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Demographic Change and its Consequences for Cities Introduction and Overview

Bernhard Müller

Demographic Change and its Consequences for Cities Introduction and Overview

The facts are known. For over a century birth rates have been falling in Germany, and for the past seventy years each generation of children has been smaller than that of its parents. This development will intensify. By 2050 the population of Germany can be expected to fall, depending on projection, from over 82 million to under 70 million accompanied by a fundamental change in demographic structures. The proportion of people between the ages of 20 and 65, i.e., people who by present standards are of employable age, will then constitute only about 55 per cent of the total population as opposed to 62 per cent at the beginning of the millennium.

This has fundamental repercussions for social security systems, for the economy and the labour market, and for public finance. Demographic change is hence of far-reaching import for politics, for the economy, and for society, because demographic stagnation or decline strongly affect almost all politically relevant areas of action.

Local authorities are particularly affected: they bear responsibility for providing public services and are the locus of civil society engagement. Owing to demographic change, demand is falling in many areas, in some it is changing structurally, in others it is expanding. At the same time, the scope for local politics and administration is changing, for the impact of demographic decline on scarce municipal financial resources is still further limiting local government room for manoeuvre.

Where the population is falling there will tend to be a drop in demand for housing, even when developments that increase demand are taken into account (e.g., reduction in the size of households). This affects infrastructure ancillary to housing. The impact depends on the given user groups. In the medium and long terms, for example, a drop in demand for day nurseries, kindergartens, and schools is anticipated, and to some extent this is already taking place - witness the closing down of schools in many East German cities. Facilities for the elderly, and especially for the 'old elderly' will be in much greater demand.

In the field of technical public utility services, the problems to be expected - and which are often already manifest - are still more serious, for capacity utilization is dropping much more strongly in areas suffering demographic decline than it would anyway due to changing consumer behaviour (e.g., in water consumption) and to more efficient technology (e.g., in energy and district heating supply). Since durable utility systems are difficult to adapt to demographic developments, higher per capita spending is incurred, which is more and more difficult to pass on to the dwindling number of users.

It should be remembered that demographic decline is by no means a process limited to Germany or East Germany alone. It is a European phenomenon, for many regions of Europe (e.g., in Spain, Italy, France, and the United Kingdom) have been recording sometimes dramatic falls in population for decades. And the situation will worsen in the future. The European Commission in its 2001 Second Report on Economic and Social Cohesion in Europe predicted population decline in 90 of 200 NUTS 2 regions by 2025. In Germany the areas in which shrinkage is already a concern for politics, administration and society are growing steadily bigger.

And it should be noted that the subject is by no means new to experts, for as long ago as the 1980s the consequences of population decline were addressed by a number of studies. In the public arena, however, no particular need for action was seen, especially since the population was continuing to grow through immigration. And during the 1990s German unification and the shift in public attention to new growth potential in the creation of "flourishing landscapes" in the East relegated the topic to the background.

Meanwhile, the number of studies and publications on demographic change and its repercussions is increasing, and the political class takes great interest in their findings and in the action recommended. Academies, foundations, associations, and groups have been devoting more and more attention to the topic in recent years. They organise conferences, prepare position papers, and draw up recommendations for actors. State governments commission expert reports, establish administrative units and stage broad-ranging congresses to reach as many interest representatives as possible and to mobilise the public on the subject.

It is not certain how seriously the problems are now taken at the local level. The facts are still obscured by exhortations to hold put; political considerations still suggest that it is not opportune to address the topic comprehensively in local politics or to draw unpopular conclusions - as the vehement discussions on school closures in many places demonstrate. Moreover, municipal master planning does not yet appear to be sufficiently prepared to meet the challenges of demographic change. Urban redevelopment programmes in East and West Germany are oriented strongly on housing market demand, hardly any intermunicipal perspective is apparent, and regional approaches are the exception.

It is time, if not high time, for this journal to focus on the subject of demographic change and its repercussions for cities. However, treating the topic "In Focus" does not allow it to be investigated in full breadth. The aim is rather to thematize important complexes and approaches in urban studies and local government. This is undertaken by five articles, which clearly show that demographic change, in particular demographic decline, is an equally serious problem for both East and West German local authorities. The authors critically examine common theses and rash categorizations, and present the preconditions and options for local government reaction in the context of society as a whole.

With the aid of empirical data on the spatial manifestation of growth and shrinkage processes in Germany, Bernhard Müller and Stefan Siedentop demonstrate that demographic change and its consequences affect all areas of the country and confront local authorities everywhere with new challenges. Most East German cities and regions have long since embarked on a "stagnation or shrinkage path." More and more regions in West Germany will be doing so in the coming 20 years.

