed, representing different levels of
market potential fulfilment (40%, 70% or 100%).

Scenario || Market fulfilment || 2015-2030 CAGR

High || 100% || 7,6%

Medium || 70% || 5,5%

Low || 40% || 2,4%

Table 41: COPERNICUS Downstream Market
Development Scenarios

This leads to a Copernicus
downstream potential turnover ranging between € 1.000 Mio, € 1.800 Mio and € 2.600
Mio by 2030, as illustrated in the figure below.

Figure 16: Copernicus Downstream Services
Market Potential

Since the complete fulfilment (100%) of the
market potential is rather unlikely, it can be considered as a
"theoretical maximum", while the low case can be seen as a “minimum
boundary”. Therefore, in the analyses which follow, the medium scenario is
retained in each case.

Impact on Employment

In the following
sections, this revenue potential is translated into direct employment effects
in the downstream area which was the focus of this study. Estimates have also
been derived for the upstream and midstream sectors. To assess a further
indirect impact, the European Commission proposed the application of a methodology
based on a previous study by Oxford Economics (2009). In the context of this
analysis:

Direct
employment refers to persons employed by an organisation operating in the space
industry (upstream, midstream or downstream);

Indirect
employment refers to persons employed in other industries which are impacted by
the Space industry, either because they form part of the Space industry supply
chain, or because the industry supplies other goods and services (such as
retail or financial services). In both cases, these industries benefit from
increased employment in the Space sector.

Downstream Direct Employment

The market dynamics projected in the
analysis are expected to result from the positive effects on the downstream
market brought about by a combination of Copernicus data and service
availability and a set of institutional market development actions.

SMEs are expected to play a key role in
this process: it is estimated that over 200 value-adding SME service providers
exist in Europe (Euroconsult, 2011), and under the EU’s Horizon 2020 strategy,
new funding instruments will be implemented in order to support early-stage,
high-risk R&D innovation by SMEs[79].

The market development can therefore be
associated with a corresponding impact on direct employment, which is defined
as persons employed by organisations operating within the downstream sector.

The approach utilises a methodology based
on the relationship between projected Copernicus downstream turnover and
industry labour productivity. Labour productivity is calculated by proxy, as
the quotient of industry turnover and the total number of employees, or FTEs
(Full-Time Equivalents) in the sector. Three employment impact scenarios are
presented below, based on the varying fulfilment of market potential.

Figure 17: EO and Copernicus Downstream
Services Direct Employment Potential

The medium scenario suggests that the
impact on direct EO downstream employment will be approximately 16.000
cumulatively by 2030. This includes both newly created positions, and existing
jobs maintained in the EO downstream sector.

The cumulative growth until 2030 in
comparison with 2011 is 12.600 new jobs in the downstream sector.

Upstream and Midstream Direct
Employment

A preliminary estimation of the related job
impact for the upstream and midstream sectors has been performed, to be read in
conjunction with the analysis done for the downstream, and as a complement to
it. The estimation is based on the application of three scenarios representing
different levels of Copernicus-related funding in the
upstream and midstream sectors. The scenarios correspond to variations of the “Copernicus
data continuity” options C and D outlined in the Booz & Co. Cost-Benefit
Analysis[80]. The high scenario implies a funding level
of approximately € 900 Mio annually, with approximately € 800 Mio for the
medium scenario and € 700 Mio for the low scenario.

The same methodological principles as used
in the analysis of downstream employment potential have been applied to the upstream
and midstream sectors, using relevant industry productivity measures in each
case. The preliminary results of the long-term employment analysis in the Copernicus
upstream and midstream segments provide a rough order of magnitude estimate of approximately
4.000 - 4.800 jobs to be maintained and created in total by 2030.

Cost Scenario || Aggregate jobs maintained and created through COPERNICUS by 2030

Upstream || Midstream || Total

High || 3.500 || 1.300 || 4.800

Medium || 3.300 || 1.200 || 4.500

Low || 2.900 || 1.100 || 4.000

Table 42: Aggregate Direct Employment
Potential (Rounded N. of Employees/FTEs, 2030)

Aggregate Employment Impact

The total impact on direct employment,
in terms of new jobs, is calculated by subtracting the current estimated
employment figures from the projected estimates. The High scenario is
disregarded in each case. The table below summarises the aggregated results of
the analysis for the downstream, midstream and upstream sectors.

Aggregate Jobs Maintained and Created through Copernicus (No. FTEs)

2030 Projection || Upstream || Midstream || Downstream || Total

Scenario || High (Theoretical Maximum): @100% DS market potential and Copernicus full data continuity and scope || 3.500 || 1.300 || 23.000 || 27.800

Medium (“Most Likely”): @70% DS potential and Copernicus full data continuity and reduced scope || 3.300 || 1.200 || 16.000 || 20.500

Low (“Minimum Boundary”): @ 40% DS potential and low Copernicus funding case || 2.900 || 1.100 || 9.000 || 13.000

Current Baseline || 2.300 || 3.400 || 5.700

Delta Medium Projection vs Baseline (New Jobs) || 2.200 || 12.600 || 14.800

Table 4: Total Estimated Impact on
Direct Employment[81]

The aggregate level of direct employment
indicates an order of magnitude of approximately 15.000 new jobs across the
entire Copernicus and EO value chain.

Indirect employment effects are typically calculated using industry employment multipliers to
estimate the effects of economic stimulus and job creation outside the
immediate industry under consideration.

The multiplier approach is based on the
understanding that one job in the Space industry can support additional jobs in
other sectors, in other industries or based on individual spending of Space
(application) industry employees. Indirect employment is likely to include the
retail, financial and business services sectors, as well as manufacturing, and
“induced” employment in retail and service industries.

