FASI: Funding Aid Strategies Investments

Not all rural development investments produce long lasting benefits, says EU Court of Auditors

European Union 2014/Photographer: Catherine CombetteThe Court of Auditors published a report about the long term benefits of rural development investments. They found that while infrastructure projects are more “durable” and still operational after the legally required period, the “durability” of diversification projects varies significantly across Member States from sector to sector.

“Not all investments in rural development deliver durable benefits”, says a report of the European Court of Auditors, according to which, since 2007, the EU Commission spent more than € 25 billion of its funds “to diversify EU’s rural economy and improving infrastructure in rural areas”.

But are all these measure successful in affecting the durability of EU funded projects? On the basis of the analysis of a series of projects supported by the European Agricultural Fund for Rural Development, according to auditors it actually varies “significantly” across Member States and sectors.

For example, auditors found that, while most infrastructure projects (roads, water, sewage network, etc.), because of their long lasting nature, were still operational after the end of the legally required five-year period, one third of the diversification projects (new business opportunities, non-agricultural activities, etc.) had stopped operations by the time of the audit. “Investments in tourist accommodation were among the most commonly supported diversification projects”, underlines the report.

The concept of “durability” concerns long-term objectives of projects, and it should be a requirement for those projects working in rural areas. So, in the report, auditors looked whether EU funded projects met durability period given by the legislation, whether they continued to operate after this period, and whether it brought “lasting changes of rural areas”. Previous auditors' reports highlighted the issues with durability in UE funded investments such as lack of focus by the authorities on durability at different steps of the funding’s management, failure in maintaining the infrastructures, or financial non-viability.

As the durability of the benefits of the diversification measures had been found to be a common issue, auditors identified specific risks that lead to that issue and provided the Commission with recommendation to share best practices on how to channel funds more effectively towards viable projects and on potential inclusion od safeguards on projects’ durability. Especially in view of the 2023-2027 Common Agricultural Policy (CAP) programming period, auditors suggest, to “make sure projects are durable”, taking into account different types of investments the Commission supports, “to gather evidence that founded activities are still operational, and to set conditions in grant agreements requiring supported projects to be used for their intended purpose”.

Auditors found that between sectors and Member States various differences occur in the implementation of “durable” projects. They assessed diversification measures and infrastructure investments in different countries such as Austria, Bulgaria, Czechia, France, Greece, Hungary, Poland, Italy, Lithuania, Romania and Slovakia, based on their expenditure for the selected measures.

Auditors evaluated 879 diversification projects (mainly tourist accommodations project) and 48 infrastructure projects. For the latter, the report underlines that all but one were still operational, while for what concerns diversification project auditors found that, while overall the 80% of tourist accommodations were still active after the end of the the legally required period, such percentage varies from country to country and from sector to sector. For example in Poland projects related to agricultural and forestry services were less durable than project in other sectors in 2007-2013, while in other Member States auditors revealed other cases in which costly tourist accommodations closed after few years.

Documents:

Durability in rural developmment report