Transcript Housing and Land Markets – Economic Framework

How the other half lives:
Urbanization and Land Markets in
a Global Perspective
Robin Rajack
Urban Anchor
(Finance, Economics and Urban
Development Department
World Bank)
Nov 19th 2007
1
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?
2
I. Urbanisation and Land Consumption
3
Urban Growth Management Initiative (UGMI)– a
global representative sample of 120 cities
Source: Sheppard 2007
Regions
East Asia & the Pacific
Europe
Latin America & the Caribbean
Northern Africa
Other Developed Countries
South & Central Asia
Southeast Asia
Sub-Saharan Africa
Western Asia
Population
Size Class
100,000 to 528,000
528,000 to 1,490,000
1,490,000 and 4,180,000
> 4,180,001
Income
(annual per
Class
capita GNP)
< $3,000
$3,000 - $5,200
$5,200 - $17,000
> $17,000
4
Expansion of Accra, Ghana: 1985-2000
5
Source: The Dynamics of Global Expansion. World Bank 2005.
6
Source: The Dynamics of Global Expansion. World Bank 2005.
7
Source: The Dynamics of Global Expansion. World Bank 2005.
Global Urban Expansion
Built-up areas are increasing in developing country cities
and could triple by 2030
Built-Up Area Projections, 2000-2030 (by Region)
900
800
Area ('000 Sq.Km.)
700
600
500
2000
400
2030
300
200
100
0
N.Amer.
Europe
LAC
Africa
Asia
Ind
Dev
Region
Source: The Dynamics of Global Expansion. World Bank 2005.
8
Hypotheses Tested/Supported
• The data produce estimates that are consistent with our
hypotheses
Hypothesis
Description
1.
x
0
L
Strongly confirmed – doubling population increases urban land cover by 44 to 77
percent.
2.
x
0
y
Strongly Confirmed – doubling national income increases urban land use by 46 to 52
percent
3.
x
0
t
Confirmed – doubling fuel cost decreases urban land use by 8 to 15 percent
4.
x
0
rA
Strongly confirmed – doubling the value added per hectare in agriculture decreases
urban land use by 17 to 23 percent
5.
x
0
w
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,
Source: Sheppard 2007, UGMI
9
Policy Implications
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
Source: Sheppard 2007, UGMI
10
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.
11
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 bring
High child mortality; greater violence and crime; persistent discrimination in income
and employment.
12
Source: FEU, 2007
II. Evolution in the Bank’s
Urban Land and Shelter
Portfolio
13
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
14
Composition of Shelter Lending,
1997-2005
Over $8.5Billion (in 2001 dollars)
approved since FY97 in over 90 projects
Disaster Relief
20%
Slum Upgrading
13%
Sites and Services
17%
Slum Upgrading
Sites and Services
Housing Policy
Housing Finance
Disaster Relief
Housing Finance
31%
Housing Policy
19%
Source: Thirty Years of World Bank Shelter Lending. World Bank 2006.
15
Urban land Interventions per say…
• Sites and Services, Land Development for Relocation
• Tenure Regularisation as part of Upgrading or postconflict/ post-disaster assistance
• Regulatory Audits, associated studies and Capacity
Building
• Town Planning and Capacity Building
• Mapping/GIS/Addressage
16
III. Land as the Binding Constraint on
Shelter Affordability
17
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. Regulation
B. Public Land Management
C. Tenure
18
19
Source: Dunkerley, 1983
(A)REGULATION
• Zoning
• Plot Sizes
• Floor Area Ratio/ Floor Space Index
• Development Rights
• Legislation e.g. Urban Land Ceiling Act, India
20
Impact of Plot Size Regulation – Ethiopia (Source: Bertaud 2004)
21
Impact of Floor Area Ratio Regulation in Mumbai
(source Bertaud and Brueckner (2005)).
22
(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)
23
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
24
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.
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Source: Rajack, 2007
Results: House Price to Income Index
Variable
Log of Log of
GDP
total
PPP
Popula
tion
House
0.84
Price to
Income
Ratio
(2005)
0.39
R2
and
Adj
R2
Extent
of
Public
Land
Extent Public Public
of
Land
Land
Public Index 3 Index 4
Domin
ance of
Land
Develo
pment
N
0.28
3.08*
34 0.33
0.19
-1.62*
0.63
26
Source: Rajack, 2007
Results: Shelter Price Inflation 2000-2005
Variable
Log
of
GDP
PPP
Estimate -0.17
d Shelter
Price
Inflation
20002005
Log of
total
Popul
ation
Exten
t of
Publi
c
Land
Extent Public Land
of
Index 3
Public
Domi
nance
of
Land
Devel
opmen
t
Public N
Land
Index
4
R2
and
Adj
R2
0.12
0.28
0.45
-0.05
0.26
0.14
-0.61***
41
27
Source: Rajack, 2007
Results: Proportion of Firms Citing
Access to Land as a Major Constraint
Variable
Log
of
GDP
PPP
Log of
total
Popul
ation
%
of -4.22* -0.28
Firms
Citing
Land
Access as
a Major
Constrain
t
Exten
t of
Publi
c
Land
Extent Contiguity
of
Index
Public
Domi
nance
of
Land
Dev.
Public N
Land
Index
5
R2
and
Adj
R2
4.26
7.71*
-1.28
0.33
0.18
-8.19
36
28
Source: Rajack, 2007
Results: Proportion of Firms Citing
Access to Land as a Major Constraint
Variable
Log
of
GDP
PPP
Log of
total
Popul
ation
%
of -4.22* -0.28
Firms
Citing
Land
Access as
a Major
Constrain
t
Exten
t of
Publi
c
Land
Extent Contiguity
of
Index
Public
Domi
nance
of
Land
Dev.
Public N
Land
Index
5
R2
and
Adj
R2
4.26
7.71*
-1.28
0.33
0.18
-8.19
36
29
Source: Rajack, 2007
(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
30
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
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because the asset to be built is spatially fixed
IV. Emerging Lessons and Future Research
32
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.
33
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.
34
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
35
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.
36
V. Land Policy Dialogues –
Are we speaking the same language?
37
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
38
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
39