Specific multipliers for the Space industry
were developed by Oxford Economics in 2009 in order to estimate the indirect
effects of increased employment in the Space upstream and downstream sectors in
the UK. The additional employment is “supported through purchases of goods
and services by companies in the Space industry, and from employment supported
by employees in the Space industry (whether direct or indirect) using their
income to purchase goods and services for their own consumption.”[82] The employment multipliers7 derived for the UK are 2,6
for upstream (2,6 jobs supported for every job in the Space industry) and 3,2
for the downstream (3,2 jobs supported for every job in the Space industry). It
is assumed for the purposes of this study that the multiplier for the midstream
is comparable to that of the upstream; since no specific multiplier is
available, the upstream multiplier will also be used for the calculation of the
indirect employment of the midstream.

Based on the medium scenario above
(3.300 upstream and 16.000 downstream maintained and created direct jobs), the
analysis suggests that approximately 63.000 “indirect” jobs could be supported
in industries outside the Space sector in the year 2030 (figures have been rounded up to the nearest hundred).

Integrating the direct employment analysis
with the indirect employment analysis based on Oxford Economics’ industry
employment multipliers, the overall employment impact amounts to
approximately 83.500, including jobs maintained and created in the wider
economy, as summarised in the following table:

|| Employment 2030 || Upstream || Midstream || Downstream || Total

Medium Scenario || Direct || 3.300 || 1.200 || 16.000 || 20.500

Oxford Economics Multiplier || 2,6 || 2,6 || 3,2 ||

Indirect || 8.700 || 3.100 || 51.200 || 63.000

Total (New and Existing) || 12.000 || 4.300 || 67.200 || 83.500

Table 5: Total Direct and Indirect Jobs
Estimate

CONCLUSIONS

A number of non-Space sectors benefit from Copernicus

The study identifies industrial sectors,
which may benefit from Copernicus, and analyses five in particular: water
transport, oil and gas, non-life insurance, power generation from renewable
sources and agriculture. Examples of practical applications are solar power
site selection and plant monitoring, damage assessment for insurance claim
management, precision farming and oil pipeline encroachment monitoring. These
and many other examples of the use of EO data demonstrate that free and open
Copernicus data provision is an essential driver for the creation of new
business opportunities.

Enabling factors are necessary for the realisation of market
potential

A number of existing activities are
underway to support market growth. The implementation of a set of enabling
factors would ensure that the identified potential can be assured, in
particular in the downstream segment:

Regulation: Free and open data policy;
assurance of data continuity; quality assurance and standards-building.

Data Availability and Access: Simplified
access to Sentinel datasets at ready-to-use processing levels (L1)[83] for high-volume distribution,
thereby responding to the needs of the value-adding industry, ideally avoiding
the duplication of efforts at national level.

Demand/Market: Continued dissemination
efforts; regional/local demand incubation and communication schemes aimed at
commercial users; federation / consolidation of user needs and industry
requirements; further integration of EO information as a supplement to
traditional systems.

The estimated EO Downstream market potential attributable to
Copernicus is € 1,8 billion by 2030

The estimated Earth Observation downstream
services total market value potential is € 2.800 Mio, of which € 2.600 Mio
could be attributable to the Copernicus-enabled downstream, i.e., value-adding
activities building on Copernicus data and products. This is based on the
expected stimulus to the market catalysed by the free and open data policy of
Copernicus. Projecting the addressable market potential over the period
2015-2030 leads to approximately € 1.800 Mio in downstream services turnover
attributable to Copernicus by 2030, assuming the “most likely” medium
scenario of 70% market potential fulfilment.

Considering the Copernicus contribution along the Space value chain,
Copernicus can be seen as a driving force for creating highly skilled job
opportunities and can have indirect effects on the wider economy by 2030.

Downstream:
Maintaining and creating approximately 16.000 direct jobs cumulatively,
provided that full data continuity is assured for Copernicus in the long term,
and the EO market potential is realised, with enabling factors in place.

Upstream
and Midstream: Maintaining and creating 4.500 direct jobs under the Copernicus
funding scenario option of full data continuity.

An
aggregate of 20.000 direct jobs will be created and maintained, of which 15.000
are new jobs, in total across the entire Copernicus and EO value chain.

A
high-level-analysis of potential economic multiplier effects (based on Oxford
Economics’[84]
Space industry multipliers, provided by the European Commission) suggests that
63.000 indirect jobs could be maintained and created, yielding an overall
employment impact of approximately 83.000 jobs in Europe by 2030.

Copernicus demonstrates that ecological and economical goals can be
mutually beneficial; environmental sustainability can promote economic
development. In fact, Copernicus and Earth
Observation satellite data can support the development of useful applications
for a number of different industry segments (e.g. agriculture, insurance,
transport, and energy) creating an appealing downstream/ value-added services
market.

Overall Conclusion

The European Commission has commissioned
a study investigating the economic impact of the Copernicus programme beyond
the institutional sector, with a focus on the downstream market. Initial
results show that Copernicus is not only a monitoring tool for institutional
needs, but can also stimulate economic growth and employment in a wide range of
industrial sectors, leading to the creation or maintenance of approximately
20.000 direct jobs in Europe by 2030, if enabling factors are put in place.
With highly skilled jobs in this sector typically impacting employment in other
sectors, the economic stimulus by Copernicus could also result in a wider
economic effect, with an additional 63.000 indirect jobs secured or created by
2030. Overall the impact on employment from Copernicus is estimated at
approximately 83.000 jobs in Europe by 2030.

ANNEX VII: Summary of the Booz & Co's Cost-benefit Analysis on
GMES

1. Introduction & Assessment Approach

Global Monitoring for Environment &
Security (GMES) is a joint undertaking of the European Commission, its Member
States, the European Space Agency (ESA) and the European Environment Agency
(EEA). It is an Earth Observation (EO) programme that seeks to develop
operational information services in the fields of environment and security.
Through investments in new space infrastructure, the programme aims to create
an independent European capacity in EO.

