State of the art and perspectives for functional area approaches in Europe

May 2023

The European Commission is actively promoting “functional area approaches” to the implementation of Cohesion Policy and, more generally, to the place-based pursuit of sustainable development. Delivery mechanisms such as Integrated Territorial Investments (ITIs), Community-led local development (CLLD), Sustainable Urban Development (SUD) and territorial strategies can all help support functional area approaches. The general rationale is that development dynamics rarely follow administrative borders. It is sometimes necessary to target territories within regions, across regional or national borders, or at a transnational scale.

This can help address key challenges such as water scarcity, biodiversity preservation, green transition in energy production and consumption, sustainable mobility and implementation of the EU farm to fork strategy (Si apre in una nuova finestra). All of these challenges require ambitious cross-sectoral approaches to arrive at effective solutions and a fair burden-sharing. Authorities, actors and stakeholders from different horizons need to engage in a dialogue. They also trigger reflections on multi-level territorial governance. The effectiveness of functional area approaches depends on framework conditions set at the European and national levels. Their proponents also need to carefully how they may provide added value to local and regional authorities and adapt to existing divisions of roles and responsibilities in targeted territories. Finally, functional area approaches raise issues regarding the democratic legitimacy of undertaken actions, insofar as targeted territories extend beyond boundaries that structure the exercise of representative democracy.

There is currently an interest in broadening the scope of functional area approaches. They have traditionally been centred on labour market areas and functional urban areas. Travel-to-work patterns were considered a good proxy of economic functional areas. As challenges such as those listed above have raised high on political agendas, alternative functional approaches are called for. Some concrete initiatives have been addressed this need. The “Functional areas in the EU (Si apre in una nuova finestra)” joint pilot initiative of the European Commission and the World Bank targeted areas such as “Lake Balaton” and “Jiu conurbations and valley”. In its report (Si apre in una nuova finestra) on the European Commission’s long-term vision for the EU's rural areas (Si apre in una nuova finestra), the European Parliament calls for a “single EU-wide definition of functional rural areas”. The 2018 preparatory study (Si apre in una nuova finestra) for the 17th session of CEMAT (Si apre in una nuova finestra) had identified no fewer than 17 types of functional areas.

The present blogpost synthesises the current “state of the art” with respect to functional area approaches and makes proposals on how they may be broadened to help address key policy challenges.

Standard “Functional areas” in policy making

As noted in the introduction, Labour Market Areas and Functional Urban Areas are established notions in public policies. Eurostat has since 2014 worked actively on the elaboration of harmonised European Labour Market Area delineations (Si apre in una nuova finestra). Labour Market Areas (LMAs) are based on criteria of self-containment (i.e. ratios of workers commuting into the area or out of it below a certain level), variable minimum numbers of workers, geographic continuity and mutual exclusivity (i.e. each portion of territory belongs to one LMA only). Different thresholds values for self-containment and size may be used depending on the geographic context (e.g. population density) and the policy context. The LMA methodology has for example been used to delineate proxy housing market areas or industrial districts (e.g. in Italy). They have also been used to describe specific commuting patterns of population groups, e.g. men and women, persons with high or low levels of qualification.

Functional urban area (FUA) delineations are based on measures of commuting around urban centres. In other words, a locality is associated to a FUA if a the corresponding urban centres is the most important out-commuting destination, and that commuting flows exceed a certain threshold value relative to its total workforce. Subtleties are then introduced to reflect “commuting chains”, i.e. commuting in direction to an urban centre which itself has a large of out-commuting in direction of another urban centre. Functional Urban Areas are mostly contained within a single LMA. However, there are LMAs that include no FUA. The European Commission and the OECD in 2019 proposed a common method for the delineation of FUAs (Si apre in una nuova finestra). The objective was to make it possible to produce “sound international comparisons of cities“.

This broad consensus in the understandings of Labour Market Areas and Functional Urban Areas does not imply that discussions on how cities may be approached functionally are closed. Cities are confronted to new challenges, e.g. in relation to climate change adaptation, the transition to sustainable mobility or the implementation of strategies for sustainable food provision. It is therefore quite possible that delineations based on commuting patterns could be complemented by other functional approaches.

Inspiration from the implementation of the Water Framework Directive

The European Water Framework Directive (Si apre in una nuova finestra) (WFD) was adopted in 2000. Without actually referring to notion of “functional areas”, its implementation has triggered integrated territorial approaches at different scales across Europe. Protecting water resources and promoting sustainable use of water brings together a broad range of actors, including urban planners, manufacturing industries, representatives of the transport, fisheries and tourism sectors, farmers, nature protection bodies and energy producers. The WFD established national and international river basin districts, but also governance instances at level of small catchment areas and even sub-catchment areas. This offered a fertile ground for reflections on optimal geographical units to address a concrete set of challenges such as reduction of pollution, conflicting uses and adaptations to climate change.