Beyond the extensive shifts in population distribution, growth and decline processes will in future unfold within built-up regions in close spatial juxtaposition. Developments in such areas will be less clearly characterised by polarisation between core city and surrounding areas than in the 1990s. There is much to suggest that the prevailing suburbanisation and dispersion trend of the 1990s will slow under conditions of shrinkage without reversing to become self-sustaining reurbanisation.

According to the authors, this shows that concepts confined to the narrow administrative bounds of the municipality must fall short. What is needed - following the integrated urban development concepts of recent years - is integrated regional strategies for adjusting to demographic change, drawn up in intermunicipal cooperation and placing decline or growth trends in a regional context. Planning and control of spatial development will need to adopt a paradigm of decline instead of a growth paradigm.

The spatial "distribution" of growth, the instruments relying largely on the designation of new building land and new construction, and the order-oriented control of land use and constructional development will not longer be sufficient to meet the challenges of population decline. In addition, planning and control approaches are needed that aim at stock development, stabilisation, revitalisation, and qualitative development, as well as the recycling of land and buildings. Planning is to be understood as strategic and as the management of shrinkage processes. Control must be exercised through intermunicipal cooperation, equalization arrangements, multi-level cooperation, and intersectoral coordination.

Looking at East German cities and urban regions, Peter Franz considers the concepts of growth and decline and, from a regional economic point of view, examines whether economists are right in claiming that economic performance diminishes as the population of a city declines. On the basis of a study of the 26 county boroughs (without Berlin) and 11 urban regions in East Germany, he establishes that in the first half of the 1990s demographic decline was not synonymous with a shrinking economy. And for the second half of the 1990s he shows that, although a large number of cities and urban regions experienced interaction between demographic development and economic dynamics, this was not the case in the majority of cities and urban regions. Overall, he sees signs that, after a first phase of relatively uniform development, East German cities increasingly embarked on diverging development paths in the second period under consideration.

Franz notes that the prevailing constellation in major East German cities is economic growth paralleled by a fall in population and employment. However, the author advises particular caution in judging the informative value of the growth indicators used (nominal gross value added per person employed and per capita income), since without in-depth studies there is a risk of being taken in by statistical artefacts. He refers to experience in the Ruhr District, where gainful employment has remained still farther below the national average than gross value added, so that per capita income in the region has increased more strongly than in the country as a whole, despite undisputed structural weaknesses. At the same time the study raises far-reaching issues important for local authority assessment of the situation, for example whether a fall in population has a differential impact on sectors concentrating on regional and on supraregional business, whether cities with sectoral accents, e.g., service cities, industrial cities, administrative cities, or commercial cities, display different patterns of productivity development, and whether the fall in population in East German cities is due more to economic or to demographic factors.

Klaus Peter Strohmeier and Silvia Bader look at segregation and social urban renewal in old industrial metropolitan areas, taking as their example North Rhine-Westphalia, and especially the Ruhr District, a West German region experiencing demographic decline. They take two observations as their point of departure. First, that the impact and extent of the anticipated decline in the (native) population and the qualitative and quantitative significance of migration for community life, especially in West German metropolitan areas, are notoriously underestimated, for, according to the authors, even if it proved possible to increase birth rates by adopting family promotion policies, it would take decades before the German population again experienced natural growth.

On the basis of empirical studies the authors show that disadvantaged population groups (the poor, the old, and foreigners) will in future predominate in the urban landscape, and will concentrate in certain urban areas in which social problems cumulate. The causes lie both in selective migration, especially outmigration by the German middle classes to the suburbs and in the demographic ageing of society. Moreover, owing to the differential age structures of the German and non-German populations, the greater part of the population in North Rhine-Westphalian cities will in only a few years come from an immigrant background even if no further immigration takes place. The argument draws strongly on municipal data from Essen, whose urban statistics and social reporting are to be considered exemplary and highly representative for major cities in general.

In order to avoid further clefts in urban society, the authors believe that an urban development approach is required that furthers participation, social integration, and the identification of residents with their city and their district. Existing approaches have been unable to attain this goal. New paths to civic participation are needed to reach the socially disadvantaged, too. Strohmeier and Bader propose "do-it-yourself projects" in which citizens are involved in the performance of municipal functions. People are networked and costs are cut because citizens perform functions through personal work, like school yard planting or neighbourhood improvement, which are really the job of the municipality or the housing industry. The starting point of such projects is to appeal to their individual utility for habitually mistrustful, poor people in socially unstable neighbourhoods; they provide low-threshold opportunities for non-integrated people to participate. People see that something improves if they do it themselves. Initially self-interested participation in projects generates the secondary outcome of social networks and integration, which means that "self-help" structures and mechanisms of social control come into being as well as identification with the neighbourhood and its residents. In this way - according to the authors - it is perhaps possible to establish a precondition for greater political participation in poor urban districts, which, owing to low political representation in local politics, now practically constitute "democracy-free zones" in urban society.

