Across and within OECD countries, significant gaps emerge in the access and quality of education and health services. Without action, shrinking and ageing populations in many rural communities are likely to experience rising unit costs due to population decline and increasing demand with higher shares of elderly, coupled with lower digital skill-levels and lower access to teachers and medical staff. These areas also suffer gaps in access to transport networks and digital connectivity, among many others. Hastened by the COVID-19 pandemic, there is now even greater urgency to embrace digital tools and adopt forward looking and effective policy levers to ensure the delivery of effective services to citizens living in rural communities.

Alentejo, a sparsely-populated region in mid-south Portugal, has among the fastest decline in population and highest ageing rate across large OECD regions. This is expected to continue in the coming decades, putting pressure on local finances, which are already under severe strain because of the pandemic. The costs needed to provide good quality services in places with smaller and more dispersed populations are higher due to their smaller economies of scale and scope, higher transportation costs, and greater difficulties in attracting service professionals. Exacerbating this are important gaps in Alentejo’s broadband infrastructure and digital skills, especially in its rural areas, creating bottlenecks for public authorities looking to deliver some public services digitally. Alentejo is not alone, many other OECD regions face similar challenges, and, like Alentejo, they will need to develop forward looking policy responses that can embrace the opportunities provided by digitalisation, as well as other innovative solutions, including through better coordination across levels of administration that can help overcome policy silos. Focusing on education, this study provides valuable lessons for regions and all levels of government experiencing decentralisation and facing demographic challenges.

As in the rest of Portugal, Alentejo is experiencing population ageing and low in-migration due to the preference of nationals and migrants for coastal areas. Alentejo is Portugal’s TL2 region with the highest share of elderly in the population (26% of +65) and lowest share of foreign‑born population (4%). These forces, which have been gradually sustained over the past 50 years, have contributed to increase the ageing gap in Alentejo with respect to other Portuguese regions, and have contributed to economic and social decline in some municipalities. Indeed, more than half of the municipalities of the region have experienced sustained and strong population decline in recent decades. According to preliminary 2021 census data, Alentejo’s population shrank at an annual rate of 0.72% on average between 2011 and 2021, four times faster than the national average (0.17%).

The region of Alentejo is one of Portugal’s seven TL2 regions. The region has five inter-municipal communities (CIM) and 58 municipalities, including its main city, Évora (Alentejo Central). The region borders Extremadura and Andalucía (Spain) on the East, the Atlantic Ocean and Metropolitan Area of: Lisbon on the West, Algarve in the South and Centro Region in the North. With 704 934 inhabitants, Alentejo is the fourth Portuguese TL2 region in terms of population. With 31 605 km2 corresponding to about one third of the national surface, Alentejo is the largest Portuguese TL2 region in terms of surface. The population density of Alentejo (23 inhabitants per km2) is five times lower than the national level (113 inhabitants per km2) and is the lowest across Portugal’s TL2 regions ().

In Alentejo, a region with both the largest territory and the lowest population density in Portugal, population decline and ageing pose large challenges for local public service provision, in particular given the ongoing decentralisation reform in Portugal (OECD, 2020[1]). These demographic developments imply, lower demand for education services and higher demand for health care services, which, in turn, requires changes to local public service provision in the region and better articulation and coordination among levels of government. Ageing and population shrinking also puts strong pressure on municipal governments and parishes, confronted with ensuring access to quality public services while striving to maintain human resource and financial capacities.

In 2005, an ambitious school consolidation reform in Portugal aimed to address the school network’s inefficiency and strong regional inequalities. The reform accomplished the goal of reducing the number of redundant schools – mostly located in rural areas – and increase efficiency. While school consolidation is efficiency-enhancing, it may lead to increased school transportation times and costs in remote and sparsely populated areas.

The Degree of Urbanisation was designed to create a simple and neutral method that could be applied in every country in the world. It relies primarily on population size and density thresholds applied to a population grid with cells of 1 by 1 km. The different types of grid cells are subsequently used to classify small spatial units, such as municipalities or census enumeration areas (see for an example). The Degree of Urbanisation was endorsed by the UN Statistical Commission in March 2020. European Commission/ILO/FAO/OECD/UN-Habitat/World Bank (2020), “A recommendation on the method to delineate cities, urban and rural areas for international statistical comparisons”, Statistical Commission background document, 51th session, 3-6 March 2020. Items for discussion and decision: demographic statistics. Available at https://unstats.un.org/unsd/statcom/51st-session/documents/BG-Item3j-Recommendation-E.pdf