Research note authored by Marcos Fernández-Gutiérrez. Department of Economics, Universidad de Cantabria (Spain)
This research note explains the content and main findings of the paper “Public Infrastructure Services in the European Union: Challenges for Territorial Cohesion”, forthcoming in the journal Regional Studies. This paper, authored by Judith Clifton, Daniel Díaz-Fuentes and Marcos Fernández-Gutiérrez, analyses and evaluates the impact of the place of residence on public infrastructure services provision in the European Union context. The paper focuses on regional and urban/rural differences in the use of and satisfaction with energy, water and telecommunications services, using data for three large European countries (Italy, Spain and the United Kingdom). Results show that residence frequently conditions the use of these services, and in certain cases this is related to accessibility and affordability problems in vulnerable areas. These results reflect existing challenges for regulation aimed at favouring territorial cohesion.
Territorial cohesion has emerged as the main policy paradigm of territorial development in the European Union (EU). However, it is a political concept whose definition is still vague. Santinha (2014) provides an accurate explanation of the concept, which he summarizes in three main objectives: 1. The harmonious development of territories, including diminishing disparities among them; 2. The consideration of territorial diversity and complementarities as a potential for development; and 3. The interaction and coordination of different territorial and sectoral policies, and policy-makers in a territorial approach.
Public infrastructure services, defined by the EU as Services of General Economic Interest (SGEI), play an essential role for territorial cohesion (Medeiros, 2012). These services are key for promoting regional competitiveness and balance, as well as the economic development and sustainability of rural communities. From ESPON (2013), the three objectives associated to territorial cohesion explained by Santinha (2014) can be connected to three regulatory aims regarding these services and territorial cohesion: 1. To promote equality of opportunities through a more balanced access to services (“Rebalancing principle”); 2. To take advantage of services for increasing territorial competitiveness (“Growth and development principle”); and 3. To consider the territory to integrate policies and their objectives in a place-based approach (“Territorially oriented principle”). The empirical approach of the paper by Clifton, Díaz-Fuentes and Fernández-Gutiérrez focuses primarily on the first of these policy ambitions, although the implications for the two others are also considered for interpreting the results and presenting the conclusions. Following the approach by Molle (2007), this paper conceives the role of public infrastructure services regarding territorial cohesion in terms of equality of opportunities. From this approach, the paper analyses whether differences in service provision associated with residence constitute a disadvantage to those citizens who live there.
Historically, the regulation of public infrastructure services varied across the EU: whilst in countries as France, Italy and Spain, legislation traditionally guaranteed citizens’ rights to these services, in others as the Netherlands and the UK, specific obligations regarding service accessibility, quality and continuity existed, albeit not in a constitution. In a territorial perspective, a major concern for regulation was that citizens living in territories where service provision was not deemed profitable may be excluded from service provision or bear the extra costs (Molle, 2007; Clifton and Díaz-Fuentes, 2010). Traditionally, in Italy and Spain, public infrastructure services were legally encompassed under the concept of “public service”. This implied guaranteeing universal provision of a certain minimum provision of these services, with the aim of promoting equal access to services. In the last decades, regulatory priorities shifted to productive efficiency, whilst technological improvements and new services emerged, particularly in the telecommunications sector. In Spain, legislative changes led to the substitution of the concept of “public service” by the Public Service Obligations (PSO), according to EU terminology. In Italy, EU terminology was introduced to distinguish between social and commercial services. In the UK, SGEI terminology was not incorporated into official legislation, although legislation recognizes infrastructure services as being important and regulation essentially consisted of defining services and guaranteeing their provision. The UK also pioneered specific policies to support so-called vulnerable consumers (including residents in rural areas), by improving the information available to them and reducing the costs of switching (CEEP, 2010; OFGEM, 2012).
Despite the political and academic interest on this topic, whilst empirical research has shown the existence of certain territorial differences in the use of some services in the EU (as the case of the Internet), insufficient evidence existed on a broad analysis of the use of public infrastructure services in a territorial perspective. In particular, further evidence was needed on whether these differences are associated with disadvantages for residents, thus constituting a concern for EU policies on territorial cohesion.
This paper analyses this issue, evaluating the provision of public infrastructure services from a territorial perspective in three large European countries where comparable information is available, representative of the EU context: Italy, Spain and the United Kingdom. The paper analyses two territorial dimensions: differences among regions and differences between urban and rural areas. Its empirical approach is based on contrasting revealed and stated preferences, reflecting residents’ use and satisfaction with the services, respectively, using a micro-econometric analysis. First the paper analyses the determinants of households’ revealed expenditure on the services, using national Household Budget Surveys from each country (INE, 2006; ISTAT, 2006; ONS, 2006). Second, it contrast those results with residents’ stated satisfaction with the access to and the price of the services, from the most recent Eurobarometer dedicated to public infrastructure services (EC, 2007). From this, the existence of problems of accessibility and/or affordability affecting the use of the services, and thus disadvantaging certain residents, is identified. The analysis encompasses six services: electricity, gas, water, fixed telephone, mobile telephone and the internet.
