Regional policy and the environment: The case of Germany

The paper discusses the mechanisms that integrate environmental issues into regional policies in Germany. While spatial planning incorporates environmental targets and lays down restrictions on land-use, it does not set financial incentives. Therefore, environmental protection aims are often overriden by economic development interests. In contrast, regional economic policy attempts to reduce economic disparities between regions by stimulating regional growth and mobilizing the development potential in structurally weak regions. The Joint Task Improvement of regional economic structures (GRW) mainly supports industrial investment by private companies and investment in economic infrastructure. GRW funding may improve environmental quality by modernizing old facilities, supporting specific environmental investments by private firms or improving environmental infrastructure. However, regional economic policy as practised by the GRW has also negative impacts for the environment, because accelerated regional growth is often in conflict with environmental protection and conservation goals. The GRW contains some negative restrictions to solve this conflict: GRW assistance is only granted if the investor complies with all federal, Länder and local environmental regulations as well as the restrictions on land use laid down by town and country planning.

While regional economic policy takes account of the interdependencies between regional and environmental policy, it generally does not attempt to exploit potentials for simultaneous improvement of environmental conditions and economic development (environmental gain), but mainly reduces negative repercussions of economic growth. However, there is scope for a more positive integration of environmental factors that would not require drastic changes of the current GRW framework. Important steps of such a reform include a greater emphasis on integration making environment an essential aspect of GRW assistance and establishing linkages between environmental targets, environmental criteria, environmental indicators and monitoring systems. Within this context, we discuss why the realization of environmental goals can improve regional economic development, how regional policy can promote measures that will encourage the detection and realization of such opportunities and how to change the institutional design of the GRW in order to secure environmental gain.

The environmental impacts of regional policy are an important theme for European and national policymakers. Regional policies can influence the environment via different channels. On the one hand, they may directly improve the environment by supporting environmental projects. However, on the other hand there are also - often unintended and indirect - negative effects that must be taken into consideration. This paper discusses some of the mechanisms that attempt to integrate environmental issues into regional policies in Germany. In this context, it is useful to distinguish between spatial planning (town and country planning) and regional economic policy.

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