Many lower density regions in the OECD face shrinkage, with projections suggesting
that half of Europe will need to manage decline in remote regions by 2050. Half of
Estonia’s counties experienced population decline greater than 25% since 1991. Shrinkage
leads to problems including lower municipal revenues, ageing, and greater per capita
costs of service and infrastructure provision. Estonia is also the most carbon-intensive
economy in the OECD, and heavily utilises its forests and land. To tackle these challenges,
the report provides analyses in a number of policy areas to respond to demographic
change in a smart and sustainable manner. A policy framework that emphasises a spatially
oriented, coordinated approach for responding to shrinkage is developed. The report
provides policy recommendations to make land use more efficient and spatial planning
more coherent. It suggests ways to improve the transfer system and strengthen the
municipal revenue base while encouraging inter-municipal cooperation. It also discusses
education, the municipalities’ largest spending responsibility, providing recommendations
that adapt the school network to shrinkage while ensuring access to high-quality education
for all students.
The OECD Centre for Entrepreneurship, SMEs, Regions & Cities, together with the Estonian Ministry of Finance and Ministry of Economic Affairs and Communication, hosted a workshop to recognise the launch of the report “Shrinking smartly in Estonia: Preparing regions for demographic change”, and the report “Shrinking patterns of Estonia: Impact of population decline on building vacancy”, that address the issue of shrinkage in Estonia from multiple policy angles