Marco Barzman
email: marco.barzman@eco-innovation.net

Frédéric Morand
email: frederic.morand@eco-innovation.net

Morand Frédéric

European sustainable development policy (1972-2005

published or not. The documents may come

European sustainable development policy (1972-2005) :

fostering a two-dimensional integration for more effective institutions

Integrate: to form, coordinate, or blend into a functioning or unified whole (unite) (Merriam-Webster Dictionary)

1.

Introduction. How to make sustainable development policy more effective?

Since its inception over three decades ago, 'sustainable development' has been in its very essence integrative. Recurrent concerns about the effectiveness of sustainable development policy have recently prompted a semantic extension of this integration.

After a short outline of this evolution we introduce preliminary concepts in order to formulate the main question addressed in this paper.

The drive to integrate development has taken a front-seat position

Integrated development has gained a normative status among researchers and policy-makers alike. Different rationales can underpin the drive to integrate:

integration can have a geopolitical origin, such as through EU enlargement.

Integration can aim at strengthening a particular sector such as the dairy or organic food sector. It can also be cross-sectoral in nature, such as in McSharry's 1992 agrienvironmental policy 2 .

The integration of conflicting dimensions of development, such as its economic and environmental pillars, has been gathering political momentum. This concern is clearly spelled out in the Brundtland Report, which was instrumental in placing sustainable development on the policy-making radar screen. This document lists 'merging environment and economics in decision making' among the critical summit3 . Today there is hardly a policy document written without reference to integrated development and sustainable development.

Emphasising cross-societal integration: preliminary definitions

Integrated development is traditionally understood in a horizontal (cross-sectoral)

sense, whereby policies pertaining to distinct sectors, areas, or issues, are made compatible. Beyond horizontal integration, a new emphasis on governance makes explicit a more vertical dimension of integration, referring to coordination across multiple governance levels. In its White Paper on European Governance, the Commission defines governance as 'means, rules, processes and behaviour that affect the way in which powers are exercised at the European level, particularly as regards openness, participation, accountability, effectiveness and coherence ' [CEC 2001b: 11].

Governance operates at distinct social levels, and the coherence between those levels does affect governance effectiveness. For Wallace and Wallace [1996: 30] one of the most important criteria for measuring policy effectiveness is that 'the policy may change behaviour by relevant actors' [quoted in Grant et al. 2000: 3].

Making a court decision, passing a law, are 'actions'. Policy-makers are also actors.

What differentiate their action from that of 'relevant actors'? Understanding the coevolution between policy and behaviour requires a concept of governance capable of distinguishing several levels of behaviour. The concept of institution4 enables this distinction when we define it broadly, as what could be the smallest common denominator to most existing definitions of institution: regularity. Institutions are regularities in human behaviour.

Institutions are visible within very diverse situations ranging from the collective to the personal and from the formal to the informal realms. Consider 'Stopping at a red light' as an example of an institution existing at various governance levels. It is formalised in the Driving Code and is customarily observed at the personal level through personal behaviour (see Fig. 1). It is also instructed in driving manuals.

Institutions take on a variety of forms such as rules, plans, strategies, habits and behaviours. Drawing on Thévenot [2001,2005] we can represent this diversity by distinguishing three main levels (see Fig. 1). The first level is where formal rules originate. We consider 'rules' in the sense of Black's regulative rules [1962: 109 ff, quoted in Ostrom 2005: 16], i.e. as something 'laid down by an authority'. ). This second source refers to a range of legitimating realms such as science, aesthetics, religion, tradition and market competition 5 .

Fig. 1. Institutions can appear at distinct governance levels

The next two institutional levels are where formal rules are made operational.

Planning constitutes a second level. The third level is where persons behave according to routines. We adopt on a preliminary basis the definition given by Gersick and Hackman [1990: 69], where routines are the repeated exhibition of 'a functionally similar pattern of behaviour in a given stimulus situation without explicitly selecting it over alternative ways of behaving'. Anyone engaged in a personal behaviour is likely to follow routines.

Routines are traditionally seen as informal, local, and of secondary importance (at best) to policy-making, although they both are ubiquitous [START_REF] Geoffrey | The ubiquity of habits and rules[END_REF]] and enable the performance of even highly complex tasks (landing an aircraft, playing a difficult solo concerto). Routines are characterised by tacitness and the absence of choice, which is why they are the least formal regularities possible. They may represent a limit case of institution.

Integration is difficult

Some policy initiatives share the pattern of the 'Stopping at the red light' regularity:

for example 'Using the euro in 2002 in the euro-zone', and 'Using an official language in courtrooms'. Others, such as 'Integrating environmental protection requirements into the definition and implementation of Community policies'6 , are harder to observe at the lower governance levels.

Achieving behaviour change in the particular area of the environment is difficult.

