Ex post eval cohesion fund_DG Regio

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					           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
    Overview of the 10 case studies




                                                                             Water management


              Waste management




                                                    Waste water management




#        2
 3 Feb 2011   Ex post eval cohesion fund_DG Regio
    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 2011   Ex post eval cohesion fund_DG Regio
      1. Ex ante situation
      Main driver for project initiation and project context


                                                                                                                                Project
                                                             Main driver
                                                                                                                                context




                                                                                                                                                      Part of 'Master Plan'
                                                                                                                                 Upgrading existing
                                         Legal compliance

                                                            Environmental



                                                                                     Risk mitigation



                                                                                                               Self contained

                                                                                                                                 infrastructure
                                                                                                                                                                                                      MAIN DRIVER

                                                                            Health



                                                                                                       Other
CASES                                                                                                                                                                            Legal compliance                                        8
01 Bulgaria/Waste Mngt                      X                 X                                                   X                                       X                        Environmental                                         6
                                                                                                                                                                                            Health                                       1
03 Czeck Rep/Pilsen: Combined water         X                 X                                                                        X                  X
                                                                                                                                                                                   Risk mitigation                                       1
06 Greece/Crete: Waste Mngt                 X                                                                     X                                                                          Other                                       2
09 Spain/Zaragoza: Water supply                               X              X                                    X                                       X                                                             No of projects
13 Spain/Madrid: Waste/Energy recovery      X                                                                                                             X
17 Spain/Barcelona: Waste water                               X                         X               X                                                 X                                           PROJECT CONTEXT
22 Ireland/Dublin: Waste water              X                 X                                                                        X                  X
27 Hungary/Szeged: Waste water              X                                                                     X                                                                  Self contained                                      4
                                                                                                                                                                               Upgrading existing                                        3
29 Poland/Szczecin: Waste water             X                 X                                         X                              X                  X
                                                                                                                                                                              Part of 'Master Plan'                                      8
50 Portugal/Lipor: Waste management         X                                                                                                             X                                                             No of projects
                                             8                       6          1               1         2       4                    3                  8



 #         4
   3 Feb 2011   Ex post eval cohesion fund_DG Regio
      1. Ex ante situation
      Ex ante assumptions, financial and economic analysis

                                                                                                                                          Quality of ex
                                                   Quality of ex
                                          Ex ante                                                                                            ante
                                                   ante financial
                                       assumptions                                                                                         economic
                                                      analysis
                                                                                                                                            analysis

                                                                                                                                                                                                              EX ANTE ASSUMPTIONS




                                                                      Weak or misleading
                                                                                                                                                                                           Very reasanable
                                       Very reasanable
                                                                                                                                                                                                                                                           2




                                                                                                          Medium quality




                                                                                                                                                         Medium quality
                                                                                                                                                                                                Reasonable                                                 6




                                                                                                                           Poor quality




                                                                                                                                                                          Poor quality
                                                                                           High quality




                                                                                                                                          High quality
                                                         Reasonable
                                                                                                                                                                                         Weak or misleading                                                2
                                                                                                                                                                                                                                          No of projects


CASES                                                                                                                                                                                                         QUALITY OF FINANCIAL ANALYSIS
01 Bulgaria/Waste Mngt                                     X                                                                 X                                              X
                                                                                                                                                                                              High quality                                                 2
03 Czeck Rep/Pilsen: Combined water    X                                                     X                                              X                                               Medium quality                                                 7
06 Greece/Crete: Waste Mngt                                X                                                 X                                                              X                 Poor quality                                                 1
09 Spain/Zaragoza: Water supply                                          X                                   X                              X                                                                                             No of projects

13 Spain/Madrid: Waste/Energy recovery                     X                                                 X                                                              X
17 Spain/Barcelona: Waste water                            X                                                 X                                              X                                                  QUALITY OF ECONOMIC ANALYSIS
22 Ireland/Dublin: Waste water                             X                                                 X                              X
                                                                                                                                                                                               High quality                                                3
27 Hungary/Szeged: Waste water                                           X                   X                                                              X                                Medium quality                                                2
29 Poland/Szczecin: Waste water        X                                                                     X                                                              X                  Poor quality                                                5
50 Portugal/Lipor: Waste management                        X                                                 X                                                              X                                                             No of projects

                                        2                   6                      2                2         7                     1              3               2         5




 #         5
   3 Feb 2011   Ex post eval cohesion fund_DG Regio
    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
    1. Ex ante situation
    The timing of the CBA

                                                                           CBA


                                                                           Application
                                       Political                           (e.g. option           Political
             Problem                                       "Master plan"
                                      decision I                             analysis,           decision II
                                                                              CBA…)



                                                                                          The project is
                                                                                          usually already a
                                          Construction Operation                          part of a process
                                   Tendering                                              or part of a
                          Application
                  EIA process/develpment consents
                                                                                          regional or local
           Project formulation                                                            Master Plan
      Project identification

                                                                                          The Project needs
                            3-5 years              3-5 years   30 years                   to be seen in this
                                                                                          context




