The cost of non-rurality. Preparing for a better urban-rural balance in EU funding

Summary:

Rapid urbanisation in several EU Member States and the ensuing population shift from rural areas towards urban centres are generally treated in economic literature as a necessity for generating growth and wellbeing. In the last two decades, however, the overly positive assessment of this trend has shifted.

Globalisation has put increasing pressure on agriculture, food processing industries and other local cottage and SME enterprises. This has led to accelerating changes in the balance between rural and urban areas and has deeply impacted the overall socio-economic fabric of regions.

At the same time, declining rural populations make many rural communities unsustainable. Once inhabitants decide to leave areas due to falling living standards, the remaining population suffers from the further deprivation of goods and services, driving even more people to leave. Several studies have been assessing the costs associated with these changes, in particular their impact on the viability of rural communities. However, they generally fall short of the holistic assessment required, as the decline and shift of populations also create further negative spillovers on the rest of the economy, for example on urban areas that are usually at the receiving end of the influx of rural populations.

This report aims to contribute to the debate on EU rural development policy by presenting a methodology to understand the net costs and benefits of investing in rural areas to society as a whole. By doing so, it asks whether rural depopulation is just a rural problem or whether the consequences have a bearing on the whole of society, and in particular urban areas.

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