According to Ludwig Kramer, a senior EC lawyer speaking in the early 1990s: 'hardly any other area of law is known for such discrepancy between regulations and actual practice, as is EC Environmental Law ' [quoted in Duncan 2000: 1]. The challenge for the EU is indeed sizeable: there are approximately 200 pieces of EC environmental legislation currently in force, including more than 140 directives [CEC 2004a: 25].

Although integration of environmental concerns has become a major drive in policymaking, the effects of this integration effort are unclear. Does the Integration

Principle ensure an effective impact of sustainable development institutions in

Europe?

To answer this question we recapitulate the policy events leading to the formal integration of environmental concerns within EU policy since the 1970s and its recent extension from an exclusively cross-sectoral focus to a cross-societal dimension ( § 2).

We highlight the challenges posed by the necessary cross-societal integration of sustainable development policy ( § 3). As a step toward answering the above question, our hypothesis is that the effectiveness of policies depends on their integration not only across policy or economic sectors but also across governance levels.

From cross-sectoral to cross-societal integration

The integration of environmental issues into policy-making is a process that has been unfolding over more than three decades. The emphasis placed on implementation issues is more recent.

Environmental concerns take on an increasingly central role in EU policy

Environmental concerns, absent from the Rome Treaty and throughout the first decade following the creation of the European Community, have gradually been raised to the status of third pillar in the Lisbon agenda in 2001. It is instructive to take a look back at this evolution.7

The long road towards the integration of environmental concerns

The Cardiff process and the Lisbon strategy mainstream environmental integration

Following the insertion of a new integration clause in the Amsterdam Treaty, the CEC [2004f]). The plan (Ibid: 3) seeks to (i) remove the obstacles so as to tap the full potential of environmental technologies for protecting the environment while contributing to competitiveness and economic growth; (ii) ensure that over the coming years the EU takes a leading role in developing and applying environmental technologies; and (iii) mobilise all stakeholders in support of these objectives.

In conclusion, persistent efforts have been devoted to the integration of environmental concerns into European law since the 1970s. Starting from a context devoid of any legal references to the environment, these efforts have resulted in a policy framework in which environmental integration is legally binding and applicable to all sectors. Eco-efficient innovation (eco-innovation) appears to offer a concept for integrating environmental concerns into other sectors of activity.

Implementation and stakeholder involvement increasingly become part of the political agenda

Besides cross-sectoral integration, aimed at mainstreaming environmental considerations across all sectors of activities, a more cross-societal process of integration is unfolding. Beyond democracy through elected representatives, direct engagement of citizens and 'civil society' organisations in the preparation and implementation of decisions emerges in the 1980s. Citizens are increasingly involved in the policy-making process at various levels.

1980s: the decentralisation thrust

The 1980s and 1990s witness an acceleration of the decentralisation and devolution process, from the creation of the French administrative regions (1981)(1982)(1983) The 5th Environmental Action Programme (1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000) is very explicit in its desire to break with centralised approaches to policy-making and policy implementation. It clearly states that 'only by replacing the command-and-control approach with shared responsibility between the various actors, e.g., governments, industry and the public, can commitment to agreed measures be achieved'. 18Subsidiarity promotes local decision-making. The subsidiarity principle stipulates that the Union not take action (except in the areas which fall within its exclusive competence) unless it is more effective than action taken at national, regional or local level. It promotes decision-making at the lowest level that is effective, be it local, regional or national. In short, subsidiarity, at least in theory, anchors decision-making

Research and international organisations usher in participatory concepts and initiatives

Such an emphasis on the cross-societal integration of governance levels is also strongly developing among research and international development organisations.

Generally, the growing literature referring to the importance of local knowledge 20 and social capital 21 can be interpreted as a significant shift away from top-down traditions in the international development world. In the public sector of most OECD In summary, after three decades of Common policy-making, integration has become a principle engraved in the EC Treaty. Efforts are being made to apply this principle to the design of new policies. The horizontal, cross-sectoral integration is being complemented, most significantly since the late 1990s, by the increasing emphasis put on a more vertical type of integration, fostering cross-society participation. In spite of the wide consensus in favour of both types of integration, there are still considerable obstacles ahead.

Implementing the integration principle remains a double challenge

Negotiations between states and/or between political groups result in new or modified laws, designed to change individual practices. For the latter change to occur however, stakeholders and citizens must experience some degree of ownership in the new law. Recent assessments by official European Commission bodies and other experts found that generating a feeling of ownership of such changes, even among EC policy-makers, remains a major challenge today. Let's address this challenge from the double point of view of cross-sectoral and cross-societal integration.

The definition of policy rules tends to remain sectoral

Some of the major barriers to cross-sectoral integration lie in the compartmentalisation of policy-making, the lack of a political will to integrate, and the misunderstanding of the rationale behind the integration principle.

Compartmentalisation between administrative units prevails

The Cardiff process, aiming at generating coherence between economic and environmental policies22 , generates mixed results. In a recent assessment the Commission warns that 'the Cardiff process has failed to deliver fully on between subsidies and barriers to sustainable development. Reforming those subsidies has become an urgent priority in many countries but considerable measurement issues are likely to make political decision difficult.

