An Overview of External Cooperation in Urban Environment Being

Undertaken by the European Commission

Evolution of Environmental Concerns within the European Commission

The EC Policy Framework for External Cooperation

Institutional and Financial Arrangements available for EU Cooperation in Urban Environment

Urban Environment in EC Development Cooperation Budget Lines

Concluding Remarks

Since its creation in the 1950s, the European Community (EC) has expanded, not only in terms of the number of member states, but also in the areas covered by a common policy and the strategies, competencies, procedures and systems of its decision-making process. However, due to the complexity and uniqueness of the EC regime, the incorporation of new policy areas of concern is tied to the legacy of the original treaties, and changes are subjected to long negotiations and the unanimous decisions of the member states.

Over the years the European Union has developed a comprehensive environmental policy framework within Europe and, more recently, in its relations vis a vis third countries. It was not until the late 1980s that environmental considerations started to become an important component of the EC development cooperation policy. The urban environment is a new field in the operations of the Commission both in relation to Europe and the developing world. Progress in this field is hampered by the lack of an explicit legal and policy framework. Nevertheless, the EC has, in recent years, financed a large number of projects and programmes aimed at assisting developing countries to improve their performance in urban environmental planning and management. This has been accompanied by increasing efforts to mainstream these activities into the policy strategies adopted in different regions of the developing world by means of evaluating the impact of previous efforts, creating specific instruments (i.e. multiannual urban programmes), and establishing ad-hoc working groups on urban development to promote the discussion within the EC and with the member states.

This chapter reviews the experience acquired by the Commission so far, looking first at the development of legal instruments and policy commitments and then at the particular instruments available and their achievements.

Evolution of Environmental Concerns within the European Commission

From the 1950s until 1972, environmental protection was not an issue for the European Community (EC)^. During this period the policy of the EC was almost exclusively focused on economic development, aiming at creating a common market, increasing production and ensuring the modernisation of industrial production.

By the beginning of the 1970s environmental issues started to receive greater attention from the international community. On the eve of the preparation of the United Nations on the environment held in Stockholm in 1972, the European Community considered for the first time the introduction of environmental policies in its operations. In 1971, the EC launched a First Communication on the environment, which was followed in 1972 by a draft of the First Action Programme. But it was only in November 1973 that the Council adopted the programme, which established the principles of a common European environmental policy and a five-year plan for its implementation.

Since then Environmental Action Programmes have been formulated every five years setting the EU policy priorities. These initially focused on environmental defensive measures within Europe but progressively expanded through the Fourth and Fifth Action Programmes to incorporate a more proactive approach encompassing the globalisation of environmental policy. The appearance of the Fourth Environmental Action Programme (1987-1992) (CEC, 1986) coincided with the adoption of the Single European Act (SEA) on 1 July 1987. The SEA legitimised and strengthened the EC legal basis to develop and implement environmental policy and to create new instruments, and introduced changes in the decision-making procedures that helped removing previous constraints and speed up the EC environmental activities. In this context, new policy instruments were developed to strengthen the EC environmental policy within the following four categories: legislative instruments; market-based instruments; financial support instruments; and horizontal instruments geared to improve the availability of statistical and scientific information, raise public awareness, professional and vocational training and education.

In addition, a number of resolutions from the Council and the European Parliament strengthened the EC development cooperation in the field of the environment. The creation of the Financial Instrument for the Environment (LIFE) introduced a new instrument to support environmental activities, which was later expanded to the southern Mediterranean countries. Other important initiatives were the initial discussions to create the European Environmental Agency and the adoption of the Socio-Economic Environmental Research (SEER) Programme, aimed at expanding the scientific focus of the existing leading environmental research programmes.

The adoption of the Maastricht Treaty on the European Union in 1992 introduced a number of provisions amending the Treaty of Rome that expanded the goals of the former EC and established the legal basis for the integration of environment and development into the single framework of ‘sustainable development'. Under this new legal basis, the Fifth Environmental Action Programme (1993-1998) (CEC, 1992), marked a turning point in the environmental policy of the European Union (EU). Building on the philosophy of the Brundtland Report, the Fifth Action Programme stresses the need to integrate environmental goals and policies in all common policy areas and the need to promote an internationally comprehensive approach to the solution of global environmental problems.

Although the Fifth Action Programme was published a few months before UNCED, it was formally adopted by the Environmental Council at the end of 1992 as ‘a comprehensive framework as well as a strategic approach (and) an appropriate point of departure for the implementation of Agenda 21 by the Community and the Member States’. The EU had a leading role in the UNCED preparation, development and follow up, acting as the main interlocutor of the developing country group. As a result of the UNCED process, the EU adopted the Rio Declaration, Agenda 21, and the statement of Forest Principles and signed the legally binding Climate Change and Biodiversity Conventions. The Community has also been actively involved in the UNCED follow-up and submits annual reports to the UN Commission on Sustainable Development (CSD) on the EU progress in integrating the Rio Agreement into its policies.

Since the definition of the Fifth Environmental Action Programme, the EU has assumed an active role both in strengthening its own environmental strategy and policies within and outside Europe and in contributing to the international process of negotiations and commitments towards sustainable development. Several documents from the Commission discuss the prospects and priorities for the EU leadership on strengthening the institutions and tools of international cooperation towards sustainable development.

In 1996 the Development Council stressed the need to introduce effective mechanisms to assess the qualitative and quantitative impact of the environmental cooperation with developing countries as well as to ensure the systematic implementation of EIA procedures in all projects funded by the Community. The Council is considering the adoption of a resolution to adopt a policy to this effect. This mechanism would allow a systematic follow-up and evaluation of the Community’s development cooperation activities and their contribution towards sustainable development.

Following the Commission’s review of the Community’s Development Cooperation Policy in the Run-Up to 2000, several steps have been taken to promote the implementation of the measures agreed at UNCED, with particular emphasis on Agenda 21. The recent adoption of a Council Regulation on Environment Measures in Developing Countries in the Context of Sustainable Development provides legal and financial basis to support environmental activities in developing countries. In the field of the urban environment priority is given to the following issues: air pollution, transport, provision of drinking water, waste and waste water management.

At the time of writing the Council and the Parliament are considering a proposal from the Commission for a Decision on the Review of the Fifth Environmental Action Programme. The proposal focuses on the necessary strategies to achieve a more efficient implementation of the EU environmental policy. Article 6 on ‘International cooperation’ stresses the need to enhance the role of the Community in relation to bilateral and multilateral cooperation on sustainable development. Article 10 on ‘Promotion of local and regional initiatives’ gives special attention to "developing a comprehensive approach to urban issues with special emphasis on the assistance required to support actions by local authorities to implement the programme of Local Agenda 21" (art.10b).

Since 1992, a central feature of the EC approach to environmental issues has been the increasing recognition of the globalisation of environmental problems and the growing interdependence of the North and South in this context. This has resulted in a widening and deepening process of EC international environmental policy and in the intensification of its cooperation with the developing world. The last few years have also been essential in the evaluation of previous efforts in the field and the definition of new strategies and programmes. The main policy challenges leading the current debate on EC environmental cooperation are:

the need to integrate the environmental dimension into all cooperation activities through cross-cutting strategies and through the systematic implementation of environmental impact assessments;

the need to develop systematic mechanisms to keep track of all environmental cooperation activities conducted in developing countries by the EU member states to coordinate efforts not only within Europe but also with other donor institutions;

the need to intensify the EC cooperation activities in the field of environment in order to provide an effective response to the growing scale and severity of environmental problems in the countries of the South;

the specific role of EU countries and of the EC in the field on environmental and development cooperation due to its expertise, know-how and long experience in areas such as environmental technologies, services and management.

the need to develop specific responses to match the heterogeneous reality and challenges of the countries of the South, in social, political, economic and environmental terms; through the diversification of technological and economic exchanges and a regional and country-based approach.

