1 How the other half lives: Urbanization and Land Markets in a Global Perspective Robin Rajack Urban...

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How the other half lives: Urbanization and Land Markets in

a Global Perspective

Robin Rajack

Urban Anchor(Finance, Economics and Urban

Development DepartmentWorld Bank)

Nov 19th 2007

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Overview

I. Urbanisation and Land Consumption

II. Evolution in the Bank’s Urban Land and Shelter Portfolio

III. Land as the Binding Constraint on Urban Shelter Affordability

IV. Emerging Lessons and Future Research

V. Land Policy Dialogues – are we speaking the same language?

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I. Urbanisation and Land Consumption

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Urban Growth Management Initiative (UGMI)– a global representative sample of 120 cities

Regions Population

Size Class Income (annual per

Classcapita GNP)

East Asia & the Pacific Europe Latin America & the Caribbean Northern Africa Other Developed Countries South & Central Asia Southeast Asia Sub-Saharan Africa Western Asia

Source: Sheppard, 2007

100,000 to 528,000528,000 to 1,490,0001,490,000 and 4,180,000> 4,180,001

< $3,000 $3,000 - $5,200 $5,200 - $17,000 > $17,000

Source: Sheppard 2007

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Expansion of Accra, Ghana: 1985-2000

Source: The Dynamics of Global Expansion. World Bank 2005.

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Global Urban ExpansionBuilt-up areas are increasing in developing country cities

and could triple by 2030

Built-Up Area Projections, 2000-2030 (by Region)

0

100

200

300

400

500

600

700

800

900

N.Amer. Europe LAC Africa Asia Ind Dev

Region

Are

a ('

000

Sq

.Km

.)

2000

2030


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Hypotheses Tested/Supported

Hypothesis Description

1.Strongly confirmed – doubling population increases urban land cover by 44 to 77 percent.

2.Strongly Confirmed – doubling national income increases urban land use by 46 to 52 percent

3.Confirmed – doubling fuel cost decreases urban land use by 8 to 15 percent

4.Strongly confirmed – doubling the value added per hectare in agriculture decreases urban land use by 17 to 23 percent

5.Confirmed – increased accessibility to global markets increases urban land use– increasing the number of direct international flights increases urban land use by 6 to 16 percent,

0x

L

0x

y

0x

t

0x

w

0A

x

r

• The data produce estimates that are consistent with our hypotheses

Source: Sheppard 2007, UGMI

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Use models to determine “excess” urban land use

Use models to predict required new urban land per year

Using history between T1 and T2 as a guide, we can determine the required amount of land to make available for new urban development

Policy Implications

Source: Sheppard 2007, UGMI

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Demand for housing services is growing

More than 2/3 of new households in developing countries cannot access the formal housing market.

Approximately 1 billion people are living in slums (as defined by UN-HABITAT).

As urban population doubles between 2000 and 2030, land consumption by cities is projected to triple.

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A tale of two continents: Urbanisation in Latin America and

Africa

Latin America and the Caribbean• Urbanized continent: 77% in 2005

and 81% in 2020; 25% of inhabitants live in Informal housing.

• Slums exist in all capitals and large cities.

• Poverty and exclusion associated with residence.

Sub-Saharan Africa• Urbanizing rapidly: 35% in 2005 to

63% in 2020.• Only 10% of city populations have

access to formal housing.• Harsh conditions: no access roads,

no water, no sanitation, no solid waste pick up, overcrowding, lack of community facilities.

• Inexistent land management; obsolete land registration.

Slums and poor housing conditions bringHigh child mortality; greater violence and crime; persistent discrimination in income and employment.

Source: FEU, 2007

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II. Evolution in the Bank’s Urban Land and Shelter Portfolio

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What have we done?

Evolution of focus 1970-80s: Focus on urban upgrading and sites and

services (together comprised about 75% of portfolio) 1990s-00s: Shift to policy-based lending and housing

finance (together comprised 60% of portfolio)

Lending Portfolio In the last 30 years: $16 billion for shelter; over 180

projects in over 80 countries Ratings/performance: over 80% satisfactory

Source: FEU, 2007

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Composition of Shelter Lending, 1997-2005

Over $8.5Billion (in 2001 dollars) approved since FY97 in over 90 projects

Slum Upgrading13%

Sites and Services17%

Housing Policy19%

Housing Finance31%

Disaster Relief20%

Slum Upgrading

Sites and Services

Housing Policy

Housing Finance

Disaster Relief

Source: Thirty Years of World Bank Shelter Lending. World Bank 2006.

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Urban land Interventions per say…

• Sites and Services, Land Development for Relocation

• Tenure Regularisation as part of Upgrading or post-conflict/ post-disaster assistance

• Regulatory Audits, associated studies and Capacity Building

• Town Planning and Capacity Building

• Mapping/GIS/Addressage

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III. Land as the Binding Constraint on Shelter Affordability

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Review of 30 Years of Shelter Lending

• While ancillary markets are a factor, Land is the binding constraint to shelter affordability

• Land Market Constraints particularly acute:A. RegulationB. Public Land ManagementC. Tenure

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Source: Dunkerley, 1983

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(A)REGULATION

• Zoning

• Plot Sizes

• Floor Area Ratio/ Floor Space Index

• Development Rights

• Legislation e.g. Urban Land Ceiling Act, India

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Impact of Plot Size Regulation – Ethiopia (Source: Bertaud 2004)

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Impact of Floor Area Ratio Regulation in Mumbai

(source Bertaud and Brueckner (2005)).

