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Table of Contents
Theme 2: Adequacy of the RD Framework
Section 1. Introduction
Section 2. Study Methodology and Timing
	3.1 Introduction to this section
		Database 1 - NUTS3 level, Guarantee fund actual expenditure, 2000-2006, EU-15
		Database 2 – Programme level, combined expenditure on EAGGF Guidance, Guarantee, SAPARD, IFDR, LEADER programmes, 2000-2006, E Spending by funding instrument, 2000-06 Analysis of EU spend within each Axis
		Axis 1
		Axis 2
			Axis 3
		Axis 4 Targeting of spend within Member States (including spend per beneficiary)
3.3 Rural area characteristics Economic characteristics
	Business activity and economic structure
	Employment and incomes Social characteristics
	Education and Social interaction
In contrast to key economic and social indicators, where one is often interested in the differential between certain character
Also of interest are indicators which illustrate how specifically rural activities, such as agriculture, are influencing these
3.3.2. Likely characteristics of interest and relevance to the consideration of RD needs
	3.3.3. Correlation of characteristics with expenditure patterns, EU-27, 2000-06
	Farming and forestry competitiveness
	Environmental management
	Enhancing the rural economy and quality of life
	The LEADER approach - local development and integrated actions
The original project specification tasked the study with developing two databases of indicators of need, one for all EU-27 pro
1. Rural wealth
	Productivity of agriculture/forestry
2. Measures of primary sector innovation/ quality
3. Extensive farming areas
4. Biodiverse areas
Goals: purpose of intervention
Table 3.16. Axis 2 – environmental land management
	Productivity of agriculture/forestry
Measures of primary sector innovation/ quality
Extensive farming areas
Biodiverse areas
	3.4.5 Conclusions, further developments and limitations
	Financial aspects
	Programming aspects
	Institutional aspects
3.5.3 Commentary
Section 4 Cost-effectiveness of RD interventions
	Highest value recorded by Applications, Agreements and Contracts Costs per hectare of land under agreement Ratio of private costs borne by beneficiaries/total eligible cost, per unit of public funding – leverage Limitations of the Data
	Table 4.6 Total public funding leverage ratios
	Table 4.7 EU funding leverage ratios
	Table 4.3 Unit cost (‘000 Euro) of contracts/agreements/applications approved, by measure, for total public spend and EAGGF sp
	Table 4.4 Cost (‘000 Euro) per hectare under agreement, by measure, for total public spend and EAGGF spend
	4.5.1. Our approach to the task
	4.5.2. Findings
		Axis 3
			LEADER+ evaluations within RDP evaluation cycles are hampered by the general tendency for new LEADER groups to be slow in gett
	4.6. Conclusions - some emerging points of interest
	Limitations of the approach Physical (manufactured) capital
			Goal 2: Environmental sustainability
			Goal 3: Rural diversity and quality of life
			Regular payments
			Recommendations, including suggestions for further work
			Theme 2: Adequacy of the RD Framework (including RD typology and catalogue, cost-effectiveness, delivery analysis and review o
Document Text Contents
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farmers without too much targeting of specific disadvantage or need will clearly have
attractions, and share characteristics of the Pillar 1 CAP regimes with which some
authorities will be much more familiar. Interestingly, this now seems to potentially explain as
large a focus in RDPs upon Axis 2 measures – LFA and agri-environment in particular – as
upon Axis 1, which might be seen as the most clearly ‘farm-focused’ of the EAFRD Axes.
Axis 2 also offers some potential benefits for programme administrators, in that funding can
be almost automatic in years 2-5, once initial contracts are agreed in year 1, so that
spending can be even over the period and out-turns can be almost guaranteed. However,
the relative significance of these factors should not be allowed to obscure the undoubted
scale of environmental needs faced in many of Europe’s rural areas, as acknowledged in the
EU Strategic Guidelines.

3.6 Conclusions – Targeting of RD resources

3.6.1 Clarification of the term ‘targeting’ and its use, in this study

As stated in its introduction, section 3 of the report concerns the assessment of scope for
better targeting of RD resources. The study specification clearly uses the term ‘targeting’ to
indicate the ways in which EU, national and regional authorities can attempt to maximise the
value for public money of investment in RD actions – i.e. focusing funding on areas or issues
where the need for RD resources is greatest, and thus by inference, giving less support to
other areas or issues. This implies a conscious choice, which is then applied to funding or
selection processes, including:
• deciding on the budgetary RD allocations for different MS, regions and sub-regions;
• deciding which measures should be available where (with what funding levels);
• deciding the criteria against which applications from beneficiaries will be encouraged,

elicited and/or selected and approved.