The EC Policy Framework for the Urban Environment

The EC has not until very recently focused specific attention on urban issues and there is no Directorate General with a specific remit in this area. However, the calls for a more active involvement of the EC in urban settings (particularly in European cities) can be traced in the Fourth Environmental Action Programme, which set as a priority the development of comprehensive environmental programmes in inner city areas (CEC, 1986). Several initiatives in the 1990s indicate that urban issues and urban environment are gaining increasing attention (see Box 3.1 below).

Box 3.1: Recent EC initiatives in the field of the urban environment

The institutions of the EU have recognised in several recent documents the importance of adopting a policy approach to increase their support towards sustainable urban development in developing countries. The Commission's Communication to Council on UNGASS highlights the fact that one of the more operational outcomes of the UNCED follow-up process has been the implementation of Local Agenda 21 by over 1500 local authorities in 49 countries by 1996 and stresses the need of "paying more attention to the local environmental problems of developing countries, to non-aid financing flows and to the social implications of environmental decisions" (Op.cit.).

The European Parliament Resolution on the Habitat II Conference (adopted on 24th May 1996), urges the Community to incorporate the right to housing in all treaties and charters regulating the EU goals and activities, and calls for the promotion of an integrated approach to housing policy with environmental, social, economic and cultural aspects. This resolution also mentions the Commission’s proposal to create a Green Fund for Cities in the Third World and calls for the promotion of decentralised cooperation, making international financial resources accessible to local organisations and communities without the mediation of national governments.

Reinforcing the proactive approach of the Parliament towards the development of an EU urban policy, a conference on the Future of Our Cities was held at the European Parliament in 1996. Building on this experience, the Environment & Development Resource Centre (EDRC) proposed to the Commission the establishment of an Urban Environment and Development Forum aimed at providing a platform to consolidate the trends discussed above and to help bring a breakthrough towards increasing political and financial support to urban environmental activities.

As discussed above, the explicit recognition of urban issues in the EC policy is relatively recent, this is due in part to the subsidiarity principle set out in the treaties which stresses that urban policies and programmes are most appropriately developed and implemented by the member states and at the city level. However, the significant role of urban settings and weight of urban related problems in the future development of the EU call for the incorporation of the urban dimension in the Community’s actions. Several initiatives from the Commission have brought the urban environment to the attention of the EU institutions preparing the ground for a more coherent policy framework, both within Europe and in cooperation with developing countries.

However, there is still a long way to go in terms of developing specific financial instruments and means of implementation and articulating the EC initiatives in both settings. in general, urban environmental problems in developed and developing countries have been approached as separate problematics, but while the specific agendas for action might differ, there is a broad scope for strengthening North-South cooperation and exchange at the urban level. During the 1990s, numerous initiatives promoted by international, national and local organisations focused on the development and implementation of Local Agenda 21 have proved that the old distinction between North and South and East and West is fading and that cities in the so called ‘developed' and ‘developing' world can benefit from each other on the basis of an equal exchange of experiences, know-how and technical and institutional support.

The regime of the EU, its decision-making powers and its role in relation to the developing countries offer an enormous scope for developing an international policy in the field of urban environment. The EU has a duty and an opportunity to actively contribute to sustainable urban development at the regional and international level. The duty is based on the international commitments adopted by the EU and the member states towards sustainable development. Addressing the environmental problems generated by and experienced within cities is part of the solution, not only to local but also national, regional and global issues. The opportunity consists in the additional benefits and advantages for Europe in supporting the transfer of know-how and environmental technologies and services to urban areas in the South, which would provide associated social and economic benefits to Europe.

The EC Policy Framework for External Cooperation

There are two Directorates General of the EC which are concerned exclusively with external affairs. DG VIII (Development) was created to administer cooperation programmes to a selection of countries with its remit eventually being expanded such that it is now responsible for the whole of Africa, the Caribbean and the Pacific (ACP countries). DG I was initially concerned with all aspects of external affairs. Whilst in the early years this involved mainly relations with other industrialised countries, more recently growing attention has been focused on other parts of the world. This has led to the creation of DG IA and DG IB. DG IB (External Relations) is concerned with countries not covered by other part of DG I or DG VIII, namely South and Southeast Asia, Latin America and the Southern Mediterranean.

Although the legal framework to support environmental activities has been dramatically expanded over the 1990s, the legal basis for the EC cooperation on the urban environment remains very narrow, with little recognition of the seriousness of urban environmental problems in the developing world and of the need for a more coherent approach on how these might best be remedied. In addition to this, the decision-making procedures for the definition of priority areas for cooperation and the allocation of funding remain highly centralised, limiting the emergence of local priorities and preventing a more easily access to funds for innovative and decentralised initiatives.

African, Caribbean and Pacific (ACP) Countries

EC policy and programmes on development cooperation were initiated with the establishment of the European Development Fund (EDF) in 1958, which has been since the subject of five year agreements, initially under the Yaoundé Conventions and subsequently the Lomé Conventions. These Conventions administered by DG VIII and now involving 70 countries in Africa, the Caribbean and the Pacific, set regional and indicative programmes (RIPs and NIPs) for development cooperation.

Whilst environment has increasingly become a subject of concern in the EC cooperation with ACP countries, the Lomé IV Convention explicitly introduced environmental concerns and sustainable development into the basic principles of development cooperation. However, the EC Progress Report on the Fifth Environmental Action Programme (CEC, 1997) concludes that the goal of integrating the environment into EC development cooperation with ACP countries has been only partially achieved. Analysis of the NIPs and RIPs between 1990 and 1995 revealed that, although almost all rural development programmes incorporated environmental considerations, only a few included sustainable development as a cross-sectoral issue at the strategic level (IIED, 1995). It is estimated that approximately 10% of the 12 billion ECU for 1990-1995 has been allocated to projects with a primary environmental objective (Op.cit.).

The need to review the overall policy framework of the EU development cooperation with ACP countries is discussed in the Green Paper, drafted in November 1996 by DG VIII. However, urban issues are hardly mentioned, just as they are absent in the Lomé IV Convention.

As part of the follow-up process to Habitat II, a series of working papers were drafted by DG VIII to support the work of the European Expert Group on Urban Development and the Sustainable Development and Natural Resources Unit (DGVIII/A/1). The comparative analysis of the National Reports of ACP countries reveals that the relevance attributed by the ACP countries to the role of cities in the development process contrasts with the neglecting of urban development issues in the EC Country Strategy Reports. Although the ACP countries remain the least urbanised amongst other developing regions, they are nevertheless rapidly urbanising, prompting, in the context of the HABITAT II Conference, a critical evaluation of past development cooperation in the urban field. This resulted in March 1997, in an ACP-EU Joint Assembly on the subject producing a Resolution on Urban Development in ACP Countries demanding that greater attention be given to urban issues in future development cooperation.

