Provision of public infrastructure in low-density urban environments: institutional framework, financing and costs

This paper analyzes the provision of local public infrastructure from the technical and economic perspectives in low-density urban settlements, i.e., municipalities. These areas, characterized by their rural nature, are classified as: (i) dispersed and disadvantaged by the European Union, (ii) eccentric and/or remote by the OECD, and (iii) unfavorable, peripheral, and in real danger of depopulation according to popular lore. The behavior of municipalities in the provision of physical infrastructure is discussed, including the scheme of intergovernmental transfers aimed at its financing, along with the rationality of the provision, which is determined by way of cost functions. This methodology allows us to obtain the minimum urban sizes and optimal densities that would be desirable for and efficient provision of local infrastructure. Actually, using indicators of effectiveness and efficiency, we propose guidelines whose realization should bring lower costs when providing basic infrastructure. These guidelines can be used by public officials in their decision-making processes when carrying out municipal urban planning.