Economic Costs

The cost of providing infrastructure and services to dispersed rural housing is significantly more than to close knit communities in villages, towns and cities. Very little of this cost is recouped directly. In most cases, whether borne by government or the utility companies, the costs are ultimately passed onto the wider population to become external costs. This has left rural communities particularly vulnerable to service withdrawals which has aan adverse knock-on impact on rural economic and social development.

Post

Postal services to dispersed rural households are estimated to Post Officecosts four times as much as compared with urban areas. Consequently, there is a high level of cross-subsidisation between urban and rural customers. People living within three miles of another delivery point are currently entitled to a door-to-door collection and delivery service, a definition which includes almost every rural resident in Ireland. Delivery in Dublin is estimated to cost half the price of a postage stamp, but in rural areas is argued to be double this amount. In recognition of these high costs, in 2002 An Post proposed that roadside letter boxes should be provided for more than 500,000 remote rural addresses to increase efficiency and reduce costs. The call was opposed politically, partly on the grounds that daily contact between remote householders and the postman provided an important social benefit. Inevitably, though, the high cost of delivery has deterred the company from providing a Saturday service and An Post has continued to have poor profitability despite the fact that stamp prices are high by international levels, and it being the monopoly service provider on letter post.

Electricity

Due to the thin spread of population and housing, Ireland has some of the most extensive network per customer in the EU, resulting in high transmission losses and costs. ESB networks is forced to maintain more than three times the length of distribution circuit per customer as compared to, for example, the UK. To avoid voltage drop over this extended network, at least one transformer for every square kilometre is needed in almost 75% of Ireland. This means that Ireland has almost one-third the number of transformers as in the UK despite having a total distribution network of just half the size and 6% of its population. Even if a comparison is drawn with Scotland, a country of similar size population and with a low overall population density, ESB  networks must supply an average of 8.5 customers per kilometre compared with 11.3 for Scottish Hydro. Ireland has five times the length of overhead line to supply and maintain (154,000 km) compared with Scottish Hydro (30,000 km) despite only having two and a half times as many customers (Scott and Brereton, 2010). 

Electricty

Comparison of Network Length

The condition of the rural electricity network is a cause for concern and voltage quality standard is not being met for a significant proportion of the rural population. The low proportion of underground cable (approximately 8% underground compared with 57% in the UK) also has a significant impact on continuity of supply. Of the approximately 1.7 million wooden poles on the system, one third are over forty years old and pole rot is a significant problem. In recognition of these high costs, electricity is the only utility where a cost differential between rural and urban homes is applied. Currently, the cost differential is just 31%. In short, although a proportion of costs are recouped in recognition of higher costs, the higher price paid by rural customers falls wells short of the actual cost incurred in providing and maintaining the service.

Roads

Providing access to dispersed rural housing places a heavy burden on Roadsroads and local government budgets. Ireland has 91,000 kilometres of non-national roads representing 94% of the total length of all the country’s roads and carrying around 60% of total traffic. Ireland’s road network per head of population (25.68 km per 1,000 population) is considerably greater than the EU average and twice that of the Member State with the next highest road length (8.5 km per 1,000 population).  Many of these minor roads are laneways that evolved with farming practice and unsuited to significant traffic movements. 

Reviewing Ireland’s road maintenance budget demonstrates that the more population is dispersed, the greater the amount of road spending that is required. According to an evaluation in 2005 per capita spending in 2001 on roads in County Leitrim was €330 compared with around €50 in most urban counties. The 2010 road maintenance allocations for Donegal and Cork county councils were €25.8m and €42.4m respectively. Both of these councils also have amongst the highest number of scattered dwellings in the country. Other rural counties with high per capita spending of between €200 and €250 included Cavan, Monaghan, Roscommon and Longford.  Since 2000, over €3 billion (c. €500 million per annum) has been allocated to non-national roads. If we allow just half of the total rural allocation to one-off rural houses, the cost is about €7,500 per dwelling during this period. 

Communications

Costs for the provision of communications infrastructure are much higher per user in dispersed rural areas than for urban areas, but are borne by private operators rather than the public utility companies. Companies must cover this cost through their customer income and so this is largely transferred to all users irrespective of need or use. Consequently, scattered one-off settlement adds to the costs borne by the wider population. High speed broadband, for example, is considered essential to the social inclusion of rural communities. Delivering high speed broadband therefore presents a significant challenge. With only 67 people per km², Ireland has one of the lowest population densities in Europe. Some counties in Ireland have a population density as low as 19 people per km2 . This low population density, coupled with a thinly distributed rural population makes the deployment of a high speed broadband network infrastructure difficult and costly.  As a result, a rural/urban differential, or “digital divide” arises in terms of access to, and quality of, service.  The higher cost of provision of broadband to rural areas has meant that service providers have been reluctant to provide services to many rural areas. Instead, costs must be borne directly by private individuals and companies who have to sign up to more expensive and inferior satellite based services (Scott and Brereton, 2010). In response, the Government has had to intervene with various broadband schemes, with the current scheme estimated to cost the tax payer in the region of €350 million euro over the period to 2020 – a direct subsidy of €460 for each of the 757,000 addresses covered. Despite this, the quality of rural broadband is consistently considered poor.

Public Transport

The provision of public transport services in rural areas with highly busdispersed settlement patterns is evidently much more expensive and inefficient often running at a significant net loss and requiring significant or complete subsidisation by the State. Again, this places rural communities at continuous risk of service withdrawals. Ireland is one of the most car dependent countries in the world largely as a consequence of our suburban and extra-urban dispersed settlement patterns. This makes providing viable public transport services almost impossible in many regions.

Some expensive public transport services are essentially rural. They include the rural transport scheme which costs €16 million euro annually and mostly addresses the unmet transport needs of elderly and disabled rural residents and the school transport scheme that costs approximately €200m a year. In order to qualify for school transport, a child must be living more that 3.2 km from the nearest school in the case of primary students and 4.8 km in the case of post primary schools. Of the 135,000 pupils carried annually, about 8,000 are students with special needs, and 30% of the cost is attributable to these pupils. Contributions make up 5% of the overall cost. Therefore, around €130 million a year is attributable to mainstream primary and secondary pupils. The annual subsidy per pupil works out at €1,025 per year, which equates to around €2.80 per journey for each student (Nix 2010).

 

 

One thought on “Economic Costs

  1. Pingback: A Suburbanised Countryside – Delusional IFA Rural Planning Policy « One-Off Ireland

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