To overcome the anti-urban biases that have traditionally characterised the EU-ACP development cooperation, DG VIII commissioned an external evaluation to assess the impact of EDF projects on urban development. The evaluation reveals that between the first and seventh EDFs, only about 3% of the total funds were allocated to urban projects (Manchotte and Payne, 1997). In addition to this evaluation, DG VIII organised three workshops on urban development projects in Dakar, Brussels and Nairobi and a number of Experts Group meetings on urban development which will continue over the year, to promote the integration of urban issues into EU development cooperation with ACP countries. The work of the Expert Group on Urban Development set by the ACP-EU Assembly and the development of the first evaluation of EDF urban projects have reinforced the topical importance of urban issues in the context of development cooperation and have promoted debate within the Commission, which will hopefully introduce changes in the policy orientation of EDF operations.

Asian and Latin American (ALA) Countries

Cooperation with Asia and Latin America (ALA) countries is regulated by a more flexible framework that gives the Commission a wider freedom to introduce new strategies and decide on the issues to be prioritised, than in the case of the ACP countries. At successive European Council meetings, the EU has confirmed its intention to strengthen cooperation and dialogue with ALA countries giving particular emphasis to the enhancement of environmental activities.

The relations between the Community and Latin America were officially initiated in 1970 with the Declaration of Buenos Aires and continued over the 1970s through the so called ‘first generation agreements', aimed at regulating trade and economic relations. Cooperation between the two regions was expanded in the 1980s through the ‘second generation agreements’ signed with countries of the Andean Pact (1980) and Central America (1984). But the decision to deepen and consolidate the EC cooperation links with Latin America was taken at the 1989 Madrid Summit, which established the basis for the Commission’s new guidelines for both Latin America and Asia.

Based on these guidelines, the Community Regulation 443/92 stipulates that the environment is one of the six priority areas for regional cooperation and provides for 10% of the total financial resources to be spent on environmental protection projects, with particular attention to tropical rain forests. Another important aspect considered in the Regulation 443/92 is the emphasis on reinforcing development cooperation, not only with the national states, but also involving local partners (decentralised authorities, public institutions, NGOs, and private organisations such as co-operatives).

During the 1990s the EC and Latin American countries signed the ‘third generation agreements' which gave a new emphasis not only to bilateral but regional agreements with the Andean Pact, Central America, MERCOSUR and the Rio Group. Although the focus of these agreements is strongly on economic cooperation and trade promotion, they have also focused some attention on the need to address the problem of urban concentrations and their interrelated environmental problems.

The 1991-1995 period was characterised by further developments in traditional sectors of cooperation and in new spheres of activity and new methods. As a result increasing attention has been given to urban and environmental projects and programmes, the diversification of partners through decentralised cooperation, the emergence of country and sectoral strategies to tailor programmes and activities to the specific circumstances of each country, region or sector, the adoption of horizontal programmes such as ALFA, AL-Invest and ALURE, and a more systematic evaluation of the Community-financed operations.

Current policy on EU-LA cooperation is laid out in The European Union and Latin America: The Present Situation and Prospects for Closer Partnership 1996-2000. This document focuses on three themes: institutional support and consolidation of the democratic process, combating poverty and social exclusion and supporting economic reforms and improving international competitiveness. Box 3.2 summarises the strategies proposed for the improvement of management methods in the EU-Latin America cooperation.

Box 3.2: Policy Objectives for EU-LA Development Cooperation

Urban problems in Latin America are only mentioned in this document amongst many other horizontal themes and no provisions are made specifically for the urban environment. However, in December 1995, the Commission adopted the multiannual URB-AL Programme that became operational in 1997. URB-AL is the first initiative of the Commission specifically focused on urban cooperation with Latin America. The focus of activity concerns the establishment of networks of municipalities in Europe and in Latin America around a number of specific themes of which one is the urban environment. It is intended that the participating municipalities will share experiences and help one another to overcome problems in the areas covered by the programme.

The EU cooperation with Asia has been traditionally conducted in the framework of Trade and Cooperation Agreements and bilateral and regional political dialogue. The importance of strengthening effective cooperation in the environmental field is highlighted in a series of sectoral, regional and national strategy papers and in a comprehensive document entitled Towards a New Asia Strategy. Apart from supporting environmental projects and sectoral projects with environmental components, several forms of technical assistance and cooperation with implications for the environment are financed from special budget lines and programmes in the themes indicated in Box 3.3.

Box 3.3: Policy Objectives for EU-Asia Development Cooperation

Encouraging developing countries to undertake effective environmental protection policies through the European Community’s Scheme for Generalised Tariff Preferences (GSP) particularly related to the sustainable management of forests.  

The recently drafted Europe-Asia Cooperation Strategy in the Field of the Environment focuses special attention to urban and industrial environmental issues in recognition of the rapid urbanisation and industrial development of the region and the environmental problems which these processes are generating. Four out of the six priority issues identified in this documents as the most pressing current environmental challenges in Asia are related to urban and industrial problems: water pollution from domestic and industrial sources, urban air pollution from transport, energy and industrial sources, and poor solid and toxic waste management particularly in metropolitan areas.

By the year 2025 it is estimated that nearly 60% of the population of Asia (2.5 billion inhabitants) will be urban and this population growth will keep on concentrating in megacities. The World Bank estimates that facing Asia's environmental challenges will require an annual investment of 34 billion ECU by the year 2000. The total level of donor funding in 1991 represented less than 5% of the required amount, which reveals that current external cooperation is very far from meeting the scale of Asia’s environmental problems.

Based on this diagnosis the EU environmental strategy for Asia focuses on two priority objectives: more emphasis on urban and industry-related issues and on pollution prevention and cleaner technologies. The Environment EU-Asia Cooperation Strategy stresses the need to adopt a ‘win-win' approach in the EU-Asia relations, addressing Asia’s environmental challenges and market opportunities from European strengths and expertise in the field of the environment (institutional capacity, innovative policies and instruments, technological innovation and sound experience in raising public awareness and promoting participatory decision making at the local level).

Within this strategic framework three areas are proposed as the focus for future activities and cooperation: developing Asia’s environmental management capacity; promoting market-based solutions and integrated and cleaner environmental technologies, and developing and supporting a Europe-Asia environment R&D network. The criteria proposed to select specific environmental cooperation activities highlight the following principles: mutual interest and benefits, synergy and complementarity between the activities of the member states and multilateral agencies and project sustainability.

The framework proposed in the EU-Asia environmental strategy reinforces the use of some of the instruments and programmes developed in recent years to assist and guide the operations of Asian companies and public agencies towards the improvement of their environmental performance, and aims at mobilising financial resources from the private sector and improving efficient pricing and cost recovery in the public sector. In addition to this and in line with other horizontal multiannual programmes such as MED-URBS and URB-AL, the Commission has recently implemented the ASIA-URBS programme.

Mediterranean Countries

Development cooperation with 12 countries of the Southern Mediterranean has historically been on a contractual basis regulated by a series of Financial Protocols, the last generation of which expired in October 1996 being replaced by the consolidated MEDA Programme. The longer term framework for political and economic cooperation between the countries of the European Union and the Southern Mediterranean envisages a free trade area, progress towards which was agreed in the Barcelona Declaration and Work Programme following the 1995 Euro-Mediterranean Conference.