Sometimes coupled with the taxation system, the lack of integrated approaches is also apparent in the financial sector. Longer payback times from some eco-innovative investments can be responsible for limited access to finance and greater risks for investors, which are not always traditionally taken into account by policy-makers.

Political will and conceptual clarity are lacking

In the conclusion of her analysis of the implementation of the Integration Principle in the European sectors of agriculture, transport, and energy, Nele Dhondt questions the usefulness of the Integration Principle in a context where political will is lacking [Dhondt 2003: 483]. Political will is necessary in particular for reducing environmentally-harmful subsidies, a move that vested interests and organised lobbies are making difficult. For example, in the Marais Poitevin (West France) subsidies to tillage crops were significantly higher than agri-environmental contracts during the 1990s, in overlapping zones. This strongly contributed to the disappearance of the wet meadows that the agri-environmental measures aimed to protect [START_REF] Frédéric | Articuler agriculture, environnement et tourisme: l'analyse des logiques d'acteurs comme outil d'organisation du territoire. Une application de la théorie de la justification [Joining agriculture, environment and tourism: stakeholders' justifications analysis as a tool for regional development[END_REF]]. As stressed by the EEA, removing subsidies can prove a daunting task even when they have been proven harmful [EEA 2003: 59].

Political will is further hampered by a persistent confusion surrounding the meaning of 'integration'. At various levels, actors often remain trapped in a short-sighted, conservative and compartmentalised definition of integration, according to which 'respecting the environment' automatically engenders conflicts and high costs. It can be argued that this confusion plays unfavourably to sustainable development, which precisely aims to prevent socio-economic costs resulting from the lack of environmental care. The need for reconciling perspectives in a win-win strategy is at the root of the Cardiff process, which introduced sustainable development as 'a concept too often perceived as purely environmental, but which brings together concerns for social and economic development alongside protection of the environment' [CEC 1998: 5].

As a consequence of this confusion and a cause of its persistence, transposed policies tend to remain polarized between, on the one side, environmental 'protection' (e.g., the agri-environmental policy and some national translations of the Habitats, Birds, and Nitrates Directives) or, on the other side, economic 'development' (e.g., energy and transport policies in many European countries). The Commission gave recurrent warnings against this confusion in its policy evaluations, such as in its 2003 environmental policy review [CEC 2004a: 5].

Getting across governance levels is a challenge to policy integration

Even when 'sustainability-friendly' laws and regulations are passed, the whole issue of their implementation is left open. The Cardiff process, itself far from being achieved, needs further complementation, because it primarily addresses policy at the European level [IEEP 2001: 29]. Yet, as expressed repeatedly in official reports regarding the state of the environment at the European level, the political message doesn't get across governance levels, and this hampers the involvement of national and sub-national authorities, agencies, advisory councils NGOs and citizens.

Compliance failures and missed targets

Failures to comply with the integration principle are common at national levels.

Regarding Poor compliance can have serious consequences, in the area of public health for example. A report jointly published by the EEA and the United Nations Environmental Programme claims that monitoring of chemicals sold in Europe is not satisfactory, making the protection of human health very challenging [EEA 1999: 5]. 24 The general public and non-governmental organisations filed those complaints. Questions and petitions from the European Parliament also brought cases of suspected non-compliance to the attention of the Commission. 25 From 1999 to 2004 Margot Wallström was European Commissioner for the Environment. In 2004 she became Vice-President of the European Commission.

In certain cases such as air pollution in urban areas, standards set by health authorities are simply violated [EEA 2003: 35].

To many respects, the Lisbon strategy, for its particular blend of economic, social and environmental ambitions, is considered the right agenda for the EU's [CORDIS 2004].

However, because of implementation gaps such as those exemplified above, the authors of the Kok Report express their fear that the Lisbon strategy will see (…) 'many of its targets seriously missed ' [CEC 2004b: 11].

Coordination across governance levels is poor

The importance of cross-societal governance to the transition toward sustainable development is a theme common to many official concerns. For the EEA, for example, sustainable development 'requires action at all levels, local, regional, national and international' [EEA 2003: 8]. The lack of cross-societal commitment has perhaps reached its most evident point in the implementation of the Lisbon strategy, tainted by 'the absence of national involvement' [CEC 2004b: 40]. Indeed, five years after the Lisbon summit, national action plans still remain to be drawn. Overall, the Kok Report stresses the general incoherence of, and the lack of cross-societal involvement in, the Lisbon strategy. Stakeholders are not sufficiently associated with change, and a 'closer cooperation between the various stakeholders is needed' (Ibid: 40). This requires a shift in communication and dialogue, since 'transparency about the progress achieved is the key to involving those stakeholders' (Ibid.). Today the public does not understand properly 'the challenges facing Europe, why policies are developing as they are and the importance of acting together' (Ibid: 43).

