As highlighted in the Communication "A resource-efficient Europe – Flagship initiative" 47 , EU-wide, coordinated public support for R&D and innovation is important to increase the availability and performance of the necessary resource efficient solutions.

Horizon 2020 identifies "Climate action, Environment, Resource Efficiency and Raw Materials" and "Food security, sustainable agriculture and forestry, marine, maritime and inland water research, and the bio-economy" as two of the priority societal challenges to be addressed by supporting R&I investments. Moreover, Horizon 2020 recognises that R&I activities for these challenges should be carried out at the Union level and beyond, given the transnational and global nature of the climate and the environment, their scale and complexity, and the international dimension of the food and agricultural supply chain.

In the report "Science, Research and Innovation performance of the EU - A contribution to the Open Innovation, Open Science, Open to the World agenda" 48 it is analysed how Europe should be leading the way in developing global research partnerships to address challenges in areas like energy, health, food and water. The report shows how the growing openness of the global R&I system has enhanced the importance of international collaboration, and has become a crucial factor in accessing new sources of knowledge and improving competitiveness.

The Post-2015 Development Agenda and the Sustainable Development Goals 49 , 50 .

The Barcelona Process launched in November 1995 at the initiative of the Euro-Mediterranean Foreign Ministers, and the related Communication "Barcelona Process: Union for the Mediterranean"(COM(2008)319), which was adopted by the Commission on 20 May 2008 and established a multilateral partnership, focusing on regional and trans-national projects.

The Communication "Enhancing and focusing EU international cooperation in R&I: a strategic approach" (COM(2012)497final) adopted by the Commission on 14 September 2012, which establishes a focus on fostering integration into – or alignment with – the European Research Area (ERA) for the Neighbourhood.

Regarding Charter of Fundamental Rights of the European Union 51 , the initiative is consistent with Article 37 on "Environmental protection: "A high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development".

4.1.Analysis of the possible options

Several policy options are available to meet the objectives identified above. These options differ in terms of scope, geographical coverage and instrument used.

As regards the scope of possible actions, the following options were identified:

Actions covering R&I activities related to water provision;

Actions covering R&I activities related to food systems;

Actions covering R&I activities integrating water provision and food systems.

As regards the geographical coverage of possible actions, the following options were identified:

Actions with EU Member States;

Actions with EU Member States and third countries associated to Horizon 2020 ("Associated third countries");

Actions with EU Member States, Associated third countries and non-Associated third counties.

As regards possible approaches, the following options were identified:

1.No dedicated EU action ("Baseline scenario" - No policy change).

2.Support to coordination between Participating States (public-public partnerships) on the basis of specific grant-based support from Horizon 2020 with:

ERA-NET Cofund actions, where the Union would co-fund one joint call for proposals leading to the funding of trans-national research and/or innovation projects;

European Joint Programme Cofund actions, where the Union would support the implementation of a joint programme of activities of governmental research organisations.

3.Support to integration between Participating States (public-public partnerships) on the basis of Article 185, where the Union participates in programmes undertaken by several EU Member States, and where that participation is justified by the scope of the objectives and the scale of the resources required.

4.Support to Public-Private Partnerships (PPP), set up between the Union and stakeholders from the private sector, in accordance with Article 187 TFEU, where all partners concerned commit to supporting the development and implementation of pre-competitive R&I activities of strategic importance for the Union's competitiveness and industrial leadership or for addressing specific societal challenges.

4.2.Options discarded at an early stage

A screening of all these options was undertaken based on Tool #14 of the Better Regulation Toolbox (Annex 6). Many options do not fulfil most key criteria related to legal and political feasibility and relevance.

As regards scope, options involving only water provision or only food systems were discarded at an early stage because of considerations related to relevance, effectiveness, efficiency and political feasibility. Options not covering both issues together would not be relevant enough to address a problem that is essentially of a cross-sectoral nature and requires an integrated approach.

As regards geographical coverage, options involving only EU Member States were discarded at an early stage due to considerations related to legal and political feasibility as well as relevance, as the problem identified concerns the complete Mediterranean area, which requires the involvement of Mediterranean third countries associated to Horizon 2020 and third countries not associated to Horizon 2020. Without the participation of both associated and non-associated third countries, it would not be possible to achieve critical mass in terms of knowledge and financial resources on both sides of the Mediterranean. The non-EU countries have important R&I capabilities and have made substantial financial commitments.

As for possible approaches, some options have been discarded at an early stage on the basis of legal and political feasibility, effectiveness and efficiency, as well as relevance:

European Joint Programme Cofund would not allow addressing the full range of stakeholders, as it would be limited to selected governmental research organisations. The political feasibility would be low. EJP Cofund would provide little support to common long-term R&I agendas, little support to National alignment, create only a limited critical mass of actors and resources and would provide no support to Strengthening innovation capabilities, thus not meet the relevance requirements.

For Public-Private Partnerships (PPPs) the preconditions are not met (Industrial leadership and its strong financial commitment). There is no political support from the Participating States for this approach. Furthermore PPPs would not necessarily provide support to a common long-term R&I agenda of the Participating States, or to the alignment of national activities, thus not meeting the relevance requirements.

4.3.Retained policy options

On the basis of the options screening undertaken, the following policy options have been retained:

Option 0: No dedicated EU action ("Baseline scenario" - No policy change)

Option 1: ERA-NET Cofund actions

Option 2: PRIMA Joint Programme based on Article 185 TFEU

Option 0: No dedicated EU action ("Baseline scenario" - No policy change)

Under the baseline scenario, which consists of no dedicated EU action under Horizon 2020, usual calls for R&I proposals would continue, and Participating States would continue to implement national activities, mostly in a bottom-up manner with little orientation towards the challenge identified. No support for coordination and collaboration between Participating States at programme level would be ensured.

The main elements of this Option 0, as already described in detail in Section 1.4, can be summarised as follows:

No dedicated EU action targeting specifically Water and Food in the Mediterranean;

Horizon 2020 will continue supporting R&I on Water and Food issues in general and ad-hoc;

Projects (indirect actions) will be selected from open calls for proposals, mainly for R&I Actions and Innovation actions, within Horizon 2020, some of which may or may not involve beneficiaries from the Mediterranean area;

The beneficiaries would be any legal entity eligible for funding (in accordance with Article 10 of Framework Programme Regulation), typically research organizations and private companies;

Individual actions would typically last 3-4 years.

Option 1: ERA-NET Cofund actions

The EU could intervene through Horizon 2020 ERA-NET Cofund actions, which support the coordination of national research programmes. The main, compulsory activity of ERA-NET Cofund actions under Horizon 2020 is the implementation of a single co-funded joint call for R&I proposals that results in funding for trans-national research and/or innovation projects. In addition, ERA-NET Cofund actions can also support the preparation and implementation of other joint activities (including additional joint calls without EU cofunding) that contribute to the coordination of national research programmes, such as workshops, meetings and studies. Past and ongoing ERA-NETs relevant to water and food in the Mediterranean area (e.g. ARIMNet2, ERANETMED) have been mentioned in previous sections 52 . In an ERA-NET action, all Participating States (EU and Third Countries) have the same rights and obligations as regulated by the Grant Agreement.

The cofunding of the Union has a positive impact on proposal evaluation and selection (international peer review, selection according to excellence) but also maximises the number of proposals that can be supported 53 .

The implementation of ERA-NETs relies on existing national programmes. The scope of calls for proposals, the nature of eligible activities, and the type of beneficiaries depend on the applicable national funding rules. The result is that in many countries participating in ERA-NETs, predominantly public research organisations participate in calls. In ERA-NETS in the area of water and food, all participants are public research organizations. Also, only in some areas, ERA-NETs have been established that address the innovation dimension, e.g. MANUNET (with 70% SME participation) or the Horizon 2020 energy ERA-NETs (with a focus on demonstration projects and higher Technology Readiness Levels). The total duration of the action should normally not exceed 5 years.

Option 1 would consist of a series of ERA-NET Cofund actions, limited to the remainder of Horizon 2020. They would result in calls being launched by Participating States in the years 2018, 2019 and 2020 respectively. On the basis of past experience with ERA-NETs and Participating State commitments, it can be assumed that Participating States would contribute around €20 million to each call, and that consequently the Union would provide support amounting to €10 million (on the basis of the reimbursement rate, which for ERA-NET Cofund actions is set at 33%). This would lead to a total investment from the Participating States of around €60 million and a Union contribution of €30 million.

Option 1 would not allow for addressing substantially the innovation dimension, since the national programmes that would collaborate and coordinate their activities during these three years are mainly addressing research activities of public research organisations. Furthermore, Option 1 is not expected to integrate national funding programmes in a common research strategic agenda.

Option 2: PRIMA Joint Programme based on Article 185 TFEU

Article 185 TFEU enables the EU to make provision for its participation in research and development programmes undertaken by several Member States, including participation in the structures created for the execution of those programmes. Article 26 of the Horizon 2020 Framework Programme Regulation specifies the conditions and criteria for identifying and proposing an initiative pursuant to Article 185 TFEU. Among other criteria, Article 185 initiatives may only be proposed by the Commission in cases where there is a need for a dedicated implementation structure and where there is a high level of commitment of Participating States to integration at scientific, management and financial levels. In order to submit a proposal, all criteria set out in Article 26(2) of the Horizon 2020 Regulation must be met and the Participating States must demonstrate that they are committed to integrating (rather than coordinating) their R&I efforts by defining and committing themselves to a joint programme. This high level of integration requires a new or pre-existing implementation structure - Dedicated Implementation Structure ('DIS') - that is designated by the Participating States, and entrusted under certain conditions, by the Commission with budget implementation tasks for indirect management purposes and with long-term commitment. The EU would provide financial support by matching under certain conditions Participating States contributions up to a ceiling. It deserves emphasis that Article 185 initiatives have a strong track record with respect to the long-term integration of national and European R&I efforts on common challenges, leverage effects and the delivery of impacts, international leadership and global cooperation, and implementation, budget and sound financial management (Box 3).

Third country participation in Article 185 initiatives

In an Article 185 initiative, all Participating States (EU Member States and third countries) have the same rights (e.g. participation in governing structures with decision-making power) and obligations (e.g. financial contribution) under the relevant basic act. Even though Article 185 TFEU refers specifically to the participation of the EU in programmes undertaken by several EU Member States, it does not preclude the participation of third countries in the Programme. However, depending on the status of these third countries in relation to the EU (especially their legal ties), different requirements have to be met to guarantee involvement on an equal footing of all Participating States.

Third countries associated to Horizon 2020 are already allowed to participate in Article 185 initiatives. The text of the specific Horizon 2020 Association Agreement expressly foresees the possibility for an associated third country to participate in various Article 185 initiatives. For the participation of third countries not associated to Horizon 2020 54 , the following requirements must be fulfilled:

-The basic act must contain an opening clause for third countries;

-International agreements must be concluded with these countries to allow their participation.

The purpose of these international agreements is to extend the legal regime from the EU basic act to the third countries. Article 185 initiatives establish obligations that include financial contributions and financial control. Therefore, mutually agreed mechanisms that guarantee the effective enforcement of rights and obligations on each side are required. These international agreements would have a purely bilateral nature regulating the obligations of third countries vis-à-vis the EU, making direct reference to the basic act. As a consequence, no significant subsequent negotiation for the conclusion of these agreements would be needed.

Implementation and management of the PRIMA Joint Programme

For an Article 185 initiative, the Horizon 2020 Rules for Participation apply by default (Article 1). Article 185 initiatives under Horizon 2020 are implemented in different ways as regards the management of the Union contribution and the way in which Participating States provide their contributions to the programme. A PRIMA Joint Programme on the basis of Article 185 would be implemented taking full account of good practices in on-going initiatives, which have been analysed in detail in Box 4.

The implementation would involve a reinforced version of the approach followed in the case of the Article 185 "European & Developing Countries Clinical Trials Partnership (EDCTP2)", involving the matching of Union and Participating State contributions at programme level. Building on the strong commitment of cash contributions from Participating States to the PRIMA Joint Programme, and on their commitment to increasing the integration of national programmes into transnational activities, the main elements of the implementation and management are described in the following paragraphs.

