Population Growth, Density and the Costs of Providing Public Services

Abstract

Recent policy interest in managing local population growth has drawn attention to the fiscal pressures that population growth imposes on local governments. This paper uses 1985 data for 247 large county areas to determine the separate impacts on local government spending of two dimensions of residential development patterns, the rapidity of population growth and the intensity of land use as measured by gross residential densities. Based on a regression model that controls for other determinants of per capita spending, this study provides careful estimates of the nonlinear impacts of population growth and population density on three types of local government spending: current account spending, capital outlays and spending on public safety. The study balances the engineering and planning view that greater population density lowers the costs of providing public services by documenting a U-shaped relationship between spending and density; except in sparsely populated areas, higher density typically increases public sector spending. In addition, the results suggest that rapid population growth imposes fiscal burdens on established residents in the form of lower service levels.