In summary, implementing cross-cutting objectives as requested by the Integration Principle is difficult on a horizontal level, where traditionally compartmentalised decision-making, lack of political will and misunderstanding have been identified as important obstacles to integration. The definition of policy rules tends to remain sectoral, making them potentially conflicting. But engaging in multi-level governance, on a more vertical perspective, is also proving a challenging task.

Changing practices according to agreed principles relies on behavioural change.

Innovations instrumental to the sustainability transition exist or are within reach, but more needs to be done to encourage their development and adoption.

Conclusion. Integrating institutions across sectors and across governance levels

This overview of key European policy trends helps understand the double nature of environmental integration in a sustainable development perspective. The integration of environmental considerations, often presented as a cross-sectoral endeavour, also implies a more vertical or cross-societal dimension. [1999a, 1999b, 2000b]. 28 The South American Community of Nations comprises the countries of the Andean Community, Mercosur, Chile, Suriname and Guyana since Dec. 2004. On the regulatory challenges it faces, see e.g., Alia2 [2004], and Lipietz [2004[START_REF] Lipietz | and the Committee on Development on the Working Party mission to Venezuela from 8 to 11[END_REF].

conflicting and polarised (Brazil29 , the USA)30 . It is likely that policy-makers in most other continents are not able to refer to such a widely accepted integration principle for designing and advocating sustainable development policies.

Europeans can legitimately find a reason of satisfaction in that EU law has acknowledged the inescapable necessity of integrating environmental concerns into all policy areas. Environmental groups and leaders, moreover, are not deprived from freedom of speech in Europe. Europeans are arguably privileged in that respect, since other citizens outside Europe are not always able to refer to such fundamental principles, or even to simply express their environmental concerns.

Integration is far from embedded in personal behaviour

The Art. 6 EC, the Lisbon strategy and the 6 th European Environmental Action Plan now represent major policy instruments for environmentally-friendly development.

However green principles, even when codified in European law, do not automatically transpose into action in the field. As such, they don't appear to ensure an effective impact of sustainable development institutions in Europe. Far from it:

assessments of the Cardiff and Lisbon processes point to significant difficulties in complying with the Integration Principle. Two main types of challenges seem to remain in the way.

First, horizontal integration remains difficult. We have reviewed (p. 17 ff) some of the obstacles to this horizontal integration: political compartmentalisation, lack of political will, and misunderstanding of the meaning of integration. Moreover, achieving integrative benchmarks and standards will require significant intellectual and financial investments [see, e.g., CEC 2004e].

Benefits of principles, no matter how green they are, will remain limited as long as they don't get across governance levels. Here lies the second challenge of integration: horizontal integration is not sufficient for guaranteeing 'green' acts. The best principles mean little as long as they are not put into operation. How are principles translated into acts? How are rules made operational and effective? To answer such questions we need to look beyond the principles and not overlook which stakeholders do or do not hear them, how they perceive formal rules, respond to them and adapt them in their daily acts.

A hypothesis for sustainable development

This review shows that if the Integration Principle has become a major landmark in the institutionalisation of sustainable development policies, possibly unrivalled so far in other geopolitical blocks, its effect and the meaning people attach to it appear less than clear. Institutions expected to promote sustainable development remain incomplete and ineffective as long as they are not integrated across governance levels. Drawing on the above, we introduce the hypothesis of the two-dimensional integration necessary to the effectiveness of an institution (see Fig. 2):

(H1) The effectiveness of an institution depends on its integration across both sectors (horizontal) and governance levels (vertical).

(H1) could appear trivial: a rule works if it is followed. However, we have not yet reached a stage where the vertical integration of policy is routinely taken into account by policy-makers. The midterm assessment of the Lisbon strategy 31 bears this out clearly. This hypothesis therefore still needs to be looked at. The following observations it inspires with regard to learning may also help advance our understanding of what is at stake in vertical integration.

Fig. 2. By hypothesis, the effectiveness of an institution requires its twodimensional integration

Reform towards horizontal integration has already come a long way through the Cardiff process. Much remains to be done for translating environmentally-friendly principles into behaviours, ownership and compliance. Our research aims to address this challenge, through an investigation of how institutional levels co-evolve 32 .

We hypothesise that vertical integration (across governance levels) is important to the effectiveness of institutions. Indeed, effective institutions, such as stopping at the red light or using the euro (see Fig. 1 p. 6), co-exist at all governance levels without significant conflicts. The same cannot be said of European sustainable development policies.

