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The fundamental principle of sustainable development is well established and widely accepted – economic growth can, and should, be made compatible with stewardship of the planet for future generations.

At EU and Member State levels, and within individual cities and regions, most policy-makers now appreciate the need to reconcile the triple objectives of wealth creation, social cohesion and environmental protection. Many even understand that win-win solutions are possible. But how can they find these solutions? What combination of policies, support measures and technologies will optimise benefits in all three domains? And how should their decisions respond to the often conflicting views of residents, businesses, public authorities and landowners?

Without sophisticated decision-support tools, successfully implementing genuinely sustainable policies is virtually impossible.

Proven and affordable tools

A range of practical tools to support informed and participative decision-making has been developed under the Fifth and Sixth Framework Programmes for research. They include modelling and simulation software, accounting frameworks and codes of practice, as well as impact assessment, performance monitoring and external cost estimation tools.

These tools enhance the capacity of policy-makers, managers, planners, public authorities and enterprises to identify, from a range of options, practical measures that will be most effective in promoting and achieving a level of sustainability suited to their own circumstances and, through acceptable tradeoffs, will maximise the benefits in economic, social and environmental terms.

To support the development and implementation of such integrated tools, specific approaches are needed in order to, on the one hand, define and estimate (in quantitative terms) so-called ‘thresholds of sustainability’ and points of no-return characterising the different ecosystems and, on the other, to quantify the likely impacts on sustainability of measures and policies in physical and monetary terms. The European Commission has developed innovative research in these two domains.

Estimating thresholds of sustainability

Dedicated research funded under the Sixth Framework Programme aims to define and estimate scientifically-based thresholds of sustainability and points of no-return, as a tool for the sustainable management and characterisation of the state of the environment. The definition of such thresholds goes beyond the identification of the carrying capacity of ecosystems, but it implies an equal balance between the necessary ecological, social and economic dimensions. The research covers the estimation of cumulative, interactive effects over time caused by current and foreseeable actions, the coupling of data with policy judgements reflecting costs, the identification of the time and scale of potential damage, and the use of thresholds in policy-making.

A good example of such thresholds of sustainability can be found in climate policy, where a 550 ppm limit value for CO2 concentration in the atmosphere is considered by the IPCC (Intergovernmental panel on Climate Change) as the limit that cannot be exceeded – from the environmental, economic and social points of view – without causing irreversible impacts on climate.

Calculation before action: impact assessment and externalities

Decision-making can only proceed in a sustainable way if the effects of new policy measures are explored and understood before they are introduced. Several years of work to develop a procedure for analysing the impact of policy decisions on sustainability has led to a framework for the assessment of any activity that affects an ecosystem.

Impact analysis and assessment – calculation of the environmental effect of a major construction project, for example – are familiar processes. A strategy for sustainable development must take into account not only its financial costs and benefits, but also its potential environmental and health impacts and its social acceptability.

An essential element for cost-benefit analyses is the ability to place a monetary value on potential economic, environmental and social costs and benefits, whether they arise from action or from inaction. The calculation of an activity’s own ‘internal’ costs is well understood – e.g. a power plant’s capital costs, raw material and running costs determine the price of the electricity it produces. But hidden costs – or ‘externalities’ as they are called in economic terms – must also be taken into account. These include the effect of emissions to the air on human health, groundwater, biodiversity and climate change, the disposal of waste products and the decommissioning of the plant at the end of its working life. These costs may be hard to determine, and research is needed to provide the tools and quantitative data to support calculations.

A series of Community funded projects, known under the acronym of ExternE, showed that the price of electricity produced from coal would more than double if external costs, such as damage to the environment and health, caused by air pollutants, in particular, were taken into account. Even the externalities of natural gas would add approximately 30% to the cost of electricity generation. Since they do not appear on electricity consumers’ bills, such external costs must be met by society at large.

Integrated frameworks for policy assessment

European research has developed a very wide range of tools to facilitate the successive steps of the decision-making process. They include tools and methods for ‘vision-making’, impact assessment, defining objectives and targets, as well as the planning, implementation, monitoring, benchmarking and transfer of good practice.

On the basis of the quantitative approaches presented above, tools are designed to promote the integration of economic, environmental and social dimensions, enabling decision-makers to mitigate the long-term negative impacts of planned projects, policies or technologies, and to maximise their overall benefits. These tools and approaches provide the integrated framework for policy testing.

Testing techniques include scenario development, cost-benefit and cost-effectiveness analyses, technology assessment, and an overall synthesis of as many of these factors as possible. These techniques then enable the best policy-mix to be selected – e.g. the right combination of legal and fiscal instruments, regulations and technology development.