Booz & Company was commissioned to
undertake a cost-benefit analysis of the GMES programme by the European
Commission. The main focus of this study is the assessment of four broad
funding options for GMES and its operational services. In carrying out this
exercise, it is important to bear in mind that GMES represents a unique public
investment programme in that it is designed to support a wide array of public
policy issues. Therefore, we have developed a strategic evaluation framework
based on our understanding of the space and EO sectors, and the role EO
infrastructure plays in supporting the implementation of government policies
aimed at better managing the environment and security.

The figure below provides an overview of
the process we have followed in defining and evaluating the impact of GMES at a
strategic level, and how this can be used to support the assessment of the
options.

Approach to Evaluating GMES Impact &
Investment Options

2. GMES Components and Services Domains

The GMES system is composed of 3 main
building blocks: (i) the Space component, (ii) the in situ component and (iii)
the service component.

The collection of EO data from space is the
primary infrastructure component of GMES. In its operational configuration, the
GSC will rely on data provided by dedicated GMES missions (the Sentinels), as
well as Contributing Missions from national or commercial providers.

The in situ component is based on
observation infrastructure owned and operated by a large number of stakeholders
and coordinated by the European Environment Agency (EEA). The observation means
include ground-based, airborne and ship- or buoy-based sensors and instruments.
The need for in situ observation activities, and associated infrastructure,
stems from a range of national, EU and international regulatory agreements.

The service component refers to the
evolving networks of service providers involved in the production and delivery
of GMES services. GMES service provision is organised in terms of six domains:
atmosphere monitoring; climate change monitoring; emergency management; land
monitoring; marine; and security applications. These are described as follows:

Climate Change: Monitoring in support of adaptation and mitigation policies through
production of Essential Climate Variables (ECVs).

Atmosphere:
Monitoring atmospheric chemistry and composition to contribute toward ECVs, as
well as measurement of European air quality

Land Monitoring: Monitoring of land use to protect ecosystem and facilitate
environmental protection and resource management.

Emergency Management: Services to allow better coordination, preparation and response
from natural and man-made disasters. This includes disaster extent and damage
assessment maps, to support post-event recovery.

Marine:
Ocean forecasting and monitoring to contribute to ECVs, monitoring marine
environments and contribute to maritime navigation by creating and calibrating
three-dimensional models used in prediction and forecasting.

Security:
Use of EO to support EU external actions at land and maritime level to promote
security.

3. GMES Value-Added

EO is seen globally as a critical source of
data to enable monitoring and modelling of major issues of global importance
using technology that removes many of the limits of national or localised
observation systems. GMES is Europe’s contribution to the Global Earth
Observation System of Systems (GEOSS), which itself identifies key societal
benefits that are the objectives of these systems including:

Understanding, assessing, predicting,
mitigating, and adapting to climate variability and change;

Reducing loss of life and property from
natural and human-induced disasters; and

Understanding environmental factors
affecting human health and well-being.

By providing the EU contribution to GEOSS,
GMES provides a strategic role for the EU in Earth Observation by:

Ensuring Europe remains a leading
contributor to GEOSS and is recognised as such;

Enabling greater collaboration between
members of GEOSS, enhancing EU policy goals by ensuring access to information
from global contributors;

Enhancing the credibility of the EU at
international negotiations by having its own data sources in order to
demonstrate its commitment to understanding the global environment; and

Ensuring the EU has an independent source of
information to guarantee the veracity of information used for EU policy
purposes at global and European levels.

GMES contributes towards maintaining the
strategic influence of the EU in important global policy areas. The GMES
programme of dedicated satellite capacity (the Sentinels), have been designed
to augment existing satellite and in-situ data sources. In total, the Sentinels
will make a significant contribution to the collection of Essential Climate
Variables (ECVs) that provide input to climate models to forecast future
climate change scenarios. In addition, the collection of new data on
atmospheric, marine and land conditions can support a wide range of policies at
European and national level.

Given that climate change is a top priority
goal of the EU, with the European Climate Change Programme (ECCP) and the EU
commitment to achieving multilateral agreement on climate change within the
auspices of the United Nations Framework Convention on Climate Change (UNFCCC),
it is apparent that the most significant impact of GMES will be to collect
observations to enhance the modelling of future climate change scenarios. This
will enable greater confidence in these forecasts which will impact on
strategies for mitigation of and adaptation to climate change, and support EU
positions at international negotiations.

In addition to supporting the EU global and
internal efforts to mitigate and adapt to climate change, the GMES programme
will enhance the EU’s understanding of and options to respond to other key
policy areas of environmental impact. The EU has a wide range of policy
initiatives and strategies directly related to the environment, including the
Europe 2020 Strategy and the EU Sustainable Development Strategy. In
particular, GMES can assist in understanding and taking steps towards
objectives in a number of areas including:

Biodiversity (e.g. deforestation,
desertification, threats to sensitive ecosystems) as expressed through the
Biodiversity Action Plan;

Promotion of improvements in air quality in
Europe to improve public health through the Clean Air for Europe programme;

Prediction, response and reconstruction
associated with major natural disasters (through the Space and Major Disasters
Charter and the Community Civil Protection Mechanism);

Improved targeting of humanitarian aid and
assistance programmes to developing countries; and

Better compliance with funding from the
Common Agricultural Policy.

Investment in GMES infrastructure also
contributes to the EU’s industrial policy, by helping to develop the EU space
sector and by facilitating the development of a downstream sector which can
take advantage of new data series to sell services to end users on a commercial
basis. This supports the EU’s endeavours to promote economic growth and
employment, based on new technologically-led industries that have an
environmental focus.

4. Economic Value of GMES

As GMES is a major EU effort to enhance our
understanding of Earth science, the main benefit of GMES will be the value of
information it provides to support policy action and resource management across
the EU and further afield. The value of information depends on a number of
factors regarding the circumstances of decision makers, including the level of
uncertainty that they face, what is at stake, the cost of using information,
and the cost of the next-best information substitute. A review of academic
literature supports the view that there is inherent value in information. Based
on this review, there are valid reasons to suggest that the overall extent of
the VOI is incremental. As such, GMES has the potential to deliver significant
economic value through enhanced EO information.

