Rural Development

Overview

Rural development refers to initiatives, policies, and programs that aim to improve the quality of life for residents of rural areas primarily through strengthening local economies and public services. As of 2020, 20% of Americans live in rural areas as defined by the U.S. Census Bureau (open country or settled areas having fewer than 2,000 housing units and 5,000 residents). Residents of rural areas produce most of our nation’s food and energy, yet on average they experience worse health outcomes, economic conditions, and energy burdens than residents of urban and suburban areas due to historic and present-day inequities.

Callout box - Census v.s. USDA Definitions of “Rural”: There are several ways that government agencies and academic researchers define what counts as a “rural” area. For instance, the U.S. Census Bureau’s definition is based on population and housing density, whereas the U.S. Department of Agriculture (USDA) uses a definition that describes rural areas as “nonmetro” counties or parishes where less than 25% of the population is commuting to or from an urban (“metro”) area with 50,000 or more residents.

Many of the predominant industries in rural areas have left a complicated impact on communities and local environments. Over the last several decades, industries like mining, agriculture, and manufacturing, which are historically more prevalent in rural areas, have experienced a decline in employment. Additionally, rural residents working in the fossil fuel, mineral, or timber industry experience economic uncertainty due to boom and bust cycles. Some rural areas have a history of “company towns,” where a manufacturer or resource-extraction company dominates the local economy, leaving behind areas of high poverty and hazardous waste when they cease operations. This phenomenon has been documented in the copper industry in the West, the coal industry in Appalachia, and textile mills in the Northeast and the South. Thus, many rural communities are saddled with industrial pollution and need financial and technical assistance to clean up contaminated sites, nurture a more diverse and sustainable array of industries, and repair public infrastructure.

Rural development efforts can leverage climate solutions to advance economic diversification and infrastructure improvement. Rural development may include incubating “green” jobs in industries like battery or electric vehicle manufacturing; bolstering outdoor recreation; improving climate resilience, water, and sewage infrastructure; improving the energy efficiency of homes and businesses; installing renewable energy systems; and supporting sustainable businesses related to agriculture, timber, forestry, fishing, and hunting.

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Rural Energy Burdens

Lowering energy burdens—the percentage of a household’s income that is spent solely on energy costs—is an important pathway for rural development because it frees up money for other necessities and creates local jobs in weatherization and sales and installations of appliances and heating and cooling equipment. In rural areas, families pay on average 40% more of their income for energy compared to their urban counterparts.

Rural housing stock tends to be older (often predating energy codes introduced in 1983), and susceptible to issues like leaky doors and windows, draftiness, and mold. Comprehensive energy-efficiency retrofits have the potential to lower household energy burdens by up to 25% and save the median low-income rural household $420 annually. However, the upfront costs of energy efficiency upgrades are out of reach for many rural households without grants or access to affordable financing. Plus, renting households may not have the authority to make such upgrades on their own. Energy-efficiency improvements in rural communities are also a source of jobs. As of 2022, 13% of energy-efficiency workers in the United States lived in rural areas. Learn more about energy-efficiency jobs in EESI’s climate jobs fact sheet.

Rural Development on Tribal Lands

Fifty-four percent of Native American and Alaska Native people live in rural areas or small towns. The federal government has unique obligations to Native American and Alaska Native tribes that extend beyond, and overlap with, its obligations to all rural residents. The federal Indian trust responsibility is “a legally enforceable fiduciary obligation on the part of the United States to protect tribal treaty rights, lands, assets, and resources.” Tribal groups are eligible for rural development programs and grants specific to tribal communities, in addition to more general rural development grants.

Federal Rural Development Programs

Some rural development projects are too large and complex for local and state governments or other entities to handle with limited resources. This is where federal support provides essential leverage. Federal programs play a major role in rural development projects through funding, technical assistance, and direct provision of services.

Though the term was not used in federal legislation until the 1950s, Congress has long recognized the need for “rural development” programs. During the New Deal era of the mid-1930s, the establishment of the Rural Utilities Service and subsequent Rural Electrification Act kickstarted years of work to electrify rural areas through farmer electrical cooperatives. This expansion of rural electrification addressed a critical gap in coverage between the service territories of privately-owned utilities that were not incentivized to invest in less populated areas and municipal utilities that served cities. Nearly 900 rural electric cooperatives are operating today, serving 42 million customers in 48 states.

Callout Box: Spotlight on the Rural Energy Savings Program - EESI has been a reliable advocate for the Rural Energy Savings Program (RESP). Run by the United States Department of Agriculture Rural Utilities Service, RESP provides rural electric cooperatives and other rural utilities with zero-percent loans to launch or expand energy-efficiency financing programs for their members. RESP is also available to green banks, community development finance institutions, state agencies, and nonprofits that provide services in rural areas. Learn more about EESI’s work on RESP here.

Since 1973, the recurring “Farm Bill” has included a rural development title, making it the primary legislative vehicle for many such programs. Farm bills, passed roughly every five years, address not only the well-being of farmers and ranchers but also of rural residents at large. While the Rural Development Policy Act of 1980 (P.L. 96-355) designated the United States Department of Agriculture (USDA) as the primary federal agency for rural development, federal resources for rural development flow through more than 20 departments and agencies. While numerous, the scattered nature of the resources make it challenging for rural communities with limited capacity to navigate the bureaucracies involved. Grant management is a hefty responsibility that requires ample time and familiarity with grantmaking processes—a part-time or volunteer government staff in a small locality is unlikely to have either. Tribal communities experience many of the same barriers to accessing federal funds as non-tribal rural communities, and face their own unique barriers as well, including cultural ones.

Despite these challenges, federal grant and loan programs for rural development are a lifeline for many rural communities. In Fiscal Year 2026, the USDA’s Rural Development mission area spent $25 billion on grant and loan programs. See below for a comprehensive list of the USDA’s Rural Development programs, sorted by issue area.