Delivering innovative, integrated R&I solutions through the PRIMA Joint Programme

The PRIMA Joint Programme will operate on the basis of a jointly formulated strategic R&I agenda comprising (1) operational objectives, (2) R&I gaps identified, and (3) main expected R&I results.

A substantial start has already been made with the formulation of this agenda, as reflected in Table 4.1.

Table 4.1: Main R&I outcome of PRIMA Joint Programme

This strategic joint R&I agenda will be implemented through a succession of Annual Work Programmes.

A clear division of labour will guide the formulation and implementation of these Annual Work Programmes. The EU financial contribution and the national financial contributions will essentially be used for different, but fully complementary, purposes.

The EU financial contribution will be focused mainly on R&I activities at higher TRLs. The EU Financial contribution will be managed exclusively by the DIS and used for transnational calls for proposals deploying Horizon 2020 instruments. However, not all Horizon 2020 instruments will be deployed. The EU financial contribution will be used in a highly focused manner. As Table 4.2 shows, the achievement of a number of operational objectives included in the strategic joint R&I agenda involves R&I activities at higher Technology Readiness Levels. These activities at higher Technology Readiness Levels are of crucial importance for the achievement of the PRIMA objectives since they are the most promising in terms of the quick delivery of the innovative, integrated and easily transferable solutions urgently needed to address the unsustainable management of water provision and food systems in the Mediterranean area. These activities are also the most demanding in financial terms and the most demanding in terms of complementary knowledge requirements and in terms of public-private stakeholder involvement needed for quick valorisation and dissemination of results. This is why there are most effectively and efficiently supported through the EU financial contribution.

Table 4.2: Technological Readiness Levels (TRLs)

Concretely, the EU financial contribution will be mainly used to support pilots and demonstrators. R&I activities at higher Technology Readiness Levels inevitably involve close-to-market pilots and demonstrators that can test adequately real life solutions. The EU financial contribution will therefore be focused on a limited number (5 to 10) of such pilots and demonstrators in strategically identified and carefully assessed areas.

On the other hand, national financial contributions will be focused on R&I activities at lower Technology Readiness Levels, on mobility and training actions, on networking activities, etc.

The Annual Work Plans (AWP) will ensure the consistency between all activities and their orientation towards the achievement of the operational, specific and general objectives of PRIMA. The AWP, which is subject to approval by the Commission, will include:

-Transnational calls for proposals to be funded by the DIS with Union contribution, in accordance with the Horizon 2020 Rules for Participation;

-Activities only funded by the Participating States, and counting for the matching with the Union contribution under certain conditions. In particular, these activities will be included in the AWP after positive external evaluation by international peer review with regard to the objectives of the PRIMA Joint Programme. They will be implemented in compliance with common principles, to be agreed by the Participating States and the Commission. These activities will include joint calls between Participating States' programmes for transnational projects, organised by the DIS (including proposal evaluations).

PRIMA will be implemented with seven Annual Work Plans (2018 – 2024). It is expected that activities, including grant agreements for proposals selected for funding from calls of the last Annual Work Plan will be concluded still in 2024 and implemented until 2027-2028.

The budget of the PRIMA Joint Programme

The development of the joint strategic R&I agenda has been accompanied by a careful financial estimation of the costs involved in its implementation. It has been concluded that at least €400 million is required to implement fully all required R&I activities and reach the operational, specific and general objectives of PRIMA.

The Participating States have already committed to providing at least €200 million in cash. In fact, the current commitment of cash plus in-kind contributions exceeds €300 million of public funding for R&I activities towards achieving the objectives of the PRIMA Joint Programme. The Participating States would also contribute any administrative expenditure beyond the 5% contributed by the Union.

The EU financial contribution would not exceed €200 million. 95% of these funds would be used for operational purposes. As set out above, this EU operational contribution would be used to support a limited number of critical pilots and demonstrators in strategically identified and carefully assessed areas. The Union would also contribute to the administrative expenditure of the PRIMA Joint Programme implementation, with a maximum of 5%.

The governance of the PRIMA Joint Programme

The PRIMA Participating States intend to designate as Implementing Structure a newly created legal entity that will implement the PRIMA Joint Programme, as body governed by private law with a public service mission, under Spanish law that will be hosted in the same premises as the Union for the Mediterranean (UfM) Secretariat. This approach is in line with the one chosen in the context of ongoing Article 185 initiatives and is considered to be appropriate in principle for a potential PRIMA Joint Programme.

The DIS will be subject to an ex-ante assessment (audit) before the European Commission delegates budget implementation tasks to it. PRIMA Participating States have declared that they will provide adequate financial guarantees, as required for indirect management under the Financial Regulation.

The main bodies taking part in the Governance of the PRIMA Joint Programme, and their respective tasks, are described below.

PRIMA General Assembly: The General Assembly will be the decision-making body of the PRIMA Joint Programme and will include all Participating States – whether EU Member States, Horizon 2020 associated third countries, or Southern-Eastern Mediterranean third countries – on an equal footing. The European Commission will have the role of Observer in the PRIMA General Assembly.

PRIMA Chair and Co-Chair: These will come from the EU Member States and the Southern-Eastern Mediterranean third countries and will act as legal representatives of the DIS.

PRIMA Executive Board: Appointed by the PRIMA General Assembly, it will include a selected number of Participating States and the Chair and Co-Chair. It will take decisions on all issues related to the administration of the PRIMA Joint Programme.

PRIMA Scientific Advisory Board: Composed of experts in the scientific fields of the PRIMA Joint Programme, it will provide strategic advice for the PRIMA Joint Programme and will be consulted as part of the decision-making process for the implementation of the Programme. It will provide recommendations for priorities and topics to be addressed in the calls for proposals and other actions of the PRIMA Annual Work Programme (AWP).

PRIMA Secretariat: This will be the Operational Management Unit, as the DIS shall be responsible for the management of the PRIMA Joint Programme.

Ensuring the sound financial management of PRIMA Joint Programme: monitoring and audit mechanisms, protecting the financial interest of the EU

DG RTD has adopted standard supervision arrangements for initiatives pursuant to Article 185 TFEU that will apply equally to the PRIMA Joint Programme. The details of monitoring and audit mechanisms are described in paragraph 7.2 of this report.

Stakeholder support for an Article 185 initiative

The on-line public consultation launched in the frame of the present impact assessment highlighted that 55% of respondents (58% of EU and 35.5% of Non-EU) believe that existing national and EU-level R&I actions in the field of water provisions and food systems in the Mediterranean Area do not adequately address the identified problem. As an alternative to the current scenario, 69.3% suggest to create a permanent dedicated structure (Article 185 TFEU); 29.1% would opt for a Cofund action; 1.6% (all from EU countries) selected "Other policy option" but did not provide any alternative policy option, except for one suggestion to launch a series of small grants, which can be likely associated to a specific implementation of the baseline scenario.

4.4.Stakeholders targeted by the different policy options

Policy Option 0 would not target any specific stakeholder, since it would rely on a bottom-up participation of stakeholders concerned in proposals submitted to Horizon 2020 calls that are relevant for food and water.

Policy Option 1, all ERA-NETs would directly target research funders, and to a lesser extend the ministries that allocate the funding to their programmes. The final target audience is the one that is invited to apply to the calls launched under ERA-NETs, for the relevant programmes of the Mediterranean Countries mostly researchers in public research organisations.

Policy Option 2, the PRIMA Joint Programme based on Article 185 TFEU would allow, for the calls implemented by the DIS, the participation of all relevant R&I actors, in particular industry and other end-users. The activities of the Participating States would target mainly public research organisations. Option 2 would furthermore target the different ministries and other governmental authorities involved on the side of the Participating States.

In Annex 7 a detailed analysis of the actors affected by the three policy options is reported.

No different digital solution subject to assessment has been identified as relevant to the problem at stake.

5.1.Likely economic, social and environmental impacts of each of the short-listed options

Taking account of the identified problem, problem drivers and objectives, this section assesses the retained options of section 4.3 according to their direct and indirect impacts.

In particular, the following most significant impacts have been identified:

Direct impacts of economic nature:

-Increased innovation and research

Integration of national R&I programmes and activities

-Technological development

Delivery of fully piloted and demonstrated, common innovative, integrated solutions for the sustainable management of water provision and food systems

-Growth and investment

Opportunities for agro-food industry and other SMEs and other companies

Indirect impacts of economic nature

-Growth and investment

Large-scale aggregate economic impacts

Indirect impacts of social nature

-Working conditions

Improved livelihoods for farmers

-Public health and safety

Improved nutrition and health

-Social impact in third countries

Political stability and reduced migration

Indirect impacts of environmental nature

-Fostering the efficient use of resources and fighting climate change

Large-scale environmental impacts

5.2.Direct impacts

The identified likely direct impacts of the Article 185 option are of economic nature, according to the impacts category of Tool #16 of the Better Regulation Toolbox. Article 185 option is expected to have relevant positive impacts on innovation and research, technological development and growth and investment, as described in the following paragraphs.

5.2.1.Rapid integration of national R&I programmes and activities in the Mediterranean area

The most immediate direct impact of the Article 185 option, and an impact that no other option can achieve, is the rapid integration of the R&I programmes and activities of the Participating States within the context of a jointly formulated strategic R&I agenda focused on addressing the challenge of unsustainable managed water provision and food systems. This will provide a comprehensive, long-term stable and predictable framework for all relevant stakeholders to collaborate towards the achievement of the operational, specific and general objectives of the PRIMA Joint Programme.

Considering the strategic and specific objectives described in Section 3, and based on Tool #16 of the Better Regulation Toolbox, the direct impacts on the integration of national R&I programmes and activities are summarised in Table 5.1.

Table 5.1: Direct impacts on the integration of national R&I programmes and activities

5.2.2.Efficient and effective delivery of fully piloted and demonstrated, common innovative, integrated solutions for the sustainable management of water provision and food systems

The aforementioned stable, focused, comprehensive framework provided by the Article 185 option, which involves all relevant stakeholders and establishes a clear division of labour between the use of the EU financial contribution (pilots, demonstrators, higher TRL levels) and the use of the national financial contributions (training, networking, lower TRL levels), will ensure the best delivery of the intended scientific and technological outcomes, whether on the input side (higher levels of R&I investment, skill creation) or on the output side (actual development, piloting and demonstration of innovative integrated solutions for the sustainable management of water provision and food systems, uptake of those solutions).

Due to the features of R&I activities linked to the policy options, only Option 2 is likely to have significant impacts in terms of delivery of fully piloted and demonstrated and integrated solutions. Option 1 usually addresses lower TRL projects with very low involvement of industry. Option 0 would require specific and ad-hoc actions under Horizon 2020 Work Programmes that are not likely to achieve the adequate level of integration and involvement of all relevant stakeholders in the Mediterranean area.

5.2.3.Greater opportunities for food industry and other SMEs and other companies

In the Mediterranean area, Micro, Small and Medium Enterprises constitute a key economic and employment driver, accounting for about 70% of the total workforce and 99% of overall enterprises in the region 56 .

Food industry SMEs account for a large share of the total number of SMEs and have much innovation potential. Dedicated statistics show, for instance, that about half of Spanish food SMEs carry out either product or process innovations. The figures for Italy are similar: 54% of all Italian food SMEs carry out product or process innovations, and 28% develop their own R&I activities. According to the PRIMA Expert Group, extrapolating the abovementioned figures to the Mediterranean region would mean that around half of the food SMEs would be able to perform innovation activities. This percentage might be lower in Southern-Eastern Mediterranean countries due to the predominantly micro-character of the local food producing and processing companies, with restricted or no market access. 57

The current position of the fragmented Mediterranean food industry is not competitive, however, in a market dominated by large food multinationals (even if food chains of Mediterranean products are characterised by the strong presence of SMEs in food production and food processing) because of low levels of innovation. Regarding organisational innovations, only part of the food and agricultural SME sector of the Mediterranean will be able to develop and implement it to be competitive (e.g. improved cost structures, better market access, increasing sales figures or profit margins).

All Policy Options are expected to affect the food value chain, farming and related services and water management sectors, from firms in the process industry to retailers.

