Does the ownership and management of public land matter to land market outcomes? Robin Rajack May 15 th 2006

Transcription

1 4th International Urban Research Symposium Does the ownership and management of public land matter to land market outcomes? Robin Rajack May 15 th 2006

2 Context 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 (2003) Buckley and Kalarickal (2006)

3 Public Interventions in Urban Markets Taxation Regulation Direct participation*

4 Key Research Questions What are the appropriate institutional structures for managing public land? Is land supply in cities with large public land assets more constrained than in cities with predominantly private land ownership?

5 Key Definitions public land includes all land under majority ownership or control of central government; municipalities and para-statal bodies such as State enterprises and statutory bodies however spatially the focus is on urban areas and on the rural-urban periphery. institutional arrangements imply organizational arrangements and associated human resource capacity; land information management; and land management practices

6 Structure of Presentation Section 1: conceptual framework relating public land management institutional arrangements with land market outcomes Section 2: ways in which public land management effectiveness has been evaluated in the literature Section 3: cross-country empirical analysis of relationships between public land ownership and management and specific land market outcomes Section 4: conclusions and suggestions for future research

7 Section 1: Conceptual framework: 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

8 1. Withholding of land from the market Failure to strategically interject land onto the market artificial scarcity Withholding due to policy ambivalence Efficiency and social costs of interrupted development Liu (2005)

9 1. Withholding of land from the market cont d Made potentially worse by land banking: where other land use instruments are very weak land banking is likely to achieve neither efficiency nor equity in the supply of land for urban development, since its operation will be likely to be skewed by the same defects that affect other instruments weak implementation, over bureacratisation, abuse of power. (Farvacque and McAuslan,1992 pg. 74)

10 1. Withholding of land from the market cont d Instead advice is often for land auctions or land leasing Auctions: greater transparency (strong, 2003) leasing: more flexible when complimentary institutions are incipient Hong and Bourassa (2003)

11 2) High Transaction Costs The contention is that if institutional arrangements for public land management were more efficient, the elasticity of supply of land would be greater. Convoluted Procedures Inter-Agency Coordination Statutory Provisions Governing Public Expenditure

12 2) High Transaction Costs cont d Incentive Framework of Public officials; Public Management Capacity

13 3) Public Management Insufficiently Decentralised Purported advantages of decentralisation: Greater knowledge of local needs and priorities Greater voice of local communities Stronger monitoring and enforcement Boosting of local revenue

14 3) Public Management Insufficiently Decentralised cont d Mixed experience with decentralisation: Boards in Botswana Functional Duplication in Indonesia Decentralisation affected by capacity and lack of central guidance

15 (4) Unfair Competition between public and private developers When State Agencies enjoy both regulatory and development powers, they are viewed by private sector competitors as having an advantage. This can allow the state to approve its own projects and reject or delay proposals from competitors.

16 (4) Unfair Competition between public and private developers cont d State often charges only nominally for raw land in its land development projects inherent subsidy. In these ways private sector participation can be hamstrung leading to exacerbations in the shortage of supply of developed land.

17 Section 2: Evaluation of Public Management Effectiveness in the Literature (i) Reviews from an Asset Management Perspective; (ii) Reviews from a Production Function Perspective; and (iii) Reviews of Comparative Transaction Costs and Development Outputs

18 Bertaud et al (2005) - India Reviews from an Asset Management Perspective Premised on opportunity cost of public land use Focus on Information Management, Accounting systems and Revenue realisaton Conway (2006) Australia Peterson (2007) Leasing McKellar (2006) Canada

19 Reviews from a Production Function Perspective data intensive model appraises inventory control, production, sales, management systems and operational areas such as land acquisition Van Meurs (1986) Agence Fonciere d Habitation (AFH) in Tunisia Korea Development Corporation (KLDC) in South Korea

20 Reviews of Comparative Transaction Costs and Development Outputs widespread in evaluating progress of land registration projects involving business process re-engineering and computerization of land records mainstreamed in the World Bank s Doing Business and Investment Climate Surveys The underlying notion is that a reduction in transaction costs for key procedures and an increase in developmental outputs are evidences of success

