Thursday, January 25, 2007

Lost in the Woods

Once again the Province of New Brunswick is examing the implications of the urban/rural division of the population. There has been a profound trend of migration from rural to urban areas over the last 50 years or more. It could even be argued that this trend dates to before the industrial revolution.

As long as I have been aware, which is either a long time or not long at all depending on who you are, governments have been attempting to stem or reverse the flow of people from rural to urban areas. There have been a myriad of plans, initiatives, studies, programs, and whatnot all intended to keep people from relocating to “The City”. Given that we’re still talking about the issue, it is safe to say that we haven’t found a workable program yet.

The current round of discussion began when it was suggested that some mills in the province be allowed to go out of business instead of receiving government support. Essentially, the proposal is to end an on-going subsidy to various forestry sectors. Those who oppose the idea have stated, rightly so, that this is equivalent to allowing many of the communities to die. This statement, of course, is designed to elicit an emotive response from the populace.

I spend a lot of time trying to teach my student to cut through rhetoric and examine issues critically. The simplest way to do this is to ask “Yeah, so?”.

Yeah, so? Why should be convinced that we need to subsidize the existence of each and every rural community in the province? Remember, I’m an economist, I see the world in terms of costs and benefits.

The Benefits:
1) Tradition and History: by preserving our existing rural communities we preserve a link to our rural heritage.
2) Way of Life: rural living has a great many things to recommend it.
3) No Relocation Costs: Moving is costly, both financially and emotionally.
4) Low Crime: there are relatively few violent crimes committed in rural areas, and population density seems to be an indicator of crime rates in North America.

These are all real benefits, though many are not financial. (Surprising that an economist can talk about non-financial benefits, eh?) The interesting thing to note is the majority of these benefits are all captured by the few people living in rural community receiving the subsidy. Very few 0f these benefits accrue to those who must pay the subsidy.

The Costs:
1) Opportunity Cost: Funds could have been used for a number of other programs. This includes popular programs like Health Care.
2) Service provision is more costly: By providing the required services to a widely scattered population we make those services more costly.
3) Environment Impact: Rural communities tend have high environmental impacts per person. By maintaining the same population in diffuse communities we increase the damage we do to the entire environment. Particularly in terms of green house gases.

These costs tend not to be born by the individuals receiving the benefits, but are paid by those already living in cities.

The question New Brunswickers need to ask themselves is very simple. Do we want to continue to have those in the cities subsidize those in the rural regions?

Of course this begs a larger question. Should Canadians continue doing this on a national scale through equalization payments?

4 comments:

Vanessa Childs Rolls said...

Considering that the rise and fall of rural areas has been on going for thousands of years I do not think there is an immediate solution. However, if you consider the Frederick Jackson Turner frontier thesis, it seems that the rise and fall of rural areas is necessary for peace and prosperity and the maintenance of democracy. (Look it up Jay, it's history, but you can suffer though momentarily).
On your cost benefit side. I think you should take a peek at homeless rates and Unemployment. These costs are paid for by everyone regardless of where they live and are mostly used in urban areas. I of course have no research to back this last point but I like talking out of my butt.
P.S. History Rules!

economistatlarge said...

There may be some merit to the frontier hypothesis, except that it ignores the population concentration ratios since the industrial revolution - slanted heavily to urban areas. I suspect it may be that there is a maximum sustainable rural population that is governed in large part by resource extraction and transportation technology.

Of course homelessness is mainly an urban problem, but at least part of it is a relocation problem. There are people who are the rural equivalent of homeless except they have a small track of land, etc.


Unemployment, however, is predominantly a rural problem - sorry data's my thing. :)

If you insist on talking out of your butt, at least have mint first. :)

Play more? Is Fun.

Vanessa Childs Rolls said...

The frontier thesis acknowledges the urban concentration, that is the basis of the idea that the unhappy, and poorest section of the population, must have a place to go where they can move up the social, and economic ladder. This land therefore ensures that those who might revolt, or atleast be revolting, will not revolt because there is an opportunity to better their position. Eventually, the city must "colonize", or repopulate urban areas.
Secondly, if we all move to the city who is going to grow food? Before you say Brazil, remember this kind of thinking lead to the fall of the Western Roman Empire, ie. your out go can't be more that your income.
See economics and history can play nice together!

Anonymous said...

Will Charlottetown support Toronto?

Sounds impossible? Let me explain, all of this is the confluence of technology and economics. Consider pre-industrial society. Wood and animals provided the energy to run society. Each person needs a certain amount of land for wood heat, and horsepower (whether or not they owned a horse they consumed the products of horse labour). As the city population increased the land needed also increased in rough proportion, the transportation coridors grew longer(horses hauling wood an ever increasing distance). Therefore energy efficiency decreased. This was initially offset by increased productivity by specialization of labour. However energy would eventually win and the city would strangle itself.

With the industrial revolution came fossil fuels, one coal mine/oil pool could supply the energy for an entire city. So you extract the resourse and transport it via ship/rail/pipeline to a central location. So now a tanker enters St John and gets refined where does the energy go? You could transport the energy to remote NB where industry builds it's widgets OR industry can relocate to St J. Transportation coridors shrink INCREASING energy efficiency. Result- cities are more efficient, industry relocates to cheap energy, population follows. This will continue until all of Canada relocates to Toronto which will start to resemble a Borg cube. If one refinery in St J is good why not two? There is no technical limit.

As Marx noted society is determined by technology. But now for the future! With climate change and resourse depletion we will shift to renewable energy -wind power and solar. From an economics point of view a wind turbine looks more like a tree than an oil refinery. Planting them closer together produces less not more energy.

Trees and horses are a distributed energy source (they need room to grow), cities are centralized. Fossil fuels are centralized. This creates a synergism between dense cities and fossil fuels. Renewable energy is distributed it is misfit with cities.

Consider powering Charlottown and Toronto. For a population of 20,000
you will need about 100 1MW turbines. So space the "trees" 100m apart for a distance of 10km and you lit up Charlottown. For TO you'll need 20,000 100m apart for a distance of 2000 km - ok you get the picture. You could place the turbine behind the other, but the wind is slowed by the first turbine. Either way you get the picture you get rising energy cost the denser the population you try to support. So if energy is cheaper in smaller cities than larger one factories will move to decrease costs and people will follow.

If you think about it, solar energy will work similarly. Net result a shift of population from dense cities to smaller centres.