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The use of Strategic Environmental Assessments for predicting the impacts of EU regional development projects in new Member States: with reference to an Estonian case

P. Mardiste1 & K. Peterson2 1Institute of Geography, University of Tartu, Estonia 2Tallinn Centre, Stockholm Environment Institute, Estonia

Abstract

The application of the funding mechanisms of EU regional policy in the ten new Member States is likely to have a significant impact on the environment since more funding is made available via new projects in infrastructure, energy, nature conservation, agriculture and environment. The purpose of the paper is to introduce the results of research into the present use of environmental impact assessments of programming documents. This will provide insight into the future deployment of EU regional development funds in the new Member States. An assessment of the success of the respective Strategic Environmental Assessment (SEA) process will be given. The SEA process of the Single Programming Document, a framework strategy applicable to EU regional assistance in Estonia for 2004-2006, will be used as an illustrative in-depth case study in this paper. Keywords: Strategic Environmental Assessment, ex ante evaluation, Single Programming Document, Structural Funds, Regional Development.

1 Introduction

It was back in 1969 when the US National Environmental Policy Act (NEPA) brought concept of Environmental Impact Assessments (EIA) to the legislation. In 1970s the EIA regulations were introduced in many developed countries and today the EIA is widely acknowledged and fairly routine practice worldwide [21]. While Environmental Impact Assessments are typically carried out for projects, the pioneering NEPA didn't actually distinguish between projects and

Geo-Environment, J. F. Martin-Duque, C. A. Brebbia, A. E. Godfrey & J. R. Diaz de Teran (Editors)© 2004 WIT Press, www.witpress.com, ISBN 1-85312-723-X

policies. It was however only in 1989 in UK when the term 'Strategic Environmental Assessment' (SEA) started to be used [6]. The World Bank adopted a provision for sectoral or regional environmental assessments into its Operational Directive 4.00 also in 1989 [5]. Differently from EIA, the SEA aims at ensuring that environmental aspects are properly addressed while a policy, plan or programme is being drafted. In late 1990s that SEAs made breakthrough in Europe. Discussions and final adoption of the respective EU Directive 2001/42/EC in 2001 was a key milestone for mainstreaming the SEA in Europe. The SEA protocol to Espoo Convention, adopted in UN-ECE Kiev ministerial conference of 2003 has helped a lot in clarifying the playing ground in transboundary context [5, 22]. Today majority of European countries, including countries in transition, are applying SEAs for sectoral or regional policies, plans and programmes [8]. While EU Directive on SEA does not call for SEA to be carried out on programmes financed from Structural Funds until 2007, SEA is being used by Member States as part of broader ex ante evaluation of the potential impacts of EU regional policy interventions. In many Member States guidelines for assessing environmental impacts of regional development policies and projects have been made [19]. There is however a need to combine the existing experience and to issue new guidelines for conducting SEA for new programming period of 2007-2013 by the European Commission.

2 Research method

Basic material for the presented case has been collected by authors through their participation as social partners in the process of SEA for Estonian Single Programming Document. Authors have been involved since the launching of the process in January 2002 throughout early 2003 when the final SPD report was adopted, providing observations and comments. Once the process of SEA was completed, key actors that were involved in SEA process in different positions have been interviewed in 2004. To gather background data on the Estonian practice in carrying out SEAs, a baseline questionnaire with choice answers was distributed and 26 responses were collected. Seven personal interviews were conducted with representatives of public authorities and SEA experts. During the interviews the responses of interviewees to the questionnaires were discussed and clarifications were sorted, also additional background information not directly covered by the questionnaire was gathered.

