Economic impact of local sustainability policies of the Basque Country

udalsarea21

basque network of municipalities for sustainability red vasca de municipios hacia la sostenibilidad

Economic impact of local sustainability policies of the Basque Country September 2015

Udalsarea 21

’s 12-year track record in fostering local sustainability policies reflects the expertise and shared methods built up from the wide range of successful experiences and the positive progress made in municipal sustainability policies by means of results that can be shown and measured to a greater or lesser degree.

The Udalsarea 21 Management Plan 2014-2015, approved by the Executive Committee of 10 July 2014, stressed that even though progress is being made in the right direction, there is still much to be done. Therefore, it has been deemed important to put special emphasis on showcasing and the public dissemination of the work of Udalsarea 21.

Driving the recognition of Udalsarea 21 as a necessary platform for the deployment of sustainability levels at a local level and outreach at grassroots level, requires sound, objective and traceable information and data to be provided on the achievements arising from the activity of the network.

Therefore, the cooperation and involvement of all the members of Udalsarea 21 is vital, based on the co-responsibility principle so that with the network they all undertake to form part of it and to contribute to the 2015 mission and vision.

The reality is that there are many initiatives undertaken by Udalsarea 21 members and numerous improvements obtained regarding the local sustainability policies implemented around environmental and social variables and their different thematic areas.

DEPARTMENT OF ENVIRONMENT & REGIONAL PLANNING DEPARTAMENTO DE MEDIO AMBIENTE Y POLĂ?TICA TERRITORIAL

However, one the aspects still to be addressed is the scale and economic activity of the local activities aimed at local sustainability. This is an argument that must reinforce the Udalsarea 21 positioning towards society in general.

Objective: To assess the economic impact arising from local sustainability management in the Basque Country.

Accordingly, in February 2014, a new working party was set up to agree and establish the methodological basis to assess and calculate the economic impact of local sustainability policies of Udalsarea 21 members in the Basque Country.

The pilot working party In early 2014, 12 local authorities signed up voluntarily to the open call to take part in the working party. Those authorities were: the local councils of Asparrena (1,652 inhab.), Balmaseda (7,829 inhab.), Basauri (41,624 inhab.), Berango (6,925 inhab.), Durango (28,220 inhab.), Elburgo (624 inhab.), Maruri-Jatabe (945 inhab.), VitoriaGasteiz (242,082 inhab.), Iruraiz-Gauna (511 inhab.) and the supramunicipal entities of Cuadrilla de Agurain (12,520 inhab.), Mancomunidad de Uribe Kosta (36,319 inhab.) and Udaltalde 21 Sustainability Office Nerbioi-Ibaizabal (108,745 inhab.).

udalsarea21

basque network of municipalities for sustainability red vasca de municipios hacia la sostenibilidad

Driving the recognition of Udalsarea 21… …as a necessary platform for the deployment of sustainability levels at a local level and outreach at grassroots level, requires sound, objective and traceable information and data to be provided on the achievements arising from the activity of the network.

The economic information of each local authorities covers 18 thematic areas grouped as follows: • Territorial aspects: Planning, Mobility, Biodiversity, Environmental Risk and Green Public Procurement.

• Environmental aspects: Water, Waste, Energy, Environmental Quality and Climate Change • Social aspects: Participation, Coordination, Economic Development, Welfare, Basque Language-Sport-Culture and Housing.

• Along with the running expenses and staff costs associated to local sustainability.

External advisors with a proven track record in this type of studies were contracted to analyse the economic information facilitated and to be able to obtain the macro-economic indicators pursued.

A proven method was chosen that has been used in other similar studies by Ihobe, the Basque Government’s publicly-owned environmental management company, based on input-output symmetric tables (IOT) for the Basque Country and the rest of the Spanish State.

Objective of the study The main objective of the study is: “To assess the economic impact arising from local sustainability management in the Basque Country”.

Along with the following specific objectives: • Highlight the economic contribution of their local sustainability policies as a driver of the economy of the Basque Country.

• Establish and assess their capacity to raise private and public funds.

• Assess the contribution of the different activities to the GDP, employment and tax yields.