5. Approach for the Quantified Cost-Benefit
Assessment

The approach supporting the cost-benefit
analysis combines an understanding of timing (e.g. when services are
operational and the build-up period before benefits fully materialise), the
level of actual benefits realised (e.g. the degree to which service guarantee
and level of investment in developing and promoting services impact), the
programme itself (e.g. infrastructure capability and availability), and most
importantly the explicit level of impact placed on the value of information
provided to decision makers and market actors.

Four options have been assessed:

Option A (Baseline Option);

Option B (Baseline Option Extended);

Option C
(Partial Continuity); and

Option D
(Full Continuity).

Each option
contains profiles of investment in infrastructure (space, in situ), services
and user take-up. The analysis is supported by a comprehensive review of GMES
services to take account of the level of foreseen operations by 2014. It has
provided a strong basis for setting a service baseline for 2014, and
demonstrates where additional funding is required to reach operational
maturity. The outcome is specific assumptions for each benefit area covering
operational readiness and time to full maturity. The quantification of benefits
is based on an approach that attributes to GMES an incremental improvement in
outcomes, e.g. measured as a change in baseline environmental damage costs.
This recognises that outcomes consist of several factors, of which the
contribution by GMES is only one part.

6. Cost-Benefit Analysis

The study has
confirmed through qualitative and quantitative analysis that GMES has the
potential to be developed into a powerful tool for the EU. GMES enables the EU
to engage positively at the global level, but also to work towards achieving
EU-wide policy objectives. The quantified cost-benefit analysis assesses four
broad funding options.

Key results
for each of the four options are presented in the figure below. It shows total
benefits, total programme costs and the associated net benefits over the 2014 –
2030 time period of the assessment. Results are cumulative undiscounted and
discounted at 4% per annum. All values are expressed with 2010 as the base
year.

The analysis
has demonstrated the value of remaining committed to the GMES programme. Option
A with no on-going commitment to replace infrastructure or investing
significantly in services is the one with the lowest net benefits. Increasing
levels of commitment to the programme, supported with increasing investments in
Sentinel Missions, and hence improving service guarantees, provide increasing
levels of benefits. This is demonstrated in Options B and C, although the
step-change in Option C is also associated with a much higher level of
benefits. However, Option C only provides partial continuity as data from
Contributing Missions is not guaranteed. This is addressed through Option D
where there are additional investments to provide a full continuity of data
from Sentinel and Contributing Missions.

In the case
of Option D, the figure shows the cumulative build-up of benefits and costs
over time in discounted terms. Option D enables the capture of a full range of
potential benefits from investing in GMES, including those relating to the
development of a comprehensive long-term response within the climate change
domain (accounting for 40% of total benefits). The option also provides a
strong basis for achieving the EU key strategic policy objectives, including
securing GMES within the context of industry policy and the wider economy.

Figure 6

Option D – Cost-Benefit Analysis, €
billion, 2010 prices

Source: Booz & Company analysis. 2011

Option D will
provide the space and downstream sectors, including SMEs, a basis for
developing capabilities and competitiveness within the sector. These advantages
can support future industrial development and support a strong positioning in
comparison with non-EU competitors and firmly secure the EU EO sector in the
longer term. In particular, it is important for businesses – and actors in
general - to have sufficient confidence that investments are supported by a
long term funding commitment. If this is not in place, it is most likely that
benefit realisation will fall short of expectations, particularly in relation
to realising benefits from climate change action. It is only through
guaranteeing the continuity of data that this is secured.

However, it
remains clear that Option D requires the EU to make a substantial – and
sustained - funding commitment over a long time period. Option D represents a
significant step-change in commitment, and provides a basis for establishing
GMES as a key tool to inform climate change mitigation and adaptation. However,
given the overall uncertainty on key parameters, further careful consideration
may be required. It is possible to gauge the wide range of potential outcomes
from the following figure, which illustrates the range from € 10.300 Mio to € 50.800
Mio from varying the assumed GMES contribution, with the black line in the
middle of range showing the Central Case projection. The range for benefit-cost
ratios is 1.9 – 5.4.

Figure 7

Option D – Low, Central and High
Case net Benefits with + / - 50% change in GMES Benefits for 2014 - 2030, €
billion, 2010 Prices, Cumulative, Discounted

Source: Booz & Company analysis. 2011

Sensitivity
analyses have been used to compare results to the Euro-GEOSS FeliX model and the
PWC study of socio-economic benefits of GMES. The FeliX model is shown to
generate benefits that are substantially higher (up to 2.9 times more than in
Option D). It illustrates a potential up-side scenario to investing in GMES.
Furthermore, total benefits projected in the current study are shown to be
lower by 2030 than in the PWC study. However, the PWC study assumed the
majority of benefits to start from 2011. Comparing the results of this study
with a PWC benefit projection on a comparable basis (i.e. take-up from 2014),
it is actually possible to demonstrate a higher result by 2030. Overall, these
findings provide some key reference points for interpreting the results and
validating the findings of this study.

Finally, it
should be stressed that this study represents a first attempt at placing the
benefits of GMES within the context of different investment options. It may
have provided an objective basis for selecting a preferred option. However, it
remains clear that additional option refinement and cost-benefit assessment
work is required to optimise any option.

7. GMES Benefit Enablers

For the full
potential of GMES to be realised, some key enablers need to be addressed in the
short term. Without resolution of these issues, GMES may still develop and
expand its role (and benefits), but there are risks of higher costs, reduced
uptake by public sector users and growth from the downstream sector. If these
risks are not carefully managed then a substantially lower benefit profile may
eventuate. These issues have been highlighted by stakeholders, both public and
private sector.