3 Assessing of environmental impacts of EU regional policy by Member States

3.1 Why environmental assessment is needed for EU regional policy interventions?

Regional disparities both within the European Union and within its Member States have been regarded as barriers to what the 1958 Treaty of Rome termed


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'harmonious development' [1]. To implement the economic and social cohesion (regional policy) within the EU, several funds have been established, among them Structural Funds and the Cohesion Fund. As those funds account to some third of the EU spending, they have significant impact to economies and natural environment of the Member States [9]. To ensure efficient use of the funds allocated for regional policy, the European Commission is allocating money to programmes rather than individual projects. Funding for a programme can come from different specific funds. A key programme, a Single Programming Document (SPD) is to be drawn by each Member State for upcoming programming period of 7 years [1]. Programme complements of the SPDs are defining types of projects and activities that can be financed from Structural Funds. For ensuring the need of minimizing environmental damage by economic development it's not enough to assess impacts of the concrete projects financed according to the framework established by SPDs. The very need for Strategic Environmental Assessment derives from understanding that driving force behind concrete investments and projects are strategic policy decisions taken before concrete projects starts. In such situation policies, plans and programmes that are framing the use of EU regional development financing have become under attention [20].

3.2 Assessment of the environmental impacts of EU regional policy

Structural Funds are committed to respect EU environmental policy and legislation while also ensuring that environmental policy itself plays a role in developing cohesion within regional development. In regard to ensuring that the environmental impact of Structural Funds interventions are minimised, specific regulatory requirements concerning the ex ante assessment of the environmental impact of the regional plans were introduced in 1993 [2]. In 1998 the European Commission published guidelines to assist authorities of the Member States to conduct good quality and coherent SEAs on programming documents [3]. In order to qualify for financing mechanisms for EU regional development co-funding a framework strategy, Single Programming Document (SPD) is prepared by a Member State. By its nature the SPD is a complex strategic document, covering broad range of issues from taxation to nature conservation and agriculture measures. Further to this, such a strategic document falls under category of policies, plans and programmes that is subject to Strategic Environmental Assessment. However, in its Directive 2001/42/EC on Strategic Environmental Assessment the European Union has explicitly stated that its Member States are not obliged to carry out SEAs on programmes financed from Structural Funds [4]. This request is however valid only until the end of current programming period (2000-2006) and it's not yet known whether SEAs become mandatory for such programmes after 2006 or not. Even though the EU co-financing from Structural Funds comprises a minor part of public spending by Member States, it still has a major environmental, social and economic impact worth of thorough assessment. It is strongly recommended by the European


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Commission that SEAs need to be carried out in such manner that Member States are able to avoid unwanted results while implementing projects based on such comprehensive framework strategies [9]. For analysing of the programming documents, Commission suggests [3] traditional impact matrices to be used to identify key environmental impacts. Matrices can provide simple way of considering environmental impacts for decision-makers. Their flexibility means that they can be refined and modified as more information becomes available, and they can include different levels of detail. The Commission does however not restrict the assessment techniques for SEAs on programming documents only to impact matrices. Other well established assessment techniques such as questionnaires, interviews and panels, checklists and trend analysis are also recommended [3]. Sample lists of baseline environmental indicators also form a valuable pat of the guidelines. As leading Strategic Environmental Assessment methodologies [11, 12] suggest, the SEA can have true impact only if carried out in parallel to the drafting process of the policy or programme itself.

3.3 Environmental assessments of regional policy in new Member States

While the history of environmental assessments in countries of Central and Eastern Europe is short, the EIA legislation has been developing fast lately. Although EIA was only introduced in the region in the mid-1980s, all CEE countries (with the exception of South-East Europe) had adopted national EIA laws and regulations by the end of 2000. In many of those countries the legal requirements for SEA are relatively progressive while these provisions are rarely implemented in the way intended according to Dalal-Clayton and Sandler [5]. All EU acceding countries were requested to transpose entire EU legislation, acquis communautaire, by date of accession, May 1, 2004 (unless any transition period was agreed beforehand with the Commission). In order to qualify for EU co-funding form Structural Funds a framework strategy, Single Programming Document (SPD) had to be prepared and agreed upon with European Commission by all acceding countries in due time. New Member States already have some knowledge in using the EU funding for regional policy programmes as Phare, ISPA and Sapard pre-accession funds have been available for many years [10]. While project-level Environmental Impact Assessments have been carried out for many projects of pre-accession funds, there has however been no requirement for conducting SEA of programming documents of pre-accession funds. SEAs for Single Programming Documents or Operational Policies, key programming documents for implementation of EU regional policy were carried out in Czech Republic, Estonia, Hungary, Latvia and Poland in 2002-2003 [15, 20]. While some methodological assistance and coordination was offered by Regional Environmental Center (REC), all countries were free to conduct SEAs according to the methodology and timeframe of their own selection [14, 15]. SEAs of programming documents carried out in most new Member States proved to be successful. Many changes to the programmes were made and lot of


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knowledge was gathered for next programming period of 2007-2013 [15]. It would be useful if the European Commission combines the knowledge gathered in SEA processes in new Member States to provide solid guidance for the next programming period.