• Facilitate the identification of possible lines of action or measures in the future and decision taking.

• Be able to compare the results of a local authority in terms of the average of the results of other ‘similar’ municipal authorities in the pilot sample and the average of the results of the pilot sample.

The scope of the study mainly refers to three main stakeholder groups: the business fabric, the public administration and the general public. Furthermore, the impact of the activity being assessed refers not only to the Basque Country, but the impact on the rest of the Spanish State is also considered.

Results of the pilot scheme This section summarises the distribution of the operating expenditure of the local authorities taking part in the pilot scheme, the distribution of spending according to its recipient stakeholders, along with the main economic activity sectors at which the spending is aimed.

The distribution of that Operating Direct Expenses was as follows:

Operating direct expenses (distribution) 18% Investments

74% Subcontracting to companies

Economic impact 8%

The key aspects of the economic impact of the study are set out below:

Subsidies to other stakeholders

On the other hand, if the objective of the operating expenditure according to the recipients of that money is analysed, the following can be seen:

Final objective (operating direct expenses) 12%

l For each euro directly spent on sustainability policies by the local authority, an additional â‚Ź1.1 are generated through other stakeholders. (indirect spending). l For each euro spent by local authorities, a total of e2.3 is generated in the economy.

Other public administrationss

9%

79%

General/society

Company

The operating direct expenses according to the sector of activity that has been the recipient of that spending can also be analysed.

Thus, the different lines of action show that the most important sectors are: recycling, energy, construction, water, other business sectors, cultural and recreational activities, public administration, market education and associative activities.

l As regards the job market, 17 jobs are generated per million invested. l This means 51%, in terms of fiscal return. In other words. â‚Ź 51 euros is returned to the Public Treasury in the form of taxes for each â‚Ź100 invested in local sustainable development.

udalsarea21

basque network of municipalities for sustainability red vasca de municipios hacia la sostenibilidad

Impact by thematic area The analysis by thematic area shows that the measures of the local authorities with a greater impact on the economic activity (due to their effect on the GDP, on employment and their collection capacity) are as follows.

• In terms of revenue (total revenue generated for each euro of total expenditure): the best results are in the social and territorial aspects, and the different areas included in each of them.

• In terms of employment (total jobs per million of euros spent): the measures related to territorial aspects are the ones shown to most contribute to generating employment.

• In terms of fiscal return (total tax collected divided by direct expenditure), the blocks of

Results

social and territorial aspects are the ones that show the best results. Within the latter, the measures related to risk and biodiversity are the ones that offer the highest return rates. The highest rates of return are the energy-related measures within environmental aspects.

• Finally, the globally highest mobilisation ratios are related to the territorial aspects.

• In terms of spending per inhabitants, the social aspects are again the ones that generate the largest total expenditure.

The following table summarises the results by thematic areas in terms of the following indicators.

Production multiplier

Income multiplier

Jobs per million

Fiscal Return

Territorial aspects

1.40

1.02

21.4

56.9%

Environmental aspects

1.22

0.87

10.8

38.5%

Social aspects

1.24

1.08

19.08

56.9%

Total

1.31

1.01

17.1

51.1%

Results

Mobilisation Ratio

Total spending/inhabitant

Total revenue/inhabitant

Territorial aspects

1.7

43

44

Environmental aspects

0.4

54

56

Social aspects

0.3

103

111

Total

1.1

210

211

Glossary l Jobs per million: Total jobs per million of euros of total expenditure.

l Production multiplier: Total production generated for each euro of total expenditure.

l Total spending per inhabitant: Total spending euros per inhabitant.

l Fiscal Return: Total tax collected divided by direct expenditure.

l Mobilisation ratio: Euros mobilised by each euro of direct spending.

l Total revenue per inhabitant: Total revenue generated euros per inhabitant.

l Income multiplier: Total revenue generated for each euro of total expenditure.

udalsarea21

basque network of municipalities for sustainability red vasca de municipios hacia la sostenibilidad

Technical Secretariat Udalsarea 21 Alameda Urquijo N º36 - 6th floor, 48011- BILBAO udalsarea21@ihobe.eus www.udalsarea21.eus