Learning matters to vertical integration

If, as stated by H1, vertical integration implies the translation of a given institution across governance levels, it is tempting to submit that the translation process requires learning 33 . In other words the translation of a formal rule into consistent plans and 32 As developed elsewhere [START_REF] Frédéric | Environmentally Harmful Subsidies Policy Issues and Challenges; Proceedings of the OECD Workshop on Environmentally Harmful Subsidies[END_REF] this model is compatible with a wide range of rulemaking institutions (from local to supra-national), because of the existence of nested hierarchies. 33 This discussion of learning is developed in Morand [2006].

behaviours, that is, its effectiveness, could depend on the quality of the learning process during each switch of level. This importance of learning is reflected in the recent emphasis placed on communication and participation since the start of the 'governance turn' in European policy-making34 . Through the articulation of levels of institutions and the filling of the implementation gap, learning and cross-societal integration may mutually enhance each other. We associate vertical integration with learning in a second hypothesis:

(H2) Learning is associated with vertical integration and thus with the effectiveness of institutions.

Revisiting eco-innovation as a governance tool for sustainable development

In the light of what precedes, revisiting the concept of eco-innovation is fruitful, particularly with regard to the integration of the environment in innovation policy, and the social acceptance of environmental technologies.

Firstly, the emphasis recently put on environmental technologies and ecoinnovations (see above p. 11) is an indicator of progress with regards to the horizontal dimension of integration. Eco-innovation, indeed, emerges as a general concept for integrating the environment to the economy, i.e., for integrating environmental concerns across sectors.

This evolution is particularly welcome when one considers the persistent gap between innovation and environment issues (see Fig. 3). First, a considerable part of environmental policy is not innovation-friendly. This is the case in agrienvironmental policy and in much of nature conservation policy (see p. 19 ff).

Second, innovation, raised at the top of the political agenda by the Lisbon strategy (see p. 11), traditionally remains 'neutral' vis-à-vis environmental concerns, and fails to consider the 'direction and content of progress ' [Rennings 2000: 322]. This Secondly the later view, known as the 'technological bias ' [Rennings 2000: 323], is worth mentioning also because it omits another essential aspect of the sustainability equation: the social dimension.

For Peter James, author of one of the very few definitions in this field, ecoinnovations are 'new products and processes which provide customer and business value but significantly decrease environmental impacts ' [James 1997: p. 53]. In light of what precedes, we argue that James' definition should be complemented: ecoinnovations, if they are to be effective institutions, should also bring greater social and cultural acceptance. This 'social pillar' that we add to James's definition is necessary because it determines learning and the effectiveness of eco-innovative institutions. Drawing on (H1) and (H2), we derive that effective institutions of ecoinnovation require vertical integration:

35 For example -and with due respect -, Schumpeter [1911Schumpeter [ (1983))].

Environment Innovation

2 -Entire areas of environmental policy are locked in a concept opposing nature and technology.

For example, agrienvironmental measures ban fertilisation, which discourages eco-innovative fertilisation techniques.

1 -Traditional concepts of innovation are 'neutral' vis-à-vis the environment (… and sometimes also vis-à-vis the social acceptance of innovation).

X X

(H3) The effectiveness of eco-innovation policy requires vertical integration

Eco-innovation has a social component. This approach gives eco-innovations a status that is more than a new type of commodity, or a new sector, even though environmental technology and eco-innovation are associated with the emergence of new economic activities or even branches (e.g., waste treatment, recycling, etc). This approach considers eco-innovation in terms of usage rather than merely in terms of product. The social pillar associated with eco-innovation introduces a governance component that makes eco-innovation a more integrated tool for sustainable development. It is fortunate that ETAP reflects this dimension in its third objective 36 , even if mainstreaming it appears a challenge likely to require considerable effort in education and monitoring.

A major difficulty associated with cross-societal integration lies in the diversity in learning abilities and commitments across countries, regions and personalities. To one Nitrates Directive at the European level correspond countless different local plans, strategies, and behaviours. This heterogeneity makes cross-societal integration challenging even in the older Member States. The challenge is particularly significant among new Members States, whose experience with the acquis communautaire is far more uneven and still fresh. This difficulty makes institutional integration research all the more relevant.

The above hypotheses open some perspectives for decision-making and learning in the enlarged Europe's sustainable development policy. Which specific policies are best integrated horizontally and vertically, and in which institutional settings? On what learning processes do they rely? What 'plans' are best integrated to both 'rules' and 'personal behaviours'? Before the methodological and empirical test of these hypotheses, further discussion of the concept of institutional level, or 'governance level', is required. Indeed, matching institutional levels introduces the need for conceptual integration. A contribution to such an integrative framework is given in the next paper of the series Integrating Institutions [START_REF] Frédéric | Environmentally Harmful Subsidies Policy Issues and Challenges; Proceedings of the OECD Workshop on Environmentally Harmful Subsidies[END_REF]].

  objectives of sustainable development [World Commission on Environment and Development 1987: 49]. In 1995 the World Summit on Social Development [United Nations 1995] achieved global consensus on what constitutes sustainable development, bringing together the so-called "three E's" -environment, economy and equity. The World Summit on Sustainable Development (Johannesburg, 2002) further built on these three pillars, as did the Lisbon strategy after the 2001 Gothenburg 2 see below p. 13.