Option 0 is expected to produce low impacts on SMEs and competitiveness because of the limited capacity of single (and not continued over time) Horizon 2020 actions to produce innovations to be brought to the market.

Option 1 is expected to provide a moderate positive impact on SMEs and competitiveness, because of the larger cooperation among a specific set of Mediterranean Countries and because of the leverage effect on investments they make.

Option 2 is expected to produce much more positive impacts on SMEs and competitiveness due to the long-lasting commitment period and to the common strategy for the adoption of eco-innovation and sustainable business models, together with the set-up of more sustainable marketing chains. The wide scientific and stakeholder base achievable within Option 2, the strong economic commitment, the closeness to regional policy-making and the long timeframe are likely to bring positive impacts on SMEs and competitiveness.

5.3.Indirect impact

The identified likely indirect impacts of the Article 185 option are of economic, social and environmental nature, according to the impacts category of Tool #16 of the Better Regulation Toolbox. Article 185 option is expected to indirectly generate relevant positive impacts on growth and investment, working conditions, public health and safety, social impact in third countries, efficient use of resources and fighting climate change. The expected significance of the identified likely indirect impacts is assessed in the following paragraphs.

5.3.1.Large-scale aggregate economic impacts

To assess the economic impact of the different options it is crucial to address the nexus 'climate change, water availability/variability/predictability, and food systems, and the role the R&I can play within this nexus.

Climate change already has, and will increasingly have in the coming years and decades, large-scale effects on water quality and availability. As a recent World Bank report (2016) argues, the impacts of climate change will be channelled primarily through the water cycle. Water will become scarcer, more variable and less predictable. The World Bank argues that this will have large-scale economic effects. Water-related climate risks cascade through food, energy, urban, and environmental systems. Water is a vital factor of production, so diminishing water supplies can jeopardise growth and economic prospects. Some regions could see their growth rates decline by as much as 6% of GPD by 2050 as a result of water-related losses in agriculture, health, income, and property. As the World Bank argues, the impacts of water mismanagement are felt disproportionately by the poor, who are more likely to rely on rain-fed agriculture to feed their families, live on the most marginal lands, which are more prone to floods, and are most at risk from contaminated water and inadequate sanitation. Changes in water availability and variability can also induce migration and ignite civil conflict according to the World Bank. Where economic growth is impacted by rainfall, episodes of droughts and floods have generated waves of migration and statistical spikes in violence within countries. In a globalised and connected world, such problems are impossible to quarantine. Furthermore, where large inequities prevail, people move from regions of poverty to regions of prosperity, which can lead with increased social tensions.

While ineffective water management policies can exacerbate the adverse growth impacts of climate change, forward-looking policies can go a long way towards neutralising them, according to the World Bank. In the Middle East, for instance, business-as-usual water management policies can lead to GDP being smaller by 14% by 2050 while efficient water management policies can reduce the effect to minus 6.02%. And in the Sahel, the business-as-usual scenario leads to minus 11.7% of GDP while good policies can reduce it to minus 0.82%.

In the Mediterranean region, water supply and food supply are inter-related. Irrigation accounts for 70% of total water use in the region and in some Southern and Eastern Mediterranean countries even for 80%. As a consequence of climate change, in order to sustain agriculture and meet the growing need for food (by 2050, the population will exceed the 600 millions), the Mediterranean area as a whole may face an increase of between 4% and 18% in gross irrigation requirements (if irrigation systems and conveyance are not improved). At present, the Mediterranean region could save 35% of water by implementing more efficient irrigation and conveyance systems.

According to the McKinsey report "Pursuing the global opportunity in food and agribusiness, Chemicals & Agriculture June 2015", fruits and vegetables in the Middle East and North Africa are one of the 24 most attractive global hotspots for investors in the period 2011-2020.

R&I are absolutely key for bringing about better water management policies and thus have, against the abovementioned background, huge potential economic and socio-political impacts. The aforementioned World Bank report explicitly calls attention to the opportunities offered by advancing technologies for water supply expansion and water resource recovery and calls for greater research inter alia to determine the commercial viability and opportunities to scale up new technologies. It also calls for carefully researching investments in technologies to reduce the impact of extremes, variability and uncertainty.

In general terms, the returns on total R&D expenditure are high. For instance, a 0.1 percentage point increase in R&D could boost output per capita growth by some 0.3–0.4%. The returns specifically on public R&D expenditure are also high. For instance, the rate of return on publicly funded R&D usually exceeds 30% while each extra 1% in public R&D generates an extra 0.17% in productivity growth. The returns specifically on private R&D are equally high. Firms' returns on their own investment in research usually range from 20% to 30% while societal returns on firms’ investment in research usually range from 30% to 40%. Each extra 1% in business R&D also generates an extra 0.13% in productivity growth.

These overall figures are confirmed by empirical evidence on returns to water and agricultural R&I. For instance, a recent study on the rates of return to water management research estimated returns between 11% and 20% per year. A recent study re-examining the reported rates of return to food and agricultural research and development estimated a median of 9.8% per year and a mean of 13.6% per year.

According to the PRIMA Expert Group, closing the gap between supply and demand by deploying water productivity improvements across regions and sectors around the world could cost about $50 billion to $60 billion annually over the next two decades. Private-sector companies will account for about half of this spending. Many of these investments yield positive returns in just three years.

R&I make their greatest contribution if governments support it. This is because of the existence of market failures. Firms often find it difficult to finance risky R&D projects, especially during recessions. R&D investment also has beneficial effects for the wider economy as a result of knowledge spill-overs but firms do not take these effects into account in their decisions. The IMF (2016) therefore calls for promoting private R&D by providing subsidies and tax incentives.

The large-scale returns on public support for R&I are demonstrated by evidence from the ex-post evaluation of the FP7. According to the High Level Expert Group (HLEG) that carried out the ex-post evaluation of FP7, the programme will directly create 130,000 research jobs over a period of 10 years and indirectly 160,000 additional jobs over 25 years. The HLEG also estimated an indirect economic effect of €500 billion over 25 years, or approximately €20 billion annually in additional GDP. According to the external evaluation of the HLEG, through short-term leverage and long-term multiplier effects, each euro spent by FP7 generated approximately €11 of estimated direct and indirect economic effects through innovations, new technologies and products.

In the specific case of the Mediterranean area, strong efforts are needed in product, processing and marketing innovation to succeed in competitive food markets (both locally and internationally). Many companies, and mostly SMEs, are developing products and services that can help business customers raise their water productivity. In agriculture, improved irrigation technologies and plant-management techniques are yielding “more crops per drop”.

Developing innovative solutions for water provision and food systems in the Mediterranean could also contribute to generating employment opportunities. A number of EU Mediterranean countries show high unemployment rates, while non-EU Mediterranean countries offer unattractive, unspecialised jobs incentivising migrations. The implementation of innovations in (traditional) food products can contribute to job opportunities. Product innovation in food SMEs is positively linked to employment, and process innovations do not necessarily reduce employment in the food industry. Additional market opportunities will be created for agricultural producers of raw materials for traditional food products.

Enhanced investment in R&I are likely to achieve the aforementioned broad economic indirect impacts if the effects of a more sustainable management of water provision and food systems would be beneficial also to other sectors, e.g. more availability of water in urban area and non-food industrial sector.

Policy Option 0 and Option 1 have a limited capability of achieving an appropriate scale of resources as to have cross-sectoral impacts thorough the Mediterranean area, for their low level of integration and short time frame.

Policy Option 2, due to the long time-frames associated with innovation development and adoption and the integrated approach, has the capacity to address regional strategies and policies to transfer positive impacts in the broader regional economy.

5.3.2.Improved livelihoods for farmers

Farmers would be amongst the most immediate beneficiaries of improved water provision and food systems. Productivity enhancements increasing farmers' resilience in the face of climate change pressures can alleviate poverty, create jobs and lower food prices 58 . The analysis suggests that while all policy options can be expected to have some impacts (in proportion to the resources invested), Option 2 is likely to be the most fit for purpose due to its wide scope, mobilisation of resources and integrated nature able to stimulate co-fertilisation among Mediterranean countries and economic sectors. In addition, R&I on sustainable agricultural practices will provide incentives for young people to invest in becoming farmers 59 , 60 . Large, long-term R&I programmes could develop or enhance instruments to attract young farmers through: a) education and increased awareness with regard to sustainable agriculture practices; b) capacity-building with regard to implementation of relevant education; and 3) financial schemes enabling access to land and credit for relevant investments and insurance coverage.

A new generation of educated young farmers, able to use advanced technologies and innovation-ready, will require an array of new services in rural areas. Young farmers also have a longer-term stake in their farmland and need to be able to rely on its continued productivity for decades to come, and then for future generations, too. Young farmers are particularly conscious of soil health and sustainability, and therefore it is crucial that they are supported by R&I programmes to protect fertile but fragile Mediterranean natural resources (as well as the services these soils provide).

5.3.3.Improved nutrition and health for the people of the Mediterranean area

The activities identified by the PRIMA initiative are likely to have positive indirect impacts with respect to achieving the SDGs. In particular, developing and implementing innovative solutions for sustainable management would likely lead to reduced unsustainable water use and agricultural practices, thus significantly contributing to SDG 2 and 6. The analysis suggests that Option 2 and, to a lesser extent, Option 1 would both be aligned with and complement high-level EU goals related to the attainment of the Sustainable Development Goals.

Sustainably managed water provision and food systems will not only improve the livelihoods of farmers and create large-scale economic opportunities in the food industry and other sectors, they will also directly improve the nutrition and health status of the people of the Mediterranean area.

According to a study by the World Bank (2016) 61 , there is growing evidence that water shocks, due water scarcity and variability, and climate change, may have much longer-term effects. This is particularly true when water shocks cause nutritional deficits or health impacts in young children, or income shocks which prevent families from investing in their children.

The establishment of clear links between food, nutrition and health in the Mediterranean is an extremely complex issue requiring a very long-term time perspective, that can exceed even the time frame of all three policy options. It would anyway be possible to influence the diet of the population in the Mediterranean region towards health-promoting nutrition and reorganising the agro-food value chain accordingly. This approach requires multidisciplinarity (agriculture, food technology, nutrition science, social sciences, economics, psychology, sociology, IT experts), and the involvement of a wide range of societal and value chain actors. Additionally a significant increase in Mediterranean scientific knowledge is required in the areas of food, nutrition and health and the interactions between them.

5.3.4.Greater political stability and reduced internal and external migration

It is now widely recognised that climate changes, increased frequency and severity of droughts and storms, changes in rainfall patterns and losses of agricultural productivity are likely to increase migration in the coming decades. Building resilience to the more extreme precipitation events of climate change will become a more urgent priority especially in rainfall vulnerable areas. Migration within and between countries tends to increase in areas facing water shocks (World Bank 2016).

A R&I strategy addressing water provision and food systems by deploying innovative solutions to tackle the adverse effects of climate change in the Mediterranean area can have positive impact on nutrition and health status for the people of the Mediterranean region, and more economic opportunities for them, as explained in the above paragraphs. These improved conditions will contribute to greater political stability, which in return will reduce internal and external migration. In fact, water scarcity and unsustainable farming can destroy agriculture, causing many farm families to migrate to cities. In Sub-Saharan Africa a 1 percent reduction in precipitation is associated with a 0.59 percent increase in the urbanization rate 62 .

The 2030 Agenda for Sustainable Development included migration in the SDG #10 on reduced inequalities within and between countries. PRIMA is likely to contribute to SDG #10 reduce the transaction costs of migrant remittances and eliminate remittance corridors among Mediterranean countries.

The analysis suggests that Option 2 is likely to be the only one that can achieve significant impact in this regard, thanks to its wide scope, mobilisation of resources and integrated nature.

5.3.5.Large-scale environmental impacts

All Options are likely to have positive indirect impacts - though clearly with different intensity - on the environment in terms of improving the resource-efficient management of water provision and food systems.