4 Use of Strategic Environmental Assessment for predicting the impacts of regional development: an Estonian case

4.1 Estonian experience with Strategic Environmental Assessments

Strategic Environmental Assessment is required by the national law in Estonia. It is stated in the law that SEA should go in parallel to the drafting process of the policy document and that likely environmental impacts arising from the implementation of a plan and a program should be taken into account. Environmental Impact Statement (EIS) should form a separate document in each such case. When the national law remains short-handed in providing guidance for SEA process often EU Directive 2001/42/EC is referred and consulted in Estonia. Environmental Impact Assessment (EIA) of projects has a longer history and practice in the Estonia (national regulations were adopted in 1992-1994), whereas SEA is new and thus little practiced yet. Accession to European Union (EU) has accelerated the development of national legislation on environmental assessment and transposition of corresponding EU legislation. Enforcement of the national law on EIA and Environmental Auditing since 1 January 2001 became the driving force for introduction of SEA in Estonia [17]. The requirement for mandatory SEA on national plans, programs and spatial plans has brought about a forceful introduction of SEA into different sectors and public administration in a short period of time. The public administrations either responsible for carrying out SEA alongside with the drafting process of policy documents or supervising the process were not prepared for the implementation of the article 22 of the law and much of the today’s experience lies on learning-by-doing practice. Followed by the enforcement of the law, there have been 7 SEAs of programmes and plans at national level and probably hundreds of spatial plans developed at county or municipal level in the period of 2001-2003 the latter usually accompanied by a short description of page or two on the possible environmental impacts only. Due to the legal requirement in the Estonian law, only licensed environmental experts can conduct environmental assessments, including SEAs. SEA expert is a physical body, who holds a valid license. Legal bodies can be subcontracted for SEA by public authorities only if they employ a licensed expert. It should be noted that there is no distinction being made in registration of experts performing project-level EIAs and policy level SEAs. The amendments to the law made in 2003 excluded the spatial plans from SEA, but the new amendments to the current law will probably reintroduce them in late 2004.


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4.2 Application of the Strategic Environmental Assessment for the EU regional development programs in Estonia

Since the law was enforced in 2001, Estonia is having very short track record of completed SEAs. Due to the general nature of the national legislation it is difficult to define policies, plans and programmes to which SEA should be done [13]. Thus, once the drafting of Single Programming Document (SPD) was started in August 2001 it was still argued among the authorities whether SEA was necessary to carry out or not. It was only in early 2002 when due to the pressure by different stakeholders (most notably Ministry of Environment and national environmental NGOs) the Ministry of Finance as a responsible public authority for SPD finally agreed to launch SEA. The decision on ex ante evaluation was perhaps speeded by the fact that Regional Environmental Center (REC) proposed assistance to SEA process [14]. The consultant for conducting the SEA was identified in March 2002, 7 months after drafting of the SPD was started. A scoping meeting was held which caused some frustration among participating environmental NGOs as the methodology and structure of the SEA process were not clearly established and understood [16]. SEA expert started the assessment process with ad hoc approach while later objective-lead approach was taken. According to Stoczkiewicz et al. [20] there were five stages in the preparation of the Strategic Environmental Assessment in Estonia:

• evaluation of the SPD strategic basis; • evaluation of the SPD program complement; • compilation of the draft SEA report; • public discussion of the draft SEA report; • finishing of the final SEA report.