Cooperation between the EC and the Southern Mediterranean countries in the field of the environment was emphasised following the Nicosia Charter (1990) and ratified in the framework of the Barcelona Convention for the Protection of the Sea against Pollution. The MEDA Regulation 1488/96 and the Barcelona Work Programme explicitly call for the incorporation of environmental protection into all development cooperation with Mediterranean countries. Decentralised cooperation in urban EPM has been carried out since 1992 through two multiannual programmes Med Campus and Med Urbs, the latter temporary suspended due to administrative problems.

Development cooperation policy is laid out in Strengthening the Mediterranean policy of the European Union: Proposals for implementing an Euro-Mediterranean partnership. This policy document reinforces the EU commitment towards the integration of environmental concerns into all aspects of economic policy, both through the promotion of initiatives towards sustainable development and the adoption and implementation of preventive regulatory measures. However, no particular provisions are made to support specific activities at the urban level.

There are further programmes of cooperation with the Southern Mediterranean countries around environmental issues, which fall outside the mainstream framework. These include a major programme entitled the Mediterranean Technical Assistance Programme (METAP), which is co-financed by the EC, the World Bank, the European Investment Bank (EIB) and the UNDP. METAP and the EIB loans have provided particular assistance to urban environment projects, in areas related to water supply, sewerage, wastewater treatment and solid waste management. In addition to these, the LIFE programme, supporting environmental projects in Europe, has been expanded to selected third countries including those of the Southern Mediterranean.

A current draft proposal is under consideration for a Short and Medium-Term Priority Environmental Programme (SMAP), which has been formulated on the basis of a participatory approach involving the Euro-Med environmental correspondents, consultation with major NGOs and other relevant groups in civil in the region and co-ordination with other EU programmes for the Mediterranean Region.

Institutional and Financial Arrangements available for EU Cooperation in Urban Environment

The European Commission is the most relevant institution in terms of developing and implementing the EU development cooperation policy and this task is performed particularly by two Directorates General: DG IB and DG VIII. However, the European Investment Bank (EIB) and other Directorates General have also developed programmes with direct relevance to developing countries. This section briefly outlines these programmes and then focuses attention on the institutional and financial instruments available within DG IB and DG VIII to support urban environmental programmes and projects in the countries of the South.

European Investment Bank (EIB)

Established under the Treaty of Rome, the European Investment Bank is formally one of the institutions of the European Union. Investment by the EIB in countries outside Europe has followed closely the growth in activities in this regard of the Commission. Thus investment in ACP countries is now in its 35th year and proceeds within the framework of the Fourth Lomé Convention. Investments in the Mediterranean, now the largest amount invested amongst the regions of the South, started in 1990 and investments in Asia and Latin America, which are still on a relatively small scale, started only in 1993. The ceilings set for the period January 1997 to January 2000 are: 2,368 MECU for ACP countries, 3,140 MECU for the Mediterranean countries and 1,175 MECU for Asia and Latin America.

Beyond the general provisions of the treaties and the setting of overall limits on lending within each region, the EIB is free to set its own policies for lending in third countries. Nevertheless, as the Commission guarantees 70% of loans, this provides an incentive to follow EC policies. DG II (Finance) and the relevant DG on external cooperation are consulted on loans made but there is no formal mechanism for coordination in detail. There are some cases in Africa and the Mediterranean but as yet none in Asia and Latin America where EIB loans have been connected with grants made by the EC.

Whilst the EIBs main policy concerns are with maintaining financial good practice and supporting European business interests, and whilst the EIB does not proactively seek investment proposals in any particular area, there is nevertheless scope for increased cooperation between the EC and the EIB in terms of the developing urban environmental programmes in specific countries. This is happening de facto in the Mediterranean with EIB involvement in the METAP programme albeit the EC involvement is not actively oriented to promote a more structured cooperation between these two parts of the EU.

The EIB does not possess an environment department or any very formal environmental requirements in project formulation. It nevertheless does incorporate environmental considerations into its loans and also invests in specific environmental projects. Between 1987 and 1996 5.75% of investments outside Europe (including Central and Eastern Europe) were considered to be for environmental purposes. These were exclusively in the fields of industrial pollution control and urban environmental infrastructure; over half of these investments were in the Mediterranean and almost none in either Asia or Latin America.

EC Directorates General not Directly Involved with Development Cooperation

Within the most relevant Directorates General indirectly involved with development cooperation in urban environment mention should at least be made of the following:

DG XI, Environment, Nuclear Safety and Civil Protection: not only collaborates with DG IB and DG VIII in evaluating proposals for environmental programmes and projects, it also funds development programmes of its own, notably the LIFE Third Countries which, as already noted, includes funding for environmental, including urban, projects in Southern Mediterranean countries. The financial contribution of LIFE Third Countries is geared to the implementation of technical assistance in the establishment of environmental administrative structures and in the development of environmental policies and action programmes, nature conservation activities, and demonstration actions to promote sustainable development.

DG XII, Science, Research and Development: has a major programme of funding research projects specifically targeted at developing countries. The International Cooperation with Developing Countries (INCO-DC) Programme is administered in the framework of the Community Research, Technological Development and Demonstration (RTD) and is implemented in close liaison with other Community initiatives and other fora for cooperation such as the Lomé Convention, the ALA regulation on financial and technical assistance and the new Mediterranean policy.

DG XVI, Regional Affairs: has been increasing its attention specifically on urban affairs and potentially has an important role to play in supporting urban environmental projects in countries of the South, although attention has so far been exclusively on the urban environment in Europe.

DG XVII, Energy: has a number of programmes in development cooperation covering the countries of the South as a whole, primarily SYNERGY, but also others with a regional focus aiming at the following objectives: to enhance security of supply, to improve energy efficiency and to promote sustainable development, particularly by reducing emissions of greenhouse gases and of other pollutants linked to energy consumption.

Box 3.4: Relevant Programmes within DG XVII

EC Directorates Directly Involved in Development Cooperation - DG IB and DG VIII

It was noted above that responsibility for EC development cooperation with countries of the South is divided between DG IB and DG VIII. Within DG IB, development cooperation in the field of the environment is managed through the three geographical directorates - Mediterranean (A), Latin America (B), and South and Southeast Asia (C) - and through the Environment Sector in Unit D/4 (Horizontal instruments). DG IB has a staff of about 400 people, six of whom are allocated to the Environment Sector.

DG VIII is organised around seven directorates, which cover several horizontal or technical divisions and a number of geographical divisions. Within Directorate A (Development Policy), DG VIII/A/1 deals with Sustainable Development and Natural Resources, has a staff of just four persons.

The mandate for the Environment Units of DGIB and DGVIII includes the following tasks: environmental and forestry policy formulation; technical assistance to the geographical desks and EC delegations; strengthening environmental capacity in DG VIII; producing guidelines and project design; ensuring the integration of environmental issues in indicative programming and the project cycle, and monitoring and reporting environmental performance; liaising with other Commission’s Directorates and ensuring policy co-ordination with EU Member States.

In comparison with the relative size of environmental sections in other donor agencies (such as the World Bank or the UK Department for International Development), the ratio of funds managed to the number of staff in the environmental sections of DG IB and DG VIII is extremely high, accounting for 1,300 MECU in DG VIII and 600 MECU in DG IB.