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(B) PUBLIC LAND MANAGEMENT

• assertion that many developing country cities are characterized by substantial public land assets which are sub-optimally managed, leading to land supply constraints and price distortions.

– Garba and Al-Mubaiyedh (1999)

– Deininger - PRR (2003)

– Buckley and Kalarickal (2006)

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Direct Intervention: 4 ways public land management may affect land market

outcomes

• (i) withholding of land from the market;

• (ii) high transactions costs;

• (iii) limited functional decentralization; and

• (iv) unfair competition with private sector developers

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Conclusions of Public Land Review• tentative positive relationships between less dominant public sector

involvement in land development activity and better land market outcomes.

• This result was supported by other findings that better and more conservative public land management practices (limited or no land banking; auctioning of land; and patrol of sites to detect encroachment) as well as decentralization are also correlated with better land market outcomes.

• These correlations were observed for indicators of affordability, encroachment and access and not for the indicator of spatial form.

• this is potentially important and suggests that significant direct participation by the State to address land market deficiencies on average may not yield better land market outcomes for the poor.

Source: Rajack, 2007

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Results: House Price to Income Index

Variable Log of GDP PPP

Log of total Population

Extent of Public Land

Extent of Public Dominance of Land Development

Public Land Index 3

Public Land Index 4

N R2 and Adj R2

House Price to Income Ratio (2005)

0.84 0.39 0.28 3.08* -1.62* 0.63 34 0.330.19


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Results: Shelter Price Inflation 2000-2005




Extent of Public Dominance of Land Development

Public Land Index 3

Public Land Index 4

N R2 and Adj R2

Estimated Shelter Price Inflation 2000-2005

-0.17 0.12 0.28 0.45 -0.61*** -0.05 41 0.260.14


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Results: Proportion of Firms Citing Access to Land as a Major Constraint




Extent of Public Dominance of Land Dev.

Contiguity Index

Public Land Index 5

N R2 and Adj R2

% of Firms Citing Land Access as a Major Constraint

-4.22* -0.28 4.26 7.71* -8.19 -1.28 36 0.330.18


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Results: Proportion of Firms Citing Access to Land as a Major Constraint




Extent of Public Dominance of Land Dev.

Contiguity Index

Public Land Index 5

N R2 and Adj R2

% of Firms Citing Land Access as a Major Constraint

-4.22* -0.28 4.26 7.71* -8.19 -1.28 36 0.330.18


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(C)TENURE

• Absence of Secure Tenure is one of the key amenities used in the UN-HABITAT definition of slums

• Wide array of emerging ways of consolidating informal tenure

• Street Addressage – a cost-effective starting point

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Land Tenure Security matters to Urban Operations because:

• It affects the ease and price at which often high value land can be alienated to different uses and users

• It is a fundamental ingredient in the process of connecting growing urban populations with housing finance which is rapidly expanding in several parts of the world e.g. India, China, Europe

• It is an important ingredient in ensuring that target populations can choose to remain the beneficiaries of subsidised infrastructure in Upgrading Programs

• Access to housing assistance in reconstruction programs usually requires proof of a ‘regular’ claim to land because the asset to be built is spatially fixed

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IV. Emerging Lessons and Future Research

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What have we learnt?

REGULATION: We now appreciate that the economic costs of inappropriate regulation of land markets including impacts on land prices and welfare costs to the urban poor can be very substantial.

PUBLIC LAND: The hands-off ‘enabling approach’ that the international community has advised and supported has not resulted in meaningful progress in meeting the land supply needs of the urban poor.

TENURE: Improving land tenure security for the urban poor can be achieved through less conventional and less costly approaches than formal land titling. We now have better understanding of the potential benefits and limitations of improving land tenure security.

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Priority Areas for Research

REGULATION: Research on the implications of various land market distortions on urban welfare/ quality of life, particularly for the poor; and consequences of these distortions on the efficacy of donor/ government interventions

PUBLIC LAND: Research on elements of good practice for public land management in relation to infrastructure provisions, land readjustment/ redevelopment, urban sprawl control, and slum policy.

TENURE: Research on the implications of the continuum of property claims/ rights and associated formalization strategies that exist in developing country cities and access to credit, municipal infrastructure and public services.

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Land Studies in the Urban Anchor

• Expanding land access through less conventional policy instruments

• Governance and urban land management

• Land management and natural hazards

• Public land management and land market outcomes

• Stocktaking of Urban Land Portfolio: FY96-FY06

• Strengthening Citizenship through Slum Upgrading

• Land Policy Dialogues: Urban and Rural Synergies

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What are the challenges?

Data deficiency remains a major challenge to effectively addressing land market issues.

Corruption in land markets is a serious threat especially in emerging markets.

The biggest threat to policy success in the future is a public policy and governance framework that is too slow or too captured to respond to the rapid demographic growth that is occurring.

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V. Land Policy Dialogues –

Are we speaking the same language?

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Cross-sectoral linkages

• Land conversion in the peri-urban areas

• Land Policy impact on food security issues

• Land use planning, zoning regulations, land readjustment

• Compensation for the land acquisition

• Institutional integration for land administration

• Political economy concerns

• Development priorities

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Lessons learnt

• Dialogues are not as Divergent as initially thought but some of the big picture being missed

• Link between Balanced Dialogues and Balanced Projects is weaker

• Team mixture normally occurs at the Peer review level rather than core team composition

• Some encouraging examples of cross-sectoral team and project composition – e.g. Albania

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