The three options would, in fact, support R&I activities aiming at the development of solutions able to address the wide societal challenges of "Climate action, Environment, Resource Efficiency and Raw Materials" and "Food security, sustainable agriculture and forestry, marine, maritime and inland water research, and the bioeconomy". Under Option 0 and Option 1, the focus of the topics of future calls for proposal would depend on the Work Programmes of Horizon 2020 and future Framework Programmes. Water provision and food systems represent, therefore, potential topics that could be addressed in specific calls and/or topics.

Under Option 2, the increasing investment in and cooperation on R&I with a long term perspective, in line with a common defined strategic R&I agenda, focusing on water provision and food systems would create the appropriate conditions to develop and implement resource-efficient and cost-effective solutions in the Mediterranean area. If successful, these solutions would bring benefits to the environment, reducing resource use and waste generation.

In particular, positive environmental effects will be achieved more effectively if innovative solutions could be developed and demonstrated in the frame of an increased collaboration and exchange of knowledge and expertise among Mediterranean countries, which are facing the same challenges due to the climate change, increasing population and social instability.

As illustrated in the previous sections, the PRIMA Joint Programme based on Article 185 could make use of the Union contribution to fund large-scale demonstration projects by transnational calls, thus reducing the time needed to implement innovative solutions.

Based on the analysis of the PRIMA Expert Group, below are reported examples of areas where Option 2 could help achieving more effectively large-scale environmental impacts:

-Improved water conservation by developing: (i) novel plant varieties for irrigated and dry farming conditions; (ii) innovative irrigation technologies and user-centred water conservation processes; efficient water allocation between different economic sectors; (iii) user-centred water-saving processes and programmes; (iv) improved water governance, management and coherence between agriculture, water and energy policies;

-Sustainable farming practices by implementing innovative solutions for: (i) reducing land conversion and habitat loss, (ii) improving water-use efficiency for irrigation, (iii) reducing soil erosion and degradation; (iv) producing and using safer fertilisers; (v) increasing productivity of local crops and farm animals;

-Recovery of water and nutrients from wastewater for agricultural use by developing: (i) new site-specific policies, (ii) user acceptance strategies, (iii) and innovative wastewater treatment and reuse technologies;

-Water desalination by developing : (i) technological breakthroughs in energy consumption and desalinated water quality, (ii) brine disposal, (iii) integration into energy networks and local water management strategies, (iv) coordinated strategies for water reuse solutions and desalination as to close water loops;

Implementing integrated innovative solutions in these areas can result in reducing greenhouse gases (GHG) emissions, harvest shocks due to droughts, heat waves and floods, and build resilience and adaptation capacity in the Mediterranean area.

5.4.Budgetary impacts

As it regards the impact on the costs and budgetary implications of the different policy options, a detailed analysis is reported in Table 5.2.

Table 5.2: Budgetary and financial impacts, including risks

Concerning the financial and operational risks associated with the different options the assessments is based on the requirements and specificities in place described below.

For Option 0 (baseline scenario) the operational and financial risks are comparable to those that apply to Horizon 2020 funding of indirect actions in general. Risks of non-recovery are covered by the Participant Guarantee Fund. Beneficiaries report on the basis of standard Horizon 2020 reporting, including where appropriate provision of certificates of financial statements. Supervision of the actions is done by the Commission services or its Executive Agencies.

For Option 1 (ERA-NET Cofund actions) the financial risks are low. The principle is that the comparable Union contribution is reimbursing part (up to 33%) of the public funding (financial support to third parties) that is paid by national programmes to beneficiaries participating in successful projects resulting from the transnational calls. The ERA-NET participants report on the basis of standard Horizon 2020 reporting, including provision of certificates of financial statements concerning the funding they have paid according to national funding rules. There are certain operational risks associated with it, typically that national commitments are not as high as expected when publishing the topic for the ERA-NET in the Work Programme, or the transnational proposals selected are not fully consuming the call budget.

In case of the Option 2 (PRIMA Joint Programme based on Article 185 TFEU) the management mode is different. Article 185 uses the indirect management of Union funds by the DIS. Before the delegation of management and transfer of funds the DIS will be subject to an ex-ante assessment in accordance with the requirements set out in Article 61 of the Financial Regulation, in order to assess its capacity to implement the programme, including receiving, allocating and monitoring the Union's financial contribution in the framework of indirect management of the Union budget. The assessment is usually carried out by using a Framework Contractor to the European Commission (DG BUDG or DG RTD) for audit services, using terms of reference developed and agreed within the DG. The ex-ante assessment leads to a conclusion accompanied, where appropriate, by a number of recommendations, prioritised according to the nature and importance of the audit findings, that need to be followed up by the DIS (action plan) in order to ensure full compliance with the rules.

Once the DIS has been positively assessed, financial guarantees provided and the delegation agreement with the Commission signed, the implementation of the Joint Programme can start. The DIS provides comprehensive annual reporting including auditor opinions and a management declaration. The DIS is furthermore responsible for the ex-ante control of expenditure of all indirect actions funded by the DIS. The financial risk for the Union is low, as the risk of non-recovery is covered by the financial guarantees that the Participating States have to provide will have to provide in due time and at the latest before the signature of the delegation agreement. There are minor operational risks that can be identified, in particular concerning the fully fledged start of programme implementation. This can be mitigated by with annual budgets starting low and increasing over time.

It has to be pointed out that the Participating States have requested flexibility concerning the central management of national contributions. This has been taken into account in the design of the Option 2 by using a two-tier approach:

Tier 1: Transnational open and competitive calls organised and funded by the DIS and resulting in financial support mainly in the form of grants to beneficiaries in indirect actions managed by the DIS, including R&I activities, e.g. demonstrators, pilot plants, testing, pre-commercial deployment, and research activities addressing the complete range of TRLs; as well as Dissemination and outreach activities to promote PRIMA and maximise its impacts.

Tier 2: Activities funded by the Participating States or their national funding bodies without Union contribution.

This approach allows flexibility for Participating States in deciding which national contributions are managed centrally by the DIS, and which contributions remain at national level, but count for the matching with the Union contribution at programme level under the conditions set out in the basic act, and are determined in accordance with the usual accounting practices and accounting standards and to the applicable International Accounting Standards / International Financial Reporting Standards.

In addition, the above described approach for the implementation of the Option 2 (PRIMA Joint Programme based on an Article 185) requires only limited derogations from the Horizon 2020 Rules for Participation. To ensure balanced core participation in indirect actions under a north-south configuration, as a derogation from point (b) of Article 9(1) of Regulation (EU) No 1290/2013, the minimum number of participants should be three legal entities established in three different Participating States of which one is established in a Member State or in a country associated to Horizon 2020, and one is established in a third country, associated or not to Horizon 2020. Derogation from Article 9(3) of Regulation (EU) No 1290/2013 is necessary to ensure that the minimum eligibility conditions for participation in indirect actions are not discriminatory for entities established in third countries participating in the PRIMA Joint Programme as Participating States. Derogations from Article 12 of Regulation (EU) No 1290/2013 are necessary to allow broadening cooperation through joint calls launched by DIS with legal entities other than third countries and international organisations.

Commitments and their fulfilments

The Participating States and the Union make up-front commitments to contribute to PRIMA. The commitment from the Union of €200 million will be mainly used to finance indirect actions resulting from calls launched by the DIS. This will cover a series of seven Annual Work Plans (2018 – 2024). The Participating States will at the same time describe in the Annual Work Plan their activities funded from national programmes and the respective budgets allocated to these activities.

The commitment of the Union contribution to each Annual Work Plan will not exceed the commitment of the Participating States to it. This ensures that at the level of commitments there is a balance with at least matching contributions of Union funding and Participating States. This allows an automatic mechanism to reduce the Union commitment if Participating States fail to commit as expected.

The fulfilment of the commitments (actual contribution) can be verified in two steps:

1.Indicatively at the level of implementation of activities:

For the Union: the amount of funding for e.g. the respective Grant Agreements signed by the DIS;

For the Participating States: the amount of funding actually committed at the level of implemented individual activities (national grant agreements and other in-kind contributions).

2.Concretely at the level of the expenditure after end of implementation of the activities:

For the Union: the sum of the expenditure incurred by the DIS for the implementation of the entrusted tasks accepted by the Commission and of the remuneration for their implementation;

For the Participating States: the sum of expenditure incurred by Participating States or their national funding bodies and accepted by the Commission.

The annual reporting of the DIS will cover both strands. This allows close monitoring by the Commission services and facilitates taking corrective measures, if necessary, in particular reducing Union commitments to individual Annual Work Plans if the implementation of the activities by Participating States does not maintain the necessary level of commitment to match the one of the Union.

5.5.Affected actors, measures to comply with requirements, and potential obstacles

The main affected actors, compliance requirements for beneficiaries and Participating States' authorities, and potential obstacles are reported in the Table 5.3.

Table 5.3: Main affected actors, compliance requirements for beneficiaries and Participating States' authorities, and potential obstacles

In the case of Option 2, it is important to distinguish between the compliance requirements on Participating States that apply collectively at the level of the programme, and those that are relevant for the individual Participating State. In the approach for the PRIMA Joint Programme there is a clear separation between the activities funded by the Union contribution and implemented by the DIS, and those that are funded by national programmes. Therefore there is no requirement for compliance for specific implementation capacities at national level. The Participating States collectively set-up the DIS for the implementation of the PRIMA Joint Programme, including receiving, allocating and monitoring of funding, and establish the PRIMA governance structure. The compliance with the financial regulation and the Rules for Participation of Horizon 2020 is required for the Participating States to the extent they do not implement activities funded by them. Furthermore, the basic act allows flexibility for the Participating States to contribute either financially through the PRIMA DIS to activities funded with Union contribution, thus achieving a high degree of financial integration, or in kind to activities only funded by them without Union contribution.

Participating State have to provide, inter alia, financial guarantees, contribute via the national activities to the programme in accordance with the requirements of the basic act, determine costs of their activities in accordance with the usual accounting practices and accounting standards and to the applicable International Accounting Standards / International Financial Reporting Standards. Requirements incumbent on the Participating States in general can be fulfilled by all Participating States, as most of their capabilities are already in place through implementation of national activities under their national programmes.

5.5.1.Assessment of capability and expected contribution of third countries not associated to Horizon 2020 in relation to the conditions to be met by Participating States in PRIMA under Option 2 (Article 185 TFEU)

The compliance requirements on Participating States set out in Table 5.3 shall apply equally to Member States and countries associated to Horizon 2020 as well as to third countries participating in the PRIMA Joint Programme. The only notable distinction is that the first two groups of countries (Member States and countries associated to Horizon 2020) would be bound by the Decision of the European Parliament and of the Council on the participation of the Union in an Article 185, while non-associated third countries would accede to an Article 185 regime through bilateral international agreements with the EU. In order to ensure participation of all countries on an equal footing international agreements would need to mirror the provisions in the aforementioned Decision of the European Parliament and of the Council establishing the Article 185.

Countries associated to Horizon 2020 enjoy equal status as Member States under Horizon 2020, having met the conditions in Article 7 of the Regulation establishing Horizon 2020. This refers to the whole of Horizon 2020 beyond joint programming initiatives such as PRIMA.

As indicated in the introduction of this Impact Assessment Report, the non-associated Participating States (i.e. having committed to contributing resources) to PRIMA Joint Programme are Egypt, Lebanon and Morocco.

Egypt

State contribution to PRIMA

€15 million cash contribution (corresponding to 7.5% of total cash contribution from Participating States)

€3 million in-kind

Nature of research and innovation relationship with the EU and track record of cooperation

The overall framework for R&I cooperation with the EU is provided by the EU-Egypt Association Agreement (OJ L304, 30/09/2004, p. 39), in which Article 43 addresses 'Scientific and technological cooperation' on access Union R&D programmes;

The EU and Egypt have signed a science and technology agreement (OJ L182, 13/07/2005, p. 12) which is in force since 2008;

Legal entities from Egypt are already eligible to receive EU funding under Horizon 2020.

Participation record in EU Research Framework Programmes:

-2007-2013 (FP7): Total participant costs: €19 million; EU contribution: €15 million drawn in accordance with research framework programme rules.

-2014-on-going (Horizon 2020): Total participant costs: €2.3 million; EU contribution: €1.6 million drawn in accordance with research framework programme rules.