The relevance of environment to mainstream development cooperation programmes of DG IB and DG VIII is operationalised at the policy, programme and project level through a number of policies, and procedural and financial instruments.

Policy and procedural instruments: These comprise a number of instruments aimed at encouraging or ensuring integration of the environment into all aspects of development cooperation including the following:

Indicative Programmes: Indicative programming is the main instrument for planning Community assistance and constitutes the first phase of the Project Cycle outlined in the PCM Manual. In the case of ACP countries the NIPs are negotiated on a bilateral basis between the Community and the ACP states every five years to set out development priorities, define key sectors to concentrate activities, the necessary resources and timetables for meeting objectives, and to earmark programmes and projects. In the case of the ALAMED countries DG IB has elaborated a number of country strategies to guide its development cooperation.

Project Cycle Management: A Project Cycle Management (PCM) Manual (CEC, 1993) was introduced in 1993 based on which all delegations have to complete annual monitoring forms for each programme/project including information on environmental sustainability. The PCM uses a logical framework, which is applied during the six phases of the programme/project cycle (indicative programming, identification, formulation, financing, implementation and evaluation). A recent evaluation (ERM 1997) concluded that the PCM provides a significant opportunity to guarantee the integration of environmental considerations into programme/project preparation, implementation and evaluation. However the lack of reference in the PCM Manual to current environmental procedures constrains the effective integration of environmental factors throughout the project cycle. In the case of EDF programmes/projects another constraint is that, since the PCM Manual was introduced after the majority of the funding commitments from EDF VII were made, its impact has been very limited.

Environmental Impact Assessment (EIA) procedures: EIA procedures were introduced by DG VIII in the Environment Manual (issued in 1993) and have become compulsory since May 1996. In the case of DG IB, EIA procedures were introduced in June 1992 through a Guidance Note defining Procedures in DG I North/South for Assessing the Environmental Impact of EC Financed Projects and Programmes and have become mandatory since March 1993. Their systematic adoption has been encouraged (both in DG VIII and DG IB) through a number of support materials and guidance, a series of staff training courses and the provision of technical assistance by the Environment Units. However the ERM evaluation recorded that between 1990 and 1995 only DG VIII and 10 undertook 14 EIA by DG IB. In the field of urban development, only one project had an EIA in DG IB and none in DG VIII (ERM 1997).

Internal and external programme/project evaluations: Project evaluations are mandatory in those cases where a continuation into a second stage is proposed. General evaluations are carried out internally and externally to facilitate a learning process from previous experience and provide orientation to future initiatives. Currently DG IB is undertaking a series of thematic evaluations on rural development and small enterprises, as well as global evaluations on EC cooperation with ten Latin American countries.

Financial instruments

The EC development cooperation in the field of the environment is channelled mainly through two types of instruments: region-specific and horizontal budget lines. In addition to these, in recent years, a number of multiannual urban programmes have been created in the Mediterranean, Asia and Latin America, all of them of direct relevance to the urban environment.

Mainstream regional budget lines: The mainstream regional budget lines finance a very diverse range of projects and programmes varying in focus between region and country according to the different policy frameworks and bilateral negotiations. In the 1990s all the mainstream instruments (ALA-MED-EDF) have increasingly funded environmental projects in these regions, both through projects directly and indirectly concerned with environmental problems and through the integration of environmental concerns in the definition of regional strategies. Financial aid to ACP countries mainly comes from the European Development Fund (EDF), while the EU budget is the main funding source for development cooperation in the ALA-MED countries. Both funding sources are the subject of different procedures. Whilst the EU budget is controlled by the European Parliament, EDF resources are approved and monitored by the EDF Committee, made up of one representative from each Member State. These budget lines are as follows:

B7-3010 - Financial & Technical Cooperation with Latin America

B7-3011 - Economic Cooperation with Latin America

B7-3000 - Financial & Technical Cooperation with Asia

B7-3001 - Economic Cooperation with Asia

B7-410 - MEDA

EDF - European Development Fund VI and VII

Horizontal instruments: These include a number of horizontal budget lines available to all developing countries. The budget heading ‘Environment in Developing Countries’ (B7-6200) is the most specific horizontal instrument available within DG IB and DG VIII to support environmental activities in the context of development cooperation. The EC has also a number of budget headings which aim at encouraging and promoting the role of local actors in the development process through strategies such as decentralised cooperation, capacity strengthening, training and raising awareness and North-South and South-South networking. These budget headings operate with a wide range of partners (NGOs, local authorities, etc.) and are cross-cutting instruments both in terms of the issues addressed and the beneficiary regions (ALA-MED and ACP countries).

B7-6200 (ex B7-5040) Environment in Developing Countries

B7-6000 (ex B7-5010) NGO co-financing

B7-6430 (ex B7-5077) Decentralised cooperation

Multiannual Urban Programmes: Special mention might be made of the significant programmes aimed at decentralised cooperation on urban issues, encompassing environment as a major issue, under the heading of URBS. Initiated in 1992 in the Mediterranean region as MED-URBS, the same type of instrument is currently being adopted also for Latin America (URB-AL) and Asia (ASIA-URBS). The URBS programmes are funded and administered by the mainstream regional budget lines and provide a potential scope for speeding up the internalisation of urban environmental issues within the mainstream instruments. (More detailed information about the URB programmes is provided in Box 3.5 below).

Urban Environment in EC Development Cooperation Budget Lines

Currently development cooperation relevant to the urban environment is financed out of nine discrete budget lines: EDF and MEDA covering respectively the ACP countries and the Mediterranean; four lines covering respectively financial/technical and economic cooperation with Asia and Latin America; and three horizontal instruments covering environment, NGO co-financing and decentralised cooperation. Taken together, the nine budget lines fund a large number of projects and an analysis has been carried out in the framework of this project to ascertain the numbers and kinds of projects which have been funded, focusing on urban environmental problems and issues, between 1990 and 1995.

The evaluation of the urban environmental projects funded by these budget lines demands the analysis of both environmental and urban activities supported from the EC available instruments for development cooperation. Isolating the specifically urban environmental projects and activities funded by the EC in the context of the developing countries raises a problem of definition because the urban environment is not a specific category used by DG IB or DG VIII in their systems for projects classification. Urban environmental activities have been funded directly and indirectly across several sectors such as health, urban planning, water supply, energy management, institutional strengthening, etc.

However, two previous evaluations of these budget lines paved the way for this study. The first is a study by consultants ERM on environmental projects (ERM, 1996), launched by DG VIII in cooperation with DG IB at the end of 1995. This evaluation consisted of the development of an Inventory of Environment Programmes between 1990 and 1995, the Evaluation of the Environmental Performance of EC Programmes in Developing Countries, which included a Desk Evaluation of a sample of 50 projects; and a Field Evaluation of some of these projects. The second study considered was commissioned in 1996 by DG VIII, and consists of an evaluation of urban development projects in ACP countries (Manchotte and Payne, 1997), funded from the 1st to the 7th EDF.

The ERM Inventory records that between 1990 and 1995 all the budget lines analysed committed 128.6 MECU allocated to 105 urban environmental projects. A re-examination of projects was carried out by this study which include some urban projects not considered by ERM to be ‘urban' but that appear to have a significant urban focus or dimension. As a result, the number of urban environmental projects and funds committed to them were found to be higher than recorded in the ERM Inventory. However, due to the fact that the visibility of urban environment components in this type of projects and programmes is not always clear and explicit, it is likely that the flow of EC funds into the urban environment in developing countries is higher than suggested by this and other studies.

