From the uneven de-diversification of local financial resources to planning policies: The residentialization hypothesis

Abstract

This paper builds a theoretical framework to question the ramifications of the rise of consumption-based economy also known as residential economy in the context of a growing circulation of populations and income. We propose the term residentialization to describe the self-reinforcing and spatially uneven expansion of the residential economy, and its intertwined impacts on land use and tax revenues that are likely to influence future local planning policies. In local areas with a developing residential economy, demographic attractiveness and urbanization strongly affect the fiscal bases of property taxes and household-related taxes in general as opposed to business taxes. This process provides local governments with new fiscal revenues but also induces a growing dependence on these incomes, especially in an austerity era. This de-diversification of local financial resources results in inequalities that weigh on local governments’ financial leeway and hence on planning policies. Using a comprehensive database of the fiscal and financial resources of France's 35,000 municipalities over the last 15 years, we provide cartographic and statistical evidence of this uneven fiscal de-diversification. We build a multivariate classification of France's municipalities and show strong links between the structure and evolutions of local financial resources and the pace and forms of urbanization. These results draw attention to the economic, social, and environmental sustainability of consumption-oriented planning strategies in an austerity era.