Once introduced, a policy must be monitored to check that its impacts were correctly predicted. The result may require strategic objectives to be re-examined, but a policy that passes this hurdle becomes an example of good practice that can be used in other contexts as a model for sustainable management.

Widespread application

This approach was originally developed for the energy sector, where policy-makers wanted to design ‘carbon taxes’ that would encourage operators to take the impacts of different technologies on global climate change into account when assessing investment options. The European Union Strategy for Sustainable Development encourages policy-makers to make wider use of fiscal and other measures to ensure that ‘external’ environmental and social costs are built into pricing structures.

The approach pioneered by EU research projects is, therefore, being increasingly widely applied as a reference framework in other sectors – e.g. transport, agriculture and forestry – and to the management of geographical areas where conflicting interests and objectives must be reconciled to achieve sustainability. In particular, the integrated approach of EU-funded research is widely applied in past and current European research to urban and peri-urban areas and their relationships with rural areas and coastal zones, where a wide range of activities – including industry, tourism, agriculture, fishery, transport, etc. – need to be evaluated with regards to their impacts in environmental, socio-economic and cultural terms.

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The following are the themes and some examples of research projects and support actions funded by the European Union which aim to improve scientific understanding of sustainable development.

External cost assessment tool – Greensense

Greensense is the most recent in a series of projects to have developed new methods of ‘green accounting’. Taking as its starting point the impact pathway analysis methodology developed by the ExternE projects, it helped to create a framework of economic and environmental assessment that accounts for both efficiency and sustainability, attaching monetary values to environmental impacts and to the actions required to meet defined sustainability standards.

As well as contributing to the development of a standard framework of environmental accounting, Greensense offers policy recommendations based on combining criteria of economic efficiency and environmental sustainability. This will help policy-makers to minimise the costs of achieving sustainable development. The project also made available improved information on current welfare losses due to environmental damage to national statistical offices for inclusion in environmental accounts.

Econometric modelling – NEMESIS

Early attempts at defining econometric models for the environment, such as the E3ME model developed with EU support, are now being seen as a good basis for more advanced modelling. Several problems were encountered with E3ME, including inconsistent results and unfriendly software. In addition, changes in the research and development landscape, such as the growing importance of R&D spill-overs and endogenous growth, had to be integrated in the model to better assess structural economic policies, particularly for the environment.

The NEMESIS project – New Econometric Model for Environment and Strategies Implementation for Sustainable Development – was set up to build a new econometric approach based on this E3ME model. Its main objectives were to convert the E3ME model into a more user-friendly interface and software system; reshape the energy/environment module; implement recent developments in economic theory, especially in relation to R&D, innovation and spill-overs; test the analytical properties of the new version of the model using analytical simulations; and to tackle policy cases related to greenhouse gas emission control strategies.

IQ Tools for improving sustainability assessment processes

IQ Tools, which is short for ‘Indicators and Qualitative Tools for Improving the Impact Assessment Process for Sustainability’, is working on improving coherence between different European policy domains. In 2002, the EU decided that, through better understanding of the economic, environmental and social impacts – both inside and outside the EU – of policy decisions, policy-makers would be able to identify likely spill-overs (good and bad) into other policy areas and, in turn, take them into account. The Impact Assessment (IA) procedure was later introduced by the Commission and responds to the Gothenburg commitment to implement an EU strategy for sustainable development as well as the Laeken decision to promote better law-making in this area.

The IQ Tools project, supported under FP6’s ‘Specific support to policy’ priority, aims to support the process of ex ante policy appraisals in the European Commission, in particular the process of IA. The tool to be developed by the consortium of partners from Germany, Italy, Spain and the UK will allow desk officers to assess the potential effects of policy initiatives on the environmental and socio-economic dimensions of sustainability, and to appraise the significance of these impacts. It will consist of a quantitative modelling component and a qualitative tool.

Urban transport and land use planning tools – Propolis

Part of the Land Use and Transport Research (LUTR) cluster, Propolis developed and tested tools and assessment methods for the design and implementation of integrated land use, transport and environmental policies. Its aim was to define sustainable, long-term urban strategies and demonstrate their concrete benefits.

The project used state-of-the-art models and simulations to analyse alternative urban transport and land use policies and their long-term impacts. Policy scenarios were tested in seven cities – Helsinki, Dortmund, Naples, Vicenza, Inverness, Bilbao and Brussels – where a new decision-support tool provided aggregate environmental, social and economic indices for alternative policy options. In the case studies, the recommended policy packages would cut CO2 emissions by 15-20%, and traffic accidents by 8-17%. They would also reduce exposure to noise and pollutants, and improve traffic flows and access to city centres. The methods and tools developed by Propolis are readily transferable to other European cities.


Benchmarking is a commonly used term to describe a standard or point of reference from which things may be compared or assessed.

More information on EU funded projects

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