  as close as possible to the citizen. In 1996, the Conference on Rural Development in Cork emphasises the diversity of the Union's rural areas and includes subsidiarity as one of its 10-point programme. It emphasises participation and a 'bottom up approach which harnesses the creativity and solidarity of rural communities' [The European Conference on Rural Development 1996, Point 5]. In June 1998 the 4 th Ministerial Conference in the 'Environment for Europe' process (Aarhus, Denmark) adopts the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters. The Aarhus Convention, as it is called, asserts that 'sustainable development can be achieved only through the involvement of all stakeholders'. It fosters government accountability, public participation, transparency and responsiveness as key factors of environmental protection. The Rural Development Regulation presses for a greater vertical integration of governance structures [Council of the European Union 1999]. The 6th Environmental Action Programme (2001-2010) recognises that successful implementation of its environmental agenda requires participatory strategies. Besides cross-sectoral integration of environmental concerns per se, another cross-cutting objective laid out for environmental policy in the Programme consist of cross-societal approaches to implementation and information management [European Parliament and Council of the European Union 2002]. The programme puts forward a variety of novel tools such as thematic priorities, extensive deliberation and consultation processes 19 , enhanced use of the IMPEL network, or improving the knowledge base through the introduction of a new priority within the EU's 6 th RTD Framework Programme.

  countries, this trend finds an expression in the managerial concepts of client focus and responsiveness[OECD 1996a].The World Bank participates in the conceptual debate around governance and participation. The Comprehensive Development Paradigm, for example, contrasts with traditional approaches of development limited to purely economic and resource allocation issues. It addresses, through an encouragement of 'truly participative processes (such as voice, openness, transparency…, government by discussion)', the issues of resource creation and 'changes in mindsets' [Stiglitz 1999: 3-4]. Significant debates directly or indirectly triggered by the World Bank are further exploring this paradigm (see e.g.,Meier and Stiglitz [2001],[START_REF] David | Helpking People Help Themselves: From the World Bank to an Alternative Philosophy of Development Assistance[END_REF]).

  expectations' [CEC 2004d: 31]. Reflecting on three years of the Lisbon strategy, the Commission recognises in another document the difficulties lying ahead: 'Full integration of the environmental dimension into the Lisbon strategy' remains a 'main challenge for European environmental policy'[CEC 2004a: 5].European and national administrations are still significantly hampered by a strong tradition of addressing issues in isolation from one another. This is manifest for example in many RDR-supported programmes 23 in which the focus continues to be placed on agriculture, whereas, as many recognise, the situation requires a pluralist approach[Dwyer et al. 2003: vii]. This situation was identified as a major stumbling block by the Governance Working Group of the Commission[CEC 2001c: 27].Retrospective insight over the first decade after the McSharry reform indicates that the use of agri-environmental measures is not associated with cost-effective and reliable attainment of environmental objectives[OECD 2004]. As a major reason for this the OECD document mentions policy measures that are 'are pulling in opposite directions' (Ibid: 7). Regulatory barriers such as environmentally harmful subsidies or taxation typically originate in the lack of cross-sectoral coherence, as one of the first international and interdisciplinary events devoted to taking stock of environmentally harmful subsidies, stressed recently[OECD 2003]. These barriers hamper the efforts of decision-makers and investors and can result in situations unfavourable to innovators, including eco-innovators. The Common Agricultural Policy historically produced countless such barriers and it remains unclear whether the trend has been reversed. Indeed, only recently has the link been acknowledged

  the achievements of the Strategy for Sustainable Development, the European Economic and Social Committee delivers a rather critical opinion, pointing to 'inadequate efforts' and the 'major challenges' Europe continues to face [EESC 2004: 2]. As noted by the European Environmental Agency (EEA), even if most Member States have established national sustainable development strategies (NSDSs), these strategies are made 'weak' by their 'frequently soft nature and the lack of vision and pathways for delivering on the objectives' [EEA 2005: 7]. The EEA further complains of 'little evidence of NSDSs being implemented' (Ibid). Typically, over a third of all complaints and infringement cases concerning instances of non compliance with Community law investigated by the Commission are filed in the environment sector alone 24 [CEC 2004c: 7]. And the trend is not encouraging, as the Commission, in its annual survey of environmental policy implementation (Ibid.) mentions the 'growing difficulties' met in the implementation of EC environmental legislation. Overall, for Margot Wallström 25 , the failure of Member States to comply with European environmental law is (negatively) 'striking' (Ibid: 2).

  neutrality finds an expression in popular definitions of innovation where entrepreneurs are focussed on 'productivity enhancing processes', 'cost advantages' and rent-seeking [see e.g., Eurostat 2004: 10-11], with little consideration for broader social or environmental standards, norms or ethics.

Fig. 3 .

