The Structural Funds of the European Union
Edited by Massimo Florio
Chapter 1: Introduction: Multi-government Cost–Benefit Analysis, Shadow Prices and Incentives
1. Introduction: multi-government cost–beneﬁt analysis, shadow prices and incentives Massimo Florio INTRODUCTION Over the last two decades, the Structural Funds and the Cohesion Fund have co-ﬁnanced through grants a very large number of projects in the Member States of the European Union. These include mainly railways, roads, ports and airports, water distribution and treatment, solid waste management, but also productive investments, science parks, museums and many others. Other sources of infrastructure ﬁnance include grants under the Trans-European Networks in transport and energy, and loans by the European Investment Bank (EIB), or by the European Bank for Reconstruction and Development (EBRD). In the coming years the EU institutions, national governments, regional managing authorities, public and private companies will all face challenging infrastructure needs. In 2007–13 the EU Funds will contribute to the infrastructure plans of 27 countries, including 12 new members (mostly former transition economies). IPA funds will assist Croatia and other accession candidates. The EU seven-year budget supporting this eﬀort will draw from a provision of over EUR 300 billion for Cohesion policy. Table 1.1 shows the Cohesion Policy Budget, eligibility, priorities and allocations. A substantial part of the funds is going to be allocated to infrastructure projects, in regions lagging behind in the endowment of basic stock of capital compared with the rest of the EU. Moreover, there will be a leverage eﬀect of the EU funds on public and private ﬁnance, because in many cases Brussels will contribute only part of the...