The key steps
that should be taken to enable the potential of GMES include:

Incorporating
a more central role for users in strategic development of the GMES programme;

Development of
a strategic approach to the downstream sector to catalyse engagement and
interest, and gain feedback on key priorities for that sector;

Development
of a longer term funding and financing strategy that enables procurement and
contracting arrangements to go beyond the FP funding periods;

Development
of a long term data policy that addresses issues of intellectual property,
privacy, data archiving, access policy and relationships with Contributing
Missions and in-situ locations;

Further
definition of the selected option, with an ongoing process of optimising
expenditure on infrastructure and services, with a dynamic view of benefits and
priorities over time; and

Determination
of ownership and operational control of the Sentinels after they have been
deployed.

In this
context, programme governance is identified as a top priority. GMES requires
strong strategic leadership, with a programme approach that is dynamic, has a
professional risk management strategy and will engage with users and the
downstream sector in the ongoing development and delivery of its programme. It
should be focused on delivering across the high impact benefit areas such as
climate change, environmental policy and facilitating the development of the
downstream sector.

If governance
is addressed, it can also provide a strategic foundation for the EU developing
GMES as a world-class, leading base for EO with a downstream sector that is
growing to its potential. Given the sheer scale of investment involved, it
would be in the best interests of the EU to maximise the potential return from
this, and to take GMES from being an interesting research and development
project that is delivering useful services, to being seen as an invaluable
contribution to a wide range of public policy and private purposes. It can do
this with a body that is empowered, strategically focused, user oriented and
dynamic.

ANNEX VIII: The FeliX Model

The FeliX
model, which stands for Full of Economic-Environment Linkages and Integration
dX/dt, is a dynamic and integrated approach to identifying and quantifying the
benefits of GEOSS. It is provided through the application of systems dynamics
models. Developing such a model and carrying out simulations of different EO
scenarios was a main output from the GOE-BENE project and is being continued
and refined as part of EuroGEOSS. This work included the development of a
systems dynamics model, which can be used to test the potential impacts of
GEOSS.

Figure 8: FeliX Model Overview

Source: GEO-BENE Deliverable D10(T30) - Draft GEO-BENE Synthesis
Report

The benefit
of systems dynamics modelling is that it recognises the complex
interdependencies between the earth’s various social, economic and
environmental subsystems. Under this approach, a series of interrelated systems
models are connect via a series of feedback loops such that changes in one
model or subsystem has consequences for other subsystems.

The FeliX
model represents these relationships at a global level, with subsystems models
representing various relationships for and between production and consumption
variables including, land, energy, the development of technology, the economy,
population and the carbon cycle, etc. A high level representation of the
sub-models and interrelationships in the FeliX model is shown in the figure
above. Under this approach, each of the GEOSS SBAs have been embedded into the
model’s subsystems. Stocks (e.g. population, knowledge) and flows (e.g. birth
and death rates, learning and forgetting, etc.) are modelled through causal
relationships and crucial feedback loops to establish linkages between each of
the key sectors of a global socio-economic and environmental system.[85]

The model
represents these causal relationships and linkages at a global level and the
model has been calibrated using 100 years of statistical data. This data
reveals that there are relatively stable long-term relationships between the
key variables that have been included in the model. The model can then forecast
changes in production and consumptions under a base scenario (i.e. with no
change to GEOSS capability) and a set of scenarios that assume various
enhancements to GEOSS that support an improved output in the model’s subsystems[86].

ANNEX IX: Comparison of the PwC 2006 study and Booz & Co's 2011
study

Previous effort to quantify the benefits of
GMES was performed by PwC in 2006. The results are summarized in the figure
below:

Figure
9:

PWC
Study - GMES Total Benefits, € billion, 2010 Prices, Cumulative, Discounted

                                                                         Source: Booz & Company analysis. 2011

All values have been adjusted to 2010
prices and discounted to 2010 by Booz & Company to enable the comparison
with the results of the latest CBA study.

The PwC study generates substantial
benefits for the time period up to year 2030 (€ 46.800 Mio).

The recent Booz & Company study
projects € 32.700 Mio of total benefits in Option C scenario (30% reduction
compared to the PwC assessment) and € 36.700 Mio in Option D (22% reduction
compared to the PwC assessment), both for the 2014-2030 time period.

Booz & Company projects reduced total
benefits from the GMES programme, as illustrated in the figure below. PwC's
study result are impacted by the assumption GMES programmes will be developed
enough and operational from 2011, thus will start to cumulate benefits.

More appropriate method to compare the
benefits assessed in the two studies is by delaying PwC's benefit projection
quantified by three years (see "PwC delayed" curve). Making the
assumption that benefits come into effect from 2014 and not from 2011
significantly impacts the final results. PwC's "delayed" benefit
projection by 2030 equals € 27.500 Mio and is therefore lower than both Option
C and Option D projections in the Booz & Company study.

This confirms the high socio-economic value
of the GMES programme.

Figure 10:

Cumulative Total
Benefits Options C, D, PWC, and the delayed PWC Profile,

€ billion, 2010
Prices, Discounted

Source: Booz & Company analysis, 2011.

ANNEX X: GMES programme - overview of programme evolution and funding
until 2013

Situation until 2013

GMES/Copernicus is currently financed at
European, intergovernmental and national levels, based on partnerships among
the different players. The EU does not finance the totality of the cost of the
development and operations of all the space based and the in situ
installations providing data for the GMES/Copernicus services. GMES/Copernicus
is set up in partnership with the Member States[87].
The EU will rather concentrate on domains where an EU-intervention will provide
a clear added value.

The EU will both coordinate these
partnerships and manage its own contribution to GMES/Copernicus, which consists
of development activities and an operational phase.

Regarding development activities, this
contribution currently consists, in particular, of the co-financing of research
activities under FP6 and FP7:

· a co-financing of space infrastructure developments[88]
that are carried by the European Space Agency (ESA) in order to fill gaps in
existing space infrastructure;

· in situ research;

· funding of pre-operational demonstrator services.