The results obtained in the paper reflect the existence of significant regional differences in expenditure on the services under analysis. Some of these differences can be explained by factors as different regional climates. However, others are associated with problems of service accessibility (as for the internet in regions with low GDP per capita, and for gas in regions with low population density), or with problems of service affordability (more frequently in regions with low GDP per capita), constituting disadvantages for those living in those territories.
The results show also significant urban/rural differences in expenditure associated with differences in satisfaction with access and/or price particularly for two services: internet and gas. In particular, a problem of accessibility to the internet is detected in Spanish and Italian rural areas, whilst a problem of affordability of telecommunications appears in British rural areas. Problems of accessibility and affordability in rural areas are also common in the case of gas. These problems may disadvantage residents in these territories, thus presenting challenges for territorial cohesion, if substitutable services are not available. In contrast, data to not reflect these problems affecting rural areas in the cases of water and electricity.
The paper concludes remarking that these results reflect that improving accessibility and affordability of public infrastructure services in vulnerable areas (as peripheral regions and rural areas, where geographical isolation or low population density makes provision less profitable) should remain a major issue of attention by regulatory policies. This may be in particular the case of those services associated to the newest technologies (as the internet and mobile telephony), where lags in access and adoption between urban and more populated areas and the most vulnerable ones may imply an erosion of equality of opportunities, generating risks for territorial cohesion. A balanced access to these services would be essential both for territorial competitiveness and for territorial development, thus connecting the “Rebalancing principle” and the “Growth and development principle” on public infrastructure services regulation in a territorial perspective described in ESPON (2013).
In addition, territorial specificities and local mechanisms of service regulation, in accordance to the “Territorially oriented principle” (ESPON, 2013), show its interest as regulatory tools able to favour territorial cohesion. As an example, water regulatory regime in Spain, based on the traditional organisation and management at the local level, which takes into account relative water abundance and other local circumstances, show satisfactory results. In contrast, one-size-fits-all reforms of the service independent of the territorial context usually face strong opposition. The characteristics of the territory, as well as the characteristics of the service, should be taken into account in the regulatory design. Also, the results show that the territorial perspective should be considered not only in the design, but also in the evaluation of regulation. In this sense, renewing the existing sources of information and incorporating more detailed information on the place of residence and its characteristics reveals essential for a continual improvement of regulation in a territorial perspective.
- Clifton, J.; Díaz-Fuentes, D. and Fernández-Gutiérrez, M.: “Public Infrastructure Services in the European Union: Challenges for Territorial Cohesion”, forthcoming in Regional Studies (DOI: 10.1080/00343404.2015.1044958) Available here
- European Centre of Employers and Enterprises Providing Public Services (CEEP) (2010) Mapping of the Public Services. Public Services in the European Union & in the 27 Member States (available at: http://www.ceep.eu).
- Clifton, J. and Díaz-Fuentes, D. (2010) Evaluating EU policies on public services: a citizens’ perspective, Annals of Public and Cooperative Economics 81 (2), 281-311.
- European Commission (EC) (2007) Eurobarometer 260: Consumers opinions on Services of General Interest. European Commission, Brussels.
- ESPON (2013) SeGI. Indicators and perspectives for services of general interest in territorial cohesion and development. (Draft) Final Report, (available at: http://www.espon.eu).
- Instituto Nacional de Estadística (INE) (2006) Encuesta de Presupuestos Familiares. INE, Madrid.
- Instituto Nazionale di Statistica (ISTAT) (2006) Indagine sui Consumi delle Famiglie. ISTAT, Rome.
- Medeiros, E. (2012) Territorial Cohesion: a conceptual analysis, presented at Regional Studies Association European Conference, Delft (The Netherlands), 15th May.
- Molle, W. (2007) European Cohesion Policy. Routledge, Abingdon.
- Office of Gas and Electricity Markets (OFGEM) (2012) Proposals for a new Consumer Vulnerability Strategy. OFGEM, London.
- Office for National Statistics (ONS) (2006) Expenditure and Food Survey. ONS, London.
- Santinha, G. (2014) O principio de coesão territorial enquanto novo paradigma de desenvolvimento na formulação de políticas públicas: (re)construindo ideias dominantes, EURE, 40 (119), 75-97.
Marcos Fernández-Gutiérrez Fernández-Gutiérrez is Lecturer (Profesor Ayudante Doctor) in the Department of Economics at the University of Cantabria (Spain). He has also been Visiting Research Fellow at the Universidad de Barcelona (Spain), the Università degli Studi di Milano (Italy), the University of Exeter (UK) and the Erasmus University of Rotterdam (The Netherlands). His research interests are public services regulation from the citizens’ perspective and the analysis of the influence of socio-economic characteristics on the use and consumption of public services from a Behavioural economics perspective. He has published his research in journals as Regional Studies, Journal of Regulatory Economics, Educación XX1, International Review of Applied Economics, Annals of Public and Cooperative Economics, Revista de Educación, Revista de Economía Mundial, Investigaciones Regionales and CIRIEC-España Revista de Economía Pública, Social y Cooperativa and has written several books and book chapters. He has participated in competitive research projects financed by the European Commission (Seventh Framework Programme) and the Spanish Ministry of Science and Innovation. Personal webpage.