 3 Fig. 3. The conceptual gap between innovation and the environment is persistent

  One source of formal rules is the legislature and the judiciary. Parliaments, courts of justice and other organisations such as the Commission and the Council at the

	Furthermore we include in this definition what Black (Ibid.) doesn't: what he calls
	'precepts' (maxims, norms) and 'principles' (physical laws). These rules are formal
	because they follow some 'established form, custom, or rule' (Merriam-Webster
	Dictionary).

European level, propose, adopt and/or transpose the law. Legal and judicial law can originate at various administrative scales (European, regional, local). A second source of rules calls for conformity. 'Beyond this organised, precise pressure exerted by the law, there is another that arises from morals'

[Durkheim 1893[Durkheim (1984))

: 162]. Formal rules originating from outside the legislature and the judiciary, 'although not sanctioned, either directly or indirectly, by any legal code, are none the less mandatory' (Ibid.

  to make the goals of the European Sustainable Development Strategy operational. It reiterates the need to integrate environmental considerations into other policies, and fosters cross-cutting strategies that require joint action from a wide array of policy sectors. Its priority issues are climate change, nature and biodiversity, resource management, and environment and health. Commissioner Fischler's 2003 CAP reform is adopted in June 2003 and enters into force in January 2005. Although important aspects, such as decoupling aid from production, do not go without controversy 13 , the reform does condition all agricultural payments (Single Farm Payment) on compliance with environmental, food safety and animal welfare standards.

European Council requests the Commission to submit a strategy for promoting sustainable development. In June 1998 at the subsequent Cardiff European meeting, this strategy develops into the 'Cardiff Process', which aimed at tackling the 'current pattern of economic development

[which]

too often entails conflicts between development and environment'

[CEC 1998: 5]

.

The Commission

's strategy highlights key guidelines including the identification of priority actions and systematic monitoring of the environmental integration 9 . In 2001 the Gothenburg European Council adopts the Commission's Sustainable Development Strategy, which calls for further development, and rapid implementation, of environmental integration [CEC 2001a]. The Gothenburg Council also adds a third, environmental pillar to the Lisbon Strategy, which further consolidates the Integration Principle, and strengthens the review process to which environmental policy is subjected 10 . Subsequent policy developments: RDR, 6 th EAP, CAP reform, Lisbon II, ETAP Subsequent policy developments add substance to environmental integration. The Agenda 2000 reforms, agreed upon in March 1999, result in a new Rural Development Regulation (RDR), the 'second pillar' of the CAP and the basis for the pre-accession instrument SAPARD 11 . The objective of RDR is to introduce a sustainable and integrated rural development policy governed by a single legal instrument to ensure better coherence between rural development and the prices and market policy of the common agricultural policy. It makes integration of rural development in other policy areas mandatory [Council of the European Union 1999] 12 . The Commission's 6 th Environment Action Programme enters into force in 2002 [European Parliament and Council of the European Union 2002]. This programme is 9 Focussing on nine policy sectors: energy, transport, agriculture, industry, internal market, development, fisheries, general affairs and economic and financial affairs. Since 2003 the whole Cardiff process is reviewed annually (e.g., see CEC [2004d]). 10 The first review of this environmental pillar is carried out in 2003 [CEC 2004a]. 11 Special Accession Programme for Agriculture and Rural Development. SAPARD offers applicant countries a menu of measures eligible for funding. 12 Brought further, among others, by Council Regulation 1698/2005. meant In its mid-term assessment of the Lisbon strategy, the Kok Report calls for reinforcing the integration of environmental considerations, and making it 'part of Europe's competitive advantage' [CEC 2004b: 35]. Reacting to the Kok Report, President Barroso in his communication to the Spring European Council points out that the Lisbon strategy fully endorses the Integration principle, since the strategy can make Europe 'a beacon of economic, social and environmental progress to the rest of the world' [CEC 2005: 3]. A strategy privileged by the Kok Report is the promotion of eco-efficient innovations, or eco-innovations (Ibid: 36). Environmentally-friendly technologies represent a concrete example of the integration of environmental concerns in economic development policy. The Commission's services for Research and for Environment jointly delivered the Action Plan for Environmental Technologies in 2004 (ETAP, see

Table 1 . French Local Operations are co-ordinated in pluralist Steering Committees Type of member

 1 such as France that have translated Regulation 2078/92 in Local Operations applied to delimited zones, according to terms of reference that are locally defined (covering biotope conservation, landscape maintenance, pollution reduction, prevention of land abandonment and environmental risks). environmental law. The Commission recognises and supports the IMPEL network, of which it is a member.

	The 1992 CAP reform builds cross-sectoral bridges: farmers talk to environmentalists
	Implementation of Regulation 2078/92 (McSharry CAP reform), although designed
	mainly to promote environmentally-sound agriculture, does also initiate a dialogue
	between farming and environmental sectors. Through the institution of local
	consultative committees, it contributes to making the CAP more decentralised and
	participatory in addition to making it more multi-sectoral. This happens in Member

up to the entry into exercise of the Scottish Parliament, the National Assembly for Wales, and the Northern Ireland Assembly in 1999. The Assembly of European Regions (AER), a political organisation of the regions of Europe and the speaker for their interests at European and international level, is created in 1985 14 ; the Congress of Local and Regional Authorities in Europe (CLRAE) in 1993; the Committee of the Regions of the European Union (CoR) in 1994. At the turn of the century all countries have some level of decentralised control by the public.