The following analysis first provides an overview of the distribution of funding and the number of projects of urban environment since 1990 by year, region and theme. This is followed by a critical assessment of the achievements. The analysis is summarised in Table 3.4. The following main points arise from this analysis:

Funding Committed to Urban Environmental Projects

This analysis concluded that between 1990 and 1995 a total of 179 projects and programmes funded by DG IB and DG VIII from the nine budget lines here under consideration may be classified as urban environmental projects; the total value of these projects is 176 MECU. This represents 18.7% of the funding committed by these budget lines to all environmental themes over the same period (941 MECU).

Considering the total funds committed by DG IB and DG VIII to all development cooperation projects during the period 1990 to 1995 amounting to 15,753 MECU, urban environmental projects accounted for little over 1% of the total amount of funding committed to ACP-ALA-MED countries. Although there are no statistics available to provide a comparison with the funding committed by other donors in the field of the urban environment, other bilateral agencies such as the Canadian International Development Agency (CIDA) or Swiss Development Cooperation (SDC) have allocated in recent years approximately 6% of their development cooperation budgets to urban development projects, about 40% of which addressed directly urban environmental issues (ENDA Tiers Monde, 1994; CIDA, 1996).

Although funding for environmental projects has increased since 1992 (the advent of UNCED), the proportion represented by urban projects has varied in a way which shows no particular trend. The increases of the financial aid allocated to urban environmental issues were not always in proportion to the increases in total environmental funding, which reflects the fact that there are no policy targets established for the volume of funding to be allocated to the urban environment.

Relevance of the Urban Environment by Budget Line

Urban environmental projects are a significant feature of the environmental components of all budget lines. EDF VI and VII account for the highest volume of funding committed to the urban environment (78 MECU) which represents 29% of the funds allocated from EDF to all environmental themes and 44% of the funding committed to urban environmental projects from all the budget lines. However, in terms of project structure, EDF funds have been allocated on average to a relatively small number of large projects in comparison with other budget lines, with only two large projects in the Caribbean accounted for more than half of the funds committed to urban environment.

In the case of the ALA mainstream instruments the situation differs from one region to another. ALA instruments account for 16% of all urban environmental projects and 31% of the funds committed to them, the contribution of funds being higher from the Latin American financial instruments (25.43 MECU) than from the Asian ones (10.58 MECU). In the case of Latin America the total volume of funds committed to all environmental themes is lower than in the case of Asia (140 MECU and 312.5 MECU respectively), but the proportion devoted to urban environmental projects is considerably higher (28% and 5% respectively).

The Mediterranean budget lines account for a high proportion of the total number of urban environmental projects (27%), but only 9% of the funding is committed to them , which reflects the fact that most urban environmental projects were funded from MED-URBS with an average funding of 150,000 ECU per project.

Regarding the impact of the Environment Budget Line (B7-6200) and other horizontal instruments, these instruments have supported a large amount of small urban environmental projects. The majority of the funds earmarked for urban environment are concentrated in ALA-MED countries and particularly in Latin America, where the horizontal instruments supported 43% of the projects accounting for 16% of the funds committed to the urban environment during the 1990-95 period.

Geographical Distribution

With the exception of the Pacific region, all regions have received funding for urban environmental projects, albeit the proportion of environmental funding and the amounts dedicated to urban environment do not reflect the importance of urbanisation and urban environmental problems in the various regions .

The Caribbean has received a disproportionate amount of funding for urban environmental projects compared with the numbers and sizes of cities in Latin America but particularly Asia, and the growth rate of cities in Africa.

Themes

A large proportion of the funds has been devoted to sectoral-focused and large-scale schemes. Water supply and sanitation are the top priorities accounting for 54% of the funding and 21% of the projects. These features mainly reflect the traditional investment orientation of EDF.

Solid and special waste treatment and management are the second priority in terms of volume of funding (15%) and number of projects (22%), however even when more than half of the of funds within this theme have been dedicated to technical solutions, there is a considerable number of small-scale projects focused on innovative approaches reflecting the contribution of the Environment budget line.

‘Software' projects in urban environmental management have been significant in number but have a relatively small impact on the budget lines. Most of these projects adopt decentralised cooperation strategies with an emphasis on capacity building and institutional strengthening objectives.

Other urban environmental projects addressing transport, energy, city greening or environmental health related problems are rare both in terms of funding and number of projects. Most of these projects have been funded by MED-URBS. The Environment budget line has also addressed a broad range of themes, although most of the funding has been committed to solid waste management projects.

Table 3.5 (not included) provides a comparative overview of the main characteristics of the urban environmental projects funded by each of the budget lines considered. Relying on the ERM and Manchotte and Payne evaluations and on the findings of this study, the following analysis gives a more detailed assessment of the potentials and constraints identified in these budget lines in supporting urban EPM activities.

Development Fund (EDF) VI and VII

In the last 30 years, only 3% of the EDF funds were allocated to urban issues, the proportion being higher in the 1st EDF (Manchotte and Payne 1997). As discussed earlier in this Chapter, the Lomé IV framework provides no consideration of urban issues and procedures tend to be highly reliant on centralised decisions, preventing a more active involvement of local authorities and communities. The lack of a defined policy strategy for urban environmental issues is reflected in the fluctuations of funds attributed to urban environment projects over the period and in the uneven geographical distribution.

The ERM Evaluation of the Environmental Performance of EC Programmes (ERM 1996) includes three urban environmental projects funded by EDF VI and VII. All of them are oriented to the provision of water supply and sanitation infrastructure, two from a predominantly technical and top-down approach (Negril Sewerage System, Jamaica and Provision of Water Supply System, Turks and Caicos), but one of them involves the participation of the local community, not in the decision making process, but in the construction activities (Rural Towns Water-Borne Sewerage Schemes for Karibib and Outjo, Namibia).

This study and the previous evaluations reveal that EDF urban environmental projects can be characterised as sectoral-focused schemes, reflecting a traditional investment orientation towards hard sectoral technical activities for urban capital provision. As noted by Manchotte and Payne (1997) the neglect of capacity building and institutional components in most projects has resulted very often in the weak sustainability of the interventions once the funding ceased, limiting their positive impact and consequently wasting resources. Other constraints identified include the following aspects:

Lack of coherence between the investment budget allocation and general background studies available for project or programme identification.

Imbalance between projects and available local resources.

Lack of objectively verifiable indicators for project follow-up and evaluation.

Evaluations tend to be short term and internal to the projects, helping to improve technical aspects. The lack of overall strategic evaluations limits the possibility of achieving a higher coherence between policies, programmes and actions.

Key aspects to be addressed with regards to the improvement of the operation of EDF in the field of the urban environment include the following:

Increasing recognition given to the role of local actors and support to their engagement in the projects through participatory processes and the strengthening of local capacities.

Increasing flexibility for the definition and funding of specific actions during implementation, once local priority needs and capacities have been recognised and assessed.

Stronger emphasis on the local context, taking into consideration the specific environmental, social, economic, cultural, political and institutional conditions.

Greater emphasis on networking schemes to move from single responses to the development of regionally consistent approaches, facilitating the exchange and learning from experiences.