Record of administrative and financial management in cooperation with the EU, and management of EU funding.

See track record in the participation in EU Research Framework Programmes above.

Proven experience of funding agencies in the participation in joint programming actions (ERA-NET type projects) and a successful track record of fulfilment of financial commitments from national budgets combined to EU funding.

-ERANETMED: Egypt contributed national funds amounting to €1.5 million 63 in Call 1 (2014), which has now been allocated to selected projects on a competitive basis. A further national funding amounting to €1.25 million has been committed to Call 2 (2016), which has attracted 174 proposals.

-ARIMNet and ARIMNet2: Egypt committed €0.5 million of national funding to Call 2 (2016).

Under the ENPI, Egypt has successfully completed phase 1 of the Research, Development and Innovation programme, which had a financial package of €11 million, with the Ministry of Scientific Research in the lead. The success of this programme has led to a second phase, which started in 2011, for which the EU has committed budget of €20 million. Most recently, Egypt awarded 26 projects under RDI in January 2015, with a total EU Contribution of €7.5 million.

In terms of broad EU-Egypt relations, bilateral programmes under the EU Neighbourhood policy (ENI funding) see transfers from the EU budget toward Egypt amounting to above €100 million annually (2014: €115 million, 2015: €105 million), which are allocated to specific national projects and/or direct contributions to the national budget.

Egypt’s STDF also has joint research funds with Germany, Italy France, Japan, South Korea, Jordan, Russia and USA (U.-Egypt STI Joint Fund amounts to $4 million per country/year). Given the availability of budget and the openness of the STDF to co-fund R&I international cooperation (9% of the STDF budget is dedicated to joint funds with other countries), it is expected that Egypt will remain committed to international cooperation with the EU.

Related R&I actions and national capacity

The governance structure of the national STI system rests on the Ministry of Higher Education and Scientific Research, the Higher Council of Science and Technology, which sets research strategy, the ASRT, which is in charge of planning and programming, and the funding agency STDF. This institutional setup is supported by the network of research centres and universities. A key challenge to the country is to step up private sector R&D to lower dependence on public research funding.

Egypt has Science and Technology Agreements with many countries, such as the USA, China and Japan, and almost all EU MS. In it national research funding policy, it maintains a highly international profile and mutual openness by dedicating 9% of the programme budget to joint programmes with international partners adopting primarily a matching fund approach.

Water scarcity is a key issue in Egypt, which relies on the Nile for 95% of renewable water resources, while agricultural production (81% of water usage) depends heavily on irrigation. The Egyptian Water Resources Vision 2050 includes research as a major driver in the development and management of water resources, conservation of water quality as well as adaptation to expected impacts of climate change. Egypt has succeeded in participating for the first time in JPI related to water "WaterWorks2015" under Horizon 2020 WP 2014-2015, where Egypt will be contributing €0.65 million to the project.

Public research in water has a dedicated research centre (National Water Research Centre – NWRC), which is supported by 12 research institutes that focus on water management, drainage, water resources, Nile research, hydraulics, channel maintenance, groundwater, construction, mechanical and electrical research, survey research, coastal research and environmental and climate research.

Lebanon

State contribution to PRIMA

€4 million cash contribution (corresponding to 4% of total cash contribution from Participating States)

€2 million in-kind

Nature of research and innovation relationship with the EU and track record of cooperation

The overall framework for R&I cooperation with the EU is provided by the EU-Lebanon Association Agreement (OJ L143, 30/05/2006, p. 2), in which Article 44 governs 'Scientific, technical and technological cooperation' on access Union R&I programmes and to study means for Lebanon to participate in European Framework Programmes for Research.

Legal entities from Lebanon are already eligible to EU funding under Horizon 2020.

Participation record in EU Research Framework Programmes:

-2007-2013 (FP7): Total participant costs: €3.3 million; EU contribution: €0.8 million drawn in accordance with research framework programme rules

-2014-on-going (Horizon 2020): Total participant costs: €2.8 million; EU contribution: €0.8 million drawn in accordance with research framework programme rules.

Record of administrative and financial management in cooperation with the EU, and management of EU funding

See track record in the participation in EU Research Framework Programmes above.

Proven experience of funding agencies in the participation in joint programming actions (ERA-NET type projects) and a successful track record of fulfilment of financial commitments from national budgets combined to EU funding.

-ERANETMED: Lebanon contributed national funds amounting to €0.2 million 64 in Call 1 (2014). A further national funding amounting to €0.4 million has been committed to Call 2 (2016).

Under the ENPI, Lebanon receives approximately €50 million annually; partly disbursed through dedicated programmes managed by Lebanese authorities and partly directly injected into the national budget.

Related R&I actions and national capacity

National STI policy is driven and monitored by the National Council for Scientific Research (CNRS), which established a first national policy in 1966. While research funding is small in absolute terms 65 , 80% of the budget is dedicated to funding the activities of research centres and programmes. The national STI system is also supported by a network of 41 accredited universities, of which some are internationally recognized research universities 66 .

Lebanon also has bilateral STI agreements with France and Italy as well as joint Lebanese-French and Lebanese-Syrian research grant programmes.

Among its public research capabilities, Lebanon has a National Centre for Remote Sensing (CRS), which has carried out several projects using remote sensing and GIS techniques in applications that are highly relevant to PRIMA such as environmental surveys on land degradation and desertification risks, watershed mapping, forestry management, integrated coastal zone management and natural hazards. CRS has also set up a detailed soil map of Lebanon for the purposes of environmental monitoring. The CRS also collaborates with the French Centre Nationale de la Recherche Scientifique in this field.

Morocco

State contribution to PRIMA

€20 million cash contribution (corresponding to 10% of total contribution from Participating States)

€20 million in-kind

Nature of research and innovation relationship with the EU and track record of cooperation:

The overall framework for research and innovation cooperation with the EU is provided by the EU-Morocco Association Agreement (OJ L70, 18/03/2000, p. 2), in which Article 45 'Regional cooperation': d) addresses how 'research in science and technology' is to be fostered with a regional impact involving third countries'.

The EU and Morocco have signed a science and technology agreement (OJ L37, 10/02/2004, p. 9) which is in force since 2005.

Legal Entities from Morocco are already eligible to EU funding under Horizon 2020.

Participation record in EU Research Framework Programmes:

-2007-2013 (FP7): Total participant costs: €17.2 million; EU contribution: €13.6 million drawn in accordance with research framework programme rules.

-2014-on-going (Horizon 2020): Total participant costs: €3.3 million; EU contribution: €3.0 million drawn in accordance with research framework programme rules.

Record of administrative and financial management in cooperation with the EU, and management of EU funding.

See track record in the participation in EU Research Framework Programmes above.

Proven experience of funding agencies in the participation in joint programming actions (ERA-NET type projects) and a successful track record of fulfilment of financial commitments from national budgets combined to EU funding.

-ERANETMED: Morocco contributed national funds amounting to €1 million 67 in Call 1 (2014). A further national funding amounting to €0.3 million has been committed to Call 2 (2016).

-ARIMNet and ARIMNet2: Morocco committed €0.5 million of national funding to Call 2 (2016).

Under the EU Neighbourhood policy Morocco benefits from a privileged partnership with the EU. Bilateral financial transfers during the period from 2014 to 2017 to range from €728 to €890 million, which are allocated to specific national projects and/or direct contributions to the national budget.

Nature of research and innovation relationship with the EU and track record of cooperation

The national STI system is steered by the Ministry responsible for scientific research (MENESFCRS), together with the Centre National pour la Recherche Scientifique et Technique (CNRST), which is primarily responsible for the implementation of national programmes. Meanwhile L'Association Marocaine pour la Recherche-Développement (R&D Maroc) deals with innovation policy and private sector research.

Bilateral cooperation is strongest with France, whereby 54% of co-publications with researchers outside Morocco occur with France, of which approximately two thirds are with the French Centre Nationale de la Recherche Scientifique 68

Research cooperation in the area of water management includes French-Moroccan research programme Sudmed targeting water resources in the region of Marrakech Tensift-El Haouz. Bilateral S&T agreements are also in place with Belgium, Portugal, Spain, Turkey and USA.

Water management is a key priority for R&I efforts in Morocco given a semi-arid climate and heavy recourse to irrigation for agricultural purposes. Agricultural production is an important contributor to Moroccan economy, accounting for 10.5% of exports and 65% of revenues in rural areas and is highly volatile and susceptible to climatic fluctuations 69 .

The International Institute for Water and Sanitation (IEA) was set up in 2008 in Morocco with a regional (MENA) focus. It activities include research on water technologies and practices. A notable project undertaken with the Hassan II Institute of Agronomy and Veterinarian Studies studied crop yields and water productivity 70 .

5.6.Impacts likely to change over time

Impacts in Option 0 are not expected to change over time.

Option 1 would contribute in a ad-hoc way to the short-term coordination of Mediterranean R&I systems. The implementation of transnational research projects based on an international peer review evaluation process should contribute to increasing the quality of research, increasing the level of funding for challenges which no country can tackle alone and avoiding the duplication of research funding.

In Option 2, which implies long-term integration and substantial resources commitments, a centralised grant management by the DIS would lead to simplification in the medium and long term. Effective co-ordination of Mediterranean R&I capacities, solid public and private investment in R&I in the field of water provision and food systems, and third countries and international relations would increase.

A similar situation could be envisaged regarding knowledge transfer and skill creation among Public Institutions and researchers and innovators.

With regards to the scope of the initiative, Article 185 initiatives could be enlarged to other countries European and third countries, and therefore, expected impacts may increase.

In a mid to long-term perspective, achieving results of the R&I activities are expected to lead to a stable Mediterranean R&I capacity likely to entail additional positive social impacts, impacts on competitiveness (e.g. food industry and water management solutions for small agricultural producers) and environmental impacts.

In consideration of the on-going activities reported in Section 1, in the previous paragraph 5.5.1, more extensively in the Annexes 4, 5 and 8, and in the next sections on the comparison of the policy options, the Prima Joint Programme based on Article 185 TFEU is not likely to have a crowding out effects of other existing or planned bi- or multilateral programmes. There are, in fact, no specific programmes overlapping with the objectives of the PRIMA Joint Programme. The existing or planned bi- or multilateral programmes, that are partially addressing either water or food, are, in most of the cases, taking place between the countries that have also committed to the participation to the PRIMA Joint Programme, with limited or no budget attached. In addition, many of the ERA-NET actions are going to be terminated by the end of 2016. Therefore, in consideration also of the approach for the implementation of the PRIMA initiative, it is reasonable to assume that there will be no discontinuity in such bi- or multilateral programme, as many activities will still be managed at national level. On the contrary, PRIMA will likely to contribute to ongoing initiatives, resulting in a more efficient and effective expenditure of public funding for R&I, thanks to a common, integrated and long term strategic agenda.

6.1.Compare the options

Taking into account the likely impacts of the options and the assessment presented in Section 5, the different policy options have been compared against each other using the baseline scenario as the reference and applying the following criteria:

Effectiveness: the proposed options should be effective at improving the R&I framework in Mediterranean Area in the fields of water provision and food systems.

Efficiency: the proposed options should achieve the identified main likely impacts with the greatest benefit/cost ratio.

Consistency with other policies: the proposed options should be coherent with other European and National R&I policies and programmes and with coordination and cooperation policies at international level.

Based on these three criteria, comparisons of the policy options have been carried out against the specific objectives and analysed main impacts, and are reported in Table 6.1 and Table 6.2 respectively.

The Table 6.3 is intended to provide a summary of the option comparison assessment.

Table 6.1: Comparison of impact of the options on Objectives

Table 6.2: Comparison of impact of the options on economic, social, environmental and other impacts

0 = Neutral, + = minor positive impact, + + = Moderate positive impacts, + + + = Significant positive impacts

Table 6.3: Comparative effectiveness, efficiency and synergy of the policy options

6.2.Highlight the trade-offs and synergies associated with each option

There is no significant trade-offs between the likely impacts of any of the Policy Options and desirable outputs of other EU policies. There are a number of potential synergies highlighted in Annex 8, regarding JPIs (on Water, FACCE, Healthy diet and Oceans), MIRA, MEDSPRING and ERA-NETs (ERANETMED, Foresterra, ARIMNet and ARIMNet2). Option 2 presents the highest potential to align national and EU R&I agendas, and to address overlapping and duplication in most relevant areas. Option 2 and, to a lesser extent, Option 1 would both be aligned with and complement high-level EU goals related to the achievement of the Sustainable Development Goals and improved North-South relations.

