Estonian municipalities of fewer than 5,000 residents fighting for survival
While the state would like to see municipalities with fewer than 5,000 residents merge with neighboring local governments, small municipalities such as Setomaa and Muhu have no plans to join forces with their neighbors.
There are ten municipalities in Estonia with populations of fewer than 5,000 people.
Over the past 20 years, Estonia's peripheral and border municipalities have experienced the most visible long-term population decline. For example, Rõuge Municipality has lost more than 1,900 residents since 2006 — more than a quarter of its population. Setomaa has lost more than 1,000 residents, while Saarde Municipality has seen its population shrink by nearly 1,000.
There are relatively few small municipalities that have managed to grow their populations. One example is Nõo Municipality, which has posted steady and strong growth both over the long term (up 21.9 percent between 2006 and 2026) and in more recent years. The increase is likely driven by suburbanization linked to the proximity of Tartu. Nõo also has the highest share of children among small municipalities — 24.1 percent — indicating that young families prefer to live there.
The small islands of Muhu, Vormsi and Ruhnu, all with populations under 5,000, have recorded notable population growth compared with 2006. Muhu in particular has seen accelerated growth in recent years, with its registered population increasing 7.2 percent between 2022 and 2026.
Rõuge Municipality, which has seen the sharpest decline, has introduced measures aimed at increasing its population. Starting July 1, the municipality will increase childbirth benefits fivefold. Of the €1,000 support payment, €500 will be paid after the birth is registered and the remaining €500 when the child turns two years old.
The last major wave of municipal mergers took place in 2017 when the number of local governments in Estonia was reduced from 213 to 79. At the time, the minimum merger criterion — with some exceptions — was set at 5,000 residents, although the government's recommended benchmark was 11,000 residents.
The most recent — and only — merger since the 2017 administrative reform took place in 2025 when Jõhvi Municipality and Toila Municipality in Ida-Viru County merged to form a new Jõhvi Municipality with more than 15,500 residents.
Hardi Alliksaar, head of the local governments department at the Ministry of Regional Affairs and Agriculture, told ERR that the ministry and the government support mergers initiated by municipalities themselves.
"For example, when municipalities see themselves as functionally connected areas where people regularly cross municipal borders between home, workplaces and schools, as well as to access other services," Alliksaar said.
Alliksaar said the government has recently passed several laws aimed at giving municipalities more decision-making power and greater financial autonomy in organizing local life.
"A bill is currently being drafted that would redirect money from several earmarked support measures directly into the revenue base of cities and municipalities. These changes are planned to be taken into account in drafting the 2027 state budget," Alliksaar said.
He added that, alongside administrative-territorial reform, cooperation between municipalities in the provision of services has become increasingly important.
"We have also introduced amendments to the Local Government Organization Act, which enters into force in July and creates more flexible opportunities for cooperation," he added.
Negative birth rate and cross-border anxiety vexing Setomaa
In Setomaa, the main reason for population decline has been negative natural growth.
"In the early Covid years, we had around 25 births and 60 deaths per year and that has had the biggest impact on population decline," said Raul Kudre, mayor of Setomaa. The trend has improved only slightly since then. "We now have 15–20 births, but still 40 or even more deaths a year."
The municipality's geographic location further complicates the situation, affecting both potential new residents and visitors.
"In recent years, people's sense of threat and security concerns have increased significantly," Kudre said. "If I'm choosing a place to live from a map, do I pick somewhere near the Latvian border or here on the Russian border?" The same concern has also dealt a heavy blow to tourism. "Tourism fell by 20 percent last year and the beginning of this year saw a similar additional decline — it clearly has an impact," Kudre said.
According to Kudre, however, the municipality has not had to cut essential services.
"Look at Setomaa's operating revenues and divide them by the number of residents — we are one of the municipalities in Estonia with the highest own-source revenue per capita. We organize events ourselves, such as Seto Kingdom Day and the Lüübnitsa Onion and Fish Fair," Kudre said.
Kudre said the municipality is making major efforts to develop local life and retain young people, including through its "Young People to Setomaa" support program.
"In reality, all of our activities are aimed at ensuring that we can provide local opportunities, activities for young people and quality education close to home. We also provide infrastructure for businesses and support entrepreneurship through municipal investments, so people do not have to travel far for work or move away," the mayor said.
Muhu trying to get summer residents to move for good
Unlike many other rural municipalities in Estonia, Muhu has seen steady population growth over the past five to six years.
"We've been fortunate in that our population has continued to grow," said Raido Liitmäe, mayor of Muhu. "At our lowest point we had 1,886 residents, whereas today we have around 2,142 people according to the population register," Liitmäe said.
Much of the growth has been driven by summer home owners who have decided to settle permanently on the island.
"People have either returned here or entirely new families have moved in. They may have first bought a summer home, but by now they have become permanent residents," Liitmäe explained. "They really do live here — it's not just a fictitious registered address."
According to the mayor, the island's safe environment and convenience are the main reasons people choose to move there.
"It's no coincidence that, in the last two or three nationwide surveys by Statistics Estonia, Muhu residents rated their living environment the highest in all of Estonia," he said, noting that despite the municipality's small size, all essential services are available locally.
More than 100 students attend the local basic school.
"If a rural school has more than 100 children, then state teacher funding is enough for us to manage fully. Once the number of students drops below 100, the situation becomes somewhat problematic," the mayor said.
The municipality's main financial lifeline is personal income tax revenue.
"The state taxes paid by working-age residents registered here are our largest source of income. State support comes through the equalization fund. Muhu receives teacher funding from there, a bit of road funding and some miscellaneous social support funding," Liitmäe said.
Merging with neighbors unattractive
Despite the state's recommendation that municipalities with fewer than 5,000 residents merge with neighboring local governments, both municipalities oppose the idea.
According to Raul Kudre, Setomaa Municipality was created specifically to preserve the region's unique cultural identity.
"How could neighboring Räpina Municipality preserve Seto culture? I can't imagine it," Kudre said skeptically about merger discussions. He pointed to administrative decisions in neighboring Võru Municipality as a warning example.
"We can already see nearby that the Orava school in Võru Municipality is being closed. It is very difficult for a larger municipality to maintain sparsely populated rural areas. An exception was made to allow the creation of Setomaa Municipality and we intend to preserve it in any case," he said.
Raido Liitmäe, mayor of Muhu, is also satisfied with the municipality's current independence and does not support mergers.
"We actually had the opposite tendency. In 2017, when municipalities were being merged, we did everything possible to avoid becoming part of the large Saaremaa Municipality," Liitmäe recalled.
He said the advantages of a small municipality are efficiency and direct communication.
"It's pleasant to have a manageable size. People value the fact that communication is direct. Officials are more accessible and today we are still able to provide services," he said.
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Editor: Marcus Turovski
