Public intervention - Muskateer Market liberalization - Marketeer Policy HEW The influence of the WTO on EU policy is limited. Cohesion policies are effective and enhance the vitality of vulnerable rural regions. As a result, the competitiveness of rural regions is increased and this buffers against globalization trends. The competitiveness and comparative advantage of European regions in the world economy is greatly enhanced. The WTO has a strong influence and this further assists European trade within the global market place. LEW Cohesion policies do not achieve their social and economic goals because the cost of policy implementation is too high. Furthermore, global influences are more strongly felt, with the WTO restricting EU subsidies. Social and economic inequalities arise from inadequate policy support. Further liberalization of existing policy structures proves impossible because of public concerns.   Governance HEW Government is strong and effective leading to the desired levels of public services. Income and regional inequalities are reduced. This leads to a vibrant democracy and caring communities. A ‘lean’ government allows regional governance structures to emerge to support public service provision on a demand basis. LEW Bureaucracy overwhelms efficient government and stifles innovation. Individuals and regions exploit incoherent policies for their own benefit, resulting in tensions and conflicts between regions. Peripheral and poor regions are disadvantaged and have little political influence, resulting in inadequate service provision. Richer regions dictate to poorer regions.   Economy HEW Policy intervention leads to the convergence of GDP between regions, resulting in a balanced spread of economic functions (demand, supply, and employment) and an expansion of the economic heart of Europe away from the London-Milan axis. Remote and intermediate rural areas are strengthened through the diversification of economic activities. In some rural areas, the primary sector remains an important part of the economy. Agricultural abandonment is reduced and rural population decline is stemmed by the creation of employment opportunities in the secondary and tertiary sectors (e.g. agri-business, services, information and communication technologies [ICT], regional tourism). Market led approaches and low taxation maximize economic benefits and keep prices low. Higher economic growth trickles down to the benefit of society as a whole, including rural regions of Europe. The adjustment to lower production costs in marginal regions increases the competitiveness of agriculture and as a consequence there is very little land abandonment. Regions diversify agricultural and other activities in line with their comparative advantages. Farmers either diversify or specialize their business activities in response to their exposure to the global market place. Tourism in peripheral regions benefits from the greater mobility of richer people LEW The high cost of intervention and subsidies leads to high taxation, high costs (employment, transport etc.), and high product prices. This leads to a lack of competitiveness in global markets. The European economy lags behind the rest of the world, with economic activities concentrating in urban and peri-urban areas. Rural areas suffer high unemployment and low incomes leading to land abandonment and the stagnation of economic activities. A lack of public investment leads to social and economic inequality between regions and between cities and rural areas. A large fraction of the food demand is met by imports resulting in the relocation of agricultural production to other parts of the world. Consequently, marginal agricultural land is abandoned and rural unemployment is high. Agricultural production intensifies in optimal areas.   Technology HEW Technological development is spread equally across Europe, including rural areas. Many public services are transformed and delivered locally through ICT. The accessibility of rural areas is greatly improved by public investment in infrastructure such as the transport network and ICT. The rate of technological development is high because of the success of private enterprise. Society at large benefits from rapid technology transfer through market mechanisms. LEW Low technological development arises from a lack of appropriate targeting (not market-led) of public expenditure. Technology transfer is low and innovation is stifled by the burden of bureaucracy. Because of short term thinking, the market does not adequately deliver technological innovation. The developments that do occur are not available to everyone. Investment in technology is concentrated in regions with a comparative advantage.   Society HEW Social values lead to local communities with strong cohesion. There is an increased demand for regional goods and services and agricultural land abandonment is low because society is willing to pay a higher price for high quality, local food. Farmers receive subsidies to provide landscape services and environmental protection, leading to an attractive countryside. Rural areas are a popular place to live and agricultural abandonment is reduced. There is strong competition between people, companies and regions leading to a virtuous circle of investment, technological development, and wealth creation. Society as a whole benefits from the high economic growth with profits being ploughed back into health, education, and infrastructure. Rural areas flourish with enterprising individuals creating new business opportunities and employment. There is little agricultural abandonment. LEW Free-riders, benefiting from society while seeking maximum personal gain, cause tensions in society. Although education levels are uniform, there are few centers of excellence, and European social development lags behind other parts of the world. People resent the economic stagnation and the high prices they have to pay for food and farmers become isolated from the wider society. In some regions agricultural land is abandoned. There are great inequalities between regions and social groups. Income and service inequalities lead to high migration between regions. People migrate from lagging regions further reinforcing inequalities. Because young people are more mobile, ageing in rural areas is reinforced. In many regions marginal agricultural land is abandoned. This leads to an increasing gap between the haves and the have-nots causing tensions in society.   Environment HEW Strong government regulation results in adequate adaptation measures to cope with environmental impacts, e.g., pollution, flooding, droughts, and forest fires. Environmental pollution is diffuse and relatively low due to both government regulation and more extensive agricultural production strategies. There is public investment in renewable energy to reduce carbon emissions. Biodiversity is protected and managed for its intrinsic value. Market-based solutions ensure adequate adaptation measures (e.g., insurance and technical innovation) to cope with negative environmental effects, e.g., pollution, flooding, droughts and forest fires. Pollution from agriculture diminishes because farmers optimize chemical inputs in an attempt to lower costs and boost profitability. There is limited investment in renewable energy because energy prices stabilize. Biodiversity is valued and managed for the services it provides to society. LEW In some regions, environmental effects, e.g., forest fires, droughts, flooding etc. form serious risks in spite of the political initiatives to adapt and attempts to mitigate carbon emissions. Subsidies push up the price of land and other agricultural production costs. Farmers respond by seeking to maximize outputs through increased inputs. Consequently, diffuse pollution (nitrates and pesticides) from agriculture is a major problem. Intensive production of bio-energy crops, especially in previously extensively used regions, has negative consequences for biodiversity, which continues to decline despite considerable effort. In some regions, environmental issues such as forest fires, droughts, flooding etc. form serious risks in spite of the attempt to use market-based solutions to cope with environmental problems. Forest fires are a problem in the Mediterranean, where forest management policy is weak. Regions with a comparative advantage intensify agricultural production and this leads to environmental pollution problems. Rising energy prices lead to a demand for bio-energy, which competes with conventional agriculture on a global market. In strong regions the pressures caused by economic growth negatively affect biodiversity, whereas in marginal regions there is little willingness to pay for conservation because other issues are more pressing.