1. # Ex Post evaluation of cohesion policy intervention 2000-2006 financed by the Cohesion Fund (incl. ISPA) WP C – CBA of Environmental Projects Workshop with Member States, Brussels 3 February 2011 Session 2: Introduction and findings of 10 Environment Projects of WP C Christina van Breugel, Tine Skyggebjerg, Szabolcs Szekeres, Birgitte Holt Andersen (COWI) Davide Sartori, Silvia Vignetti (Csil) 1 3 Feb 2011 Ex post eval cohesion fund_DG Regio

2. # Overview of the 10 case studies 2 3 Feb 2011Ex post eval cohesion fund_DG Regio Waste management Water management Waste water management 01 Bulgaria 03 Pilsen 17 Barcelona 06 Crete 09 Zaragosa 27 Hungary 22 Dublin 13 Madrid 29 Poland 50 Portugal

3. # Outline of presentation 1.Presentation of the Ex ante situation 2.Reporting of results of ex post CBA 3.Main differences from ex ante to ex post 4.Typical components and typical benefits  Waste management projects  Water Management projects  Waste water projects 5.Main findings related to:  Ex ante CBA  Ex post CBA 3 3 Feb 2011Ex post eval cohesion fund_DG Regio

4. # 1. Ex ante situation Main driver for project initiation and project context 4 3 Feb 2011 Ex post eval cohesion fund_DG Regio

5. # 1. Ex ante situation Ex ante assumptions, financial and economic analysis 5 3 Feb 2011 Ex post eval cohesion fund_DG Regio

6. # 1. Ex ante situation The use of CBA for project formulation and decision  One thing is the quality of the ex ante – another thing is HOW the CBA was actually used for project formulation and decision making  CBA used for project formulation? –NO - Why not? (a)since most projects emerged to comply with legislation (b) project is part of a larger context (Master Plan)  CBA used as basis for decision making? –Not really, perhaps due to the timing of CBA 6 3 Feb 2011 Ex post eval cohesion fund_DG Regio 'The city authorities opted for this project largely because they were told that only such an integrated project would be eligible for financing'

7. # 1. Ex ante situation The timing of the CBA 7 3 Feb 2011 Ex post eval cohesion fund_DG Regio Problem Political decision I "Master plan" Application (e.g. option analysis, CBA…) Political decision II CBA Project identification Project formulation EIA process/develpment consents Application Tendering ConstructionOperation 3-5 years 30 years The project is usually already a part of a process or part of a regional or local Master Plan The Project needs to be seen in this context

8. # 2. Reporting on results of ex post analysis  Most projects investigated appear to be sensible investments as they provide for fundamental EU environmental infrastructures ('needs to have'/legal compliance)  In economic terms however only one project generate positive ex post ENPV meaning that economic benefits justify the costs  Few problems with either over-capacity or under-capacity  The implemented technical solutions are with one exception sensible and reasonable  Size of investment costs appear more or less reasonable according to our technical experts  There are however unrealised benefits in some of the projects  Wider benefits include: improved environmental awareness among citizens, political benefits, enabling benefits, etc. 8 3 Feb 2011Ex post eval cohesion fund_DG Regio

9. # 2. Reporting on results of ex post analysis Outcome of the projects (1/2) 9 3 March 2010 Ex post eval cohesion fund_DG Regio

10. # 2. Reporting on results of ex post analysis Outcome of the projects (2/2) 10 3 March 2010 Ex post eval cohesion fund_DG Regio

11. # 3. Main differences from ex ante to ex post Financial results –higher operational costs –lower operational income –project delays –investment costs overrun 11 3 Feb 2011Ex post eval cohesion fund_DG Regio Economic results –overestimated or arbitrary economic benefits –unrealised benefits

12. # 3. Main differences from ex ante to ex post Results of financial and economic analysis (1/2) 12 3 Feb 2011 Ex post eval cohesion fund_DG Regio EX ANTE The investments has risen due to budget overruns – some ex-post CBA are only done for some of the component and are therefore not comparable The FNPV are small or even negative – the negative results are larger in the ex-post analyses - no good business cases have been identified The ENPV are more positive in the ex-ante analyses than the ex-post CBAs – When complying with legislation a less positive ENPV could be accepted as it is part of a higher level objective of generally improving the environment

13. # 3. Main differences from ex ante to ex post Results of financial and economic analysis (2/2) 13 3 Feb 2011 Ex post eval cohesion fund_DG Regio Few B/C ratios above 1 A number of the benefits have only been qualitatively described in the CBAs due to lack of benefit estimates A number of projects have experienced overcapacity Barcelona – improved marine water quality Hungary – covers just a section the Tisza river Bulgaria - is part of a master plan of national waste handling

14. # 4. The typical components and typical benefits of the different types of projects  Waste management  Drinking water management  Waste water treatment 14 3 Feb 2011Ex post eval cohesion fund_DG Regio

15. # 15 3 Feb 2011 Ex post eval cohesion fund_DG Regio Waste Management

16. # 16 3 Feb 2011 Ex post eval cohesion fund_DG Regio Water supply

17. # 17 3 Feb 2011 Ex post eval cohesion fund_DG Regio Waste Water

18. # 5. A) Main findings related to ex ante CBA The main CBA ex ante issues:  not integrated in the decision process  not looking at individual components  missing the bigger pictures (e.g. synergies, risk un-realised benefits) 18 3 Feb 2011Ex post eval cohesion fund_DG Regio Recommendations:  Do the CBAs much earlier in the process. A solid CBA should precede doing the final technical design of the project  CBA thinking should apply to the selection of alternatives, prior to the final design of the project  CBA to be related to the Master Plan context  Cost efficiency analysis could be considered for 'need to have' projects

19. # 5. B) Main findings related to ex post CBA This study has used CBA for ex post impact assessment and have drawn some lessons: 1)starting from individual components is the easiest way to identify the benefit elements 2)concentrate on valorisation of the main benefit elements, if too uncertain the result is altered unreasonable 3)the wider benefits are often important outcomes but are difficult to quantify 19 3 Feb 2011Ex post eval cohesion fund_DG Regio Considerations 1)break-even analysis might be more convincing to illustrate economic surplus/deficit 2)develop a price and benefit catalogue (Excel tool) to support CBA in practice 3)CBA to be combined with other qualitative impact assessment methodologies to improve the capturing of wider benefits

20. # 20 3 Feb 2011Ex post eval cohesion fund_DG Regio THANK YOU FOR YOUR ATTENTION!