A number of instruments available to the Commission provide a broader scope for the promotion of a more decentralised and integrated approach to urban environmental planning and management in ACP countries, such as the EDF Micro Projects Programmes (MPP), several projects supported by the decentralised cooperation budget line (B7-5077), and the Programme Managing the Environment Locally in Sub Saharan Africa (MELISSA), a joint initiative of the World Bank and the EU (B7-6200). The question remains to what extent and how this approach will be integrated to the mainstream operations of the EDF.

Financial/Technical and Economic Cooperation with Latin America (B7-3010 and B7-3011)

According to the ERM evaluation, the environment has been increasingly integrated into cooperation activities with Latin American countries, not only through projects addressing directly environmental problems but also through the incorporation of environmental considerations into social and economic themes. However, the urban environment has not constituted a priority area or received a clear policy approach in the operation of the Latin American development cooperation instruments. This is reflected in the fluctuation of the funds committed over time to urban environmental projects and the disparities in their geographical distribution. Whilst most projects were focused on the Andean Community and in Central America, the highly urbanised countries of South America received little or no attention.

Most urban environmental projects identified were based upon engineering solutions for the provision of water and sanitation infrastructure. Only, a few projects addressed urban problems in a crosscutting way (e.g. Pueblos Jóvenes de Lima, Peru; and Pobreza Urbana, Peru). The integration of environmental components in urban development projects seems to be more the result of the high level urban environmental awareness of the beneficiaries rather than the result of a policy framework from the Commission aiming at integrating the environment into sectoral policies.

ERM noted that large scale projects involving several countries with a top-down approach have proved to be over-ambitious and lacking in consultation with local and direct beneficiaries and a context-specific analysis of their expectations, priorities and capacities in the design stage, jeopardising their commitment and contribution to the later stage of implementation. The difficulties faced in the implementation of the Regional Programme for collection and treatment of hazardous hospital wastes in Central America exemplifies this aspect (see Appendix B).

By contrast, another regional programme in Central America, funded by the decentralised cooperation budget line but elaborated with the mainstream Latin American cooperation instruments, adopted a more flexible and bottom-up approach supporting a variety of interventions locally defined (Europa-América Central - Programa de Cooperación Descentralizada). Due to the heterogeneous political, environmental, economic, socio-cultural and institutional conditions of Latin American countries, regional programmes demand a flexible approach focused on enabling local partners to adopt context specific solutions to urban environmental problems.

Smaller scale projects adopting a decentralised cooperation approach have proved to offer a potential for a better integration of the direct beneficiaries along the different stages of the project cycle management, allowing greater flexibility to adjust over-ambitious proposals and incorporate changes during implementation (e.g. Assainissement du Rio Tarcoles, Costa Rica). This project was initiated in the context of the CIUDAGUA Programme, funded by the EC Industrial Cooperation budget line (B7-5020), which fostered a decentralised cooperation agreement between the cities of San Jose (Costa Rica) and Nancy (France). It constitutes one of the few examples in which assistance from different instruments within the EC was mainstreamed into a single process.

The URB-AL programme constitutes a potential instrument to implement a decentralised approach in the EU cooperation with Latin America. However, the resources allocated to the programme and to the future implementation of joint projects appear to be very limited and constrain the potential impact of the programme. The programme will devote approximately 1/3 of its budget to prepare the ground for decentralised cooperation, enabling local authorities to know each other and work together in the identification of key issues for intervention and approaches and solutions to these. Funds allocated to specific projects will allow the development of small number of demonstration projects, therefore mainstreaming the work of the networks into the regional budget lines will be essential to sustain the achievements of the programme.

Financial/Technical and Economic Cooperation with Asia (B7-3000 and B7-3001)

The urban environment is, prima facie, a key priority for Asia’s sustainable development but has been a neglected area in the operation of these budget lines, which is reflected in the marginal volume of funding devoted to urban environmental projects, its fluctuation over the time and its highly uneven geographical distribution.

Despite the lack of an explicit policy approach to the urban environment and the limited resources oriented to this field, several strategic components have been placed in the EU-Asia cooperation strategy to integrate economic and environmental objectives, which have synergy effects on the urban environment, such as: the articulation of urban and industry related issues and the emphasis on promoting pollution prevention and cleaner technologies and management systems. Following this approach the Economic Cooperation instrument (B7-3001) has supported a number of projects, which include the following: Pollution control of leather tanneries, India; Programme on Industrial Pollution Reduction, Thailand; and the regional Interactive Forum on urban and industrial environment. Other institutional strengthening projects, such as the establishment of the Regional Institute for Environmental Technology (RIET) in Singapore, are also relevant to address urban and industrial related problems by promoting companies’ awareness and capacities to adopt innovative environmental management systems.

Institutional strengthening is the second component stressed in the urban environmental projects funded from these instruments. Examples of these are the Municipal Environmental Cooperation Programme (MECP) and in the EU-China Local Authorities Project, focused upon the provision of technical training and establishment of partnerships between European and Asian cities and towns. Implemented by the United Towns Development Agency (UTDA), MECP constitutes the first attempt undertaken by the Asian mainstream budget lines to introduce a decentralised cooperation approach in their operation. However, very limited resources were available to support the implementation of projects developed in cooperation, which limited the impact of the programme.

Another decentralised cooperation programme in the process of being implemented in Asia is the EC-China Environmental Management Cooperation Programme for Sustainable Development (EMCP). This programme is even more comprehensive, in which it is also proposed to build on the existing institutional regional capacity to improve environmental management (e.g. RIET, ACCA, etc.) and aims at strengthening synergy between several funding sources (other EC programmes, EU Member States, industries, etc.)

Financial/Technical and Economic Cooperation with Countries of the Southern Mediterranean

There are no funding targets or guidance to direct resources from the Financial Protocols and MEDA to environmental issues. As a result very few resources have gone into environmental projects and even less to urban environmental actions. However, within the region-specific budget lines, the MED decentralised cooperation programmes have funded a larger number of urban environmental actions (32) engaging a low amount of resources (12 MECU).

A large number of small projects demand a greater load of work to evaluate the proposals, follow up their implementation and assess their outcomes and this becomes a key problem if one considers that most units have limited resources and staff to undertake these activities. Due to these constraints, the decentralised cooperation sub-programmes were consequently suspended from 1996. As a result of the limited resources devoted to the identification of targeting networks, the preparation activities to launch the programmes, and the lack of mechanisms and resources to follow-up and assess the implementation of the projects, the Commission is now evaluating the long-term sustainability of the networks generated through these programmes and the visibility and impact of the projects.

Both the themes of the urban environment and decentralised cooperation strategies are relatively new issues to the Commissions approach to development cooperation. MED-URBS was a pioneer experience in the field and many constraints were probably due to its novelty. However this approach is being reaffirmed through new proposals to go further in the involvement of civil society actors in the Euro-Mediterranean partnership programmes and the assessment of its potentials and constraints has served as a learning experience for the design and implementation of URB-AL and ASIA-URBS.

Despite the constraints faced during its implementation, MED-URBS has been an effective incentive to place an alternative approach to urban environmental issues in the EU development cooperation with the Mediterranean and to fund a relatively high number of innovative projects and partnerships between European and Mediterranean organisations at the local level. It should also be noted that MED-URBS has also played a key role in mobilising European partners in member states, including Italy, Greece and Spain, that otherwise have a low engagement in urban environmental issues. Other decentralised cooperation programmes from the MED family, such as Med-Campus and Med-Techno, have all supported urban environmental activities from complementary angles, promoting training initiatives and innovative technological solutions respectively.