Throughout 2002 the SEA expert team worked in close cooperation with authorities responsible for preparing the analytical part and program complement of SPD [16]. As many of the participating agencies (including Ministry of Finance, the lead agency) had never been involved in SEA before, the process became a useful learning exercise for many of them. As SEA expert team was integrated into the SPD process and were involved in all discussions, they had direct impact on the process, not just via formal reports. Special trainings on procedure and methodology of SEA provided to participants of the SPD process were also of a great value [14]. Even though the SEA process started late and couldn't follow an established methodology, it helped to limit some of the negative environmental consequences of potential activities that may have otherwise being included into the implementation plan of the SPD. Setting of environmental objectives, indicators and adding new topics such as past pollution or public transport can also be considered as a positive input to SPD by SEA expert team [14]. However such situation should be avoided in the future where SEA starts long after some crucial decisions in the planning process have already been taken.


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5 Discussion

The SEA process of the Estonian Single Programming Document 2004-2006 was a useful learning experience for all of the involved parties. More than hundred people participated in the process as social partners. Hereby the authors would like to draw some preliminary conclusions from SEA process, based on their own judgement as participants of the process, using results of the interviews carried out with other parties of that exercise. As for the SEA in policy-making processes it is unfortunately often still considered by authorities as unnecessary burden and waste of time which result in delays of the drafting and increases the total cost. In practice, the two processes (drafting of the policy document and corresponding Strategic Environmental Assessment) do not usually go in parallel, neither complement each other, but rather stay separate and have little impact on each other. The biggest problem in the case of SEA of the Estonian Single Programming Document 2004-2006 was appropriate timing. When the overall time schedule and financing plan for the SPD was drawn by the Ministry of Finance it was decided that SEA would not be carried out at all. Only due to external pressure the SEA process was started 7 months later. By the moment that SEA expert team got involved the major strategic choices were already made as the strategic basis of the entire SPD program was already decided upon. It is however widely recognised that SEA would be most effective if carried out as an integral part of planning process itself [8, 21]. It is a bad practice as the entire SPD process was broadly advertised in Estonia as being a model case for the participating agencies [18]. Once the SEA process got started and run in parallel to SPD process the problems with the timing were not over. According to the contract the SEA report was finalised after public consultations by December 2002. The finalising of the Estonian Single Programming Document however continued until spring of 2003. It was argued that after December 2002 only minor changes were introduced into SPD, i.e. some re-allocation of funding between different implementation measures and schemes for EU Structural Funds was under discussion, and it was not regarded to change the main findings of SEA report. Authors do believe that SEA process should have lasted until the end of the SPD drafting process. As financial allocations for environmental measures were drastically decreased while extra allocations were given to sectors with higher potential of environmental damage (e.g. agriculture and transport) in the last drafts of SPD, the findings of SEA should also have been revised. Typically an SEA should also consider socio-economic aspects besides environmental ones. In case of Estonian Single Programming Document there were however separate teams of foreign experts carrying out ex ante assessment of socio-economic impacts [14]. While SEA expert team produced its reports in Estonian, the working language of the foreign ex ante expert teams was English and it made the process of integrating the results of teams more difficult. Besides MSc thesis of Tuuli Rasso [14] there has been no analysis of the SEA of SPD 2004-2006 in Estonia. However soon after the entire Single


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Programming Document got finally completed there was a quick debriefing by key participating agencies. Following some of the general problems with Estonian SPD results are listed as described by Keskpaik [7]: • The strategic part of the SPD remains weak, it lacks necessary political and

institutional support • Financial plan does not derive from strategic part • Quantitative targets are incomplete • Measures in various policy areas are not coherent As for the process Keskpaik [7] concludes that due to constant rush, meeting of the deadlines in the process was very difficult. It was also noted that the coordinating task was not performed well by the Ministry of Finance. Some problems related to entire SPD process had negative impact to SEA process and quality as well.

6 Conclusions

This paper indicates that SEAs are increasingly being carried out for programming documents in order to assess the impacts of the EU regional development funds in the Central and Eastern European region. Partly due to weak guidance and legislation, the quality of such environmental assessments, however, differs greatly across the region. Different SEA methodologies are used for assessing similar strategies in new Member States. In the case of Estonia, the programming process for utilising the EU regional development funds was rushed and poorly managed. The SEA of the Single Programming Document, a key framework strategy for utilising EU regional assistance, was a unique exercise and did not comply with any established SEA methodology. Such conclusions are also supported by previous research conducted by authors (for example by Regional Environmental Center and by the environmental groups CEE Bankwatch Network and Friends of the Earth Europe).

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