Annual World Bank Conference on Land Policy and Administration Land in the Bank s new Urban Strategy Robin Rajack World Bank April 2010
Will the World Bank s New Urban Strategy please stand up
What has changed? Housing finance has grown rapidly in places such as Mexico Mexico, China and India Spatial extent of cities has changed more rapidly than population growth Absolute numbers of slum dwellers has grown Technology h l ffor gathering h i and d analyzing l i d data h has become b much h more accessible Concept of security of tenure has become more nuanced Decentralization has increased and with it an expectation for revenue generation at the h local l l level l l Land acquisition through eminent domain has been increasingly challenged by courts Local and international NGOS have become much better organized and networked Two big global agendas have merged: MDGs and Climate Change
What do we now know better? New evidence on scale and driving forces behind urban expansion New evidence on access to land as a hindrance for doing business ((systematic y DB and ICA Surveys y regularly g y administered)) New evidence of the impact of policies for management of public land on land market outcomes Better understanding of which regulations matter most Better understanding of the importance of political economy perspectives.accepting rather than rejecting complexity
A Real Problem for Investment: Proportion of Firms Citing Access to Land as a Major Constraint Percentage of Firms Citing Access to Land as a Major Constraint 60.00 50.00 40.00 30.00 20.00 10.00 Source: World Bank Group/ Doing Business Surveys M al i Et hi op ia C ol om bi a M ex ic o U ru gu ay H un ga ry N ig er ia T Th urk ey e G am bi a G er m an y Po la nd In So ut dia h Ko re a C hi G le eo rg ia Ky R rg u ss yz ia R ep ub li In do c ne si a C Ph hin ilip a pi ne s Ar m en ia Br az il Eg y Vi pt et Ba na ng m la de sh Al ge ria 0.00
Public Land Management DIAGNOSTIC: When the public sector dominates land development activity, activity land market outcomes tend to be worse for the poor and for investment price to income ratios house p shelter price inflation % firms citing access to land as a major constraint to their business Public land management policies seem to matter more to land market outcomes than the extent of p public land ownership p Strategically located public land held off market, can significantly affect supply (Source: Rajack, 2007: Does the Ownership and Management of Public Land Matter to Land Market Outcomes?)
URBAN CHALLENGES Urban Expansion Densities are declining Urban Growth Management Initiative
URBAN CHALLENGES Urban Expansion Densities are declining Urban Growth Management Initiative
URBAN CHALLENGES Secondary Cities are growing the fastest Increase in Urban Population (2000 2015) Incre ease in Populatio on (millions) 51% 25% 9% 9% 3% 1% 1% 2% City Size UN World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2007 Revision
ROLE OF CITIES City densities optimize service delivery Being more densely settled, urban areas offer infrastructure mass targeting options that are more cost effective than rural areas Regions such as LAC and ECA with the highest urbanization rates also have greater access to sanitation services Share of urban population with access to improved sanitation (%) Urban population (% of total population) 100 75 50 25 0 EAP ECA LAC MNA SAR AFR World Development Indicators, World Bank 2006
ROLE OF CITIES The New Urban Strategy: A systems approach to cities Cities are complex p systems y In some respects, they are comparable to other complex systems a corporation, an economy, a living b d an ecosystem body, t Practitioners of systems analysis have a great belief in leverage g p points At leverage points, a small shift can produce significant changes Those who manage to intervene in systems at the leverage point can catalyze a shift in paradigm Who are the leaders of the urban revolution?
