Annexes to SEC(2011)1573 - FINANCING NATURA 2000 Investing in Natura 2000: Delivering benefits for nature and people

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agreement by the Council and the European Parliament on the final package of funding instruments may not be decided until late 2012, there is still a need to prepare the planning for the next financing period. Early planning will help meet the objective of achieving a strengthened integrated approach as well as ensuring consistency by Member States and the Commission of Natura 2000 investments under the cohesion policy Funds, the EAFRD and the EMFF with the priorities of Natura 2000 action frameworks.

6.1. A more integrated planning approach for Natura 2000 financing

Article 8 (4) of the Habitats Directive already foresees the need to develop "a prioritized action framework", to be taken when sites are designated as SACs. This will be made possible when Member States establish national or regional Natura 2000 prioritized action frameworks for the next financing period.

Natura 2000 prioritised action frameworks are important planning tools to strengthen the integration of Natura 2000 financing into the use of relevant EU financial instruments. They will provide a clearer framework to set out priorities, describe the Natura 2000 activities to be financed and provide an integrated overview of how to achieve them. These action frameworks should therefore assist Member States who must prepare partnership contracts and operational programmes for the funds covered by the Common Strategic Framework and which must address environmental protection and climate aspects.

The Commission has already developed a list of measures that are considered necessary for the management of Natura 2000, the application of which will need to be considered by the Member States in relation to the different habitat types and species for which they have responsibility. Relevant information is already available to support the identification of priorities and necessary actions. This includes scientific data on the species and habitats for the national or regional territorial area, assessments of their conservation status, information on current and projected management planning, estimates of current use of EU funds and of overall financing needs as defined by the Member States. The prioritized action frameworks will avail of this information.

The principal aim of the prioritised action frameworks is to provide an integrated overview that sets out the necessary measures and links these to the corresponding EU funds (e.g. rural development under Common Agriculture Policy, Structural and Cohesion funds, European Maritime and Fisheries Fund). Member States will still need to specify their financing needs for Natura 2000 under the relevant plans or programmes and, as such, the action frameworks are likely to have a greater impact if prepared well in advance of Member State operational programmes. The aim will be to ensure strategic focus on the most important priorities, as well as complementarity and consistency between the information contained in the prioritized action frameworks and the relevant programmes.

Within the framework of the Habitats Committee20, work is ongoing with the Member States to develop a uniform format for the prioritised action frameworks which may be updated in

Committee set up under Article 20 of Council Directive 92/43/EEC, comprised or representatives of the

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light of improved knowledge about the management and restoration of Natura 2000 as well as experience with the implementation of different funding mechanisms.

The prioritised action frameworks will be valuable references for the development of "integrated projects" under the proposed new LIFE Regulation for which early preparation is necessary to optimize take up during the next programming period

In order to assess how successfully the integration approach is working under the next multi-annual financial period there will be a need to monitor the allocation and uptake of funds for Natura 2000 and biodiversity. The need to further develop approaches to determine how much

EU funding is used by the Member States for nature has already been highlighted by the Commission21.

Furthermore, Member States and stakeholders have indicated that administrative burdens can be an obstacle to the use of EU funds for Natura 2000. Simplification of the rules has been a key consideration of the financial proposals for the next multi-annual financial framework. The Commission proposal for rural development indicates that appropriate action is envisaged to simplify the implementation of the rural development programme22.

6.2. Strengthening understanding of management needs for Natura 2000 sites

Management plans or equivalent instruments can provide public authorities with necessary information on how best to invest in Natura 2000. There is now increased focus within Member States on defining conservation objectives as well as in developing the necessary measures to ensure effective management of Natura 2000. This is supported by practical demonstration and best practice projects at the local level, especially within the framework of the LIFE+ programme, which could be up-scaled to a wider territorial level. The Commission is also promoting the sharing of best practice and expertise between Member States in relation to the management of Natura 2000. Therefore, the knowledge base is improving understanding of the necessary conservation measures to be applied in the areas.

An ad-hoc working group on the management of Natura 2000, involving Member States and stakeholders, provides a forum for the exchange of good practices and cost-effective approaches for the management and restoration of Natura 2000. Furthermore, in the context of implementation of the new biodiversity strategy, the Commission has started a new process with Member States and stakeholders to promote the sharing of experience and expertise at biogeographical level on the management of species and habitats of EU conservation concern.

As follow up to the white paper on climate change adaptation23 the Commission services are currently preparing guidelines on "dealing with the impact of climate change on the management of Natura 2000 sites". There is also ongoing dialogue with Member States and key stakeholder groups to promote good practice and prepare management guidelines on "agriculture and Natura 2000" and "forests and Natura 2000". The Commission continues to work with Member States in promoting effective fisheries management measures relevant to Natura 2000 within the context of the Common Fisheries Policy and also having regard to the provisions of the Marine Strategy Framework Directive on marine protected areas. In the

COM(2008) 864 final COM(2011) 627 final p.36

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context of implementation of the Biodiversity 2020 strategy, the Commission has undertaken to set out its views on Green Infrastructure in 2012, with the aim of maintaining/enhancing ecosystem services and restoring degraded ecosystems.