21 Reviews of Comparative Transaction Costs and Development Outputs cont d Reforms at the Bangalore Development Authority (BDA), India McKinsey,2004 Institutional reforms and development outputs in Trinidad Rajack and Barhate (2004) Privitisation in the Russian Federation Kisunko and Coolidge (2007)

22 Section 3: Cross-Country Empirics Probe for correlations between particular features of public land management and specific land market outcomes Probe for correlations between extent of public land ownership and land market outcomes

23 Data Sources First round data from the World Bank supported Urban Growth Management Initiative Partial Second Round data from the Urban Growth Management Initiative The World Bank s Investment Climate Assessment Database Henderson s Decentralisation Index Database Original Data Collection

24 Original Data Collection on key parameters of public land management Relative extent of public land ownership Active public land management functions Degree of decentralization in public land management Degree of functional agglomeration in public land management Whether regulatory and development functions are combined in any State Agencies Status of Information Organisation re computerization and reliability Existence of Special Empowered Agencies engaged in the management of public land

25 Original Data Collection cont d : Existence of a devoted agency for a wide array of public land management functions Reliance upon in house versus outsourced land management capacity Extent of reliance on Banking Whether the cadastre and registry are either integrated into one institution or at least enjoy strong coordination Relative level of land development activity of the public sector compared to the private sector.

26 Public Management Indices Public Index 1 Represents How Derived Ran ge Public Information Management Sum of : Information Records mostly complete and reliable (1,0); and Coordination of Registry and Cadastre (1,0) Remarks 0-2 Higher score indicates better land information manageme nt.

27 Public Management Indices Represents How Derived Range Remarks Public Index 2 Public Organisational Arrangements and Capacity Sum of: Existence of a Specially Empowered Agency (1,0); and Existence of a single Agency with multiple functions (1,0); and Significant in-house capacity (1,0); and Non-existence of a dual purpose Agency that develops and regulates (1,0) 0-4 Higher score indicates more favourable organization al arrangement s and capacity

28 Public Management Indices Public Index 3 Represents How Derived Rang e Public Management Practices Sum of: banking not regularly used (1,0) and Public s regularly patrolled (1,0); and Auctions Used (1,0). Remarks 0-3 Higher score represents better public land manageme nt practices

29 Public Management Indices Public Index 4 Represents How Derived Rang e Composite of 2 Indices Sum of: Public Index 1; and Public Index 2. Remarks 0-6 Higher score indicates better public land information management and organizational arrangements and capacity

30 Public Management Indices Represents How Derived Rang e Remarks Public Index 5 Composite of 3 Indices Sum of: Public Index 1; and Public Index 2; and Public Index Higher score indicates better public land information management, organizational arrangements & capacity and public land management practices

31 Results: City Distribution by Index 1 Low (0) Med (1) High (2) Proportion of 28% 35% 37% Cities Example Cities Dhaka Manila Caracas Cairo Ho Chi Minh City Istanbul Warsaw Coimbatore Buenos Aires Hong Kong Santiago Seoul

32 Results: City Distribution by Index 2 Low (0-1) Moderate (2) High (3-4) Proportion of 35% 28% 37% Cities Example Cities Accra Bacolod Rajshahi Manila Alexandria Moscow Mumbai Tehran Bangaore Algiers Warsaw Valledupar

33 Results: City Distribution by Index 3 Low (0-1) Moderate (2) High (3) Proportion of 32% 47% 21% Cities Example Cities Bacolod Ahvaz Mumbai Guaruja Addis Ababa Coimbatore Shymkent Pusan Tehran Tebessa Manila

34 Results: City Distribution by Extent of Public Ownership Low (less than 25%) Moderate (25-50%) High (>50%) Proportion of 62% 19% 19% Cities Example Cities Coimbatore Caracas Dhaka Buenos Aires Guangzhou Accra Ho Chi Minh City Pusan Istanbul Addis Ababa Moscow Singapore Algiers Warsaw

35 Results: City Distribution by Extent of Public Sector Dominance of Development Low to Moderate (1-3) High (4-5) Proportion of Cities 68% 32% Example Cities Guadalajara Seoul Vijayawada Montivideo Manila Accra Algiers Cairo Ho Chi Minh City Guangzhou Moscow

36 Results: House Price to Income Index Variable Log of GDP PPP Log of total Popula tion Extent of Public Extent of Public Domin ance of Develo pment Public Index 3 Public Index 4 N R 2 and Adj R 2 House Price Income Ratio (2005) to * -1.62*