14

Its vocation is to bring together the regions of Europe, currently represented by its 250 member regions from 26 European countries and 12 interregional organisations. (http://www.are-regions-europe.org/GB/A1/A1.html).

States

At the local level, each measure is prepared by farmers, environmentalists, local authorities and local governmental representatives participating in a Steering Committee (SC, see Table

1

). The SC is responsible for the terms of reference laid down in agri-environmental contracts. Local Operations, in spite of their limited marginal scope, are instrumental in initiating a dialogue between farming and environmental sectors, not only at the administrative levels but also with economic actors and civil society.

The 'governance turn' in European policy-making

Since the 1990s, initiatives in favour of better governance are multiplying. The Leader initiative, experimented since 1989, relies on bottom up approaches and publicprivate partnerships. It contributes to innovation, employment and growth in rural areas by promoting locally-defined strategies (see Box 2).

15

Fishermen, hunters, tourism operators, etc.

16

Study of EU environmental agencies commissioned by the Dutch Presidency of the

EU in 1991, quoted in Duncan [2000: 1]

.

European th Axis of the proposed European Agricultural Fund for Rural Development for

2007 -2013 [Europa 2005]]

. It is also used as a reference for successful rural development in other continents (see e.g.,

Warner [1999]

).

see below p. 10.

The literature offers various definitions of institutions, many of which differ in their way of delineating what is and what is not an institution, depending on whether the object of analysis isformal, legal, constitutive, normative, public, etc. Morand [2006] discusses these definitions in greater details.

See below p. 10 ff.

For more details on the progressive integration of the environment into EU law, see e.g.,Dhondt [2003] orCEC [2004g]. For simplicity's sake, the line followed here is chronological.

The 1992 EU Treaty, known as the Treaty of the European Union[European Council 2002[START_REF]Consolidated version of the Treaty on European Union[END_REF]], or Treaty of Maastricht, mentions the 'principle of sustainable development' once, in rather general terms.

For an overview of the reactions to the 2003 reform, see, e.g., Environment News Service[2003].

Liaison entre actions de développement rural, or 'Links between actions for the development of the rural economy'.

(http://europa.eu.int/comm/environment/actionpr.htm).

From even the design of the Programme itself, see e.g.,REC [2000,

2001]. 20 E.g.,OECD [1996b],[START_REF] Ray | Agricultural Extension and Rural Development. Breaking out of Traditions[END_REF],Hagedorn [2002], Malone and Yohe[2002], Gertler[2003], Finger and Schuler [2004]. 21 E.g.,[START_REF] Ostrom | Social Capital: A Fad or a Fundamental Concept[END_REF],[START_REF] Henk | No man is an island: the research programme of a social capital theory[END_REF],Ostrom and Ahn [2003].

See above p. 10.

On missionaries advocating sound management of the Amazon, see e.g.,BBC News [2005], Portal Amazônia[2005].

Consider for example the US policy in terms of consumer information on GM food [Environment News Service 2005b] or mercury emission control [Environment News Service 2005a].

See above p. 14.

Eco Innovation (www.eco-innovation.net) / Humboldt University of Berlin, RTD project QLRT-Integrated Development of Agricultural and Rural Institutions Research and Technological Development project (IDARI, QLRT-2002-02718) funded under the European Union's 5 th Framework Programme 1 (Quality of Life and the Management of Living Resources, Key Action 5)

1 Discussions within the IDARI project have been useful in developing some ideas contained in this paper and we wish to thank their organisers and participants.

Abstract

At the creation of the European Community in 1957, little attention was paid to environmental concerns. It's only in 1997, after decades of debate, that the 'Integration Principle' became formally engraved in European treaties. This principle, requiring all policies to take environmental concerns into account, represents a major landmark in the institutionalisation of environmental policy. Yet the effects of this integration appear unclear. So does its meaning. Does the Integration Principle ensure an effective impact of sustainable development institutions in Europe? We aim to answer this question by casting light on the origin and significance of the Integration Principle. We recapitulate the policy events leading to the formal integration of environmental concerns within EU policy since the 1970s. We highlight its gradual extension from a horizontal (cross-sectoral) to a vertical (cross-societal) dimension and stress the challenges posed by the necessary cross-societal integration of sustainable development policy. As a step toward answering the above question, our hypothesis is that the effectiveness of an institution depends on its integration not only across policy or economic sectors but also across governance levels. We derive implications with regard to the importance of learning to eco-innovation.

Suggested JEL classes: D70, E61, K32 (K30), N40, N50, O19, Q18, Q20