Within FP6, the EU has spent € 100 Mio on
GMES/Copernicus projects, whereas ESA has invested another € 100 Mio in the
GMES/Copernicus Service Elements projects. In the space theme of the specific
programme "cooperation" of FP7, the EU will make available
approximately € 430 Mio for GMES/Copernicus service projects and procurement of data
for these Services between 2007 and 2013. Additionally, € 624 Mio from the space theme of
FP7 have been and will be used to contribute to the development of the ESA
Space component programme, which amounts to € 2.246 Mio in total (including
funds contributed by ESA Member States).

First operational activities, in particular
in the field of emergency management and land monitoring, are financed under
the GMES/Copernicus programme and its initial operations in addition to some
other operational elements in the land domain (Corine Land Cover, Urban Atlas).
Funds allocated to initial operations are € 107 Mio. Other services such like
marine, atmosphere, security and climate change are financed through FP7. All
of these services are close to operational status.

Europe and the Member States have invested
significant resources in the development of GMES/Copernicus space infrastructure
and pre-operational services in order to ensure an uninterrupted provision of
accurate and reliable data and information on environmental issues, climate
change and security matters to decision makers in the EU and its Member States.
This information is needed by public authorities in the Member States and
regions who are in charge of the policy conception and implementation. The
Commission also needs this information for evidence based policy making and
monitoring. As a total, the EU has spent/earmarked about € 3.200 Mio for development and
initial operations of GMES/Copernicus. But GMES/Copernicus
also makes use of infrastructure (satellites, in-situ networks, ICT capacities,
etc…) existing and financed at National level worth several billion euros and
of international mechanisms of cooperation.

Continuous and significant financing
efforts have been made by GMES stakeholders, namely the EU (through Framework
Programmes for Research and Development, Preparatory Actions), ESA Member
States (GMES Space Component Programme, Earth Watch and GMES Service Elements,
Earth Observation Envelope Programme), together with direct contributions from
Member States and European organisations, for the development of services, the
access to space and in situ data, and for the construction of a dedicated
observation infrastructure.

With the entry into force of the European
Earth monitoring programme (GMES) and its initial operations (2011-2013) on 9
November 2010, GMES is now entering into a new phase with a dedicated
operational budget.

This document provides an overview of the
overall funding of GMES since the early stage of the initiative (1998 Baveno
Manifesto) until the end of 2013.

Mobilising funding resources

1st phase: 2000-2006: designing the concept
of GMES

Different financial instruments have been
mobilised depending on the nature of the activities to be funded for GMES.

On the EC side, preliminary thematic
projects and networks have been supported by the 5th Framework Programme for
Research, Technological Development and Demonstration. The first concrete steps
started with the development of the pre-operational GMES fast track services
(2004-2006) using available funds from EC/FP6 Space & GMES Theme (€ 100 Mio).The
first ESA activities in support to GMES were adopted at the ESA Ministerial
Council in November 2001 (e.g. Earth Watch proposal and GMES Service Element).
The ESA contribution through the GMES Service Elements amounts to € 130 Mio.
Additional studies were launched by ESA for the GMES space component (€ 30 Mio)

2nd phase: 2007-2013: from concept to
reality

The EU contribution for this period comes
from four sources:

– FP7: Under the Seventh Framework Programme for Research (FP7), 2007
– 2013 the European Commission has made € 1.400 Mio available in support of space
related activities, out of which about 85% was made available for GMES, with a
split between services and the space component (€ 365 Mio and € 624 Mio at
current economic conditions for the services and for the space component
respectively, and € 9 Mio for the in situ component);

– GIO: The GMES Regulation on the Initial Operations provides an
operational budget of € 107 Mio;

– Preparatory Actions: some € 10 Mio have
been made available for funding operational activities in view of the
implementation of the GMES Regulation;

–
DG REGIO:
additional funding was made available by DG REGIO for supporting the
development of the Urban Atlas.

Details of the FP7 and GIO appropriations
are presented in table 1.

ESA contribution

On its side, ESA received contributions from
its Member States for the following activities:

– € 1,621 Mio (2008 e.c.) for the GMES Space Component (for both
segments 1 and 2);

–
€ 32 Mio for further developing some GMES
Service Element projects;

–
And € 75 Mio for the Climate Change Initiative.

Space Component

The space component includes:

– The construction, launches and operations of Sentinel satellites or
instruments developed specifically for GMES;

–
The GMES Space Component Data Access (GSCDA)
which is composed of an access infrastructure and a data buy mechanism enabling
the access to GMES Contributing Missions (GCM) developed and operated outside
GMES.

The total development cost of the GMES
Space Component is € 2,300 Mio (2008 e.c.) of which ESA Member States provide
72% and the EC 28%.

According to the GSC Programme Declaration
adopted at the CMIN’08 Segment 1 and Segment 2 have been merged into a unique
set of activities.

Other contributions

Other contributions should be taken into
consideration for consolidating the overall past funding of GMES, namely:

– Member States with their in kind contribution of in situ data which
can be estimated at more than € 300 Mio/year, and their respective national
space programmes which leverage the access to the GMES contributing missions;

– FP consortia who participated to GMES projects with a share of
approximately half of the EC contribution, thus in the order of € 230 Mio for
the whole period until 2013;

– Intergovernmental agencies such as EUMETSAT and ECMWF who provide
access to some of their infrastructure, skills and data at no cost for GMES
(e.g. computing facilities at ECMWF, meteorological data…);

–
Other Commission services (DG ECHO, DG ENV, DG
JRC…) who provided additional funding to GMES related activities (e.g. CORINE
Land Cover, EFAS, …).

Global overview

–
As a whole, the overall funding made available
until 2013 by the EU and ESA has reached over € 3.000 Mio (table 2):

– For the in situ and service components: the EC provided
funding above € 520 Mio, completed by € 240 Mio from ESA;

–
For the space component, ESA made some € 1,650 Mio
available and the EC € 780 Mio (FP7 and GIO funding).