37 Results: Shelter Price Inflation Variable Estimate d Shelter Price Inflation Log of GDP PPP Log of total Popul ation Exten t of Publi c Extent of Public Domi nance of Devel opmen t Public Index 3 Public Index 4 N R 2 and Adj R ***

38 Results: Contiguity of Built Development Contiguity of Built Development Chonan Gorgan Harare Guaruja Algiers Guangzhou Seoul Jalna Alexandria Kanpur Shymkent Mumbai Moscow Ho Chi Minh City Dhaka Zugdidi Warsaw Istanbul Ribeirao Preto Budapest Banjul Hyderabad Guadalajara Tijuana Cebu Buenos Aires Bandung Valledupar Jaipur

39 Results: Contiguity Index Variable Contiguit y Index around 2000 GDP PPP Total Popul ation e- 08* Slope Exten t of Publi c Extent of Public Domin ance of Devel opmen t Publi c Index 3 Publi c Index 4 N R 2 and Adj R

40 Results: Proportion of Invaded that is Public 1.2 Estimated Percentage of Invaded that is Public Owned Aswan Alexandria Cairo Accra Bandung Istanbul Guangzhou Kanpur Dhaka Algiers Rajshahi Coimbatore Hong Kong Vijayawada Hyderabad Tijuana Jaipur Syedpur Pune Kolkata Jalna Mumbai Santiago Tebessa Valledupar Cebu Manila Bacolod Ribeirao Preto Guaruja y = -0.11x R 2 = Decentralisation

41 Results: Proportion of Invaded that is Public Variable Estimate d Proportio n of Invaded land that is Public GDP PPP Total Popul ation Exten t of Publi c Extent of Public Domi nance of Dev. Publi c Inde x 3 Publi c Inde x 4 Decent -ralis ** N R 2 and Adj R

42 Results: Proportion of Firms Citing Access to as a Major Constraint Percentage of Firms Citing Access to as a Major Constraint Colombia Mexico Uruguay Hungary Nigeria Turkey The Gambia Germany Poland India South Korea Chile Georgia Russia Kyrgyz Republic Indonesia China Philippines Armenia Brazil Egypt Vietnam Bangladesh Algeria Mali Ethiopia

43 Results: Proportion of Firms Citing Access to as a Major Constraint Variable % of Firms Citing Access as a Major Constrain t Log of GDP PPP Log of total Popul ation Exten t of Publi c Extent of Public Domi nance of Dev. Contiguity Index Public Index 5 N R 2 and Adj R * *

44 Results: Proportion of Firms Citing Access to as a Major Constraint Variable Log of % of Firms Citing Access as a Major Constrain t Log of GDP PPP Log of total Popul ation Exten t of Publi c Extent of Public Domi nance of Dev. Contiguity Index Public Index ** * N R 2 and Adj R

45 Conclusions tentative positive relationships between less dominant public sector involvement in land development activity and better land market outcomes. 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.

46 Conclusions 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.

47 Conclusions These correlations were observed for indicators of affordability, encroachment and access and not for the indicator of spatial form. Across the spectrum of indicators, extent of public land ownership did not generally feature as a reliable predictor of land market outcomes.

48 Conclusions The potential effect of more idiosyncratic organizational and capacity arrangements was difficult to trace and in no instance was it found to be an independently reliable predictor of land market outcomes. The results are very tentative as the models presented typically explained less than 20% of variation in the land market outcome indicators as quantified by the Adjusted R2 values.

49 Conclusions However, the frequency with which public land management variables featured as reliable predictors of a variety of land market outcome indicators suggests that we should also be cautious about dismissing their relevance to hastily. Even so, correlation between public land management and land price growth does not lend to straightforward interpretation

50 Future Research The political economy of public land management and reform The social and environmental benefits that may be derived from vacant public land Are particular public land management institutional configurations better suited to specific public land intervention instruments? Pursuing specific land management practices and other institutional arrangements under widely varying land tenure systems Detailed country specific studies that utilize econometric tools to study comparative development outputs and impacts under evolving institutional structures Wherever feasible, the type of analysis undertaken and proposed in this paper should be repeated using actual land market transaction data rather than expert opinion