Does low urban density increase municipal expenditure? Population density as a performance target for compact city planning in Japan

Abstract

In depopulating cities, vacant houses and lots are common throughout the urban area, creating low-density urban areas that can lead to inefficiencies in public services and financial deterioration for municipalities. However, despite some studies demonstrating the relationship between population density and public expenditure, no generalized conclusion regarding the essential effect of reducing public expenditure has been reached. Consequently, no method for rationally setting a population density as a performance target for municipalities when developing compact city planning has been established. Thus, this study used the cross-sectional data from Japanese municipalities and the exponentiation regression equation, to determine the strong relationship between population density and per-person public expenditure (PPPE). The findings are particularly noteworthy for municipalities that grew under a nationwide uniform city planning and accounting system, as they provide valuable insights into the generalization of the public expenditure reduction effect. Furthermore, this study developed a method using the exponentiation regression equation, which demonstrated an L-shaped trajectory indicating that PPPE increases at an accelerating rate when population density falls below a certain threshold. Municipalities can evaluate the efficiency of public expenditure simply by applying their population density to the regression equation. They can also verify population density as a performance target. Furthermore, this study revealed the turning point of population density at which the acceleration in the increase in PPPE begins, implying that municipalities can expect a grace period until the turning point.