#       7
3 Feb 2011   Ex post eval cohesion fund_DG Regio
    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 2011   Ex post eval cohesion fund_DG Regio
       2. Reporting on results of ex post analysis
       Outcome of the projects (1/2)
                   Fulfillment of                                                                                                                                                                           Other project
   Project                                                                                                                                                            Hindrances for
                     objectives           Financial sustainability                           Direct benefits                    Unrealised benefits                                                     outcomes/unintended
  outcomes                                                                                                                                                          realizing benefits
                      Score 1-5                                                                                                                                                                                effects
                                     Only the operational cost can be
                                     financed by the waste management tax                                                                                                                           A first step toward a modern waste
01 Bulgaria               4                                                  Reduction of illegal waste disposal                              _                                  _
                                     No re-investement are included for e.g.                                                                                                                        handling management system
                                     sealing of the cells

                                                                                   Much improved quality of drinking water
                                                                                   + reliability of supply of tapped water
03 Czeck                             Yes due to the tariffs and since the          Reduced pollution of the river due to                                                                            Enabled other projects to emerge,
                                     affordability analysis of the total tariffs   reduced risk of overspill of sewage     Upgrading of the river                Perhaps slowed down now            e.g. Greenways
Rep/Pilsen:               4
                                     showed no risk of payment problems            system                                  environment (underway)                due the financial crisis           Institutional learning, e.g. establishing
Combined water                       among household consumers.                    Connection of approximately 1000                                                                                 of UKEP
                                                                                   households to the central sewage
                                                                                   system
                                                                                                                              Use of compost for soil            Lack of awareness among
                                                                                   Reduction of illegal waste disposal of                                                                           Waste management know-how to
                                     Uncertain                                                                                enrichment                         farmers
06 Greece/Crete:                                                                   90000 tonnes of waste a year                                                                                     benefit rest of Crete
                          4          OP cost much higher than budget                                                          Reduced use of pesticides          Lack of education of
Waste Mngt                                                                         Recycling of 30.000 tonnes of waste a                                                                            Increased environmental awareness
                                     Revenues lower than budget                                                               Refined sorting of waste           households to sort waste at
                                                                                   year                                                                                                             among citizens
                                                                                                                              100% waste management              source


                                                                                                                                                                                                    Reduction of potabilization treatment
                                                                                                                                                                                                    costs for municipalities.
                                                                                                                                                                                                    the project has also indirectly induced
09                                                                                                                                                                                                  the municipality of Zaragoza to
                                     The project is sustainable thanks to full
Spain/Zaragoza:           5                                                        Significant improvement in water quality                   _                                  _                  undertake actions that have radically
                                     cost recovery tariffs
Water supply                                                                                                                                                                                        reduced water losses and modified
                                                                                                                                                                                                    the behavior of the users, with
                                                                                                                                                                                                    beneficial effects on environment and
                                                                                                                                                                                                    safety of water supply.



                                 The energy generation component                                                              Unutilized synergies (energy
             9
13 Spain/Madrid:
   #
Waste/Energy            5
                                 generate a surplus. While the other
                                                                        Closing off illegal landfill - stopping
                                                                        negative environmental impacts
                                                                                                                              plant) with other facilities of the
                                                                                                                                                                  Contractual bindings of
                                                                                                                                                                  current contract with different
                                                                                                                                                                                                    An important part of the combined
 3 March
recovery 2010       Ex post eval components require operational funding Energy generation
                                  cohesion fund_DG Regio                                                                      combined Madrid
                                                                                                                                                                  operators
                                                                                                                                                                                                    Madrid Waste Management facility
                                 form the municipality.                                                                       management facility
           Fulfillment of                                                                                                                                                                                                 Other project
   Project
      2. objectives Financial sustainability
  outcomesReporting on resultsof ex post analysis
                                                                                                                                                                             Hindrances for realizing
                                                                                          Direct benefits                            Unrealised benefits                                                              outcomes/unintended
                                                                                                                                                                                    benefits
             Score 1-5                                                                                                                                                                                                       effects
        Outcome of the projects (2/2)
                                                                       Reduced risk of flooding (giving positive effects
                                                                                                                                                                                                                      A lot of knowledge and
                                                                       on quality of bathing water, traffic congestion
                              Based on the financial indicators, the                                                                                                                                                  experience has been gathered.
17                                                                     and reduction of damage costs)
                              project is not sustainable. No income is                                                                                                                                                The project has many visits
                                                                       Improved know how of water management.
Spain/Barcelona:       5      generated. However; the economic                                                                                     _                                          _                       from delegations from other
                                                                       Qualitative benefits includes access to ground
Waste water                   assessment shows a sustainable                                                                                                                                                          cities and countries. There has
                                                                       water for irrigation and street cleaning,
                              investment.                                                                                                                                                                             been a lot of awareness rising
                                                                       improved ecosystem in marine water, public
                                                                                                                                                                                                                      among the population.
                                                                       information activitiesand cleaner streets.