Concerning risks of simultaneity or potential financial overlapping with other relevant initiatives on R&I on water provision and food systems in the Mediterranean, it has to be considered that:

The first joint calls under Option 2 would be launched in 2018;

INCO-NETs (MEDSPRING) and ERA-NETs (ERANETMED and ARIMNet2) will be finished by the end of 2017;

Joint Programming Initiatives, FACCE JPI and Water JPI will be active beyond 2017, focussing on pan European societal challenges (not specifically on water provision and food systems in the Mediterranean), and they do not imply any predefined funding/financial instrument at conceptual level.

The conceptual approach of JPIs stands for Strategic Research Agendas; therefore, synergies could be expected at the level of: (i) coordinated visibility and advocacy inside and outside Europe, (ii) mapping capacities, (iii) exploring interfaces, and (iv) joint activities.

The European Innovation Partnerships stands for Strategic Innovation Agendas, and do not have any linked funding/financial instrument either. Therefore, the approach on synergies regarding EIP on water and on EIP on agriculture is the same as described above for the JPIs.

6.3.The likely uncertainty in the key findings and conclusions and how these might affect the choice of preferred option

The likely uncertainty refers to the success to agree and implement, on time, common financial and administrative arrangements within EU and third countries in Option 2. It is not possible, however, to discriminate between EU Member States and third countries in an Article 185 initiative considering that participation to the Horizon 2020 Framework Programme is open to all Mediterranean countries. The participation of the EU to Article 185 initiatives provides a number of inherent safeguards with respect to the use of the EU budget, namely that the EU contribution is subject to financial commitments by participating states being honoured.

Options 0 and 1 do not imply the set-up of the DIS, the agreement on a feasible and integrated grant management, or international agreements there is therefore no significant implementation uncertainty. In terms of financing and programming, however, Option 0 and 1 cannot rely on a long terms strategic agenda, as budget and topic addressing water provision and food systems in the Mediterranean area are subject to the adoption of the (bi)annual Work Programme for Horizon 2020 and future Framework programmes.

6.4.Preferred policy option

According to the outcome of the stakeholder consultation activities carried out in the context of the present Impact Assessment, Option 2 is considered to represent the optimal policy option. According to the Expert Group, as stated in its report, Option 2 is also considered representing the most favourable policy option.

From a broad policy perspective, the option to prioritize must be commensurate with the importance of the problem to tackle and its acuteness, the need to address it in earnest and without delay, and the ambition and commitment of the participants to devote sufficient resources and collective attention to ensure a successful outcome. In this perspective, due to a potentially higher level of effectiveness for achieving the identified objectives, a better efficiency of implementation, and more coherence with other policies and programmes, Option 2 appears the most adequate, although not exempt from a number of risks which would have to be properly mitigated.

An initiative based on Article 185 TFEU appears as the most efficient and effective mode of intervention to achieve the strategic and specific objectives. In particular, the use of an Article 185 TFEU initiative is likely to have high leverage effect on national public funds in a stable, long-term and integrated manner, as demonstrated by previous and on-going initiatives (see Box 3), thus contributing to:

delivering the desired structuring effect on and integration of national R&I policies and programmes;

enabling the formulation of stable, long-term, common strategic research agendas with adequate scale and scope of actions;

supporting the alignment of national R&I programmes;

enabling the involvement of partner countries on an equal footing;

enabling the structural involvement of different types of stakeholders, both public and private, bringing together and leveraging their respective knowledge and financial resources;

strengthening R&I capabilities in a lasting manner.

An Article 185 TFEU would enable the development of a more equal relationship with neighbourhood countries whereby the EU and the countries concerned will determine together their mutual priorities in a tailored manner, thus entering into a new phase of cooperation, in line with the priorities of the European Neighbourhood Policy.

Article 185 initiatives are only used in selected areas, ambitious in terms of their objectives, scale and scope, and are only used in cases where objectives cannot be achieved with other instruments. This limits their number by definition and requires a strong commitment from the Participating States. Four initiatives have been launched so far under Horizon 2020, with up to Euro 1.445 million Union contribution and at least Euro 2.000 million contributions from Participating States. PRIMA would be the last Article 185 initiative launched under Horizon 2020.

6.5.Conformity to principles of subsidiarity and proportionality

Problems confronting the Mediterranean area go beyond the scope of individual countries, thus there is a need to tackle them jointly. Under both Options 2 and 1, interventions by the EU can be justified by the principle of subsidiarity. The scale of the problems, including the inability of many individual countries to mobilise sufficient endogenous resources, justifies a proportionate response to Option 2. It will be certainly greater than any response dependent solely on endogenous resources as in Option 0.

7.1.Plan for future monitoring and evaluation

Key evaluation issues for the initiative should be effectiveness (whether it has realised its objectives); efficiency (whether it has been well implemented); and impact (what are the intended and unintended impacts).

In case of an Article 185, effectiveness should be evaluated at both programme level (focusing on whether the overall objectives have been achieved) and national level (focusing on whether the goals and aspirations of individual countries have been attained). The initiative should be subject to mid-term and ex-post evaluations only in this case. Baseline scenario and Cofund action do not imply specific monitoring and evaluation activities, apart for the ones normally envisaged for Horizon 2020.

7.1.1.Core monitoring indicators for the main policy objectives

Monitoring and evaluation are important activities that need to be adequately planned at the start of an initiative. Key elements include:

the definition of major evaluation issues (e.g. effectiveness, efficiency and impact);

the elaboration of an adequate logic model for the initiative, linking aims, objectives, actions and expected impacts;

the design of appropriate indicators relevant to each of the chosen evaluation issues;

a baseline study to provide an adequate benchmark;

well planned and resourced monitoring strategies.

To the extent possible the indicators should be able to provide information which is Relevant, Accepted, Credible, Easy to monitor, and Robust ('RACER').

Implementation indicators

A number of indicators will be further developed to measure the effectiveness and efficiency of the initiative. This will require qualitative research methods such as interviews and surveys with those directly involved in the governance system. A baseline study of the situation at the start and the expectations for the future is advisable.

Table 7.1 presents a set of qualitative indicators that should contribute to assessing the medium-term development of the activities. It is nonetheless important to stress the indicative nature of these indicators.

The first set of indicators refers to the inputs associated with the activities of the initiative. Indicators should look at the quantitative aspects such as scale (e.g. the amount of R&I funding that is allocated to the specific objectives, the geographical dispersion) and scope (e.g. the coverage of all themes set out in the programme, its coverage of relevant stakeholders, the inclusion of relevant Technology Readiness Levels). Qualitative input indicators should focus on the development of an implementation structure and a governance model that underpins the goals of the programme.

The second set of indicators should cover the outputs and the overall outcome of the initiative.

Table 7.1: Qualitative indicators to assess the medium-term development of the PRIMA activities

Impact indicators

The most challenging indicators to define are the Impact indicators, as they should be able to demonstrate a causal link between the outputs, on the one hand, and the impacts that the initiative wants to achieve, on the other hand.

To this end, a set of Key Performance Indicators (KPIs) for monitoring the achievement of the operational objectives of the PRIMA Joint Programme have been defined. They are aiming to assess and monitor the performance of the initiative.

The indicators have been selected based on the Sustainable Development Goals (SDGs) framework and focus mainly but not exclusively on food security (SDG #2 End hunger, achieve food security and improved nutrition and promote sustainable agriculture) and sustainable management of water (SDG #6 Ensure availability and sustainable management of water and sanitation for all). They aim at specific targets addressing social aspects:

1.Multidimensional Poverty Index

2.Population overweight (%)

3.Land Use (%)

4.GHG emissions (total and AFOLU – t CO2e)

5.Cereal Yield (kg/ha)

6.Agriculture Value Added (EUR/worker)

7.Fertilizers consumption (kg/ha of arable land – available also at 5 x 5 km scale)

8.Crop water productivity (kg/m3)

9.Proportion of total water used (% – available also at 5 x 5 km scale)

10.Population using safely managed water services (rural, %)

11.Population using safely managed sanitation services (rural, %)

12.Amount of agricultural residues used for energy purpose (t)

The KPIs defined above have been put in relation with the eight operational objectives of the PRIMA initiative. The final aim has been to identify which KPI is more adequate to address and measure each single specific objective. The results of this coupling exercise are reported in Figure 7.1 here below:

Figure 7.1: Key Performance Indicators (KPIs) and PRIMA operational objectives

The targets to be achieved for each operational objective of the PRIMA Joint Programme have been listed in Table 7.2, which also makes the link with the most relevant SDGs:

Abbreviations: AC=Associated Country; MC=Mediterranean Country; MPC=Mediterranean Partner Country; MS=EU Member State.

Table 7.2: PRIMA operational objectives, targets to be achieved and SDGs

7.1.2.Verification of monitoring arrangements

An Article 185 initiative needs to be evaluated at mid-term as well as ex-post, as already mentioned. The conditions and data requirements for these evaluations need to be specified at the start of the initiative as an Article 185, as it requires a DIS that manages the programme and oversees the adoption of common rules for the implementation of the programme. Resources will need to be reserved to set up the monitoring and evaluation essentials, such as a data collection system and a baseline study of the situation at the start of the initiative. In terms of mapping international collaborations, some work has already been done by previous ERA-NETs and INCO-NETs, but more work tailored to the topics related specifically to water provision and food system in the Mediterranean area is needed. Indicators to be defined at the outset need to closely fit the main policy objectives of the initiative.

7.2.Monitoring and feedback process of Article 185

For an Article 185, the results of the monitoring exercise should feedback continuously into the daily management of the initiative, as should the results of the mid-term evaluation. The results of both the mid-term and the ex-post evaluation should feed into future policy formulation and the design of future policy initiatives.

Results will be used by the European Commission and the Participating States to better improve performance, including fine-tuned measurements of key performance indicators. Key principles of the monitoring and evaluation system are the following:

Evidence and quality-based (e.g. indicators).

Comprehensive in the following sense:

-Indicators updated and published annually by Participating States.

-Annual reports on the implementation of the initiative giving details on its performance and progress towards targets.

-Initiative assessed through an interim evaluation, carried out by an expert panel convened by the Commission, conducted no later than 2021, with a specific focus on implementation, quality of R&I, progress towards objectives and targets, and recommendations for possible improvements.

-At the end of the programmes, and not later than 2028, an independent evaluation conducted to reviewing quality and performance of the implementation and performance, and funded activities.

-A final independent evaluation conducted no later than 2030.

Participating States have to provide detailed evidence on the nature and volume of direct and indirect contributions to the joint programme annually. The Commission will also ensure that all actions taken and supported in the context of the initiative respect the Charter of Fundamental Rights of the EU.

7.3.Monitoring and audit mechanisms

DG RTD has adopted standard supervision arrangements for initiatives pursuant to Article 185 TFEU that will apply equally to the PRIMA Joint Programme. The key elements are described below.

With respect to monitoring and audit mechanisms, a distinction has to be made between the responsibilities of the Commission Services and those of the DIS and the Participating States. They will be defined in the basic act and at the level of the delegation agreement between the Commission and the DIS.

The DIS will be subject to an ex-ante assessment in accordance with the requirements set out in article 61 of the Financial Regulation before the delegation agreement is signed, in order to assess its capacity to implement the programme, including receiving, allocating and monitoring the Union’s financial contribution in the framework of indirect management of the Union budget. The DIS provides comprehensive annual reporting including auditor opinions and a management declaration. The DIS is furthermore responsible for the ex-ante audit of expenditure of all indirect actions funded by the DIS.

The Participating States will determine the costs of their activities in accordance with the usual accounting practices and accounting standards of the concerned Participating States and with applicable International Accounting Standards/International Financial Reporting Standards. These include audit certificates and a management declaration.

