Urban sprawl and local public service costs in Japan

It is readily accepted and widely known that the phenomenon known as urban sprawl has emerged in the United States during the past few decades. However, there is also acceptance that Japanese cities have also experienced a pattern of increasing low-density growth. Arguments opposing increasing urban sprawl derive from its arguably significant environmental, social, and economic impact (for instance, Brueckner 2000, 2001; Glaeser and Kahn 2004; and Ewing et al. 2014). Among others, the influence on the costs of local public services is the most relevant for this study.

This paper empirically investigates the impact of the growth of urban sprawl on local public service costs in Japan using a local expenditure model. We undertake our analysis using cross-sectional data from 2008 for 1,093 Japanese municipalities. In the model, we combine the supply and demand functions for local public services to better separate the cost effects of urban sprawl from other factors. With the supply function, we find that supply factors, including increasing urban sprawl, positively correlate with the costs of public service provision. Overall, urban sprawl growth has a positive and significant impact on local public expenditure with estimated coefficients between 0.0929 and 0.0990. Based on a certain statistically significant and theoretically consistent outcome, this suggests that a 1 percent increase in urban sprawl in Japan will increase the marginal cost of public service provision by some 0.1280 percent.

Suburbanites can gain easier access to open space, lower traffic congestion, better schools, and less crime than can urban residents. However, local governments need to provide additional services for these residents. Nevertheless, at present, all inhabitants, including central area residents, equally share public service costs. This situation then violates not only the equity of the tax burden, but also the efficient provision of local public services. From the affirmative standpoint, there is an opinion that urban sprawl would improve if housing opportunities were provided for disadvantaged households. However, Aurand (2013), for example, does not provide evidence supporting this hypothesis, suggesting the charging of suburbanites for the additional local public service costs they generate. As a policy implication, we then suggest that local governments should charge suburbanites for the additional local public service costs they generate.