                              The Project capacity is based on the
                              information from the time of the
                                                                                                                                                                          The design capacity of the new
                              application - and now it requires an
                                                                            The direct benefits include an increase in                                                    infrastructure is too low and it does not
                              upgrading to cater for unexpected
22 Ireland/Dublin:                                                          housing permissions and recreational benefits,                                                comply with the requirements of the
                       3      increased demand - therefore it is not                                                                               _                                                                                  _
Waste water                                                                 in particular in connection with cleaner Dublin                                               newly designated sensitive waters.
                              financially sustainable and requires the
                                                                            Bay beaches.                                                                                  Hence, further investments are
                              identification of further investment funds.
                                                                                                                                                                          needed to fully reap the benefits.
                              Further, a revision of the user fee
                              structure is needed.
                                                                                                                                 The objective of a cleaner Tisza
                              The project is financially sustainable                                                             River is unrealized because the
                              despite its poor financial results,                                                                dillution effects of the river are so
27                                                                          The direct benefits are the extension of the                                                                                              The project is excellently run.
                              attributable to the high capital costs. But                                                        strong (2400:1). The effects of the
                                                                            sewage system to new users, who therefore                                                                                                 There has been some
Hungary/Szeged:        5      the fixed assets are not in the books of                                                           project might be more directly felt in                       _
                                                                            avoid the cost of dealing with their own                                                                                                  awareness rising among the
Waste water                   the operator. Tariffs are sufficent to                                                             the future, when incoming river
                                                                            individual sewage solutions.                                                                                                              population.
                              cover operating and reinvestment costs                                                             water will be cleaner (icluding that
                              and are inflation indexed.                                                                         of the Maros, which arrives from
                                                                                                                                 Romania)

                                                                                                                                 Since the new infrastructure has
                              The project appears to be financially
29                                                                          Direct benefits to the inhabitants of Szczecin due   only been in operation for
                              sustainable as user fees have been
                                                                            to improved quality of waste water and water         aroumnd a year, it is still early                                                    Szczecin is no longer a
Poland/Szczecin:       5      allowed to increase in line with the                                                                                                                            _
                                                                            supply services, and from improved                   days for estimating e.g. possible                                                    HELCOM hotspot
Waste water                   increase in the quality of service
                                                                            environmental conditions of the Oder River.          impacts on business and housing
                              provision.
                                                                                                                                 developments.


                                                                                                                                                                          Usual implementation delays of a fairly
                                                                                                                                                                          large and multisectoral investment
50 Portugal/Lipor:            Financial sustainability is insured either    Comprehensive and efficient management of
                                                                                                                                                                          Acceptance of compost quality by
                              by green or "guaranteed"                      urban solid waste generated in the second
Waste                  5                                                                                                                           -                      farmers                                 Not detected
   #
management   10               administrative prices and close control
                              of costs
                                                                            largest conurbation of the country with a
                                                                            population in excess of one million inhabitants
                                                                                                                                                                          Awareness to waste source
 3 March 2010        Ex post eval cohesion fund_DG Regio                                                                                                                  separation + recycling of the public at
                                                                                                                                                                          large
    3. Main differences from ex ante to ex post


     Financial results                              Economic results

          – higher operational costs                  – overestimated or arbitrary
                                                        economic benefits
          – lower operational income
                                                      – unrealised benefits
          – project delays

          – investment costs overrun




#      11
 3 Feb 2011   Ex post eval cohesion fund_DG Regio
     3. Main differences from ex ante to ex post
     Results of financial and economic analysis (1/2)

                                                   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


#      12
3 Feb 2011   Ex post eval cohesion fund_DG Regio
    3. Main differences from ex ante to ex post
    Results of financial and economic analysis (2/2)


    • 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


#     13
3 Feb 2011   Ex post eval cohesion fund_DG Regio
    4. The typical components and typical benefits of
    the different types of projects



     Waste management

     Drinking water management

     Waste water treatment




#      14
 3 Feb 2011   Ex post eval cohesion fund_DG Regio
    Waste Management




#     15
3 Feb 2011   Ex post eval cohesion fund_DG Regio
      Water supply




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




#     17
3 Feb 2011   Ex post eval cohesion fund_DG Regio
    5. A) Main findings related to ex ante CBA

     The main CBA ex ante issues:                   Recommendations:

      not integrated in the decision                Do the CBAs much earlier in the
       process                                        process. A solid CBA should
                                                      precede doing the final
      not looking at individual                      technical design of the project
       components
                                                     CBA thinking should apply to
      missing the bigger pictures                    the selection of alternatives,
       (e.g. synergies, risk un-realised              prior to the final design of the
       benefits)                                      project

                                                     CBA to be related to the Master
                                                      Plan context

                                                     Cost efficiency analysis could
                                                      be considered for 'need to have'
                                                      projects




#      18
 3 Feb 2011   Ex post eval cohesion fund_DG Regio
    5. B) Main findings related to ex post CBA

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




#      19
 3 Feb 2011   Ex post eval cohesion fund_DG Regio
                       THANK YOU FOR YOUR
                           ATTENTION!




#      20
 3 Feb 2011   Ex post eval cohesion fund_DG Regio

				
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