Apart from questions of economic development and social integration, the impact of demographic development on the infrastructure is particularly relevant for local authorities. In the field of social infrastructure, a key issue is the maintenance and restructuring of facilities in the face of declining or structurally modified demand. Such questions currently attract a great deal of public attention and are politically highly sensitive. Nonetheless, social facilities are still relatively easy to adapt in comparison to public utility technical infrastructures and transport (especially public transport) facilities, whose adaptation confronts local authorities with daunting challenges.

Matthias Koziol addresses this latter complex in his examination of the effects of demographic change on local authority technical infrastructure in East Germany. Objectively and subjectively, the operators of urban technical infrastructure systems face a completely new situation. Handling dwindling consumption and customer or tenant numbers is, according to the author, not only felt to be a negative development but also creates completely new framework conditions for planning and operating durable infrastructures. He shows that the shrinking city will be an expensive one, and that, under the conditions of demographic change and urban redevelopment, the assumed economic superiority of central systems, which used to be accepted for all metropolitan areas, will need to be relativised.

His argument is based on the following considerations. The enormous basic investment in service lines for drinking water supply, sewage disposal, electricity, and district heating are reflected in long-term effective fixed costs, the key component of charges and prices for providing these services. They contribute considerably to housing service and maintenance costs, which, in the case of unrehabilitated panel-construction housing, is often little less than the basic rent. In urban redevelopment, i.e., extensive, selective demolition or the dispersed demolition of residential buildings, direct costs are incurred in scaling down, diverting and relocating service lines, in adapting pumping stations and distribution stations, and indirect costs arise from apportioning existing fixed costs among a smaller number of consumers. Passing on the direct and indirect costs of infrastructure adjustment to the consumer is often impossible for political and legal reasons.

Koziol urges that urban redevelopment planning should be based on serious development prospects and not on best case assumptions. Utility sector concerns should be taken into account in drawing up and updating municipal urban redevelopment plans. Furthermore, clear decisions on realistic substitute uses for demolition areas should be made at an early stage. Where possible, urban development restructuring should use existing networks. Moreover, planning should take account of developments and demand in the city/suburban complex. New service lines and facilities should kept within reasonable dimensions. Where advantages are apparent, distributed solutions should be chosen.

This confronts municipalities with considerable challenges. But their scope for action threatens to become more and more restricted. Not only the general, broadly discussed crisis in public finance plays a role but also the influence of demographic change on local authority income and expenditure. Heinrich Mäding discusses this problem. He points out that this influence is often indirect and very complex. In the public and political debate, the circumstances are partly obscured by myths and imbued with fears that do not hold up to scientific scrutiny. This is the case, for example, when population decline is superficially equated with financial crisis. A differentiated examination is required. Mäding focuses on the financial effects of a drop in population for the local government level and the individual municipality and on the fiscal consequences of municipal reaction strategies.

With regard to the first aspect, the author comes to the conclusion that the thesis of a threatening local government financial crisis on the revenue side caused by national population decline is misleading because increasing public and municipal per capita income can be expected with the anticipated growth in productivity and gross national product. However, the thesis can prove valid on the expenditure side if not only the effects of a fall in population on per capita spending (expenditure lag) are taken into account but also the impact of other demographic structural effects (ageing, heterogenization, individualisation) and the consequences of migration (suburbanisation).

For the individual municipality, this picture is relativised, especially as regards revenues. In Mäding's view, local differences in demographic processes constitute the real danger for the finances of the individual local authority. For in many cases local revenues from the municipal share in income tax and financial equalization will remain below average - e.g., where the regional or local population shrinks at an above-average rate owing to natural population development, deviates negatively from the state average owing to international migration flows, or declines owing to East-West migration or suburbanisation or both. The fiscal consequences of municipal reaction strategies are no less serious, for where the population as a whole is falling, competition for residents will increase for financial reasons. Local authorities seek to improve their competitive position by taking measures that involve spending: e.g., the improvement and designation of land for residential purposes, support for home ownership, neighbourhood revitalization, attractive infrastructures and green spaces, major events in the sports business or culture. Mäding therefore perceives an indirect danger from demographic decline in attempts by local authorities to win the competition for residents by 'cut-throat' expenditure-side competition, although from an overall perspective it is clear that an individual municipality can win only at the cost of others. In conclusion, he calls for an integrated local policy that sets realistic spending priorities without losing sight of demographically determined fiscal 'dangers.'

Overall, the articles in this issue show that the consequences of demographic change for cities require interdisciplinary examination and can be dealt with only in an integrated approach. This has far-reaching consequences for local authorities. It requires not only opening the eyes of local policy to holistic approaches but also for the cross-sectional processing of the problems involved by an administration which usually thinks and acts in departmental categories. This is surely one of the biggest challenges demographic developments pose for municipal government.

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