The Commission is observer in the decision-making body of the DIS (without voting rights) and verifies and approves the AWP and related budget plans by Commission decision. Commission Services receive, examine and accept the comprehensive annual reporting. If the accounts cannot be accepted then follow-up action will be taken in order to mitigate any financial and reputational risks to the Commission. Where necessary, payments to the DIS will be suspended and/or recovered, if necessary by drawing on the financial guarantees provided by the Participating States. If all of the above steps are inadequate to protect the financial interests of the Union or to ensure that policy objectives are properly achieved then, after due consideration, an audit of the DIS may be performed. Furthermore, the Commission may decide if necessary to suspend the implementation or terminate the Delegation Agreement.

In addition interim and final evaluations of the initiative will be undertaken.

Annex 1: Procedural information

1.1.Identification

This Staff Working Paper was prepared by the unit I2 'Eco-Innovation' of Directorate I 'Climate Action and Resource Efficiency' of Directorate General 'Research & Innovation'. The RWP reference of this initiative is 2015/RTD/009.

1.2.Organisation and timing

The IA has been conducted through the following steps:

An internal RTD related PRIMA Task Force (members from DG RTD including Dir. A., B, C, F, I, J and R & DG AGRI.H.5) was set in March 2015 in order to discuss all the issues relevant for the IA report and beyond, including a drafting team for the IA report and preparing the contributions for the ISG meetings.

An ISG was set up in October 2015 that included the following DGs: AGRI, BUDG, CLIMA, CNECT, DEVCO, EEAS, ECHO, ENV, GROW, HOME, JRC, MARE, NEAR, REGIO, RTD, SANTE, SG and SJ. Ten meetings were organised from October 2015 to June 2016.

An Expert Group 71 was set up in October 2015 and duly registered in the SG Register. It is composed of 9 experts. Their mandate was to support an informed and evidence-based decision-making processs especially with regard to the desired economic, environmental and social impacts of the proposed initiative, taking into account the impacts on the integration of national research and innovation systems in a common initiative. They submitted a first final draft report in April (final version in May 2016) This report provided results of different analyses and date in support of the IA report.

Public Consultation: an online Public Consultation was launched on the 1st February up to 24 April 2016. It has been complemented by dedicated events in particular a 'Public Consultation Stakeholder Event' in Malta on 17 March.

The PRIMA Consortium sent an Addendum on 29 February 2016 to the initial Joint Proposal as requested by Robert-Jan Smits' letter on 25 November 2016.

Each inter-service group meeting was dedicated to clarify different issues.

1.3.Evidence

The whole report and the options considered in the IA report were designed by taking into account the following documents:

Science, Research and Innovation performance of the EU – A contribution to the Open Innovation, Open Science, Open to the World agenda – 2016 ( http://bookshop.europa.eu/en/science-research-and-innovation-performance-of-the-eu)

Ex-Post Evaluation of the Seventh Framework Programme-SWD(2016) 2 final  ( https://ec.europa.eu/research/evaluations/index_en.cfm )

Horizon 2020 Monitoring Report 2014 ( https://ec.europa.eu/research/evaluations/pdf/archive/Horizon 2020_monitoring_reports/first_Horizon 2020_annual_monitoring_report.pdf )

PRIMA Joint Programme Proposal – December 2014

Addendum to the PRIMA Joint Programme – February 2016

Experts Group Final Report – May 2016

Public Stakeholders Event – March 2016

'EC Contributions to Sustainable Development Goals' workshop – February 2016

The sources are clearly indicated in the bibliography and range from academic papers to industry figures and estimates.

1.4.External expertise

The European Commission sought external expertise on the technical field, on Horizon instruments as well as on environmental and socio-economic impacts.

An Expert Group was set up in October 2016 and duly registered in the SG Register. It is composed of 9 experts coming from Mediterranean MS, non-Mediterranean MS and Third Countries. The members of the Expert Group have covered a wide and complementary field of competences: water technologies and management, agriculture, food systems, sustainability, sociology, policy, econometrics, impact assessment, migration, Mediterranean, and SMEs.

Five out of the nine members of the PRIMA Expert Group are based in countries participating in PRIMA. The organisation these five experts currently work for could eventually become grant beneficiaries of actions launched in the context of PRIMA. All of the experts have a senior R&I background, and have long been involved in activities and initiatives related to the different Framework Programmes, with an emphasis on Mediterranean issues and cooperation. At this point of their careers, most of them have high-level management responsibilities. As a consequence, these five members could have more of an indirect interest in PRIMA rather than a direct one.

The Expert Group collected evidence and drew their conclusions and recommendations based on:

the analysis of an extensive set of policy and research documents related to PRIMA. This resulted in a thematic CIRCA repository with over a hundred documents and 188 references to external documents in the Expert Group Report;

20 open-ended interviews and six questionnaires with relevant external stakeholders;

a review of the existing initiatives for cross-border R&I collaboration in the PRIMA domain;

a bibliometric analysis of Mediterranean scientific cooperation, including Article 185 initiatives AAL and BONUS;

an analysis of FP7 projects in the Themes of the PRIMA operational objectives;

an analysis on the demand for R&I projects in the Mediterranean Region.

The methodology followed by the expert group was shared and discussed in a constant interaction with the PRIMA ISG.

The experts met five times:

1st meeting on 6 November 2015.

2nd meeting on 16 December 2015.

3rd meeting on 4 February 2016. The meeting was held in conjunction with the Workshop one EC Contributions to the Sustainable Development Goals' and included a first meeting of the Expert Group with the PRIMA Consortium.

4th meeting on 8 March 2016.

5th meeting on 14 and 15 April 2016.

Additionally:

The Chair of the Expert Group addressed the inter-service group on 16 December 2015, 17 February 2016, and the Rapporteur on 13 May 2016.

The PRIMA Expert Group was represented at the PRIMA Stakeholders Event, which took place in Malta on 17 March 2016.

The inputs from the Expert Group's report were duly taken into account in the elaboration of the final IA Report and compared with the findings from other sources (e.g., literature review carried out by the EC services and results of the online public consultation).

Annex 2: Stakeholder consultation – Synopsis Report

2.1.Stakeholder consultation strategy

In their meeting of 13 January 2016, the members of the PRIMA Impact Assessment (PRIMA IA) Inter-Service Group (ISG) agreed on a Consultation Strategy 72 , aiming at ensuring the inclusiveness and full transparency of the IA process and collecting the views of those directly or indirectly affected by the PRIMA initiative. More specifically, the Consultation Strategy was designed with the purpose of collecting:

data and information on the state-of-the-art of research and innovation in the field of water and food systems in the Mediterranean area;

input on the problem definition and on the scope of a potential EU intervention;

feedback on the different options for future research and innovation in the field of water and food systems in the Mediterranean area (including their impact).

The following categories of stakeholders have been considered as particularly relevant for the purpose of the PRIMA IA: research organisations and associations of research organisations; universities and associations of universities; public authorities (including regional/local administrations); local communities; farmer associations; large businesses; SMEs; business associations; inter-governmental organisations; non-governmental organisations (NGOs), and individual citizens. Giving the potential area of intervention of PRIMA, both European and third countries' stakeholders (with a particular focus on Mediterranean countries) have been targeted.

In line with the provisions of the Consultation Strategy, two main consultation activities were organised in the context of the PRIMA IA:

a 12-week online public consultation, running from 1 February to 24 April 2016;

a stakeholder event which took place in Malta on 17 March 2016.

Both these activities, as well as the whole PRIMA IA process, have been actively disseminated through: a webpage dedicated to the PRIMA initiative 73 ; the mailing lists of the different members of the PRIMA IA ISG; social media (Facebook, Yammer, LinkedIn and Twitter); a press package sent to EU representations and delegations; the mailing list of some ongoing FP7 and Horizon 2020 ERA-NET projects focusing on the Mediterranean Area; and a news alert sent in the occasion of the launch of the online public consultation. The online public consultation was published on Your Voice in Europe. The members of the PRIMA Expert Group (PRIMA EG) also contributed to disseminate the different consultation activities via their network of contacts.

Members of the internal PRIMA Task Force were also invited to present the PRIMA IA process and the different consultation activities at the following events:

11 February, Brussels: Spanish Office of Science and Technology (SOST), short session dedicated to the PRIMA IA;

16 February, Brussels: UfM Senior Officials' Meeting (SOM);

1 March, Brussels: IGLO (Informal Group of RTD Liaison Offices) Open event;

15 March, Lisbon: final conference ARIMNet project and kick-off ARIMnet2 project;

16 March, Brussels: UNIMED event.

In order to ensure the transparency of the whole IA process, the outcome of the two main consultation activities were published in the webpage dedicated to the PRIMA initiative as short summary reports 74   75 . Furthermore, the participants of the PRIMA stakeholder event in Malta were given the possibility to provide a feedback on the initiative via a post-event questionnaire. The feedback received via the post-event questionnaire was also included in the short summary report of the stakeholder event.

During the whole IA process, external stakeholders have been given the opportunity to interact with the EC services via the functional mailbox RTD-PRIMA-STAKEHOLDER-CONSULTATION@ec.europa.eu . In addition to this, and in line with the provisions of the Better Regulation Package, external stakeholders have been given the possibility to provide feedback on the PRIMA Inception Impact Assessment (PRIMA IIA) via the dedicated webpage 76 .

2.2.The questionnaire

Following the discussions taking place at Inter-Service Group (ISG) level, the questionnaire of the online public consultation on PRIMA 77 was structured around the following seven sections: Respondent profile; Problem definition; Core objectives; R&I priorities; Actions; Impacts and Policy options. Some inputs and suggestions from the PRIMA EG have also been incorporated in the final version of the questionnaire.

The questionnaire served as a source of inspiration for the parallel tables which were organised during the afternoon session of the PRIMA stakeholder event in Malta. The participants were asked to choose among 4 parallel discussion tables focusing on the following topics: Problem Definition; Objectives and R&I Priorities; Actions and Impacts, and Policy Options. A copy of the questionnaire was distributed to the participants at the beginning of the session with no obligation for them to follow and/or base their discussions on the text of the questionnaire.

2.3.Feedback and analysis

The contributions received from both the PRIMA online public consultation and the PRIMA stakeholder event were duly considered and analysed.

In the specific case of the PRIMA online public consultation, a quality check of the replies was carried out at the end of the consultation period. In case of more than one contribution from the same respondent, the respondent was contacted and asked to choose which contribution had to be finally retained. In the absence of a reply, the most recent reply only was taken into account, on the assumption that this reply was submitted with the purpose of amending the less recent one (-s). In the case of some organisations (mainly, universities), replies from different departments members or persons somehow related to the particular organisation were received. These replies were sent mostly on each respondent's personal behalf and their individual content is different from one another. These replies were therefore considered as separate replies. One contribution was not taken into account since its content appeared as automatically generated and not linked to this particular online public consultation. A statistical analysis of the replies was carried out with the aim of identifying the most recurrent answers and their distribution among typologies of respondents. The results of this statistical analysis were included as an annex in the Short Summary Report of the online public consultation.

In the summary of each stakeholder consultation activity, an effort was made to provide a complete overview of the different inputs received, by reporting the full range of the collected options without discarding possible minority views.

The main findings of the PRIMA online public consultation and the PRIMA stakeholder event were then compared and grouped according to the seven sections of the questionnaire. The results of this comparison are presented in the paragraphs that follow.

The views and perspectives of the external stakeholders have been incorporated in the final version of the IA Report and carefully taken into account in the formulation of a potential EU intervention in support of PRIMA.

2.4.Stakeholder profile

A total number of 562 replies to the PRIMA online public consultation were received and 86 people participated in the stakeholder event which was held in Malta on 17 March 2016. 29 out of the 86 participants of the stakeholder event also sent their contribution, under their individual name or on behalf of their organisation, to the PRIMA online public consultation.

The online public consultation registered a large majority of replies from EU countries (86.5% of the total). third countries countries were relatively more represented at the Malta event, accounting for 28% of the total number of participants.

