Financial Sustainability and Cost Effectiveness of Policies in the Context of Article 7 EED

All policies under Art. 7 require some resources of different manner to deliver results that can be reported under the Art. 7 target. The monitoring, reporting and verification costs occur in all policies. Providing financing and cost effectiveness by design are key to the financial sustainability of Art. 7 policies.
Availability of funding is crucial for many policies to deliver results. Various funding options could be considered and many of them depend on political support and priorities. The choice of source could also impact the scope and duration of the programme. Some of the funding options are available only in specific regions or dedicated to chosen target areas. Designing a mix of policies (Alternative Measures and Obligation Schemes) that take advantage of multiple available funding options could support reaching their targets. Proper use of multiple funding options could decrease the risks and uncertainties connected with each source of financing.
Cost effectiveness of policies can be evaluated from various perspectives. For the purpose of this report, cost effectiveness is evaluated from the broad perspective accounting for the benefits and costs of all stakeholders involved as well as the impact on the public budget.
Cost effectiveness of policies could decrease the need for financing and, therefore, increase the sustainability of the scheme in place. Programmes that are effective in mobilising private resources lessen the need of using state budget or other funding sources and could be sustainable in the long term. Innovative financing solutions that tackle specific barriers for the implementation of projects could be used in some sectors.
When analysing cost effectiveness of Art. 7 EEOS or AM, it is important to distinguish between different types of costs as each type can be addressed in a different manner. Typically, the cost structure can be split into:

Programme costs (also support costs)

Societal costs (also investment costs)

Administrative costs (also running administrative costs)

Read more in the report: Financial Sustainability and Cost Effectiveness of Policies in the Context of Article 7 EED


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