Scientific Foresight (STOA) By / September 4, 2017

New ways to finance cross-border transport infrastructure

Written by Mihalis Kritikos, Border regions face considerable challenges when it comes to cross-border transport infrastructure. These regions therefore need…

STOA workshop Cross border transport infrastructure, 6 June 2017

Written by Mihalis Kritikos,

STOA workshop Cross border transport infrastructure, 6 June 2017
STOA workshop Cross border transport infrastructure, 6 June 2017

Border regions face considerable challenges when it comes to cross-border transport infrastructure. These regions therefore need Member States’ support to develop their own unique mobility and transport plans. Publication of a forthcoming STOA study on innovative transport infrastructure funding, expected in November 2017, will follow a presentation to the STOA Panel on 14 September 2017. STOA’s recent workshop on innovative financing for cross-border transport concluded that small cross-border projects could form part of a bigger investment package, tapping into a greater diversity of EU funding instruments.

Cross-border projects are a vital issue for an efficient and sustainable transport system that contributes to strengthening the economic, social and territorial cohesion of the European Union (EU) and regional development across borders. A wide range of financing options for transport infrastructure is currently available at EU level, such as the numerous European Groupings of Territorial Cooperation (EGTC) that aim particularly at enhancing the technological infrastructure of cross-regional transport. Nonetheless, regardless of this diverse funding and financing landscape, the cross-border context generates important externalities (e.g. recognising the environmental benefits of rail vs road), which make cross-border investments less appropriate and attractive for mainstream financial instruments, especially for small scale projects that are not immediately bankable. Indeed, Claudia Schmidt (EPP, Austria), a member of the STOA Panel, has highlighted that, when it comes to cross-border interconnections, the problem is rail, not road, stressing that the EU has neglected small-scale cross-border rail. EU funds tend to favour large-scale projects focusing on the core TEN-T (Trans-European Transport Networks) corridors, and ex-ante conditionality for Member States’ access to EU funds, could be strengthened in terms of simplifying the procurement and licensing procedures for cross-border projects and promoting cross-financing.

Technology provides new opportunities to connect regions across borders, and sufficient connectivity can provide new prospects for border regions, for example by providing opportunities to access two markets at once. However, investment transport infrastructure needs vary, according to the particular border, but also within border regions.

National governments also prefer large investment in major infrastructure projects, rather than in small border crossings of 60-90 km. Currently, regional development programmes stop at the border, as small-scale links in cross-border regions are often unattractive in terms of public/private investment, and cost-benefit analyses and public-private partnerships for small-scale cross-border links absent. Small-scale projects are either too minor or not bankable, and there is a shortage of economic studies on most of the missing small-scale links. STOA’s workshop on the issue emphasised the need to focus on small-scale rail connections that are not currently part of the Trans-European transport network (TEN-T). European Groupings of Territorial Cooperation can play a bigger role in coordinating investment to enhance cross-border transport infrastructure, especially if individual cross-border programmes merge, retaining sufficient flexibility to tailor priorities to different border areas. Furthermore, cross-border technology projects can be a vehicle for fulfilling other regional development goals. This is especially the case when investments in transport and tourism are coupled, for example, with other sources of funding, provided, by the European Investment Bank (EIB), or with innovative financing instruments, such as blending, to combine EU grants with loans or equity from public and private financiers.

If you missed the STOA workshop, watch a recording.

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