Access to space data has been supported by
dedicated FP7 budgets with € 48 Mio through a FP7 grant, completed by € 53 Mio
as part of the EC/ESA Delegation Agreement, and additional € 43 Mio from FP7 as
a complement to the GIO budget.

A summary is given in the following table:

M€ (2000-2013) || ESA || EU || others

Sentinels || 1,651 || 632 ||

Data Access || || ||

            Access infrastructure || - || 40 ||

            Data buy || - || 104 ||

Services || || ||

            Core Services || - || 262 || ~116 (FP7 consortia)

            other FP7 || - || 256 || ~120 (FP7 consortia)

            GSE+CCI || 237 || - || -

In-situ || || 9 ||

Total || 1,888\* || 1,303\* ||

(\*): figures
are not fully comparable since ESA figures are based on 2008 e.c. and EC
figures on c.e.c. Readjusting the table to 2008 e.c. would reduce the EC
contribution with a factor related to the inflation rate.

Table
1: overview of the funding made available under FP7 and GIO for the period
2007-2013

[1]               SEC(2009)639 of 20.5.2009

[2]               SEC(2009)1440 of 28.10.2009

[3]               Hereafter referred to as “Booz CBA” - available at http://copernicus.eu/pages-principales/library/study-reports/

[4]               COM (2005) 565 final of 10 November 2005

[5]               COM(2008)748 final of 11.12.2008

[6]               COM(2009) 223 final of 20.5.2009. Regulation (EU)
911/2010 of the European Parliament and of the Council of 22 September 2010 on
the European Earth monitoring programme (GMES) and its initial operations
(2011-2013) – OJ L276 of 20.10.2010, page 1.

[7]               COM(2009)589 final of 28.10.2009

[8]               COMMISSION DECISION of 5 February 2010 setting up the
GMES Partners Board (2010/67/EU) – OJ L35 of 6.2.2010, page 23.

[9]               See e.g. the "GMES operational capacity
workshop" in Sofia on 25-26 March 2010; the "GMES downstream
services" conference in Tallin on 6-7 May 2010; the "Space and
Africa" conference organised by the Belgian Presidency on 16 September
2010; the “2-nd GMES Operational Capacity Workshop” in Sofia on 17-18 March
2011; a Space conference by the Hungarian Presidency in Budapest at 12 and 13
May 2011 and the “GMES and Climate Change” conference held in Helsinki, on
16-17 June 2011.

[10]             Results from the online questionnaire closed on 11
February 2011.

[11]             http://copernicus.eu/pages-principales/gmes4regions/graal/

[12]             http://copernicus.eu/pages-principales/gmes4regions/doris-net/

[13]             NEREUS

[14]             See note 4

[15]             The GMES user forum gathered for the first time on 17
April 2011. The GMES Committee on 18 April

2011. Before stakeholders and users
were consulted through working groups on the different thematic.

[16]             NEREUS, Position Paper, April 2011.

[17]             EARSC Position Paper on GMES, March 2011.

[18]             An analysis of the impacts of different budget volumes
can be found in the Booz CBA study referenced above.

[19]             Declaration during the Baveno Manifesto

[20]             http://www.mobilise-europe.mobi/

[21]             CSES, Centre for Strategy & Evaluation Services,
UK. See Annexes III and IV

[22]             COM
(2010) 700 point 4.3

[23]             Communication
(2020) 2010

[24]             COM(201)
of 4.4.2011

[25]             Competitiveness
Council, 31 may 2011.

[26]             Council of the European Union, Brussels, 31 May 2011, 1090/11.

[27]             Opinion of the European Economic and Social Committee
of 20 January 2010

[28]             European Parliament legislative resolution of 16 June
2010 on the proposal for a

regulation of the European Parliament
and of the Council on the European Earth

observation programme (GMES) and its
initial operations (2011–2013) (COM(2009)0223 –

C7-0037/2009 – 2009/0070(COD))

[29]             See
note 7.

[30]             Throughout this document the convention for
representing ‘thousands’ is by using the separator “.” and for

decimal numbers the separator “,”.
Although this is not in accordance with common English usage it is

employed here to reflect common
Commission practice.

[31]             In
particular, information aggregated at European or global level with a
sufficient quality is currently not available to European policy makers.

[32]             See for instance Next generation innovation policy, the
future of EU innovation policy to support

market growth, CEPS and Ernst &
Young, 2011.

[33]             The European Space Industry in 2010, ASD-Eurospace, 15th
edition, June 2011.

[34]             SpaceTec Partners 2012.

[35]             See
also the Impact Assessment accompanying the Commission Communication on the
European Space policy, SEC(2007)505 of 26.4.2007, p.
10.

[36]             See
for instance: Socio-economic benefits, PWC, 2006 or the results of the Booz
Cost/benefit analysis in chapter 6 of this impact assessment. .

[37]             the European Monitoring and Evaluation Programme is a
scientifically based and policy driven programme under the Convention on
Long-range Transboundary Air Pollution for international co-operation to solve
transboundary air pollution problems

[38]             Earth System Science Partnership

[39]             The security aspect is not included in the Cost-Benefit
Analysis.

[40]             For
an analysis of the Downstream service in Europe, see Annex VI.

[41]             Only the space component of Horizon 2020 is mentioned
here, for the safe of briefness; nonetheless other research areas are clearly
related to Copernicus and its services (e.g. Climate Change, Transport).

[42]             Already € 3.5 million have been mobilized in 2012 to
fund 6 demonstrators and an additional action providing more traditional
business support for entrepreneurs developing new services relying on the two
Commission space Flagships.

[43]             For full considerations regarding enabling factors,
refer to Annex I

[44]             Refers to total direct and indirect new and maintained
jobs associated with Copernicus.

[45]             Global Earth Observation System of Systems.

[46]             The Commission described its overall approach for the
governance of GMES in its Communication of 28 October 2009 entitled
"Global Monitoring for Environment and Security (GMES): Challenges and
Next Steps for the Space Component".

[47]             See Annex VI, Evaluation of the Activities of the GMES,
Bureau: Executive Summary.

