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 (Opens in a new window). 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 (Opens in a new window)” 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 (Opens in a new window) on the European Commission’s long-term vision for the EU's rural areas (Opens in a new window), the European Parliament calls for a “single EU-wide definition of functional rural areas”. The 2018 preparatory study (Opens in a new window) for the 17th session of CEMAT (Opens in a new window) 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 (Opens in a new window). 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.