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Fridays Academy: Urbanization and Growth

Ignacio Hernandez's picture

Urban Land Management and Housing

It is not easy to control migration into a city. Therefore, cities become overcrowded with growing competition for space, mobility and resources. In the past 30 years the urban population in the Asian and Pacific region has increased by 560 million people (or 260 per cent) and in the next 30 years it is expected to increase by about 1,450 million people (or 250 per cent).

This unprecedented urbanization process has been fueled by rapid economic growth and even more rapid industrialization. However, efficient and equitable land markets are a prerequisite for well functioning cities. Most cities in developing countries suffer from land market distortions caused by poor land development and management policies including poor planning, slow provision of infrastructure and services, poor land information systems, cumbersome and slow land transaction procedures, as well as under regulation of private land development, leading to unplanned or ribbon/corridor development of land in the urban periphery. In addition, due to the natural growth of population in urban areas as well as the influx of new migrants, urban land is increasingly becoming scarcer.

Distortions in the land markets and scarcity of urban land together allow land speculation which often prices the poor out of the formal land markets, into the informal land markets which are exemplified by slums, squatter settlements and illegal sub-divisions, mainly in the periphery of cities. This leads to longer commuting time and costs, very poor living conditions, caused by a lack adequate infrastructure and services, causing poor health and greater expenditure, thereby entrenching the cycle of poverty. The Commission on Growth and Development (2008) has noted that urban land management is crucial both to better plan sustainable cities, prevent spiraling prices and reduce poverty.

Rapid urbanization puts severe strains on urban housing, particularly in countries with a large informal sector. Unauthorized housing violates regulations concerning land ownership, land use and zoning, and building construction. Arnottt (2008), while studying the housing patterns in developing countries, notes that in 1990, what is most striking is that about two-thirds of housing units in low-income countries were unauthorized, while essentially none in high income countries (table below). This large proportion of housing that is unauthorized has impacts on government housing policy. If the government were to simply regularize unauthorized housing, developers would have little incentive to conform to regulations in the first place. Thus, the government must strike a balance between discouraging unauthorized housing and disrupting the informal housing market and hurting the needy. In addition to strains on urban housing, the very large size of the informal sector in urban areas also poses challenges for redistributive policies and urban infrastructure.

 

Rates of Owner-Occupancy, Unauthorized Housing, and Squatter Housing by Country Income Group, 1990

 

                                                                                                                                                                                                             Source: Arnott, Richard. 2008.”Housing Policy in Developing Countries: The Importance of the Informal Economy”. Working Paper Number 13. The Commission on Growth and Development, May 2008

 

(From Raj Nallari and Indira Iyer's lecture notes)