At the time of writing, no feedback on the PRIMA Inception Impact Assessment document has been received via the dedicated webpage. One position paper – signed by The Netherlands' Ministry of Economic Affairs, Ministry of Infrastructure and the Environment and Ministry of Education, Culture and Science – was sent to the IA functional mailbox. The same stakeholders also sent a contribution to the PRIMA online public consultation. The only difference between the two contributions lies in the preferred policy option: while the baseline scenario was chosen in the case of the online public consultation, Co-fund action was selected as preferable policy option in the position paper.

In terms of typology of respondents/participants, public authorities, research organisations and universities were the most represented categories at the Malta event, whereas individual citizens resulted as the largest contributor (33.8% of the total number of replies) in the online public consultation. From an analysis of their replies and contact details, many of these individual citizens who took part in the online public consultation appear to be staff of universities and research organisations who replied on their personal behalf. Their professional affiliation probably explains why more than half of them are, to various degrees, familiar with the Framework Programmes for Research and Innovation of the European Commission and with the PRIMA initiative.

With the exception of organisations representing local communities, all the targeted categories of stakeholders appear to have been reached out by the consultation activities which were put in place. The high response from citizens in the online public consultation is considered to somehow partially compensate the lack of replies from local community organisations. Small-sized and more local actors like SMEs and farmer associations have also been reached out: SMEs were 7% of the participants in the Malta event and 3.7% of the replies to the online public consultation; the representative of one farmer association from Malta was present at the stakeholder event and three other EU farmer associations replied to the online public consultation.

2.5.Problem definition

The difficulty to implement innovative solutions due to the lack of effective cooperation among countries and actors, as well as inadequate R&I investments and R&I governance structures, emerge as the most relevant issues for R&I in the Mediterranean area.

More specifically, in the online public consultation the following three problem statements were identified as the most relevant R&I challenges in the field of sustainable food production and water resources management in the Mediterranean area:

lack of coordination and cooperation between countries and research organisations and duplication of research efforts;

lack of cooperation between academic and non-academic actors;

insufficient investments in R&I.

More funding for R&I investments emerges as a less critical factor, above all among third countries respondents. According to the majority of respondents, encouraging synergies among countries and actors is considered essential to ensure the benefits of additional R&I funding.

Similar conclusions can be drawn from the discussions on Problem Definition which took place during the Malta event. Inadequate R&I governance structures and processes to address common and inter-related problems and the insufficient implementation of innovative solutions emerged as the most relevant challenges for R&I in the field of food production and water resources management in the Mediterranean area, with the first one being the most difficult challenge to implement. Insufficient investments in R&I was included among the five most relevant R&I challenges but it was considered as the least relevant one, with no particular implementation issues.

2.6.Core objectives

Supporting the development and application of innovative solutions in the field of sustainable food production and water resources management in the Mediterranean region was identified as the most relevant objective for PRIMA by both the respondents to the online public consultation and the participants in the stakeholder event in Malta. There appears to be a general consensus on the importance of this objective, independently on the country of origin (EU or third countries) of the respondent/participant.

Another objective which was particularly emphasised is the need to reinforce cooperation not just among Euro-Mediterranean countries but also among sectors and regions. Knowledge sharing and transfer (e.g., via a dedicated platform), capacity building, support to knowledge-based jobs and competences and ensuring research quality were also mentioned as relevant objectives for PRIMA.

2.7.R&I priorities

As for the most relevant R&I priorities for the PRIMA initiative, a slightly different feedback was provided by the respondents to the online public consultation, on the one hand, and the participants in the stakeholder event in Malta, on the other.

According to both EU and third countries replies to the online public consultation, finding context-adapted solutions capable of increasing food and water chain efficiency and reducing losses and waste in the region is the most relevant R&I priority for a Partnership for Research and Innovation geared towards improving the efficiency and sustainability of food production and processing and water resources management in the Mediterranean basin. In addition to this, EU respondents underlined the importance of supporting the common development of smart and sustainable farming systems capable of maintaining natural resources and increasing production efficiency as well as the need to test and stimulate the application of context-tailored water-saving solutions, particularly in agriculture. From EU respondents, there was also the suggestion to address within PRIMA the whole water-food-energy nexus, thus adding energy as an area of intervention. As for third countries respondents, they strongly emphasised the need to improve land and water sustainability in arid and semi-arid environments.

As already mentioned, slightly different R&I priorities were identified as a result of the dedicated discussion table which took place during the Malta event. Participants highlighted the importance of supporting the development of:

tools for knowledge capitalisation;

climate modelling / services for end-users;

collaborative projects including different stakeholders.

2.8.Actions

Asked about the most relevant actions for PRIMA to achieve its objectives, both the respondents to the online public consultation and the participants in the Malta event valued as very important the development of pilot projects. Respondents to the online public consultation also considered as particularly relevant the following two actions: public sector's direct investments in R&I and the support to networking and coordination/cooperation activities. Training for researchers and career development was identified by third countries replies as a very important element for PRIMA to achieve its objectives. In addition to the need of developing and supporting pilot projects, participants in the stakeholder event underlined the relevance for PRIMA of having the private sector investing in R&I, with the public sector facilitating these investments.

It is here worth mentioning that, in the optional box dedicated to any potential additional actions which might be relevant for PRIMA to achieve its objectives, respondents to the online public consultation – and EU stakeholders in particular – strongly underlined the need to set up those synergies among actors whose importance was emphasised in the problem definition section. For a R&I initiative to be successful, local actors and end-users need to be involved from the very early stage of the process and specific training programmes and schemes need to be designed and implemented.

2.9.Impacts

Respondents to the online public consultation and participants in the Malta event considered as relevant all the impacts listed in the questionnaire of the PRIMA online public consultation. Particular importance is attributed by external stakeholders to the introduction and dissemination of innovative products, technologies and production methods adapted to the specific socio-economic conditions of the Mediterranean area.

According to EU respondents to the online public consultation, more effective, sustainable and responsible production, food consumption patterns and use of water resources in the region emerge as the most relevant impact for PRIMA. They particularly insisted on PRIMA's potential to improve wellbeing and quality of life in Mediterranean Countries (especially in the Southern shore), thus contributing to mitigating the current migration crisis. Improving wellbeing is also very present in the comments regarding additional potential impacts for PRIMA, next to raising awareness of climate change issues and boosting cooperation and synergies. As for third countries respondents, they strongly emphasised the potential for PRIMA to support economic growth in the region through job creation.

The potential for PRIMA to support job creation and economic growth, as well as to improve the competitiveness of the SMEs established in the region, was particularly stressed during the discussion table on Action & Impacts which took place during the stakeholder event in Malta.

2.10.Policy options

From the outcome of the stakeholder event in Malta and the analysis of the online public consultation results, it emerges that existing national and EU-level R&I actions in the field of water resources management and food systems in the Mediterranean Area do not adequately address the problem statements highlighted by the same stakeholders in the Problem Definition section.

Only 26.5% of the total number of respondents (149 out of 562) to the online public consultation – less than one quarter of EU replies, but slightly more than half of the third countries replies – believe that the current scenario is enough to address the R&I challenges in the field of sustainable food production and water resources management in the Mediterranean area. 18.5% of the total number of respondents (104 out of 562) did not express any opinion in relation to policy options. The reasons explaining the overall satisfaction of the majority of third countries respondents (43 out of 76, corresponding to 56.6%) with the current scenario could not be further investigated since none of these respondents provided any additional justification for their choice in the optional box

A positive evaluation to the current state-of-play has been interpreted by the ISG members as a preference for the baseline scenario option mentioned in the PRIMA IIA. It has not been possible though to dig more into the advantages of the baseline scenario, since none of the respondents who are positive about the current scenario provided any reason in support of their choice in the dedicated optional box.

Among those respondents not in favour of the baseline scenario, 69.3% (214 out of 309) suggest to create a permanent, dedicated structure (Article 185 TFEU), while 29.1% (90 out of 309) would opt for a Co-fund action. 1.6% of the respondents – five replies, all from EU countries – selected "Other policy option" but did not provide any alternative policy option, except for one reply suggesting to launch a series of small grants. While long-term cooperation commitment emerges as the key advantage of Article 185 TFEU, the reduced administrative cost and burden of such option (in comparison to Article 185 TFEU) is indicated as the key advantage of a Co-fund. No strong opposition from specific categories of stakeholders could be detected. All typologies of respondents are represented in almost similar proportions in all the options, with the exception of inter-governmental organisations which all opted for Article 185. For instance, individual citizens represent 26.2% of the replies in favour of the baseline scenario, 33.3% of the replies in favour of Co-fund, and 32.3% of the replies in favour of Article 185; research organisations represent 25.5% of the replies in favour of the baseline scenario, 20% of the replies in favour of Co-fund, and 21.5% of the replies in favour of Article 185; universities represent 27.5% of the replies in favour of the baseline scenario, 25.6% of the replies in favour of Co-fund, and 27.1% of the replies in favour of Article 185. As a general remark, the absence of an overwhelming majority of replies in favour of the Article 185 is likely to indicate that the stakeholders who sent their inputs to the PRIMA online public consultation do not represent a biased sample of respondents.

Article 185 TFEU emerged as the preferred policy option also from the Policy Options-dedicated discussion table at the PRIMA stakeholder event in Malta. In this case, participants were asked to identify a maximum of three suitable policy options for addressing the challenges for R&I in the field of food production and water resources management in the Mediterranean area. The pros and cons of each policy option were then to be counted and a final ranking list was to be provided. The participants decided to base their discussions on the three policy options (baseline scenario, Co-fund action and Article 185 TFEU) mentioned in the questionnaire of the online public consultation. Article185 TFEU ranked as the most suitable policy option, with three pros and three cons. The three pros are: the long-term commitment, the coherence/alignment among national and international programmes that an Article 185 TFEU is expected to bring along, and the additional financial contribution from the EU. At the same time, the differences among national R&I programmes, together with the legal and the implementation issues which are likely to arise, are all elements which can jeopardise the successful outcome of the initiative.

With regard to the position paper sent by The Netherlands' Ministry of Economic Affairs, Ministry of Infrastructure and the Environment and Ministry of Education, Culture and Science, and based on the text of the e-mail which accompanied the paper, it can be concluded that the preference for the Co-fund option is intended to replace the one for the baseline scenario made in the contribution by the same stakeholders to the PRIMA online public consultation. As mentioned in the paper, Co-fund is seen as the most suitable option to implement the 'virtual common pot' mechanism envisaged by PRIMA proposers. There is no rationale – the paper continues – for the EU to support an Article 185 initiative, if the PRIMA partner countries themselves do not allow for further synergies between their national programmes.

Annex 3: Socio-economic outlook of the Mediterranean region

3.1.Introduction

The figures here reported are intended to provide a socio-economic outlook of the Mediterranean region, which includes data on population, GDP, diversity, migration, inequality, competitiveness, unemployment, governance, easy of doing business.

3.2. EU vs. non-EU countries

EU vs. non-EU Mediterranean countries (2015 data) 78

3.3.Population: density and migration

Population density per country (2016) 79

Recent migration figures in the Mediterranean region 80

Migrants living in each Med country as % of population (2013 data) 81

Arrivals by sea in 2016 82

3.4.GDP

GDP per capita (PPP US$ thousand) 83

GDP per capita (PPP US$ thousand – latest available data for each country)  84

GDP growth forecast for 2017 85

3.5.Unemployment

Regional Unemployment (latest available data for each country) 86

3.6.Governance

Governance (2014 data) 87

3.7.Competitiveness

Global competitiveness index ranking (2015 data) 88

Ease of doing business ranking (2015 data) 89

3.8.Trade

High technology exports (2014 data) 91

3.9.Inequality

Inequality (Gini coefficient – latest available data for each country)  92

Annex 4: Mapping of on-going programmes in areas to be addressed by the PRIMA Joint Programme (other than Horizon 2020)

A non-exhaustive list of the main programmes of scientific and technological collaboration between EU Member States and third countries in areas to be addressed by the PRIMA Joint Programme is shown below.

Table 1: Synoptic table of the main programmes of scientific and technological collaboration in areas to be addressed by the PRIMA Joint Programme

The details of the identified programmes between EU Member States and third countries related to PRIMA Joint Programme are reported are tables 2 and 3.