07 June 2023

Designing infrastructure projects to invest in long-run rural prosperity

Grete Gansauer

PhD Candidate, Montana State University

Grete Gansauer

PhD Candidate, Montana State University
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Grete Gansauer is a PhD Candidate at Montana State University, and part of EdgeNet, the Regional Studies Association research network on peripheral places and regions. This month, she joins NICRE’s Bryonny Goodwin-Hawkins to convene a special session at the Association’s Annual Conference 'Transforming Regions: Policies and Planning for People and Places'. Ahead of the conference, Grete shares insights from recent research supported by funding from the US Department of Agriculture.

Rural economic development tool

Investing in infrastructure – from broadband to energy and transport – is an intuitive and widely-applied rural economic development tool. Well-maintained infrastructure networks are critical to overcoming the ‘frictions of distance’ businesses and communities experience in remote regions. Infrastructure networks enable rural products to reach larger markets; they connect rural communities to remote work, education, and digital services; and, they are an essential baseline for wellbeing and quality of life.

However, rural areas often face well-known challenges in developing infrastructure and meeting quality standards equivalent to cities. In rural areas with low population density and greater distance between settlements, per-capita and per-kilometre costs of infrastructure development are relatively high while absolute economic returns may be low. Austerity and public service rationalisation have also left many rural areas with infrastructure deficits that constrain their economic potential.

Rural Infrastructure Grete Blog

Will more infrastructure investment unlock rural potential?

Recent research from Montana State University shows that infrastructure investment may actually have mixed effects for long-run economic development and resilience in rural areas. We identified four ‘traps’ through which infrastructure development can undermine rural development goals.

  • Trap 1: Infrastructure is over-specialised to export industries. Diversification and local value retention are key economic development challenges for rural areas. However, infrastructure networks that are built primarily to export products from the region or serve the needs of a single industry can create ‘lock-in’ effects that make it more difficult to diversify the local economy in the future.
  • Trap 2: Infrastructure contradicts or fails to fulfill local social need. Because of the high costs of infrastructure provision in remote areas, infrastructures that generate few direct productivity gains may not attract investment. This can leave communities without infrastructures that meet local social needs simultaneously resisting high-value developments that bypass those needs.
  • Trap 3: Infrastructure finance prevents local wealth building. The increasing ‘financialisation’ of capital assets encourages outside investors to profit from infrastructure development. There is also evidence that competitive grant and loan schemes to support capital improvement projects may reward clever marketing over strategic economic development substance. Financial benefits from assets that are not locally owned are more likely to leave the area, too.
  • Trap 4: External interests dominate planning politics. Powerful external interests can overshadow local voices in infrastructure planning. For example, private industry is increasingly involved in infrastructure planning and finance through public-private partnerships. Politicians may also pursue particular agendas. Again, rural business and community needs may become sidelined.

Strategies to overcome rural infrastructure investment traps

To overcome chronic infrastructure deficits, local government and rural community leaders need to discern between infrastructure projects that translate into investments in their long-run economic and social prosperity, versus those that reinforce rural development barriers. Our research suggests several strategies:

  • Planners can ensure that infrastructure development fulfills the needs of multiple industries, including emerging and key growth sectors, and local value-added enterprises.
  • Infrastructure investments can be structured to invest in people as well as industry, in accordance with local and regional development goals.
  • Local and regional government can prioritise project finance mechanisms that build community assets and wealth over time.
  • Rural leaders should advocate for infrastructures that meet place-based needs and for democratic principles in infrastructure planning.

Of course, Government should continue to proactively design programmes to address disparities in infrastructure provision. But developing infrastructures to meet rural business and community needs requires more than investment alone. To support rural innovation, infrastructure planning processes need to bring material, social, and financial goals into alignment.

Related NICRE work in rural infrastructure

NICRE is currently involved in several projects relevant to rural infrastructure in Northumberland. In collaboration with Community Action Northumberland (CAN) and the Rural Design Centre Innovation Project, NICRE is working with 40 community buildings (and growing) to complete feasibilitly for solar panel installation and establish a cooperative community energy company to manage energy storage and supply. NICRE is also working in partnership with CAN and iNorthumberland to boost digital skills in rural communities as part of Commsworld’s development of full-fibre infrastructure across the county over the next 20 years. For more information about these and others, see 'Projects'.

Image credit for aerial photo: Chris Boyer, Kestral Aerial
Image credit for headshot: Kelli Roemer

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