In the analysis that we have undertaken for this section of the study, only in section 3.3 have
we used a method which investigates explicit decisions of this kind through detailed analysis
at the programme level. By contrast, the approach as required in sections 3.1 and 3.2
provide implicit examinations of targeting, because they seek to establish the degree to
which RD resources have been allocated, or are planned for use, in accordance with what
would appear to be objective indicators of need.

It should be borne in mind that the determination of these indicators of need has been
pioneering and exploratory, since we believe that no established method for this task existed
prior to this study, in respect of the full range of pillar 2 goals. Ideally, further refinement and
peer review would be needed, before we could place significant weight upon the implications
of the findings described here, in assessing the effectiveness of RD targeting at the
European level.

Examination of spatial differentiation of spending on the various measures does not in itself
enable the identification of reasons underlying the patterns observed. As we noted in the
conclusions to section 3.2, expenditures (actual and planned) may vary for many reasons, of
which explicit ‘targeting’ as defined above, is only one. Unrecognised barriers to access by
beneficiaries, including both real and perceived costs, can significantly affect expenditure
patterns, as can administrative decisions about how measures will be delivered (e.g. with or
without flanking support from extension services, with strong promotion or without, with or
without accompanying burdensome reporting and control requirements). Also, unknown (to

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programming authorities) local contextual factors can play a role in influencing uptake
patterns. And finally, expenditure itself does not automatically imply successful targeting, in
that funding can easily be wasted if measures are inappropriately designed in respect of their
specific goals, irrespective of where this occurs.

At the same time, “better targeting of resources” was approached in section 3.5 by assessing
the divergence (differences) between the stated “needs” of RDP areas and the expenditures
planned within the proposed RDPs. This approach also poses a number of challenges:
• Financial expenditure is only one way of pursuing policy goals or addressing needs;

regulation and general education (or exhortation, persuasion) are others which may be
used and which are not specifically considered in RD policy.

• Policy-related transaction costs are important elements of policy (and Programme) design
and implementation. While analysis suggests that targeted interventions are generally
more efficient, very high transaction costs, or very widely distributed market failures
addressed by the Programme, may make a less targeted approach more attractive.

For all these reasons, the conclusions drawn from this section of the study must be cautious.

3.6.2. Conclusions on the scope for better targeting of RD policy

A comparison of indicators of need developed in section 3.4 with patterns of expenditure
presented in section 3.2 enables brief analysis of the extent to which resources appear to
have been targeted towards ‘objective’ measures of need, across the EU-27. This is
complemented by the analysis in section 3.5 which attempts to understand how and why
funding patterns occur, at the level of individual RDPs.

By and large, there are clear similarities between expenditure patterns (both actual 2000-06
and planned 2007-13) and patterns of indicators of need. Globally, more resources are
devoted to convergence areas where socio-economic needs tend to be greater, for example.
Within axes, it appears that some conscious targeting is evident for particular issues (for
instance, the increased emphasis upon human capital and adding value within the RDPs of
more developed rural economies, which appear to match patterns suggested in our
characteristics analysis).

However, also at the global level, the strong emphasis of spending upon axis 2 within RDPs
cannot be assessed adequately on the basis of the available evidence. Whilst it is possible to
conclude, from the body of wider research, that environmental needs across the EU-27 are
considerable, it is not possible to measure whether the relative priority given to them in Pillar
2 policies, by comparison with economic and social needs, is either sufficient or appropriate.
We concluded from our work on indicators of need that there is no simple, objective way of
determining how to apportion funds between economic, social and environmental goals at
this scale of operation. Clearly it is desirable to maximise synergies between these goals
wherever possible. In that respect, we should also note that axis 2 is not synonymous with
the environmental component of RDPs because axis 1 and axis 3 measures can also be
used to pursue environmental outcomes. Conversely, some of the analysis in section 3.3
indicates that axis 2 measures may not be applied exclusively for environmental ends. So,
our ability to comment on this balance in respect of strategic goals, is compromised.

In respect of socio-economic needs, it appears from the combined results of sections 3.2 to
3.5 that when considered alone, RDPs probably target too significant a proportion of rural
funding towards the agricultural sector and not enough to the wider rural economy and
community. Nevertheless, this conclusion has to be seen in the context of wider policies,

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