6.3.        Improving recognition of the benefits of investments in Natura 2000

Despite increasing knowledge that management and restoration of Natura 2000 is a central element of sustainable development, and can bring multiple benefits to society, especially in rural and peripheral areas, the benefits of investing in Natura 2000 and biodiversity are often not recognised sufficiently. This can have important implications in respect of funding for Natura 2000. This is currently being tackled as part of the follow-up to the Biodiversity 2020 strategy.

Based on the methodological approach that has been developed for the study of "The Economics of Ecosystems and Biodiversity (TEEB)" the Commission services are developing a first assessment of the overall economic value of the services provided by the Natura 2000 network. A practical tool is being developed for Natura 2000 site management to support valuing changes in ecosystem services flows linked to the implementation of conservation measures for the sites. This will provide a stronger basis for ensuring that investments in Natura 2000 are factored into funding decisions that have a primary socio-economic focus, including those linked to regional development.

6.4.        Promoting the use of innovative approaches and market based instruments including private funding in support of financing Natura 2000

The 2020 EU biodiversity strategy recognises that in order to reach the 2020 EU biodiversity objectives, Member States and the Commission should work to diversify and scale up various sources of funding. There is a need to use both traditional and innovative financial instruments, such as payments for ecosystem services or biodiversity offsets, and to engage the private sector, in particular businesses that depend upon natural capital. The role of the European Investment Bank (EIB), and possible other intermediaries, is being considered in this context. Although not all such instruments might be suitable for financing Natura 2000, given limiting factors such as a lack of direct financial revenues and constraints for exploitation of resources originating from Natura 2000 sites by business, there is some scope for diversifying financing sources for Natura 2000 sites and increase investments from the private sector.

Member States may introduce instruments such as micro-financing of pro-biodiversity businesses, trust funds and endowments and private equity. There is also further scope for capturing some of the benefits visitors gain from Natura 2000 sites through entry fees and tourist levies. Other schemes may be applicable for specific connected activities offering financial yields (e.g. provision of water and other commodities, labelling and marketing initiatives recognizing the qualities of goods and services originating in the Natura 2000 sites and capturing this added value).

At national and sub-national level, fiscal instruments can also help redirect funding towards Natura 2000 sites, such as for example ecological fiscal transfers for municipalities that have a proportionally higher amount of land designated for conservation. Synergies can also be gained by seeking co-benefits for example between climate and biodiversity financing. The management and restoration of Natura 2000 sites can make an important contribution to

climate change mitigation and adaptation. For example healthy peatland ecosystems are greenhouse gas neutral or sequestrating carbon. Therefore the use of funds generated by, for example, the auctioning of allowances from the Emissions Trading System (which are already used by at least one Member State for biodiversity co-benefits through ecosystem-based adaptation in their international climate initiative), could also be considered in support of management measures in Natura 2000 that reduce greenhouse gas emissions by sequestering and protecting important stocks of carbon and climate adaptation by providing flood control benefits.

However, new innovative funding instruments are likely to account for only a small proportion of the overall financing of the Natura 2000 network in the nearer future, and core public funding from the EU and Member States will continue to be required to deliver the conservation benefits of the network. Public funding will continue to be justified as a result of the public benefits that the network delivers. While the majority of public funding is likely to continue to be delivered through traditional means, there is scope for innovative approaches to public funding, which may help to catalyse contributions from the private sector.

Within the framework of ongoing work on implementation of the EU biodiversity strategy the Commission has indicated its willingness – together with the Member States and other financial and private institutions - to test, develop and promote new and innovative private and public funding mechanisms for Natura 2000 with specific sectors over the next financial period. The future LIFE instrument, along with other instruments in the next Multiannual Financial Framework, may usefully support pilot projects and future implementation of innovative financing for Natura 2000.

7. Conclusions

The Commission has indicated that the financing of Natura 2000 is best achieved by its mainstreaming in the definition and implementation of the EU programmes for the Common Agricultural, Cohesion, Maritime and Fisheries and Environment policies as well as forming a key element of the new LIFE programme for the environment and climate action. In its proposed Regulations for the next financing period the Commission has provided the basis to ensure adequate EU financing opportunities for Natura 2000.

However, Member States need to identify needs and priorities and improve strategic multi-annual planning and co-ordination with a view to increasing the level of uptake of available funds. The Habitats Directive anticipates the need for strategic planning for Natura 2000 through establishment of Natura 2000 Prioritized Action Frameworks. This will be an important tool for the next programming period to meet the objective of ensuring consistency between Natura 2000 investments under the relevant EU funding instruments and the priorities of the Natura 2000 action frameworks. This approach could also facilitate the building of partnerships between the public and private sector as well as with nongovernmental organisations.

The preparation of the Natura 2000 Prioritized Action Frameworks should also provide the foundation for Member States preparation of 'integrated projects' for the management of Natura 2000 covering areas of their territory, under a new LIFE programme, also linked to the application of the relevant main EU funds under shared management. The Commission continues to evaluate and promote awareness about the benefits of Natura 2000. As part of the new biodiversity strategy and in collaboration with the Member States the Commission will

test, develop and promote new and innovative private funding mechanisms for Natura 2000 over the next financial period, using the future LIFE instrument.

Finally, it will be possible to assess the effectiveness of the approach to mainstream nature protection into EU funding instruments via the monitoring and evaluation foreseen in the proposals for the separate instruments. The key indicator of success will be the conservation status assessments for species and habitats of EU conservation concern to be issued in both 2014 and 2020.