Strategies for services in shrinking places

Alison Weingarden

Governments should focus on maintaining predominantly local services like schools and primary care. Yet, as trends like ageing, urbanisation, and population decline continue, school networks might need reorganising.

Areas with declining populations will have to make tough choices about resizing public services to match their smaller numbers and tighter budgets. Policies need to balance cost with accessibility, meaning services must remain both available and easy to reach within reasonable times and distances.

Most OECD countries have some regions that are losing people. For example, rural areas in Japan and Korea have already faced substantial population decline. Similarly, in the EU, population loss has been concentrated in remote places; nearly half of all villages and over 40% of towns have lost people in the past decade. Many more places in the OECD will face similar trends in the next decade.

Population loss can lead to economic stagnation ? and vice versa. Population decline and economic stagnation often go hand-in-hand. When areas begin to decline, job opportunities shrink, making it difficult to attract and retain young people. This cycle makes it hard for shrinking places to preserve their tax bases and fund their services. Yet loss of services can also accelerate depopulation and foster discontent.

A difficult challenge: maintaining access to services while containing costs

People in rural areas usually travel longer to access services than those in cities. The new OECD report Getting to Services in Towns and Villages looks at how towns and villages ? particularly those far from cities ? provide services that support employment and well-being. Though these places often have more local services, many have lost population, unlike similar-sized towns and villages near cities, which have grown rapidly. Areas losing population face extra challenges with oversized infrastructure like buildings and water systems that are too expensive to maintain. They may need rightsizing to prevent decay and oversupply.

Online solutions can help, but they cannot solve everything. Digital or on-demand approaches are promising, but they are unable to replace most services, especially those requiring physical presence, like medical exams or childcare. Older residents and people living in remote areas may struggle more with online services. Governments must continue to measure and consider physical access while looking for innovative solutions (OECD, 2021). In Italy, Poste Italiane?s Sportello Unico project will transform post offices in remote places into hubs for both digital and physical administrative services. Australia?s long-standing Royal Flying Doctor Service and School of the Air continue to serve very remote areas.

Keep some services local but connect to larger places, too

It is vital to keep towns and villages vibrant to ensure everyone can get to services. Small places are crucial for their residents and others nearby, especially older people and those with fewer resources. Governments should focus on maintaining predominantly local services like schools and primary care. Yet, as trends like ageing, urbanisation, and population decline continue, school networks might need reorganising, even if rural students already travel long distances to school (OECD-JRC, 2021). Other services, like universities or specialised medical or educational facilities already need larger populations to thrive. Better public transport to regional centres (larger towns or cities) can improve access to specialised services and support environmental goals.

Share of EU settlement swith negative population change (2011-21)

Many places will lose population, few will gain

Population loss is not a sign of weakness but a demographic reality. Many places in the OECD need to plan for smaller populations because internal and international migration cannot restore population growth to all places. Nor will service provision reverse mega-trends like urbanisation. Governments must plan, fund and coordinate efforts to maintain adequate service provision in all regions.

Alison Weingarden is an Economist and Project manager in the Economic Analysis, Data and Statistics Division of the Centre for Entrepreneurship, SMEs, Regions and Cities, OECD.