[48]               This paper, while based on material
from the Specific Contract referred to above,
has been edited and updated to reflect the Commission's proposal for a
Regulation establishing the Copernicus programme.

[49]               Referred to as “Booz CBA” from here on out. All data
in this study are evaluated “as given”; responsibility for any errors in the
document lies with the original authors.

[50]               Global Earth Observation System of Systems.

[51]               This figure includes the indirect effects of the
Space industry on the wider economy, which is €163Mio, €152Mio and
€152Mio for the three scenarios, respectively.

[52]               Refers to total direct and indirect new and
maintained jobs associated with Copernicus.

[53]               The budget is, at the time of writing, yet to be
finally approved by the European Parliament.

[54]               The wider economic impacts include the economic
activities of industries that support the upstream Space sector through the
provision of material and labour inputs, activities of the housing and retail
sector linked to expenditure by the Space sector, and the wider economic
benefits associated with economic spillovers that are linked to the R&D
aspects of the Space sector.

[55]               Along which the Booz CBA also extends.

[56]               These are referred to as STP High, STP Medium and STP
Low, and should not be conflated either with the Booz CBA Options A-D, nor the
Scenarios I-III outlined in this document

[57]             Full of Economic-Environment Linkages and Integration
dX/dt.

[58]             This refers to data derived from the Copernicus family
of dedicated satellites, the Sentinels

[59]             L1 includes geometric and
radiometric pre-processing.

[60]             Simplified from questions taken from European
Commission’s Impact Assessment Guidelines, SEC(2009) 92

[61]             The involvement of scientists in, for example,
operational meteorological services, has historically been deep, and determinant
in both their success and their ubiquity.

[62]             Expenditure associated with supporting service take-up
is funded through CIP.

[63]             SEC(2009) 92: “Impact Assessment Guidelines”, January
2009.

[64]             Global Earth Observation System of Systems.

[65]             See
the document PB – 02 – DOC 01.

[66]          Establishment of a network of NFPs
composed of civil protection agencies

[67]             For instance, in the marine field, a project on ice
monitoring was funded an but there was no possibility to address other areas
served by the Marine Service within FP7 (MyOcean 2).

[68]          This problem was also identified under the SAFER
GMES precursor sevice and is presently largely out of the control of the
service conrtactor given it is linked to the availability of sufficiently
recent satellite imagery through ESA’s DWH, which in turn depends on satellite
flyover frequencies.

[69]          EIONET is a partnership network of the European
Environment Agency and its member and cooperating countries, connecting
National Focal Points. The network supports the collection and organisation of
data and the development and dissemination of information concerning Europe’s
environment.

[70]          The main network to facilitate
this cooperation has been the NRCs for Land within EIONET and the GMES working
group within EIONET.

[71]          Examples are the Water Framework Directive, Air
Quality Directive, Birds Directive, Habitats Directive and the monitoring of
Natura 2000 areas.

[72]             GMES will hereafter be referred to as Copernicus,
following the recent decision by the European Commission to change the name of
the programme (as per http://europa.eu/rapid/press-release\_IP-12-1345\_en.htm).

[73]             This refers, in the first instance, to data derived
from the Copernicus family of dedicated satellites, the Sentinels. The
transitory phenomenon of Contributing Mission data will be dealt with in a
follow-on study on the midstream, scheduled for 2013.

[74]             L1 includes geometric and
radiometric pre-processing.

[75]             COM (2011) 808, final, p. 10.

[76]             The Compound Annual Growth Rate expresses the smoothed
annualised growth rate of an investment or of a business element (in this case,
industry turnover).

[77]             NACE is a standardised
classification system for describing economic sectors and their activities in
the European Union. The second revision of the NACE taxonomy has been used in
this study.

[78]             Knight et al., 2009.

[79]             See
http://ec.europa.eu/research/horizon2020/pdf/press/fact\_sheet\_on\_sme\_measures\_in\_horizon\_2020.pdf.

[80]             This study, performed in 2011 by Booz & Co. and
SpaceTec Partners serves as an underpinning to the current analysis of
projected programme costs. It will be referred to as “Booz CBA” in this text,
for short. See
http://ec.europa.eu/enterprise/policies/space/files/Copernicus/studies/ec\_Copernicus\_cba\_final\_en.pdf.

[81]             Due to the method of calculation, it is not possible to
distinguish between upstream and midstream employment for the baseline.

[82]             Source: Oxford Economics, The
Case for Space, 2009.

Applied (Type
II) employment multiplier is equal to (direct impact + indirect impact +
induced impact) / direct impact. We have simplified it in the table to provide
more intuitive reference for calculation. The following explanation is taken
from the original Oxford Economics study: “The number of dependent jobs in the
supply chain is computed by assessing how many workers would be required in the
supply chain to produce the amount of goods and services demanded by the space
industry. To calculate the number of jobs supported through the induced impact,
we model the additional effect on domestic demand in the UK economy that
salaries generate through consumer spending. This is then converted into jobs
using average productivity across the economy."

[83]             L1 included geometric and
radiometric pre-processing

[84]             Oxford Economics (2009).

[85]             Each
sector is represented using a model module that is based on widely accepted
modelling structures.

For example, the
economy model is based on neo-classical growth theory that separately considers
capital accumulation and labour, and includes factors to capture their levels
of productivity. As another example, world population is modelled as an ageing
chain. Linkages between the models are provided via feedback mechanisms. For
example, climate change and its impacts are represented in the economy model,
etc.

[86]             A FeliX model simulator is publicly available on the
GEO-BENE website, see www.geo-bene.eu

[87]             Existing space missions that will provide data for GMES
include Spot, TerraSAR-X, EUMETSAT satellites, CosmoSkymed, DMC Deimos, Ikonos,
GeoEye, Quickbird, and ENVISAT.

[88]             ESA is currently developing 5 "Sentinel"
missions under its GMES Space Component Programme.

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