ROLE OF CITIES A paradigm shift in thinking about urbanization WDR 2009 Reshaping Economic Geography drives the new urban agenda Keyy Message: g Urbanization is inevitable More than this,, it is essential to maintain economic growth, built upon agglomeration economies Old Paradigm: Urbanization is too rapid and primary cities are too large New Paradigm: Density is needed. Drivers of this Transformation will include: Land Use Efficiency & Labor Mobility Spatially Blind Institutions, Infrastructure and Incentives: to enable efficient land markets, connective infrastructure, and targeted slum upgrading Urban Growth Agenda: Dealing with trade offs between benefits of agglomeration economies and congestion
WORLD BANK @ WORK Client interest in urban sector operations is increasing Dedicated urban lending unit established in 1972 Between 1972 2008, roughly $37 billion lent for urban projects Urban Portfolio Performance is above Bank average greater than 80% satisfactory 5 year average annual lending close to $1 billion in nominal terms for the last twenty years, while declining in the late 90s and increasing under the Infrastructure Action Plan From FY2006 to FY2008, total number of urban sector projects nearly doubled from 22 to 38
A NEW URBAN AGENDA Refining Our Five Business Lines to better meet clients needs
Enabling framework plus? C Continued ti d case ffor emphasis h i on regulatory l t environment and housing finance expansion But renewed case for not throwing the baby ((slum upgrading pg g and sites and services)) out with the bath water Additional case for more innovation if only because the problems persist
Which Regulations Matter? Minimum plot and flat size Floor Area Ratio/ Floor Space Index Land Use Zoning Ratio of developed land that is saleable
Land and Housing market analysis A NEW URBAN AGENDA Poor land use regulations can have negative effects on housing market Minimum plot size is only affordable to 18% of the top income households in Addis Ababa Mexico City
Given this reality, what land polices should governments pursue? A. Policies that allow formal land supply to be responsive to effective demand of households and firms B. Policies that anticipate rather than react to new settlement so that there is greater efficiency in new settlement patterns C. Policies that take stock of the built reality that is already there rather than dream of a clean slate ((to be discussed another time)) D. Policies that return to the public purse some of the value created by public investments: infrastructure, zoning etc. (to be discussed another time)
What new tools have we added to the lb? toolbox? Urbanization review Inner city Market Assessment Tool Urban Vulnerability Assessment Street Addressage Land Market Assessments Land readjustment Land acquisition Guided land Development Streamlining public land management Auctions of public land Satellite imagery GIS applications Regulatory Audits
Recent Examples of Land Auctions L ti and d Activity A ti it Location P d Proceeds R k Remarks Cairo, Egypt May 2007, 2100 ha US$3.12 billion 117 times total urban property tax collections Mumbai, India US$1.2 billion b o 10 times MMRDA s total capital spending spe d g in fiscal sca 2005 005 Istanbul, Turkey Mar Apr 2007 Mar, Sale of old bus station and admin site US$1.5 billion 1.5 times total municipal capital spending in fiscal 2005 Cape Town, South Africa Nov 2006..sale of waterfront property US$1.0 billion Equal to 17% of 5 year capital investment plan Source: Peterson, 2009: Unlocking Land Values to Finance Urban Infrastructure
A NEW URBAN AGENDA Brazil s National Housing Program $500 $500 million illi Development D l t Policy P li Loan L Part of ongoing engagement since 2002 Policy analyses and dialogue between Bank and Civil Servants Brazil s B il housing h i sector reforms f ffocus on ffour areas: National policy and institutional framework Federal housing subsidy system Housing i credit di and d savings i system Formal urban land development My House, My Life aim to build 1 million new homes for families at subsidized rates based on household incomes Construction sector stimulus generates 1.5 million jobs
A NEW URBAN AGENDA Morocco Housing Development Policy Loan $150 million development policy loan to Strengthen institutional, regulatory and fiscal environment of housing market Increase access of low income and severely disadvantaged households to more affordable and higher quality housing P Program includes i l d th the following f ll i components: t Modernize urban planning standards and regulations Restructure and refocus public sector housing agencies and enterprises Rationalize and simplify real estate taxes and subsidies Reforms and measures to expand urban slum upgrading Social housing programs through market friendly approaches Improve efficiency of residential rental market Expand access of informal sector and low income households to market based housing finance