These reflections led practitioners and academics to challenge simplistic approaches to “functionality”. They observed that delineations based on a targeted “phenomenon”, e.g. the river catchment areas for water management, cannot be presumed to offer the best preconditions for effective policy design and implementation. More generally, commentators conclude that “spatial fit” offers “no panacea”. Main reasons evoked are that (A) the resolution of one boundary problem often generates new ones (B) Shifting management to a “new geography” generates transaction costs and (C) Multiple social, economic and ecological systems may need to be involved in policy responses to an emerging trend (Moss, 2012 (Si apre in una nuova finestra)). The “complexity of fit” leads observers to advocate flexible context-sensitive solutions (Ostrom et al., 2007 (Si apre in una nuova finestra)) to functional area governance. The “problem of fit” can on this basis be formulated as follows:  The problem of fit asserts that the effectiveness and the robustness of territorial governance arrangement are functions of how they fit with the social, economic and biophysical domains in which they operate, especially with respect to geographical organisation of functional relations, networks and flows within these domains (adapted from Folke et al. (2007 (Si apre in una nuova finestra))).

Key characteristics of functional approaches

Experience from the implementation of the WFD therefore suggests that aligning territorial governance areas on geospatial delineations of areas in which targeted flows and exchanges are concentrated does not lead to “robust and effective” solutions. A functional approach also presupposes that relevant actors from the targeted geographic area are associated to decision making processes and strategy implementation. The delineation of functional areas is therefore a compromise between “geospatial delineations” based on scientific evidence, administrative units and other existing governance areas.

Borders of functional areas can be “fuzzy”. The ESPON ACTAREA (Si apre in una nuova finestra) project on soft territorial cooperation provided guidance on how such functional approaches can be organised. It also produced an atlas describing 13 examples of soft territorial governance across Europe. All of these cooperation instances are based on a functional area approach. Schematic maps of cooperation areas and of overlaps between administrative units and existing territorial collaborations proved particularly useful tools to guide reflections. They help to synthesise the rationale behind the functional approach and its positioning in the institutional landscape in an effective way. Discussions around such figures also help to ensure that all involved actors share the same mental representation of the targeted area.

The main distinguishing feature of a functional area approach is the focus on flows, exchanges or other relations of (inter)dependence between territories. The previously mentioned CEMAT report (Si apre in una nuova finestra) identified 17 types of functional areas, including e.g. islands and mountain ranges and depopulated areas. Such a broad understanding makes it difficult to distinguish functional areas from territorial typologies. However, territorial typologies can usefully inform functional approaches, insofar as they are associated to specific patterns of functional relations. For example, the social, economic and institutional specificity of islands is constructed in relation to one or more mainlands. Mountain areas are structured by relations between highlands and piedmonts, while exchanges between neighbouring valleys can be limited. Settlements in sparsely populated areas tend to be organised as archipelagos. Territorial typologies can therefore help adapt functional approach to different contexts across Europe.

Functionality addressing unknowable future & Functionality as a project

Many of the key challenges listed in the introduction are characterise by extensive knowledge gaps and uncertainty about future developments. While science provides irrefutable proof of major, accelerating losses of biodiversity, our understanding of causal factors and interdependencies between ecosystems and biotopes is limited. While there is a scientific consensus on the reality of climate change, its future effects in individual territories is largely unknowable. Functional approaches are not only built around concrete problem solving or the need to adapt to changes. The objective can also be to maximise chances of dealing with an issue on the basis of patchy available evidence or to enhance resilience in the face of a largely unknowable future.

Integrated territorial strategies for biodiversity preservation offer a case in point. In many cases, involved actors consider the economic and social sustainability of a protection initiatives as they key factor of long term commitment. As a result, the integration of actors capable of developing and running ecotourism activities often plays a central role in the design of a functional approach to nature preservation. The SHAPE (Si apre in una nuova finestra) project has described multiple examples of how sustainable heritage areas can be organised around tourism. This does necessarily imply that conservation activities play a secondary role. However, involved actor may pragmatically consider that the critical factor for the spatial delineation and structuring of the protection initiative is that it offers sufficient incomes to be economically viable and socially acceptable.

The emergence of functional areas can also be a policy objective in its own right. The 15-minute city urban planning concept seeks to establish neighbourhoods as functional areas for daily life, as part of a project to improve quality of life and sustainability in cities. Cross-border labour markets can be promoted to enhance size and diversity, reduce mismatches and enhance resilience in the face of external shocks. Rural functional areas can be a grouping of actors that seek to preserve a cultural heritage or “way of life” that may be threatened by external influences. In all these cases, the objective is to generate flows and interdependencies within a given area, as an instrument to achieve certain objective. The “functional area” is therefore an output rather than a starting point.

Concluding remarks

This blogpost has challenged linear approaches to functional areas. Delineating a governance area on the basis of a geospatial delineation, reflecting patterns functional relations, networks and flows, seldom offers a robust basis for a functional approach. Experience from the implementation of the Water Framework Directive has shown that it is important to bring relevant actors from a given territory around the table, and then to make evidence-informed decisions on how to circumscribe territories that would help to set up effective policies. This presupposes a circular approach to dialogues between decision makers and experts.

by Erik Gløersen