Counting the cost: maintaining access to education and health services in rural areas

After years of population decline, many rural communities now host schools with more teachers than students. Declining fertility rates, low rates of immigration and population ageing have put pressure on local services, pushing up costs per head in facilities with very few users and in some cases forcing closures. Can governments continue to provide services efficiently to people regardless of where they live?

The answer is far from straightforward. Most governments do not have reliable estimates at different geographical scales. Moreover, costs and responsibilities for education and health care are often fragmented across multiple ministries agencies, and levels of government. Even where costs are known, it is difficult to disentangle which represent inefficiencies, and which reflect a higher standard of provision.

To fill this gap, the OECD has worked with the European Commission’s Joint Research Centre to produce the report Access and Cost of Education and Health Services; the second report of the work-stream Preparing Regions for Demographic Change. It offers new, internationally comparable estimates of service costs, and simulations of optimal school and health service locations. The report also estimates changes in costs driven by future population changes under different policy scenarios to help countries plan future service delivery.

For education, the calculations show that annual costs per student in sparse rural areas are 20% higher (EUR 720) compared to cities for primary schools and 11% (EUR 681) higher for secondary schools. This cost difference can be more than 40% for primary schools in Estonia, Finland and Latvia. Looking ahead by 2035, we estimate that service demand can be satisfied while maintaining similar distances to schools with between 8% and 20% fewer primary and secondary schools in sparse rural areas; 5% and 13% less in villages; 3% and 5% less in towns and suburbs, while in cities between 6% and 8% more will be required. While further school consolidation may bring efficiencies, there are limits to this process, as students in these areas already travel on average four to five times further compared to students in cities.

For health care, the report estimates that, in Europe, on average 1 in every 100 inhabitants uses cardiology, maternity and obstetrics services. To satisfy the spread out demand in sparse areas, countries have to decide whether to operate either smaller, less cost-efficient facilities close to users, or larger ones that are more efficient but require users to travel further. While a concentrated demand in in densely-populated countries such as Belgium, Malta, the Netherlands and the United Kingdom means that less than 15% of the sparse rural population lives far from a health service location, in countries with a sparse demandp such as Sweden and Finland this percentage can be higher than 40%. These results highlight the particular struggle of locations serving extensive, sparse rural hinterlands as they face a more challenging balance between efficiency and access.

Demographic change will tighten the trade-off between costs of and access to education in rural areas. The report shows that the cost of education per student in sparse rural areas may increase by around 3% on average by 2035, even where countries close schools as a response to lower future demand. Where such closures are not made, the increase in costs will double by 2035 in sparse rural areas and rise by 60% in villages, without achieving much improvement in access. This effect is clearly stronger in countries expecting a sharper decrease in student numbers in sparse rural areas: costs rise by as much as EUR 1 243 per student in Lithuania (25% more) and EUR 741 in Latvia (14% more).

For health services, demographic changes will have very different effects depending on the type and scale of the service. For the medium-size health locations considered in the report, adapting to demographic change will require concentrating maternity and obstetrics services in many countries while increasing and dispersing the provision of cardiology services that will be more in demand due to an ageing population. By 2035, the number of cardiology service locations per user will need to increase on average by 20%. Slovenia (88%), Ireland (71%) and Denmark (64%) are expected to need much higher increases. On the other hand, the number of maternity and obstetrics service locations is expected to decrease on average by 4%. Latvia (-67%), the Slovak Republic (-56%) and Lithuania (-44%) are expected to have much higher closure rates.

This report and new database are the result of a close collaboration between CFE/OECD and the LUISA team at the EC-JRC, which has led the production of present and projected fine-grained population grids by age groups and gender for EU27 countries and the United Kingdom. You can find our present (2011) and future (2035) cost and access estimates by degree of urbanisation, regions and municipalities as well as our visualisation here.

Author profile
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Ana Isabel Moreno Monroy is an economist at the Centre for Entrepreneurship, SMEs, Regions and Cities at the OECD. Previously she worked as a Visiting Assistant Professor at the Autonomous University of Barcelona, and as Marie Sklodowska Curie Fellow at the Rovira i Virgili University and the London School of Economics. In her research she uses geo-spatial data and economic and geography methods to contribute to the design of social inclusion policies. She has published in leading academic journals including the Journal of Development Economics and the Journal of Urban Economics. Ana owns a Masters and a PhD in Economics from the University of Groningen.