However, MED-URBS operated in isolation and the mainstream Mediterranean instruments have funded no further activities from the networks supported by this programme. The search of synergy between this and other decentralised cooperation programmes and the operation for the mainstream budget lines are a key challenge to be addressed in all the regions.

Environment in Developing Countries - B7-6200

The Environment budget line was established in 1982 to promote the integration of the environmental dimension into the EC development cooperation through the financing of innovative pilot projects and strategic studies. Over the years, projects funded under this budget line have evolved from an EC policy-driven nature to a higher responsiveness to local community demands for assistance, with a general increase in projects assisted by NGOs. To access a wide range of pilot experiences, this budget line covers a broad set of environmental themes and is open to different actors, including local and international NGOs, research institutions, local authorities and private operators.

In recent years, and especially since 1993, the Environment budget line has played an important role acting as a catalyst for the integration of the urban environment in the Commission’s activities. The budget line has supported a relatively high number of urban environmental projects, promoting small-scale, innovative and locally oriented solutions, aspects generally neglected by the mainstream region-specific channels.

Urban environmental issues have received a different degree of attention in the operations of DG IB and DG VIII. Whilst 33% of the total funding committed by DG IB between 1990 and 1996 was allocated to urban environmental projects, DG VIII only earmarked 6% of the Environment funds to urban projects. Therefore this budget line has had a considerable impact in the ALA-MED regions and less so in ACP countries.

Although most of the activities funded have consisted of demonstration projects on sectoral themes, two recent programmes provide a broad scope for the promotion on an integrated approach to urban environmental management within a decentralised cooperation framework. These are the Urban Popular Environmental Economy Programme (PRECEUP) and the Programme Managing the Environment Locally in Sub Saharan Africa (MELISSA) (see Appendix B). Both initiatives aimed at supporting innovative local initiatives to urban environmental problems, providing a framework to promote South-South exchanges through networking and the dissemination of good practices.

NGO Co-financing - B7-6000

This budget line finances development activities carried out by European NGOs to support grassroots organisations in developing countries under Chapter XII of the General Conditions (Documents VIII/764/87 EN and VIII/271/87 EN). Several budget headings concerned with NGO operations in Cuba, Vietnam and Cambodia, amongst others, have been incorporated into the overall heading of NGO co-financing.

The NGO co-financing heading aims at assisting Northern NGO projects to support Southern NGOs and NGO campaigns to promote public awareness and solidarity in the EU of development issues in the context of developing countries. Project themes include a wide range of issues, such as slum upgrading, promotion of small enterprises and income generation activities, development of environmental and social infrastructure, empowerment of minority or less advantaged groups, etc. Projects cover a broad and varied set of issues. Actions are driven by the demands of specific case by case problems; they are not tied to a specific programme.

Within the crosscutting budget headings this is the largest in terms of budget size (160 MECU in 1997). About 30% of funds from this instrument are allocated to urban projects. In 1994, 312 NGO projects concerning urban areas were granted 16.5 MECU in Bangladesh, India, Mali, Nicaragua and most Latin American countries. About 50% of these funds were allocated in Latin America and 23% in Sub Saharan Africa. However actions are demand-driven around specific cases; they are not tied to any specific urban policy framework.

Due to the demand driven orientation of this budget line, the activities supported in developing countries depend almost entirely of the profile of the Northern NGOs responsible for the design and implementation of projects. This is reflected in the fact that environmental problems are approached in two different ways in the projects examined. Environmental NGOs tend to focus heavily on the conservation of natural resources in rural areas. On the other hand, development NGOs give more attention to urban development problems albeit the focus tends to be on welfare issues. Although the activities undertaken by the NGO sector are not longer focused exclusively on humanitarian and charitable ends, urban environmental issues are still new to the operation of most NGOs and usually only addressed indirectly in projects concerned with health and urban sanitation. Therefore NGO capacity building in urban EPM should be considered as a mechanism to prompt a more consistent direction into the activities of the sector.

In addition to this, the increasing number of actors and intervention modes within both South and North NGOs and the lack of clear definitions of their role within the development process have complicated the way in which the development cooperation chain operates as a whole. Recent and rapid changes in the South NGO sector are prompting their requests for direct access to the northern sources of external assistance, which has traditionally been a prerogative of the Northern NGOs. This demands the redefinition of working modes and roles to be played by Northern and Southern NGOs towards effective partnerships of mutual interest.

Decentralised Cooperation in Developing Countries - B7-6430

The purpose of this budget line is to support a variety of development initiatives mounted by a wide range of non-government bodies in the developing countries (NGOs, local communities, local authorities, etc.). Since the budget line allocation is small (5 MECU in 1997), projects and programmes are normally financed with official cooperation funds from the region-specific budget lines (EDF/ALA/MED), requiring the prior agreement of the Commission’s representative and public authorities in the beneficiary country. Co-financing by the counterpart is normally the rule, but some projects have been fully financed.

This budget heading adopts a strategic approach to maximise the impact of the funds available and acts as a catalyst for supporting preparatory projects to encourage, strengthen and mobilise the development capacities of decentralised organisations, both in developing countries and in Europe, to foster South-South and North-South networks, partnerships and projects paving the way for longer-term ODA-financed operations. Priority is given to initiatives reinforcing South networks and North-South partnerships, training schemes aiming at strengthening the capacity of potential agents of decentralised cooperation, and participatory pilot projects only when they are considered to be innovative and provide a clear scope for replicability.

Between 1992-1996 this budget line has funded 91 projects and programmes, which accounted for 18.6 MECU, nearly half of these activities have been based on urban twinning schemes and North-South and South-South partnerships and networks between NGOs and local authorities focusing on institution-building and support for decentralisation, and urban and municipal development, as well as on innovative pilot projects in areas such as urban management and the city environment. Examples of these are the African Sustainable Cities Network and the Europe-Central America Decentralised Cooperation Programme (both reviewed in Appendix B).

The regional distribution of funds over the period 1992-1994 was allocated mainly to ACP countries (61%), followed by Latin America (28%), Asia (4%), the Mediterranean (1%) and other (6%). In 1995 and 1996 the distribution of funds followed a similar pattern, but the Mediterranean increased its shared. During 1995 and 1996 about one third of the projects and programmes were directly related to municipal development and urban management (including in many cases environmental components), all of them in Africa and Latin America.

The Decentralised Cooperation instrument operates with a wide number of international NGOs, municipal associations and local authorities with rapidly growing experience in the implementation of ‘Local Agenda 21’, including the International Council for Local Environmental Initiatives (ICLEI), United Towns Organisation (UTO), Towns and Development (T&D) and the Association of Netherlands Authorities (VNG) amongst many others. This provides a broad scope for the articulation of the EC activities with other agencies and integration of innovative approaches in urban environmental management into the activities to the mainstream ALA/MED/EDF budget lines.

Concluding Remarks

It is clear from the above analysis that the European Commission is engaged in a large number of projects in the urban environment which, hitherto, have not been seen in any coherent way either as separate from more environmental or urban projects. These projects have been initiated using different instruments and under different administrative regimes that has discouraged coherence of approach. The final Chapter of this report addresses the alternative routes to overcome this problem.