Politécnica de Madrid

Diversification of the rural economy: the response to the challenges facing the countryside

Members of CEIGRAM-UPM emphasise in a report for the European SHERPA project the measures necessary to reduce the depopulation of rural areas.

In recent decades, the rural economy has faced many challenges that will eventually lead to further depopulation of rural areas. The effects are having a significant impact in those areas of Spain where agriculture represents a key economic sector, including the autonomous community of Aragon.

To fight this loss of the rural population and increase the weight of the rural economy in the region necessarily requires economic diversification and collaboration between public institutions, together with adequate networks of services, infrastructure, and communication. This is the main conclusion from the report “Change in production and diversification of the rural economy”, based mainly on Aragon territory - though it can be extrapolated to a large part of Spain. This report has been issued by Centro de Estudios e Investigación para la Gestión de Riesgos Agrarios y Medioambientales (CEIGRAM) researchers Isabel Bardají, Bárbara Soriano – both professors of  'Escuela Técnica Superior de Ingeniería Agronómica, Alimentaria y de Biosistemas' (ETSIAAB) – and Carina Folkenson as part of the European project SHERPA (Sustainable Hub to Engage into Rural Policies with Actors.)

Major challenges ahead

The rural sector of Aragon must face a series of challenges. On the one hand, about 70% of its population is concentrated in municipalities of more than 10 000 inhabitants. On the other hand, even more significant is that the share of the rural population is 15.9%, has decreased by 8.9% between 2008 and 2018.

An ageing population, the negative population growth rates and an outflow of the young population searching more populated areas in search of job opportunities continue to hamper the rural economy. As demonstrated by Eurostat, 2016, Aragón is the second-most aged European region.

However, farm production is still of great importance in many areas of the autonomous community. In 28 of them, agriculture and related services are among the top four economic activities.

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Diversification: the way out

The report issued by CEIGRAM-UPM emphasises that economic diversification is gaining relevance in the development of the rural economy because it plays a strategic role in stabilising incomes and increasing the attractiveness of rural areas, offering more job opportunities.

It must also be stressed that regional authorities and local stakeholders such as banks, providers, and distributors must work together to make this diversification real. A sectoral approach on its own is not enough. A cross-disciplinary, multi-sectoral approach is needed for agricultural policies and coordination with appropriate territorial planning, demographic policies, and economic development strategies.

According to the authors of this report: “Efforts to diversify the rural economy will only be fruitful if the general living conditions and standards are in place, such as housing, communication, and services. Without adequate general living conditions, people will continue to emigrate from rural areas regardless of the efforts made to generate work opportunities”. And: “A comprehensive and horizontal strategy is needed, taking into account the complexity of reality”.

In the specific case of Aragon, the regional authority finds that diversification contributes to overcoming some of the critical weaknesses of the rural areas, promoting job creation, entrepreneurship and services provision in the rural areas of this region.

Multi-level initiatives

Several policies are currently trying to reverse the key trends identified in the rural areas, such as national and regional initiatives or rural development programmes at the European level.

At the European level, the project “A vision for rural areas towards 2040” aims to develop a shared European vision for 2040, providing a rural action plan to guide rural communities and businesses.

In the case of Spain, the government has developed a strategy against depopulation through a plan consisting of 130 measures funded by the European Recovery Fund.

From the local perspective, the government of Aragon is currently developing the draft bill “Dynamisation of rural Aragón”, intending to coordinate the necessities and opportunities of rural areas in the region.

Concrete actions

According to this report, digitalisation, training and investments in platforms for functioning markets are the three most important actions to be developed for the rural economy. On the one hand, digitalisation is considered essential to put rural areas on equal grounds to cities. On the other, adapting education and professional training to the needs of the rural areas is vital to increase the fit between supply and demand.

Finally, for any public policy action aimed at generating employment in these areas to be effective in the long run "it is essential that rural areas have the necessary infrastructure to access local, national and international markets, either through the development of short channels or distribution platforms and/or online sales support to break the isolation of rural areas”, as said by the authors of this report.

Based on the above, to face the challenges of the rural economy, the report underlines as essential guidance the development of a coherent national diversification strategy that fits common objectives. “This strategy has to go beyond sectorial approaches and take into consideration all aspects of life and of the economy. The actual challenge lies in achieving coordination between administrations to ensure rural development interventions' effectiveness and avoid the possible negative impacts of selected planning.”